Sitting of 7 April 1981

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

  PRIVATE BUSINESS
  SION COLLEGE BILL [Lords]
  Read a Second time and committed.

Oral Answers to Questions
  EDUCATION AND SCIENCE

    Overseas Students
    Mr. Canavanasked the Secretary of State for Education and Science what recent representations he has received about the level of fees for overseas students.
    The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): Since the beginning of this year some 180 representations have been received by my right hon. and learned Friend from hon. Members, students and their organisations, academic institutions and national bodies.
    Mr. Canavan: If this uneducated Tory Government are too mean to abolish full cost fees for all overseas students, will they at least give some special consideration to students from Commonwealth countries with which we have had longer and stronger links than we have with the Common Market? Is it not a piece of blatantly unfair discrimination, for example, for students from a British dependent territory such as Hong Kong to be charged full cost fees whereas students from a Portuguese overseas territory such as Macao will pay exactly the same fees as British students once Portugal joins the Common Market?
    Dr. Boyson: The hon. Gentleman should have noticed that a month ago the Foreign and Commonwealth Office raised the value of Commonwealth scholarships from £34 million to £42 million. An additional £5 million is being given to Zimbabwe to enable another 800 or 900 students to come to Britain. We have helped to facilitate student movement in Europe because we are part of Europe. The hon. Gentleman should remember that we send more students to Europe than the number of European students who come here. The rest of Europe is the only area with which we have a reverse balance of trade with students.
    Mr. Cormack: Does my hon. Friend accept that there is real concern about this issue in many parts of the House? Will he give us the assurance that he will continue closely to monitor the full cost fees system?
    Dr. Boyson: I appreciate entirely what my hon. Friend says. We are monitoring the system continually. My right
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    hon. and learned Friend said that we would do so. We shall continue to monitor the number of students coming to Britain and the countries from which they come.
    Mr. Robert Hughes: Is not it true that the number of students coming to British universities has declined and that the balance between rich and poor countries has shifted adversely for developing countries, which need education more than other countries? What will the hon. Gentleman do about it?
    Dr. Boyson: There are 2,500 more students in higher education in Britain than would have been paid for under the quota set by the previous Labour Government before they fell in 1979. The figures published last week tell us that between 1975–76 and 1978–79—[Interruption.] If the hon. Member for West Stirlingshire (Mr. Canavan) listened, it would do him some good—the number of students coming from the poorest countries to Britain fell by 18 per cent. while the Labour Government were in office.
    Mr. Durant: Is my hon. Friend aware that the figures for my local university at Reading have held up remarkably well? There have been anxieties, but it has done extremely well for overseas students.
    Dr. Boyson: I am grateful for that comment. At some universities there has been an increase in the number of overseas students. For example, there has been a 40 per cent. increase at the LSE. At other universities the numbers have decreased. Much depends on the contacts that universities in Britain have made with the rest of the world.
    Mr. Kinnock: Is the hon. Gentleman claiming that the full cost fees system is a success or a failure? It seems that it is so much of a failure that it requires additional stimulus from the Foreign and Commonwealth Office to relieve the burden caused by the decline in the number of applications from overseas students. Does he recognise that increases in applications from certain institutions have arisen from a capacity to buy and not from merit?
    Dr. Boyson: The arrangement under the hon. Gentleman's Government—
    Mr. Robert Hughes: My hon. Friend the Member for Bedwellty (Mr. Kinnock) was not a member of that Government.
    Dr. Boyson: The hon. Member for Bedwellty (Mr. Kinnock) was a member of the Labour Party at that time, as was the hon. Member for Aberdeen, North (Mr. Hughes). Under the previous Labour Government, there was an indiscriminate subsidy for every overseas student irrespective of whether he or she came from a richer country than Britain or from a rich family. We levied the fee and we are trying to help those from poorer countries and poor families.

    School Meals
    Mr. Gwilym Robertsasked the Secretary of State for Education and Science when the next census of school meals will take place.
    The Under-Secretary of State for Education and Science (Mr. Neil Macfarlane): My right hon. and learned Friend has this matter under consideration.
    Mr. Roberts: Does the hon. Gentleman accept that school meals have an important education and welfare function to perform? Bearing in mind the 25 per cent. reduction in the take-up of school meals during the past year and the real danger that the school meals service will collapse because of Government policies, will the hon. Gentleman provide the relevant figures more regularly and act to increase the take-up of school meals?
    Mr. Macfarlane: As the House knows, that matter has been discussed on several previous occasions. Once again, Opposition Members are trying to exaggerate the situation into making the House believe that the school meals service is collapsing. That is far from the truth. The hon. Member specifically asked me when the next census of school meals would take place. I remind him and the House that the school meals census is a costly operation, which involves local education authorities and my Department in a great deal of work. However, I confirm that my right hon. and learned Friend is considering the matter.
    Mr. Michael Brown: Is my hon. Friend aware that in the county of Humberside, which has reduced its rates by 6p in the pound, more school meals have been taken following the introduction of its new system?
    Mr. Macfarlane: I am grateful for my hon. Friend's comment. That is a good example, and there are others elsewhere. The legislation passed last year guaranteed that local authorities had more flexibility to make the meals more attractive.
    Mr. Field: As about 175,000 poor children have lost their right to free school dinners under the Government, will the Minister tell the House what steps he is taking to ensure that each of those children receives an adequate, balanced diet?
    Mr. Macfarlane: That is a matter for the local authorities and the local social services. Hon. Members understand that fully. I have to remind the hon. Member once again, for about the third time this year, that two-thirds of local authorities are providing the statutory requirement, as enshrined in last year's legislation.
    Mr. Haynes: Is the Minister aware that, when that census has taken place, the results will show clearly that meals provided in schools have been drastically reduced because of Government policy? Is he also aware that the other Under-Secretary told us in the House that schoolchildren should even walk to school? Is it a policy to starve children?
    Mr. Macfarlane: The hon. Gentleman is exaggerating the case. His question has no relevance to the question put down by the hon. Member for Cannock (Mr. Roberts).

    Special Schools
    Mr. Edwin Wainwrightasked the Secretary of State for Education and Science how many special schools for educationally deprived children exist in the Barnsley, Doncaster and Rotherham metropolitan borough councils' education districts, respectively; and how many are scheduled to be closed.
    Mr. Macfarlane: My right hon. and learned Friend is not aware of any such schools in Doncaster or Rotherham.
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    The Barnsley education authority has two centres for remedial education, both of which it proposes to close at the end of this academic year.
    Mr. Wainwright: Does the hon. Gentleman realise that the cuts in education are drastically affecting the education of children with learning difficulties? Does he not realise that if those children are now educated they can perhaps take their places in the society of the future? Therefore, the cuts in education are placing the local authorities in an invidious position. There should be more such schools and not fewer.
    Mr. Macfarlane: I understand the hon. Gentleman's concern for his constituents. I have read some of the correspondence which has been exchanged between him and the local director of education. However, the Barnsley local education authority is proposing to make alternative provision in ordinary schools for pupils who currently attend those centres. That is an important contribution, given the theme which is echoed in the legislation now going through the House.

    Local Government (Transfer of Powers)
    Mr. Greville Jannerasked the Secretary of State for Education and Science how many representations he has received during the past 12 months concerning the transfer to county councils of powers in respect of education which were previously held by city or district councils.
    The Secretary of State for Education and Science (Mr. Mark Carlisle): None, Sir.
    Mr. Janner: Is the right hon. and learned Gentleman aware of the deep anger and frustration which is felt in the city of Leicester—[Laughter]—and which is no laughing matter there, because the local authority believes that the destruction of the city's education system is caused by its transfer to a Tory-dominated county authority, which has no concept of the problems of deprivation in a city? Will he not see that those powers are transferred back so that the entire system, including nursery schools, which are in a particularly bad way can be reconstructed on an understanding basis?
    Mr. Carlisle: If the local authority is as angry and frustrated as the hon. and learned Gentleman says, it is surprising that it has made no representations to me about the matter.
    Mr. Latham: Does my right hon. and learned Friend realise that the electors and ratepayers of Leicestershire wish that the hon. and learned Member for Leicester, West (Mr. Janner) would fight the battles of the future, not those of the past?
    Mr. Carlisle: It is important that we should have a period of stability in the organisation of education.
    Mr. Ashley: Is the Minister aware that the city of Stoke-on-Trent feels the anger and frustration mentioned by my hon. and learned Friend the Member for Leicester, West (Mr. Janner), and has referred it to the Minister? It is a city of a quarter of a million people, with a fine educational record, yet its educational services are run from the small town of Stafford. Why does not the Minister restore local democracy?
    Mr. Carlisle: I can only repeat what I said to the hon. and learned Member for Leicester, West (Mr. Janner). I

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    am advised that I have received no representations during the last 12 months from any city about that matter. Even if I did, I have no intention of making changes in the distribution of responsibility for education, as I believe that it is right to have a period of stability.
    Mr. Janner: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I give notice that I shall seek to raise the matter on the Adjournment.

    Student Loans Scheme
    Mr. McQuarrieasked the Secretary of State for Education and Science if he is yet in a position to announce his decision on a student loans scheme to replace the existing student grants scheme; and if he will make a statement.
    Dr. Boyson: My right hon. and learned Friend expects to make a statement shortly.
    Mr. McQuarrie: I should like to draw the attention of my hon. Friend to page 3 of today's Glasgow Herald which states that the issue has already been taken—[Interruption.]
    Mr. Speaker: Order. Will the hon. Gentleman be good enough to put his statement in the form of a question, even if he is referring to his local newspaper?
    Mr. McQuarrie: I am grateful to you for your guidance, Mr. Speaker, but it is not my local newspaper. However, in deference to you, Mr. Speaker, I shall ask a question.
    Does my hon. Friend agree that the decision to bring into operation a student loans scheme has been shelved and that that will bring considerable joy to students and parents?
    Dr. Boyson: I was interested in my hon. Friend's comment. I have not yet read today's Glasgow Herald, as no doubt many other hon. Members have not. We shall shortly announce our decision and when that announcement is made the whole country will be able to read the announcement not only in the Glasgow Herald, but in any other paper which reports it.
    Mr. Flannery: What will the Minister say in that statement? Does he not remember that many potential students in his day and mine were deterred from going on with education because they would have to pay back loans? It took me years to pay back the loan which I received just before the war. Does he not realise that that deters people from continuing their education? Will he assure us that grants will continue and that they will even be extended?
    Dr. Boyson: I am sure that we are all pleased to have an intervention from the hon. Member. However, I can go no further than what I have already said. Having repaid his loan, the hon. Member must wait quietly until next week or some time very soon, when the announcement will be made.
    Mr. Alexander: May I urge my hon. Friend to realise that "very soon" cannot come too soon for many students who are genuinely concerned about their future? May I urge my hon. Friend to ensure that any decision he makes will not alter the status of students who are now at university, that whatever he decides will make no difference to them during their stay there?
    Dr. Boyson: When economic charges were introduced for overseas students, they did not apply to overseas students already at university. We do not intend to change the arrangements for those already at university, even if we change them for others.
    Mr. Whitehead: The Minister must now be taking for granted the opposition of all Opposition parties and student organisations to those regressive proposals? [HON MEMBERS: "Not the Social Democrats."] I mean all parties represented here today. Will he consider putting in the Official Report a list of all Conservative Members and Conservative students' associations which also opposed any form of loan scheme, from those who are opposed to such schemes on the grounds of public expenditure, such as the hon. Member for Southend, East (Mr. Taylor), to those who are opposed to them on educational grounds such as the hon. Member for Cambridge (Mr. Rhodes James)? Where are the Minister's supporters?
    Dr. Boyson: This is not a football match, in which one has to line up one's supporters. One weighs up what is best for one's country. Inside the Conservative Party, unlike the Labour Party where the debate is less important, there has been a continuous debate. From that, a true answer has been distilled, which will shortly be announced to the country.

    Schools Curriculum
    Mr. Thorntonasked the Secretary of State for Education and Science what requirement there will be upon local education authorities and schools to implement his schools curriculum document.
    Mr. Mark Carlisle: None, but I shall shortly be issuing a circular which will invite authorities to formulate a policy for the curriculum in their area; to make themselves aware of current provision in their schools; and to plan future developments in the light of the guidance in our statement.
    Mr. Thornton: As many parents, teachers and employers are concerned that some local education authorities may choose to ignore the guidance, will my right hon. and learned Friend ensure that his Department not only monitors the curriculum but also impresses on LEAs the importance of curriculum guidance?
    Mr. Carlisle: I have no reason to believe that any local education authority will ignore the document, which has been widely accepted, but we shall issue a circular to draw it to their attention formally. In about two years we shall ask what change has been made.
    Mr. Kinnock: Is the right hon. and learned Gentleman aware that the document was described by The Times Educational Supplement as verbiage? How does he have the gall to impose new obligations by circular or by law on LEAs only six weeks after Her Majesty's Inspectorate published a document showing that the curriculum was being significantly damaged because of Government expenditure cuts?
    Mr. Carlisle: If money is short, that is all the more reason to make sure that we obtain the best possible value for it and that more thought is given to the planning of the curriculum. We make it clear in the document that we realise that the restraint on facilities will affect the speed of implementation.
    Mr. William Shelton: Is my right hon. and learned Friend aware that his document is widely welcomed throughout the educational establishment and that the only regret is that it was not published by the Labour Government years ago?
    Mr. Carlisle: I am aware that, apart from The Times Educational Supplement, on the whole, the document had a good press.

    Computers (Teaching)
    Mr. Dobsonasked the Secretary of State for Education and Science what assessment his Department has made of the progress of education authorities in teaching the use of computers and related subjects; and whether he is satisfied with the Inner London Education Authority in this respect.
    Mr. Macfarlane: The Department receives information from Her Majesty's Inspectorate about the work of schools, colleges and local education authorities in this field, and a survey of authorities' arrangements for the provision of software in schools has been commissioned under the microelectronics education programme. So far as can be judged on the evidence available, the Inner London Education Authority has made a substantial investment in hardware, in-service training and supporting services.
    Mr. Dobson: I welcome the Minister's acknowledgement of ILEA's prowess, but is that not ironic after the authority has been roundly denounced by the hon. Member for St. Marylebone (Mr. Baker), who is now the Minister responsible for computer science?
    Mr. Macfarlane: It is encouraging to note that the ILEA, like a number of other local education authorities, has invested cash in the programme. I am happy to see that the ILEA chief inspector responsible for computer education is contributing to the national programme sponsored by my Department.
    Mr. John MacKay: Does not the fact that yesterday the Prime Minister launched the campaign for a computer in every secondary school show how seriously we take the future educational development of microprocessors and microcomputers?
    Mr. Macfarlane: Developments are extremely encouraging. The Department of Industry is sponsoring the provision of hardware, which is complementary to the Department of Education and Science programme for in-service training and software analysis.
    Mr. Dalyell rose—
    Mr. Speaker: Mr. Roy Hughes, Question No. 8.
    Mr. Mark Carlisle rose—
    Mr. Dalyell rose—
    Mr. Speaker: Order. I missed an Opposition Front Bench speaker, but there is no prescriptive right for Front Bench Members to be called, any more than there is for Back Bench Members. However, it is a "maiden" Front Bench question for the hon. Member.
    Mr. Dalyell: What is the cost of the in-service training programme?
    Mr. Macfarlane: So far, my Department has spent just under £1 million on 34 projects. About one third have
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    come from 36 local authorities. We are happy to say that more background is now being provided by the Council for Education Technology, which is beginning to mount a series of six-week courses. In the past 12 months, 800 teachers have been through the programme.

    Expenditure Cuts
    Mr. Roy Hughesasked the Secretary of State for Education and Science if he will consider convening a conference of local education authorities to consider the effect of expenditure cuts on education.
    Mr. Mark Carlisle: I have regular meetings with the local authority associations at which we discuss, among other things, the effect of the Government's expenditure plans on the education service.
    Mr. Hughes: Will the Secretary of State at last appreciate the serious deterioration in education, which is confirmed by the report of Her Majesty's Inspectorate? Does he accept that if he called a conference of local education authorities he would at least get a first-hand, blow-by-blow appraisal of the situation?
    Mr. Carlisle: The report was fully debated recently in the House. If the hon. Gentleman wants a re-run of that debate, I shall be happy to take part at any time. I visit many schools, and am fully aware of the position throughout the country. I have never pretended that it is easy to reduce expenditure, but I do not accept what the hon. Gentleman says about the effect of the cuts.
    Mr. Freud: When the Secretary of State next meets LEAs, will he tell them that he will not implement contentious LEA decisions in the months before the county council elections?
    Mr. Carlisle: It would not be right to hold back departmental decisions just because an election is pending, but I shall bear in mind what the hon. Gentleman says.
    Mr. Dickens: Since local government officers are past masters at convening conferences at seaside resorts at the taxpayers' and ratepayers' expense, will the Secretary of State resist the temptation to convene yet another conference?
    Mr. Carlisle: When I meet local education authorities it is usually at Elizabeth House and not at a nice seaside resort.

    Primary Schools (Costs)
    Mr. Knoxasked the Secretary of State for Education and Science how much was spent per pupil in primary schools in England in each of the past three years, at constant prices.
    Dr. Boyson: Net recurrent expenditure at 1980 survey prices for children of primary school age was £375 in 1977–78, £406 in 1978–79 and £422 in 1979–80.
    Mr. Knox: Does my hon. Friend agree that, if there is a connection between standards and the amount spent on education, there is no reason why standards should have fallen in the past three years but strong reasons why they should have risen?
    Dr. Boyson: That is true. The intention is to increase expenditure for each child of primary school age to £427

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    this year and to £432 in 1983–4. As primary school expenditure per child has increased by 64 per cent. in 20 years, we should expect good standards.
    Mr. Allen McKay: As lack of finance has caused primary schools to close in my constituency of Penistone, will the Minister meet parents to discuss the problem?
    Dr. Boyson: I imagine that the fall in the birth rate has caused the closures. If schools were full, they would not close. If the hon. Gentleman writes to us, we shall be glad to meet a delegation.

    Village Schools
    Mr. Nicholas Bakerasked the Secretary of State for Education and Science if he will issue a circular to local education authorities advising them on methods of encouraging the preservation of village schools in rural communities.
    Mr. Macfarlane: My right hon. and learned Friend has no plans to issue such a circular. He recognises the contribution to village life which small rural schools can make, but there are educational and economic arguments for closing schools in some areas as pupil numbers fall. Whether to maintain a school or take it out of use must in the first instance be decided by local education authorities in the light of local circumstances.
    Mr. Baker: Does my hon. Friend accept that many people in my constituency and in rural areas elsewhere will be very disappointed by that reply? Does he recognise the important educational and community advantages of village schools? Will he reconsider his decision and see what help he can give to parent-teacher associations to encourage the retention of village schools?
    Mr. Macfarlane: As my hon. Friend knows, a tremendous change is taking place. I certainly understand what the closure of village schools has meant in many communities, but the educational and economic arguments are important. My right hon. and learned Friend intends shortly to issue a circular on falling rolls and surplus places and the educational and financial factors which must be considered in the appraisal.
    Dr. Edmund Marshall: For how many village schools in rural communities has the Secretary of State since he took office approved proposals for cessation of maintenance without replacement by local education authorities?
    Mr. Macfarlane: If the hon. Gentleman tables a question I shall see that it is answered.
    Mr. Watson: Will my hon. Friend dispel once and for all the notion that children at small rural primary schools are suffering in some way from educational disadvantage?
    Mr. Macfarlane: I think that this may well apply in many schools in some areas. We are looking at those issues and problems in my Department's appraisal in conjunction with HMI and local authorities, and it will remain part of the appraisal of falling rolls.

    Secondary Education (Guidance)
    Dr. Mawhinneyasked the Secretary of State for Education and Science if he will give official guidance to local education authorities on methods they could use in determining whether a change from a system of schools for
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    11 to 18-year-olds, schools with sixth forms to schools for 11 to 16-year-olds and sixth form colleges will save or cost local ratepayers money.
    Mr. Mark Carlisle: Yes, Sir. The Department has commissioned management consultants to prepare a method of costing. This will be of use to local education authorities which are reviewing their provision for 16 to 19-year-olds as the joint Government and local authority review recommended.
    Dr. Mawhinney: I thank my right hon. and learned Friend for that information. Does he agree that it is not possible to place a cost upon the disruption caused by replacing schools for 11 to 18-year-olds which are doing a fine job with schools for 11 to 16-year-olds and sixth form colleges?
    Mr. Carlisle: I assure my hon. Friend that, as the report made clear, we believe that there is still room for the viable school for 11 to 18-year-olds with its own individual sixth form.
    Mr. Andrew F. Bennett: Does the Secretary of State agree that it is most unfair for a local authority, having offered a child at age 11-plus a place at a school for 11 to 18-year-olds, to begin to reorganise the system before that child has completed his education?
    Mr. Carlisle: If one thinks about that for a moment, it means that one could never organise anything because in any year there are bound to be some children who were in the school the previous year. It is necessary for local authorities to look at their provision for 16 to 19-year-olds because the effect of falling rolls would otherwise mean non-viable classes in many small schools.
    Mr. Stoddart: Is the right hon. and learned Gentleman aware that the proposal by Wiltshire county council to reorganise secondary education in Swindon on the basis of an age range of 11 to 16 and a sixth form college has caused uproar in the area because people believe that it is educationally non-viable and will be bad for the children? As he must have received representations about this, will he ensure that more consultation takes place? Will he come to Swindon to discuss the matter with the people there?
    Mr. Carlisle: I have not seen the matter to which the hon. Gentleman refers, but if he cares to make representations to me about at they will certainly be borne in mind as part of the Department's review of any individual application to change the nature of a school.

    Music Tuition
    Mr. Brintonasked the Secretary of State for Education and Science what advice he is now able to give to local education authorities on the continued provision of instrumental music tuition, both in and out of school.
    Mr. Hal Millerasked the Secretary of State for Education and Science whether he has yet reached any conclusions about the Forbes judgment on the matter of charging for music lessons by the Hereford and Worcester local education authority.
    Mr. Mark Carlisle: Local education authorities that now charge for instrumental music tuition will need to examine the terms of the judgment, in consultation with

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    their legal advisers. I am considering whether the judgment calls for action on the part of Government, but I have no current proposals for legislation.
    Mr. Brinton: I thank my right hon. and learned Friend for that answer. Does he agree that the recent case to which he referred, brought with the backing of the National Union of Teachers, has gravely imperilled music teaching in many schools? Will he confirm once again that he is urgently seeking to ascertain whether legislation is necessary so that parents may voluntarily pay part or the whole of fees for instrumental tuition?
    Mr. Carlisle: I agree with what my hon. Friend says. I think that the only effect of that case is to put at risk a great deal of instrumental teaching in schools. There is nothing new in charging for such teaching. More than 40 local education authorities do so at present. Clearly, they will now have to review the provision that they make. On the second part of my hon. Friend's question, I am considering what guidance and help I might give. As I have said, however, at the moment I have no proposals to bring immediate legislation before the House.
    Mr. Miller: Does my right hon. and learned Friend accept that the Hereford and Worcester local education authority, in whose area the case arose, is certainly of the view that amendment to the legislation is necessary to permit continuation of the practice of charging, which enabled the authority to provide new instruments for the purpose as well as employing peripatetic music teachers?
    Mr. Carlisle: I am aware that that view has been expressed by many people. I ask my hon. Friend to accept that one must consider very carefully before deciding to change the law in this area. The matter needs a great deal of thought, which we are giving to it.
    Mr. Flannery: Before the Minister uses that judgment in the way that he proposes, will he realise that the man who brought the case has since accused the authorities of cutting even more deeply than previously? Is he aware that the judgment will be used to curtail music teaching by reactionary authorities all over the place which would cut deeper and deeper in any case whether the judgment existed or not?
    Mr. Carlisle: I am not using that judgment in any way. In many parts of this country it has been normal, accepted practice to make a charge for individual instrumental tuition. I therefore confirm that the effect of the judgment is that many of those local education authorities are now reviewing their practice to see whether they can continue the service.
    Mr. Anthony Grant: Does my right hon. and learned Friend agree that the top priority, as recommended by the Gulbenkian report, should be to help the very limited number of specialist music schools, of which the Purcell school at Harrow-on-the-Hill is one example, because it is at those schools that the orchestras and musicians of the future will develop?
    Mr. Carlisle: As my hon. Friend knows, we have recently announced that we are grant-aiding places in the three major music schools in this country which were not grant-aided under the previous proposals.
    Mr. Kinnock: Is the right hon. and learned Gentleman aware that music and musical tuition standards in this country are jeopardised far more by the cuts and the loss
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    of peripatetic teachers as well as other music teachers than by any judgment in the Jones case? Does he agree with me and many others who believe that authorities making charges for music lessons inside schools, on the curriculum, whether in music theory or instrumental music, are breaking section 53 of the Education Act 1944? Does he now intend to bring before the House a new miscellaneous provisions Bill to change the law in a way which would be acceptable to Tories but utterly abominable to anyone who cares about music and music tuition in this country?
    Mr. Carlisle: If local education authorities are providing music tuition which is part of the curriculum in the school in circumstances similar to those obtaining in the Hereford and Worcester case, clearly the judgment of the court applies. The hon. Gentleman will appreciate that that judgment concerned the provision of musical tuition in the particular circumstances of that case. On the second part of the hon. Gentleman's question, I repeat that I have no current proposals for introducing legislation, but I am reviewing the whole situation. One has to accept that, if an authority was attempting to retain the service and to obtain some of the income through a modest charge, that has now been prevented and therefore the service becomes at risk.

    Universities (Scientific Research)
    Sir David Priceasked the Secretary of State for Education and Science whether he is satisfied that basic scientific research in universities will not be diminished as a result of his proposals to reduce the funds allocated to the University Grants Committee.
    Mr. Mark Carlisle: The detailed implications of the Government's expenditure plans on all aspects of university activities, including basic science research, are under discussion with the University Grants Committee.
    Sir David Price: Is my right hon. and learned Friend aware that it will be extremely difficult to maintain the momentum of scientific research in our universities without some degree of earmarking of grants by the University Grants Committee?
    Mr. Carlisle: A working party chaired jointly by the UGC and the advisory board for the Science Research Council is examining the current arrangement for the dual funding of research. I do not think that I can add to that at this stage.
    Mr. Dalyell: Is the Secretary of State aware that, for example, while the physics department of the University of Hull is doing extremely distinguished work on lasers and the treatment of pre-malignant cervical cancer, it has not been able to appoint a new member of staff since 1968? Is not there a problem in that in many science departments whole groups of lecturers, senior lecturers and professors are ageing together? Should not something be done about getting a proper age structure in university science departments?
    Mr. Carlisle: There is a lot in what the hon. Gentleman has said. I cannot comment on the individual case. A lot of people were taken on by the universities at a particular time, and the age structure of those teaching in universities is, therefore, not ideal. It means that vacancies for new teachers in universities are difficult to come by.
    Mr. Ancram: I accept the general need for reductions, but is my right hon. and learned Friend aware of the genuine concern in universities, such as my local one in Edinburgh, that the speed at which the reductions are required will not allow for sensible changes to be made but will force quick savings that will be at the expense of departments such as the technical and scientific ones that we need?
    Mr. Carlisle: I am aware that there is concern in the universities about the need to make savings. The need exists, but I am reviewing with the UGC the details of the proposals.
    Dr. Bray: Is the right hon. and learned Gentleman aware that already the availability of equipment, research assistants and general support for research is so far below the standards that able researchers can get in the United States that it is becoming an increasingly great sacrifice for young scientists to remain in this country?
    Mr. Carlisle: We have made no reductions in expenditure by the research councils.

    SMP Mathematics and Nuffield Physics
    Mr. John MacKayasked the Secretary of State for Education and Science what evidence he has as to the acceptability of SMP mathematics and Nuffield physics as qualifications for the engineering industry as compared with traditional mathematics and traditional physics.
    Mr. Macfarlane: My right hon. and learned Friend is not aware of any evidence that any one A-level mathematics or physics course consistently produces better or worse prepared candidates for careers in engineering; nor is he aware of any systematic study of the preferences of the engineering industry.
    Mr. MacKay: Will my hon. Friend undertake to see whether the engineering industry has any reservations about modern mathematics or physics courses? Is he aware that if it does that would have most serious implications for our schools which should consider their mathematics and physics syllabuses with a view to the use that future students of engineering and physics might make of them?
    Mr. Macfarlane: That is an important point. My right hon. and learned Friend hopes that the Cockcroft committee will shortly have some advice to offer on the question of mathematics syllabuses. We are certainly aware that some employers have expressed a preference for more traditional courses, but I hope that the House will be pleased to hear that this is part of a regular scrutiny of the GCE syllabus, and so far neither has given rise to concern about standards of acceptability by engineering companies and universities.

    Expenditure Cuts (Universities)
    Mr. William Hamiltonasked the Secretary of State for Education and Science if he will make a statement on the expenditure cuts to be made in respect of the universities.
    Mr. Mark Carlisle: I made an announcement to the House on 13 March about the recurrent grant for universities for the academic year 1981–82.
    Mr. HamiltonIs the right hon. Gentleman aware that there has been a great deal of alarm and despondency
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    within the universities as a direct result of the proposals in the White Paper? Does he realise that evidence given last week to the Public Accounts Committee on this matter indicated that if those proposals were implemented immediately there would be at least 3,000 redundancies among the academics, and that the redundancy payments that those 3,000 would claim would be far more than the salaries they would expect to be paid if they were kept on?
    Mr. Carlisle: We are discussing these matters with the UGC, but I must repeat that the proposals in the White Paper for 1981–82 constituted a reduction of 3 per cent. in the fundings of universities. That is essential if we are to retain control over public expenditure.
    Mr. Stokes: Does my right hon. and learned Friend agree that the basic problem is that we have too many universities? What the country really needs is more students with national certificates and fewer graduates, some of whose courses are half-baked.
    Mr. Carlisle: There is need to rationalise the number of courses being provided by all the various universities and colleges of higher education, and that is what we are doing.

  PRIME MINISTER

    Engagements
    Mr. Stanbrookasked the Prime Minister if she will list her official engagements for Tuesday 7 April.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further meetings later today. This evening I shall attend the annual dinner of the Ross McWhirter Foundation.
    Mr. Stanbrook: Has my right hon. Friend, as a London Member, had time to study the declared intention of the London Labour Party to increase the rates of every household in London by £1 per week if it is returned to power in the Greater London Council? Does not that demonstrate Labour's disregard for the interests of ratepayers?
    The Prime Minister: I have no doubt that should Labour unfortunately be returned to power in the GLC that would mean, judging from the Labour Party's statements, a policy of higher spending, higher rates and intolerable new burdens on industry and the commercial enterprises upon which London relies for jobs. Many of those increases would be passed on in higher prices. That would be altogether a calamity. It would be far better to vote for good housekeeping of the kind that we shall give.
    Mr. Foot: Will the Prime Minister tell us to what extent rents and rates in London have increased during the period of her Government? Will she find time in her busy schedule today to meet the TUC representatives from the Northern region to discuss the unemployment which has nearly doubled in that region since May 1979?
    The Prime Minister: Over the past four years rates under the GLC have risen less than inflation. On rents, I assume that the right hon. Gentleman would not wish to perpetuate the circumstance under which the income from that source was less than half the cost of maintaining local council housing. On the latter part of the right hon.

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    Gentleman's question, he knows that I see individual Members if they have a problem about a particular closure, but I do not see general deputations.
    Mr. Foot: Will the right hon. Lady reconsider the matter? Throughout this week the House will be lobbied by people who will be making representations about rising unemployment all over the country. Unemployment in the Northern region is as bad as anywhere. Will she therefore meet some of these people during the week? What does the right hon. Lady have to say about the fact that company failures—[HON. MEMBERS: "Too long."] I know that Conservative Members are not interested in this aspect, but in the first half of this year company failures have been at a record high—51 per cent. higher than a year ago. When will the right hon. Lady do something about that?
    The Prime Minister: In reply to the first part of the right hon. Gentleman's question, I should say that I have some highly competent right hon. Friends who will, if need be, receive those deputations. As regards the latter part of his question, there are a number of bankruptcies. That is a measure of the lack of competitiveness and of the overmanning that the Government have had to deal with.
    Mr. Lawrence: Is my right hon. Friend aware of the reports to the effect that the International Monetary Fund is giving the seal of approval to the £ sterling and allowing it to be used for loans to countries that are in depressed circumstances? As the pound has for too long been the sick currency of Europe, is this not one of the Government's proudest achievements?
    The Prime Minister: I am aware that sterling has once again received the blessing of the IMF. I am also happy to observe that we have reduced our overseas debt in relation to our trade to the lowest level since the war.
    Dr. Owen: Is the Prime Minister aware that the Institute of Careers Officers announced today that 1 million teenagers would be seeking jobs this year and that this year promised to be the worst year ever? Is the right hon. Lady aware that the Government industrial Civil Service, for which she is responsible, is cutting apprentice training? How on earth can private industry increase its intake of apprentices when the Government are setting such a bad example?
    The Prime Minister: Last year, this year and next year are years that involve a particularly large number of school leavers, because of the bulge in the birth rate that occurred some years ago. As a result, more school leavers than usual will be seeking jobs. That is one reason why we have increased the facilities of the youth opportunities programme. We shall do everything we can to increase training facilities.
    Mr. Roy Hughesasked the Prime Minister if she will list her official engagements for Tuesday 7 April.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Hughes: Will the Prime Minister pause to reflect on the cowardly nature of the Government's incomes policy and, in particular, on the despicable way that the Government are treating their own staff, the Civil Service? Will she compare the Government's attitude towards the Civil Service claim with their attitude towards the miners'
    812
    claim, when the white flag was hoisted before battle had even begun. Similar settlements have been made in other areas. In reality, has not the Iron Lady got feet of clay?
    The Prime Minister: I do not regard a 50 per cent. increase in pay this year compared with two years ago, and a further offer of 7 per cent.—which will lead to an increase of 11 per cent. over last year's pay because of the way in which staging takes effect—together with job security and inflation-proof pensions as bad treatment. Many people would like to have that deal.
    Mr. Brotherton: Will my right hon. Friend give further thought today to the Civil Service? Is she aware that there is widespread concern at her Government's failure to reduce significantly the numbers of those employed in the Civil Service? Furthermore, is she aware that any capitulation on the 7 per cent. offer will be regarded with horror by the vast majority of the population?
    The Prime Minister: The numbers in the Civil Service have dropped by about 35,000 and will continue to drop in accordance with plans. The offer of 7 per cent. has been made although there is a 6 per cent. cash limit. That is reasonable both in terms of those who work for the Government and in terms of past pay increases. In addition, it is reasonable in terms of what people can afford.
    Mr. Dixon: As the right hon. Lady will not meet the leaders of the deputation from the Northern region, will she at least realise that they are complaining about the high level of unemployment? Is she aware that in comparison with other regions in England, Scotland and Wales the Northern region has the highest percentage of unemployment? Is she further aware that, compared with other regions, it has the second lowest number of vacancies? Every vacancy is being chased by 50 men and women as a result of the Government's policy. What message has the right hon. Lady got for those people from the Northern region?
    The Prime Minister: The hon. Gentleman will be aware that considerable help is given to the regions in the form of help to the nationalised industries and through regional aid. That will continue to be our policy.
    Mr. Hal Miller: Has my right hon. Friend noticed the report today to the effect that the fall in the level of sterling has led to an increase in industry's costs?
    The Prime Minister: I have not noticed the report. However, it means that all raw materials or semi-manufactured goods that are invoiced in sterling will increase in price.
    Mr. Frank Allaunasked the Prime Minister if she will state her official engagements for 7 April.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Allaun: Is it not unfair to blame Labour-controlled councils for vast rent and rate increases that have been caused by the Government? Should not the Government refrain from shooting the pianist for being compelled to play a rotten tune that has been composed by the right hon. Lady and her Government?
    The Prime Minister: That is just not so. On average, Labour-controlled councils have increased rates far more

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    than Conservative-controlled councils. That is due to their attitude toward public expenditure. Labour councillors think that they know how to spend the money better than ratepayers do.
    Sir William Elliott: Given the questions that Opposition Members have asked about the North-East, is my right hon. Friend aware that I am completely willing to meet leaders of the TUC from the North-East? However, they do not appear to have arrived. Is my right hon. Friend further aware that when they arrive I shall point out the recent figures that have been produced by the English Industrial Estates Corporation, which suggest that many more factories are opening in our region than are closing?
    The Prime Minister: I am grateful to my hon. Friend for those remarks. I am sure that he will convey that news to the deputation, should it arrive to hear it.
    Mr. Spriggs: is the Prime Minister aware that in Merseyside, which has one of the highest levels of unemployment, the Prescot Cable Company is importing cable from Taiwan and thereby importing unemployment into the country? Will she call for a full investigation and report to the House explaining why Taiwan is allowed to export unemployment to the United Kingdom?
    The Prime Minister: The hon. Gentleman will be aware that there are a lot of jobs in exports. If we were to adopt a completely protectionist attitude, unemployment would be even higher than it is now.
    Mr. Biggs-Davison: While I welcome my right hon. Friend's proper interest in matters ecclestiastical, will she spare a moment today to refute the rumour that ministerial pressure is being excercised to prevent the introduction of a Bill to preserve the Book of Common Prayer for those who wish to continue to use it in their Anglican worship?
    The Prime Minister: My hon. Friend must wait until permission is sought to introduce the Bill. I think that he will understand when I say that he must not be surprised if many of my right hon. Friends and some of my hon. Friends feel that they must constitutionally support the Synod.
    Q.4 Mr. Flanneryasked the Prime Minister if she will list her official engagements for 7 April.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Flannery: Will the right hon. Lady once again turn her mind to unemployment? Does she realise that by tomorrow there will have been five lobbies of Parliament? I venture to guess that none of those involved is worrying about the Book of Common Prayer. Does she realise—[Interruption.] If the public school hooligans would listen they might realise that those people witness factory closures every day. Does the right hon. Lady realise that, where industry was thriving, there are now more than 3 million unemployed? Does not she accept that her policy is a monumental failure? When will she change it and do something about the massive amount of unemployment that is at virtually everyone 's door?
    The Prime Minister: The best way of protecting jobs is to produce goods at a competitive price that those at home and abroad will buy. There is no substitute for that. As long as goods are uncompetitive or not of a type that people will buy out of their pay packets, there will be factory closures.
    Mr. Henderson: Is my right hon. Friend aware that in Scotland Labour-controlled district councils on average have raised their rates by more than 40 per cent., while Conservative and independent local authorities on average have increased their rates by only 11 per cent.? Does that not indicate that the increasing burden of rates is more a function of the way that local authorities are managed than of any action by Her Majesty's Government?
    The Prime Minister: Yes, I totally agree. The fact is that Labour councils are big spenders of other people's money.
    Mr. Spearing: Does the Prime Minister accept that her insistence on competition opens the possibility of extinction? How long will she and her Government persist in their attitude to imports—until British industry has been so undermined that it can never recover? Does not she accept that technological change throughout the world now makes that a real possibility?
    The Prime Minister: Those nations which compete most effectively and have concentrated more on productivity than on pay have the highest levels of prosperity.

References to Members
Mr. Arthur Lewis: On a point of order, Mr. Speaker. I am sorry that I have not had the opportunity of giving you notice of the question, but you will be aware that we have always had an understanding in both Houses that we do not attack Members of either House in a disparaging way.
Knowing that you, Mr. Speaker, like many hon. Members—not myself—are a teetotaller, I think that you might be a little offended to know that a former Member of this House, now in another place, has made a slighting, wounding attack upon a number of right hon. and hon. Members who are teetotallers. He has tried to assert that there is almost perpetual drunkeness in one Bar. The former Member to whom I refer is Eric Lubbock, now Lord Avebury. When he was called to order he corrected himself and included the other House as well.
You and I know, Mr. Speaker, that a few Members have a drink occasionally, but no one is ever drunk in this place, because that is against the rules. We know that you are a life-long total abstainer and you would never allow us to break the rules. It was wrong for the Member of another place to say what he did, when we all know that what he said is not true.
Mr. Speaker: I quite understand that the hon. Member for Newham, North-West (Mr. Lewis) did not have the opportunity to inform me that he would raise his point of order. We do our best in both Houses to observe the courtesies about each other and to each other.
I believe that the remarks, which I read with some interest, were made by a Member of another place, but were not made in another place but outside. In this country all sorts of things are said that we do not like. The hon. Gentleman knows that I am not inviting him to do it, but a question of privilege may be raised with me in private. It would be an exceedingly delicate matter. The hon. Gentleman is quite correct, in that all my predecessors have ruled that no right hon. or hon. Member is ever too much under the influence of drink.
Mr. Lewis: In view of your last sentence, Mr. Speaker, I thank you and say that you have well made the point.

WELSH AFFAIRS
Ordered,
That the matter of the Reorganisation of the National Health Service in Wales, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for their consideration.—[Mr. Le Marchant.]

EUROPEAN COMMUNITY DOCUMENTS
Ordered,
That European Community Document No. R/3298/78, concerning divisions of public limited companies (scissions), be referred to a Standing Committee on European Community Documents.—[Mr. Le Marchant.]

Co-ownership of Flats
3.34 pm
Sir Brandon Rhys Williams: I beg to move,
That leave be given to bring in a Bill to give powers to residents of flats in private ownership in purpose-built blocks and in certain conversions jointly to purchase the premises of which their flats are part; to specify the procedures to be adopted; to amend the Housing Act 1980 in respect of the powers of local authorities to acquire land in certain circumstances for the purpose of its disposal to residents of flats built thereon acting as joint purchasers; to make consequential provisions as to the management and upkeep of premises so purchased; and for connected purposes.
The purpose of the Bill is to provide a convenient statutory means by which the tenants of blocks of flats can come together to purchase their landlord's interest at a fair valuation. It is natural justice that residents of flats in private ownership should have similar rights to those now enjoyed by tenants of houses on long leases and by tenants in council flats. For tenants in privately owned premises, Parliament has already given security of tenure and a measure of control over rents.
Unfortunately, inflation is making those concessions of little value to people in retirement, or those who are unable to keep pace with changes in money values. If they owned their houses they would have an asset that would protect them to a considerable extent against inflation, but in private ownership a tenant who has to surrender the lease of his flat can take nothing out with which to procure other accommodation.
That is a serious social problem for many people, including those who may have thought themselves relatively well-to-do. When they can no longer keep pace with the rise in rents, service charges and rates and have to seek other accommodation, they find that they have nothing to sell with which to procure themselves another home. They often fall to supplementary benefit level to procure accommodation.
There are a number of other reasons why Parliament should act now. One is the continuing drift of the electorate out of inner London. I calculate that if the decline continues at the rate at which it has been proceeding for the past three or five years, one-third of the electorate of inner London will have moved out over the next 10 years. That is not just a problem for inner London Members; it is of concern to the whole country.
Unhappily, we are also seeing more and more bitter disputes over service charges. Although the Department sought to improve the rights of tenants in disputes over service charges in their legislation last year, there are still many disputes and a great deal of bad blood and unhappiness.
Once again, we are seeing the creeping hotels threat. Landlords seek by various means—some of them not at all clean—to evict long-stay tenants from blocks of flats so that the character of the buildings can be changed and they can be turned into flats for short-term letting to overseas visitors, sometimes only for a few days at a time.
Perhaps the most important factor that needs the attention of the Department is the deterioration of many of the older mansion blocks, and even some of the postwar blocks, where the landlords do not have the inclination—or perhaps do not have the means—to keep their properties up to an acceptable standard. The central London blocks are part of our heritage. It is foolish to

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allow the deterioration of those blocks to continue because we cannot solve the problems of the relationships between the landlords and the tenants.
Where will the money come from to maintain the blocks in a decent condition? Local authorities cannot be expected to provide an endless source of grants for conversion or improvement of blocks of flats. In many cases the landlord cannot or will not do it. Only the tenants can be expected to find the money, but they will not do it and will resist to the end while they think that the money they are spending on the improvement or maintenance of their blocks is accruing to a landlord for whom they have no time. They will not find the necessary money unless they have a permanent stake in the block. It is a matter of human nature, which the Department of the Environment should understand.
Perhaps the most important element in the Bill is valuation. I do not suggest that there should be any element of expropriation. I should like the valuation to be scrupulously fair, so that if a landlord is required to sell his property to his tenants he suffers nothing except the necessity to reshuffle his portfolio of assets.
I therefore propose that the Bill should specify that the owner should receive half the vacant possession value. I believe that on that basis the majority of owners would think that they had had a fair deal and would be quite willing to sell. In the terms of valuation we should recognise that having conferred security of tenure on the tenants we must not let that right be withdrawn again through inflation. We meant the tenants to have a real asset when we gave them security, and that asset must be taken into account when the valuation is made.
Tenants seeking to acquire their properties should be required to form themselves into a company in order to manage the block. Partnership schemes and loose associations would not be appropriate, because things could go badly wrong after the property had been bought and we would not succeed in maintaining the quality of the block if the tenants, having bought it, fell out among themselves.
The operations of a small company, however, are well understood in this country. The people concerned would know that they had to produce proper accounts and hold regular meetings, and that shareholders would have their rights. I should like to include in the Bill a model form of memorandum and articles for tenants' associations seeking to form companies to acquire their mansion blocks. That may be of use even if the Bill does not go through.
We should also specify that there should be no windfall capital gains. I suggest that the profit on a flat that falls vacant in the early years should accrue to the company or be shared between the tenant leaving the flat and the company. Otherwise, we should give tenants an incentive to sell in order to secure their vacant possession value, and that would unsettle the very people whom the Bill is intended to provide with greater security of tenure.
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The types of property in which tenants would have the right contained in the Bill must be clearly specified. I propose that they should be purpose-built blocks or conversions consisting of not less than four fully self-contained flats. There should be no question of single flats or parts of premises in owner-occupation being eligible for inclusion in co-owenership schemes.
I should also like to include in the Bill something about the powers of local authorities. A tantalising section in the Housing Act 1980 confers on local authorities the power to use compulsory purchase orders to acquire land for immediate resale for the provision of housing accommodation.
I interpret that section to mean that local authorities may acquire land with mansion blocks or flats already standing on it; but there could be some doubt about that interpretation and I should like to clarify the section by saying that CPOs may be used by local authorities to acquire properties for immediate sale to a properly constituted tenants' association where they are satisfied that the property is deteriorating because of the relationship between the tenants and the landlord, or where they find that it is gradually being withdrawn from regular residential occupation. The local authority should then have the right to intervene, and I hope that the Department would recognise the need and confirm the CPO.
I recognise that the problem that I am seeking to deal with in the Bill is not a vital one in the majority of constituencies, because mansion blocks are a feature of inner London and of certain other areas only; but it is a matter of great significance to tens of thousands of people in London who are anxious about the future of their homes. I therefore hope that the House will give me leave to introduce the Bill.
Question put and agreed to.
Bill ordered to be brought in by Sir Brandon Rhys Williams, Mr. Peter Bottomley, Mr. Nicholas Scott, Mr. William Shelton, Mr. Martin Stevens and Mr. John Wheeler.

Co-ownership of Flats
  CO-OWNERSHIP OF FLATS
  Sir Brandon Rhys Williams accordingly presented a Bill to give powers to residents of flats in private ownership in purpose-built blocks and in certain conversions jointly to purchase the premises of which their flats are part; and to specify the procedures to be adopted; to amend the Housing Act 1980 in respect of the powers of local authorities to acquire land in certain circumstances for the purpose of its disposal to residents of flats built thereon acting as joint purchasers; to make consequential provisions as to the management and upkeep of premises so purchased; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday next and to be printed [Bill 113].
Orders of the Day
  SUPPLY
  [15TH ALLOTTED DAY]—considered
  SUPPLY

    Youth Unemployment
    Mr. Speaker: I have selected the amendment in the name of the Prime Minister. I remind the House that this is an abbreviated debate. I hope that hon. Members who are called to speak will remember their colleagues.
    3.45 pm
    Mr. John Grant: I beg to move,
    That this House condemns Her Majesty's Government for creating unprecedented youth unemployment, continuing anxiety to school leavers and their parents and frustration to educationists and for wasting the human resources vital to the regeneration of the economy.
    A debate centring on the employment problems of young people is long overdue. I say that not because of a lack of concern for older people who are out of work. Indeed, I hope that in the months ahead we shall be able to deal with the employment problems of other disadvantaged groups, including the disabled, ethnic minorities, the long-term unemployed, and women. Of course, all those groups contain young people who are directly relevant to the debate. I hope to refer to some of their special difficulties.
    Hundreds of thousands of young people, especially school leavers, face the traumatic experience of constant rejection for jobs at a time when they are at their most immature and most emotionally unstable. The effect on them is immeasurable, but it is no exaggeration to say that many will carry the scars of that bitter experience throughout their lives, and we shall all have to bear our share of the social strain.
    For all the brave words that we hear, the Government's efforts are increasingly exposed as utterly inadequate to deal with the problems that Government policies have done so much to create. The message that Ministers offer to our young people is a message not of hope but of despair and despondency.
    The Secretary of State for Employment wrings his hands regularly once a month when the unemployment figures are announced. He describes the situation as appalling, or finds another unhappy adjective or phrase. I am sorry that the right hon. Gentleman cannot be with us. He was kind enough to tell us that he has had to go overseas on Government business. We understand that, but it is a great pity that he is not here, because he needs to be held as personally accountable as possible.
    I hope that the Under-Secretary will offer us more than the pious prayers that we get so often from the Secretary of State. If the hon. and learned Gentleman can be positive I shall be delighted, though I shall also be astonished, because whatever the wishes of the Secretary of State and his Ministers, and however much they talk of their good intentions, they share collective responsibility in a Government who are governing not with guts but with guilt. The Government know what they are doing to the country but they lack the guts to own up and to take the right sort of action. The Secretary of State is unable to put
    820
    his money where his mouth is, because the Prime Minister and the Chancellor of the Exchequer will not permit him to do so.
    I shall concentrate mainly on the youth opportunities programme. Time and again the Secretary of State and the Prime Minister boast of the extra cash that they are pouring in to the Manpower Services Commission's special programmes, and particularly into the YOP. The amendment refers to the programme and the Prime Minister mentioned it at Question Time earlier.
    The Secretary of State told us that he has doubled the number of YOP places this year, speeded up the offer of places and put a new emphasis on quality training for work. He added that "as resources permit" the Government would work towards the point where every 16 and 17-year-old not in education or a job would be assured of vocational preparation up to his or her eighteenth birthday. He was talking about all youngsters and not just the unemployed. That was a worthy objective.
    The Manpower Services Commission will agree with the right hon. Gentleman. Its chairman has said publicly very much the same thing. The TUC will agree with him. It has called for that kind of approach. So will the CBI. Part of its six-point plan is to relieve unemployment and to increase training, as shown in the recently published document "The Will to Win". I see that even the Duke of Edinburgh made the same point yesterday. They will all back him. However, most of those to whom I refer also agreed about the Budget. That is where the major obstacle to implementing these ideas lies. It lies in the Government's economic strategy—if it can still be called a strategy.
    The Secretary of State for Employment and his Ministers have not a clue about how or when they can hit their target. Will resources permit them to do so this year, next year, some time, never? While they fiddle and fail to persuade their colleagues there is a grave danger that the existing youth opportunities programme will come to grief.
    I am sure that a number of my hon. Friends will want to make specific points about the programme. The most explicit version of the fears about YOP are contained in the recent Youth Aid review. My hon. Friend the Member for Bishop Auckland (Mr. Foster) was chairman of the working group that drew up that valuable document. It stresses the growing concern over job substitution and the abuse of the scheme by some employers. About 30 per cent. of the places are now reckoned to come into that category. This has caused considerable and understandable anxiety among trade unionists.
    The review emphasises, as does the Manpower Services Commission, the inadequate level of the current allowance. I hope that the Minister will be able to comment on reports of Government plans for a flat rate allowance for all young people aged 16 to 19. I hope that he will say something about the potential effect, if such a proposition were carried through, on employment schemes such as YOP, and the reported conflict within the Government and the opposition of the Secretary of State to that course of action. The review points to an increasing inability to find jobs for YOP trainees when they have passed through the scheme. We are talking about real jobs. Conservative Members used to sneer and ask "Where are the real jobs?" when referring to the youth opportunities programme. That sort of remark is no longer heard from the Conservative Benches.

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    The review also underlines the difficulty for employers in making work experience places available. That is hardly surprising when one considers the record number of bankruptcies in the private sector and the vicious squeeze on public sector employment. All these matters are vital to the continued credibility of the scheme. The Opposition certainly want it to remain credible.
    The biggest difficulty is the sheer weight of numbers which the youth opportunities programme is now expected to carry. Its original purpose is being undermined. The jam is being spread more thinly. More young people are now taught how to compete against each other for fewer jobs. That cannot be the right approach. It is no wonder that Youth aid called its report "Quality or collapse". That was not a question; it was a statement, or a demand.
    Rising unemployment now threatens to swamp the expansion of YOP which was announced by the Secretary of State in November with such gusto. There is a widespread belief that we are heading for the worst ever year for teenage unemployment. Within the Manpower Services Commission there is now a belief that funding for 440,000 places this year will be decidedly inadequate and that it may need to find at least another 50,000 places without even taking account of the effect of the Budget on unemployment.
    Two weeks ago The Times Educational Supplement reported:
    "Manpower Services Commission officials fear that the programme may have to cope with close to 500,000 youngsters. The commission has been given enough money to provide for a maximum of 440,000 entrants in the financial year which begins next month. But its area boards and regional directors say that they need room for at least another 43,000 in the light of the latest unemployment trends. The commission's senior officials have told its special programmes board that even that may be a conservative estimate".
    Our young people today face a bleak future. In disaster areas such as Merseyside and the North-East—it would be possible to mention others—most youngsters leaving school now expect to go on the dole. Even in once prosperous areas like the West Midlands the problem is acute. In inner London, at least 10 school leavers are chasing every job, three times the comparable figure a year ago.
    I was talking last week to a major employer in the City. He told me that his firm's labour turnover was virtually nil, because everyone was hanging on to his job and that this meant that the firm would take on very few young people, including graduates, in the autumn, contrary to usual practice. The firm would be taking 50 compared with a normal intake of 350. The situation will get far worse. In my borough of Islington one-fifth of manufacturing jobs have been lost in a year. It is no wonder that the school leaver programme has grown sevenfold in a year.
    It is the admission of a desperate situation for the Government to turn to military training, albeit voluntary, as an answer. Irrespective of the merits or the demerits of the idea, it is likely, if pursued, to damage the credibility of the YOP, certainly if the MSC is involved. It can only be a drop in the ocean and can do nothing to tackle the real problems faced by young people.
    Mr. Frank Allaun: I agree with my hon. Friend; it is a drop in the ocean. However, the Minister, speaking in an Adjournment debate a few days ago, suggested that this was a pilot scheme. I suggest, therefore, that if the Government get away with this
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    proposal it will be a matter not of 1,000 but of 100,000 young men involved in what could become compulsory military service.
    Mr. Grant: I understand my hon. Friend's point. It is a matter that we shall have to watch and examine with care. I hope that before any proposal is implemented it will be brought before the House for careful scrutiny.
    The Manpower Services Commission is rightly anxious to introduce short-term changes to improve the quality of youth opportunity training. Those changes should be supported, but there are deeper implications. The lasting solution, as our motion suggests, lies in the regeneration of the British economy and in a change of course by this hidebound Government. If, however, the Prime Minister continues to have her way, one feels that young people will grow old in the dole queues. She will still be saying that she has got it all right. Even with a different Prime Minister and a different Government, which we need, a changed approach to the youth opportunities programme will be required. It has to be built on to produce, preferably, a full-scale 12 month programme of vocational preparation and further education for all 16 to 18-year-olds who want to take it. Much less is done in this country than in other Western industrialised nations. We have every reason to do far more.
    There are other important matters with which I can deal only briefly. The acute cutback in apprentice training is one such issue. Apprentices are being laid off by some firms. Other firms which have taken on apprentices in the past are not now doing so. As a consequence, the skill shortages of the future are being ensured. The Manpower Services Commission warned the Government recently that the recession threatens a collapse of this provision in some areas. It shows how short-sighted the Government have become if that can happen. It is time for the Government to set out their views. We should know what the Government intend to do to try to relieve the situation.
    A whole range of problems for young people arise from the Employment and Training Bill; I do not intend to dwell on them. That piece of dogmatic nonsense is being taken apart by my right hon. and hon. Friends in Committee. I wish, however, to refer to the great difficulties for physically and mentally handicapped school leavers. All the voluntary bodies involved with these youngsters express great concern. They believe that these young people face a critical situation. I hope that the Minister will explain the Government's plans for coping with the problem.
    A specific area to which I want to refer is unemployment among young blacks, which is growing faster than unemployment generally. These young people, like the disabled, are particularly vulnerable. There is no doubt that they face discrimination in the job market. The Commission for Racial Equality believes that there is a serious upward trend in this respect. It is perhaps inevitable with high unemployment. These young people have other disadvantages. Yet there have been no worthwhile Government initiatives in this area since the general election.
    Last July the Commission for Racial Equality put forward specific proposals. It suggested more preparatory courses for youngsters with a poor knowledge of English and said that special efforts should be made, particularly in regions with high ethnic minority communities, to

    823
    promote black self-help groups. It made other similar proposals. I hope that the Minister can tell us whether progress has been made in that connection.
    The code of practice on discrimination in employment has been kicking around for months. All that it needs is ministerial approval, but that is being denied. It is time that the House knew when the code of practice is to be made available. There seems to be a dangerous complacency among Ministers in what is a potentially volatile if not explosive sphere. A clear Government lead and commitment are needed.
    We are letting our young people down. I do not pretend that the answers are easy, but I charge the Government with failing miserably to measure up to the size of the problem.
    The chairman of the Manpower Services Commission, Sir Richard O'Brien, summed up the commission's aims and objectives after its meeting on 25 March. He said:
    "This is a critical time for training. Our traditional approach is inadequate and faces dislocation and failure. The needs of the 1980s are very different from those of the past. The Commission has spelled out the objectives we must pursue. We now need commitment to achieving them and that means a commitment to ensuring that we have effective machinery and adequate means to enable the national training system to deliver what is required of it. The future of Britain as a competitive nation is at stake. So too are the job prospects of millions of workers".
    I agree with Sir Richard. Those aims and objectives must now be backed by the Government with more than empty rhetoric, because we are dealing with the question of investment in our nation's future. The refusal to act, the price of neglect, will leave a tragic and indelible mark on our society, particularly on a whole generation of young people that is being cast aside without hope. It is for that reason that we shall vote for our motion in the Lobby tonight.
    4.4 pm
    The Under-Secretary of State for Employment (Mr. David Waddington): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
    `this House regrets the high level of unemployment amongst young people during the present economic recession, but welcomes the Government's massive expansion of the Youth Opportunities Programme and the new undertakings given by the Manpower Services Commission to provide young people with opportunities on the Programme; and strongly reaffirms that only through the Government's economic strategy can a lasting improvement in the economy be achieved and much-needed new and secure jobs be provided for young people.'.
    I am grateful to the hon. Member for Islington, Central (Mr. Grant) for having explained why my right hon. Friend the Secretary of State is not present today. As the United Kingdom is to assume the Presidency of the Community in July this year, it was important that he should attend today a meeting of Employment Ministers at The Hague.
    It is proper for us to debate youth unemployment. No one can doubt the importance of the subject. To be out of work is always a great misfortune, and although the penalties which flow from being unemployed may not be as great financially as they used to be—though severe hardship can occur even today—the condition is as soul-destroying as ever.
    For young people it is far worse. Greater bitterness must arise from thwarted ambition. Great frustration must
    824
    result from youthful energies unexpended. There must be crushing boredom, and there is the humiliation of not being able to bring home a wage to help one's family—something that most young people look forward to doing, as their school days end. Clearly, it is the Government's duty to do what they can to help these young people. In a moment I shall outline what steps we are taking.
    First, I shall make some general points—more in sorrow than in anger. We have had several debates on unemployment. Not long ago the Leader of the Opposition threatened us with repeated debates on the subject. However, it has become more and more clear as the months have passed that there is not much enthusiasm on the Opposition Benches for these great occasions. When the hon. Member for Islington, Central started to speak there were eight Labour Back Benchers in the Chamber. Yet the Opposition have chosen to debate this matter today. They allege that it is causing much bitterness and hostility in their ranks, and that is why they have chosen to debate this subect on a Supply day. I do not think much of it, if the best that they can do is to produce eight supporters.
    Mr. John Golding: The Under-Secretary should note that my hon. Friends are not in the Chamber because most of them are listening to the representations of people from the North-East who have come here today to protest about Government policies. They are not here because they are meeting constituents and organisations from other areas.
    Mr. Waddington: At least my hon. friend the Member for Newcastle upon Tyne, North (Sir W. Elliott) is here because he believes that what happens in this Chamber should take precedence over other matters. I repeat that there is a pretty low ratio of Labour Members to the number of people unemployed—one Labour Member to every 312,000 unemployed at the beginning of the debate, and now one Labour Member to every 200,000 unemployed. That is a poor coefficient of compassion.
    Mr. Robert C. Brown: The Under-Secretary is being less than fair. Every hon. Member from the Northern region, with the exception of my hon. Friend the Member for Bishop Auckland (Mr. Foster) and myself, are in Westminster Hall at a mass meeting of TUC representatives, or in the Central Lobby, or in other parts of the building talking to people who are unemployed. It is not fair to say that the hon. Member for Newcastle upon Tyne, North (Sir W. Elliott), is the only person here who represents the unemployed in the North.
    Mr. Waddington: The hon. Member for Newcastle upon Tyne, West (Mr. Brown) has exercised his right to explain the absence of those from the Northern region, but that is not the only region in the country.
    Mr. Nicholas Scott: Perhaps Opposition protests would ring more true if last week, having had a three-line Whip on the Forestry Bill, they had mustered enough people on Monday night to vote on unemployment in the Midlands. Their record today is in tune with their record on that occasion.
    Mr. Waddington: I am grateful to my hon. Friend for making that clear to the country, because some of the remarks in the press are giving an entirely false impression.

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    I pay the hon. Member for Islington, Central the compliment of believing that he cares deeply about youth unemployment. I am sure that he acknowledges that others, too, care. If there were an easy cure for youth unemployment, surely no Government would fail to write the prescription. The waste is tragic, and youth unemployment is hated by all thinking people. The political disadvantages of refusing to take steps when steps can be taken are obvious.
    The hon. Gentleman knows the scale of the problem and the history of its growth. However, I shall say a brief word about the history. In July 1974 there were 80,000 under-20s unemployed. By July 1976—two years later, after just over two years of Labour Government—the number of young people under 20 who were unemployed had risen from 80,000 to 390,000.
    There was an increase of no less than 380 per cent. in those two years of Labour Government. By July 1978 the figure had risen even higher, to 441,000. By July 1980 it had risen to 532,000—the peak.
    The figure of 532,000 cannot be wholly the result of the present Government's policies. The hon. Member for Islington, Central certainly knows that the Labour Government cannot take the credit for youth unemployment being down to 80,000 in 1974. He knows that the Labour Government must take a large share of the responsibility for the figure of 390,000 unemployed in July 1976.
    Was there not then—to quote the motion—
    "unprecedented youth unemployment, continual anxiety to school leavers and their parents and frustration to educationists"?
    Incidentally, I find the last phrase rather odd. The object is not to put young people into work to stop educationists being frustrated. I cannot think of any educationists who are not frustrated. All who had anything to do with my education were frustrated. The object is to look after young people and to ensure that they can find work.
    I am tempted to say that the last Administration served at least one useful purpose—as a bad example to us all. I am tired of being lectured. The trouble with Opposition Members is that they treat the public like fools. The British people know that there is no easy way out. They know that no soft option is available. They know that one cannot lower the duty on petrol by putting up the dog licence, as one of my Socialist constituents argued the other day. They know that the laws of mathematics operate in Government as much as in the corner shop and the pub. They know that if the productivity of a country's industry rises by 15 per cent. while earnings increase by 300 per cent.—which is our record in the last 10 years—that country is living on borrowed time as well as borrowed money and that it had better sort itself out.
    Mr. Frank Allaun: Is the Minister aware that people who have canvassed for the May elections do not find that reaction? They find that former Conservative voters are bitterly hostile to the Government for increasing unemployment. Many of them say that their children who have left school are taken on for six months and then sacked so that a fresh crop of cheap labour can be taken on. If the Government really want to do something about that, instead of creating phoney jobs, why do they not cause reflation through a vast house building and improvement programme, which would bring real jobs and satisfy real needs?
    Mr. Waddington: The hon. Gentleman is right. A few people always say "Stop the world, I want to get off." That is the reason for the rise of the Social Democrats. I am talking about the majority of people who keep their heads and know that no such soft options exist.
    We are suffering from a world recession. The level of youth unemployment here is comparable with that in some other industrialised countries, such as the United States of America, France and Australia. But the self-inflicted wounds hurt the most; they are the least excusable. One is sickened by some people, even now, making wholly unrealistic pay claims which, if granted, can only postpone economic recovery and increase the unemployment for which they are only too ready to hold others responsible.
    The answer to the hon. Member for Salford, East (Mr. Allaun) is that we must emerge from the recession in a position to compete in the world's markets. If we exercise restraint now, if we master inflation, if we cure some of the deep-seated ills in our economy, we shall succeed and youth unemployment will drop dramatically. If we do not, it will not.
    An important job has to be done now. To do them credit, the last Administration responded properly to rising youth unemployment by accepting the proposals in the Holland report and introducing the youth opportunities programme. In Opposition we backed that report, and since coming to office we have backed YOP to the hilt. It has grown into an excellent scheme.
    Of course criticisms are voiced from time to time. I pay tribute to the TUC for remaining solidly committed to the scheme, in spite of natural fears of substitution. I am sure that the TUC is right to give its support because YOP is not just a way of cushioning young people against the hopelessness of prolonged unemployment. By providing opportunities for training and work experience it gives young people a real chance to improve their prospects of obtaining a satisfactory permanent job at the earliest possible moment.
    Mr. James Dempsey: The Minister said that the Government were backing YOP to the hilt. Is he aware that the training services division of the Manpower Services Commission is not backing it to the hilt? Some training establishments still have vacancies. My constituency has one of the highest unemployment rates in the United Kingdom but there are 40 vacant training places for short industrial courses because the MSC will not allocate young boys and girls for training. Will the Minister look into that?
    Mr. Waddington: Obviously that is an important matter. I am sure that my hon. Friend the Under-Secretary of State—the hon. Member for City of Chester (Mr. Morrison)—will investigate it. I was saying that generally the total resources committed to the YOP have increased dramatically since we came to office.
    Work experience, work preparation and basic training help young people to develop confidence, maturity and basic skills. The programme has enabled many young people to obtain work. It will enable many others to help both themselves and the country when the upswing comes. We recognise that there is plenty of room for improvement, as there always is. Efforts are constantly being made to increase the range of opportunities open to the trainees by giving them as broad a range of experience as possible.

    827
    Most sponsoring employers allow trainees to try their hands at a number of tasks so that the work options open to the individual may be increased. When the sponsor is a small employer with little varied work experience to offer, efforts are made to link schemes so that a person placed with such a small employer has the chance to experience more than one job.
    I acknowledge that the YOP can be abused. Entrants can wrongly be regarded as cheap, temporary labour. The MSC is constantly on the watch to ensure that sponsors do their duty. I am glad to say that the evidence shows that the majority do that. A few bad sponsors have been got rid of and others, at the insistence of the MSC, have provided new arrangements.
    The problem is not all training on the job. Two years ago only 17 per cent. of work experience trainees received off-the-job training. Now the figure is about 40 per cent. and is increasing. Off-the-job training is often important to cope with the problems of numeracy and literacy and other work-related basic skills. The MSC is constantly concerned to improve the quality of training and to fit the opportunities to young persons' needs and capabilities. That means that as more qualified people become unemployed placements are being made with professional, commercial and scientifically based sponsors who are prepared to relate on-the-job learning to relevant technical and specialist further education. The aim is as much to encourage the young person to maximise his or her potential in further or higher education as it is to obtain work. We believe that the YOP is doing a good job.
    Mr. David Alton: Is it not a matter for concern that the number of people going back into full-time employment from these schemes is falling? About 41 per cent. now go on to the dole instead of continuing in employment. Indeed, the figure of those continuing in employment fell to 59 per cent. from 80 per cent. last September. Is that not a matter for concern?
    Mr. Waddington: Of course it is a matter for concern if anybody who has done a YOP course does not find employment immediately thereafter. My case, which I thought would be conceded by all hon. Members, is that having done a YOP course those people are better able to seize work opportunities when they arise. The point that the hon. Gentleman was making is the general economic point but I cannot, in a debate of this nature, go further than I have gone in that regard and point to the Government's commitment to squeeze inflation out of the system, which in the long run is the only way of ensuring full employment.
    Mr. Golding: The Government have given the undertaking that those 16-year-olds and 17-year-olds who have been unemployed for three months by October 1981 should have an offer of a place by Easter 1982. There is confusion in the minds of the careers officers as to whether this includes those who have previously been on a YOP scheme. Could the Minister clarify what the undertaking means?
    Mr. Waddington: I was going to deal with the two prime undertakings, of which I am sure the hon. Member knows—one being that school leavers will have a YOP opportunity by the following Christmas rather than the
    828
    following Easter, as is the position now; the other being that all other 16- and 17-year-olds who have been out of work for three months will get a YOP opportunity within three months of that period. But my hon. Friend the Member for City of Chester has the prime responsibility for this field and I am sure that the hon. Gentleman will excuse me if it is dealt with later this evening. I have no ready answer to that problem, but inquiries will be made.
    Mr. John Grant: Before the hon. and learned Gentleman leaves this point, can he give the House the up-to-date figure for the number of YOP trainees who are actually placed in employment at the end of their training now, as compared with, say, a year ago?
    Mr. Waddington: I can give some figures—I shall come to that shortly—for the number of school leavers and related matters. If the hon. Gentleman will forgive me, I think that I had better stick to the statistics that I have. If they do not meet the points which he wishes us to cover I will certainly have investigations made and try to get the figures by later this evening.
    The YOP, to our mind, must be doing a good job when seven out of 10 of those who went on courses which finished during the year ended last autumn either got a job or entered another YOP course or full-time educational training. As a result of all these matters, we have decided to increase the size of the programme for 1981–82 so that it will be able to offer up to 450,000 places.
    The hon. Member for Islington, Central mentioned the total number of places which would be available. The position is that the Manpower Services Commission has not asked the Government to revise the originally agreed figure of 450,000, but naturally the matter will be kept continually under review. At the moment, however, the figure remains as it was at the end of last year, at 450,000 places—a 40 per cent. increase over last year—with 160,000 young people involved at any one time. It means an increase in spending from £209 million in 1980–81 to £320 million in 1981–82. These figures are remarkable when the Government are for ever being painted as lacking compassion and unable to bring themselves to spend money even when it is needed for social purposes of this kind.
    Mr. Alton: Although I accept that the amount of money being put into statutory programmes is increasing and that the Government are trying to respond in that direction, does the hon. and learned Gentleman seriously want the House to believe that that is a substitute for the 10,000 apprenticeships which have been lost over the last 12 months alone in private industry?
    Mr. Waddington: I really do not think that I can be expected to go further than I have. The hon. Gentleman may have his panacea. He may have some brillant new Liberal policy which would, if put into effect, remove youth unemployment tomorrow. If he has such a policy, we have heard nothing of it yet. We are not really concerned with panaceas; we are concerned with what should be done here and now to alleviate a present problem.
    Mr. Clinton Davis: My hon. Friend the Member for Islington, Central (Mr. Grant) raised a matter which is highly pertinent to his area and mine—the accelerating problem of unemployment among black youths. Can the hon. and learned Gentleman offer

    829
    any words of encouragement, or optimism, to this group of young people who are becoming disenchanted with the political system, which represents a real danger to all of us?
    Mr. Waddington: The hon. Gentleman is entirely right to raise the matter, but I would not be on good terms any longer with my hon. Friend if I were now to deliver his speech as well as my own. I promise the hon. Gentleman that my hon. Friend will deal with that particular matter when he winds up.
    I dealt with the present undertakings to the young unemployed in answer to the hon. Member for Newcastle-under-Lyme (Mr. Golding). I concede, of course, that we should not be too proud about an expansion in the programme which has come about following an increase in the number of those out of work. But an increase in the cost of YOP to the extent that I have mentioned is certainly nothing to be ashamed of. Furthermore, I believe that the impact made by this programme will be not only transitory but perhaps of lasting benefit. It may go a long way towards meeting the needs of our country for a better motivated and better trained young work force.
    One matter that is all too often forgotten is that even in these times of recession the great majority of school leavers find jobs. Of the 700,000 young people leaving school for work last summer, only 20 per cent. remained on the register at the end of the year as unemployed school leavers. We must see that those in work also receive suitable vocational preparation. Many hon. Members will know about the pilot programme of unified vocational preparation which has been running since 1976 and which aims to provide training for young entrants into work. My right hon. Friend the Secretary of State announced on 21 November 1980 that we were continuing and developing the programme so that by 1983–84 it will cover 10 per cent. of all young people who currently enter jobs in which they receive no further vocational preparation. We believe that this is of key importance. The need for the country to have a better trained work force at every level cannot be overestimated. There certainly must be a more flexible system of training for skills and we hope that within a few weeks now the MSC's proposals for a new initiative will be published.
    The Government are fighting the causes of unemployment and youth unemployment and they are also fighting the effects. We need to raise the vocational skills of those most clearly in need of help—the young unemployed. We also need, however, to provide for those with jobs so that they are more likely to keep employment or, if they lose it, to regain it. We need the help of employers, unions, voluntary bodies—everyone—in this task. It cannot be a job for Government alone. I believe that the Government are playing their part and dealing properly with a serious problem.
    I therefore ask the House to reject the motion and to vote for the amendment.
    4.30 pm
    Sir William Elliott: I am extremely grateful to be called in this debate, particularly—as was made clear during Prime Minister's questions and since the beginning of the debate—because there is at this time a lobby from the North-East of England on unemployment.
    With regard to unemployment generally—
    Mr. Robert C. Brown: On a point of order, Mr. Deputy Speaker. Although I am not seeking to challenge your conduct of the debate, it is, to say the least, singularly unusual for the occupant of the Chair to select a further Conservative Member immediately after a Conservative Minister.
    Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I apologise to the hon. Member for Newcastle upon Tyne, West (Mr. Brown). I assure him that he will find that the matter will be rectified very speedily.
    Mr. Anthony Fell: Further to the point of order, Mr Deputy Speaker. There are hardly an) Labour Members left in the Chamber.
    Sir William Elliott: I return to the point that I was about to make. Unemployment troubles us all. 'There is nothing more certain than that. The hon. Member for Newcastle upon Tyne, West (Mr. Brown), who has just raised a point of order, suggested a little while ago that I was sitting here seeking to represent the unemployed of the Northern region. I do not presume to do that, but with him and others from the region I do my best for them. I certainly feel strongly for them, and I seek in successive debates in this House and at all other times to do what I can for them.
    I agree very much with what my hon. and learned Friend the Under-Secretary of State said. If there were a magic answer that could rid this country of unemployment in general and of youth unemployment in particular we would rejoice and introduce it, whichever party was in office. But there is no magic answer; therefore we must do our best, particularly for young people. If we do not feel strongly about young people being unemployed we do not understand young people in general, because the vast majority of them loathe it.
    I try to understand the problem. In recent weeks I have visited two comprehensive schools in Newcastle upon Tyne and the polytechnic college there to talk to young people about to emerge into the working world. It is a matter of giving them encouragement. There is too much despondency. We should try to suggest to able young people that they will be needed, if not at the moment certainly in the foreseeable future.
    Training and qualifications are therefore all-important. I welcomed the Holland report and the eventual youth opportunities programme. I pay tribute to the youth opportunities programme as it has worked in the North-East of England. The objective of the Manpower Services Commission in the Northern region was that 41,000 school leavers should participate in the youth opportunities programme from Easter—in other words, from approximately a year ago. The achievement is that 42,000 school leavers have participated, thanks not least to the massive expansion of the programme by the Government.
    As a result, there are fewer than 400 young people without any experience of training in the Northern region. Of those who have known work experience, a recent count shows that approximately 50 per cent. are now employed.
    I appreciate that several Labour Members, the spokesman for the Liberal Party, and others have suggested that that percentage is falling. That may well be so, but it is even more necessary to emphasise the importance of training. I appeal to those who have been through work experience and who are not yet employed to

    831
    accept the immediate position and to have great hope for the future, because work experience is in itself a qualification.
    When the economy revives we shall have in the Northern region more qualified young people than ever before. I agree with my hon. and learned Friend that what we have lacked in the past, in regions such as the North-East of England, is skill. It used to be said that we had two great disadvantages as an area. One was location. Often in debates there has been reference to the long haul for our goods. The other disadvantage was lack of skill, which arose from our great basic industries having been such enormous employers in the past.
    Mr. Robert C. Brown: Does the hon. Gentleman agree that one of the problems that we face, in terms of lack of skills, particularly in the North-East, is that the very dire circumstances in which our people live result in our exporting skills every week by migration?
    Sir William Elliott: I accept that there has been migration, but there is considerable hope for the future. More and more of the people with greater skill—and the much more extensively skilled young people in particular—will find employment.
    Earlier this afternoon, during Prime Minister's questions, I suggested that there were more factories opening than closing in our region. That is the case. The figures produced recently by English Industrial Estates suggest that there is a considerable new interest in trading estates in the region.
    We have known in the Northern region—the hon. Member for Newcastle upon Tyne, West is as well aware of this as I am—the enormous problem of the closure of the Consett steelworks. It would be a substantial problem for any region. Yet in Derwentside, in the Consett area, there are 57 factory units now under construction. Twelve are already reserved. There is considerable interest in the balance. There are already an assured 700 future jobs.
    Mr. Alton: Can the hon. Gentleman tell the House what numbers of jobs are involved in the Consett example that he gave us—the number of jobs displaced through the closure of the steelworks and the number likely to be created by the new factories?
    Sir William Elliott: The approximate number of jobs lost through the closure of Consett steelworks was 3,500. But already there has been a considerable very refreshing initiative from many people in Consett. A good many of those who have been made redundant are seeking to set up small businesses. Some of them have already done so successfully. That will help to reduce the figure of 3,500. So will the new units. These units are being funded by resources specially allocated by the Government for the steel closure areas of Scunthorpe and Consett, and between £4 million and £5 million will be available annually for the next three years. That will do a great deal to create new employment to replace the old.
    In addition to the 700 jobs that will come from those units there is a good deal of industrial activity elsewhere. Findus Foods—a firm that we welcome to the Northern region—will provide 1,000 new jobs when it opens in September.
    832
    I say all this in the name of optimism. We need a bit of optimism. The optimism is well-founded. New industry has come into the region. There will be work for many young people who are now unemployed.
    Training availability under the youth opportunities programme is greater than it has ever been in the Northern region or anywhere else. There can be a 13-week short training course, which can be associated with 26 weeks with an employer for work experience, and then there can be a further six weeks' training. The results are already there to see. We have more skilled and able young people for the take-up in the economy, ready for the new industrial expansion, than we have ever had before in the region.
    As my hon. and learned Friend said, youth opportunities are not an end in themselves but they provide very valuable training, and industry will benefit. I congratulate the Manpower Services Commission, particularly that section of it which is in the Northern region. I also congratulate and pay tribute to co-operative employers for their help. Lastly, I pay tribute, in his absence, to my right hon. Friend the Secretary of State for Employment, who understands very well the enormous problems of regions such as mine.
    The overall aim of the YOP is to obtain the maximum benefit for the individual youngster. It is pleasing to learn that in the last week the Manpower Services Commission in the North-East of England is to allocate some of the best of its staff to see how the quality of training can be further improved.
    I wholeheartedly support the amendment. Only—in the words of that amendment—through the Government's economic strategy can a lasting improvement in the economy be achieved, and with it a reasonable level of employment for all.
    4.40 pm
    Mr. Robert C. Brown: I shall not follow entirely the speech made by the hon. Member for Newcastle upon Tyne, North (Sir W. Elliott), but I will take him up on one matter. It is accepted that Government Back Benchers support the Prime Minister at Question Time, and I do not criticise the hon. Gentleman for that, but I certainly object to his offering the Prime Minister an opportunity to give a misleading slant by saying that things are not so bad in the North-East because, after all, more factories are opening than are closing.
    I do not have to hand the number of factories that are opening, and I entirely accept what the hon. Gentleman said, but if 100 small factory units are opening it does not compensate for the loss of 750 jobs at Vickers, Scotswood, in one fell swoop, or the loss of 350 jobs at Tress, Newburn, at one fell swoop and the hundreds of jobs lost in the shipyards. It is not good enough for the Prime Minister, in response to her hon. Friend, to make this sound like a success story.
    I make no apology for talking this afternoon only about the city of Newcastle. I want to give the figures for unemployed young people in Newcastle in January 1980 and January 1981. In January 1980 2,645 under-twenties were unemployed. In January 1981 the figure had increased to 3,342. In January 1980 2,391 people aged between 20 and 24 years were unemployed. By January 1981 the figure had increased to 3,121.
    All told, 5,036 young people of 25 years of age or under were unemployed in January 1980, and 6,463 were

    833
    unemployed in January 1981—a 28·3 per cent. increase in 12 months. In 1980 the number who had been unemployed for over 26 weeks was 1,862. In 1981 the number was 3,184. That means that 37 per cent. of the unemployed in the city were under 25 years of age in January 1980, whereas in 1981 the figure was 49 per cent.
    In January 1980 just over one-third of the unemployed under-twenty-fives had been out of work for over six months. In January this year almost half the under- twenty-fives had been unemployed for more than 26 weeks.
    The conclusions are that unemployment among young people in Newcastle rose by 28 per cent. in 12 months and that the proportion of young people out of work for over six months rose to almost half of all unemployed young people. That is a damning indictment of the Government, and for that reason, if for no other, I shall support the motion.
    The problems of youth unemployment in the Northern region are serious, and are worsening month by month. Many traditional Newcastle employers have drastically reduced their work forces, and small firms in the inner city have been closing down. Young people have felt the impact of these events.
    In addition, reductions in public spending have meant a sharp fall in the number of young people gaining employment in the public sector. In various departments of the city council at the civic centre in Newcastle graduates are applying for what 10 years ago were regarded as office boys' jobs. Several scores of jobs which would have been regarded as juniors' jobs four or five years ago are now going to graduates. Hundreds of young people with two, three or four A-levels are applying for office-boy-type jobs with local authorities. Again, that is a dreadful indictment of the Government.
    There has been a noticeable reduction in the number of apprenticeships and training courses offered by large firms in recent years. This trend over the area is showing every sign of continuing. Office employment can be expected to continue to decline as public expenditure restraint and the introduction of new technology have a continuing impact over the years.
    The Manpower Services Commission advises that at least a 50 per cent. increase in school leaver unemployment will occur this year. That is in addition to the devastating figures that I have already quoted.
    The youth opportunities programme was originally intended as a temporary expedient to provide a bridge between school and permanent employment. In the North-East, and in Newcastle particularly, it has become a major component of the job market for young people. Thank goodness that we have the youth opportunities programme. I fear to think what would be the situation without it. My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) deserves credit for the work he did on the youth opportunities programme in the Labour Government.
    Youth unemployment is a national problem. I compliment the Newcastle city council and the Tyne and Wear county council on their efforts to alleviate the effects of unemployment in the area. This they have done by creating permanent employment opportunities within the local community and subsidising temporary jobs whenever and wherever possible. They have also accepted, regretfully, that youth unemployment is an unfortunate fact of life and have tried to make the situation for the young unemployed more tolerable by opening youth
    834
    centres at various times during the day and organising worthwhile opportunities to give the unemployed youngsters some interests.
    Mr. Gary Waller: Does the hon. Gentleman agree that one of the major reasons why small firms especially have not been able to employ more young people has been the high level of rates imposed, particularly by Labour local authorities, which at the margin have so eroded their profits that it has been not worth while to take on new people and to invest in the future in that way?
    Mr. Brown: The hon. Gentleman trots out that Tory hack stuff that no one believes any more. The hon. Member for Chelsea (Mr. Scott) is in his place. The hon. Gentleman should have a word with him about the incidence of high rates. High rates are not confined to wicked Labour-controlled authorities. They are to be found throughout the country. I see no prospect of improvement in the near future.
    The burden of job loss is not falling equally on all sections of the community. There are three groups that have suffered more than their share—women workers, young people and elderly workers. In Newcastle in July 1979 there were 9,651 men unemployed and 4,059 women, a total of 13,710. In July 1980 those figures increased to 11,502 men and 4,948 women, a total of 16,450. That represents an increase of 19 per cent. in male unemployment and a 22 per cent. increase for women. There was an overall increase of 20 per cent. Over the past six years male unemployment has doubled, while among women there has been a fourfold increase.
    Unemployment is not a simple problem. It is one that must be considered group by group. At the beginning of 1980 slightly more than 5,000 young people aged 16 to 24 years were unemployed in Newcastle. That was about 40 per cent. of total unemployment. In July 1980 the number had increased to 7,200 with the addition of school leavers. That was over 47 per cent. of total unemployment.
    The operation of the labour market is such that young people in areas such as Newcastle, where unemployment is high among all age groups, form an increasing proportion of the total unemployed. Many of the traditional employers in the city have been reducing their work forces while small firms in the inner city have been closing down.
    We have the hope that is provided by the small factory units that the Tyne and Wear county council and the city council have been energetic in developing.
    Sir William Elliott: Hear, hear.
    Mr. Brown: I am glad to know that I have the agreement of the hon. Member for Newcastle upon. Tyne, North.
    On the Bells Close site only one factory unit remains to be let. As the site is in the much vaunted enterprise zone I hope that that one factory will be let quickly.
    The reason why 600 people have travelled from Newcastle today to lobby the House of Commons is so that they can express their concern for a generation of young people in our area and throughout the country that has never had the opportunity and privilege of working full time. That is the indictment of the Government.
    4.55 pm
    Mr. David Young: I speak for the 1,500 young people in Bolton who are without work and are Bolton's investment in the future. I recognise that Britain is not the only country with a recession, or with unemployment. I welcome the youth unemployment programme and any programme of like effect that may be introduced, but is not the present programme geared to the present escalating unemployment? We are fighting long-term unemployment which has affected young people and every other section of the community. I pay tribute to the local authority in my area, which happens to be Labour-controlled. It has used all its available resources to provide employment for young people. However, the only question that counts in the end is whether there is a meaningful job. It appears that what was intended as a short-term, stop-gap measure is being used on a permanent basis.
    We cannot talk about youth unemployment without considering the economic situation generally. Unemployment in the North-West increased to 12·4 per cent. compared with 7·7 per cent. a year ago. In Bolton unemployment increased to 12·3 per cent., whereas it was 6·3 per cent. a year ago. Youth unemployment increased during the year by 137 per cent. Bad though these figures are, the worry is that Government policy is eroding Bolton's industrial base. No matter what schemes are evolved to deal with youth unemployment, we shall never find meaningful jobs for our youth if the industries disappear that should provide the jobs.
    One of the Government's first actions was to remove development area status from Bolton. That is a good example of their attitude towards the town. That status was given to Bolton in 1972, when the unemployment rate was 4·7 per cent. When it was removed in 1979 the rate was 5·9 per cent. It is now 12·3 per cent. The Government's policy for Bolton appears to be to provide less aid as unemployment increases. Their policy takes firms away from an area of escalating unemployment while other firms are not attracted in. As industries move out of Bolton, close down or go bankrupt, no other industries are attracted in and obviously jobs are not available for young people.
    We talk glibly about when the upturn will come. I am unaware of any prophecies or estimates of when that will be. However, when the upturn comes, the skill of the apprentice will be required. As industries close now, apprentices are not being taken on. In many industries in my town apprentices are being declared redundant with the rest of the workers. Last year, only one firm in Bolton—British Aerospace—was taking its full allocation of apprentices. Now, British Aerospace is declaring almost 300 redundancies. That is the present situation.
    I ask the Government to ensure that the measures which are being and which will be put forward will deal with the long-term problem. As for youth opportunities proposals and schemes, a circular from my local jobs centre contains the following paragraph:
    "Some resistance is being experienced by youngsters advised to consider YOP, due to the failure to increase the £23·50 allowance in line with the increases in unemployment and social security benefits."
    There is also a growing feeling that youth opportunities schemes are being used as a means of cheap labour. In many cases youngsters can see no meaningful job at the
    836
    end of six months' training. That means that, gradually but surely, resistance is building up among this generation, in whose hands our future lies.
    The House would do well to regard with concern the position of our young people. At our peril will we neglect that, because members of this generation, so many of whom find themselves on the scrap heap on leaving school, will not support the democratic institutions which find no solution to their problems. They are young people and will not regard themselves as a lost generation and not be prepared to do something about it. If the House does not find a solution we shall pay the price in social unrest and disillusionment with the very democratic institution for which we stand as Members of Parliament.
    Therefore, let us not be so self-congratulatory. Let us recognise that we have a problem and that we have in our hands the responsibility for the future of a generation which will decide Britain's destiny.
    5.5 pm
    Mr. Alan Haselhurst: No hon. Member can deny that unemployment amongst young people is a serious and worsening problem. It causes great anxiety amongst all hon. Members, whatever political party they support.
    We do not help to solve the problem of youth unemployment by a whole series of set-piece party barrackings in the House. We should acknowledge that the problem has been growing for some years and that it will probably continue to grow, for reasons which are almost outside our control.
    Many of the speeches which can be made now from Opposition Benches echo the remarks which could have been made when Conservative Members sat on those Benches a few years ago—and those remarks were made. Those speeches reflected the concern which anyone feels about growing unemployment. However, to start blaming each other for what is happening is not conducive to finding the right results. Therefore, there must be common understanding between both sides of the House about the nature of the problem before it will be possible to find a solution.
    Having studied the matter for some time, I sincerly believe that what is needed as a solution is something more drastic, imaginative and wide-ranging than anything that has been devised so far. Many things which have been done have made a contribution. Initiatives were taken by the previous Government. They hoped that what they were experiencing was a temporary phenomenon which could be dealt with by introducing measures which were called temporary and which were designed to be so. Experience has shown that those measures have had to be considerably extended. I pay credit to the Government for extending them and for considering many new ideas and ways in which we can deal with the problem.
    However, there is still some wishful thinking that when the so-called upturn in the economy comes the vast numbers of unemployed young people will melt away into jobs. Two things are wrong with that. The first is that even if the economy could expand at such a rate that those young people would be absorbed into jobs, I would not be too happy if I felt that they were being absorbed into jobs without the amount of training and preparation for work which is necessary for them to be good workers and for them to obtain satisfaction at work. Secondly, worse than that consideration is the realisation that if we are to achieve

    837
    a reasonable amount of economic expansion and industrial investment, and if it is to be in the country's interest it will be in forms in which there will be little extra employment for people.
    The other day I saw the opening of a new plant in the flavours and fragrances division of the chemical industry. It represented a considerable investment and has enormous potential in sales for this country. I asked how many people were needed to look after the plant. The answer was "Two". That pattern is occurring much more in this country and must occur if our productivity is to be comparable with that of the nations with which we are bound to compete.
    If we try to organise industry on the basis of simply absorbing people into jobs without regard to industry's ability to sell a product at the price people will pay, we are doomed to disaster. We must have a reasonable level of productivity and, therefore, we must recognise that the expansion of industry will not lead to an enormous increase in the number of jobs. Such increases as we can look forward to are likely to take place in the service sector.
    The problem of unemployment amongst young people will remain with us in some shape or form, however well the economy performs. If we recognise that, we must look for a scheme for dealing with that problem which is more comprehensive and more permanent than anything which has been attained up to now.
    We must consider something as dramatic as delaying the entry into full-time work—in the sense in which that has been previously accepted—to the age of 18 or 19 years. If we consider the period up to the age of 19 as one in which there must be a combination of education and training in forms yet to be determined—many varieties have been considered—we shall start to come to grips with the numbers game.
    We must be positive about preparation for work, which will in turn affect the labour market. It will provide a worthwhile and dignified occupation in training and education before people expect to embark on full-time work for the next 40 years or so of their lives. We must reach that dramatic conclusion to avoid the number of young unemployed people growing out of control and to prevent public anger engulfing us. It requires a change of attitude, but it is not an impossible dream. We have edged towards the position in the schemes proposed. We are starting to see in the Manpower Services Commission the hazy formation of an overall scheme for people between the ages of 16 and 19.
    To get on top of the problem we must have the political will in the House to grasp three nettles, the first of which is finance. The Treasury tells us that to have someone unemployed costs between £4,000 and £5,000, yet the money cannot simply be transferred in order to keep a person in employment. I believe that it is a little easier than we are led to believe. The money available can be used for a constructive programme if only we can find the right scheme.
    The second nettle is trade union resistance. Trade unions must abandon their cherished ideas about training young people and the ways in which they should be occupied. I understand their fears, but they are no longer relevant in the vastly changing labour market.
    Mr. Golding: Will the hon. Gentleman give way?
    Mr. Haselhurst: I understand the hon. Gentleman's interest, but I have promised to be brief.
    The third nettle is the connection between education and training. The problem is viewed from both sides of the fence, but we need to shake hands across the fence to bring the two aspects together. We must not allow traditional educationist attitudes, combined with traditional industrial attitudes, to prevent us from reaching a coherent solution. We must avoid party disputes, recognise the size of scheme needed and work with a joint political will. Unless we do so we may have another generation scarred for life by the memory of unemployment, which will also have a traumatic effect on our social development.
    People look to the Government for action. Initiatives are being taken, but they should be brought together. We should move forward, using experience, and show that we are capable of facing the challenge.
    5.13 pm
    Mr. David Alton: The Government have measured the success of the youth opportunities programme by the number of people who have gone on to full-time employment. It is of grave concern that the number is diminishing. By September last year the figure had fallen from 80 per cent. to 59 per cent. About 41 per cent. of our youngsters return to the dole queue once they are supposedly trained. What point is there in having the best educated or trained youngsters if they end up on the dole?
    Many of my young constituents complain about inadequate remuneration on the schemes. The allowance of £23·50 has not been adequately increased in line with inflation. Once travel expenses are taken out, it leaves little more than would be received on supplementary benefit, so the incentive for school leavers to become involved in such programmes is not great.
    Industry's annual take-up of apprenticeships has dropped by 10,000 since 1979–80, which is alarming. Whilst it is better to pump money into the programmes than to have people on the dole, if the number of real jobs and apprenticeships is falling there is little hope for the unemployed. The 10,000 drop is a cut of 10 per cent., which exemplifies Government waste in failing to get adequate training opportunities through private industry.
    The Secretary of State for Employment is keen to introduce a voluntary option of military training as part of the YOP, but that would damage the intent of the programme. In many depressed areas, a person would be forced to take the option. Six months is not sufficient time for training of real value, which makes the option ludicrous, as well as damaging. Local headmasters have written to me expressing concern.
    There is also the correlation between youth unemployment and crime. The Merseyside chief constable has warned that if youth unemployment increases it will mean a corresponding increase in crime.
    Ethnic minorities suffer especially from unemployment. Between 1973 and 1977 unemployment doubled, but for black people it quadrupled. Black youth is disproportionately affected by unemployment.
    In Liverpool, 47 per cent. of youngsters under 18, 34 per cent. of young people between 18 and 19 and 27 per cent. between 20 and 24 are out of work. About 11,000 people under 20 are out of work. Recently only 20 or 30 job vacancies were notified to one local careers office.

    839
    That is appalling, and the Government must wrestle with the problem. If they do not, others will prey on the disadvantages of the young.
    A group called "Youth Training" is circulating in Liverpool a letter is signed by Vanessa Redgrave, the chairman, which concerns courses available in a local youth training centre. The courses include hairdressing, drama, cookery, electrical work, dressmaking, boxing and judo. The centre has a tea bar offering soft drinks and soups. It states:
    "Youth Training is open to all youth between 16 and 22,"
    There is a form attached to enrol for dressmaking, hairdressing, cooking, catering, music and drama. Nowhere is it stated that the Workers Revolutionary Party, a very Left-wing group, is involved.
    However, on 20 March the Workers Revolutionary Party newspaper, News Line, stated:
    "A call for youth everywhere to build the Young Socialists as a mass revolutionary youth movement and to build the Youth Training Movement was issued by the Young Socialists national secretary Claire Dixon, moving the main resolution"—
    at its conference in Southport.
    The article states:
    "The Youth Training centres will concentrate on training youth in all the up-to-date techniques and technology …
    We must mobilise a massive youth movement—a revolutionary youth movement. We must take our message to youth everywhere.
    We warn that you can have no illusions that there is going to be an upturn in this slump. The ruling class have no answers to this crisis …
    There is no peaceful road to socialism—we are building a revolutionary socialist youth movement to lead the struggle.".
    It continues:
    "Vanessa Redgrave of the Workers Revolutionary Party, Central Committee, appealed to the conference to throw its full support behind the Youth Training programme.'
    This is a serious matter. One centre has been opened in Liverpool and, according to another edition of News Line, another has been opened in Brixton, in South London. These people are preying on the disadvantages of youngsters and unemployed people.
    It is not just people on the far Left who are preying on the disadvantages of youngsters and the unemployed in this way. In the same area, as the hon. Member for Liverpool, Walton (Mr. Heffer) will know, a group called "Viking Youth" on the far Right is trying to do the same kind of thing. Unless we take measures to try to tackle their problems, unemployed youngsters will be more and more susceptible to organisations of that kind. The cynicism, bitterness, anger and frustration of young people will be used to pull them into these extreme Left- and Right-wing organisations. In this respect, we should heed the warning of the hon. Member for Bolton, East (Mr. Young) earlier in the debate.
    I accept that there are no simple or easy solutions. I do not believe anyone who says that there are, whether they be monetarists or Marxists. It is right to remind the House that when the present Leader of the Opposition was Secretary of State for Employment, unemployment rose—including unemployment among young people. When he was Secretary of State, unemployment in Britain rose from 579,000 to 1.2 million. In Wales it rose from 3 per cent. to 7 per cent., and in his own constituency from 3·9 per cent. to 11·4 per cent. The right hon. Gentleman said:
    840
    "I am not prepared to sit in this place and preside over mass unemployment."
    I do not hold the right hon. Gentleman personally responsible for what happened after that but I find it difficult to take that kind of sentiment and statement seriously when I see the same right hon. Gentleman walking through the streets of my city waving a stick and shaking his fists, especially when people participating in the march that he led stayed at the Adelphi hotel, the most prestigious in town.
    When I hear the Prime Minister talking about the problems of unemployment and about her sympathy for the unemployed, I remind the House that she has not set foot in Liverpool since the election of May 1979
    Mr. Eric S. Heffer: I remind the hon. Gentleman of his claim that the unemployment demonstration in Liverpool would or could lead to violence. Some of us pointed out that it was a Labour Party unemployment demonstration involving trade unionists in this country as well as people from Merseyside and elsewhere. It did not lead to violence. It was a most peaceful demonstration. Indeed, ours is the only party at present doing anything about rousing the people of this country to activity against unemployment.
    Mr. Alton: The House will recall that only a week or so ago my right hon. and hon. Friends and I presented a massive petition, with more than a quarter of a million signatures, from people concerned about unemployment in this country, because we believed that that was a way of bringing the concern of the nation to the attention of the House. We do not believe that rabble-rousing or dazzling rhetoric is an answer to the nation's problems. That is why we do not lead marches. We do not believe that that sort of protest would lead to a solution. We are modest enough to accept that we have no simple solution. I was making the point to the hon. Member for Walton and others that those leading the march had themselves been in jobs in which they had responsibility to try to tackle the problem. They failed before, and I believe that they will fail again.
    Mr. Dennis Skinner rose—
    Mr. Alton: I shall not give way. I wish to make progress. The hon. Member for Bolsover (Mr. Skinner) has only just arrived. He has not been present for the rest of the debate.
    Mr. Skinner: I was at the youth unemployment committee.
    Mr. Alton: The Prime Minister seems to subscribe to the view that if two wrongs do not make a right, one should try a third. We seem to be treated to the same old formula as before. She is regarded by many young people in the North of England as being rather like the wicked witch of the South, except that she has got the words of the spell wrong and the incantation is going sadly awry.
    We have had enough of here-today-gone-tomorrow politicians who march through our cities, staying in the most prestigious hotels. Their policies have failed and they will fail again. They are swooping and preying on those unfortunate enough to be unemployed. They are dishonest and deceitful in raising false hopes in communities that have suffered long enough. Indeed, they are behaving in a downright criminal way. There are 2½ million people out of work, and it will soon be 3 million.
    Mr. Skinner: Let the hon. Member explain about the Lib-Lab pact. That was when unemployment rose.
    Mr. Heffer: Will the hon. Member explain what the Liberal-controlled council in Liverpool is doing?
    Mr. Alton: One person becomes unemployed every 30 seconds. Our entire industrial base is being eroded. Factories close and businesses go bankrupt. Productivity and profitability decline. The entire economic policy of the Government is a disaster. Twenty five per cent. of our people have now been out of work for more than a year. Half a million are said to be unemployable because they lack essential skills, and 77 per cent. have no formal qualifications whatever.
    We Liberals have positive and sensible solutions to offer. We would get rid of the pretence that there is an easy solution to unemployment. We would create the climate for new jobs by increasing incentive, by introducing a prices and incomes policy and by giving workers a say in the running of their firms and a stake in the profits. By doing that we would remove much of the confrontation at the workplace—the kind of mindless militancy which in Liverpool, as the hon. Member for Walton knows, has led to the loss of many jobs. By reducing the working week and allowing much earlier retirement we would create the possibility of many new jobs.
    Mr. Heffer rose—
    Mr. Skinner: What about the Lib-Lab pact?
    Mr. John Lee: On a point of order, Mr. Speaker. With the greatest respect, the hon. Member for Liverpool, Edge Hill (Mr. Alton), endeavouring to make his contribution, has been present since the debate began. He is now being hounded by hon. Members who have appeared relatively recently. That is monstrous. Many hon. Members have sat here throughout the debate hoping to participate later.
    Mr. Heffer: I shall explain to the House exactly what the Liberal-controlled city council has done to deal with unemployment in Liverpool. As a result of Liberal policies, backing the Government's policies, the unemployment situation in some parts of Liverpool has worsened. In housing, in maintenance departments and in other sectors, the Liberals have been responsible for putting people out of work in Liverpool. Let the hon. Gentleman answer that.
    Mr. Alton: I hope that the hon. Member for Walton will at some time place before the House any evidence that he may have. The Liberal-controlled council in Liverpool has not made a single person unemployed. There has not been a single redundancy as a result of Liberal policy on the city council. I refute any allegation to that effect. The reason why there has been a decline in the construction industry, with 300,000 people out of work, is that we have the worst public sector house building figures since 1924. That is hardly the fault of the Liberal-controlled council in Liverpool.
    I shall not detain the House much longer, as I know that other hon. Members wish to speak. I return to other constructive suggestions that we would use to tackle unemployment. At present, £9 billion or £10 billion per year is being raised in revenue from North Sea oil. We should like to see some of that channelled into many youth opportunities and apprenticeship training schemes. In West Germany, more than 400 occupations are covered by
    842
    apprenticeship schemes. We would offer firms new youth training allowances and insist by law that new apprenticeships be created.
    We believe that many other useful schemes could he promoted. Insulation programmes, for example are socially useful and also employ people. They also save energy. That would be far more useful than having young people on YOP schemes going around counting the number of lamp posts.
    In conclusion, I wish to speak of the climate that we should create for British industry. As long ago as 1879, John Stuart Mill wrote:
    "There is a far more complete remedy for the disadvantages of hired labour …—the admission of the whole body of labourers to a participation in the profits, by distributing among all who share the work, in the the form of a percentage on their earnings, the whole or a fixed portion of the gains."
    It was in that tradition that my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) wrote in his excellent and inspiring book "The Common Welfare":
    "From the stand point of economic efficiency, as a means of increasing the opportunities of the less well-off, and certainly as a cure for inflation and unemployment, corporatism as it has been increasingly practised in the last 40 years is a failure. A free society must be a libertarian society and that libertarian society must incorporate a free market and voluntary cooperation."
    My right hon. Friend then goes on to describe various succesful producer co-operatives throughout the world, and it was in an attempt to try to strengthen that tradition that my right hon. Friend the leader of the Liberal Party, and my hon. Friend the Member for Rochdale (Mr. Smith) forced the last Government to establish the Co-operative Development Agency, to foster the creation and maintenance of industrial partnerships.
    We should never forget that it was the Liberals, not the Labour Party or those members of it who belong to the self-styled Institute for Workers Control of Industry, who forced that policy through. That is why this country needs the sort of ideas that I have been outlining today. We shall vote with the Opposition tonight because we are not satisfied that the Government are doing what they should be doing about youth unemployment. I should like to see much more done, and I hope that the Government will therefore take into account some of the things that I have said.
    5.21 pm
    Mr. John Lee: In part the background to this debate has been set by earlier speakers. Currently about 38 per cent. of the unemployed are under 25 years of age. In January 1981 425,000 young people were registered as unemployed, and 136,000 were participating in the youth opportunities programme. By the end of March that figure had reached 156,000. In my area of Pendle, in North-East Lancashire, 500 youngsters under the age of 20 years are unemployed, and only a handful of vacancies are available for them. In January 1981 there were only 3,800 vacancies at careers offices throughout the country, and the MSC estimates that there will be about 600,000 young unemployed school leavers in the 1982–83 period—nearly 80 per cent. of those who will be leaving school in those years.
    I have the honour of being the chairman of the National Youth Bureau. It and other youth bodies are finding that their work is almost totally dominated by youth unemployment. At the NYB we are experiencing about a fivefold increase in the number of inquiries from youth

    843
    service organisations throughout the country about schemes for alleviating the plight of the young unemployed.
    I pay tribute to the expansion of the youth opportunities programme, undertaken by the Government, to which my hon. and learned Friend the Minister referred. However, there must be genuine doubt whether the 450,000 pledged places can be provided, so awesome is the scale of the problem. Only 50 to 60 per cent. of those completing YOP schemes are going into permanent jobs. An article in the evening paper in my part of North-East Lancashire said that of those in the area who were completing YOP schemes only 20 per cent. were going into permanent employment. That compared with about 70 per cent. when the scheme first started. It is not surprising that youngsters are therefore losing faith in the scheme. That feeling is permeating back to schools, and a mood of depression and disillusionment is creeping in. It is particularly hard hitting for ethnic minority youth groups, for the handicapped and for the disadvantaged.
    So much of what has happened was fairly predictable. Last July, in our debate on young persons, I asked:
    "Are these schemes on a sufficient scale to deal with the whirlwind which now approaches?"
    I said:
    "The social and political dangers of substantial numbers of unemployed young people cannot be overestimated. Extremists of the Left or of the Right are gathering like vultures."—[Official Report, 7 July 1980; Vol. 988, c. 70.]
    The hon. Member for Liverpool, Edge Hill (Mr. Alton) referred to that aspect. Nine months later it is apparent that the schemes that were in operation were inadequate to deal with the size of the problem, and the rise of extremist racist youth movements must make all those who believe in a tolerant and decent society shudder.
    It is accepted by all, irrespective of political persuasion, that the traditionally high levels of employment of the past will not be reached for some time. We are living with a fairly high permanent level of unemployment. My hon. Friend the Member for Saffron Walden (Mr. Haselhurst) referred to that. He at least has started to think about a radical approach and radical alternatives. We have to face the realities. We cannot be ostrich-like and bury our heads in the sand.
    What, then, can the Government and society do for our young people? There is no one answer. My hon. and learned Friend the Minister agreed with that. We must tackle the problem in a number of ways. First, let us think about broadening the youth opportunities programme to embrace many more voluntary and community-based organisations. For example, the Scouts have been doing an enormous amount of work recently in examining their role to see how they can help in solving present difficult problems.
    Secondly, we must examine the financial differentials that exist between young people—those who are continuing in sixth form courses and colleges of further education and who are effectively receiving no wage, the unemployed youngster, who receives about £15·50, and the YOP participant, who receives about £23·50. We must consider how those differentials affect overall youth employment prospects. There has been some talk recently of the Government considering a flat £5 a week payment to almost all 16-year-olds. Perhaps the Minister will respond to that point when he replies to the debate.
    844
    Thirdly, we must re-examine the whole question of early retirement and the scope for work sharing and perhaps reducing overtime. I should like to think that the trade unions would play their full part in those discussions. Fourthly, we must examine the on-costs, such as national insurance, which inhibit employers from taking on young people permanently. Could we devise incentives to encourage firms to take on more apprentices?
    Fifthly, there is the whole area of voluntary involvement with the military and Outward Bound organisations. I raised this aspect in the debate last July. The National Youth Bureau and the majority of those in the youth services are opposed to the military option for a variety of reasons, and I accept that it is far better to keep that option outside the youth opportunities programme. But, given the size of the problem, it is unrealistic to discard the option. Already the Ministry of Defence is providing certain non-military courses, and these are well regarded by those who operate in youth activities. Perhaps we should consider extending the pre-recruitment period for those who wish to undertake a more permanent military career, or perhaps we should consider expanding the cadet forces—the sea cadets and the air training corps, perhaps with an enlargement of the TAVR.
    Sixthly, we should consider a degree of privatisation or contracting out by letting youth bodies or commercial undertakings produce alternative packages of training, perhaps on some form of tender basis. In short, we must examine all the options with open minds.
    There is a danger that if we fail to rise to the challenge of providing stimulation, motivation, involvement and opportunity for young people a whole generation may be blighted. The suffering will be not only on the part of individuals directly involved. A disinterested generation will pose a threat to the cohesiveness of our society. I know that the Government are aware of the problem and that they care, as do hon. Members on the Opposition Benches, as has been demonstrated by their speeches. It is particularly pleasing that so many of my hon. Friends participate in the youth lobby and in national and youth affairs, and genuinely care. In the longer term our economic policies, which will produce greater efficiency in British industry, will benefit all the nation. In the meantime, it is vital that the Government should make available the necessary resources, continue to take initiatives, and rise to the challenge.
    5.39 pm
    Mr. John Golding: I should tell the hon. Member for Liverpool, Edge Hill (Mr. Alton) that I marched proudly in Liverpool and did not stay in a posh hotel. On one occasion when I stopped in that posh hotel I found that it could not provide any black pudding for breakfast, which was a blow. I am also willing to defend my record in the Department of Employment on youth unemployment.
    The Minister said that the Labour Government accepted the report of the Holland committee. We did more than that. We added an essential element to it, namely, the guarantee—the MSC more timidly called it an undertaking—that youngsters who left school one year would be provided with a job opportunity by the following Easter. Why did we insist on that guarantee? It stemmed not from any theoretical writings or Civil Service briefs, but from my experience of visiting the South-West. I visited a site at which the training services division was

    845
    teaching youngsters to lay kerbstones. I spoke to some of the youngsters, who greatly impressed me. Afterwards I expressed surprise that the youngsters were of such high quality and that there were no rough ones on the course. The training services division solemnly assured me that it had weeded out the roughest youngsters and had ensured that those on the course were of the best quality.
    A question popped into my mind: What had happened to the rough ones? I went to the careers office and asked what had happened to them. I was told that they were unemployed. I asked when they would find work. The careers office said that it did not expect them to find work. When I asked why, I was told that in a little while, at Easter, other youngsters would leave school and that employers preferred school leavers to those who had been unemployed for 12 months. Those youngsters will remain unemployed. They will probably be unemployed next year.
    My attitude was "It ain't on". It is intolerable that youngsters should witness kids from the class after them getting work while they are out of work. As a result of that experience the youth guarantee was introduced. I thought of the kids that I went to school with and found the situation impossible to accept. When the report of the Holland committee was presented to us it did not include that guarantee. The scheme was of a high quality. It proposed to provide so many youngsters with a place each year.
    When the Manpower Services Commission presented that report something else popped into my mind, namely, that those involved in placing youngsters tend first to find jobs for the brightest youngsters. That pleases employers, and is the easiest thing to do. Even under the original Holland proposals youngsters who were not particularly bright—there is nothing wrong with that—could get written off by the numbers game. A youngster might not be bright, or might not have got on well at school. He might become demoralised and find himself on the wrong side of his teachers. That youngster could be written off. That is why we insisted on the guarantee, or—as the more timid MSC might say—the undertaking.
    We introduced a school-leaver undertaking and then an undertaking for the long-term unemployed. The Government have built on those undertakings. I appeal to them to maintain the guarantees. I appeal to them not to go along the path that Youth Aid would like everyone to go along. I appeal to them not to provide opportunities for only a limited number of youngsters. They should ensure that opportunites are open to all. If, as Youth Aid states, it is a choice of quality or collapse, the Government must solve the dilemma by dealing with each and every problem.
    They should not reduce the size of the programme. If the number of unemployed youngsters increases, they should increase the size of the programme in order to meet the needs of every youngster. They should not give way to anyone who asks them to abandon the guarantees.
    Will the guarantees be met this year? They may not be. If the Government admit that they have not met the guarantees the Opposition Front Bench should not make too much of it. Let us tell them merely to do better next year. The careers service and the MSC have put in an enormous amount of effort in order to meet those guarantees, but they need more resources. Let this year's failure help us to do better next year. Let us ensure that any shortfall this year is met next year.
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    I have one serious criticism to make. The Government should not have allowed the community industry scheme to slip in the way that it has done during the past year. There should not be fewer people in that scheme. Despite all the effort that has been put into the youth opportunities programme, the Government have not been sympathetic, as they say. Youth unemployment increased from 170,000 in January 1980 to 305,000 in 1981. There is a desperate need to help youngsters. Against that background, the Government have created enormous problems for careers officers and others by changing the rules on supplementary benefit. Youngsters are being encouraged to leave school at Easter and to draw supplementary benefit instead of staying on to take their examinations in the summer. It is nonsense to pay kids not to take their examinations. What has such action got to do with the quality of education and the quality of school life?
    In addition, it costs money to find work. If a youngster's mum and dad are unemployed and things are tight at home, he will not be given the money to go the careers office or to run around looking for work. H the Government are getting shot of supplementary benefit they should replace it with an allowance that would help youngsters to find work. They must think again about supplementary benefit.
    In my constituency questions are being asked about the pressure that the DHSS puts on youngsters not to take advantage of the rule that enables them to study for 21 hours per week at a technical college and to draw supplementary benefit. DHSS officials ask how such youngsters can be looking for work if they are in class. The Government should tell the DHSS that they prefer the youngsters to be in college for 21 hours a week while drawing supplementary benefit rather than on the streets. The Government must know what is going on, and they must do something about it.
    The Government should take a more tolerant attitude generally to youngsters who, if it were not for the recession, would be in work making money, with all that that implies. We need to expand the youth opportunities programme.
    First, we must tackle the problem that I did not properly tackle—I am the first to adrnit—of creating better schemes in big firms and nationalised industries. There is an imperative need for that to be done now. We have to do everything that we can to avoid substitution. The way in which the media have latched on to substitution is criminal. They have tried to discredit the youth opportunities programme. Many media men snatch at one stick to beat with. They do not consider the value of YOP as a whole. The Secretary of State for Employment used the same sort of stick when he was shouting about counting lamp posts, which was a media stunt to discredit job creation.
    We should invite the media to consider the picture as a whole. But there is a problem, as the hon. Member for Nelson and Colne (Mr. Lee) knows, in that some employers see the youth opportunities programme as a way of getting cheap labour. The Manpower Services Commission has continually suggested that one of the first things that the Government should do is to increase the allowance to at least £27. Perhaps it should be more, but I have always been a moderate negotiator. Allowance should also be made for travelling costs to make them more applicable to present circumstances.

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    Secondly, we need greater supervision. The trade unions made a mistake on the introduction of YOP by not insisting that youngsters join trade unions. There should be greater trade union supervision of the youth opportunities programme. The Government have had to condone that in agriculture.
    Mr. John Townend: Is the hon. Gentleman saying that non-trade union firms would not be allowed to take advantage of the youth opportunities scheme under his suggestion?
    Mr. Golding: I think that the quality of the schemes would increase if that were so, because non-union employers generally have the most stingy and exploiting attitude to their employees.
    The Institute of Careers Officers made a good suggestion that the Government should bring together careers officers, the MSC, the CBI and the TUC to discuss the problem. We do not want the scheme to be soured because of exploitation by a small minority of employers. We must do more for those leaving the youth opportunities programme without a regular job.
    I criticise the Government strongly for constantly using figures that are a year out of date. It does no good for the Government to claim that the placement rate is 60 per cent. We all know that the figures have dropped dramatically in the past 12 months. It is history to be told what the placement rate was in the autumn, or 12 or 18 months ago. The Government should admit freely that the placement rate is dropping fast. The youth opportunities programme can be defended on other grounds than by placing youngsters all the time into regular work. The Government must be honest. If they are not, the youngsters who do not get work will think that there is something wrong with them. What is certain is that there is nothing wrong with the youngsters; what is wrong is the economic situation, for which we are responsible, which is leaving the youngsters without jobs.
    The youth opportunities programme was designed as a 12 months-plus scheme, yet the MSC is providing, on average, one placing or opportunity lasting 23 weeks. We must have second, third and fourth placings. There must be a continuing involvement of the youngsters. One cannot finish them at 23 weeks and say "That is it".
    I speak for too long, as ever, but the problem now is spreading faster and faster to the older youngsters. The Minister seems to have narrowed the provision for the 16, 17 and 18-year-olds to provision only for 16 and 17-yearolds. Yet now, unlike the situation when Labour was in office, there is a growing problem of the placement of 18-year-old school leavers. Does the Government's school leaving undertaking apply to 18-year-olds as well as to the 16 and 17-year-olds? If it does not, it is a scandal. The Government will say that those youngsters can take part in the work experience programme, but that contains only 25,000 places for half a million-plus long-term unemployed. It is virtually impossible for them to find adequate and satisfactory places.
    The under-twenties long-term unemployment, of which my hon. Friend the Member for Newcastle upon Tyne, West (Mr. Brown) spoke so eloquently, is now 96,000, and is growing rapidly. The Government could quickly increase the placing rate from the youth opportunities programme by reintroducing the youth employment
    848
    subsidy, so that employers were given a financial incentive to employ youngsters rather than an older person or no one.
    I hope that the Government will continue to build on and expand the youth opportunities programme; that they will rectify its difficulties but never abandon it.
    5.59 pm
    Mr. Nicholas Scott:
    "He which hath no stomach to this fight, Let him depart".
    Thus Henry V before the Battle of Agincourt, according to Shakespeare. While honourably exempting members of the Labour Party who are present for the debate, I believe that the founding fathers of the Labour Party must be turning in their graves at the fact that when unemployment stands at 2½ million their parliamentary representatives in two successive weeks have barely been able to fill the rota of speakers and but a handful of them are present. What is more, our friends from the Social Democrats have not made one appearance for the debate.
    I want not to pursue that partisan line but to reinforce the point made by my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) about the appalling cost that unemployment now presents. If, as seems inevitable, unemployment tops 3 million in the coming winter, the impact on our economy in terms of transfer payments and loss of revenue will be more than £12 billion, to which we must add the costs of broken homes, physical and mental ill health, vandalism and crime. It will not have escaped the attention of, for example, my right hon. Friend the Financial Secretary to the Treasury that such payments must, by definition, be inflationary because they are paid into the economy and no goods or services are produced in return.
    We face a gigantic problem, which seems to have grown relentlessly under successive Governments since 1965 when Lord George-Brown produced a national plan which forecast a shortage of manpower of about ½ million by the end of the 1970s. Almost from the day that he produced his report things changed for the worse.
    Within the overall picture the young have suffered disproportionately and will continue to do so, whatever we do, because for at least the next couple of years more will be coming on to the job market, because many are sadly ill equipped by our education system to compete in that market and because many firms seeking to reduce their workforce do so, for the best of reasons, by natural wastage and ceasing recruitment. All the surveys suggest that even if later this year the economy bottoms out or begins a mild upturn it will not be reflected in extra demand for labour, because employers will be looking for a 15 per cent., 20 per cent. or even 25 per cent. increase in production before they begin to increase their workforce. The prospects facing young people are grim and those youngsters are in direct competition with women in many areas. The problem will not go away.
    I pay tribute to Ministers at the Department of Employment and to the MSC for their work, but they are taking only small steps, albeit in the right direction. I wish to outline what we could begin to do, but I wish first to stress what we should not do.
    First, we should not abandon the battle against inflation. However, in fighting that battle we should have

    849
    particular care for the inevitable casualties and should look ahead to ensure that our economy will be fit to fight future battles.
    Secondly, we should not promise the moon, as the previous Labour Government did. Outlining his industrial strategy in 1978, the right hon. Member for Leeds, East (Mr. Healey) promised an extra 60,000 jobs in manufacturing industry, but before that Government went to the country there was a net loss of 96,000 jobs in manufacturing. Whatever we propose, we should be realistic about what we can achieve.
    Action is possible under three headings. The first is constructive capital investment. I do not want to abandon the battle against inflation, but even this year my right hon. and learned Friend the Chancellor of the Exchequer has a contingency reserve of £2½ billion in the Budget. He has a choice: he can either fund substantial capital investment projects or spend that money on increased unemployment pay before the end of the year.
    It is urgent—indeed, it is almost too late—to consider capital projects such as the Channel tunnel, investment in British Telecommunications and British Rail, and housing improvements and insulation. Those projects could have an immediate impact on unemployment and would begin to create demand in the economy, which would benefit all of us.
    Secondly, since the problems of unemployment, particularly youth unemployment, will be with us for a long time, we should improve the job release scheme and reduce the qualifying age progressively from 64 to 60. Even that expensive measure should be only the first stage of a progressive reduction in the retirement age for the national pension to 60 for men.
    That cannot be done overnight, but there is no reason why we should not commit ourselves to such a programme over, say, eight or 10 years, starting with the job release scheme and going on to a progressive reduction in the national retirement age, which would have a dramatic effect on employment opportunities elsewhere.
    Thirdly, too many YOP schemes do not provide the essential training element. We have heard how many employers are having to cut apprenticeship schemes in order to survive. The training boards should step in and support those apprentices. I have urged Ministers to bear in mind, when the MSC sector-by-sector review is considered, the importance of keeping apprenticeship schemes running at a high level over the next 18 months or two years and the important part that ITBs can play. If we do not do that we shall be eating the seed corn of future industrial expansion.
    The Army, the Royal Navy and the Royal Air Force are probably our three best training organisations. I understand the worries expressed by some Members—I exclude the hon. Member for Salford, East (Mr. Allaun), because he reacts instinctively whenever the Armed Forces are mentioned—when it is suggested that the Armed Forces could help with training. However, they could play an extra part in training young people. We ask employers in the private and the public sectors to help and I believe that the Services could help, with training not in military skills, but in catering, motoring and all the other skills that form part of the modern Armed Forces. They could offer short courses that would benefit young people.
    I agree with my hon. Friend the Member for Saffron Walden that we must quickly reach a view about an overall "citizens-in-training" approach to all 16 to 18-year-olds.
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    My headings for action are a determined effort to get an investment-led recovery, a planned move to earlier retirement, and training, training and still more training for our young people. Action under those headings can make a great impact on our problems.
    I agree with the hon. Member for Liverpool, Edge Hill (Mr. Alton) that if we do not take the necessary action we shall be sowing the dragon's teeth of social unrest in future. The National Front, the Socialist Workers Party and their allies are recruiting young people. An immensely dangerous problem could emerge on our streets if we do not take early action.
    6.8 pm
    Mr. Derek Foster: The hon. Member for Beeston (Mr. Lester) invited us on Friday to congratulate the Secretary of State for Employment on his guarantees and on delivering sufficient finance for 440,000 YOP places in 1981–82. Labour Members would be more inclined to congratulate the right hon. Gentleman but for two things.
    First, it is feared that the 440,000 places will be inadequate to meet the need in the coming year. The Times Educational Supplement reported a fortnight ago:
    "Manpower Services Commission officials fear that the programme may have to cope with close to 500,000 youngsters."
    The article added:
    "But its area boards and regional directors say that they need room for at least another 43,000 in the light of the latest unemployment trends".
    The second and more fundamental reason why I am sceptical about congratulating the Secretary of State is that it was this Government that brought about the torrent of job destruction in the first place. A total of 1 million jobs—800,000 in manufacturing industry alone—has been lost since May 1979. Nowhere else in Europe has manufacturing industry lost 15 per cent. of its output in just over 12 months. Nowhere else in Europe has unemployment increased by 77 per cent. Yet, although we are told that the Secretary of State is not enthusiastic about Government policies, he defends them as stoutly as the remnant of true believers. In my view he and his Government stand condemned as incompetent and immoral.
    The blighting of hundreds of thousands of teenagers' lives will not be lightly forgotten. Nor will the reaping time long be delayed, when the bitter harvest of disillusionment and despair will stand rotting in the Secretary of State's barns. Yet the right hon. Gentleman expects our congratulations. I tell him that his 440,000 places and his guarantees are the minimum with which a civilised community can salve its conscience. Our young people deserve and will expect much more.
    Nowhere has youth unemployment been more damaging than in the North-East. I understand that there are only 200 vacacies for the young unemployed. That is why, along with many of my hon. Friends, I marched from King's Cross to Westminster this afternoon. The march explains why so many of my hon. Friends have not attended the debate. They have been talking to representatives of the TUC and between 600 and 700 people from the North-East about unemployment.
    I will, however, congratulate the Secretary of State for his statement in November 1980, when he said:
    "We are trying, as resources permit, to work towards the point where every 16 and 17-year-old not in education or a job will be assured of vocational preparation lasting as necessary up to his or her eighteenth birthday.

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    We see this development of the youth opportunities programme in the wider context of improving preparation for and training in work for all young people, and not just the unemployed."—[Official Report, 21 November 1980; Vol. 994, c. 205.]
    That is a statement of the profoundest significance, which has not yet received the acclaim that it deserves. YOP will cater for one in three of our young people, and possibly one in two. I must, however, warn the Secretary of State that he should not assume that a greatly improved youth opportunities programme or his one-year traineeship is the best solution for all young people, even in the short term. The best solution for many young people, especially in working-class areas, is to stay on in full-time education. In the North-East about 17 per cent. stay on, whereas in the South-East about 30 per cent. do so. This has little connection with ablility. The right hon. Gentleman should therefore persuade the Secretary of State for Education and Science to give top priority to strategies for increasing participation. He will find a proper educational maintenance allowance an indispensable tool for this purpose.
    In better times, many youngsters would have gone into craft apprenticeships, but many companies have severely cut recruitment, sometimes by as much as 25 per cent. About 10,000 apprentices have been sacked in mid-training. The construction industry is already warning that future growth will be constricted by a shortage of skilled men. If industry will not, or cannot, see beyond its nose, the Government must fund at least the first year of apprentice training for many more thousands of young people.
    I turn now to the youth opportunities programme itself. Those of us who have been involved since 1977 thought that we were pioneering a new transition from school to work, a new work-based education service and an integrated scheme of opportunities within which there would be progression—all designed to meet the individual needs of young people. If YOP has not always fulfilled those high expectations, it is still a good scheme, and potentially a great scheme. But the need to expand the programme so rapidly has been to the detriment of quality. The reduction in placement rates is straining the scheme's credibility to breaking point. The Under-Secretary of State has told me that the placement rate in the Northern region is 51 per cent. I want to tell him that in certain parts of the North-East it is as low as 18 per cent. and 25 per cent.
    The programme must be relaunched as a one-year vocational training programme for all 16 and 17-year-olds. Secondly, 20 to 30 per cent. substitution, especially in work experience on employers' premises, is unacceptable and must be rectified if trade union support is to continue. Thirdly, off-the-job training and education of about 40 per cent. of entrants must be substantially increased. Fourthly, the bureaucratic behaviour of the Manpower Services Commission, which is souring the higherto good relationships with voluntary organisations and other sponsors, must be dealt with.
    Fifthly, small work experience and employers' premises placements should be combined in group schemes. Sixthly, the base of information about individual young people must be greatly improved in order to develop individualised programmes with hard education and training content. The early weeks of the initial placement should be used to compile profiles of competence and
    852
    qualities. Seventhly, progression from module to module of the programme must increase, but this will highlight the inadequacy of the administrative arrangements for achieving co-ordination and integration. Eighthly, in many cases it is still impossible to know whether what was planned for individual young people is being delivered. Ninthly, every young person should be given a profile of assessment and experience, which is kept throughout the programme and can be shown to prospective employers. Tenthly, the youth opportunities programme and the unified vocational preparation programme should be seen as complementary, sharing the same objectives and designed for the same client group. Young people should be able to move smoothly from one to the other, as appropriate.
    The YOP should be designed on a local educational authority area basis with the full participation and co-operation of the Manpower Services Commission, the careers service, colleges of further education, the youth service, voluntary organisations, employers and trade unions. Nothwithstanding what we describe as an education and training programme based on work experience, and notwithstanding the substantial contribution of the various arms of the local education authority, the programme should continue to be administered as a partnership, with the money flowing through the Manpower Services Commission. That money is the lever for achieving change in the education service and for achieving co-operation until we have an education and training department.
    The YOP should not only be an integrated programme itself; it should be integrated with all other educational and training arrangements for the 16–19 age group, so enabling young people to move smoothly from education to training and to work, as appropriate. Of course, the financial allowances are unbalanced and must be rationalised, but I warn the Cabinet that if the plan for a single youth benefit involves substantial losses for participants in the youth opportunities programme—as is widely rumoured—it will be rejected by the Labour Party and the TUC, and subsequently the youth opportunities programme will be rejected by young people.
    Proper jobs are infinitely preferable to the YOP. We must not accept too readily that there is no better way. The return of a Labour Government, committed to full employment, is infinitely preferable to further monetarist madness. None the less, with the prospect of 3 million unemployed, a Labour Government committed to full employment would do well to get unemployment below 1 million in four years. So we are stuck with high youth unemployment for the foreseeable future. The YOP can be the forerunner of a superb programme of education and training based on work experience.
    If the Secretary of State, having made the right noises, uses all his energies to deliver such a high-quality programme, he will richly deserve our congratulations. If not, let him seek his congratulations from the young themselves in the North-East, Merseyside, Scotland and Wales, and among the ethnic minorities of our inner cities. I predict that he will not be congratulated but will be swept, along with many of his hon. Friends, into electoral oblivion.
    6.22 pm
    Mr. David Madel: All those who have spoken in the debate have referred to the scale

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    of the problem and to the fact that during the past 10 to 15 years the number of jobs in productive industry has dropped dramatically. However, we must remember that it is not only a British problem. Other countries are battling with youth unemployment. The French President has just announced a crash scheme of craft training for 100,000 people each year. So the problem does not affect only Great Britain.
    It has been said that the devastating effect of youth unemployment is even worse in homes where someone is already out of work or where there is no history of further education or staying longer at school. The hon. Member for Bishop Auckland (Mr. Foster) hinted that even an extra year at school would help.
    We cannot expect an early upswing in manufacturing industry. All the automation during the past 10 years shows that while production and productivity can go up in Britain it does not necessarily result in an increase in the total number of people employed. I was glad to see the announcement from the Construction Industry Training Board that this year an extra £2 million in grants for training will be given to employers. I hope that that will restore some confidence to the industry.
    In the Budget the Chancellor rightly stressed the importance of small businesses. He talked about the startup scheme. It should be remembered that it is a matter not just of cash or loan guarantees but of management expertise. That is required on a much greater scale than hitherto. More commercial courses in adult education are needed, because without an improvement in management education, cash loans and loan guarantees will not necessarily get a small business off the ground.
    It will take time for our economy to adjust to its changed circumstances, and the education service must carry us through this difficult period and help to protect young people from the effects of unemployment.
    Two documents were recently published by the Government. One is entitled
    "Education for 16–19 year olds"
    and the other "The School Curriculum". In those documents the Government say that they want to extend and improve education. I hope that they heed the advice that they give themselves in those documents. In paragraph 50 of the document "Education for 16–19 year olds", the Government say that more professionalism is needed in the training of careers officers. They say that there is a
    "need for more and better training for careers teachers, lecturers and officers, through initial and in-service programmes".
    The document mentions the difficulties of employers in supporting the part-time education service. They say that stability of direction is needed before it is decided how many people are to be trained. I hope that the Government will follow the advice in the document.
    The document "The School Curriculum" is of equal importance. If we do not get the curriculum right—and, of course, adequate specialist teachers—we shall be unable to train people properly for adult and working life. In the foreword to the document the Government state that everyone should be appropriately trained to cope with the demands of adult and working life.
    A few sentences from the document make clear the Government's intention. It is only a matter of carrying out that intention. They say in paragraph 21 that
    "the effect of technology on employment patterns sets a new premium on adaptability, self reliance".
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    In other words, more specialist teachers are ugently needed. In paragraph 32, the Government say:
    "each teacher should, wherever possible, be deployed where his professional strong points can be fully used to promote the quality of the pupils' education".
    If that means keeping good teachers in the classroom, rather than using them as administrators, that will help.
    In paragraph 41, the Government say:
    "Pupils should not drop potentially valuable subjects before they are mature enough to understand their importance or to have mastered their elementary ideas and skills".
    That is another hint that more specialist teachers are urgently needed. Paragraph 53(c) says:
    "The Secretary of State for Education and Science has accordingly commissioned a study from a senior industrialist of the nature and coverage of these activities, their effectiveness, and ways in which it might be enhanced".
    That is a reference to the need for the links between education and industry to be improved.
    Finally, paragraph 57 says:
    "The Secretaries of State will themselves he responsible for taking further the work which is now required on science and on modern languages".
    The Government then say that they will act on the recommendations of the Cockcroft committee's report on the shortage of mathematics teachers.
    The Government have given many hints that teaching has to be improved. They recognise that the shortage of skilled and specialist teachers is not improving education. They realise that people will be better prepared for adult life if those problems can be overcome. If what the Government recommend in the documents is done and is done effectively, we shall do much to shield young people from the hardships of unemployment. It will take some years yet for our economy to reshape itself and adjust to the most rapid changes in industrial techniques this century. Meanwhile, we must rely on an improved and extended education service to rescue young people from the despair of unemployment. All the hints are in those Government documents. I urge the Government to act quickly on them.
    6.28 pm
    Mr. Eric S. Heffer: The problems of the underlying economic situation have been left out of this debate. We cannot talk about youth unemployment in isolation. It is part and parcel of overall unemployment. Unemployment has increased because of the recession, undoubtedly fostered by certain Government policies. We must get young people back to work by job creation by means of a change in the economic policy pursued by the Government during their period of office.
    My second point is the effect of unemployment on young people. During the 1930s I was an apprentice carpenter and joiner. I was lucky, I learnt a craft. I can think of youngsters—particularly in Merseyside, but also elsewhere—who were employed and thought that they had an apprenticeship, until their factory or firm closed. The unions have often been helpful. They have done their best to place youngsters in other jobs so that they can complete their apprenticeships. However, many hundreds of young workers, particularly in areas such as Merseyside, whose jobs have finished, will not complete their apprenticeships. That is a criminal waste. Schemes created by the Government or anybody else do not compensate such young people for not completing their time and becoming skilled workers and craftsmen. That aspect must be examined.

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    The key is training, which is a vital part of any future upturn. Because more and more youngsters are being thrown out of work with other sections of the community, when the upturn comes the skilled craftsmen will not be available. I do not say that the upturn will come under this Government, but it will come. Bottlenecks will be caused and thousands of unskilled workers will be out of work who would have been in work if there had been sufficient training. All Governments must have a policy for training and retraining. My Government did much better than most, but no Government have really dealt with training and retraining.
    I have disagreed with the hon. Member for Liverpool, Edge Hill (Mr. Alton) about many matters. That is inevitable since we represent the same city and disagree about local issues. However, I did not disagree with everything that he said today. I agree with him about the military option. It should not be considered; we should rule it out.
    I was amazed that some hon. Members whom I believed to be enlightened should have said that we should consider that option. It is our job to create a nation not of militarists but of people employed in decent civilian jobs. They should indulge in military activities only if they wish to, as volunteers, or when there is a crisis, in which we must all join.
    The way to deal with youth unemployment, as with all unemployment, is to change the Government's economic policies. My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) outlined the nitty-gritty of what we should do. We must change the Government's economic policy. The way to do that is to ensure that the next Labour Government operate their alternative economic strategy to put our people back to work.
    6.33 pm
    Mr. Eric G. Varley: It is a pity that the Secretary of State for Employment is not able to take part in the debate. We accept and understand the reasons. We hope that he will read the contributions. He will see that hon. Members from both sides have described how youth unemployment is spreading and deepening throughout the country.
    Sympathy has been expressed along with indignation and anger. However, hon. Members have not been able to put themselves in the place of the young people who for years have been protected from the harshest impact of life by their families and school environments. Suddenly, when their confidence should be bolstered by that step out of the school and home, when they should be able to count as breadwinners in their own right, they find that in the eyes of society they count for nothing. The school door has been closed, but no other door has opened to let them in.
    The demoralisation must be devastating. One youngster told me that because he could not get a job he felt that he had failed his parents, that he was not able to contribute to society, and that society could not find a place for him. That was a heartrending statement.
    In the long days that the young unemployed must get through somehow, some will find a useful way to occupy their time. Others will become listless and apathetic, while others will hang around street corners, turn to vandalism and perhaps to petty crime. Some may even qualify for the Home Secretary's short, sharp shock treatment.
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    Recent studies show that there is a connection between delinquency or criminal activity and unemployment. The true guilt must be laid at the door of policies which cause youngsters to be out of work instead of finding the jobs that they desperately need. One horrifying feature of the record post-war unemployment affects the country more than any other—the record number of young people who do not have a job and who are unlikely to have one for some time.
    Parents are desperately worried about the prospects for their children. As their children approach their sixteenth birthday parents are desperately anxious to know whether they will obtain a job. That anxiety permeates the whole family, from brothers and sisters to grandparents.
    Even the parts of the country which used to be regarded as prosperous are unable to provide jobs for youngsters. The chances of getting a job depend not on qualifications but on where one lives. The difficulties are most acute in the weaker economic regions. The tragedy is that if the Government do not act quickly—and there is no evidence that they intend to act urgently—the position will become a great deal worse.
    The Government predict that unemployment will rise to nearly 3 million by the end of this year and stay at that level to the end of this Parliament. That forecast was made in the public expenditure White Paper, published on 10 March. Many forecasters regard that figure as hopelessly conservative. Even on the Government's own figures there will be a disproportionate rise in young unemployment, as the hon. Member for Chelsea (Mr. Scott) said. That is not just because of the bulge in the number of school leavers. The Department of Employment's studies show that youth unemployment will continue to rise faster than the general rate of unemployment.
    Last November the Secretary of State told the House of his plans to expand the youth opportunities programme to provide 440,000 places in 1981–82.
    It is now abundantly clear that this figure is inadequate. Indeed, it is a serious underestimate of the need.
    The Under-Secretary said that they had received no further requests from the Manpower Services Commission about expanding on the 440,000 jobs, but I understand that the special programmes board of the MSC predicts that another 40,000 places will be required and that even this new target may prove insufficient. So we expect that very shortly now the MSC will be getting in touch with the Secretary of State and asking for that 440,000 to be increased to something like 500,000. I therefore want to put these general questions to the Minister who will be replying to this debate.
    When the MSC accepted the 440,000 target of places for the youth opportunities programme for 1981–82 it said that it reserved the right to return to the Government and seek additional resources if that should prove necessary. It is as plain as a pikestaff that additional funds are necessary. I should like the hon. Gentleman to give the House an unequivocal assurance that additional funds will be provided if the MSC tells the Department that it has to increase the programme.
    That is not a difficult task for the Under-Secretary. It is something that he can do. He does not need to consult anyone about that. He should chance his arm and be quite adventurous this evening.
    Secondly, is it not now time for the allowance of the youth opportunities programme trainee, as my hon. Friend the Member for Newcastle-Under-Lyme (Mr. Golding) said, to be raised from £23·50 to a figure that will restore the original

    857
    purchasing power? The MSC has recommended an increase, and if the figure is raised now it will help to maintain the interest of young people and the widespread support it enjoys.
    Above all, we need to know when the fine words used by the Secretary of State for Employment on 21 November 1980 will be translated into action. I want to refresh the memories of hon. Members as to what he said when introducing the special measures:
    "We see this development of the youth opportunities programme in the wider context of improving preparation for and training in work for all young people, and not just the unemployed … What we are trying to build up in these days is a system whereby 16 and 17-year-olds will be better equipped for working life, and this is being further considered within our review of industrial training." [Official Report, 21 November 1980; Vol. 994, c. 205.]
    The Opposition continue to support all the schemes currently in operation, but we want to go further. We want to go along the road laid down by the Secretary of State in November of last year. We support the youth opportunities programme, the community industry programme and the community enterprise programme, although that is woefully inadequate. If we are now thinking of long-term unemployment of something like 500,000, it is clear that 25,000 places in the community enterprise programme will not make much of an impact.
    A great deal more could be done by the Department itself in addition to the Manpower Services Commission. We could see a restoration of the small firms subsidy and a greatly expanded job release scheme. Most of those who have taken part in the debate know of the ambitious plans of the special programmes board of the Manpower Services Commission for what it calls a quality improvement of the youth opportunities programme. It, too, has our 11111 support. If it is planned to develop the youth opportunities programme to provide for a better quality of education and training this will deserve the support not only of the House but of the whole nation. My hon. Friend the Member for Bishop Auckland (Mr. Foster) touched on this subject.
    The MSC is to be congratulated on the initiatives that it is taking but the Government must back up its efforts, because it is now absolutely clear that the problems of youth unemployment cannot be solved by the existing schemes. There are two reasons for this. First, youth unemployment is getting too big to be handled by the existing arrangements. More young people than ever are coming into the labour market and unemployment now is beyond the scope of the present schemes which aim to assist the unemployed.
    The youth opportunities programme has a very creditable record so far, certainly in the early stages of placings. Initially, the figure was between 70 per cent. and 80 per cent. but there has been a dramatic reduction over the last few months. With total unemployment getting worse and with such increased numbers of young people, more and more will return to the dole queue.
    For example, when YOP started in 1978–79 it was called on to assist one in eight young people. In 1979–80 it was 1 in 6, in 1980–81 it was one in four and in the current year 1981–82 it is likely to have to assist one in two school leavers. That is an increase and a measure of the deterioration of job prospects for the young. So what was intended to be relief for short-term problems is now unable to carry the burden of the deepening crisis.
    That crisis will persist for as long as the Government pursue policies which deliberately use the creation of
    858
    unemployment as an instrument of economic policy. It is tragic that bright-eyed youngsters are being given the impression that once their formal education is over society has no use for them. The expenditure cuts, which are helping to bring about youth unemployment, save far less money than the material cost to society of that same youth unemployment—the cost that can be quantified directly and the indirect cost, which can never be properly counted. That cost is quite apart from the price paid by the young people themselves whom society now disheartens and demoralises.
    If this problem is not tackled urgently the social and psychological impact on our way of life will be devastating. The only way to solve this problem of youth unemployment is by a complete change of economic policy, and it is about time that this Government had the courage and the decency make that change.
    6.47 pm
    The Under-Secretary of State for Employment (Mr. Peter Morrison): I will try in the limited time available to answer most of the points which have been made by right hon. and hon. Members in all parts of the House. I was flattered that the right hon. Member for Chesterfield (Mr. Varley) should suggest that I chance my arm. As an ex-pairing-Whip I am surprised that he gave another ex-pairing-Whip the advice to chance his arm. I cannot believe that the leader of his party or the leader of my party would have given that advice to either of us when we occupied the position that we did.
    The right hon. Gentleman said that nobody in the House or in the debate had been able to put himself into the place of those youngsters who have been without a job, some of them for some time. Perhaps that is true; for the vast majority of us it probably is. Therefore it is difficult for us to see from a personal angle the despair which some of those youngsters must feel.
    For all that, hon. Members in all parts of the House have shown how strongly the House of Commons feels about the plight of school leavers and their difficulty in getting a job during a recession, especially a job which they want to do.
    Both the hon. Member for Islington, Central (Mr. Grant) and his right hon. Friend the Member for Chesterfield noted that my right hon. Friend the Secretary of State was not here. As they both readily acknowledged, nobody would want to be here more than he, but he had a prior engagement. As I hope right hon. and hon. Gentlemen will appreciate, despite what the hon. Member for Islington, Central said, my right hon. Friend has done a tremendous amount to help young people and school leavers.
    Mr. Arthur Lewis rose—
    Mr. Morrison: No, I will not give way to the hon. Gentleman. He has not been here for the whole debate and I do not see why I should give way to him. There has been some banter about who has and who has not been here. I do not wish to pursue that line except to say that I was very sad that, despite the fact that two members of the Social Democratic Party are here, there was no contribution from that party on this important matter. I should have thought that Labour Members would agree that this is a matter with which Social Democrat Members would be concerned, but once more they have not told us what they would do.

    859
    It was depressing to hear nothing constructive from the Opposition. The hon. Members for Bolton, East (Mr. Young) and for Newcastle upon Tyne, West (Mr. Brown) described the problems in their areas. The Government are also concerned about the problems, but the hon. Members said nothing very constructive.
    By contrast, my hon. Friend the Member for Chelsea (Mr. Scott) proposed that the Government should look again at the job release scheme. Obviously, if we could achieve what he suggested it would help the employment of school leavers.
    The hon. Member for Newcastle upon Tyne, West was concerned that too many graduates in his area were taking clerical jobs. In America, many people take clerical jobs after graduation, and there is nothing unusual or regrettable about it.
    I agree with my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) about the importance of satisfaction at work.
    My hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott) made one of the most important points in the debate when he said that all was not gloom and doom for the school leavers and the youngsters. We should be betraying them if we suggested that all was gloom and doom. By Christmas of last year more than 80 per cent. of last year's school leavers had found jobs. It would be better if the figures were 90 per cent. or 95 per cent., but the great majority of school leavers can find jobs.
    As my hon. Friend the Member for Bedfordshire, South (Mr. Madel) said, the international experience has been bad, and this country—
    Mr. Golding: Will the hon. Gentleman give way?
    Mr. Morrison: I shall not give way to the hon. Gentleman. I have sat quietly through the debate and have much to say in the remaining few minutes.
    As hon. Members in all parts of the House have said, youth unemployment has been an increasing trend over recent years. There was an increase of 380 per cent. in 1976 over 1974. [Interruption.] No, I am not making a party political point. The increase in 1978 over 1976 was 13 per cent. The increase in 1980 over 1978 was 21 per cent.
    The hon. Member for Hackney, Central (Mr. Davis) and the hon. Member for Islington, Central were understandably concerned about unemployment among the ethnic minorities in their constituencies. The draft of the code that they mentioned has not yet been formally presented to my right hon. Friend the Secretary of State for Employment, but work is being done on it and it will be presented as soon as possible.
    Mr. Clinton Davis: When is that likely to be?
    Mr. Morrison: I ask myself whether, in regard to the young unemployed, there has not been an erosion of differentials. That is a question which all hon. Members should ask themselves. I meet some employers who say that if they did not have to pay quite so much they would take on more young people.
    I also ask myself whether the links between schools, employers and unions have been as effective as they could have been over the years. Perhaps the lack of an effective link is one of the reasons for our present predicament.
    860
    The hon. Member for Newcastle-under-Lyme (Mr. Golding) has had an enormous amount to do with the youth opportunities programme. As he said, he was responsible for the launch and for doing things slightly different from those mentioned in the Holland report. He suggested that the press had blown up the problem of substitution. Of course, we must take that seriously to some extent—expansion of the programme, which the hon. Gentleman launched, will inevitably result in some slippage—but I was grateful for his comments.
    The hon. Gentleman suggested that opportunities under the programme should be open to all and that we should meet the needs of every youngster. That is the intention of the Manpower Services Commission, via the Government.
    I do not agree with the hon. Member for Islington, Central that the credibility of the scheme is under flack—if that is the right way of putting it—because the vast majority of youngsters who go through the scheme are very grateful for it and believe that it has something to offer which otherwise they would not have. As my hon. Friend the Member for Newcastle upon Tyne, North said, work experience as a result of the scheme creates potentially more skilled people than would otherwise be the case.
    The hon. Member for Liverpool, Edge Hill (Mr. Alton)—supported by the hon. Member for Newcastleunder-Lyme—talked about the increase of the YOP allowance from £23·50 to £27. I was in Liverpool two weeks ago and met many youngsters who seemed to be quite happy with the £23·50. I remind those hon. Gentleman that this year, in 1981–82, we shall be spending on the youth opportunities programme £100 million more than we did in 1980–81. Perhaps some of my hon. Friends think that that is too much, but the Government believe that the money is well spent. If we were to increase the allowance there the public sector borrowing requirement would be affected. The Liberal Party, of course, is not concerned with that.
    The hon. Member for Edge Hill said that 41 per cent. of those who go through the youth opportunities scheme go into unemployment. That is his figure, not ours; we do not have the figures. But even if he is correct—I do not suggest that he is—the fact remains that 59 per cent. go into employment. I hope that he is grateful for that.
    The analysis for 1980–81, for which the hon. Gentleman asked, is not quite complete. If there is a shortfall it will be very small. For 1981–82, which has only just started, we are fairly certain that we shall be all right, but at this stage we cannot know.
    Many hon. Members referred to the training element. Under the Employment and Training Bill there is a much more flexible attitude and approach to training. We are talking here about standards and not about time-serving. We believe that it will have a great effect on youth employment.
    Several hon. Members mentioned military training. It is extraordinary that Opposition Members seem to imagine that we want to bring back compulsory military training. That is not so. If, under a pilot scheme, 1,000 people went into the Army on a voluntary basis and were told exactly what their obligations would be, employers would, in my opinion, want to take them on afterwards. I have met many school leavers who would like the opportunity to do that voluntarily.

    861
    The trouble with the Opposition is that all they want to do is to buy their way out. They just want to throw money at the problem. They are not concerned about inflation. They are not concerned that if we inflate the economy young people will have fewer opportunities. That is sad for the young people. They know that the Government are doing the best for them.
    Question put, That the original words stand part of the Question:—
    The House divided: Ayes 238, Noes 288.

    Division No. 147]

    [7 pm

    AYES

    Abse, Leo

    English, Michael

    Adams, Allen

    Evans, loan (Aberdare)

    Allaun, Frank

    Evans, John (Newton)

    Alton, David

    Field, Frank

    Anderson, Donald

    Fitch, Alan

    Archer, Rt Hon Peter

    Flannery, Martin

    Ashley, Rt Hon Jack

    Fletcher, Raymond (llkeston)

    Ashton, Joe

    Fletcher, Ted (Darlington)

    Atkinson, H. (H'gey,)

    Foot, Rt Hon Michael

    Barnett, Guy (Greenwich)

    Ford, Ben

    Barnett, Rt Hon Joel (H'wd)

    Forrester, John

    Bennett, Andrew (St'kp't N)

    Foster, Derek

    Bidwell, Sydney

    Foulkes, George

    Booth, Rt Hon Albert

    Fraser, J. (Lamb'th, N'w'd)

    Bradley, Tom

    Freeson, Rt Hon Reginald

    Bray, Dr Jeremy

    Freud, Clement

    Brocklebank-Fowler, C.

    Garrett, John (Norwich S)

    Brown, Hugh D. (Provan)

    Garrett, W. E. (Wallsend)

    Brown, R. C. (N'castle W)

    George, Bruce

    Brown, Ron (E'burgh, Leith)

    Gilbert, Rt Hon Dr John

    Callaghan, Rt Hon J.

    Ginsburg, David

    Callaghan, Jim (Midd't'n & P)

    Golding, John

    Campbell, lan

    Gourlay, Harry

    Campbell-Savours, Dale

    Graham, Ted

    Canavan, Dennis

    Grant, George (Morpeth)

    Cant, R. B.

    Grant, John (Islington C)

    Carmichael, Neil

    Grimond, Rt Hon J.

    Cartwright, John

    Hamilton, James (Bothwell)

    Clark, Dr David (S Shields)

    Hamilton, W. W. (C'tral Fife)

    Cocks, Rt Hon M. (B'stol S)

    Harrison, Rt Hon Walter

    Cohen, Stanley

    Hattersley, Rt Hon Roy

    Concannon, Rt Hon J. D.

    Haynes, Frank

    Conlan, Bernard

    Healey, Rt Hon Denis

    Cook, Robin F.

    Heffer, Eric S.

    Cowans, Harry

    Hogg, N. (E Dunb't'nshire)

    Craigen, J. M.

    Holland, S. (L'b'th, Vauxh'll)

    Crawshaw, Richard

    Home Robertson, John

    Crowther, J. S.

    Homewood, William

    Cryer, Bob

    Horam, John

    Cunliffe, Lawrence

    Howell, Rt Hon D.

    Cunningham, G. (lslington S)

    Howells, Geraint

    Cunningham, Dr J. (W'h'n)

    Huckfield, Les

    Dalyell, Tam

    Hudson Davies, Gwilym E.

    Davidson, Arthur

    Hughes, Mark (Durham)

    Davies, Rt Hon Denzil (L'lli)

    Hughes, Robert (Aberdeen N)

    Davies, lfor (Gower)

    Hughes, Roy (Newport)

    Davis, Clinton (Hackney C)

    Janner, Hon Greville

    Davis, T. (B'ham, Stechf'd)

    Jay, Rt Hon Douglas

    Dean, Joseph (Leeds West)

    Johnson, Walter (Derby S)

    Dempsey, James

    Johnston, Russell (Inverness)

    Dewar, Donald

    Jones, Barry (East Flint)

    Dixon, Donald

    Jones, Dan (Burnley)

    Dobson, Frank

    Kaufman, Rt Hon Gerald

    Dormand, Jack

    Kerr, Russell

    Douglas, Dick

    Kilfedder, James A.

    Douglas-Mann, Bruce

    Kilroy-Silk, Robert

    Dubs, Alfred

    Lambie, David

    Dunn, James A.

    Lamborn, Harry

    Dunnett, Jack

    Lamond, James

    Dunwoody, Hon Mrs G.

    Leadbitter, Ted

    Eadie, Alex

    Lestor, Miss Joan

    Eastham, Ken

    Lewis, Arthur (N'ham NW)

    Edwards, R. (Whampt'n S E)

    Litherland, Robert

    Ellis, R. (NE D'bysh're)

    Lofthouse, Geoffrey

    Ellis, Tom (Wrexham)

    Lyon, Alexander (York)

    862

    Lyons, Edward (Bradf'd W)

    Roper, John

    Mabon, Rt Hon Dr J. Dickson

    Ross, Stephen (Isle of Wight)

    McDonald, Dr Oonagh

    Rowlands, Ted

    McElhone, Frank

    Ryman, John

    McKay, Allen (Penistone)

    Sandelson, Neville

    McKelvey, William

    Sever, John

    MacKenzie, Rt Hon Gregor

    Sheerman, Barry

    Maclennan, Robert

    Sheldon, Rt Hon R.

    McMahon, Andrew

    Shore, Rt Hon Peter

    McNally, Thomas

    Silkin, Rt Hon J. (Deptford)

    McTaggart, Robert

    Skinner, Dennis

    McWilliam, John

    Smith, Rt Hon J. (N Lanark)

    Magee, Bryan

    Snape, Peter

    Marks, Kenneth

    Soley, Clive

    Marshall, D (G'gow S'ton)

    Spearing, Nigel

    Marshall, Dr Edmund (Goole)

    Spriggs, Leslie

    Marshall, Jim (Leicester S)

    Stallard, A. W.

    Martin, M (G'gow S'burn)

    Steel, Rt Hon David

    Maxton, John

    Stewart, Rt Hon D. (W Isles)

    Meacher, Michael

    Stoddart, David

    Mikardo, Ian

    Stott, Roger

    Millan, Rt Hon Bruce

    Strang, Gavin

    Miller, Dr M. S. (E Kilbride)

    Straw, Jack

    Mitchell, Austin (Grimsby)

    Summerskill, Hon Dr Shirley

    Mitchell, R. C. (Soton Itchen)

    Taylor, Mrs Ann (Bolton W)

    Morris, Rt Hon A. (W'shawe)

    Thomas, Jeffrey (Abertillery)

    Morris, Rt Hon C. (O'shaw)

    Thomas, Mike (Newcastle E)

    Morris, Rt Hon J. (Aberavon)

    Thomas, Dr R. (Carmarthen)

    Morton, George

    Thorne, Stan (Preston South)

    Moyle, Rt Hon Roland

    Tilley, John

    Mulley, Rt Hon Frederick

    Tinn, James

    Newens, Stanley

    Torney, Tom

    Oakes, Rt Hon Gordon

    Urwin, Rt Hon Tom

    Ogden, Eric

    Varley, Rt Hon Eric G.

    O'Halloran, Michael

    Wainwright, E. (Dearne V)

    O'Neill, Martin

    Weetch, Ken

    Orme, Rt Hon Stanley

    Welsh, Michael

    Owen, Rt Hon Dr David

    White, Frank R.

    Palmer, Arthur

    White, J. (G'gow Pollok)

    Parker, John

    Whitehead, Phillip

    Pavitt, Laurie

    Whitlock, William

    Pendry, Tom

    Wigley, Dafydd

    Powell, Raymond (Ogmore)

    Willey, Rt Hon Frederick

    Prescott, John

    Williams, Sir T. (W'ton)

    Race, Reg

    Wilson, Rt Hon Sir H. (H'ton)

    Radice, Giles

    Wilson, William (C'try SE)

    Rees, Rt Hon M (Leeds S)

    Winnick, David

    Richardson, Jo

    Woodall, Alec

    Roberts, Albert (Normanton)

    Woolmer, Kenneth

    Roberts, Allan (Bootle)

    Wrigglesworth, lan

    Roberts, Ernest (Hackney N)

    Wright, Sheila

    Roberts, Gwilym (Cannock)

    Young, David (Bolton E)

    Robertson, George

    Robinson, G. (Coventry NW)

    Tellers for the Ayes:

    Rodgers, Rt Hon William

    Mr. Donald Coleman and Mr. Hugh McCartney

    Rooker, J. W.

    NOES

    Adley, Robert

    Body, Richard

    Aitken, Jonathan

    Bonsor, Sir Nicholas

    Alexander, Richard

    Boscawen, Hon Robert

    Amery, Rt Hon Julian

    Bottomley, Peter (W'wich W)

    Ancram, Michael

    Bowden, Andrew

    Arnold, Tom

    Boyson, Dr Rhodes

    Aspinwall, Jack

    Braine, Sir Bernard

    Atkins, Robert (Preston N)

    Bright, Graham

    Atkinson, David (B'm'th, E)

    Brinton, Tim

    Baker, Nicholas (N Dorset)

    Brittan, Leon

    Banks, Robert

    Brooke, Hon Peter

    Beaumont-Dark, Anthony

    Brotherton, Michael

    Bell, Sir Ronald

    Brown, Michael (Brigg & Sc'n)

    Bendall, Vivian

    Bruce-Gardyne, John

    Benyon, Thomas (A'don)

    Bryan, Sir Paul

    Benyon, W. (Buckingham)

    Buchanan-Smith, Alick

    Best, Keith

    Buck, Antony

    Bevan, David Gilroy

    Budgen, Nick

    Biffen, Rt Hon John

    Burden, Sir Frederick

    Biggs-Davison, John

    Butcher, John

    Blackburn, John

    Cadbury, Jocelyn

    Blaker, Peter

    Carlisle, John (Luton West)

    863

    Carlisle, Kenneth (Lincoln)

    Hawksley, Warren

    Carlisle, Rt Hon M. (R'c'n)

    Hayhoe, Barney

    Chalker, Mrs. Lynda

    Heddle, John

    Channon, Rt. Hon. Paul

    Henderson, Barry

    Chapman, Sydney

    Heseltine, Rt Hon Michael

    Churchill, W. S.

    Hicks, Robert

    Clark, Hon A. (Plym'th, S'n)

    Higgins, Rt Hon Terence L.

    Clark, Sir W. (Croydon S)

    Hill, James

    Clarke, Kenneth (Rushcliffe)

    Hogg, Hon Douglas (Gr'th'm)

    Clegg, Sir Walter

    Holland, Philip (Carlton)

    Cockeram, Eric

    Hooson, Tom

    Colvin, Michael

    Hordern, Peter

    Cope, John

    Howe, Rt Hon Sir Geoffrey

    Cormack, Patrick

    Howell, Rt Hon D. (G'ldf'd)

    Costain, Sir Albert

    Howell, Ralph (N Norfolk)

    Cranborne, Viscount

    Hunt, David (Wirral)

    Critchley, Julian

    Hunt, John (Ravensbourne)

    Crouch, David

    Hurd, Hon Douglas

    Dickens, Geoffrey

    Irving, Charles (Cheltenham)

    Dorrell, Stephen

    Jenkin, Rt Hon Patrick

    Douglas-Hamilton, Lord J.

    Jessel, Toby

    Dover, Denshore

    Johnson Smith, Geoffrey

    du Cann, Rt Hon Edward

    Jopling, Rt Hon Michael

    Dunn, Robert (Dartford)

    Joseph, Rt Hon Sir Keith

    Durant, Tony

    Kaberry, Sir Donald

    Dykes, Hugh

    Kimball, Marcus

    Eden, Rt Hon Sir John

    King, Rt Hon Tom

    Edwards, Rt Hon N. (P'broke)

    Kitson, Sir Timothy

    Eggar, Tim

    Knox, David

    Elliott, Sir William

    Lamont, Norman

    Emery, Peter

    Lang, Ian

    Eyre, Reginald

    Langford-Holt, Sir John

    Fairbairn, Nicholas

    Latham, Michael

    Fairgrieve, Russell

    Lawrence, Ivan

    Farr, John

    Lawson, Rt Hon Nigel

    Fell, Anthony

    Lee, John

    Finsberg, Geoffrey

    Lennox-Boyd, Hon Mark

    Fisher, Sir Nigel

    Lester, Jim (Beeston)

    Fletcher, A. (Ed'nb'gh N)

    Lewis, Kenneth (Rutland)

    Fletcher-Cooke, Sir Charles

    Lloyd, Ian (Havant & W'loo)

    Fookes, Miss Janet

    Lloyd, Peter (Fareham)

    Forman, Nigel

    Loveridge, John

    Fowler, Rt Hon Norman

    Luce, Richard

    Fox, Marcus

    Lyell, Nicholas

    Fraser, Rt Hon Sir Hugh

    McCrindle, Robert

    Fraser, Peter (South Angus)

    Macfarlane, Neil

    Fry, Peter

    MacKay, John (Argyll)

    Galbraith, Hon T. G. D.

    Macmillan, Rt Hon M.

    Gardiner, George (Reigate)

    McNair-Wilson, M. (N'bury)

    Gardner, Edward (S Fylde)

    McNair-Wilson, P. (New F'st)

    Garel-Jones, Tristan

    McQuarrie, Albert

    Gilmour, Rt Hon Sir Ian

    Madel, David

    Glyn, Dr Alan

    Major, John

    Goodhart, Philip

    Marland, Paul

    Goodlad, Alastair

    Marshall, Michael (Arundel)

    Gorst, John

    Mates, Michael

    Gow, Ian

    Mather, Carol

    Gower, Sir Raymond

    Mawby, Ray

    Grant, Anthony (Harrow C)

    Mawhinney, Dr Brian

    Gray, Hamish

    Maxwell-Hyslop, Robin

    Greenway, Harry

    Mayhew, Patrick

    Grieve, Percy

    Meyer, Sir Anthony

    Griffiths, E. (B'ySt. Edm'ds)

    Miller, Hal (B'grove)

    Griffiths, Peter Portsm'th N)

    Mills, Iain (Meriden)

    Grist, Ian

    Miscampbell, Norman

    Grylls, Michael

    Moate, Roger

    Gummer, John Selwyn

    Montgomery, Fergus

    Hamilton, Hon A.

    Moore, John

    Hamilton, Michael (Salisbury)

    Morris, M. (N'hampton S)

    Hampson, Dr Keith

    Morrison, Hon C. (Devizes)

    Haselhurst, Alan

    Morrison, Hon P. (Chester)

    Havers, Rt Hon Sir Michael

    Mudd, David

    864

    Murphy, Christopher

    Spence, John

    Myles, David

    Spicer, Michael (S Worcs)

    Neale, Gerrard

    Sproat, Iain

    Needham, Richard

    Squire, Robin

    Neubert, Michael

    Stainton, Keith

    Newton, Tony

    Stanbrook, Ivor

    Onslow, Cranley

    Stanley, John

    Oppenheim, Rt Hon Mrs S.

    Steen, Anthony

    Osborn, John

    Stevens, Martin

    Page, Rt Hon Sir G. (Crosby)

    Stewart, Ian (Hitchin)

    Page, Richard (SW Herts)

    Stewart, A.(E Renfrewshire)

    Parris, Matthew

    Stokes, John

    Patten, Christopher (Bath)

    Stradling Thomas, J.

    Pattie, Geoffrey

    Tapsell, Peter

    Pawsey, James

    Taylor, Robert (Croydon NW)

    Percival, Sir Ian

    Temple-Morris, Peter

    Peyton, Rt Hon John

    Thatcher, Rt Hon Mrs M.

    Pink, R. Bonner

    Thomas, Rt Hon Peter

    Porter, Barry

    Thompson, Donald

    Powell, Rt Hon J. E. (S Down)

    Thorne, Neil (Ilford South)

    Prentice, Rt Hon Reg

    Thornton, Malcolm

    Price, Sir David (Eastleigh)

    Townend, John (Bridlington)

    Proctor, K. Harvey

    Townsend, Cyril D, (B'heath)

    Pym, Rt Hon Francis

    Trippier, David

    Raison, Timothy

    Trotter, Neville

    Rathbone, Tim

    van Straubenzee, W. R.

    Rees, Peter (Dover and Deal)

    Vaughan, Dr Gerard

    Renton, Tim

    Viggers, Peter

    Rhys Williams, Sir Brandon

    Waddington, David

    Ridley, Hon Nicholas

    Wakeham, John

    Ridsdale, Sir Julian

    Waldegrave, Hon William

    Rifkind, Malcolm

    Walker, Rt Hon P.(W'cester)

    Rippon, Rt Hon Geoffrey

    Walker, B. (Perth)

    Roberts, M. (Cardiff NW)

    Walker-Smith, Rt Hon Sir D.

    Roberts, Wyn (Conway)

    Waller, Gary

    Rossi, Hugh

    Walters, Dennis

    Rost, Peter

    Warren, Kenneth

    Royle, Sir Anthony

    Watson, John

    Sainsbury, Hon Timothy

    Wells, John (Maidstone)

    St. John-Stevas, Rt Hon N.

    Wells, Bowen

    Scott, Nicholas

    Wheeler, John

    Shaw, Giles (Pudsey)

    Whitney, Raymond

    Shaw, Michael (Scarborough)

    Wickenden, Keith

    Shelton, William (Streatham)

    Wilkinson, John

    Shepherd, Colin (Hereford)

    Williams, D.(Montgomery)

    Shepherd, Richard

    Wolfson, Mark

    Shersby, Michael

    Young, Sir George (Acton)

    Silvester, Fred

    Younger, Rt Hon George

    Sims, Roger

    Skeet, T. H. H.

    Tellers for the Noes:

    Speed, Keith

    Mr. Spencer le Marchant and Mr. Anthony Berry.

    Speller, Tony

    Question accordingly negatived.
    Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
    MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
    Resolved,
    That this House regrets the high level of unemployment amongst young people during the present economic recession, but welcomes the Government's massive expansion of the Youth Opportunities Programme and the new undertakings given by the Manpower Services Commission to provide young people with opportunities on the Programme; and strongly reaffirms that only through the Government's economic strategy can a lasting improvement in the economy be achieved and much-needed new and secure jobs be provided for young people.

  Greater Manchester Bill [Lords] (By Order)
  As amended, considered.
  Greater Manchester Bill [Lords] (By Order)
    Clause 36

      POWER TO ORDER ALTERATION OF CHIMNEYS
      7.10 pm
      Mr. Andrew F. Bennett: I beg to move amendment No. 18, in page 34, line 26, after 'council' insert 'or any person aggrieved'.
      Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to take the following amendments: No. 13, in page 34, leave out from beginning of line 32 to 'to' in line 33.
      No. 14, in page 34, line 33, leave out 'other'.
      Mr. Bennett: I understand that the promoter is prepared to accept the amendment.
      Mr. Fred Silvester: That is so. The promoter is prepared to accept the amendment and those grouped with it. It raises no objection.
      Amendment agreed to.
      Amendments made: No. 13, in page 34, leave out from beginning of line 32 to 'to' in line 33.
      No. 14, in page 34, line 33, leave out `other'.—[Mr. Andrew F. Bennett.]

    Clause 56

      NOTICE OF STREET PROCESSIONS
      Mr. Andrew F. Bennett: I beg to move amendment No. 1, in page 52, line 15, leave out clause 56.
      Clause 56 deals with the requirement to give notice for processions. It is an issue that the House has debated on several occasions over recent months and years and it is one on which many of my right hon. Friends still feel strongly. We contend that the clause should be omitted. I accept that it has been considerably improved as a result of petitions and objections, especially in another place, and that many of the worst features have been eliminated. However, I still believe that it should not be included in the Bill.
      Should locally promoted Bills deal with issues of this sort? It has been said from the Front Benches that public order and processions should be dealt with in national legislation and not in local legislation in a piecemeal fashion. However, it seems that the promoters of some local Bills have been determined to deal with such matters locally. They should consider their position carefully. If it is logical that these issues should be dealt with in local measures, there should be different measures in different localities to take into account different circumstances. On the other hand, national issues should be dealt with in one set of measures that should be considered as a result of national legislation.
      At one stage the promoters of local Bills went for a common clause that had a seven-day provision. When they began to run into difficulties in the House they modified the common clause and it took the form of clause 56. It is now plain that circumstances are the same in each of the metropolitan authorities and in some of the county
      866
      authorities. I suggest that a local measure should meet local circumstances. That was the position before local government reorganisation.
      In Greater Manchester there was a requirement to give notice for processions in some districts and not in others. The districts that found it necessary to receive notice had the necessary powers. The districts that did not consider it necessary did not have those powers. I think that some authorities required notice for processions that included services and performing animals while others required notice for slightly different circumstances. Different authorities required different periods of notice to take into account local circumstances. It seems odd that we are now considering proposals for, in effect, national legislation by the back door by means of local Bills.
      In Greater Manchester one of the fundamental principles of free speech was established by those who went to Peterloo to establish the right to assembly and to march to that assembly. We are removing that right by requiring people to give notice.
      I do not object to the requirement to give notice. I think that in our debates almost everyone has agreed that it would be good practice for notice to be given where that is possible. However, on many occasions it is difficult to give notice, and it is especially hard to require an individual to give notice. That is an obnoxious feature and it appears in other local Bills. The provision is that an individual is required to give notice and is, in effect, required to act, and to claim to be able to act, on behalf of those participating in the demonstration. Anyone who knows what happens at demonstrations knows the impossibility of one person accepting responsibility for what takes place on such occasions.
      Once notice has been given, can the procession be banned by the implementation of the Public Order Act 1936? I have been disturbed about the number of bans that have been imposed in the past few months. I fully understand that people impose bans because of the possibility of a breach of public order when certain groups, particularly those with strong racist attitudes, threaten to demonstrate. It is dangerous to impose such bans. It is particularly dangerous to impose blanket bans for a month or more rather than saying which organisation is likely to lead to a breach of public order and that a ban should be imposed for the minimum time required to stop that group of people marching. There should be no suspicion that one is trying to achieve the banning of all marches and that that should become established. That would be a dangerous development.
      I hope that if there is to be a Front Bench intervention, the Home Office spokesman will make it clear that he deprecates long bans which affect all organisations rather than a ban which is specifically aimed at a group which is setting out to cause public disorder in its demonstration. That development, which has taken place in the last few months, is particularly disturbing.
      The clause should be deleted from the Bill to increase the pressure on the Home Office to bring forward in the next Session legislation to deal with the whole area rather than to go on imposing it in a piecemeal way in such Bills, particularly when the rules and laws change in an undesirable way from one authority to another.
      Mr. Tom Arnold: The debate has an air of déjà vu about it. Contrary to what the hon. Member for Stockport, North (Mr. Bennett) suggested, I believe that

      867
      the matter is best dealt with by local legislation and not by national legislation. I have held that point of view for some time. In reply to the hon. Gentleman's murmurings, I would point out that the Home Secretary in the last Labour Government thought that there were occasions when it was right and appropriate for local authorities to decide what sort of powers they needed to deal with the circumstances of their own area. That point came out in the debates in the last Parliament.
      The circumstances of Greater Manchester are such that the chief constable, the police authority and the sponsors of the Bill believe that there is a case for the clause. Contrary to what has been suggested by Opposition Members, the powers that are being sought are not so great as to cause offence. As the hon. Member for Stockport, North said, considerable modifications have been proposed since the original proposal for a period of notice of seven days. We are now down to 72 hours. There is a defence of diligence, if it can be shown that someone took due care and yet was unable to provide the information necessary, for whatever reasons. No prosecution can be brought without the consent of the Director of Public Prosecutions, and so on.
      We must consider the problems of policing in Greater Manchester. The problems which have arisen in recent years may arise again. It is not sufficient to give examples of other parts of the country, they have their own problems. The sponsors of the Bill are seeking to deal with the problems of Greater Manchester. That is why I believe that much of the criticism which has been directed against the clause is misconceived.
      The proposal is fairly modest and goes some way towards dealing with the legitimate fears and worries of the police and other authorities in Greater Manchester, in coping with the sort of problems which we have seen in recent years. I hope that the clause will stand.
      Mr. Stanley Orme: I intervene briefly in the debate as one of the signatories of the motion of my hon. Friend the Member for Stockport, North (Mr. Bennett).
      The sponsors of the Bill have not proved that the clause is necessary. When I gave evidence to the Private Bill Committee about that proposal no evidence was brought forward by counsel or by Mr. Anderton that the trade union and labour movements in the Greater Manchester area had not co-operated with the police on every occasion, given adequate notice. They believed that it was their right—in a spontaneous manner, if necessary—to demonstrate in a democracy, in the city of Manchester, when they felt that that was necessary. That right is being taken away.
      It must be borne in mind that the legislation is basically proposed by chief constables, who have got together and brought forward such proposals. They have been forced down by the House of Commons from seven days' to three days' notice. Mr. Anderton, the chief constable of Greater Manchester, advocated 14 days' notice, but he acted in an entirely different manner when the National Front demonstrated in Manchester and the infamous Martin Webster march was protected by 6,000 police.
      There may be a slight difference between my hon. Friend for Stockport, North and me on this matter. If there is threatened public disorder, the Public Order Act should
      868
      be invoked until there is different legislation, when racialist and Fascist organisations can be dealt with in other ways.
      We feel strongly about the issue. I believe that the Home Office Minister will confirm that the Home Secretary is now considering the Public Order Act, processions and the licensing of those processions. If he is doing that, why are we going through Bill after Bill in the House of Commons? Why are we making it difficult for the sponsors to enact many provisions in the Bill to which Opposition Members do not object?
      Mr. Tom McNally: Would it be unduly cynical if I suggested to my right hon. Friend that the answer to his question is that that cabal of chief constables believes that if the measure is included in sufficient Bills they will make up the Home Secretary's mind for him?
      Mr. Orme: I hope that the Home Secretary will not be influenced in that way. That would be pre-empting the decision. The Home Secretary will be faced with a large number of decisions about the three-day proposal, which could influence him in his recommendations to the House of Commons.
      My hon. Friend the Member for Stockport, North has played a commendable part in the defence of civil liberties. He has opposed many of these Bills, and many of my hon. Friends have assisted him. He has been successful in bringing down the proposed notification date from seven days to three days. The sponsors of the Bill should take away the clause on the basis that the matter is being discussed by the Home Office, which, I assume is consulting the chief constables and every other organisation, including the civil liberties organisations, the trade unions and every other bona fide organisation. The hon. Member for Manchester, Withington (Mr. Silvester) should take away the clause on the basis that it is an impediment in the Bill. We should proceed no further with it.
      If the sponsors of the Bill will not see reason, I hope that we shall have a Division to record yet again our dissatisfaction with the proposal. It is a most unsatisfactory way of dealing with a sensitive and important civil rights issue.
      7.30 pm
      Mr. Fergus Montgomery: The Liberal Benches are empty, but according to my local papers the hon. Member for Truro (Mr. Penhaligon) is interested in Manchester—in a proposed rubbish tip in my constituency. I should have thought that he had enough problems in his constituency without pushing his nose into mine. [HON. MEMBERS: "Rubbish!"] I was taught that it was a convention of the House to write to an hon. Member in advance if one went to his constituency on political business. That courtesy was not extended to me. Had it been, I could have saved the hon. Gentleman the journey.
      Mr. Deputy Speaker: Order. We are discussing the subjects of processions.
      Mr. Montgomery: I am sorry, Mr. Deputy Speaker. I was carried away, like the hon. Member for Truro. Rubbish tips are covered by the Bill, but that may come later.
      The clause that we are discussing is contentious. Opposition Members have strong and genuine fears, but

      869
      the issue has been debated for years. Initially Greater Manchester wanted seven days' notice, but the Acts for Merseyside, Cheshire, the West Midlands and the Isle of Wight contained a modified processions clause providing for 72 hours. The Greater Manchester council, therefore, realistically and regretfully, decided to accept that, which is sensible. When my hon. and learned Friend the Member for Cleveland and Whitby (Mr. Brittan) was Minister of State, Home Office, he stated in the debate on the West Midlands legislation:
      "There are grounds for debating the provisions of the new clause, and even in its present form it may not be regarded as suitable by every local authority that wishes to have a notice of procession provision in local legislation.
      However, I believe that it is desirable that some measure of uniformity should be achieved wherever the inclusion of such requirements in local legislation is thought to be necessary. No doubt local authorities will wish to look at the new clause when considering how they wish to fonnulate any proposals that they intend to put before the House."—[Official Report, 21 January 1980; Vol. 977, c. 114.]
      Greater Manchester is not jumping on the bandwagon created by the West Midlands legislation. The situation in Greater Manchester is a patchwork quilt. Different periods of notice have to be given in different parts. It is 24 hours for parts of Oldham, Rochdale and the Urmston part of Trafford; 36 hours for parts of Trafford, Tameside and Stockport, the former West Riding area of Saddleworth, Swinton and Pendlebury; and 48 hours for the former Bolton county borough, so it makes sense to have a uniform period for the whole of Greater Manchester.
      Mr. Kenneth Marks: It is strange that the periods that the hon. Gentleman is quoting are all less than the period in the Bill and that the districts that he did not mention have no rules.
      Mr. Montgomery: That is right. I merely argue for conformity. The 72-hour period has been agreed in the other local government Acts and it is sensible that it should also apply to Greater Manchester.
      Mr. George Cunningham: Is not the hon. Gentleman trying to have it both ways? One cannot argue that Greater Manchester should have a provision whether it is required throughout the country or not, while arguing that the period should be 72 hours because that is what has been agreed in other parts of the country.
      Mr. Montgomery: As 72 hours has been agreed for other parts of the country, the sponsors perhaps felt that that was the period most likely to be acceptable to Parliament. I repeat that the issue has been debated many times in the West Midlands legislation and in this Bill. The Bill was debated in the House of Lords, came to this House in January for three hours and then went to a Select Committee, where the issue had a two-day hearing involving counsel and witnesses. I was present when Mr. Anderton, the chief constable, gave evidence, and his evidence was absolutely on the ball. He voiced the view of the police force in his area. He comes in for a great deal of abuse from Opposition Members, but he is responsible for maintaining law and order.
      I hope that if we vote on the amendment we shall demonstrate that the House is clearly and conclusively in favour of retaining the clause.
      Mr. Robert Sheldon: I am unhappy about the arguments, because we are discussing
      870
      Greater Manchester and not the West Midlands or the country as a whole. If it is intended to achieve uniformity throughout the country we need legislation to cover the country as a whole, but I speak only for the area that I know.
      What are the problems and the evidence that point a need for this provision? I do not believe that there is a need. In East Manchester and Manchester as a whole we have a long tradition of free and willing marching to show our views. The Bill is not concerned with traditional church or trade union marches, but those marches illustrate the way in which we voice our feelings about the things that matter. It does not take much for people in Manchester to form an orderly procession to convince others of the strength of their witness or the conviction of their views.
      The reasons given for the provision are wholly inadequate. If there were a great deal of disturbance or disorder, or people were being hurt, I could understand it, but we do not have that. We have sensible and responsible people acting together to convey their views. If people go beyond what is reasonable and necessary, we have public order legislation. If this provision had come before the House after a long and difficult period, it would be understandable.
      In my constituency and that of my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) we have had a march and a scuffle or two, but that is no reason for legislating in this House. If it were, we should be legislating every minute of the day. [Interruption.] The hon. Member for Stretford (Mr. Churchill) laughs because he does not understand the problems. He has come to them only recently. He is not aware of the strong convictions that we hold and that he rather scorns. We take note of his attitude to problems about which many of us feel deeply.
      Mr. Churchill: The right hon. Gentleman has so far failed to address himself to the reasons why he believes that the request of the police force, and the chief constable in particular, should be turned down in this case. Why should not due notice be given of marches? Is it fair that the police, who are heavily over-committed at weekends—I know this well from the Stretford area when there are football matches—should be given no notice at all of processions which may lead to racial or other violence, about which the police are naturally and rightly concerned?
      Mr. Sheldon: I am surprised at the hon. Gentleman. Does he believe that the House should simply listen to a request from a police force and rubber-stamp it? We listen to the request, and, if there is merit in it, we weigh it up. But when one considers the disturbances that have taken place in Greater Manchester, there is no case whatever for this provision. It is a peaceful area of the country. Before action of this kind is taken, the contrary must be proved. That case has not been made.
      Mr. Orme: Is my right hon. Friend aware that in the Private Bill Committee to which the hon. Member for Altrincham and Sale (Mr. Montgomery) referred counsel for the Bill was unable to find any post-war example of any demonstration other than a National Front demonstration which had given rise to any difficulty or any complaint from the police?
      Mr. Sheldon: My right hon. Friend is absolutely right. This measure seems to have been designed to placate the

      871
      law and order lobby, which seems anxious to create problems where they do not exist. We have peaceful demonstrations, regularly and frequently, in all parts of Greater Manchester, and it is right that they should continue.
      Mr. Montgomery: I am sure that the right hon. Gentleman speaks for most people when he says that peaceful demonstrations are all right, but has he forgotten that on 1 March 1980, in his own constituency, the National Front staged a demonstration and rally to coincide with a "Troops Out of Ireland" meeting? Could there not have been grave public disorder on that occasion if the police had not had prior notice?
      Mr. Sheldon: In the past 100 years the hon. Gentleman can quote that one example. Let him quote some more, or tell me when legislation has been passed by the House as a result of one example. The House is rightly slow to legislate on many matters. On matters concerned with public order it is extremely slow, and it is right that that should be so. To rush into legislation because of the views put forward by one chief constable, perhaps aided and abetted by a couple of others, is not the correct way to proceed. We must be convinced in our own minds not that it is desirable but that it is necessary and even essential. That case has certainly not been made.
      Mr. Andrew F. Bennett: Does my right hon. Friend accept that, sadly, there have been fairly riotous occasions in the Greater Manchester area but that the most riotous of them were a very long time ago? The Oldham by-election in 1897, which I believe was contested by Churchill and Mawdsley, occasioned a considerable breach of public order, but no one went forward for a ban then. In the period 1911–12 a series of demonstrations caused problems, but no one went forward for a ban. Recent incidents have been far more peaceful than some of those that took place in the past.
      Mr. Sheldon: My hon. Friend rightly puts the matter fully into perspective.
      Mr. Churchill: The hon. Member for Stockport, North (Mr. Bennett) is, however, wholly incorrect. Mr. Churchill, as he then was, never fought a by-election in 1897.
      Mr. McNally: But did he cause a riot when he did?
      Mr. Sheldon: The essential point remains, as my hon. Friend rightly said, that one must go back a long way to a period when there was disorder. We have a reputation for tranquillity and knowing how to behave ourselves. With that kind of background and tradition, there is no justification whatever for a clause of this kind. We should throw it out.
      7.45 pm
      The Minister of State, Home Office (Mr. Patrick Mayhew): I intervene with some diffidence in a Greater Manchester matter in the hope that it will be helpful if I explain what the Government propose regarding the Public Order Act and the Government's attitude to the clause. We believe that it must be for the House to decide whether the case for the provision has been adequately made in terms of the special needs of the Greater Manchester area.
      872
      The right hon. Member for Salford, West (Mr. Orme) referred to the review of the Public Order Act being carried out by my right hon. Friend the Home Secretary. That is certainly so. The issue was discussed in the Green Paper published not long ago. I cannot say precisely when my right hon. Friend will be able to publish the results of his review. I am glad to say that there have been a considerable number of responses. It would therefore not be right, as hon. Members have suggested, to shelve or to delete the clause purely on the ground that the Government's conclusions on this matter are imminent. Without in any way wishing to prejudge what those conclusions may be, one clearly cannot conclude that legislation would immediately follow the publication of the results of the review. I believe that the House should therefore look carefully at the present proposal-in the light of the case made by the sponsors of the Bill.
      In that regard, it must be relevant to recall that a Committee of the House which considered the matter concluded that the clause should remain. The fact that advance notice provisions already exist in 10 parts of the metropolitan counties is clearly also relevant, as is the fact that 107 local authorities have restrictions of one kind or another relating to notice.
      Mr. Orme: The decision of the Private Bill Committee to which the hon. and learned Gentleman refers was a majority decision.
      Mr. Mayhew: The right hon. Gentleman is rather keen on majorities carrying the day in a democracy. I do not think that one can look too far behind the decision of the Committee. It is plainly a matter that the House would wish to take into account.
      In view of what has been said about the desirability of national legislation rather than inclusion of a clause of this kind in local legislation, the fact that restrictions are imposed in 107 local authorities—three in Scotland—and that it is also the law in Northern Ireland that notice should be given, is a matter that the House may properly take into account, together with the view of the chief constable. Clearly, none of these matters is decisive by itself.
      I understand the concern of those who do not wish the clause to prevent processions which arise suddenly out of an immediate issue. Several right hon. and hon. Members have stated that it is the right of people to demonstrate spontaneously. I do not think that the clause as drafted would have the effect that they fear. It is modelled closely on similar provisions in recent local Acts—notably the West Midlands County Council Act 1980. I know of no evidence to suggest that that Act, so far—I appreciate that it has not been in force for very long—or others like it have caused any difficulty for those who genuinely wish to march spontaneously in order to express their views on a pressing issue. The clause contains the magic words:
      "or as soon as reasonably practicable after that time."
      I should have thought that there would be a sensible interpretation of those words in that kind of circumstance.
      In conclusion, I suggest that, faced with the problems which processions can cause both to the police and to the rest of the community, it is not unreasonable that those who wish to process should have to give the police some notice of their intention to do so.
      Mr. Charles R. Morris: I am grateful for the Minister's comments so far, but I was struck by his reference to 107 local authorities taking

      873
      separate legislation and creating a proliferation of different periods of notice for processions of this kind. Can he give some indication when the Home Secretary will arrive at a final decision? He must surely have some idea when he will make a decision.
      Mr. Mayhew: Naturally, I hope that it will be as soon as possible, and so does the right hon. Gentleman. The Green Paper has been published for some time, and it will not be terribly long before the Minister's conclusions appear. But I should not be justified in saying to the House, first, that the conclusions will be here very shortly and, secondly, that it can assume that there will be some legislation one way or the other. I cannot do that. The House would therefore be wise to take into account the fact that a large number of local authorities have thought it right in the circumstances of their areas to have a provision of this nature. I put it no higher than that. In so far as it is of any help for the Government to express a view on this matter, our view is that the sponsors of the Bill have, on balance, made out a case for such a provision having regard to the needs of Greater Manchester.
      Mr. George Cunningham: I must press the Minister to adopt a different approach, if not on this occasion then on others—if, unfortunately, we have any—when private local legislation comes before the House containing this sort of provision.
      This is at least the third time that I have faced a Home Office Minister on this kind of point in the past 18 months or so. I think that we have had from Home Office Ministers generally a slightly more encouraging response about the prospect of national legislation—that is, about the Home Office's view of the desirability of such legislation. The danger is obvious. It is that Greater Manchester is seeking such legislation, and, further, that it is opting for 72 hours because Merseyside opted for something like that, and that Merseyside was doing that because some other authority did it. We shall end up with a patchwork quilt of something like a national norm but without the House of Commons having ever addressed its mind properly to the principle.
      The principle is a national, not a local principle. I quote the words of no less a person than Lord Denning on this important subject. It is obiter, I know, but he was considering the right to process in streets as a result of the case of Hubbard v Pitt in 1974 and 1975. He said:
      "Here we have to consider the right to demonstrate and the right to protest on matters of public concern. These are rights which it is in the public interest that individuals should possess; and, indeed, that they should exercise without impediment so long as no wrongful act is done. It is often the only means by which grievances can be brought to the knowledge of those in authority—at any rate with such impact as to gain a remedy. Our history is full of warnings against suppression of these rights. Most notable"—
      and it is particularly apposite tonight—
      "was the demonstration at St. Peter's Fields, Manchester, in 1819 in support of universal suffrage. The magistrates sought to stop it. Hundreds were killed and injured. Afterwards the Court of Common Council of London affirmed 'the undoubted right of Englishmen to assemble together for the purpose of deliberating upon public grievances'. Such is the right of assembly. So also is the right to meet together, to go in procession, to demonstrate and to protest on matters of public concern."
      The day after that judgment someone wrote an article with the heading "Denning's finest hour". Lord Denning was in no doubt as to the right under common law of people
      874
      to demonstrate and to process, and of the need always to protect any infringement or regulation of that right so long as everything is done in an orderly fashion.
      The point is that that is such a fundamental principle that it is not something to be dealt with in private local legislation. Of course, if certain provisions exist in some local authority areas and other provisions exist in other areas a difficult tidying-up operation is needed when there is local government reorganisation. But this issue demands now, as it always has in the past, national legislation so that the principle may be examined. The Home Office must now—very quickly before another Bill such as this comes before the House—produce its proposals for national legislation on the subject.
      Mr. Silvester: I do not intend to cover all the ground again. That would add nothing fresh to the debate. I regret that I cannot accept the suggestion of the right hon. Member for Salford, West (Mr. Orme) that the promoters should withdraw the clause. I take that view for two reasons. Although I agree with the hon. Member for Islington, South and Finsbury (Mr. Cunningham) that in many respects this is a national matter, it is not solely a national matter. There is no suggestion that we should abolish the right of which Lord Denning was speaking. Under the Public Order Act, for example, restrictions have already been imposed on marches, and the problem under that Act is that it is not always known when the march will take place. I advise hon. Members to read the evidence of the chief constable to the Committee and of those who have the responsibility of keeping law and order in Greater Manchester, because it demonstrates that there is a substantial administrative problem.
      Let me quote one part of the evidence given to the Committee by Mr. Anderton, which puts another side to the matter. He said:
      "Marches and processions in 1981 are not the marches and processions of 50 years ago, net even when the Public Order Act 1936 was enacted. In the 1930s the vehicle level in this country was about 450,000 … today it is 21½ million … In 1980 my force had reported to it 180,000 indictable crimes, many of a most serious nature. That total of 180,000 last year in Greater Manchester was larger than the entire total of indictable crime recorded in the whole of England and Wales just 50 years ago. So what we now say, with all due respect, is that you have to contemplate the policing of public events, public order marches and processions in an entirely different environment and climate from what used to be the case."
      That is a not unreasonable statement from the person who is responsible for the practical problems involved. The Bill may not provide the right solution, but it is the solution that has been hammered out in other private Acts. If there is to be a national Act we would expect that that would overtake what we are doing here, just as it would overtake what the West Midlands has done. Perhaps it will be based upon what we are doing here. The police have made a good and reasonable case. This is a practical solution to a problem which they see. The House has debated the subject much and often, and I hope that it will give Greater Manchester the powers that have been given to other places.
      Question put, That the amendment be made:
      The House divided: Ayes 103, Noes 167.

      Division No. 148]

      [8.00

      AYES

      Allaun, Frank

      Bray, Dr Jeremy

      Booth, Rt Hon Albert

      Brown, Hugh D. (Provan)

      Boothroyd, Miss Betty

      Callaghan, Jim (Midd't'n & P)

      Bradley, Tom

      Campbell-Savours, Dale

      875

      Carmichael, Neil

      McCartney, Hugh

      Clark, Dr David (S Shields)

      McElhone, Frank

      Cocks, Rt Hon M. (B'stol S)

      McKay, Allen (Penistone)

      Concannon, Rt Hon J. D.

      McKelvey, William

      Cook, Robin F.

      McNally, Thomas

      Cowans, Harry

      Marks, Kenneth

      Craigen, J. M.

      Marshall, D (G'gow S'ton)

      Cryer, Bob

      Marshall, Dr Edmund (Goole)

      Cunliffe, Lawrence

      Maxton, John

      Cunningham, G. (Islington S)

      Mellor, David

      Dalyell, Tam

      Mikardo, Ian

      Davidson, Arthur

      Miller, Dr M. S. (E Kilbride)

      Davies, Ifor (Gower)

      Mitchell, Austin (Grimsby)

      Davis, T. (B'ham, Stechf'd)

      Morris, Rt Hon A. (W'shawe)

      Dewar, Donald

      Morris, Rt Hon C. (O'shaw)

      Dixon, Donald

      Morton, George

      Dobson, Frank

      Newens, Stanley

      Dormand, Jack

      O'Neill, Martin

      Dubs, Alfred

      Orme, Rt Hon Stanley

      Dunwoody, Hon Mrs G.

      Pendry, Tom

      Eadie, Alex

      Powell, Raymond (Ogmore)

      Edwards, R. (Whampt'n S E)

      Prescott, John

      Ellis, R. (NE D'bysh're)

      Richardson, Jo

      English, Michael

      Roberts, Albert (Normanton)

      Evans, John (Newton)

      Rowlands, Ted

      Field, Frank

      Sheldon, Rt Hon R.

      Flannery, Martin

      Skinner, Dennis

      Fletcher, Ted (Darlington)

      Smith, Rt Hon J. (N Lanark)

      Forrester, John

      Snape, Peter

      Foster, Derek

      Soley, Clive

      Foulkes, George

      Spearing, Nigel

      Garrett, W. E. (Wallsend)

      Spriggs, Leslie

      George, Bruce

      Stallard, A. W.

      Graham, Ted

      Stoddart, David

      Grant, George (Morpeth)

      Stott, Roger

      Hamilton, James (Bothwell)

      Strang, Gavin

      Hamilton, W. W. (C'tral Fife)

      Taylor, Mrs Ann (Bolton W)

      Harrison, Rt Hon Walter

      Thorne, Stan (Preston South)

      Haynes, Frank

      Tilley, John

      Home Robertson, John

      Wainwright, E. (Dearne V)

      Homewood, William

      Weetch, Ken

      Hughes, Mark (Durham)

      Welsh, Michael

      Hughes, Robert (Aberdeen N)

      Wigley, Dafydd

      Jones, Dan (Burnley)

      Winnick, David

      Kaufman, Rt Hon Gerald

      Young, David (Bolton E)

      Lamond, James

      Lestor, Miss Joan

      Tellers for the Ayes:

      Lewis, Arthur (N'ham NW)

      Mr. Andrew F. Bennett and Mr. Ken Eastham.

      Lofthouse, Geoffrey

      Mabon, Rt Hon Dr J. Dickson

      NOES

      Alexander, Richard

      Churchill, W. S.

      Ancram, Michael

      Clark, Sir W. (Croydon S)

      Atkins, Robert (Preston N)

      Clarke, Kenneth (Rushcliffe)

      Atkinson, David (B'm'th. E)

      Clegg, Sir Walter

      Baker, Nicholas (N Dorset)

      Colvin, Michael

      Banks, Robert

      Cope, John

      Bell, Sir Ronald

      Costain, Sir Albert

      Berry, Hon Anthony

      Cranborne, Viscount

      Best, Keith

      Douglas-Hamilton, Lord J.

      Bevan, David Gilroy

      Dover, Denshore

      Biffen, Rt Hon John

      du Cann, Rt Hon Edward

      Biggs-Davison, John

      Dunn, Robert (Dartford)

      Blackburn, John

      Durant, Tony

      Blaker, Peter

      Edwards, Rt Hon N. (P'broke)

      Bowden, Andrew

      Eggar, Tim

      Braine, Sir Bernard

      Fairbairn, Nicholas

      Bright, Graham

      Fairgrieve, Russell

      Brinton, Tim

      Fenner, Mrs Peggy

      Brooke, Hon Peter

      Finsberg, Geoffrey

      Brotherton, Michael

      Fisher, Sir Nigel

      Bruce-Gardyne, John

      Fletcher, A. (Ed'nb'gh N)

      Buchanan-Smith, Alick

      Fletcher-Cooke, Sir Charles

      Butler, Hon Adam

      Fookes, Miss Janet

      Cadbury, Jocelyn

      Forman, Nigel

      Carlisle, John (Luton West)

      Foulkes, George

      Carlisle, Rt Hon M. (R'c'n)

      Fowler, Rt Hon Norman

      Chalker, Mrs. Lynda

      Fraser, Peter (South Angus)

      Chapman, Sydney

      Fry, Peter

      876

      Gardiner, George (Reigate)

      Morrison, Hon P. (Chester)

      Garel-Jones, Tristan

      Murphy, Christopher

      Goodlad, Alastair

      Myles, David

      Gow, Ian

      Neale, Gerrard

      Gower, Sir Raymond

      Needham, Richard

      Grant, Anthony (Harrow C)

      Newton, Tony

      Gray, Hamish

      Onslow, Cranley

      Grieve, Percy

      Oppenheim, Rt Hon Mrs S.

      Grist, Ian

      Osborn, John

      Gummer, John Selwyn

      Page, Rt Hon Sir G. (Crosby)

      Hamilton, Hon A.

      Page, Richard (SW Herts)

      Haselhurst, Alan

      Parris, Matthew

      Hawksley, Warren

      Patten, Christopher (Bath)

      Hayhoe, Barney

      Percival, Sir Ian

      Heseltine, Rt Hon Michael

      Pym, Rt Hon Francis

      Hicks, Robert

      Rees, Peter (Dover and Deal)

      Hill, James

      Rhys Williams, Sir Brandon

      Howe, Rt Hon Sir Geoffrey

      Ridley, Hon Nicholas

      Howell, Rt Hon D. (G'ldf'd)

      Rifkind, Malcolm

      Howell, Ralph (N Norfolk)

      Roberts, Wyn (Conway)

      Howells, Geraint

      Ross, Stephen (Isle of Wight)

      Hunt, David (Wirral)

      Rossi, Hugh

      Hunt, John (Ravensbourne)

      Sainsbury, Hon Timothy

      Hurd, Hon Douglas

      Shaw, Giles (Pudsey)

      Jessel, Toby

      Shaw, Michael (Scarborough)

      Jopling, Rt Hon Michael

      Shersby, Michael

      Joseph, Rt Hon Sir Keith

      Silvester, Fred

      Kilfedder, James A.

      Sims, Roger

      King, Rt Hon Tom

      Skeet, T. H. H.

      Knox, David

      Speed, Keith

      Lamont, Norman

      Squire, Robin

      Lang, Ian

      Stainton, Keith

      Lawrence, Ivan

      Stanley, John

      Lawson, Rt Hon Nigel

      Stewart, Ian (Hitchin)

      Lee, John

      Stewart, A. (E Renfrewshire)

      Le Marchant, Spencer

      Stradling Thomas, J.

      Lennox-Boyd, Hon Mark

      Thomas, Rt Hon Peter

      Lewis, Kenneth (Rutland)

      Thompson, Donald

      Lloyd, Peter (Fareham)

      Thorne, Neil (Ilford South)

      Loveridge, John

      Townend, John (Bridlington)

      Luce, Richard

      Trippier, David

      Macfarlane, Neil

      Trotter, Neville

      MacKay, John (Argyll)

      van Straubenzee, W. R.

      Macmillan, Rt Hon M.

      Vaughan, Dr Gerard

      McNair-Wilson, M. (N'bury)

      Viggers, Peter

      McQuarrie, Albert

      Waddington, David

      Major, John

      Walker-Smith, Rt Hon Sir D.

      Marlow, Tony

      Waller, Gary

      Mates, Michael

      Watson, John

      Mather, Carol

      Wells, Bowen

      Mawby, Ray

      Wheeler, John

      Mayhew, Patrick

      Wickenden, Keith

      Miller, Hal (B'grove)

      Young, Sir George (Acton)

      Mills, Iain (Meriden)

      Younger, Rt Hon George

      Mitchell, David (Basingstoke)

      Moate, Roger

      Tellers for the Noes:

      Moore, John

      Mr. Fergus Montgomery and Mr. Tom Arnold.

      Morris, M. (N'hampton S)

      Question accordingly negatived.

    Clause 86

      DURATION, REVOCATION AND VARIATION OF LICENCES
      Mr. Silvester: I beg to move amendment No. 7, in page 84, line 14, leave out 'trading' and insert 'trader's'.
      Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 8.
      Mr. Silvester: The amendments are purely drafting amendments to bring the words into line with the rest of the clause.
      Amendment agreed to.

    Clause 90
      CONSULTATION WITH TRADERS, ORGANISATIONS, ETC.
      Amendment made: No. 8, in page 85, line 10, leave out ' trading ' and insert ' trader' s '—[Mr. Silvester.]
    Clause 166

      HACKNEY CARRIAGE FARES
      Mr. Andrew F. Bennett: I beg to move amendment No. 17, in page 132, line 28, leave out clause 166.
      I move the amendment from a sense of frustration. I should prefer to be moving amendments Nos. 2 to 6 but they have not been selected. I understand that they have not been selected because of the procedures of this House and of the House of Lords when dealing with Private Bills.
      The amendments that were tabled in my name express more clearly what I should like to see done. The reason why I move amendment No. 17 is to enable the House to have a full debate in the remaining time because Members on both sides feel strongly that the clause on taxis is not in the best interests of the people of Greater Manchester. There should be better legislation to deal with taxis.
      The taxi service is part of the public transport system of Greater Manchester. If it is logical for Greater Manchester to have powers over buses and the rail services throughout much of the area it is logical to develop one taxi service for the entire area. I do not normally like powers to be moved from the district to the metropolitan authority. I should prefer taxi licensing to be left with the districts but with the addition of a Greater Manchester service.
      Each district licenses its taxis and there are different arrangements when taxis leave the district. For a long time in the city of Manchester the system was that metered fares applied up to six miles from Manchester town hall, whereas most of the other districts had a metered fare within the individual district.
      8.15 pm
      The reasoning behind the Bill is to rationalise all local measures. Yet the taxi service has produced further illogicality rather than rationalisation. The districts license taxis for fares within the district and for carrying passengers outside the district for four miles. En the original provisions the distance was six miles. The measure does not allow drivers to pick up as they return until they reach their own district. The taxi driver is disadvantaged because he may have to carry a fare four miles beyond the boundaries and return four miles without being able to pick up a fare. That is frustrating for the taxi driver. It is also frustrating for a fare in Stockport to see a Manchester city taxi drive past with an illuminated "for hire" sign. The driver cannot stop to pick up that fare until he returns to the city. That is unsatisfactory for the driver and for the public.
      There are problems for passengers arriving at Manchester airport. I know that many hon. Members use Manchester airport and suffer some of the frustrations, but because they know the system they know what to expect. Unfortunately, a large number of passengers often arrive in this country for the first time at Manchester airport. They do not understand the British taxi system, which
      878
      takes some understanding, and they are misled—that is the fairest word—by the taxi driver, often accidentally, but sometimes, I fear, on purpose.
      Mr. Orme: Does my hon. Friend agree that it is not just at the airport but also at the railway terminals that people suffer frustrations? From Piccadilly station to travel a stone's throw to Salford one has to pay a double fare for such a short journey—
      Mr. Arthur Lewis: My right hon. Friend should address the Chair.
      Mr. Orme: My hon. Friend is not Mr. Speaker. I assume that I am in order, Mr. Deputy Speaker.
      Mr. Deputy Speaker: Perfectly.
      Mr. Orme: That creates injustice. Many taxi drivers do not like it, whereas a minority exploit the situation. That gives a bad name to the taxi service within the Greater Manchester area.
      Mr. Bennett: I accept that. It applies at the railway stations, at bus terminals, especially for long distances buses, and at the airport. I mentioned the airport because it is especially hard on travellers coming from abroad who have had no experience of the British taxi system. Those travellers are often the most vulnerable.
      I also have sympathy for taxi drivers who work from the airport, because they are part of a lottery. A driver may have a fare which takes him a mile or two miles or he may be fortunate enough to have a fare which takes him to Blackpool or anywhere in the North-West and which earns him considerable income.
      What is needed is the establishment of a Greater Manchester taxi service. That sounds simple, but there is one major problem—the unfortunate custom and practice which has developed over the years that one does not buy a taxi and have it licensed by the local authority. Because each local district licenses its own taxis, that has restricted the number of licences issued. Thus, the taxi plates, or licences, are sold by one owner to someone who wishes to take it over. Some owners refer to the plates as their pension funds. When they give up working they can sell their plates for considerable sums to ensure an income on retirement.
      The system of sale is often unfair to drivers. Many people license a taxi and drive part of the day themselves as owner-driver and for the other part of the day they employ a driver and pay him a wage. Many of those drivers would like to become taxi owners, but because of the high price at which plates are exchanged they cannot do so. They often feel aggrieved that there is no system by which drivers can eventually become owner-drivers.
      The problem is that licence plates change hands for different amounts in different areas. A plate for the city of Manchester has the highest value and plates for other districts do not cost so much. There was considerable upset in Stockport in 1974 when the borough took in the out districts and drivers who had acquired plates for places such as Marple and Bredbury for small sums had conferred on them the privilege to run their taxis throughout the whole Stockport district alongside drivers who had paid large sums for plates for the old Stockport borough district.
      That problem was overcome, though not particularly fairly, because there was an advantage to those from the out districts and a disadvantage to those from Stockport. However, it should not be beyond the skills of the Greater

      879
      Manchester council, the district councils, the taxi owners and the drivers, through their trade union representatives or on their own account, to devise a scheme equitably to phase out the practice of buying plates, so that those who have recently bought plates for considerable sums are not too greatly disadvantaged compared with those who obtained plates for much less.
      I beg all those in Greater Manchester to ensure that when the Bill goes through a conference is quickly convened to organise one taxi service in Greater Manchester, with no taxi owner or driver being disadvantaged, so that the public will benefit from a unified service with fares for any journey within Greater Manchester clearly marked on a meter and taxis entitled to pick up passengers anywhere in the Greater Manchester area.
      I suspect that many hon. Friends will wish to make similar points. I move the amendment to give hon. Members an opportunity to debate the issue. I would have preferred to move the amendments that were not selected, because they would have improved the situation. I hope that the promoters will assure us that the Greater Manchester council will do all that it can to organise a conference and to ensure that within the next year we have, if necessary, another Bill to establish a Greater Manchester taxi service.
      Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. I apologise to you and to my right hon. Friend the Member for Salford, West (Mr. Orme) for my intervention a few moments ago. You, Mr. Deputy Speaker, were otherwise engaged at the time and I do not think that you or my right hon. Friend understood the import of my intervention.
      We have in the Chamber microphones that pick up our voices and operators who try to help us by ensuring that the correct microphones are switched on, but it is becoming a practice of speakers from both Front Benches to turn round and address the House with their backs to the Chair. That is what my right hon. Friend was doing.
      I have been told that one addresses the Chair for two reasons. First, the occupant of the Chair can hear and decide whether what is being said is in order; secondly, hon. Members in various parts of the House can also hear the hon. Member who is speaking. I was not getting at my right hon. Friend the Member for Salford, West, but it is a growing practice for right hon. and hon. Members to turn their backs to the Chair. I have often heard occupants of the Chair tell even prominent Members, including the late Sir Winston Churchill, to address the Chair. The hon. Member concerned invariably complies with that request, which makes things easier for all concerned.
      Mr. Deputy Speaker: I thank the hon. Member for his point of order. He is correct, and I confirm that it is becoming a common practice for hon. Members to turn their backs on the Chair. It has been noted several times by occupants of the Chair.
      However, it is also common practice for an hon. Member who is answering a point to turn around momentarily to address the other hon. Member concerned. I took it that that was what was happening when the hon. Member for Newham, North-West (Mr. Lewis) intervened in the speech of the right hon. Member for Salford, West (Mr. Orme).
      Mr. Alfred Morris: My hon. Friend the Member for Stockport, North (Mr. Bennett) tabled several amendments to clause 166, the principal effects of which would have been to make the additional compellable zone one of six miles rather than four and, in the case of the city of Manchester, to extend the added compellable zone even outside the county of Greater Manchester.
      Those amendments have not been selected. If they had been agreed, their effect would have been to convert clause 166 back into the form in which it was originally introduced in November 1978. My hon. Friend now seeks in amendment No. 17 to delete clause 166 altogether. Clearly his purpose is to give the House an opportunity to discuss the clause generally and to give his view of the taxi trade in Manchester as a whole.
      Here I think it should be said that there are people who feel that the promoters of the Bill should have been much more ready meaningfully to consult about their proposals than they are said to have been. Two men of high integrity, both of whom are highly respected in the Manchester area, have been in touch with me to make that point. Mr. James F. Kent, chairman of the TGWU No. 6/191 branch (taxis) and Mr. Geoffrey Duce, the chairman of the Manchester cab committee, say without equivocation that the promoters of the Bill
      "would not consider discussing any alteration to the Bill that reduced in any way the powers that the Bill gave to the district councils. Indeed, they kept insisting that we were wasting our time objecting and should be spending our time agreeing with the district councils the amount of increase required to compensate for the additional area …"
      The letter from Mr. Kent and Mr. Duce goes on:
      "the district councils when approached would not discuss, nor even intimate, what they would consider a fair enhancement of the existing rate to cover the extra area, insisting that the matter be left until the Bill was enacted. This was not acceptable as it left us with a fait accompli and with no redress."
      In view of the stated purpose of this debate, and the clear pressure of time, I do not propose to extend it further. I do, however, feel that at the very least the important point raised with me about meaningful consultation should not be ignored by the House.
      Mr. Ken Eastham: I support the amendment. I must confess, however, that I do not feel quite so generous as some hon. Members towards the practices of some taxi owners. As the hon. Member representing Blackley, I have been subjected on numerous occasions to strong complaints about the disgraceful practices of some taxi drivers operating particularly from Manchester airport. There is a constant public outcry for action to be taken to remedy the situation. It is unfortunate that some of the complaints about the blatant conduct of some taxi drivers should reflect on the airport, which has to endure and suffer the blame.
      Councillor Franklin, the airport chairman, has recently expressed to me his grave concern about incidents of serious exploitation known to his committee. There have been cases where the fare quoted to the passenger has been so extortionate that the passenger has left the taxi. The passenger has rejoined the queue only to find that some arrangement exists among the drivers that precludes his entering another taxi to negotiate an alternative price. There has been serious protest and condemnation about the conduct of some of the taxi drivers.
      Some hon. Members representing Manchester constituencies have been furnished with great wads of

      881
      evidence of complaints received through Manchester town hall referring to grave exploitation. I should like to reinforce my protest by quoting examples of correspondence passed to me. A letter from the Colgate-Palmolive company, addressed to the licensing authority, dated 27 February, states:
      "I am absolutely disgusted with the charges enforced upon travellers by the taxi-drivers at Manchester Airport. Arriving back from a trip abroad at 1.45 pm on Wednesday, 25 February, I tried to take a taxi from the airport to the Colgate-Palmolive building in Ordsall Lane. The first taxi driver demanded double fare, I refused this and said that I would consider one-and-a-half times fare (in itself, I feel, ridiculous). He refused to take me. It is pointless to say the fare should be settled by negotiation. If you once get into a cab at the airport and do not accept his price, no other driver there will take you."
      8.30 pm
      Another letter expressing similar sentiments from the same firm complained about the conduct of taxi drivers charging as much as £10 to the company for a relatively short journey. Another complainant, who was not even leaving the district of Manchester, writing to the authority in January, said:
      "I would like to complain about excessive overcharging against taxi No. 144 (Mantax). On Sunday 18 January, 1981 I was at Manchester Airport and decided to take a taxi to the Forum Leisure Centre, Wythenshawe. The time was approximately 1·45 pm. On arriving at the Forum, the clock displayed £1·20. The driver asked for £2·40. I did not argue with the driver. I paid him and then made a note of the time, and the driver's number."
      Another complaint with which I should like to acquaint the House was sent on behalf of a foreign visitor who travelled to Manchester through Manchester Airport in March this year. The complainant states:
      "I wish to bring to your notice that on the 16th inst., one of our engineers, a Japanese gentleman, who is unable to converse in English, was charged £14 taxi fare from Ringway Airport to our premises at Junction Street, Hyde, Cheshire.
      The sum of £14 we feel was extortionate and we would ask you to give this your attention. The taxi arrived at approximately 12.45 pm. We enclose copy of signed receipt for your reference".
      I could describe other complaints. The town hall licensing authority is tired of hearing about the conduct of some taxi drivers. I do not say that all taxi drivers behave in that way but even if they are a minority they are damaging the good name of Manchester.
      If the malpractice is as great as it appears to be, particularly at Manchester airport, it might be a good idea to take away the taxi rank there and have a desk in the airport building where cars can be hired at fair and honest prices, as opposed to the present Mafia-type operations.
      Mr. Andrew F. Bennett: I am sure that my hon. Friend would not want to give the impression that all the taxi drivers behave in that way. The local authority should take away the licences of the drivers who operate sharp practices. I have met drivers who behave in a very fair manner. It would be wrong to stigmatise all drivers for the practices of a few.
      Mr. Eastham: I assure the House that all taxi drivers do not behave in that manner, but unfortunately the minority who behave in that way do a grave disservice to the taxi service and to the good name of Manchester. We in Manchester believe that it reflects badly on the city, and it is bad for business. The investment in Manchester airport—the finest in the country—should not be damaged. Many people in the city are demanding drastic action. I agree with them, because we have suffered long enough. I therefore hope that Manchester airport committee will take drastic action.
      Mr. McNally: If I were a representative of a taxi owners association or a trade unionist I should be worried when I read our debate in the Official Report. Many Members who represent the Greater Manchester area have voiced doubts about the quality of the taxi service. The clause does not solve the problem, and it does not calm the public doubt about the taxi service. The clause leavers the problem as it is.
      It is not a matter of knocking individual taxi drivers, or regarding them all as rogues and thieves. The system that has developed in Greater Manchester does not give the citizen a fair deal. It causes problems for the good taxi driver and provides opportunities for the bad ones.
      The population of Greater Manchester is about 490,000, but a further 1·6 million people live within six miles of the city. The total population of about 2 million would have been covered by the original proposals. I fail to understand the compromise, because it satisfies no one and leaves many of the 1·6 million people unprotected.
      We should not think of taxis as the prerogative of the rich. Manchester is a busy shopping centre. It is important for the housewife to be able to use the taxi service to get home. Manchester is a business centre. My hon. Friend the Member for Manchester, Blackley (Mr. Eastham) gave a timely warning about how a bad first impression by a visiting business man can damage the city's reputation. In the centre of the city are two main line railway stations. The taxi service from them and the fares charged are important.
      Manchester is a centre for major specialist hospitals. People might have to use taxis to cross district boundaries when attending such hospitals. Manchester is also the centre for arts and leisure. People using those facilities might also be compelled to use taxis to cross city boundaries.
      Because of the policies of Manchester city council many old Mancunians live in overspill areas and have family links in the city. That might cause people to cross boundaries and to use taxis. A recent survey estimates that about 25 per cent. of journeys originating in the city of Manchester end outside the city boundaries but within six miles of the centre. A patchwork of taxi services has developed, causing real problems and opportunities for the worst to operate in that industry.
      A number of references have been made to the special status of Manchester international airport. Its location and the inadequacy of public transport put the taxi service in a special position. I hope that it will not be too long before there is a rail link to the airport. Taxis operate what is almost a monopoly service from the airport. The four-miles provision is restrictive. People in some parts of Cheshire will not be protected. Parts of my constituency will be excluded from protection.
      Mr. Andrew F. Bennett: One of the ironies is that many of my hon. Friend's constituents and people in Cheshire who live under the flight path suffer from the noise of the airport but have to pay a surcharge on taxi fares.
      Mr. McNally: My hon. Friend is right. I have received representations to that effect.
      The original six-mile plan went some way to accepting the realities of shopping, hospitals, entertainment, main line services and of where people live and work. Yet overcharging of between 100 per cent. and 300 per cent.

      883
      is not uncommon. That does Greater Manchester and the airport damage. We are allowing the worst to drive out the best. Many of us have seen that this is not inevitable. I believe that since the Home Office legislated on taxi metering from London airport there has been a significant drop in accusations of sharp practice from that airport.
      8.45 pm
      Taking up something that my hon. Friend the Member for Blackley said, the last time I went through a New York airport—La Guardia—thre was an official of the airport, wearing a uniform, standing at the point where taxis were for hire, with a large notice saying "If you have any doubts about the fare quoted to you, please consult the official on duty." That is the kind of consumer protection that we should be thinking about if we want to maintain the good reputation of Manchester international airport.
      Mr. Bennett: Representatives of the Home Office are on the Front Bench. We should perhaps press them as to how far they have got with the review that they are carrying out of taxi services outside London.
      Mr. McNally: My hon. Friend is ever eloquent and the Home Office is ever attentive. I am sure that the Minister of State, Home Office—the hon. and learned Member for Royal Tunbridge Wells (Mr. Mayhew)—will want to intervene, because I am sure that with his experience of the London taxi service he understands what a source of irritation and damage this can be. I strongly endorse the idea and I hope that it is taken on board by those who have responsibilities, not least the district councils.
      I take the point made by my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris). Let us have consultations. Let us have a strong commitment to a Greater Manchester taxi service, because we know that the taxi service is damaging to the Greater Manchester area as a whole; it is damaging to tourism; it is damaging to industry; it is irritating to the local population; and it is—I mean this very sincerely—damaging to the taxi industry itself.
      I urge those local authorities and those involved in working and managing the taxi industry to take note of what is being said tonight, because we are voicing the real irritation and anger of the people of Greater Manchester and we are putting to Ministers, to district councillors and to the Greater Manchester council an appeal for proper legislation, and not the inadequate measure before us tonight.
      Mr. Jim Callaghan: It was not my intention to speak on the amendment, although I had intended to speak on clause 149, but unfortunately the relevant amendment was not selected. However, having listened to the various speakers on this subject I feel moved to contribute to the debate. It has been said that there are cowboys among the taxi owners and taxi drivers in the Manchester area. I suggest that there are cowboys in every section of society, and I would put the other side of the argument.
      I think that it is well known among our Back Benchers that my hon. Friend the Member for Gateshead, East (Mr. Conlan) feels very strongly about the cowboys in the taxi service operating from the railway station, either because they take him the long way round through Manchester to
      884
      where he lives or take him to the border of Manchester and, as he lives 100 yards across the border, they very often want to charge him double the taxi fare.
      I am in a somewhat similar situation, in that on occasion, when I have had to hire a taxi from the Piccadilly railway station to my home in Middleton and Prestwich, I have had to negotiate a fare—which varies from driver to driver—because we are going across the border.
      On the other hand, there are many good taxi drivers and I should like to pay a tribute to one of them. One very bad night when I was seven hours late and thought that because of the blizzard I would not be able to get home, that man, a good Samaritan, went round collecting people who were travelling on the north side of Manchester—Rochdale, Oldham—and fought his way through the dreadful conditions. On that night I should have been pleased to pay him anything for the service that he rendered to me. So we have good and bad in all sections of our society.
      Before the reorganisation of local government boundaries there used to be a very stupid and very silly system. It was akin to the taxi system which operates at present in the Greater Manchester area. Formerly, if one got on to a bus or any other form of public transport and travelled to the border of the next local government authority, one then either had to get off the bus and walk to the bus stop of the next authority and pay a second fare, or pay the conductor a fare to the border of, say, the Manchester authority, and then pay the conductor a second fare if one happened to be travelling in Hyde or Stockport.
      I am delighted to say that that silly system was completely eradicated and that with the Greater Manchester transport authority it is now possible to travel across the huge conurbation from Hyde to Wigan paying only the one fare. There has been a sensible rationalisation of resources. We ought to take a leaf out of that book and operate the taxi system on a similar basis. I hope that the Secretary of State for Transport will investigate the possibility of having a similar system for the taxi drivers.
      Mr. Bennett: One of the crazy aspects of the problem is that taxis are not dealt with by the Department of Transport. It is the Home Office that is responsible for the licensing of taxis. I understood that the Home Office had a working party that was supposed to be looking at the question of provincial taxis. We ought to be pressing the Home Office to get on with it.
      Mr. Callaghan: I thank my hon. Friend the Member for Stockport, North (Mr. Bennett) for his intervention. It is useful to have the information that the authority responsible for taxis is the Home Office. I should like to know why the Secretary of State for Transport is not dealing with the matter. However, it is a point for another debate at another time.
      I completely agree with my hon. Friend about the need for a rationalisation of the taxi service throughout Greater Manchester, so that we can have a unified system whether we are getting a taxi at a railway station or at Ringway airport. My hon. Friend mentioned the occasion when he tried to flag down a taxi with a "For hire" sign on it and could not be picked up because it was not in the appropriate territory. It is an absurd, lunatic system. The sooner the Home Office decides to look at the system and make it sensible—similar to the one that we now have with public transport in Greater Manchester—the better it will be.
      Mr. Silvester: We have had a very useful debate. I do not know whether the hon. Member for Stockport North (Mr. Bennett) will seek leave to withdraw the amendment but I am glad that he tabled it. This is not a party matter. We are all disappointed that the Bill still has not solved the taxi problem.
      I do not think that the hon. Member for Stockport, South (Mr. McNally) quite gave credit to the promoters. What they started with may not have been the right answer, but at least it was better than the compromise that we now have. The problem will not be an easy one to solve and the attempts made so far show the enormous difficulties that we face. Mention was made of the cost of the plates, showing that there are very considerable personal difficulties involved. There have been various local Acts in the past, as a result of which different rules have applied in Manchester, Rochdale, and so on.
      Times are changing, and the changes are most noticeable at the airport. The taxi service must move into the present clay. There may have been a time when the taxi service was on the fringe of society, but nowadays it is at the heart of it. We all have at heart a desire for the future growth of Manchester airport. We all know what it means for the North-West, and it is right that we should give attention to it.
      The hon. Member for Manchester, Blackley (Mr. Eastham) suggested that there should be a desk at the airport to deal with people wanting private car hire. As he was speaking, I was looking up the evidence given to a committee in the other place by the senior supervisor at the information desk, where advice about private hire cars is given. She said that passengers arrive and ask how to get to their destination, to stations or other towns, and it is the job of the girls at the information desk to help them in the best way possible, depending on how they wish to travel. The problem is that there are very often groups of taxi men standing near the desk who listen to the conversation and then follow the passengers, or even interfere in the conversation with the passengers. Evidence has been given elsewhere of one or two occasions when the police had to be called.
      Mr. Eastham: I am sure that the hon. Gentleman would not defend taxi drivers who conducted themselves in that way. What he says reinforces my comments about the disgraceful conduct of some people, which should be stopped.
      Mr. Silvester: I could not agree more. I am simply saying that the desk exists and that there is pressure even on the people manning the desk. The hon. Gentleman gave illustrations of the way in which people at the airport are treated. That is bad for business. It is a shame for Manchester and a shame for good taxi drivers. The sooner we can do something about it the better. With that I agree, and I am sorry if the hon. Gentleman thought otherwise.
      It would be nice to end on a note of agreement and of hope that we can solve the problem, as this is the last debate on the Bill. I am not in a position to give the categorical undertaking asked for by the hon. Member for Stockport, North to hold a conference on taxis. It is not in my power to make such a promise, nor is it in the power of the people who are in the House tonight advising me. All I can say is that I give my personal undertaking, following the debate, immediately to seek to get Greater Manchester council to take the matter further. A conference may be necessary. As it is a district matter, people will be treading on eggshells. It may be necessary to have a joint conference of districts. I undertake riot to let the matter rest.
      As the right hon. Member for Manchester, Wythenshawe (Mr. Morris) said, consultation is at the heart of this matter. I am sorry that the previous consultation did not lead to a satisfactory conclusion. The problem will not go away; it will get worse and it is in the interest of everyone concerned that a rational and fair solution is reached. I shall do what I can to achieve that end.
      Mr. Andrew F. Bennett: This has been a useful debate. I hope that the Greater Manchester Council, the district councils of Greater Manchester, the taxi owners, the taxi drivers and their trade union representatives, if they have not been able to listen to the debate, will read it and take note. Hon. Members who have spoken tonight are unanimous in saying that the taxi services should be improved, and we genuinely speak for a large number of our constituents who are dissatisfied. As my amendment would do nothing to improve the situation and was tabled merely to ensure that we had a debate, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Bill to be read the Third time.

    WAYS AND MEANS

      Transport (No. 2)
      9 pm
      The Under-Secretary of State for Transport (Mr. Kenneth Clarke): I beg to move,
      That, for the purposes of any Act of the present Session to provide for the reconstitution of the British Transport Docks Board and to confer on a company powers over that body corresponding to the powers of a holding company over a wholly-owned subsidiary, it is expedient to authorise any charge to tax attributable to provisions treating as dividends payments made by that body to that company.
      This motion relates to our proceedings on the Transport Bill, which has completed its consideration in Committee. It has proved necessary because of a comparatively small technical problem that has arisen over the treatment for taxation purposes of a new statutory corporation to be known as Associated British Ports, which will be set up once the Bill has received Royal Assent.
      Those who served in Committee on the Transport Bill—they constitute a slight majority of the thin House that we have retained for this debate—will be familiar with the background. Part II of the Bill provides for the denationalisation of the British Transport Docks Board. The Government's intention behind that policy is to transform the board from its present wholly publicly owned status to that of a private sector industry. The Government believe that thereby the intention of the board, which has been successful so far under public ownership, will be enhanced and improved.
      We believe that the board or its successor companies will thrive when freed from the political control that is inevitably exercised from time to time when a trading company is wholly nationalised. We also believe that the change from a public sector corporation to a private sector business will give the management of the docks company access to private capital uninhibited by the restraints which have to be imposed on a nationalised industry by the Treasury under a Government of any colour. That is the background to the policy.
      That policy will be implemented by creating a new two-tier structure for the docks business. The board will become a new statutory corporation which the Committee decided will be known as Associated British Ports. It will be a statutory corporation created entirely by the Bill, especially clauses 5 and 10 and schedule 2. Anyone who wants to know anything about the management of Associated British Ports, its proceedings or the statutory duties under which it will operate, can resort to the Bill and to our debates in Committee. He or she will thus be able to understand the position of Associated British Ports.
      The statutory corporation will be subject to a Companies Act holding company, which also will be created under the Bill. That holding company will initially be a Companies Act company wholly owned by the Secretary of State for Transport as the guardian of the public interest. However, it is the Government's policy that as soon as reasonably possible the Secretary of State will sell off 49 per cent. of his interest in the shares of the holding company.
      At the same time it has been made clear that my right hon. Friend will not use his 51 per cent. interest to intervene in the day-to-day management of the holding company or in its business policy. As a result of the sale
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      of 49 per cent. of the shares and that declaration of intent on the part of the Secretary of State the holding company will become a private sector company and will operate the docks by the agency of its wholly owned subsidiary, the statutory corporation—namely, Associated British Ports.
      That is the structure of the Bill. I shall not burden the House with the reasons for choosing the two-tier structure, with the statutory corporation being the successor to the British Transport Docks Board.
      The reason for choosing that apparently curious approach is that it is the nature of docks businesses and of businesses at present conducted by the British Transport Docks Board to be operated under a wide variety of statutory duties, largely contained in local Acts which appertain to ports throughout the country.
      The best way in which Associated British Ports can be enabled to continue to discharge those statutory duties is by giving it the nature of a statutory corporation and by charging it with those duties—giving it, therefore, the burden of the day-to-day conduct of the business in the docks concerned. It means that any change in the overall status of the docks business in the future—certainly any change in the burden of the statutory duties which are laid on the owners of the docks—will continue to attach to Associated British Ports. Any change in Associated British Ports will require further legislation.
      The practical effect which we hope to achieve is a relationship between the new holding company and its subsidiary—the statutory corporation, Associated British Ports—similar to the relationship between two Companies Act companies when one is the holding company at the head of a group and the other is a wholly-owned subsidiary beneath it.
      We intended not only that for most practical purposes the relationship between the two companies should be based on ordinary Companies Act principles but that, for many purposes, the ordinary Companies Act law should apply to the day-to-day proceedings, accounts, and so on, of Associated British Ports. Clause 10, which is already before the House and waiting to come before the whole House on Report stage, sets out in considerable detail the various provisions of the Companies Act which will apply to Associated British Ports, although it will not be a Companies Act company but a statutory corporation.
      Some problems still arise. Without the motion, problems would arise in clarifying the position of Associated British Ports for tax purposes. It follows that as Associated British Ports is not a company but a statutory corporation it does not have a share capital. There are other differences which distinguish it from an ordinary Companies Act company.
      We hope that for most practical purposes, and particularly for taxation purposes, the corporation will be treated as if it were a Companies Act company. The motion will pave the way for amendments dealing in detail with that point to be taken later. We intend that Associated British Ports will be subject to taxation as if it were a Companies Act company and that for most purposes Associated British Ports and the holding company will be treated as if they were both Companies Act companies.
      Mr. Bowen Wells: Apart from the motion, from which it is difficult to discover what is intended, I do not understand why, if we want Associated British Ports to be treated as a limited liability company, we do not make it a limited liability company.

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      Why do not we make the ports subject to the normal laws of a limited liability company and if necessary, and if possible, make the shares available to the public and employees of that company?
      Mr. Clarke: I am not sure whether my hon. Friend was here a few moments ago when I explained the underlying policy. I shall briefly explain it again.
      It is the clear intention of the Government to denationalise the British Transport Docks Board. We propose to transform it from a nationalised industry into a private sector company, not under the control of the Government and not governed by Treasury rules for its access to capital, which in future will be obtained by access to the private capital markets in the usual way.
      One means by which we could have proceeded was by changing the British Transport Docks Board to a Companies Act company and as soon as possible floating it by selling shares. That was done last year with the National Freight Corporation, which is now the National Freight Company, in which we propose to sell the majority interest, if not all the shares, as soon as possible. However, had we done that with the British Transport Docks Board—even changed to, say, the British Transport Docks Company—the company would still have been subject to a range of statutory duties which apply to all its ports. Any dock undertaking within the British Transport Docks Board collection is normally subject to a range of past legislative provisions that place conservancy functions on the owner of the docks and sometimes obligations to provide services and facilities to ships. Whoever is the owner is subject to those statutory duties.
      Had we taken the straightforward course we should have created a curious body—a Companies Act company but one which remained subject to a range of statutory duties in the operation of its business. Among other things, we felt that the structure might stand in the way of denationalisation, because it would be an unusual company in which to float shares. One would be floating a company in which to a considerable extent the development of activities would be inherited by statutory duties and might even require primary legislation if changes were needed.
      We therefore chose the other method of merely changing the British Transport Docks Board into a statutory corporation—Associated British Ports—but we are making it a wholly-owned subsidiary of a brand new Companies Act company, which the Bill creates. That brand new company will be wholly owned at first by my right hon. Friend, but he will denationalise, in effect, the holding company; then we shall have a private sector business—that Companies Act company—which will be the controlling owner of the subsidiary, the statutory corporation, and in that way the whole business will go into the private sector.
      I know that that still sounds a convoluted structure, but it does have its precedents. Although the analogy is not exact, a similar structure applies at Felixstowe. Felixstowe is owned by a statutory company, which is owned by a holding company, and it is the holding company—I believe, European Ferries Limited—which is the Companies Act company and the private sector business.
      My hon. Friend's intervention bears exactly on the point. It is a difficult point to get at. In the end, what we are talking about is making sure that although we have chosen that structure for some purposes, because of the
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      statutory duties on the subsidiary, for taxation as well as for most other purposes, we wish both businesses to be treated as if they were Companies Act companies. In particular, we wish the statutory corporation to be treated for corporation tax purposes, when it makes profits, as a private sector business. We also wish any payments made by the subsidiary business to the holding company—the holding company will derive its income from payments and from its wholly-owned subsidiary—to be treated as dividends for tax purposes.
      That will be the effect of the amendments to the Bill that we shall discuss if the motion is passed by the House, but it will not be possible to discuss all the necessary amendments if, for some reason, the House does not approve the motion.
      I shall leave the Opposition the chance to make their own points, but I know that they come here with scepticism about what we are doing and no doubt a belief that in some way it facilitates a policy of which they disapprove. They are against denationalisation. They somehow believe that although denationalisation is to the disadvantage of the management—the interference that it suffers and the denial of access to private capital that results—it is, nevertheless, ideologically sound that the corporation should remain wholly nationalised.
      Although I know that the Opposition are brought here by those doubts, I suggest that on this occasion those issues are not raised. All that we are paving the way for here is a minor and sensible technical change which will enable these companies to be treated for taxation purposes, as they are for most other purposes, as if they were Companies Act companies.
      No particular advantage or disadvantage accrues to the corporation or the holding company as a result. It merely introduces common-sense arrangements with which everyone will be familiar. To some extent, it will enable the holding company to take advantage of group or consortium relief for tax purposes. The motion is particularly required because it would otherwise be arguable that any payments from Associated British Ports to the holding company would not be treated as dividends for corporation tax purposes. The amendments that we have tabled will make it clear beyond peradventure that such payments are to be treated as dividends for corporation tax purposes.
      The undertakings will be placed in the same position as Companies Act companies. My guess is that few of those dealing with them in day-to-day business would even realise that they were not both Companies Act companies. The change will mean that the taxation laws apply in a common-sense fashion. They will acquire benefits but also disadvantages from that status, but they will be placed in exactly the same position as any other businesses in their relationship to one another. They will be no better off and no worse off than other equivalent industries. Indeed, had we chosen the straightforward path recommended by my hon. Friend—but for the problem of statutory duties on Associated British Ports—they would have wound up like this in any event.
      As I said, the motion is required before the necessary amendments can be taken to make this clear. I therefore hope that although we have had some trouble in our proceedings on the Transport Bill so far, that trouble will not be extended into this minor and not very important technical matter.
      9.18 pm
      Mr. Albert Booth: The Under-Secretary of State is to be congratulated on keeping a perfectly straight face when he said that the motion was a minor, technical matter. I submit that it is one of two things. Either it is an attempt by the Government to repair an error made when they presented the Bill on Second Reading—an error so grievous that they cannot now put down the financial amendments that they wish—or the Government have changed their judgment as to what should be the appropriate financial effects and provisions of the Transport Bill.
      It is significant that although the motion is in the name of the Financial Secretary to the Treasury, the Under-Secretary of State for Transport introduced it tonight. Had it been the Financial Secretary we should have been asking him whether there is any constitutional precedent in the history of the House for amending what are in effect the provisions of this country's tax law on the basis of a Bill not yet passed by the House.
      There are a number of serious objections to passing the motion. First, the House is being asked to pass a motion which will pave the way for a quite specific tax provision relating to a statutory body before Parliament has passed legislation constituting or reconstituting that statutory body. Any change in tax law consequent upon changing the status of a statutory body, reconstituting the British Transport Docks Board as Associated British Ports, is not a matter for inclusion in the Transport Bill at some future stage. However, we are not tonight debating the Transport Bill. This is a matter for the House to decide in a subsequent Finance Bill.
      We should not be asked to prejudge the changes that will be needed in our tax law as a result of this special arrangement, by which the holding company will have as a wholly owned subsidiary the concern to be known as Associated British Ports. It is necessary for the House first to take a final decision on whether it wants to turn the BTDB into Associated British Ports and to make ABP the wholly owned subsidiary of a holding company in which there will be a certain degree of public ownership when the change in the tax law takes effect.
      No one knows how much of ABP will be owned by the public when the new tax law change becomes effective. As the Under-Secretary says, it might be possible quickly to sell 49 per cent. of the new company to private buyers. We do not know who the private buyers will be. If the 49 per cent. were purchased by a shipping company, for example, certain Conservative Members might take a different view of the arrangement from the one that they would adopt if the shares were dispersed in 5 per cent. lots among the various insurance companies and pension funds. Indeed, we on the Labour Benches might take a different view as well in those circumstances.
      In Committee, upon questioning the Under-Secretary we discovered that the Government had no intention of being bound to retaining 51 per cent. of the shares. They want to be free to sell 60 per cent, 70 per cent or perhaps even 100 per cent. of the shares—the last amounting to total denationalisation. If the Government want to put that proposition to the House we shall be happy to debate it. However, on Second Reading most of us were led to believe that the Government would maintain a majority stake in the holding company. As a democratically elected body we are entitled to assume that the Government are
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      not immune from the arguments advanced in the House about what is an appropriate arrangement for ownership and control of the BTDB, which is just about the only remaining collection of ports to be operating profitably against fierce competition at a time of world economic crisis.
      There is no financial provision in clauses 13 and 14 or schedule 4 of the Transport Bill for the tax arrangement described by the Under-Secretary this evening. Those seem to be the only parts of the Bill purporting to contain provisions consequent upon the BTDB becoming Associated British Ports, the wholly owned subsidiary of the holding company.
      The financial and explanatory memorandum indicates a different arrangement. The House is entitled to work on the assumption that when the Government drafted the Transport Bill they considered the financial and manpower implications and put them before the House in the explantory and financial memorandum. The memorandum states:
      "The British Transport Docks Board's capital liabilities to the Minister of Transport which amount at present to £81 million will be extinguished. They will be replaced by the shares and securities which the Holding Company, owning … (the reconstituted British Transport Docks Board) issues to the Minister. In place of the present fixed interest payments to the National Loans Fund of approximately£5 million in 1980–81, there will be provision for payment into the Consolidated Fund of dividends and any other payments which the Minister receives as owner of shares or securities in the Holding Company."
      It is reasonable to suggest that in Committee we had every right to assume that that was the financial arrangement between the reconstituted British Transport Docks Board and the Treasury. In other words, the dividends were to be paid directly. It is now proposed that there should be another taxation arrangement.
      Mr. Kenneth Clarke: The right hon. Gentleman has misunderstood the point. That financial memorandum still applies to dividends or other payments that the Minister receives as the owner of shares or securities in the holding company. The holding company was always a Companies Act company. As long as it remains wholly owned by the Minister, or as long as the Minister owns 51 per cent. of the shares, any income that he receives as a shareholder of the holding company will be paid into the Consolidated Fund. It is public money and it does not go personally to the Minister.
      The Ways and Means resolution refers to any payments that are made by Associated British Ports to the holding company. It makes it clear that they will be treated as if they were dividends paid by one Companies Act company to another. That will merely involve payments from ABP to the holding company. As regards the financial memorandum, if the holding company pays anything in turn to the Minister it will be paid into the Consolidated Fund. That is how the public will benefit from the Minister's holding.
      Mr. Booth: I had thought that the Under-Secretary was a step ahead. However, I am now sorry that I gave way. I am not arguing whether the dividends from the holding company will be paid to the Minister. Some of them will go to the Minister and some to whoever has purchased shares. It depends on how much of the holding company is sold. However, the House gave the Bill a Second Reading and accepted the financial resolution. It was entitled to assume that all the dividends of the wholly owned subsidiary would go to the holding company.

      893
      The Minister made it clear that that was not the Government's intention. If that had been their intention on Second Reading they could have made it clear in the financial resolution at that time. They did not. If they have changed their minds since then and want to alter the financial provisions, this is not the correct way to do it. They should accept the limitations that they, like others who debate legislation, are placed under in accordance with the terms of the financial resolution accepted on Second Reading. Any straightforward reading of that financial memorandum shows that there are limitations. I challenge the Under-Secretary to find anything in the financial and explanatory memorandum which suggests that the dividends paid by the holding company are anything other than the total dividends which will be declared in the first instance by Associated British Ports or the reconstituted British Transport Docks Board until the holding company begins other activities.
      Mr. Kenneth Clarke: I shall try again to explain to the right hon. Gentleman, who has got himself into the most unbelievable muddle.
      The financial resolution in the original Bill refers merely to any payments that the Minister receives as owner of the shares or securities of the holding company. All that that resolution was meant to do was to make it clear that anything that the Minister receives as a holder of shares in the holding company belongs to the public and goes to the Consolidated Fund and not to the Minister. That remains true. The income that he receives from the holding company will depend on what proportion of the equity he holds at any given time. That is all that that covers.
      The financial resolution makes no reference to payments made by Associated British Ports to the holding company because, as we all knew throughout, Associated British Ports remains a wholly owned subsidiary of the holding company, so all payments made by ABP were always destined to go to the holding company and they will continue to go to it.
      The ways and means resolution paves the way to ensure that when dividends are paid from ABP to the holding company those payments will be treated as dividends for Companies Act purposes.
      Mr. Booth: It is the Under-Secretary of State who has not understood the point. I put it to him in two ways. First, on Second Reading the House was entitled to assume, having read the financial resolution, that dividends were the dividends of the holding company and that since the holding company would initially have but one activity, one wholly owned subsidiary, and no other activities, although it was a Companies Act company, they would he the dividends paid by the reconstituted British Transport Docks Board.
      If the Under-Secretary now says that the House was expected to assume that the dividends might not be, and that part may be paid in taxation or would be liable to tax before they reached the holding company, he is entitled to make that assertion. If he was entitled to make that assertion and to assume that, why was no provision made in the Bill for that sort of payment? There was no such provision, and that is the reason for the motion. The Government have either made a mistake or changed their financial judgment.
      One other consideration became apparent in Committee. Associated British Ports may not be directly
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      owned by the holding company. Under the provisions of clause 13, as we found in Committee, the holding company can nominate another company to take charge of Associated British Ports. If the Secretary of State does not use his 51 per cent. to instruct or tell the holding company what to do, those who purchase any shares can decide that instead of owning Associated British Ports directly they can nominate another company to own it. In those circumstances even the financial resolution would not necessarily enable the Government to tax the dividends of that company. All they can do is to tax the dividends paid to the holding company. That is not a major consideration, but it is one of the effects of the Bill.
      Since we started to debate the Bill it has become clear that those who buy shares in the holding company will control it. They will control payments made by ABP and instruct it accordingly. They can instruct ABP what the charges should be. If shipping companies buy in to the holding company, that may influence the way in which they instruct ABP. Having failed to make provision in the Bill, the Government should withdraw the motion until the Bill has been passed and allow the House to decide in a subsequent Finance Bill whether we should have special tax legislation to deal with the matter.
      If the Secretary of Stale wants to control payments made by ABP to the holding company, and I can understand why he may wish to do so, his 51 per cent. shareholding will enable him to instruct ABP how much it should pay until the House can deal with the financial effects and taxation consequences of the Bill in the proper way.
      I believe that the Secretary of State wants to evade the responsibility of instructing the holding company. He does not want any financial responsibility for ports policy, any more than he wants direct responsibility for the way in which British ports are run. For that reason, we shall oppose the motion.
      9.36 pm
      Mr. James Hill: We are making a mountain out of a molehill on this simple motion. The Opposition Front Bench have created confusion because they are unaware of some of the vital points made by my hon. and learned Friend the Under-Secretary in Committee.
      My hon. and learned. Friend gave way on the consideration of the Secretary of State's holding 51 per cent. of the shares in the holding company. I suggested that a number of those shares could be given to the work force in the ports. We referred to the British Aerospace form of flotation. A firm commitment had been given that 51 per cent. of the shares would be held by the Secretary of State, but in trying to get a share issue to cover not only the dock labour force but ancillary workers in the ports, I was happy to agree that my right hon. Friend might wish to reduce his holding. There was not too much protest from the Opposition over that provision, because they realised equality of the British Aerospace flotation and both sides of the House want to see a similar flotation and a similar equality in the share issue of ABP.
      The holding company was clearly defined in Committee. I had no doubt that my right hon. Friend would set up the holding company and could nominate another company to take over its responsibilities, perhaps at a later date. The decisions were perhaps a little obscured because the holding company, the flotation of shares and

      895
      perhaps the whole mechanism of forming the subsidiary will be delayed until after the Bill has received Royal Assent.
      Both sides of the Committee wanted a clearer definition, but it became clear that my right hon. Friend was aware of some hesitation among his hon. Friends about the fact that he would retain 51 per cent. of the shares and perhaps reduce that holding at a later stage. There was no firm commitment in Committee to the 51 per cent.
      We made the point several times about the greatest spread of shares to cover the fears of some of the dock labour force that large shareholdings would, from the beginning, be in the hands of very few people. We also agreed in Committee that it was not possible for my right hon. Friend to lay down a hard and fast rule about where the shares in the subsidiary should lie forever. If people, given a free share issue, care to sell them on the open market, there is no way in which my right hon. Friend can prevent the shares being accumulated if the purchaser so wishes. It is fairly clear to me that hard and fast rules can be made for the first day when the flotation is formed. From then on, the market place will begin to take over. The market place will take over only if Associated British Ports still return the good figures on capital of the last two or three years. It lies with the work force and with the management—the holding company will determine the first board—which will be able to go into other areas of work practice. These are outlined clearly in schedule 3.
      This is a point that gave rise to some interesting debates in Committee. It did not seem to me that if the Department had made a genuine omission the House would be so dogmatic that it would not respect the motion tonight. The Transport Bill represented an enormous volume of work for both Front Benches. Given the time available, the depth of debate and the fact that we are discussing an evolution in port management, I believe that the motion should be approved. I am sure that that would be the right decision.
      9.42 pm
      Mr. Iain Mills: It is with some hesitation that I address the House on this matter. I was a member of the Standing Committee that examined various matters in the Transport Bill. That afforded a full and free opportunity to contribute views on various aspects of the Bill, including the affairs of the British Transport Docks Board. I do not include in my experience quite the same expertise in financial management as is evidenced by other hon. Members on both sides of the House. I feel however, that as a Member of the Standing Committee it is correct that I exercise my right to speak tonight and to raise a number of small problems.
      The words of the motion state:
      "That, for the purposes of any Act of the present Session to provide for the reconstitution of the British Transport Docks Board and to confer on a company powers over that body corresponding to the powers of a holding company over a wholly-owned subsidiary".
      Those words are not particularly easy to understand. The fundamentals behind the words are, however, important. In terms of philosophy, the motion bears closely upon the twin innovations achieved by the Government in their relationship with industry. It is important to understand
      896
      these innovations when examining the way in which the fiscal tax and other matters will be reconstituted by amendments introduced through the motion.
      First, I ask my hon. and learned Friend to compare the proposed mechanism for selling shares in Associated British Ports—previously the British Transport Docks Board—with the mechanism for the sale of shares in the National Freight Corporation, British Aerospace, and British Rail subsidiaries. Two innovations have been introduced by this Government. First, there has been the denationalising of public assets into a more competitive market through privatisation and, equally important, the demonopolisation enshrined in the term "liberalisation." I realise that Opposition Members are stirred by my rhetoric. They spent many happy hours listening to me in Committee, and no doubt they are looking forward to a lengthy intervention from me now. However, I must disappoint them, because what I wish to say is simple and of necessity superficial, because I lack their grasp of the financial aspects. As an honest man of industry, not as a high-powered financier, it is perhaps better that I should ask those questions rather than those who consider themselves economic intellectuals.
      I apologise for being distracted from this important Ways and Means motion. I have spent long nights and days on not just one but two Transport Bills. I was delighted that the Bill finished on Thursday. However, the Iron and Steel Bill is now in Committee, and I seem to be almost permanently in Committee. I therefore feel that I must go into some detail on this occasion.
      The Government would not bring a motion of this nature before the House unless they were convinced of its necessity. If the Government can create these innovations of privatisation and liberalisation it is only fair to allow them, in this Ways and Means motion, the mechanism to do so.
      Some aspects of my hon. and learned Friend's speech caused me anxiety. I ask him to define more clearly Companies Act companies. In Committee and on the Floor of the House it is easy to discuss Companies Act companies as if the term were enshrined and could not be challenged. However, it is difficult for laymen like myself to understand the commitments.
      Mr. John Prescott: Being a business man.
      Mr. MillsAs a business man, I want to know exactly the liabilities of a Companies Act company. I hope, therefore, that my hon. and learned Friend will explain the matter to me.
      I also want to know how ownership relates to our discussions in Committee. I come back to what was said by my hon. and learned Friend about capital and the obligations of Associated British Ports. On 24 February my hon. and learned Friend was not prepared to go into detail about how the 49 per cent. shareholding was to be sold. However, he took notice, as he always does, of my hon. Friend the Member for Southampton, Test (Mr. Hill), who is very knowledgeable in this respect.
      In Committee we discussed the possibility of a substantial employee shareholding in the company. I hope that my hon. and learned Friend will refer to that. My hon. and learned Friend said that the Government would have to examine that but that it was not possible to give precise details.

      897
      The name of the new corporaion is important. It is strange that Opposition Members were so full of opposition to the new name for the British Transport Docks Board that they voted on many occasions against the name proposed by my hon. Friends the Members for Faversham (Mr. Moate), and Southampton, Test and myself. I have an interest in the matter. We believe that it is just that the name "Associated British Ports" should be brought to the attention of Opposition Members who are muttering from a sedentary position—to coin a phrase in parliamentary language.
      Do the Government intend to sell part of the 51 per cent. share at some time'? The Government have said that initially they propose to sell 49 per cent. There is no quick reaction to that, so perhaps I am wrong. Would the company really have to fulfil its statutory duties? My hon. and learned Friend alarmed me when he said that it would have certain obligations to ships. What are those obligations? Are they to supply clean linen and fresh food, or is some other unreasonable obligation involved? Opposition Members may laugh, but the issue is important to people who work on ships. Opposition Members should take an interest.
      Can the Minister define a wholly owned subsidiary of a holding company? I find the concept difficult to grasp. As someone who is green to the economic facts of life I do not fully understand the obligations of wholly owned subsidiaries and holding companies. It would be for the benefit of the House and for people who work for the British Transport Docks Board—now named Associated British Ports—to have the Minister's comments.
      9.53 pm
      Mr. Bowen Wells: I wish to exercise the unusual right of a Back Bencher to comment on the quality of the debate. If I were the judge I should decide the debate in favour of the Minister. A mistake has obviously been made by my hon. and learned Friend and the Department of Transport in producing a Bill without the proper financial element. Perhaps I shall be corrected about there being a mistake, but such a mistake does not invalidate what the Government seek.
      I have always been suspicious of Government-owned companies in which the Government own 51 per cent. What happens to the 49 per cent. minority holding? The Government obviously have a massive majority and can dictate everything that happens.
      The resolution is directed at a narrow point—that the new organisation should enjoy rights and privileges similar to thoseof a limited liability company. The subsidiaries of a limited liability company, wholly or majority-owned, pass dividends between the subsidiary companies to the owning company without being taxed on those dividends. That is a reasonable proposition. I am sure that the House will agree to it without Division or further delay.
      9.55 pm
      Mr. Kenneth Clarke: My hon. Friend the Member for Hertford and Stevenage (Mr. Wells) touched on the one valid point that was raised by the right hon. Member for Barrow-in-Furness (Mr. Booth)—why the motion has been tabled at this stage. Obviously there has been a change of intention on the part of the Government in producing at this stage a Ways and Means resolution which will pave the way for amendments which will be taken on Report.
      898
      These taxation provisions were always intended. It always was intended that the holding company and Associated British Ports should both be treated as Companies Act companies for taxation purposes, but there was a choice of legislative vehicle—on the one hand, the Finance Bill and, on the other, the Transport Bill, which we now propose to use. The difficulty that has arisen is a timetabling difficulty in terms of allowing the House to consider the details properly.
      The Finance Bill and the Transport Bill are passing parallel through the House, and I am glad to say that the Transport Bill is at the moment in the lead, and with some difficulty has held its lead so far. There would be considerable difficulty in tabling the necessary amendments to the Finance Bill dealing with the taxation treatment of companies which were themselves being created by another provision which at that stage was proceeding elsewhere in the House. Therefore, as it was obvious that the Transport Bill was about to go to its last stage in this House before the Finance Bill had anything like completed its Committee stage, we decided to use the Transport Bill as the legislative vehicle for the purpose of making these tax provisions clear.
      The right hon. Member for Barrow-in-Furness appears to believe that we are making great changes in the tax law without the House having the opportunity to consider them. He is very fond of seeing great constitutional significance in comparatively minor procedural points. There are no great constitutional points here. The Ways and Means resolution is needed merely to pave the way for the amendments themselves to be taken, and the House, of course, in its debate and voting—if necessary—on the amendments will have the opportunity of exercising parliamentary judgment on the Government's proposals. It makes no practical difference and no constitutional difference whether these taxation changes are made in a Finance Bill or in a Transport Bill.
      The taxation changes are perfectly straightforward. As my hon. Friend the Member for Hertford and Stevenage has just made clear, they merely enable the taxation arrangements for the holding company and Associated British Ports to be exactly the same as they would be if they were both Companies Act companies—no better and no worse in either case. The only effects will be that as a group under the holding company it is possible that there will be some group or consortium relief available for corporation tax purposes in certain circumstances; and if any payments are made, as we trust they will be, by Associated British Ports to the holding company which owns it, those payments will be subject to advance corporation tax payments because they will be treated as if they were dividends for corporation tax purposes.
      No one suggested any other arrangement by which these companies could be dealt with for taxation purposes. It is arguable that they would be dealt with in that way whether or not we legislated. What the amendments will do if the House subsequently approves them will be to make that position clear beyond doubt.
      Mr. Peter Viggers: Does my hon. and learned Friend agree that during the last hour we have had a rather remarkable demonstration of anger from the Opposition Benches which might have been averted had the Government taken the trouble to produce an explanatory memorandum to the Ways and Means resolution rather similar to that which accompanies Bills?

      899
      All the anger has been misdirected. The point is a very narrow one. All would have been clear had the Government explained the position.
      Mr. Clarke: That is possibly the case. I am quite prepared to accept that stricture and apologise for the omission. Had he been present throughout the debate my hon. Friend would have seen the danger of providing explanatory memoranda to the Opposition Front Bench because many weeks later hon. Gentlemen rise with a puzzled frown and completely misunderstand the arrangements that have been made in the Bill as printed in the first place. There was some difficulty on the previous financial memorandum.
      Nevertheless, I hope that we have now made the position clear. I confirm to my hon. Friends the Members for Southampton, Test (Mr. Hill) and for Meriden (Mr. Mills), who supported this policy throughout the Committee stage, that this does not reflect any underlying change of policy and that there is no difference between the present policy of the Government and the policy of the Government as expounded on Second Reading, despite what the right hon. Member for Barrow-in-Furness said. Once the Bill has obtained Royal Assent the Minister will create a holding company which will be a wholly owned Companies Act company, and that holding company will be the sole owner of Associated British Ports. Thereafter, as soon as is reasonable, he will float the holding company and sell up to 49 per cent. of the shares. The 49 per cent. will be retained by the Government for the foreseeable future, but we cannot give ourselves a timeless guarantee. We are anxious to make room for workers' shareholdings of exactly the kind that was mentioned.
      Question put:—
      The House divided: Ayes 168, Noes 93.

      Division No. 149]

      [10.00

      AYES

      Alexander, Richard

      Channon, Rt. Hon. Paul

      Ancram, Michael

      Chapman, Sydney

      Aspinwall, Jack

      Clark, Hon A. (Plym'th, S'n)

      Atkins, Robert(Preston N)

      Clarke, Kenneth (Rushcliffe)

      Atkinson, David (B'm'th,E)

      Clegg, Sir Walter

      Baker, Nicholas (N Dorset)

      Colvin, Michael

      Banks, Robert

      Cope, John

      Beaumont-Dark, Anthony

      Costain, Sir Albert

      Bendall, Vivian

      Cranborne, Viscount

      Berry, Hon Anthony

      Dorrell, Stephen

      Best, Keith

      Douglas-Hamilton, Lord J.

      Bevan, David Gilroy

      Dover, Denshore

      Biffen, Rt Hon John

      du Cann, Rt Hon Edward

      Biggs-Davison, John

      Dunn, Robert (Dartford)

      Blackburn, John

      Emery, Peter

      Bottomley, Peter (W'wich W)

      Eyre, Reginald

      Bowden, Andrew

      Fairgrieve, Russell

      Braine, Sir Bernard

      Fenner, Mrs Peggy

      Bright, Graham

      Fisher, Sir Nigel

      Brinton, Tim

      Fletcher, A. (Ed'nb'gh N)

      Brittan, Leon

      Fletcher-Cooke, Sir Charles

      Brooke, Hon Peter

      Fookes, Miss Janet

      Brotherton, Michael

      Fraser, Peter (South Angus)

      Brown, Michael (Brigg & Sc'n)

      Gardiner, George (Reigate)

      Bruce-Gardyne, John

      Garel-Jones, Tristan

      Bryan, Sir Paul

      Gilmour, Rt Hon Sir Ian

      Buchanan-Smith, Alick

      Goodlad, Alastair

      Buck, Antony

      Gow, Ian

      Cadbury, Jocelyn

      Gower, Sir Raymond

      Carlisle, John (Luton West)

      Grant, Anthony (Harrow C)

      Carlisle, Kenneth (Lincoln)

      Gray, Hamish

      Carlisle, Rt Hon M. (R'c'n)

      Greenway, Harry

      Chalker, Mrs. Lynda

      Griffiths, Peter Portsm'th N)

      900

      Gummer, John Selwyn

      Page, Richard (SW Herts)

      Hawksley, Warren

      Pattie, Geoffrey

      Heddle, John

      Percival, Sir Ian

      Hicks, Robert

      Proctor, K. Harvey

      Hogg, Hon Douglas (Gr'th'm)

      Pym, Rt Hon Francis

      Howell, Rt Hon D. (G'ldf'd)

      Rathbone, Tim

      Howells, Geraint

      Rees-Davies, W. R.

      Hunt, John (Ravensbourne)

      Renton, Tim

      Hurd, Hon Douglas

      Rhodes James, Robert

      Jessel, Toby

      Rhys Williams, Sir Brandon

      Jopling, Rt Hon Michael

      Ridsdale, Sir Julian

      Joseph, Rt Hon Sir Keith

      Rifkind, Malcolm

      Kaberry, Sir Donald

      Roberts, M. (Cardiff NW)

      Kilfedder, James A.

      Ross, Stephen (Isle of Wight)

      King, Rt Hon Tom

      Rossi, Hugh

      Lamont, Norman

      Sainsbury, Hon Timothy

      Lang, Ian

      Shaw, Giles (Pudsey)

      Lawrence, Ivan

      Shaw, Michael (Scarborough)

      Le Marchant, Spencer

      Shepherd, Colin (Hereford)

      Lennox-Boyd, Hon Mark

      Shersby, Michael

      Lester, Jim (Beeston)

      Skeet, T. H. H.

      Lloyd, Peter (Fareham)

      Speed, Keith

      Loveridge, John

      Speller, Tony

      Luce, Richard

      Spence, John

      Lyell, Nicholas

      Sproat, Iain

      Macfarlane, Neil

      Squire, Robin

      MacKay, John (Argyll)

      Stainton, Keith

      McNair-Wilson, M. (N'bury)

      Stanbrook, Ivor

      McQuarrie, Albert

      Stevens, Martin

      Major, John

      Stewart, A.(E Renfrewshire)

      Marlow, Tony

      Stradling Thomas, J.

      Mates, Michael

      Thorne, Neil (Ilford South)

      Mather, Carol

      Thornton, Malcolm

      Mawby, Ray

      Townend, John (Bridlington)

      Mawhinney, Dr Brian

      Townsend, Cyril D, (B'heath)

      Maxwell-Hyslop, Robin

      Trippier, David

      Mayhew, Patrick

      Trotter, Neville

      Mellor, David

      van Straubenzee, W. R.

      Meyer, Sir Anthony

      Vaughan, Dr Gerard

      Miller, Hal (B'grove)

      Viggers, Peter

      Mills, Iain (Meriden)

      Walker, Rt Hon P. (W'cester)

      Mitchell, David (Basingstoke)

      Walker-Smith, Rt Hon Sir D.

      Moate, Roger

      Waller, Gary

      Morris, M. (N'hampton S)

      Watson, John

      Morrison, Hon P. (Chester)

      Wells, Bowen

      Murphy, Christopher

      Wheeler, John

      Myles, David

      Wickenden, Keith

      Neale, Gerrard

      Wilkinson, John

      Needham, Richard

      Younger, Rt Hon George

      Newton, Tony

      Onslow, Cranley

      Tellers for the Ayes:

      Osborn, John

      Mr. Robert Boscawen and Mr. Donald Thompson.

      Page, Rt Hon Sir G. (Crosby)

      NOES

      Allaun, Frank

      Dixon, Donald

      Ashton, Joe

      Dobson, Frank

      Atkinson, N. (H'gey,)

      Dormand, Jack

      Bennett, Andrew (St'kp't N)

      Dubs, Alfred

      Booth, Rt Hon Albert

      Dunwoody, Hon Mrs G.

      Boothroyd, Miss Betty

      Eadie, Alex

      Bray, Dr Jeremy

      Eastham, Ken

      Brown, Hugh D. (Provan)

      Edwards, R. (W'hampt'n S E)

      Callaghan, Jim (Midd't'n & P)

      Ellis, R. (NED'bysh're)

      Campbell-Savours, Dale

      English, Michael

      Canavan, Dennis

      Evans, John (Newton)

      Carmichael, Neil

      Field, Frank

      Clark, Dr David (S Shields)

      Fitt, Gerard

      Cocks, Rt Hon M. (B'stol S)

      Flannery, Martin

      Concannon, Rt Hon J. D.

      Fletcher, Ted (Darlington)

      Cook, Robin F.

      Foster, Derek

      Cowans, Harry

      George, Bruce

      Craigen, J. M.

      Gourlay, Harry

      Cryer, Bob

      Grant, George (Morpeth)

      Cunliffe, Lawrence

      Hamilton, James (Bothwell)

      Cunningham, G. (Islington S)

      Hamilton, W. W. (C'tral Fife)

      Dalyell, Tam

      Harrison, Rt Hon Walter

      Davidson, Arthur

      Haynes, Frank

      Davies, Ifor (Gower)

      Hogg, N. (E Dunb't'nshire)

      Davis, T. (B'ham, Stechf'd)

      Home Robertson, John

      901

      Homewood, William

      Newens, Stanley

      Hughes, Robert (Aberdeen N)

      O'Neill, Martin

      Jones, Dan (Burnley)

      Palmer, Arthur

      Lamond, James

      Pendry, Tom

      Lestor, Miss Joan

      Powell, Raymond (Ogmore)

      Lofthouse, Geoffrey

      Prescott, John

      Lyons, Edward (Bradf'd W)

      Richardson, Jo

      McCartney, Hugh

      Roberts, Albert (Normanton)

      McElhone, Frank

      Ross, Ernest (Dundee West)

      McKay, Allen (Penistone)

      Skinner, Dennis

      McKelvey, William

      Snape, Peter

      Marks, Kenneth

      Soley, Clive

      Marshall, D(G'gow S'ton)

      Spriggs, Leslie

      Maxton, John

      Stoddart, David

      Miller, Dr M. S. (E Kilbride)

      Stott, Roger

      Mitchell, Austin (Grimsby)

      Taylor, Mrs Ann (Bolton W)

      Morris, Rt Hon A. (W'shawe)

      Thorne, Stan (Preston South)

      Morton, George

      Tilley, John

      902

      Urwin, Rt Hon Tom

      Young, David (Bolton E)

      Welsh, Michael

      White, Frank R.

      Tellers for the Noes:

      Wilson, Rt Hon Sir H.(H'ton)

      Mr. Joseph Dean and Mr. James Tinn.

      Winnick, David

      Woolmer, Kenneth

      Question accordingly agreed to.
      Resolved,
      That, for the purposes of any Act of the present Session to provide for the reconstitution of the British Transport Docks Board and to confer on a company powers over that body corresponding to the powers of a holding company over a wholly-owned subsidiary, it is expedient to authorise any charge to tax attributable to provisions treating as dividends payments made by that body to that company.

      BUSINESS OF THE HOUSE
      Ordered,
      That, at this day's sitting, the Motion relating to Member's Salaries may be proceeded with, though opposed, until half-past Eleven o'clock or for one and a half hours after it has been entered upon, whichever is the later.—[Mr. Mather.]

      Members of Parliament (Salaries)
      Queen's recommendation having been signified—
      Motion made, and Question proposed,
      That the following provisions about salaries of Members of this House be made:—
      The salary payable to Members of each of the descriptions in the first column of the following Table—

      (a) in respect of service on and after 13 June 1980 and before 13 June 1981 shall be at the yearly rate specified in relation to that description in the second column of that Table; and

      (b) in respect of service on and after 13 June 1981 shall be at the yearly rate specified in relation to that description in the third column of that Table.

      Table

      Description of Member

      Yearly rate of salary from 13 June 1980 to 12 June 1981

      Yearly rate of salary from 13 June 1981

      £

      £

      1. Member not within paragraph 2

      11,750

      13,150

      2. Officer of this House or Member receiving a salary under the Ministerial and other Salaries Act 1975 or a pension under section 26 of the Parliamentary and other Pensions Act 1972

      6,930

      7,670

      —[Mr. Mayhew.]

      10.12 pm
      Mr. David Stoddart: I understand that the purpose of the motion is to enable the salaries of EuroAssembly persons to be increased in line with the salaries of Members of this House. As the Minister did not explain the motion, no doubt he will correct me if I am wrong. I shall confine my remarks to what I believe that the motion means.
      When the salaries of Members of the European Assembly were first agreed, I believe that I voted against them. However, the House decided otherwise. I remain of the opinion that the European Assembly has only a marginal role, if it has one at all. It has no legislative powers. It has no real decision-making powers. It has no powers of taxation. This House has the responsibility for raising all taxes paid over to the EEC.
      According to a written answer that was given by the Financial Secretary to the Treasury on Wednesday 1 April, since 1973 we have paid in taxation to the EEC £4,069 million. That money has been raised by taxing the British people; and it is this House that takes responsibility for such taxation. It is this place that faces the aggro from the voters who have to pay these taxes and who believe that these huge sums are paid to the EEC for no good purpose save for those who think that extremely high food prices are good in themselves.
      The European Assembly meets for only two weeks out of four. It does not really have the powers of a parish council. We do not pay parish councils anything, but
      904
      perhaps we should be charitable and accept that we should pay European Assembly persons a nominal fee rather than a salary.
      In struggling to find a role for themselves, Members of the European Assembly seem to be swanning all over the place. This is happening at great expense to the European taxpayer. We heard that the cost was £250,000 a time for one trip by about 16 Members and 60 advisers and interpreters. Members of the European Assembly visit the Lomé countries. The purpose of that I do not know, as the Lomé countries have permanent representatives in Brussels. They negotiate between the Commission and the Council of Ministers, which are the powerful bodies in the EEC.
      Some Members of the European Assembly are so anxious to find a role that, even now, they wish to discuss with representatives from other countries such as Germany, France, Denmark and Italy, matters for which the House has absolute responsibility and power. One of these members wants to discuss the British Nationality Bill which is now in Committee. However, those matters are not for those countries but for this sovereign Parliament to which Members of the European Assembly are subject. They depend on its consent for their continued existence.
      We know that Conservative right hon. and hon. Members are concerned about the expenditure of public money and that they wish to curtail it. This expenditure will increase public expenditure by the Government in payment of salaries and will be additional to the £125 million which is spent by the European Assembly every year—that is about three times what is spent in this Parliament—on what is a useless body, as we would say if we were honest about it.
      I always have believed that there is no need for that Assembly. Ministers are accountable to this House and this House alone. I wish that some of my hon. Friends in the Labour Party who are members of the European Assembly would make it clear to the European Assembly that it has no role. They should press for its disbandment. If they did that, they would be doing a real job in accordance with party policy, which would comply with the wishes of most people in this country.
      Having reiterated my position—possibly ad nauseam—I do not intend to vote against the motion because we gave an undertaking to Members of the European Assembly that their salaries would be tied to the salaries of Members of this House. Parliament should not rat on a decision which it took a little while ago. Therefore, I shall not vote against the motion, but I hope that I have made my view clear, that we are throwing good money after bad.
      10.18 pm
      Mr. Alan Clark: The House is considering this problem because of an oversight—with which we all sympathise—by the Home Office, as a result of which the salaries for the Members of the European Assembly were not confirmed at the same time as our own. We understand that there was no malevolence in that oversight. Nevertheless, it gives the House a welcome opportunity—albeit an accidental one—to consider the performance of the Assembly men before we confirm their salaries, and the extent to which they have justified the salaries which we will be asked to vote for them.
      We all have our views about the identity and adequacy of Members of the European Assembly. We realise that the

      905
      large majority originally hoped and intended to come to this place. For various reasons, probably not unattributable to their personality or acceptability, they were rejected by the various bodies charged with the task of selecting candidates to contest general elections. As we know, they failed and subsequently found consolation in being confirmed as Members of an Assembly whose functions are largely nugatory and meaningless.
      The next stage that those persons entered into, readily and greedily, was to try to ensure unlimited access to this place. Although they were not elected, they none-the-less by back-door devices tried to ensure that they were allowed to move freely in this place, as if they had been elected. Thankfully, and due to the corporate wisdom of the House, that has so far been rejected and, I believe, will continue to be rejected by the House.
      Simultaneously, those persons moved to a second condition of—if I may use the language of the Common Market, and in this case the House may consider it appropriate—Folie de Grandeur. They sought to ensure for themselves an immunity in the passage of customs.
      In parenthesis, may I say that it is curious that the majority party as returned to the European Assembly—
      Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. We are debating the proposed salary increase. The hon. Gentleman must confine himself to the motion on the Order Paper.
      Mr. Clark: I am greatly obliged to you, Mr. Deputy Speaker, for reminding me of that, but you will appreciate that, when considering the proposed increase in salaries, the House has also to consider whether these—I do not know the generic term for them—
      Mr. Tom Pendry: Rejects.
      Mr. Clark:—are worthy. We should, therefore, scrutinise generally whether they are worthy of the increase.
      Another factor which these persons were not slow in seeking to establish—and it was reported in The Times as recently as yesterday—was immunities. They have sought to establish that they should be immune from arrest and prosecution, under the common law and statute of the countries in which they commit an offence, should they do so. That is another example of their attempt to elevate themselves above even the status of Members of this House.
      Mr. Michael English: Is it a question of their trying to arrogate themselves above Members of this House or believing themselves to be more likely to commit offences?
      Mr. Clark: It would be inappropriate—and I am sure, Mr. Deputy Speaker, that you would rule it out of order—to speculate on that. However, Members of the European Assembly who have been charged with common law or statutory offences have sought to avoid arrest or punishment by seeking to establish an immunity dependent on their status.
      Mr. Deputy Speaker: Order. The hon. Gentleman must relate his remarks to the remuneration of Members of the European Parliament.
      Mr. English: It is a point of law in this country that nobody can benefit by a criminal offence.
      Mr. Clark: In certain circles, it might be thought that a perk or attribute of a particular office that is remunerated would be that it carried immunity from prosecution or arrest. As these "characters"—I use that generic terra as it embraces both females and males—have sought to establish free passage through customs, and immunity from arrest and detention as perquisites of their office, it seems to me that they have moved some way towards elevating themselves to a status where the House might seriously question whether it can vote, without considerable discussion and examination, on the advisability of ranking them with ourselves in financial terms.
      10.26 pm
      Mr. Bob Cryer: This proposal should not pass without comment. Our salary increases were accepted and agreed last year. It is highly misleading to place upon the Order Paper an item relating to
      "provisions about salaries of Members of this House"
      without indicating that it is in fact designed to allow the salaries of European Assembly Members to be increased. Such a provision should not be allowed to pass without some comment on the merits of the increase.
      Many Labour Members and a few Conservative Members opposed the European Assembly elections in principle. As it happened, so did the people. The turn-out was abysmally low because people did not understand or care about it and instinctively recognised that it was merely a talking shop which would have no effect at all. It is interesting to compare the level of participation in United Kingdom elections with that in the Euro-elections. As an indication of the nature and content of the power of this place as compared with the European Assembly, long may there continue to be a much greater participation in our elections than in European Assembly elections.
      It is worth reminding the House that the legislation for the European Assembly elections was passed by the Labour Government only on the threat of Labour Ministers being sacked if they voted for Labour Party policy. The Labour Party opposed the European Assembly elections because it viewed the Assembly as no more than a democratic facade to paste over a highly anti-democratic and bureaucratic operation known as the Common Market in which the Assembly has no power. Power is wielded in secret by commissioners and councils of Ministers which have in effect the power of legislation and which meet behind closed doors. We felt at that time and many of us feel now and, indeed, the Labour Party still maintains the attitude—that the Assembly is no more than a talking shop to give some kind of democratic respectability to a system that is otherwise highly anti-democratic.
      One looks askance at the percentage increase. One can make the point, as did my hon. Friend the Member for Swindon (Mr. Stoddart), that an undertaking was given that a link would be maintained. The question of dividing the House may not therefore arise. However, we should issue a warning that the way in which opinion in the Labour Party and the country at large is developing is leading to our disentanglement from the Common Market. That would mean withdrawal from the bureaucratic apparatus of the Commission and of the Council of Ministers, and from the European Assembly.
      Mr. Douglas Hogg: Where is the hon. Member's internationalism?
      Mr. Cryer: Our view has always been that the world does not stop at the boundaries of the Common Market. Our internationalism spreads across the world. It is not confined to the inward-looking trading arrangements of the Common Market.
      Mr. Deputy Speaker: Order. The hon. Gentleman must not be provoked by interventions. He must stick to the motion that is before the House.
      Mr. Cryer: Thank you Mr. Deputy Speaker for your protection against the savage attacks of the hon. Member for Grantham (Mr. Hogg). I hope that I shall retain your indulgence long enough to explain that the Labour Party is an international Socialist Party which looks beyond the boundaries of a narrow trading organisation which shelters behind parity.
      There is without doubt a mood in the country, reflected in Labour Party policy, to the effect that the United Kingdom should withdraw from the Common Market. That is one issue that we should be debating here and outside the House. We can do it here by making clear that the Assembly represents nothing more than a hollow talking shop.
      Mr. James Kilfedder: The hon. Gentleman spoke of the assurances given about the linking of salaries. How do the expenses given to a Member of the European Parliament compare with those paid here?
      Mr. Cryer: I was about to come on to that point.
      The increase in the motion constitutes a percentage that the Civil Service would greatly welcome. Civil servants are at the moment fighting an industrial action to try to secure a decent increase.
      The expenses which the Members of the European Assembly receive are, by all accounts, lavish. In addition, they enjoy expensive and well-organised trips provided at the expense of the Community. They jet all over the place on highly costly fact-finding trips in a manner which seems unnecessary and ostentatious. We are right to criticise the ostentatious activities of some—though not all—of these Members.
      We should therefore make our opposition clear tonight. We should put down a marker for the future and show that we recognise that the European Assembly is meaningless. We should show that we recognise that the Common Market has done nothing but damage to this country and that there are means of maintaining trading relations with Common Market countries without our getting entangled in their bureaucratic structure.
      We could work together with other countries—not only the Common Market countries—as equals but not as subordinates to a bureaucratic structure to which the European Assembly lends no democratic credibility.
      10.34 pm
      Sir Anthony Meyer: I hate to disrupt—even briefly—the beautiful harmony that exists over the salaries to be paid to European Members of Parliament. However, it would be a pity if no voice were raised to correct some of the misconceptions that linger on, even in the mind of so brilliant, so well-informed, judicious and wise a speaker as my hon. Friend the Member for Plymouth, Sutton (Mr. Clark).
      In case my hon. Friend does not understand, I should explain that there are some female European Members of Parliament. Not all its members have been rejected by this
      908
      House. Some were elected to this House but chose to retire. I think of Mrs. Barbara Castle and Sir James Scott-Hopkins. They are elected to their position in the same way as we are. They are worthy of the salaries that they receive, if only because of the extremely good work that they do in the European Parliament. They put across the Government's policies as well as those of the Labour Party—if it has any. Indeed, if the Labour Party's reputation in Europe is not as low as it might be, it is due more to the activities of some of its members in Strasbourg than to anything that we may hear from Opposition Members.
      Mr. Alan Clark rose—
      Sir Anthony Meyer: I shall not give way. My hon. Friend made a long speech and I shall make a short one.
      Mr. Clark rose—
      Sir Anthony Meyer: I have no intention of giving way. Members of the European Parliament are elected in exactly the same way as we are. Admittedly, they are not of the tremendous intellectual calibre of the speakers that we have heard tonight. Nevertheless, Members of the European Parliament include men such as Sir Henry Plumb, Sir Frederick Catherwood and Basil de Ferranti. Therefore I am not talking about the ultimate in nit-wits.
      If anyone reads the Official Report, he will not be immensely impressed by the breadth of vision displayed by the Mother of Parliaments.
      10.37 pm
      Mr. Frank Haynes: I should like to attack this subject from a different angle. My hon. Friend the Member for Keighley (Mr. Cryer) made his usual first-class contribution. He made a first-rate attack on the European Parliament and on Great Britain's membership of the EEC.
      The salaries of Members of Parliament and of European Members of Parliament involve public expenditure. We hear a lot about public expenditure from the Government Dispatch Box. They say that they were elected to reduce public expenditure and, thereby, inflation, in the interests of the nation and of the economy. That is the approach that I shall adopt. The Government should be ashamed of themselves and of the vindictive policies that they have imposed on the nation's workers. After all, it is the workers who pay these salaries.
      I remember the debate on the salaries of Members of Parliament. I did not have the opportunity to make a speech on that_ occasion. I am seizing the opportunity tonight, because I am seething like my constituents who come to my surgery regularly complaining about the way in which they are being hit. We had a massive unemployment lobby not long ago. For example, the pensioners were told that the Government would rake back 1 per cent. of their pension increase next time. Yet here we can afford to discuss increases of this size for European Members of Parliament because it is linked with the figure that we shall enjoy ourselves.[Interruption] I thought that the unruliness was on the other side, but it appears to affect Labour Members as well. The awful, vindictive policies of the Government make Al Capone look like a saint. However, we are discussing the increases that European Members of Parliament will enjoy. I want to make it clear that in no way shall I vote against the order, but an agreement was reached last year and I shall not breach that

      909
      or rat on it. felt that I should make my feelings clear about what is happening to the people we are supposed to represent. We are crucifying them at the same time—[Interruption.] I am talking about the Government.
      Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. The hon. Gentleman should be talking about Member's salaries, not about the Government.
      Mr. Haynes: I am trying to explain how the Government raise the finance to be able to pay the increase proposed by the motion. Some Conservative Members have very short memories. I try to remember many of the things that are said. When people are told that they can have only a certain percentage increase, when we are supposed to have free collective bargaining, we should not be doing this. This is a massive increase compared with the increases some of our workers enjoyed in the last pay round. It is totally unfair.
      The Government should come clean and have more fairness in their policy on behalf of the workers of this nation whom we represent in this place.
      10.43 pm
      Mr. George Cunningham: The House has a number of opportunities, though not enough, to debate the affairs of the European Community, but not many of them allow the House to address itself to the relationship between this place and the European Assembly. We could do with some opportunities to do so. I do not think that the motion presents the proper opportunity to do so, and I want to speak for only a minute or two on the very narrow subject matter and purpose of the motion.
      In 1979 we passed the European Assembly (Pay and Pensions) Act, which laid down that the salary of a European Member of Parliament should be the same as that for the time being paid to a British Member of Parliament. That decision, taken in the Council of Ministers—questionably legal, I might say—was very much at the instigation of Britain. Therefore, we have an obligation to do whatever is necessary to implement it. Of course, everybody thought that we had done what was necessary to implement it, but a mistake has been made—not for the first time in the general context of motions relating to Members' salaries. The money that we are talking about is already in payment to European Members, as it is to Members of this House.
      If the Government had done the sensible thing in July and August, we would not be faced with the difficulty of retrospectively authorising something which has been going on, without proper authority, for about nine months. The House had two motions before it in July, an opinion-expressing motion and an effective motion. Hon. Members who took part in that debate may recollect that when we carried amendments to the opinion-expressing motion I suggested, not speaking in a home affairs capacity, that the Leader of the House should withdraw the second motion and bring it back suitably amended. If he had done that, we would not be in the present mess. Unfortunately, when the motion came back it did not repeat the terms used in the previous July, and so the mistake has grown up.
      I hope that the Minister of State, Home Office will pass on to the Leader of the House the view that it would be useful if he would consider all the complications that have
      910
      arisen from the 1972 Act dealing with Members' pensions. It was from the sloppy drafting of that Act that the difficulties that have culminated in the motion arose. Because of the way in which that Act was drafted, we normally have to pass motions on this subject in a cumbersome manner, with two motions instead of one. That was the only way of getting out of the difficulty that was belatedly discovered in about 1978, but it is not an easy way of dealing with things.
      The motion on the Order Paper ought to be passed. It does no more than do for European Members what we do for ourselves, which is required by the Act that Parliament has passed. It does no more than to repeat the terms of the motion that the House passed in June in respect of our own salaries, and there is no reason why it should not be passed without opposition.
      10.47 pm
      The Minister of State. Home Office (Mr. Patrick Mayhew): I cannot complain, particularly as I have enjoyed it, at the fact that hon. Members have taken full advantage of the rich opportunities that the legislative slip referred to by the hon. Member for Islington, South and Finsbury (Mr. Cunningham) has afforded them. I hope that I shall be forgiven if I do not range as wide as some other hon. Members but address myself to the narrow point that the hon. Member has discussed, because it is the guts of the motion.
      The purpose of the motion is to correct a technical error relating to the salaries of United Kingdom representatives in the European Assembly. [t does not change the salaries, pensions or allowances of Members of this House and it does not alter the terms under which the House has determined, in legislation, to pay the salaries and pensions of United Kingdom representatives in the European Parliament.
      Sir Anthony Meyer: I am trying to be helpful, but I find it hard to understand why we are debating the salaries of Members of the European Parliament on a motion which makes no mention of the European Parliament. It refers solely to the salaries of Members of this Parliament.
      Mr. Mayhew: I greatly enjoyed my hon. Friend's speech and I look forward to explaining the point that he has understandably raised.
      The need for the resolution is this. Parliament has determined in passing the European Assembly (Pay and Pensions) Act 1979 that Members of the European Assembly should receive the same ordinary salary as Westminster Members save where they hold a dual mandate, in which case they should receive that salary with an addition of one-third of it.
      Proposed salaries of Members of this House are set out in motions to approve resolutions of the House of Commons. There are two kinds. The first is an abstract resolution passed as an expression of opinion to which the Government have expressed their agreement, which is sufficient authority to pay the ordinary salaries of Westminster Members. This is because Members' salaries here are paid under the authority of the Appropriation Act out of voted moneys, and an abstract resolution is a sufficient basis for the submission of appropriate Estimates.
      The second kind of resolution is one such as that appearing on the Order Paper, known as an effective

      911
      resolution that bears the Queen's Recommendation. An effective resolution is an authority that is required to pay the pensions of Members of this House. It is also required in order to pay the salaries of our representatives to the European Assembly. Their salaries are charged on, and paid out of, the Consolidated Fund; and payment requires the authority of the Comptroller and Auditor General. Thus, the salary of a Member of the European Parliament is ascertained by reference to the last effective resolution by the House of Commons on the salaries for Members of the House of Commons. It is complicated, but that is the situation.
      Mr. Alan Clark: I am greatly interested in the nomenclature used by my hon. and learned Friend. At the start of his speech he referred to Members of the European Parliament. That is, of course, a solecism. When reading from his text, drafted by goodness-knows-who—they were, however, sticking to the rules of accuracy—he referred consistently to the European Assembly. In the penultimate sentence, he reverted to the term "European Parliament". The correct term is "European Assembly". The concept of the European Parliament is a cosy notion that has been introduced as a way of making the whole idea more acceptable to the public of this country. I am interested in the variation of terms that my hon. and learned Friend uses.
      Mr. Mayhew: My hon. Friend is right. At this time of night, it is rather jolly to vary one's language.
      On 21 July 1980, the House carried an abstract resolution on pay to increase the salaries of Members of this House from £10,725 to £11,750 with effect from 13 June 1980.
      Mr. English: I am grateful to the hon. and learned Gentleman for noticing me after some delay. Why did he drag the Comptroller and Auditor General into this issue? The Comptroller and Auditor General is a quasi-autonomous civil servant. It has been suggested that he should be independent, but he is not, in fact, independent. Why was he dragged in?
      Mr. Mayhew: The Comptroller and Auditor General does a rather dull job and he likes a mention in the House of Commons from time to time.
      The House rejected, however, the related effective resolution bearing the Queen's Recommendation when it rejected the Government's proposal on Members' pensions. An effective resolution to give effect to the pensions increase was finally passed on 19 February this year. This related only to a Westminster Member's pay for pension purposes, his pensionable salary. But the last effective resolution on Westminster Members' salaries was passed on 11 July, 1979.
      The lack of any effective later resolution on the salaries of Westminster Members meant that there was no legal authority to pay the increase to representatives of the
      912
      European Parliament which had been authorised for Members of this House. Members of the European Assembly are therefore currently entitled to draw only £10,725 a year instead of £11,750 payable to Westminster Members. This was clearly accidental. It was not a deliberate expression of opinion by this House. The fact that there was no proper legal authority came to light in February and was drawn by the Government to the attention of the Comptroller and Auditor General. The Comptroller informed the Government that it would be necessary to cease paying representatives at the higher rate until an effective resolution had been passed.
      It is to remedy that situation that this motion has been introduced. Express provision is made for retrospection in section 1(5) of the 1979 Act. Accordingly, I commend the motion to the House.
      Mr. English: Was there a suspension payment during that period?
      Mr. Deputy Speaker: Order. I thought that the Minister had sat down. I called the hon. Member for Nottingham, West (Mr. English) to make a speech.
      Mr. English: I thought that I was addressing you, Mr. Deputy Speaker. I was perhaps asking a rhetorical question. It is important to decide whether such questions are rhetorical.
      Let us take the Crown Agents. Every payment from the Crown Agents since 1837 was illegal. No one noticed it. Now we are suggesting that some payments may be illegal. Or were they paid? The Minister's statement did not make that clear. He made it clear that the Comptroller and Auditor General should not be paid, but he did not say whether the payment was made.
      Question put and agreed to.
      Resolved,
      That the following provisions about salaries of Members of this House be made:—
      The salary payable to Members of each of the descriptions in the first column of the following table—

      (a) in respect of service on and after 13 June 1980 and before 13 June 1981 shall be at the yearly rate specified in relation to that description in the second column of that Table; and

      (b) in respect of service on and after 13 June 1981 shall be at the yearly rate specified in relation to that description in the third column of that Table.

      Description of Member

      Yearly rate of salary from 13 June 1980 to 12 June 1981

      Yearly rate of salary from 13 June 1981

      £

      £

      1. Member not within paragraph 2

      11,750

      13,150

      2. Officer of this House or Member receiving a salary under the Ministerial and other Salaries Act 1975 or a pension under section 26 of the Parliamentary and other Pensions Act 1972

      6,930

      7,670

      Northern Ireland (Queen's University of Belfast)
      10.57 pm
      The Under-Secretary of State for Northern Ireland (Mr. John Patten): I beg to move,
      That the draft Queen's University of Belfast (Northern Ireland) Order 1981, which was laid before this House on 25 February, be approved.
      The senate of Queen's University of Belfast, has petitioned Her Majesty for a new charter. The new charter has been requested as a result of changes in circumstances since the university was incorporated at the beginning of the century and with a view to the better management of its affairs. The general objective of the revised charter and statutes is to simplify and clarify the statutes and to make their provisions more appropriate to present-day circumstances.
      The changes have two main effects. First, the statutes are re-arranged in a more logical order, and unnecessary detail and obsolete provisions have been removed from them. Items likely to be the subject of frequent amendments are also removed, and will now be dealt with by resolution of the senate from time to time as necessary. Secondly, provision is made in the new charter for all categories of academic staff and the student body to have a voice in the academic affairs of the university, and for a reduction in the work load of some of its existing committees.
      At every stage in the development of the revision of the charter and statutes the appropriate university bodies were consulted, and they included the students' representative council. It is hoped that the proposed new charter will come into operation in January 1982.
      If Her Majesty is pleased to grant the new charter, certain legislation relating to the university will require to be repealed. The order now before the House provides for those repeals. The most important repeals concern the financial arrangements of the university. Those provisions authorise grants payable to the university and require the accounts of the university to be audited by the Comptroller and Auditor-General.
      The provisions relating to the payment of grants no longer serve any effective purpose because the amounts of the grants authorised are deducted from the total figure recommended by the University Grants Committee. At present grants paid by the Department of Education to the university run to over £21 million a year. Of that sum only £60,000 is based upon the statutory authority of the legislation which will be repealed if the order is approved. That is unusual. For the future we propose to rely on the statutory authority of Appropriation orders for all the grants payable to the university by the Department of Education. I reassure the House that payment will be conditional upon the Comptroller and Auditor-General being accorded continued access to the university's books and records.
      Mr. Michael English: Which Comptroller and Auditor-General—the United Kingdom one or the Northern Ireland one?
      Mr. Patten: I am referring to the United Kingdom Comptroller and Auditor-General.
      The changes will bring Queen's University into line with comparable practice in other United Kingdom
      914
      universities. We are not differing from that practice. The provisions of the new charter supersede part of the remaining legislation being repealed while the rest has simply become obsolete with the passage of time.
      I commend the order to the House.
      11.1 pm
      Mr. Tom Pendry: The debate provides the House with an opportunity to discuss the new charter and statutes. It is important to discuss the formation of the senate, as designated in the new statutes and charter and to make a few points about the representation of university staff and students.
      I call attention to the time that has being taken in preparing the new charter and statutes and contrast it with the brief consultative procedures. The move to change the charter and statutes began in the late 1960s. The students, who make the university what it is, were allowed to comment on the proposals only after a lengthy legal quibble. Then they had to meet an almost impossible timetable of less than three months. Perhaps the Minister will reflect on what he said about that, because he appears to be wrong.
      The trade unions which represent the non-academic employees were not consulted at all. To omit consultation with such interested groups shows that the nineteenth century statutes that we hope to repeal tonight have pervaded attitudes towards students and non-academic staff. There is not much evidence of forward thinking by the Committee that reviews statutes in that respect. I am sorry that the Committee did not follow the practice of most other public and commercial institutes of undertaking close consultation with all interested groups at an early stage.
      The Committee erred by acting without prior consultation with groups with an interest in the government of the university. It decided rightly that there was no justification for the anomalous position whereby the Northern Ireland Chamber of Commerce was represented on the senate when the Northern Ireland Committee of the Irish Congress of Trade Unions was not. Rather than follow the sensible course and give the unions a seat in the senate, the committee decided that a seat should not be given to either group.
      What makes the position rather worrying is that the Northern Ireland Chamber of Commerce has plenty of opportunities under the provisions of the statutes to gain representation on the senate. For instance, Northern Ireland industry gains a disproportionate representation on the senate through appointments to the executive committee of the better equipment fund. This fund was originally set up to improve equipment at the university in 1908 but is now a dated anachronism. I find it hard, for instance, to understand why the committee on the review of statutes did not consider the backdoor appointments of the fund to the senate to be out of keeping with a twentieth century charter and statutes. In the past the better equipment executive committee has appointed three individuals from the spheres of banking, industry and commerce to sit on the senate, and it appears that that practice is to continue.
      I also find it hard to rationalise the situation whereby outsiders have a stronger influence on the governing body of an institution than do certain important groups within that institution, namely, the students and non-academic staff.

      915
      A more detailed examination of the proposed form of the new senate reveals some interesting and, in many cases, welcome departures from the existing structure. I would certainly commend those to the House, but they are few. Two members from the non-academic staff are to be elected to sit on the senate, but how they are to be elected is still not clear, and perhaps the Minister will tell us this when he winds up. The problem with this is that a representation of two is insufficient to cover three types of non-academic staff—technical, clerical and manual. In my view, there should be at least one representative for each of these groups and they should be elected through their appropriate trade union machinery.
      I also note that there is to be a place on the senate for one member of the student council in addition to the student union representative, and that of course is a welcome move, but considering that there are in excess of 6,000 students in this university. I believe it to be an inadequate representation. There is no justification for the clause which gives voting rights to these representatives only if they are graduates.
      I am sorry to note that the representation of the convocation has been increased from eight to 10. Only a very small fraction of the graduates of Queen's are active participants in the current work of the university and I therefore suggest that those extra seats should have gone to the students and the trade union representatives, as I have outlined.
      Dr. Brian Mawhinney: Am I not right in believing that it is a requirement of the University Grants Committee that undergraduate students do not have the right to vote and that it is something that pertains not to the statutes of this university only but to those of all universities?
      Mr. Pendry: The point to make is that this is a new charter, which is bringing up into the twentieth century legislation which in many cases, as we see from the order, dates back to the previous century. I am suggesting, and I think it is reasonable to suggest, that this is a great opportunity to make some innovations and to set a trend for the future. There are not too many new charters for universities around at the moment and I think it would be a great opportunity for this university to act in a twentieth century way.
      Queen's University is an important academic institution which has made a lasting contribution to the community in Northern Ireland and beyond. I wish it well in the future and I certainly hope that some of the points that I have made will be taken on board by those who will scrutinise the charter once this order is passed by the House, as I hope it will be tonight.
      11.10 pm
      Mr. John Biggs-Davison: The hon. Member for Stalybridge and Hyde (Mr. Pendry) has made some suggestions about the terms of the new Royal charter for the Queen's University of Belfast. I am not quite sure where the university has got to. Is this charter a draft, or is it in its final form? Will account be taken of the suggestions made by the hon. Gentleman and other suggestions which may be made in the debate?
      I realise that the Royal charter is more a matter for the prerogative and the Privy Council than for this House.
      916
      Nevertheless, the heart of the order is the Royal charter, which I have not seen. I believe that the hon. Member for Stalybridge and Hyde must have seen it, because he was referring to what he considers to be omissions from it. Will the charter, whether it be in draft or in a final form, be made available to hon. Members?
      I wonder why the university petitioned Her Majesty for a new charter in advance of the main report to be submitted eventually by Sir Henry Chilver, who in December 1978 undertook
      "to consider the present provision of higher education in Northern Ireland, to review both the general and the particular needs of the Northern Ireland community in the 1980s and 1990s for higher education (including advanced further education) and to make recommedations".
      The Chilver committee has, of course, produced an interim report on teacher training. This has, I believe received the approbation of the hon. Member for Down, North (Mr. Kilfedder), but it has also aroused considerable concern in the Roman Catholic community in Northern Ireland. The Government have not yet announced their intentions following the arrival of the interim report. It is something that the House would want to debate, whether in the Northern Ireland Committee or in this Chamber.
      But the main report, which we still await from Sir Henry Chilver and his committee, will presumably make proposals for the future of the new University of Ulster at Coleraine and for the Ulster Polytechnic at Jordanstown, as well as for Queen's University, Belfast, which is the subject of the order. What if Chilver makes recommendations which run counter to what is contained in the Royal charter? Will the Royal charter be held for a while, or what will happen? What will happen if Chilver produces recommendations which appear to be excellent and the charter has gone off in a quite different direction?
      11.12 pm
      Mr. J. Enoch Powell: Despite the two interesting speeches to which the House has just listened, what is before the House in the order is not the charter itself but simply the question whether the repeals set out in the schedule, and certain minor arrangements in the control of the financial support of Queen's University, should be made simultaneously or in connection with the granting of the new charter.
      So far as my hon. Friends and I have been able to ascertain, there is in no quarter any disposition to dispute those changes in legislation which are being made by the order. Nevertheless, the short debate so far has thrown up a certain requirement—not as a matter or right but perhaps of courtesy to the House—and that is that the House, and particularly Northern Ireland Members, should be able to have a view of the charter in its proposed form at an appropriate stage. It obviously imports substantial changes, and I mean no implication that there would be any disposition to criticise or seek to change these, but at least there is something curious in our tidying up before or after a charter of the contents of which we have no official knowledge.
      That said, I have only one comment to make upon the order itself, and that, I am afraid, is a comment which I too often have occasion to make when such orders come before the House. Article 1 states that the order will come into operation
      "on such day as the Head of the Department of Education may by order appoint."

      917
      Those who prepare, print and present the order to the House know that nothing of the sort will happen. They know that the order will be made by the Secretary of State and not by the non-existent entity the "Head of the Department of Education". That refers to the non-existent constitution which is in suspension by reason of the 1974 Act.
      Even if it is obligatory to continue printing in these orders what nobody means and nobody intends shall happen, at least I make a plea once again that the explanatory notes, which presumably, to judge by their name, are intended to explain and accompany the orders, should not repeat the mumbo-jumbo that does not apply but should tell hon. Members—not only Northern Ireland Members but Members generally—what will happen and the procedure that will be followed. That having been said, I welcome the minor tidying-up of the legislation connected with Queen's University which the order effects.
      The public support of university education has from a very early period run through the concern of the House with Ireland and subsequently with Northern Ireland. It goes back to the grant to Maynooth under Peel's Administration, which had the bizarre result of bringing about the first resignation of Mr. Gladstone. That was not because he disagreed with the grant to Maynooth—indeed, he agreed with the grant—but because he believed that it was inconsistent with his election address, a kind of conscientiousness that is perhaps somewhat disused today, although it may have its connections with the sort of debate that one understands is going on in the Labour Party.
      Mr. English: He was Tory at that time.
      Mr. Powell: I am well aware of that. I was not trying to associate Mr. Gladstone directly with the current internal affairs of the Labour Party. I was merely saying that the question of what should be the relationship between what is stated in the manifesto and how those who are elected on that manifesto behave when they are elected is still a live question, even though we do not always today handle it with the same delicacy and subtlety—a subtlety that baffled Sir Robert Peel, who admitted to be completely nonplussed by the attitude of his Vice-President of the Board of Trade in the matter.
      Mr. English: Surely the right hon. Gentleman will agree that at the time Gladstone was not elected on any election manifesto.
      Mr. Powell: He was elected upon his own manifesto.
      Mr. English: No. There was no party manifesto.
      Mr. Powell: I did not say that it was a party manifesto. I referred to the manifesto upon which he had been elected, the propositions to his electorate upon which he had been elected as well as the opinions that he had expressed in that extraordinary book "The State in its relations with the Church".
      I move on from Maynooth. It is ironical but by no means discreditable that it was in the year of the potato famine that Parliament proceeded to endow the three Queen's colleges of the Queen's University of Ireland as non-sectarian places of university education. In a sense, the structure of universities, other than that of Trinity College, Dublin, has since that time been built upon that provision. That is a fact worth putting on record since there
      918
      is so much popular misrepresentation of the concern of the House and of this country for the affairs of Ireland in the period of the famine.
      The next statute—I promise you, Mr. Deputy Speaker, that I will not go through them seriatim and, indeed, this is the last that I shall mention—is the one that stands at the head of the repeals that are set out in the schedule. It attached to the maintenance of the university which was to be converted into the Royal University of Ireland—though it would contain the same constituent colleges—funds which had been produced by the surplus at the disestablishment of the Church of Ireland by the Act of 1869.
      Thus the intentions which had been professed in connection with the disestablishment that the revenues should go to the purposes of education—and of education applicable to the whole of the population of Ireland—were carried into effect by that statute. So far as Northern Ireland was affected through the Queen's College of Belfast, as it was then, we are now tidying up the ultimate derivation of that public maintenance of non-sectarian university education in Ireland and now in Northern Ireland.
      Therefore, it is not an unworthy history which lies behind the minor adjustment of the law which the House, I am sure, will make in a few moments.
      11.22 pm
      Mr. James Kilfedder: The hon. Member for Epping Forest (Mr. Biggs-Davison) alluded to my attitude to the future of teacher training colleges in Northern Ireland. I agree with him that it is a tragedy that the Government, who protest that they have so much courage, have abandoned the right attitude to sectarian teacher training in Northern Ireland.
      The three teacher training colleges—St. Mary's, St. Joseph's and Stranmillis—should be abolished. Teacher training should be placed properly either at Queen's University Belfast or the new University of Ulster. I hope that something can be done to ensure that teacher training is taken out of the sectarian area and is placed in a nonsectarian university.
      Mr. Biggs-Davison: I think the hon. Member said that that was my view. I never expressed that view in the debate.
      Mr. Kilfedder: I hope that I have made it clear that I merely said that the hon. Member alluded to my attitude. If it is thought that I was trying to suggest that he was critical of the Conservative Government. I withdraw that. Enough Conservative Members are critical of the Government, without adding the name of the hon. Member for Epping Forest.
      The right hon. Member for Down, South (Mr. Powell) rightly referred to the history of university education in Ireland. I also pay tribute to what was done in the past. Queen's University of Belfast is one of the great Queen's colleges which Sir Robert Peel established by his Act of 1845. That Act of Parliament was one of the noblest achievements of Peel's intrusion into Irish affairs. The other was his decision in 1840 to separate the education of Roman Catholic clergy from the university education of Roman Catholic laity. As a consequence, the new Queen's colleges were to be open to students of all denominations, and there was to be no instruction by the colleges in dogmatic religion.

      919
      The signal achievement of Queen's University, Belfast, is that, since its foundation, the institution has managed to keep itself free from the virulent taints of sectarianism. It has survived attacks from many quarters, from the early part of the nineteenth century, for instance when Archbishop John McHale led the assualt in 1845 on what he dubbed the godless colleges, to the present.
      That Government, unlike others since, were not prepared to compromise on such a vital principle as nondenominational and non-sectarian higher education, and they firmly rejected all the demands made to create a religious divide, including the demand that Roman Catholic students at the Queen's colleges should be educated by Roman Catholic teachers approved by the church even when they were being instructed in history, logic, moral philosophy, anatomy and geology. Thank God that we do not have sectarianism in the university in Northern Ireland.
      Ulster and Southern Ireland owe a profound debt of gratitude to those who framed the Irish universities legislation of 1908 and to the men and women of the old Queen's colleges who persuaded the Privy Council in the previous century to grant the Irish universities a radical Royal charter. Queen Victoria's charter has continued to this day, although it will be replaced in due course. It is the rock base of the administration of Queen's University of Belfast.
      Because of the charter, and because of the 1908 Act, the arrangements for the internal government of the institution were far in advance of those for British universities. It should be made clear that we led the field in Ireland. Many of the provisions of the charter were not repeated in the articles of government of many Great Britain universities until after the commission of inquiry into student discontent about 12 years ago. That is especially true of the provisions relating to wide academic involvement with the university authorities on important committees dealing with finance.
      The old Queen's College, Belfast, when it became Queen's University, never broke faith with its charter or with the far-seeing provisions of the Irish universities legislation of 1908. It owes much to a succession of outstanding vice-chancellors. None was hampered, as are many of their colleagues in Great Britain, by unnecessary restrictions in charter provisions.
      I hope that the Government will heed the criticism of the hon. Member for Stalybridge and Hyde (Mr. Pendry). I share his disquiet. The non-academic staff and students should have been consulted in greater depth and earlier. I feel strongly that it is not sufficient to have only two student representatives on the senate, one the president for the time being of the students' union as an ex-officio member and the other a member of the students' union council to be elected by that council. A university with 6,000 students should have four student representatives. I do not know how many officers there are on the students' representative council, but I see no reason why we should not have the president, the secretary, the treasurer and another officer as ex-officio members of the senate.
      In conclusion, I refer to an article published in the "Higher Education Review" some years ago by Professor Moodie and some students and staff of York University. First, it states that:
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      "A university can either try to persuade its students that it is deserving of confidence in the exercise of its traditional authority, or it can take such action as it feels appropriate to enable the individual to identify himself more closely with the processes by which his institution is directed. The second course seems to us to be preferable. It has been increasingly evident that students (like many others) wish to see their views being taken seriously, and that they are no longer willing to believe that these views can accurately and effectively be transmitted by anyone from outside their number … At the heart of current problems of university government, therefore, there lie basic questions about the nature and purpose of authority in universities as well as questions about the procedures by which it is exercised."
      The other quotation reads as follows:
      "authority within a university must be exercised in a manner consistent with its own nature and source. If one accepts the traditional liberal conception of learning as involving criticism, thinking which is open to evidence and argument, and the twin intellectual qualities of freedom and integrity, then it follows that any authority which derives from a person's role in the learning process must not be exercised in arbitrary or despotic ways. Facts may be arbitrary and logic despotic but those who deploy them dare not be. Universities must therefore encourage and not merely permit discussion and criticism of their decisions by others, including the general public and, particularly, their own members …
      Understood in the ways we have outlined, the nature and source of authority carry with them important implications for the role of students (and others) in university government."
      I believe that just as Queen's University has led the field in the past, the Government should ensure that it will point the way for other universities in the future by provision being made to ensure that the students have a proper, adequate and effective voice in the senate. This can be achieved only if there are four representatives of the students themselves. Who better is there to fulfil that role—and this would be the simplest way—than those in whom the students have reposed their confidence by electing them as the four officers in the students union?
      Mr. English: I ask one simple question. The Minister said that any audit would be carried out by the Comptroller and Auditor General of the United Kingdom.
      Mr. John Patten: I inadvertently misled the House. It would be done by the Comptroller and Auditor-General for Northern Ireland. I apologise to the hon. Gentleman and to the House.
      Mr. English: That ends my speech.
      11.33 pm
      Dr. Brian Mawhinney: I hope to speak for a little, though not much, longer than the hon. Member for Nottingham, West (Mr. English). We have had an interesting debate which was greatly aided by the historical perspective given by the right hon. Member for Down, South (Mr. Powell) from his considerable erudition and added to by the hon. Member for Down, North (Mr. Kilfedder). Perhaps I may make a slightly more up-to-date contribution.
      As one of what I believe are only two graduates of Queen's University at present in the House, I commend it not only in historical terms but also in terms of experience. As one who has enjoyed both the friendliness of a provincial university and the high academic standing of an international institution of academic renown, it may be helpful to put on record the fact that at least one Member of the House can testify to the excellence of the teaching and the facilities of that university.
      I believe that my hon. Friend the Minister could help the House by responding positively to two or three of the

      921
      points raised in the debate. The point raised by the right hon. Member for Down, South about making the charter available to Members of the House in advance, before it is finally confirmed, would be of assistance. It would be helpful to couple that with the point raised by my hon. Friend the Member for Epping Forest (Mr. Biggs-Davison) about the Chilver committee. I am not expressing a preference when I say that I suppose it is technically possible that the Chilver committee will make a report which in some way sought to combine Queen's University, Belfast, with the new university at Coleraine. If it were to do that, and if that were to find acceptance, this new charter would soon have to be replaced by another and different one. It would be useful for the House to be told by the Minister whether there is any rush to introduce this charter, or whether it can await the report of the Chilver committee.
      As someone who was elected to the students' representative council and served on it for a number of years, I welcome the increase in the number of students on the Senate.
      Mr. Pendry: One extra student.
      Dr. Mawhinney: That is right, but as one who teaches statistics I realise that one extra student is a doubling of the number, or a 100 per cent. increase. The argument is not, however, about an arbitrary number. Four have been offered, and two are on offer. Someone else might make a case for three. What is useful is that these days more recognition is given to the role of students in higher education.
      I suppose that I have a vested interest, in that I am still a member of the academic staff of the University of London. Academic staff have a long-term vested interest in the universities at which they teach, inasmuch as they will spend perhaps all of their working lives in that institution, but the hon. Member for Stalybridge and Hyde (Mr. Pendry) was right when he said that non-academic staff also have a lifetime contribution to make to these institutions.
      It is not my intention to argue numbers with my hon. Friend the Minister, save to say that, not having seen these proposals—just as most other hon. Members have not seen them—I have to take his word for it that the numbers will be about right. If there were a preponderance of people from outside the university over those who make their living at the university, that would not accord with the forward thinking referred to by the hon. Member for Stalybridge and Hyde.
      Finally, I wish to put one question to my hon. Friend. I accept that he will not be able to answer it this evening, and perhaps he will write to me. He spoke about the tidying up of statutes and the removal of some. I ran into considerable difficulty while at the university. There was a substantial disagreement with the vice-chancellor of the day over the interpretation of one statute which spoke about the university recognising only those religious activities that were under the auspices of the chaplains to the university. That made life difficult for those independent Christian-based organisations—Catholic organisations, Christian Union, Student Christian Movement, and so on—that are recognised in all British universities but which, if they wished to do something more substantial, ran into trouble because of the statute. I hope that the review has taken the opportunity to resolve
      922
      that difficulty. This is a matter of detail and, as I said, I do not expect my hon. Friend to have the answer, but perhaps he will write to me at an appropriate time.
      I welcome the move to bring up to date the charter of a fine university. It is one of the finest universities that the United Kingdom boasts, and I welcome what my hon. Friend has said this evening.
      11.40 pm
      Mr. John Patten: I thank that the speech of my hon. Friend the Member for Peterborough (Dr. Mawhinney) exemplified the constructive and, in all senses, helpful tone of most of the debate. I am sorry that, as he suggested, I shall be unable to help him tonight on the last point he raised, but I undertake to write to him about it.
      This has been an interesting debate in many ways. It is the first time that I have had to apologise to the House and to the hon. Member for Nottingham, West (Mr. English), who is no longer in the Chamber. Perhaps I owe the right hon. Member for Down, South (Mr. Powell) an apology for what he may have thought was happening on this side of the House during his speech. He drew attention to the fact that I appeared not to be listening to him while I was engaging in consultations with my hon. Friend the Member for Peterborough. My right hon. Friend was engaged in a most interesting historical discussion. I assure him that 10 years or more as the fellow of a college in Oxford, with the Byzantine machinations of an Oxford common room, taught me to listen in two directions at once, and I was listening precisely to the point he n-lade about Mr. Gladstone.
      The right hon. Gentleman and my hon. Friend have raised a point of substance about the availability to the House of the proposed charter in its present form. This is primarily a matter for my noble Friend the Lord President of the Council, but I shall certainly draw this sense of unease to my noble Friend's attention and convey to him the request for every possible provision of the charter to be conveyed to right hon. and hon. Members. The right hon. Member also raised a point to which he returns repeatedly when we enact these orders, and that is the use of the terminology "Head of Department" or, from time to time, "the Department". That arises simply from the legislation which governs the order at the moment, which is the Northern Ireland Act 1974. Everything that we are doing and the form of words are consequent upon that Act.
      Mr. J. Enoch Powell: At least it would be a help if the explanatory memorandum would be translated into actual practice, though I think that the Minister will find that the form of the legislation relates to the 1973 Act, and the translation or transposition into what will actually happen derives from the 1974 Act.
      Mr. Patten: I am grateful to the right hon. Gentleman for those observations.
      The hon. Member for Down, North (Mr. Kilfedder) and my hon. Friends the Members for Epping Forest (Mr. Biggs-Davison) and for Peterborough, all in their different ways, mentioned the present position of the Chilver committee, which is presently examining the proper provision of higher education in Northern Ireland. In many ways the Chilver committee echoes what the Lockwood committee was trying to do in the early 1960s when it examined the proper provision for and of higher education in the Province in the 1960s, 1970s and 1980s. The

      923
      Chilver committee is attempting to find the best way forward for higher education in the Province in the 1980s and 1990s.
      I must explain that the committee is an independent committee. It has yet to present its conclusions. It has presented an interim report, but it is some way, since its formation in December 1978, from presenting its final report. We hope to have sight of that report towards the end of this year. It will then be open for public examination. But I think that it would be wrong for me from this Dispatch Box to seek to anticipate in any way what its final recommendations will be. Least of all, I must tell the hon. Member for Down, North, should I anticipate the Government's reactions to those recommendations when the report is finally published.
      Mr. Kilfedder: We know them already.
      Mr. Patten: I am well aware of the hon. Gentleman's strong feelings about what he terms sectarian education in Northern Ireland. I well remember during an earlier debate that he heartily and heavily attacked me and alleged that I was a supporter of educational apartheid, something I greatly resented then. I do not think that the future of teacher training colleges and other related issues and their effects on religious education can be properly and fully debated until we have seen the Chilver report.
      I hope that my hon. Friends the Members for Epping Forest and for Peterborough will also accept that it has taken 10 years to prepare the charter. It does not do much to the university's basic statutes. However, it makes better provision for the financial management of the university. It also brings into play certain amendments to the provisions for membership of the senate. In addition, it repeals various pieces of obsolete or otiose legislation.
      It would be a great mistake to delay the introduction of the charter after such a lengthy period of preparation. However, the hon. Member for Stalybridge and Hyde (Mr. Pendry) feels strongly that there was less than adequate consultation with the trade union and student sides. I am sure that the hon. Gentleman will appreciate that many of the matters that he raised involve the Lord President of the Council and the university. The university has not been specific about naming the trade unions or other bodies that might be fit to be represented on the senate, because it wants the statutes to be durable. It does not wish to list all the different bodies that could have a right to make nominations to the senate. Indeed, that is why the Northern Ireland Chamber of Commerce has been omitted, although it was included in the earlier statutes.
      Although trade unionists may not be named as having the right to be on the senate, they will have many opportunities to serve on it. The academic council nominates six members—four of whom must be professors—to the senate. Several of them will probably be members of the Association of University Teachers. I am sure that the three members of the academic body who are not members of the academic council but who are elected by the non-professional body of the university will include trade union members.
      Mr. Pendry: I think that the hon. Gentleman has missed the point. Indeed, the hon. Member for Peterborough (Dr. Mawhinney) took it up. Some technical, clerical and ancillary staff are just as much part
      924
      of the university as academic staff. They were not consulted, although they should have been. They should have places on the senate.
      Mr. Patten: I am sure that the senate and those university authorities responsible will read what the hon. Gentleman has said with interest. Non-academic staff within the university will have the right to two places on the senate. If Her Majesty the Queen grants this charter, the Crown's provision of senate places will increase from four to five. I hope that the hon. Gentleman will accept that there will be at least one trade union nomination from amongst those put forward by the Government for membership of the senate. Those nominations may not be made by trade unionists working within the university, but under the old statutes members of the senate have long included trade union members. Indeed, they have contributed greatly to the running of the university.
      The hon. Gentleman also felt strongly that the number of members—three—who could be nominated to represent the better equipment fund could be a crooked, back-door way in for industrialists and those on the commercial side of life in the Province, while the trade union side would be somehow excluded.
      Members of the committee are actively engaged in exploring ways and means of further fund raising. It is true that at the moment the majority of members of that committee are industrialists and people involved primarily in the commercial and professional life of the Province. I am sure that they would welcome trade union involvement in that fund raising because we know that all bodies such as universities have to depend from time to time on the fund raising activities of voluntary bodies of one sort or another.
      The proper interests of trade unions are recognised under these arrangements. Despite what the hon. Member for Stalybridge and Hyde said, the interests of students are equally well represented, because the students not only have a 100 per cent. increase in their representation from one to two on the senate but an increased representation on the libraries board, where they have four members, on the finance committee where they have a member and on the buildings committee where they have a member. I know that the student voice in the university will be heard just as loudly now as it was when my hon. Friend the Member for Peterborough was a member of the student representative council in the University of Belfast.
      Mr. Pendry: I am sorry to keep interrupting the Minister, but will he address himself to the point I made following his statement about full consultation with the students? Why did the legal quibble have to be ironed out before the students were allowed to make their contribution? When they were allowed to do so, why were they given only three months in which to make their case?
      Mr. Patten: Those are surely matters between the university and the student's representative council. They are not matters for Her Majesty's Government in the first instance.
      The student body and outside interests are well represented on the potential future senate of the University, which could have up to 51 members—a considerable increase in size over the senate under the old statutes.
      Mr. Kilfedder: The Minister said that there would be up to 51 members hi the new senate. Surely it is

      925
      disgraceful to allow the students only two representatives. Will he consider that point again? It is important, because we want to ensure that the students are fully identified with the university, because they are the university. If he consults student representatives he will find that they are anxious to have more members. Four is a reasonable number.
      Mr. Patten: I know that different bodies in the Province have all had a considerable amount of time to make representations to the University authorities about issues such as this. The full consultation process was gone through and the charter was advertised in the London Gazette and in the Belfast Gazette. It is always difficult to get the right balance between conflicting interests in a body such as the senate of the University of Belfast. I shall draw the hon. Gentleman's views to the attention of my noble friend the Lord Elton, whose responsibility this is.
      In that sense and in all other senses the charter is good for the Queen's University of Belfast. It has been the subject of 10 years' careful preparation and I commend the order to the House.
      Question put and agreed to.
      Resolved,
      That the draft Queen's University of Belfast (Northern Ireland) Order 1981, which was laid before this House on 25th February, be approved.

      ARMED FORCES BILL
      Ordered,
      That the Select Committee on the Armed Forces Bill have power to adjourn from place to place.
      Ordered,
      That the Committee have power to appoint persons with technical knowledge either to supply information which is not readily available or to elucidate matters of complexity within the Committee's order of reference.—[Mr. John Stradling Thomas.]

      European Community (Transport Policy)
      Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]
      11.54 pm
      Mr. Tom Bradley: My purpose in raising this Adjournment debate is to draw attention to the lack of progress towards establishing a common transport policy for the European Economic Community and to restate the vital need to formulate an overall strategy for transport in the interest of the economic well-being of the Community as a whole.
      Transport is one of the four areas of activity specifically identified in the Treaty of Rome as forming the "Foundations of the Community". The first annual report of the EEC Commission said, that
      "transport is a service indispensable for the growth of all productive activity … its historical past, its social and strategic role, the scale of existing and future investment, the advent and rapid expansion of new means of transport involve far-reaching intervention by public authorities".
      It went on to indicate that those features made it difficult for the drafters of the treaty to lay down in detail the ways of integrating transport in the Common Market.
      But the concept was clear. Part II of the treaty, articles 74 to 84, lays down that the objectives of the treaty shall be
      "pursued by Member States within the framework of a common transport policy"
      and specific provision and rules were inserted for dealing with discrimination against the carriers of other member states, transport rates and charges, State intervention and subsidies.
      The history of the application of those provisions of the Treaty of Rome is, by common consent, a sorry story and the pursuit of what is called a "small steps" policy for more than 20 years has badly shaken public confidence in the achievement of a common transport policy. Although some success has been achieved in the harmonisation of social provision, the development of common accounting practices for railway undertakings and so on, progress in many more areas requiring positive action has been painfully slow.
      A detailed report on the state of progress of the policy, drawn up in early 1979 by the European Parliament's regional policy, planning and transport committee, claimed that
      "the Council of Ministers has never had a policy of any kind, but has simply shilly-shallied from one file to another."
      It was also critical of the Commission which, it said, should not have released the Council from its responsibilities.
      At the end of 1979 hopes were raised when the Commission prepared a green paper on
      "the role of the Community in the Development of Transport Infrastructure"
      and those hopes were reinforced by the enthusiasm of the then Transport Commissioner, Richard Burke, in his advocacy of the draft regulation on support for projects of Community interest. Interest in this country was stimulated by the green paper as it seemed to some to be a possible source of long-term EEC expenditure which could help to correct the imbalance in the United Kingdom's contribution to the EEC budget and might even attract support for a fixed link across the Channel.

      927
      The optimism that shone through the green paper was in such striking contrast to the disappointing and undistinguished record of the Community in transport policy that the Select Committee on Transport of which I am chairman decided to undertake a short inquiry into the infrastructure proposals and their implications for this country. Our conclusions are recorded in the Committee's first report to the 1979–80 Session of Parliament and reflect the uncertainties and doubts that we discovered are involved in trying to define the concept of what is called "Community interest". Other difficulties were encountered which served only to underline the unsatisfactory responses that one receives when seeking to go beyond the legal obligations of the Council. The Committee's experience was rather unrewarding.
      In my view, it is essential to press the Council of Ministers for action on transport because of the relative importance of the transport sector to member countries' economies and because I share the conviction that a more coherent approach in this area will bring general benefits to the people of Europe. As usual, it is a question of priorities and the need to ensure a proper distribution of resources.
      I have referred to the relative importance of the Community transport sector, which is steadily increasing. That of agriculture has declined. Transport now accounts for 6 per cent. of the Community's gross national product—that is, more than agriculture—for 15 per cent. of total capital investment, and for 40 per cent. of capital investment in the public sector. The share of the Community budget allocated to agriculture is widely regarded as disproportionate and, in the current year, gathers over 70 per cent. of the appropriations. This should be compared with the share allocated to transport amounting to only 0·003 per cent. of the total budget.
      All hon. Members, whatever their political affiliations—I remain an unrepentant European—feel that the Common Market is in need of structural reform and the mandate given to the Commission by the Heads of State last year to prepare proposals for budgetary reform have widespread approval. It is essential to see the Community budget reflecting an overall approach to transport policy that takes realistic account of recent economic developments and, in particular, of the energy crisis and environmental considerations, not to mention the interdependence between transport and other vital policy areas.
      At a time of economic recession and appalling unemployment, Community assistance for improving transport infrastructure could only contribute to general economic expansion, development and the stimulation of trade. Any reduction in transport barriers, bottlenecks and frontier procedures should create savings and help the process of convergence of member States' economies. It could certainly narrow the gap in living standards between the richer and less-favoured nations of the Community.
      I should like to consider certain policy areas. In transport infrastructure, the need for a coherent policy to overcome what are clearly identifiable bottlenecks in the transport of people and, most important, of goods is self-evident. Without the provision of adequate transport links between the centre and the periphery of the Community, the creation of a genuine free market for goods in both directions will be doomed. Moreover, the pursuit of such
      928
      a policy should be a positive benefit to the United Kingdom, not only in our dealings with other member States but also in our internal transport networks. Some of the main, identified Community bottlenecks such as the cross-Midlands route from Ireland to the Haven ports or the route from the Midlands to the South Coast ports are important in internal United Kingdom terms as well as in Community terms.
      Recent years have seen a continuing deterioration in the financial situation of railway undertakings. Forecasts indicate that with unchanged policies the railways' share of the traffic is likely to continue to fall. There is a great need for a change in emphasis in Community railway policy in this decade. New initiatives and actions have to be taken if present market and financial difficulties in railway operations are to be reversed. I understand that the Commission has examined the situation and will be placing before the Council a paper which examines a list of options and proposals for a new Community railway policy, including a new examination of public service obligations. This is of particular relevance to the future of our own work. I hope that the Secretary of State's response will be based on the desirability of maintaining a full range of transport modes.
      The connection between regional policy and transport policy is easy to establish. A fair competition policy is impeded by fiscal and legislative barriers stemming from physical obstructions that must be broken down. The fact that the Community's transport sector accounts for about 18 per cent. of total energy consumption argues for the need for a transport infrastructure that will reduce our dependence on imported energy sources. It hardly needs to be said that an industrial policy could be securely based on Community funding for transport infrastructure with its multiplier effect for steel and other construction sectors.
      Surely the time is ripe for a new impetus. Can we expect it? The history of decision making on transport in the Community is depressing. Time and again the Commission, supported by the European Parliament, has tried to tie down the Council of Ministers to a coherent programme of action to implement the transport chapter of the Treaty. Time and again the assembled Transport Ministers shrugged their shoulders and did nothing. In 1962, the Commission submitted an action programme on transport, but it was not adopted by the Council. In 1973, a Commission communication to the Council contained a work programme for 1974–76. The Council merely took note. In 1977, the Commission proposed a further programme of work in transport for 1978–80. Again, it was noted by the Council. Two weeks ago, the Transport Council at last adopted a resolution identifying the main areas of policy on which it would "attempt to make progress", but it merely took notice of the Commission's priority programme and timetable for action.
      The number of outstanding Commission proposals for action in transport, which have already been endorsed by the European Parliament and the economic and social committee, now stands at no less than 32. The list includes many matters of considerable significance to the United Kingdom and the EEC transport system as a whole. Apart from the draft regulation on the financing of transport infrastructure projects, it covers a range of proposals relating to the functioning of the transport market, the harmonisation of taxation and social legislation, and relations in transport between the Community and its trading partners.

      929
      I understand that the Council of Ministers now delegates responsibility for drafting decisions, not to the Commission—as was the firm intention of the authors of the Treaty—but to a body called the permanent representatives' committee. There is no public or parliamentary control over that group of officials, whose work appears to be wrapped in impenetrable mystery. So an under-staffed Commission submits periodic proposals to meetings of the Council, which are infrequent and ill-equipped to deal with them. Ministers then send the proposals back to the permanent representatives' committee, which has no legal status and no negotiating powers.
      European and national parliamentarians have a duty to break that deadlock and improve the system. We are coming up to Britain's Presidency of the Council of Ministers, and a great opportunity exists for an initiative. That may have been provided already by the Dutch, who put forward an idea on infrastructure which concentrates initially on two aspects--frontier crossings, and facilities for combined transport. It is a great deal more limited than the Commission proposal that I mentioned earlier, but it provides the opportunity for an earlier start than otherwise might have been expected.
      I understand that the Secretary of State supports the Dutch proposals, and I welcome that. In answer to a written question from me last week, the Secretary of State confirmed that at the meeting of the Council of the Transport Ministers held on 26 March a resolution was adopted identifying the main areas of transport policy in which it would attempt to make some progress. That is not enough. There is no difficulty about describing problem areas; the difficulty lies in getting something done.
      The Secretary of State also told me, as part of his written answer, that he was disappointed about the lack of progress towards infrastructure support, on railways policy and on the proposed increase in the Community's multilateral road haulage quota, but he said that he would continue to work for a constructive solution to all those problems. The opportunity to do so lies ahead during our Presidency. It is in our national interests that the opportunity should be seized. I hope that the Under-Secretary will be able to tell me tonight that it is the firm purpose of the British Government to endeavour to break the logjam which has obstructed progress in implementing one of the basic principles of the Treaty of Rome, namely, the realisation of the transport infrastructure network matching Community requirements.
      12.10 am
      The Under-Secretary of State for Transport (Mr. Kenneth Clarke): The hon. Member for Leicester, East (Mr. Bradley), who is Chairman of the Select Committee on Transport, has raised an important topic. I agree with much of what he said. I accept that if the country is to achieve the benefits of the free market which the European Community presents to us it is necessary to remove restrictions on the free movement of goods and passengers within the Community. Considerable economic advantages could flow from any moves in that direction and from any attempt to harmonise arrangements in the Community. There is a great deal of common Community interest in establishing the right transport infrastructure which the Community must, at some time, tackle.
      I regret the lack of progress towards a real Community transport policy. I hope to persuade the hon. Gentleman
      930
      that the Government share his general aims and his disappointment at the lack of progress. The Government are not contributing to the delay. We hope for more progress and will continue to strive for the achievement of it in any practical way.
      The hon. Gentleman was right to say that article 3 of the Treaty of Rome lays down guidelines for a common transport policy. Articles 74 to 78 make more detailed, but unfortunately generalised, provisions which, had they been put into effect, would have established common rules for international transport within the Community and common operating conditions for carriers when moving between member States.
      The articles are aimed at the elimination of any aids to particular transport industries or parts of transport industries which might discriminate between member countries and distort the transport market.
      The aims of the Treaty of Rome when it was signed were for the establishment of a free transport market within the Community, fair competition between modes and between carriers from different member countries, and a free choice of mode and style of transport for the passenger and customer. Britain accepted those aims 'when it entered the European Community. The present Government believe that they are desirable.
      The Government favour, and continue to press for, the liberalisation of the transport market within the Community with the steady removal of obstacles to the free movement of our goods and passengers and carriers within the Community. We would certainly support any regime which established fair competition between modes and, carriers and the harmonisation of conditions of competition.
      Since the signing of the Treaty another objective has emerged—the possibility of European Community financial support for transport infrastructure. I refer in particular to that which facilitates movement across boundaries—in our case across the Channel—between member States where there is a Community interest in removing bottlenecks and improving the free flow of goods and people.
      The objective was established early on and the Commission set up a committee to examine the matter in 1973. A draft regulation was submitted as a result to the Council of Ministers in 1976. The last Transport Commissioner, Commissioner Burke, pressed for progress until his period in office came to an end. The present Government favour in broad principle the establishment of financial support for transport infrastructure within the Community, but progress has been limited. For 24 years not enough progress has been made. Some objectives have been achieved. But the pace of progress has been disappointing. We should like to make more progress in the right direction.
      Before we talk ourselves into a deep state of mutual gloom on the topic we must remember that there has been some progress. There is a European transport policy and some achievement. For example, since 1975 the Commission has defined, and the Council of Ministers has agreed, the broad lines of approach towards harmonising relationships between railway undertakings and Governments. The main aim of the policy is greater managerial and financial independence for the railway undertakings in the hope that distortions to the rail market which might obstruct the free movement of goods over boundaries will be removed.

      931
      Some progress has been made towards achieving these objectives, but uniformity has by no means been achieved throughout the European Community. There has been some limited progress towards common accounting principles for railways and also towards common methods of costing international rail freight traffic, but in neither of these cases is there yet full harmonisation.
      There has been progress also as regards the requirement for members to report fully on their railways every two years and to disclose the full nature of aid they are receiving from the State. Again, comparisons are difficult and limited progress has been made because, although all member States give assistance in one way or another to their railway undertakings, inevitably there is a very wide divergence of practice between member States. It is, therefore, difficult to harmonise arrangements, as would be desirable if we were to establish a Community policy. Common rules have been established for the basis upon which acceptable State aid should be given where it meets the social needs of transport and compensates for what has been described as public service obligations.
      The present PSO payment that we make to British Rail is made in accordance with the EEC directive on the nature of the public service obligation payments. There are some current Commission proposals for revising the rules on PSOs, in which the Government are certainly interested, although there is a danger that the present proposals are likely to be over-elaborate and difficult to apply, so the Government will wish to be somewhat critical of the details of the new rules which the Commission intends to apply.
      Steps have been taken, therefore, at least to begin to clarify the principles and practice of railway finance within the Community. If further progress can be made, it will enable member States' undertakings to be compared and that might enable us to move towards a more harmonised practice of railway finance and railway movement throughout the Community. So far the achievements are undoubtedly modest in the railways field. We remain interested and will adopt a constructive approach to any proposals that the Commission produces in that field.
      As regards road haulage, progress in the European Community on regulating lorry traffic has been a good deal more substantial. As the House knows, the whole European Community now subscribes fully to most of the important social regulations which govern drivers' hours and rest periods. This means that, given the substantial flow of goods carried by various operators from member States all over Europe, the competition between them is established on a reasonably fair basis, with the same road safety obligations resting upon operators in each member State.
      The drivers' hours regulations are extremely important road safety measures, which protect other road users against lorries being driven for excessive hours in any one day by a driver. The latest step that this country has taken towards complying with EEC social regulations will be completed when the tachograph becomes compulsory in the United Kingdom next year.
      There are also uniform European Community standards regarding heavy vehicle noise and emissions. We have recently been able to reach agreement on a form of Community driving licence, where previous British Governments had been holding up agreement on that
      932
      measure, and we also have established common rules on the recognition of certain professional qualifications in the road haulage field.
      There is a directive, to which the hon. Member for Leicester, East referred, for the adjustment of national taxation systems, which is concerned to ensure that all vehicles above a certain weight meet at least the marginal cost they impose on road infrastructure. This has been agreed in the Council in principle although, unfortunately, it has not yet been finally implemented. However, this country is certainly going to move in that area of policy in directions which comply with that directive entirely.
      In lorry traffic there has, therefore, been considerable harmonisation of conditions of competition, except for the important gap of weights and dimensions, on which there has been disagreement for a number of years. This country has recently produced the Armitage report on weights and dimensions and it is necessary for the House and the country to come to some agreement about dimensions and weights of lorries that suit our own conditions before we can move towards any EEC agreement. Certainly, Sir Arthur Armitage has strongly recommended that we do not go to the present proposals for EEC limits on the axle weight of vehicles, which would be excessive for our roads and cause damage to our bridges.
      Nevertheless, once we have established what this country desires, it should be possible then to reach some understanding on size and dimensions, weights and so on, which is acceptable to this country, and also, I suspect, acceptable to most EEC countries—one would hope all—because they are subject to the same environmental pressures and interests as we are but also wish to achieve uniformity of competition and the maximum economic benefit from their road haulage industry.
      One area in which insufficient progress has been made is in the free movement of lorry traffic between countries in regard to the carriers from each member State. We still have bilateral agreements with countries governing that, and several countries—particularly France, Germany and Italy—impose strict quotas on the number of British lorries that they will admit carrying our goods into and across their territories. Those quotas are restrictive and, are not adequate for our carriers, and this Government constantly press the other member States of the Community to increase their quota allocation because we believe that the action of some of the European Governments is plainly contrary to the principles of the Community and is a deliberate obstruction to free trade between member States.
      The Community has been helpful in establishing a system of multilaterial road haulage quotas, and when British operators are able to obtain those they, like the operators from other member States, are able to make as many trips as they want in one year across the boundaries of member States. But there are only 4,000 such quotas in total, so that this country gets a very small number. That is another area—the liberalisation of the road haulage market—where the British Government would like to see much more progress.
      With regard to infrastructure support, the Government are playing a constructive role and see potential advantage in establishing some kind of financial support from the Community for projects of Community interest of the kind contemplated in the draft regulation. I entirely accept the description which the hon. Member gave of the present imbalance between agricultural spending and the rest

      933
      within the European budget. He is right in saying that that is particularly unfortunate, given that agriculture accounts for only about 5 per cent. of GNP for the Community as a whole and transport accounts for 6 per cent., whereas the spending of the Community is in quite different proportions.
      Before we can make real progress something has to be done to restructure the Community budget as a whole. That is a much wider question, but as long as agriculture continues to dominate the present budget there cannot be substantial European Community funds for other worthwhile industrial purposes of the kind that we are talking about. Given that that large matter can be tackled and some progress made, as the Government would wish, there should be prospects for EEC financial support. We have a number of queries on the regulations and would like to see sea and air transport included as well as the present road and rail proposals. There is obviously need to reach a sensible agreement on what is meant by Community interest. We also want to know the size of the aid concerned and the forms which it will take. Nevertheless, the British Government's position is that we would like to see some progress towards agreement on those matters.
      At the Transport Council on 26 March my right hon. Friend supported the very valuable initiative of the Dutch
      934
      Presidency which suggested that there should be at least a pilot scheme on which all members could agree and on which some progress could be made. I deeply regret that it was not possible for that to be carried through the Council of Ministers. We shall continue to work as constructively as we can. We feel that the work that has already been done on the bottlenecks report has not been wasted, because we have been able to identify ways in which the road system might be helped, and we have, of course, the Channel link in which we have a great interest, which seems to us to be a reasonable example of the kind of international link of genuine Community interest which might benefit from support.
      Having shared the hon. Member's disappointment, I do not think that we should abandon the aims that he set out. The Government have to be careful in this area and look after national interests when considering what comes before the Council of Ministers. We are not among the laggards. We are among those trying to press for progress. Perhaps in the Dutch Presidency and in the British Presidency this year we can at least take some limited steps in the right direction.
      Question put and agreed to.
      Adjourned accordingly at twenty-four minutes past Twelve o'clock.

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

The Norman Porch: Public Access
Lord Lee of Newton: 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 why the entrance to the Norman Porch is not accessible to visitors.
The Earl of Avon: My Lords, the pavement beneath the Victoria Tower was closed as a precaution, while a canopy was erected to give protection from any stone that might fall from the upper half of the Tower before it could be properly inspected. The canopy has now been erected and the Norman Porch was re-opened on 31st March.
Lord Lee of Newton: My Lords, I thank the noble Earl for that Answer. Will he agree that, in part, it contains the Answer given to a Question for Written Answer which I was supposed to ask last Monday week but which, in fact, was asked last Tuesday week by the noble Lord, Lord Mowbray and Stourton? In that reply it was stated that the state of the Victoria Tower was pretty dangerous. In the course of the reparations that are now to be made and which will take a considerable period of time, will the noble Earl ensure that attention is paid, first, to the state of the Victoria Tower?
The Earl of Avon: My Lords, the inspection proper of the upper parts of the Victoria Tower will start on 27th April and it should be possible to complete that by June. Subject to what is found during the inspection, we can then go forward.
Lord Lee of Newton: My Lords, although I have the greatest respect for The Times and the Guardian, will the noble Earl ensure that in future they do not give the Answer to a Question before that Question is asked?
The Earl of Avon: My Lords, I apologise to the noble Lord for jumping the gun.

Enterprise Zones
2.37 p.m.
Baroness Vickers: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied with the number of enterprise zones so far created, and whether they have plans to accelerate the rate of their introduction in towns and cities.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, 11 enterprise zones have been announced in a variety of areas and with a wide geographical spread. These should permit the results of the enterprise zone experiment to be satisfactorily assessed and no more sites are proposed for the time being. Good progress is being made in bringing the zones into effect.
Baroness Vickers: My Lords, I thank my noble friend for that reply and congratulate him on the success of the experiment so far. Will he bear in mind that there are other cities which need this action? Can he give any idea whether he will consider some in the near future?
Lord Bellwin: My Lords, at the present time there is no intention to designate any further zones. We want to see how the existing ones work. As I said, it is an experiment, one in which we have a great deal of confidence and which has been very well received by all concerned. We shall have to watch how it goes. If it is successful, we shall certainly contemplate what more might be done to extend it.
Lord Byers: My Lords, when does the noble Lord think that the first assessment will be able to be made, and when shall we know what is the result?
Lord Bellwin: My Lords, it is difficult to say exactly. The first designations will be under way, if that is the right term, in June and the others will follow in July and August; the very last ones will be going ahead by the end of the year. Then it will be a matter of judgment as to when one decides whether the experiment has gone as it is hoped it will go. I cannot give the noble Lord an exact time, but I know that many people will be watching it with much interest, not least the members of my department.
Baroness Sharples: My Lords, can my noble friend say how many small businesses have had a start in this way, and how many have in fact succeeded?
Lord Bellwin: My Lords, I cannot help my noble friend on that because as yet the zones have not in fact come into effect. However, I can tell her that there has been enormous interest in the areas concerned, and it looks very promising indeed.
Lord Leatherland: My Lords, can the noble Lord tell us why it is necessary to have these experiments, when we were told at the last general election that the return of the Tory Government would lead to an all-round revival in industry?
Lord Bellwin: My Lords, perhaps it would not have been so necessary to have had these experiments if the previous Administration had done much more than they did.
Lord Elwyn-Jones: My Lords, will the companies that have gone into liquidation in the present or proposed enterprise zones be given any hope of resurrection or recovery?
Lord Bellwin: My Lords, I cannot, of course, speak of companies that have gone into liquidation in these zones. In fact, many of the zones are areas where there is very little activity and cover land which is derelict. Clearly we are hoping that the enterprise zones will both stimulate existing businesses and bring new ones into existence, wherever they may be located.

Overseas Aid
2.42 p.m.
Lord Hatch of Lusby: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what percentage changes have been made in British overseas aid between 1979, 1980 and 1981, taking the degree of inflation into account.
The Parliamentary Under-Secretary of State, Department of Trade (Lord Trefgarne): My Lords, the latest Public Expenditure White Paper, Cmnd. 8175, shows that net overseas aid rose by about 2 per cent. in real terms between 1979–80 and 1980–81 and that it will decline by 7·7 per cent. between 1980–81 and the current financial year, reflecting the Government's planned reductions in this sector.
Lord Hatch of Lusby: My Lords, is the noble Lord the Minister aware that, in addition to the decline of 7.7 per cent. that he mentioned, the Public Expenditure White Paper also provides for a further decline in the following year of over 8 per cent., making over 15 per cent. in total, and that this is nine times as high as the average Government expenditure? Can he tell the House why overseas aid has been picked out in this way? Is he further aware that the reduction already made brings down the British contribution to overseas aid to just over 0.3 per cent. of the gross national product, round about half the figure in 1960, when the country as a whole was half as wealthy as it is today?
Lord Trefgarne: My Lords, I cannot of course answer for the aid policies of the previous Administration, which I fancy could not have been sustained in the light of current economic circumstances. As for the charge that our aid cuts have fallen unfairly on the aid budget as compared with other expenditure programmes, I should perhaps point out that trade, agriculture, employment, energy, industry, and housing will all fare worse, so that that is not a charge which can be sustained. As for 1981–82, gross aid in that year will be £1,037 million, the first time in fact that British aid has exceeded £1 billion, and an increase of about 8 per cent. in cash terms on the money available last year.
Lord Kilmarnock: My Lords, does the noble Lord not agree, though, turning to Cmnd. 8175, that the
434
figure of £1,037 million which he has just given to the House in fact includes capital repayments of £64 million, and that therefore the percentage decrease of which he has informed the House is in fact even greater than he has stated?
Lord Trefgarne: My Lords, I gave the cash figures for 1981–82, which are in fact as I described. I think that the noble Lord may be referring to the figures adjusted for inflation, which are of course a different matter. We have made no secret of the fact that our aid budget must be trimmed to coincide with our resources, and that I should have thought was a prudent policy.
Lord Goronwy-Roberts: My Lords, can the Minister indicate now or later what percentage of the GNP of this country has been devoted to overseas aid in the three years indicated in the Question of my noble friend, and indicate also how far short in each year we have been of the United Nation's target of 0.7 per cent. of GNP? Moreover, will he confirm, or not, that in those three years between 1979 and 1981 we have fallen behind our competitors in Europe and elsewhere in the amount of aid we extend overseas, with the result that, compared with them, we are suffering diplomatically and commercially in those countries?
Lord Trefgarne: My Lords, I do not think that our aid performance compares at all badly with that of a great many of our European colleagues. Indeed, compared with some Eastern European countries and Soviet countries, our aid is many times the modest expenditure which they feel able to support. As for the question by the noble Lord about the percentage of GNP which we achieve in this matter, we of course accept in principle the 0.7 per cent. of GNP aid target but, like our predecessors, including the noble Lord himself, we are not committed to a timetable for achieving it. Progress must of course depend upon our financial and economic circumstances, and indeed the other calls on our resources.
Lord Paget of Northampton: My Lords, since the reduction in our aid payments in terms of proportion of our GNP has been going back since 1960, can it really be ascribed to our relatively new impoverishment? Is not the real reason that we have found by experience that so much of our aid was not achieving the objects for which we intended it, because it was being diverted by corrupt Governments? In fact, would it not be far more important to turn our mind to control of the expenditure of our grants in aid as famine aid or as real investment rather than passing it into the hands of Governments which have been very unsatisfactory recipients?
Lord Trefgarne: My Lords, I should want to refute the charge that this Government have been responsible for irresponsible allocation of aid monies. Indeed, I think I should be prepared to defend the previous Administration against that charge as well, because all Governments of every complexion have to a greater or lesser extent been determined to ensure that aid monies are properly disbursed, and indeed almost all capital aid that we disburse these days, not only under

435
this Administration but under the previous one, is tied in some way or another to the purchase of British goods. As for the percentage of GNP to which the noble Lord referred when he pointed out that this percentage had declined somewhat over approximately the last 20 years, the fact is of course that that percentage is calculated by reference not only to the amount of money that we spend but also to the GNP itself, and as the GNP increases of course the percentage, if the amount remains constant, drops.
Lord Morris: My Lords, does my noble friend agree that the measure for evaluating overseas aid as a proportion of GNP is in itself a criterion that is wanting because there are many other factors that ought to be brought into account?
Lord Trefgarne: My noble friend is certainly right, my Lords, in that the percentage of GNP which is used by some as a measure of aid performance is at best an imperfect measure, and sometimes other figures are more helpful.
Lord Goronwy-Roberts: My Lords, the Minister gave an interesting answer to my former supplementary but it was a rather adroit, misleading one, if I may say so in all friendship, when he compared our performance in this field with that of Eastern Europe. Would he now compare it with our friends and partners in Western Europe? They are very much more our commercial competitors in the countries of aid than we are competitors with the Eastern European countries.
Lord Trefgarne: My Lords, I do not have in front of me the figures of the aid performance of our other immediate European neighbours. I recall discussing this with the noble Lord across the Floor of the House and I seem to remember telling him from the brief I then had in front of me that our performance compared very favourably even with our Western European partners.
Lord Glenamara: My Lords, is the Minister aware that hardly any of us on this side would share the view of my noble friend Lord Paget on this subject, and that most of us regard this cut as quite appalling and shameful, in that a still relatively rich country like Britain should be cutting its aid in this way when there is so much grinding and appalling poverty in the world? Is the noble Lord aware that it is a shameful thing to do?
Lord Trefgarne: My Lords, noble Lords opposite are comparing what is now a realistic aid programme with the moonshine, if I may call it that, they thought they were going to achieve when they were still in office.
Lord Alport: My Lords, would my noble friend agree that the amount of aid in money terms is less important than what is produced for the assistance of overseas countries as a result of the employment of funds from this country? Would he agree that the most important and economical way of assisting developing countries is the provision of instructors for the schools and
436
institutions of higher education there and the provision of opportunities at our universities and institutions here for their students to come to the United Kingdom?
Lord Trefgarne: My Lords, my noble friend, not for the first time, has put his finger on a crucial aspect of our present aid policy, which is to get the maximum value for money. I believe that the training we can offer to overseas students in various ways is one of the very best uses for our aid monies.
Lord Blyton: My Lords, is the Minister aware that while I have no objection at all to the giving of overseas aid, in this country rents have gone up, as has the price of gas, electricity and rates? Would he not agree that in the context of Government policy the people of this country should receive some economic aid from the Government?
Lord Trefgarne: That is another view, my Lords, but I find it difficult to relate it to the view advanced by so many of the noble Lord's noble friends.
Lord Hatch of Lusby: My Lords—
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): My Lords, I suggest we have given this Question a good run for its money and that it would now be appropriate to move on.
Lord Hatch of Lusby: My Lords, may I ask a quick question?
Several noble Lords: No!
Earl Ferrers: My Lords, I should have thought that if anybody was going to ask a question it should have been the noble Lord, Lord Brockway, who I notice tried to get in half a dozen times without success, so I think we should move on now.

Northern Ireland: Unemployment
2.53 p.m.
Lord Blease: My Lords. I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are yet in a position to comment on the Northern Ireland Economic Council's Economic Assessment, March 1981, and in particular its conclusion that "losses in employment and a further narrowing of Northern Ireland's base, are grave".
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Elton): My Lords, the Government have taken note of the Northern Ireland Economic Council's Economic Assessment, March 1981. Every effort is being made to offset the effects in the Province of the current recession from within available resources. In particular, emphasis continues to be placed on the creation of new jobs through indigenous and inward investments, support as necessary of existing viable employment, and a generous training programme.
Lord Blease: My Lords, while thanking the noble Lord for that reply, may I ask him to confirm or refute the assessment of the Northern Ireland Economic Council that the Government's policies could mean unemployment in Northern Ireland reaching over 25 per cent., which is one-quarter of the total working population, within the next 12 months?
Lord Elton: My Lords, it is not our practice to make unemployment forecasts and it cannot be said with certainty what the level will be in Northern Ireland in 1981.
Lord O'Neill of the Maine: My Lords, is my noble friend aware how tragic it is for people like the noble Lord, Lord Blease, who played such a large part as secretary of the Northern Ireland trade unions in his day, to see the industries which were attracted to Northern Ireland in the 'fifties and' sixties slowly slipping away today? Is the Northern Ireland Office also aware how unfortunate it is, with the divisions which exist in the Province, that these divisions should be added to by constantly rising unemployment?
Lord Elton: My Lords, of course I echo the concern of my noble friend about the effects of divisions within the Province. I would encourage him, all my noble friends and Members of this House, to take a realistic view of what the situation in political terms is in the Province and allay the unreal estimate of those divisions that is held abroad as a result of the way in which the media concentrate on the bad news.
As for current developments in the Province with regard to unemployment, I should not like your Lordships to think that nothing is being done. First, we have taken the necessary measures through our central economic policies to strengthen the economy of the United Kingdom. Secondly, we are taking steps to sustain industry and to stimulate new job-creating investment in Northern Ireland by offering the most generous industrial development incentives in the United Kingdom. Thirdly, we have implemented a number of measures to alleviate the problem for adults and young people who would otherwise be employed.
There are 6,350 persons in the Youth Opportunities Programme, 11,400 in the Temporary Short-time Working Compensation Scheme, 11,550 in training on employers' premises, 1,010 in the Job Release Scheme, 830 in Enterprise Ulster and 360 in Government training centres, attachment training, and so on. That is a total of 31,500, to which should be added in the current year 3,000 new places on the Youth Opportunities Programme and about 450 under the new Action Community Employment Scheme. Altogether, £9·4 million has been added to the provision for special employment measures in 1981–82, but much our prime concern is still to stimulate economic activity which will create real and lasting employment.
Lord Blease: My Lords, would the Minister agree that the Northern Ireland Economic Council is a very influential body and is comprised of knowledgeable people with wide experience of the commercial and industrial life of the Province? Will he, in efforts to support what he has stated on behalf of the Government, attempt to get that council and the Government to
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work together, so that the general public in Northern Ireland may feel that they are working in tandem to try to do something in the best interest of the Province and perhaps some useful results may be achieved? In other words, will the Minister use his good offices to try to get the Government and this influential body to work together?
Lord Elton: My Lords, the differences between the council and Government are not as real as the noble Lord may think. The Government have always acknowledged that Northern Ireland's particular needs differ from those of Great Britain. It is in recognition of those that per capita expenditure of public funds is higher in the Province than elsewhere in the United Kingdom. That there are higher levels of per capita public expenditure in Northern Ireland is acknowledged by the Northern Ireland Economic Council and is not in dispute. I share with the noble Lord, as do the Government, the anxiety that that prestigious body should in fact lend its weight to our efforts towards reconstruction, and I take the point well.

Barnsley Borough Council Bill
Read 2a, and committed to an Unopposed Bill Committee.
Lloyds Bank Bill
Read 3a, and passed.

Companies (No. 2) Bill [H.L.]
3 p.m.
Further considered on Report.
Clause 23 [Index of names]:
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendment No. 56:
Page 30, line 32, leave out ("and").
The noble Lord said: My Lords, I beg to move Amendment No. 56, and with the leave of the House, I should at the same time like to speak to Amendment No. 58. In so far as these two amendments are concerned I am acting somewhat as a proxy because they were initiated at the Committee stage by the noble Lord, Lord Mottistone. He has written to the noble Lord the Chairman of Committees stating that he is quite unable to attend today and he has asked me whether I would in particular propose Amendment No. 58. As your Lordships will recall, the question of registering societies under the Industrial and Provident Societies Act 1965 was discussed and I declared an interest as chairman of one of the societies registered under the legislation. As reported at column 879 of the Official Report of 19th March, the noble and learned Lord the Lord Advocate was good enough to say:
"We can see the merit of this amendment"—
which is now couched in Amendment No. 58—
"which the noble Lord has proposed and we should like to consider it further".
It seems as though the Government have accepted that amendment and so when we come to Amendment No. 58 there will be no problem about it. It is quite clear from the Marshalled List that the Government have accepted that amendment. It is made clear to your Lordships in a somewhat curious way that they have accepted the amendment which I proposed at the Committee stage regarding the registration of industrial and provident societies. I say that because the Government have included that proposal in the second amendment on the Marshalled List, together with their proposal to delete the part of the subsection which is concerned with business names and which was inserted by your Lordships at the Committee stage.
Therefore in proposing this first amendment, which is a paving amendment for Amendment No. 58, I should like to say only that I am sure that it would assist the business of the House immensely if in dealing with their Amendment No. 57, the Government were to limit that amendment precisely to the question of whether or not the business names registry should be abolished, rather than to dilute it, or to affect it in any way by a reference to the Industrial and Provident Societies Act, which is now proposed in the amendment. My Lords, I beg to move.
Lord Trefgarne: My Lords, I am of course in the hands of the House on this matter, but I had expected that this amendment would be the one upon which the noble Lord deployed his arguments and I deployed mine on the general question of the Register of Business Names, but I am—
Lord Lloyd of Kilgerran: My Lords, I am sorry to interrupt the noble Lord, but I made quite clear to the Government Chief Whip that that was not the position as of yesterday. I understood that by our side it had been made quite clear that we were to deal with the business names matter on the next amendment, Amendment No. 57, which the Government are to propose.
Lord Trefgarne: My Lords, I am happy that that should be so, if that is the wish of the noble Lord. But on the question of Amendment No. 57, to which we shall come in a moment, the principle that we propose in that amendment, which is clear from the Marshalled List, is one with which I think the noble Lord knows we have some sympathy. Therefore in respect of this amendment I should like to deploy my arguments on that narrow point, and we can consider the wider point of the Register of Business Names in a moment.
As I understand it, the amendment seeks to require the registrar to include in the index the names of the bodies registered under the Industrial and Provident Societies Act 1965, as was proposed earlier in our proceedings by the noble Lord, and by the noble Lord, Lord Mottistone. I should explain that the bodies which fall within the present scope of this clause, and whose names are to be included in the statutory index, are all ones in respect of which the registrars of companies within the United Kingdom have statutory responsibilities. It was for that reason that societies
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registered under the Industrial and Provident Societies Act 1965 were then omitted, as they are the responsibility of the Registrar of Friendly Societies.
However, on further consideration, the Government recognise that for many years it has been found convenient that the names of bodies registered under the Industrial and Provident Societies Act have appeared on the present, non-statutory index maintained by the registrar, and that it has not been the practice to allow a company to be registered in the name of such a body. This amendment will ensure that that will continue to be the case. Therefore I accept the principle of the amendment, and I shall ensure that that provision is included in the Bill at an appropriate moment.
Lord Lloyd of Kilgerran: My Lords, I am very much obliged to the noble Lord for his assurance about what he is proposing to do regarding the registration of the societies. In those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.7 p.m.
Lord Trefgarne Lord Trefgarne moved Amendment No. 57:
Page 30, leave out lines 33 and 34 and insert—
("(f) societies registered under the Industrial and Provident Societies Act 1965.").
The noble Lord said: My Lords, with your Lordships' permission I now propose to move this amendment, and I hope that it will be for the convenience of your Lordships if we take it that this amendment is related to the principle of the Register of Business Names. I hope to persuade your Lordships to take a view that is different from the one at which you arrived during the Committee stage of the Bill, when on a slightly obscure amendment your Lordships reached a decision, as I understood it, on the principle that was then contained in the Bill. Therefore I hope that your Lordships will agree that this same procedure will be appropriate now, though I admit that it is a little difficult to deduce that from the wording of the amendments on the Marshalled List.
Lord Ponsonby of Shulbrede: My Lords, I should like to say that from our point of view we accept that whatever be the decision on this amendment, it will follow on in relation to Amendments Nos. 62 and 63 and later amendments. However, I must say that I think the Government are very unwise to reintroduce this amendment at this time.
Lord Trefgarne: My Lords, of course I appreciate that the noble Lord and, I believe, noble Lords on the Liberal Benches do not agree with the proposal that was originally contained in the Bill and no doubt regret that the Government are now seeking to persuade your Lordships to reconsider the matter. However, we shall all have to take our chances in the Division Lobby in due course, if that be necessary.
When an issue has been thoroughly debated and determined in Committee, I would not lightly invite your Lordships to reconsider it. In this case, however, I believe that the merits of the Government's proposals have not been fully appreciated. I shall be inviting your Lordships to endorse the Government's

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amendments, Nos. 62, 63 and 106, which would restore the structure of the Bill to that in which it was introduced. Similarly, on the clause which your Lordships are now discussing, I shall invite your Lordships to accept this amendment, and indeed to reject certain other amendments.
Let me now address myself to the case for retaining a central register of business names. I would remind your Lordships that the present register has nothing to do with company law or company registration; nor, incidentally, is it a register of all businesses. It is merely a register of businesses trading under names other than their proprietors' names. Even to that extent, it is clearly deficient. A principal requirement of the Registration of Business Names Act is that the certificate of registration should be exhibited in a conspicuous position at the principal place of business. I have here an example of such a certificate. Possibly this is not as familiar to your Lordships as it would have been if the present law had been better observed.
Throughout the country, there are innumerable examples of businesses which should have registered but which have failed to do so. For example, in Cardiff a recent spot-check indicated that only 10 out of a random sample of 28 businesses had registered, and of those only four displayed a certificate in their principal places of business. In Edinburgh, 11 out of 33 had registered, but only two displayed a certificate. In London, samples showed roughly the same picture: in one area, 10 out of 24 had registered, with only four certificates displayed; and in another, six out of 13, with two certificates displayed.
This situation is clearly illustrated also by some recent statistics relating to the register to which the noble Lord, Lord Lloyd of Kilgerran, referred in our debate on 19th March. He pointed out that there had been an increase during 1980 in the number of registrations, either initially or on a change of ownership. But what do these figures actually demonstrate? Only just over 23,000 businesses notified a change in their ownership, and just under 20,000 notified that they had ceased trading. I suggest that when compared with a register purporting to contain details of some 2·6 million businesses, these figures, showing only a tiny percentage of people actually complying with the Act, clearly confirm the extent to which the requirements of the law are manifestly ignored.
Even when registration has indeed taken place at the start of trading, there can be no guarantee that the information is up-to-date. I was struck by a recent press article which described a situation where out-of-date information at the business names register led to a court order being served on an individual who had nothing whatever to do with the business in question. The register is far from perfect, and there must be many such situations in which the information that it contains is positively misleading.
The Registration of Business Names Act does not set up a general licensing or registration system before one can engage in business. It has the much more modest objective of enabling the public to discover who is the proprietor of a given business in circumstances where that information would otherwise be difficult to ascertain. So far as the requirements are properly observed, the register should then answer the question: in a dispute, who should I sue?
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It is disappointing that the debate over the register has diverted attention from the Government's alternative. The clause which was in the Bill as introduced, and which we are asking your Lordships to restore by Amendment No. 63 in what we believe to be an acceptably improved form, will enable customers to have this key question answered on the spot. There will be no need to visit a central register, or to pay an agent to do so. The relevant information will be displayed at business premises themselves and on business documents, and business contacts will have a right to ask for it to be supplied in writing. They will no longer be dependent on the imperfections of the present system. I suggest to your Lordships that this is by no means a second best. In many respects it is superior to the present imperfect arrangements.
Since I have inevitably been drawn to say something on Amendment No. 63, I trust that I shall not unduly weary your Lordships if I draw your Lordships' attention to some significant changes and improvements which the Government propose to make to these provisions in the light of comments made during the earlier proceedings and the constructive suggestions, which we welcome, from the National Consumer Council. First, subsection (2) includes a very important change. We were asked by the National Consumer Council to confer on any person a right to require the relevant information on demand. At Second Reading, the noble Lord, Lord Mishcon, also commented on what he felt to be the rather restrictive definition in the Bill as introduced. It seems to the Government that this proposal goes a little too far. But we agree that any person in a business relationship with a firm should be entitled, immediately and on the spot, to the information he needs to answer my "Who to sue?" question, and this is now achieved by our proposed new clause.
Secondly, we have accepted that the class of business documents on which the relevant information is to be stated should be extended to specify invoices and receipts. We considered carefully the representations made by the noble Lord, Lord Mishcon, that order forms should be included in the specified documents. I think it must be recognised, however, that that phrase is very wide-ranging; it should include, for example, any cut-out coupon in a newspaper advertisement placed by the business. It could be difficult and costly for a business to be required to publish lengthy material about its proprietors' names and addresses in such a case, and I am not at present persuaded that it would be right to go so far.
Some noble Lords wanted us to go further and include, for example, trade cards, catalogues and other promotional material. I think one must consider what is reasonable for a possibly small business to be expected to print, bearing in mind that some of these documents— for example, classified advertisements in local papers— may be quite small, and that the information to be disclosed may be extensive. I believe that in subsection (1)(a) we now have the balance about right, hearing in mind that customers and others will have the separate right to ask for information to be disclosed at any time. I should stress again that this entirely new right to free and immediate access to the information concerned is seen by the Government as a valuable safeguard to consumers. Thirdly, we are proposing to extend the class of business premises at

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which information must be displayed, with a view to the interests of suppliers as well as customers. This is in subsection (1)(b).
To sum up, the Government continue to see an overwhelming case for scrapping the central register and replacing the whole registration system by the proposals in our Amendments Nos. 62 and 63.
Perhaps I should finally say a word about the particular amendments to Clause 23 which are before the House. Clause 23 requires an index to be maintained, against which the Registrar of Companies will check proposed company names before registration. Even if we were to maintain the present Register of Business Names I should have to advise the House strongly against retaining the particular provision in paragraph (f).
As I attempted to explain in Committee, it would be virtually impossible to amalgamate the present registers of companies and of business names. The first is computerised, the second is manually maintained. An amalgamation would mean putting the two indices on to the same basis; it would take many man-years to accomplish; and the result would be of very doubtful benefit, if only because of the omissions and errors in the present Register of Business Names. Furthermore, the effect of accepting the amendments set down by the noble Lord, Lord Lloyd of Kilgerran, in place of the Government's Amendment No. 57 would be to preclude any company in future from being registered by the same name as that of a business. No such ban has ever operated or been contemplated. Such a ban, indeed, would throw the whole system relating to company names into considerable confusion. I hope that what I have said will persuade the House to endorse the Government's amendment which we are debating now, and that your Lordships will see fit not to persist in the line which was agreed at Committee stage. I beg to move.
3.19 p.m.
Lord Ponsonby of Shulbrede: My Lords, we have accepted that the debate on this amendment is a debate on the whole principle of the retention of the Registry of Business Names. As I understand it— and I speak as a relative new boy to this House— it is a convention of your Lordships' House that the same amendment, or virtually the same amendment, is not introduced in the House at Report stage when it has been decided by noble Lords, and in this case by a vote of all your Lordships, at Committee stage. It would appear to me that the Government are ignoring that convention. I accept that the Government would wish to seek to reverse the decision of your Lordships at some later stage in the progress of the Bill. I believe that the Government have been badly advised to seek to do this in this House because inevitably they will be faced with a further problem on this amendment when the Bill goes to another place. Indeed, as I see it, the effect of their seeking a further vote from your Lordships on this particular amendment is to waste further Government time. I had thought that the intention of the Government was to seek to get their programme through as quickly as possible and not to waste time.
Lord Denham: My Lords, on this limited point I wonder if the noble Lord will forgive me. I would not want to make too much of it, but there are precedents for this being done. I could quote a precedent when the noble Lord's party were in power of something being reversed on Report stage when the decision had already been taken in Committee. There is, which so often happens on Report stage, a marginally different package presented to your Lordships from that which was debated on Committee.
Baroness Llewelyn-Davies of Hastoe: My Lords, if the House will forgive this intervention, the highly marginal difference is a little irrelevant. We have been harried by the Government for the whole of this Session to get their programme through. Time after time the noble Lord the Chief Whip has urged the House to get everything through. He is now going to have an immense debate in this House and will face the same thing, win or lose in this House, in the other place. I do not think that this is getting the Government legislative programme through.
Lord Ponsonby of Shulbrede: My Lords, if I may revert to the question of the principle of the Registry of Business Names, the noble Lord, Lord Trefgarne, has given the Government view as to why they believe the registry should be abolished. The fact is— and I am in danger of repeating what I said on Committee— that without the Registry of Business Names there will be no central register of unincorporated businesses; there will be no access to information about a business other than from the business itself— and objective information is vital to trade creditors to protect them from the risk of dealing on open credit terms with businesses that they know nothing about. As we said at Committee stage, abolition of the registry is unnecessary because it can easily become self-financing. There are many indications (and we had some debate about this in Committee) that if the search fee were increased from 5p to £1 and if the registration fee were increased from £1 to £5 or £10 it would bring the registry into a solvent position. Therefore from the point of view of the cost of the running of the registry, that side of the problen could easily be solved by the Government being prepared to increase the fees which are charged.
The noble Lord, Lord Trefgarne, made much in his speech of the question of lack of compliance at the present time with the provisions of the 1916 Act. It is also clear that there has been considerable improvement in compliance over recent years and there is no reason why that level of compliance could not be further improved. As is generally known, a business registered under this Act is now required by any bank with which it may bank to produce its certificate of registration, and this semi-self-regulating feature has been one of the factors which have enabled there to be very improved compliance with the Act. That the level of compliance with an Act is not 100 per cent. is in itself no reason to do away with the Act. Indeed, we are well aware that many of us, I fear, from time to time exceed the 40–mile an hour or 70–mile an hour speed limit, but because we know there is not 100 per cent. compliance with the speed laws the Government do not suggest that these particular laws be abolished.

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I should have thought that serious consideration should be given to the institution of an annual fee for a business registered under the Act because this would have the effect of ensuring that the information was very much more up to date than it is at present. I think that I should also underline the fact that from the point of view of the consumer it is very important that the registry should be maintained, because it is often only through the existence of the registry that a consumer can find out who is behind a particular business with which he trades. Often it is inappropriate to ask for this sort of information when a consumer is initially carrying out a transaction. I think that when this question was debated by your Lordships in the initial stages I quoted a number of cases where the existence of the registry was something which was of very beneficial use to the consumer. I hope that your Lordships will decide this afternoon to reaffirm your decision to retain the Registry of Business Names.
3.28 p.m.
Lord Lloyd of Kilgerran: My Lords, I am grateful to the noble Lord, Lord Trefgarne, for agreeing with me that the discussion on Amendment 57 is solely concerned with the principle of having a business names registry. Like the noble Lord, Lord Ponsonby, but for other reasons, I fail to understand why the Government have brought in this amendment. I should have thought that a discussion of a business names registry dealing with small firms would have best been left to the other place, to the elected House, rather than taking up your Lordships' time. The noble Lord, Lord Trefgarne, started off his speech by saying that the merits of the Government's case had been fully understood. My post indicates that countless representations have been made to the Government, in writing and orally on the matter. Let me say that the intended abolition of the Registry of Business Names by the Government has drawn howls of anguish from such users of the service as companies, banks, accountants, credit organisations, the Institute of Trade Marks Agents and the Institute of Patent Agents— and I pause here to say that often inadequate tribute is paid to those two institutes in regard to the efforts they make for industry and the creation of wealth. They know what is the position in regard to business interests of the community. Then we have the protests of the Institute of Directors and the Law Societies and other institutions. There was even a letter from the Consumers' Association, which publishes Which? and an article there recently saying that the business names registry, imperfect though it is, fulfils a useful purpose.
It is often said that company law is an engine of fraud. That is a cliché, but so frequently clichés are realistic and correct. It is fair to say that if this business names register is not accepted in some form or another, then we are letting in the con-man and it is a boon to those who wish to deceive the consumer public. It will make it easier for firms to hide behind their real identity.
The noble Lord or his department, without giving any details, has recently made certain inquiries of its own at public expense. Not satisfied with the mass of information, the mass of evidence, that came from
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these institutions to which I have referred, they went down to Cardiff for a spot check. I wonder why they chose Cardiff. I wonder what kind of reception they received. We do not know whom they visited. I know Cardiff very well. I wonder whether they went into Chez Myfanwy, a series of milk bars run by a friend of mine— at least I know him— named Jim Davies, a reformed alcoholic and known locally as the holy and blessed man.
Apparently only four displayed notices in Cardiff. That is put against the volume of evidence that came from the CBI and all the other institutions. They went up to Edinburgh, again at public expense, and then they went to somewhere in London. They did not say where in London. I am sure that if they went just behind their offices in Victoria Street to the small shops there (where years ago a relative of mine opened up a shop as he was expelled from Wales because of unemployment) they could have found evidence. They did not need to go all round the country in the way they have done. That is the kind of evidence, without any details whatsoever, that is being presented to your Lordships this afternoon on this important matter.
The principles are quite clear. Anyone who sets up in business has a duty to say who he is and where he can be reached. The Registry of Business Names— imperfect as it is— is a useful and inexpensive tool as at present administered. If I may refer to the speech made yesterday by the noble and learned Lord the Lord Advocate, he said that the Government were very interested in helping small firms. Indeed, he referred to the Green Paper introducing a new form of incorporation. I should have thought that that policy of the Government demands a central registry for the performance of the duties that it has been doing, however inadequately, in the past.
The noble Lord, Lord Morris, made a most significant speech yesterday when he said how surprised he was that the Government should be obsessed with the difficulties of administration. This afternoon the noble Lord the Minister has told your Lordships that the Register of Companies Names is run by a computer whereas the Registry of Business Names is "manhandled". I think that was the word he used. I agree with the noble Lord, Lord Morris. I have had correspondence since the defeat of the Government on this issue telling me how cheap and easy it would be to arrange for this central registry.
What is really being substituted by the Government for this useful central Registry of Business Names? I agree that the proposed amendments that are to follow, to which the noble Lord referred, Nos. 62 and 63, will improve the matter. But those amendments do not go to the issue which is now before your Lordships. Of course, it is better for people to put up notices in more legible characters in their shops. Of course, it is a good thing for the names of the partners to be put up inside or outside the business premises. But does that help greatly? Suppose one of your Lordships went into a small firm, perhaps in Cardiff, to make a purchase. Suppose that, back home in the North of Scotland, he lost the invoice. If there was dissatisfaction with the goods, how would it be possible to find out the name of that business from which they had been purchased? The first thing that an agent

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or solicitor would do would be to get in touch with the business names registry. A visit back to Cardiff might disclose that the firm had disappeared.
I agree with the noble Lord when he said that there is a large percentage of people that have not used the register and have not registered their names. But as the noble Lord, Lord Ponsonby, said, that is no adequate reason for getting rid of this registry. The Minister in the other place, Mr. Eyre, is reported as having said on the radio, when taxed with the question of how this policing of business names should be undertaken, that the trading standards officers and the police would go about their daily duties and, in the course of that, would look to see whether a business was complying with the regulations. If not, the Department of Trade had power to commence proceedings.
Think of it, my Lords. Notices are to be put up, according to the Government, in all these businesses and shops. Officials would be going round to the firms to see whether they are complying with Amendments Nos. 62 and 63. The police, according to the Minister from the other place, are being expected to see whether the names of the partners are displayed. The police and the trading standards officers do a splendid job and are already terribly overloaded. It seems to me very strange indeed that a Government Minister should be advocating the use of those gentlemen for the purposes of seeing whether persons are complying with the business names regulations as set out in these amendments.
In conclusion, it is plain business common sense to allow a business registry to exist, and for the Government to apply their mind to simplifying and bringing up to date the administration, as by the use of computer arrangements, to make the business names registry a little better in its registration than it has been in the past. I strongly ask your Lordships to vote against this amendment.
3.39 p.m.
Lord Wigoder: My Lords, may I say one word in support of the observations made by the noble Lord, Lord Ponsonby, and the noble Baroness, Lady Llewlyn-Davies, as to the desirability of your Lordships' House supporting the Government in this amendment. It ought to be placed on record that this amendment seeks to omit two lines which were originally inserted at Committee stage as the result of an amendment moved by my noble friend Lord Lloyd of Kilgerran. The debate on that amendment took place not on a Friday, not late at night, but at an ordinary working hour on a Thursday afternoon. There was a very full attendance; no fewer than 186 Members voted in the Division. It was an amendment which, many days in advance when it has been tabled, was known would be one upon which there was going to be a Division. It was therefore, in so far as any Division can be in this House, clearly one which reflected the considered wishes of a very substantial number of your Lordships. In addition to that, it was a Division which took place on a Bill which is originating in your Lordships' House and has still to go to the elected Chamber for their consideration.
I do venture to ask your Lordships to consider,
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without any regard at the moment to the merits of whether or not there should continue to be a Registry of Business Names, whether it is in the best interests of your Lordships' House that the Government should now seek on Report stage to overthrow an amendment introduced and debated in those circumstances. I am pleased to see that the noble Lord, Lord Denham, is just taking his seat, like the deus ex machina. I was hoping to ask him, if I may, whether he can give me any precedent in recent years for a Government seeking to overthrow on Report an amendment carried against them on Committee, where 200 Peers had voted on a Bill which had been introduced in your Lordships' House and still had to go to the elected Chamber. I take it from the silence of the noble Lord, Lord Denham, that the Government are now in fact inviting the House to embark on a step without precedent in recent years.
Lord Denham: My Lords, the noble Lord is really laying down almost impossible conditions in the criteria which he is suggesting for this question. If he would like to give me two or three hours in the Library, I am sure I could come back with the information he wants but, according to his question, it has to be a Bill started in your Lordships' House and a Bill where a Division took place on behalf of the Government. There are many precedents that could be found for not absolutely reversing, but suggesting a slightly parallel line which could be adopted on Report stage to one which has not been accepted earlier. I have in mind one particular occasion when that was done by the party opposite when they were in power. I daresay, if I looked hard enough, I could find occasions when Members of the Liberal Party voted in such a position; but I do not think it is really useful to take it further than that. There are many times when the Opposition of the day seek to change the mind of the House on Report from what it was on Committee and I see no reason why, if the Government feel particularly strongly about an incident, they themselves also should not have this opportunity.
Lord Wigoder: My Lords, may I just add that the noble Lord, Lord Denham, has had more than two or three hours, because he knows perfectly well from the discussion he had with me yesterday that the question arose as to whether there were any precedents in these circumstances, and no such precedent has been forthcoming.
I entirely accept that the Government have this right in theory and that there have been occasions in the past when unrepresentative Divisions taken late at night, and things of that sort, have reached a certain decision so that Governments have felt strongly that they must come back on Report; but when a Bill is on its way through your Lordships' House and is about to go to where there is an elected Conservative majority which can put the matter straight if they want to, I want to ask noble Lords opposite to reflect on this matter just for one moment.
In recent years your Lordships' House has always been in some danger of falling into disrepute as one of the two Chambers of a democratic Parliament because it happens to have in its midst a very substantial hereditary Conservative majority. Your

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Lordships' House has not fallen into that disrepute precisely because noble Lords opposite have always been led in recent years with great skill, great judgment, great courage and great restraint. In the result, that overwhelming majority which exists inevitably has not been used, as it might have been when the Labour Government were in power, to defeat them on every possible occasion; and when a Conservative Government have been in power, as they are now, we have seen on a number of occasions Conservatives on the Benches opposite behaving again with restraint and from time to time accepting defeat graciously and responsibly. I should have thought that this was one of the occasions when that ought to apply and when the Government now, by seeking to call in their supporters from all parts of the country on a three-line Whip in order to seek to overthrow a decision made by your Lordships freely— I see noble Lords opposite saying "Not a three-line Whip!" and I accept that. Perhaps it was two lines— what's in a line?
Lord Denham: My Lords, before the noble Lord comes on to the point of the amendment, I should just like to point out— I see no reason why I should divulge this to the noble Lord but I am quite happy to do so— that I did not send out a three-line Whip on this occasion.
Lord Wigoder: My Lords, I have the clear impression from the Benches behind the noble Lord, Lord Denham, that my guess as to that was clearly wrong. But the situation is this, is it not?— there is an issue here of very real importance that has nothing to do with the merits of whether or not there should be a Registry of Business Names. I hope that noble Lords on the Conservative Benches who believe that there should be a registry, for the reasons put forward by the noble Lord, Lord Ponsonby, and by my noble friend Lord Lloyd of Kilgerran, will oppose this amendment which seeks to remove that registry. I hope, equally, that noble Lords opposite, who may feel convinced by the Government's own arguments that there ought not to be a Registry of Business Names, will nevertheless hesitate a very long time before going into the Lobbies in support of this amendment, on the ground that the reputation of your Lordships' House is of far more importance than the future of the Registry of Business Names.
3.48 p.m.
Lord Robbins: My Lords, I do not intend to expatiate on these doubtless procedural arcanae, but I do wish in a few sentences to express my perplexity at the Government's attitude in this respect. I do not think it will be any secret to those of your Lordships who have observed my humble behaviour in your Lordships' House, that I understand and support the Government's intention to create a more efficient and competitive economy. Having listened to statements from the Government Front Bench on the reasons for supporting the original proposal and for rejecting the proposal which was successfully carried in opposition to that original proposal, I confess that I am completely perplexed. The reasons given have been that at present the business register is not specially up to date. I am quite sure those Members of your Lordships' House
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who have had anything to do with upright, critical structures on the behaviour of certain types of business will agree that the register is not particularly efficient. But if one discovers that a register— which all common sense suggests should be efficient— is inefficient, the right way to proceed is surely to make it efficient.
We were told that this register is hand-written and that it would take years and years to convert it to computational methods. Again, I am professionally totally perplexed. Why should it take years and years to convert a hand-written register— doubtless improved— to a register on a computer? I certainly could recommend to Her Majesty's Government various computational experts, who could probably arrange for this to be done in a few months rather than years—
Lord Trefgarne: My Lords, I wonder whether the noble Lord and the House will allow me to intervene. I did not say "years". I said "man-years". The noble Lord really must not distort what I said.
Lord Robbins: My Lords, I apologise to the noble Lord, if my imperfect hearing of his case deprived me of understanding of his main argument. But with all the apologies which are due, I submit that, to me, the argument is implausible. In any case, I return to my main point: why oppose the existence of a business register, however imperfect it may be, when all considerations of common sense, publicity and the maintenance of decent competition suggest that you should have one?
Lord Spens: My Lords, I am a hereditary Peer and I do not sit on the Government Benches. In fact, I believe that yesterday I voted against the Government five times. But, today, I am going to support the Government on the merits of the case. I consider that to impose the Register of Business Names on to the Companies Registry would make bad matters absolutely chaotic. The Register of Business Names itself is chaotic. The Companies Registry is a bit better. But if you suddenly land it with this awful Register of Business Names to take over as well, the Companies Registry will get very much worse. I therefore support the Government.
Baroness Elliot of Harwood: My Lords, at the Committee stage of this Bill, I spoke with some strong feeling on the subject of a central Register of Business Names. I promised my noble friend Lord Trefgarne that would listen very carefully to what he said about the current proposals which the Government are making, and which he explained with great lucidity and simplicity. I have listened, I have studied the question and I have been in touch with a variety of different agencies and organisations which are all interested in this matter; and, as your Lordships know, I am particularly interested in it, because was the first person to be chairman of the first Consumer Council. It has now passed into much bigger hands and is backed by the Government, and paid for by the Government, but I still remain extremely interested in this subject.
I do not think that the proposals, which my noble friend Lord Trefgarne has put forward extremely brilliantly, meet the point about a central business

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register. I know that, in all probability, it could be much better run. Lots of things in life could be much better run, but you do not do away with them because they are badly run; you do away with them because you think that they are wrong. I happen to think that this is right. I happen to think that it is right to have this register. It is available for anyone who wants to consult it. The fact is that there are a number of names which are not on the register, because of inefficiency, because it is not properly run, or— and this is really the key to the matter— because it is far too cheap for people to register.
It so happens that, after the last debate during the Committee stage, I went home and had to ring up my accountant in a neighbouring town, Kelso. He does all my business accounts, as well as everybody else's accounts. He had just been registering a new, small business company and he said to me with amazement, "It cost me £1." I said that it was ridiculous. It costs a great deal more than that to do anything. It is too unfortunate for words that this organisation has not kept up with the times and does not charge what it should, when we all have to pay the economic price in every other sphere. However, that is just a small point.
The need for a register was very well expressed in a letter which Mr. Jeremy Mitchell, the director of the National Consumer Council, wrote to The Times. I shall quote just one small passage. He wrote:
"Consumers, creditors, enforcement officials, other businesses and journalists, all for differing reasons, share the need to be guaranteed access to adequate information about the true identity of traders. Anyone who sets himself up in public as a trader should say who he is".
That puts it in a nutshell, and I hope that we shall still support the Register of Business Names. I do not say that the proposals which the Government will make if we lose this will not be an improvement on what has been suggested beforehand, but I still think that a central register is essential to the organisation of businesses in this country.
Baroness Burton of Coventry: My Lords, may I just follow the noble Baroness, Lady Elliot of Harwood, because she and I have fought for many years on behalf of the consumer, although I never attained the honour that she did in being chairman of the Consumer Council. But I should like very much to support what she has said. I have talked lately to many people in various consumer organisations who are most distressed at the thought that what the Government are proposing now may be carried into effect. With great temerity, I must say that I really did not agree with the noble Lord, Lord Spens, who, I am sure, knows a lot more about accountancy than I do. As I understood what he said, it was that because something was in a chaotic condition you should not then add on something and, presumably, have two things in a chaotic condition. That does not seem to me to be a very progressive outlook. So I should like very much to support what the noble Baroness, Lady Elliot, has said and I hope that the amendment proposed by the noble Lord, Lord Trefgarne, will not receive the support of this House.
Viscount Colville of Culross: My Lords, I am sorry
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that the noble Lord, Lord Lloyd of Kilgerran, spoke so soon in reply to the amendment. But I hope that he will forgive me if I revert again for a moment to the merits as a number of others of your Lordships have done. It seems to me, leaving aside the procedural point, into which I should not like to insert any observations— it has been very widely discussed— that there remains the question of the merits. My noble friend Lady Elliot and the noble Baroness opposite have been talking about the protection of the consumer. What is particularly noticeable in the debate that is before your Lordships at the moment, is that there is a great deal of common ground about the way in which the consumer can be protected. Clause 28 of the Bill and Amendment No. 63 both have in them a very clear requirement that people who trade other than under their own names shall set out their names on their documentary material— their invoices, their letters and so on— and at the same time shall display them in their premises so that everybody can see them. That appears to be common ground. The noble Baroness I am sure would agree that this would be an improvement— I think she said so— over what was originally in the Bill before it came to the Committee. Therefore one does not have to argue the question whether that would or would not be a good thing, because everybody is agreed that it would be.
For myself, I can see the immediate advantage to somebody who is dealing with a non-incorporated organisation that they should know exactly who the people are by looking either at the invoice or at the notice on the place of business. The noble Lord, Lord Lloyd of Kilgerran, said that if you go home to Scotland from Cardiff having lost your invoice, what is easier than to get your agent to go to the Registry of Business Names? True, but it is equally easy to get your agent to go along to the shop in Cardiff, which is about the same distance away. There you would find what would be an up-to-date, one would hope, list of the people concerned.
This is a matter which, apart from the procedural question, has boiled down to the protection of the individual. It is very interesting to see that when the 1916 Act was before another place it was not entirely a matter, as the noble Lord, Lord Noel-Buxton, suggested in his maiden speech, of protecting people from trading with unknown Germans who were masquerading under aliases in this country. It had apparently been a very lively issue for some 15 years before that, on a purely consumer protection basis which existed even in those days. There was one honourable Member of another place who suggested exactly what is now both in the Bill and in the amendment of my noble friend Lord Trefgarne: that the names of the people concerned should be on the writing paper and put up on the premises.
What therefore, it seems to me, we are debating on the merits is whether, in addition to that— because all that is quite agreed— one should retain the Registry of Business Names. I take the point made by the noble Lord, Lord Robbins, that any competent, modern technologist would be able to convert the existing register in next to no time into something which went on to a computer. Of course he would. However, that I do not think is the point. The point is this: would people in the future, any more than they have

453
done in the past, either register themselves in the first place, thereby feeding the computer with accurate information or, if the membership of a particular firm were to change, would they register that change? Human nature being what it is, the shadier you are the less likely you are to register it. And that, I suppose, is part of the trouble. It must be much more difficult to enforce if there is a single register in one place, or in perhaps three places, than if the enforcing authority can go and look at the premises where the trade is carried on to see whether or not a list of names is displayed as required and whether or not the names are also on the documentation.
Supposing the fees were increased, which is what has been suggested by noble Lords who wish to cure the defect at the moment which relates to the financing of this affair, the shadier you are the less likely you are to wish to pay a vastly increased sum of money. There would therefore be an added disincentive for registering yourself in the first place, and an added disincentive for changing the registration if you took over a business which previously had been registered under somebody else's name and having it transferred into your own.
What does the register add in these circumstances? What does it genuinely add, first to the consumer who wishes to know with whom he is dealing— and that has always been the point of this legislation— and, secondly, to those who are in a position to try to enforce it, either in the local authority or in the police? It must be easier for the local authority and the police— and, I should have thought, the consumer who usually does not buy his goods in Cardiff when he lives in Edinburgh— to find out, either in the shop or by getting a piece of paper, who it is who is in charge than to have to send an agent, as the noble Lord suggested, to a central register to do it for them.
For those reasons, it seems to me that what we have in the Bill, and what is agreed by everybody to be of advantage to the consumer, is on balance all that is practicable or sensible to require. If we do any more and we put up the fees to a large extent in order to cover costs, we shall merely add to the disincentives for those who do not want to co-operate, anyway, and we shall do nothing but harm to the "goodies" who are perfectly prepared in any case to register either the initiation of their business or the change of names in it. It seems to me, therefore, that the Government have come forward, on the merits of this case quite apart from the procedure, with a very proper compromise which takes account not only of the history of the Bill and its origin but of very real, current term activities and attitudes of mind.
Lord Morris: My Lords, I believe that my noble friend has put forward a very poor case indeed. The first rule that he must obey is that he must find himself a first-class counsel. In this respect Her Majesty's Government, in your Lordships' House at any rate, have done extremely well in obtaining the services of the noble Viscount, Lord Colville of Culross, who argued the case so ably for them.
Viscount Colville of Culross: My Lords, for no fee!
Lord Morris: Naturally! I believe, however, that the case which has been put forward by the noble Lord, Lord Lloyd of Kilgerran, and by his noble colleague is unanswerable. Anybody who has done any search at Companies House or at the Registry of Business Names will be able to determine very easily indeed, purely by the date upon which the information is placed upon the central registry, whether a particular business or whether a particular point should be followed up any further. Secondly, the main tenet of the Government's case, so far as I can make out, is the hideous administrative difficulties imposed. This raises the question of penalties under their two amendments. Despite the merits or otherwise of the penalties themselves, which do not bear too much examination, I should dearly love to know how the Government are going to administer these sanctions. I believe that in the end this will be either totally ignored or, in the long run, hideously expensive.
4.8 p.m.
Lord Bruce of Donington: My Lords, this is a nonparty question. I think your Lordships will agree that there is no question of party politics being involved. It is a question of plain common sense. There have been few occasions over the past few years when there has been such unanimity among the accountancy profession, the legal profession, the business organisations, the consumer organisations, all of which have put forward views which are firmly against the abolition of the Registry of Business Names. In fact, among organised expressions of opinion in this country I would say that at present about 90 per cent., or possibly even more, are in favour of the retention of the Registry of Business Names.
This afternoon the Government have put forward a very novel doctrine: that because a law is not complied with to quite a considerable extent, and the point has been conceded many times, the law itself serves no useful purpose and should be abolished. My noble friend Lord Ponsonby instanced the whole question of the traffic regulations. I myself could bring forward an illustration even more apposite to the matter we are discussing. It concerns Section 12 of the Companies Act 1976, which requires in some detail all companies, whether they be large or small, to retain proper records of each of their transactions and there are very heavy penalties for non-compliance. In the experience of the accountancy profession and in my own personal experience, there are numerous instances where firms do not keep proper books of account and do not record the individual transactions in the way that is required under Section 12 of the Companies Act 1976. Indeed, in response to a Parliamentary Question which I tabled some months ago, it was revealed that in the five years since the passing of the Act there had been only four prosecutions. The profession knows perfectly well that there are hundreds of firms up and down the United Kingdom that are in breach of the requirements of Section 12 about keeping proper sets of accounts, but would anybody dream that precisely because that is the case one should abolish the requirement of Section 12 that proper accounts should be kept?
The advantage of the existing system is that it provides for some measure of deterrence. This was

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touched upon by my noble friend Lord Ponsonby when he mentioned the requirements of the joint stock banks. I should like to venture to emphasise to your Lordships the importance of that. It is the policy of the joint stock banks that when anyone goes along to them to open an account in a name other than their own the banks require the production of a certificate under the Registration of Business Names Act 1916. This is undoubtedly a step which secures considerable compliance with the Act itself and in fact extends some measure of protection to the public and indeed to creditors.
In fact on the merits of the case there can be very little argument at all. The noble Lord, Lord Lloyd of Kilgerran, said that after all the matter could be referred to another place. I am quite content to have it resolved in this place because I believe that the majority of your Lordships, when you are faced with a proposition that has no party political connotations whatsoever, are quite capable, right across the party ranks, as they have done on so many occasions before, of arriving at what after all is a sensible conclusion.
The noble Lord, Lord Robbins, expressed some perplexity as to why the Government should have persisted in their present course of action. I share that perplexity but I have an explanation and, in giving that explanation, I have to cast the noble Lord, Lord Trefgarne, in the very amiable role of Rumpole of the Bailey— who will of course be known to the majority of your Lordships. Rumpole of the Bailey from time to time complained that he had to comply with the wishes of "She-who-must-be-obeyed". Now, we know perfectly well that the edict has gone forth from No. 10 that there have to be economies in manpower in all Government departments. We know perfectly well that the Department of Trade has its quota. We know perfectly well that in the Department of Trade consultations have taken place— very much, I fear, after the style of "Yes, Minister"— as to where the economies should be made, and that it has eventually been decided that the least offensive way of complying with the requirement would be to eliminate the 100 to 150 people in the register.
The House has been confronted with a package deal. It has already been agreed inter-departmentally that 150 people must go, which makes us wonder what is going to happen when it comes to ensuring compliance with subsection (7) in both Amendments No. 62 and Amendment No. 63, which require individuals to do a number of things. Who is going to wander the little streets of Britain to make quite sure that there is full compliance with the measures that the Government propose as an alternative? They will need far more than the 100 to 150 that they are economising with by the abolition of the Register of Business Names.
We know quite well that it is a package deal. We know quite well that because of the package deal the Government have to seek to bring their own party majority into operation in the Lords in defiance of the well known convention in this place that on nonparty matters these questions can be judged entirely on their merits. As a number of noble Lords have said, the amendments proposed by the noble Lord amount to nothing more than a crooks' charter, as indeed has been proved from time to time on a Saturday
456
morning by "Checkpoint". I invite the House and every Member of the House, regardless of party, to retain the Register of Business Names and to reject the Government's amendment.
Earl de la Warr: My Lords, I am always rather suspicious when the noble Lord, Lord Bruce of Donington, starts by saying, "This is a non-party matter". Nevertheless he did not leave us in much doubt for very long as to how he really felt about it. I think we should be quite clear that for years the operation of this Register of Business Names has been making an ass of the law, and that is something which I know none of us likes at all. We have spoken about a rogues' charter; I should have thought that noble Lords would know very well that if a chap is out to cheat you then, my goodness! he will do it in a more subtle way than by dodging this Register of Business Names. It is not there to stop the rogue; it never has and it never will.
The noble Lord, Lord Ponsonby of Shulbrede, asked why it had to go just because it was a bit less than 100 per cent. complete. Surely it is hardly the way to describe a register which has become tattered over the years to say that it is a little bit less than 100 per cent. I will not mention any figure but he must know that the implication that it is very nearly 100 per cent. is perhaps a doubtful one. He has assured us that it has been much improved lately. I wonder how he knows? He has assured us that in his opinion no doubt it will get better. I wonder how? The Opposition and the noble Lord, Lord Lloyd of Kilgerran, seem to be investing this tattered old register with a sort of saintliness and an effectiveness which quite certainly it does not have. If we were talking about something that was really good and really doing its job then of course we should be talking about quite a different subject.
My noble friend Lord Colville of Culross drew the attention of the noble Lord, Lord Robbins, to what he said about computers. Of course we all know that it would be easy to get the present register computerised and he knows just as well as anybody else that the information you get out of a computer is only as good as the information you put into it and if you put in something that is so half-baked as to be nearly rubbish then that is what you will get out.
I urge your Lordships to look at this in a practical sort of way and not to talk as though this were a matter of sacred principle because we are losing a tool which will leave the small businessman and the consumer absolutely naked of a piece of protection which they had previously. That is not the case. My noble friend Lord Trefgarne has argued the case very adequately indeed and I fully support him.
Lord Ponsonby of Shulbrede: My Lords, before the noble Lord sits down, may I say this. I know that the compliance levels have improved from conversations with a former Minister at the department, because procedures instituted by the previous Government have increased the level of compliance.
Lord Trefgarne: My Lords, your Lordships may think the time is now approaching when we ought to make up our minds on this matter. I want for a few moments

457
to pull the strings of the debate together. If we come to divide at that point, as I believe we shall, I hope your Lordships will be able to agree to the amendments which I propose. I want to remind your Lordships of the present position. We have a register containing 2,600,000 names at least, of which about half are thought to be out of date, inaccurate, or to record the names of businesses that have for one reason or another ceased to trade. Of course the register never sought to be a complete list of unincorporated businesses; it seeks only to be a register of unincorporated businesses where they are trading under other than the name of the proprietor. They have never sought, certainly not in recent times, to offer any sort of protection to the name itself. For example, there are, I am told, a very great many "Ann's Pantrys" listed on the register, which are presumably tea shops of one sort or another dotted up and down the land. The present arrangement, as I have said, has 2,600,000 names on it, and one of the proposals put forward by the noble Lord, Lord Ponsonby, was that each of those 2,600,000 names should reregister each and every year. Well, my initial mental arithmetic suggests that there is about half a million pounds worth of postage stamps there, let alone the actual administration of recording all those new registrations.
Lord Ponsonby of Shulbrede: My Lords, one would have an annual registration fee which would pay for that.
Lord Trefgarne: Well, my Lords, I am aware of that, but that simply adds to the burden; the registration fee is adding to the burden of the small unincorporated businesses which I am seeking to protect in this way. The new enhanced proposals which are contained in the amendments in my name which follow, I believe, provide a precise and accurate means of conveying to consumers, to suppliers, and to those who have a legitimate business with the enterprise concerned, precisely the information they require, precisely at the place they require it and precisely at the time they require it. That I believe is a very substantial improvement on the existing out-of-date and inadequate arrangements.
A number of points have been made during the debate. I will not seek to cover all of them. The noble Lord, Lord Ponsonby, for example, suggested that in making the registry self-financing we would achieve some partial solution to this problem, but even if we did increase the fee to say £6— and this point was also raised by my noble friend Lady Elliot— we would still leave the question of compliance unattended to and still have the same out-of-date and inaccurate register. It is true that the rate of compliance may have been assisted by the banks, but as the samples I mentioned earlier have shown, we still have, despite the assistance of the banks in this matter, a substantially unsatisfactory register. In any event, the banks, when they look at the certificate of registration prior to opening a bank account, only require to see evidence of registration; they do not insist, indeed they have no means of checking, whether the details recorded on the certificate are accurate.
The noble Lord, Lord Lloyd of Kilgerran, made what I thought was a somewhat superficial point about
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going all over the country to find our evidence. I think he was referring to the samples I mentioned in opening. The evidence was discovered in Edinburgh, Cardiff and London, because, as those of your Lordships who are familiar with the system may be aware, the Registrar of Companies maintains facilities in those places, so local staff were asked to do the surveys to which I referred.
I pay tribute to the sincerity of my noble friend Lady Elliot in this matter; indeed, I would pay tribute to the assistance we have received from consumer bodies in formulating the proposals. I confess that they do not agree with the first point, abolishing the register itself, but they have made a number of useful proposals for the alternative régime contained in the amendments I am proposing, and I should like to thank them for the assistance they have given. My noble friend Lady Elliot said that anybody who sets himself up in public as a trader should say who he is. I entirely agree with that and that is what the Governments proposals provide for. Not only do they do what my noble friend wants but they require anyone who sets himself up in public as a trader to say in public, and indeed whenever asked by a customer or supplier, exactly who he is. At the moment the customer or supplier has only a 60 per cent. or even less chance of finding out with any degree of certainty precisely who are the proprietors of the business he wishes to do business with.
May I turn finally to the general policy point. It has been raised by at least one noble Lord. It is the general policy of this Administration, for which we were indeed elected, to roll back the apparatus of government and seek to reduce the incidence of the Government machine in the affairs of small businesses and indeed our commercial life in general. To achieve these aims we have to make a number of changes, some of which will seem to some people to be uncomfortable. But I have to say, particularly to some of my noble friends behind me, that this proposal forms part, albeit a small part, of the main thrust of the Government's policy to which I have referred. I hope, therefore, that your Lordships will agree that it is right to put an end to this charade, if I can call it such, of a Register of Business Names.
4.28 p.m.
On Question, Whether the said amendment (No. 57) shall be agreed to?
Their Lordships divided: Contents, 121; Not-Contents, 107.

CONTENTS

Airey of Abingdon, B.

Chelwood, L.

Allerton, L.

Cockfield, L.

Alport, L.

Colville of Culross, V.

Atholl, D.

Colwyn, L.

Auckland, L.

Cork and Orrery, E.

Avon, E.

Cottesloe, L.

Balfour of Inchrye, L.

Craigmyle, L.

Bellwin, L.

Cromartie, E.

Belstead, L.

Cullen of Ashbourne, L.

Boardman, L.

Dacre of Glanton, L.

Bolton, L.

de Clifford, L.

Boyd-Carpenter, L.

De Freyne, L.

Bradford, E.

De La Warr, E.

Caccia, L.

Denham, L.— [Teller.]

Cawley, L.

Derwent, L.

459

Drumalbyn, L.

Mowbray and Stourton, L.

Dundee, E.

Moyne, L.

Eccles, V.

Moyola, L.

Effingham, E.

Newall, L.

Ellenborough, L.

Noel-Buxton, L.

Elphinstone, L.

Norfolk, D.

Elton, L.

Northchurch, B.

Falkland, V.

Nugent of Guildford, L.

Ferrers, E.

O'Neill of the Maine, L.

Ferrier, L.

Onslow, E.

Fortescue, E.

Orkney, E.

Fraser of Kilmorack, L.

Orr-Ewing, L.

Gage, V.

Portland, D.

Gainford, L.

Rawlinson of Ewell, L.

Garner, L.

Redmayne, L.

Gibson-Watt, L.

Reigate, L.

Glendevon, L.

Rochdale, V.

Gowrie, E.

Romney, E.

Gridley, L.

St. Aldwyn, E.

Hailsham of Saint Marylebone, L.

Sandys, L.— [Teller.]

Selkirk, E.

Hankey, L.

Shannon, E.

Hawke, L.

Sharples, B.

Hillingdon, L.

Skelmersdale, L.

Hives, L.

Soames, L.

Home of the Hirsel, L.

Spens, L.

Hornsby-Smith, B.

Strathclyde, L.

Hunt of Tanworth, L.

Strathspey, L.

Keith of Castleacre, L.

Sudeley, L.

Kemsley, V.

Swansea, L.

Kinnaird, L.

Swinfen, L.

Lauderdale, E.

Swinton, E.

Linlithgow, M.

Thorneycroft, L.

Long, V.

Tranmire, L.

Lonsdale, E.

Trefgarne, L.

Luke, L.

Trenchard, V.

Lyell, L.

Trumpington, B.

McAlpine of Moffat, L.

Vaizey, L.

McFadzean, L.

Vaux of Harrowden, L.

Mackay of Clashfern, L.

Vickers, B.

Macleod of Borve, B.

Vivian, L.

Mancroft, L.

Ward of Witley, V.

Mansfield, E.

Westbury, L.

Marley, L.

Willoughby de Broke, L.

Massereene and Ferrard, V.

Wolverton, L.

Mills, V.

Young, B.

NOT-CONTENTS

Ailesbury, M.

Gladwyn, L.

Airedale, L.

Glenamara, L.

Allen of Fallowfield, L.

Greene of Harrow Weald, L.

Amherst, E.

Grey, E.

Amulree, L.

Hale, L.

Ardwick, L.

Hanworth, V.

Bacon, B.

Hatch of Lusby, L.

Banks, L.

Hayter, L.

Barrington, V.

Henderson, L.

Beaumont of Whitley, L.

Hood, V.

Beswick, L.

Hooson, L.

Blease, L.

Houghton of Sowerby, L.

Blyton, L.

Howie of Troon, L.

Boothby, L.

Hylton-Foster, B.

Bowden, L.

Ilchester, E.

Braye, L.

Jacques, L.

Brooks of Tremorfa, L.

Janner, L.

Bruce of Donington, L.

Jeger, B.

Burton of Coventry, B.

Kilmarnock, L.

Caradon, L.

Leatherland, L.

Chitnis, L.

Lee of Newton, L.

Cledwyn of Penrhos, L.

Listowel, E.

Collison, L.

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

Cooper of Stockton Heath, L.

David, B.

Lloyd of Hampstead, L.

Davies of Penrhys, L.

Lloyd of Kilgerran, L.— [Teller.]

De Ramsey, L.

Donaldson of Kingsbridge, L.

Lucas of Chilworth, L.

Elliot of Harwood, B.

McNair, L.

Elwyn-Jones, L.

Maelor, L.

Gardiner, L.

Milne, L.

George-Brown, L.

Mishcon, L.

460

Morris, L.

Shinwell, L.

Nathan, L.

Simon, V.

Northfield, L.

Sligo, M.

O'Brien of Lothbury, L.

Stamp, L.

Ogmore, L.

Stewart of Alvechurch, B.

Oram, L.

Stewart of Fulham, L.

Pargiter, L.

Stone, L.

Parry, L.

Strabolgi, L.

Peart, L.

Strauss, L.

Phillips, B.

Taylor of Gryfe, L.

Ponsonby of Shulbrede, L.

Taylor of Mansfield, L.

Redcliffe-Maud, L.

Underhill, L.

Ritchie-Calder, L.

Wallace of Coslany, L.

Robbins, L.

Walston, L.

Roberthall, L.

Wedderburn of Charlton, L.

Robson of Kiddington, B.

Wells-Pestell, L.

Rochester, L.

White, B.

Ross of Marnock, L.

Wigoder, L.

Sainsbury, L.

Wilson of Langside, L.

St. Davies, V.

Winstanley, L.

Seear, B.

Wootton of Abinger, B.

Seebohm, L.

Wynne-Jones, L.

Sefton of Garston, L.

Resolved in the affirmative, and amendment agreed to accordingly.
4.37 p.m.
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendment No. 58:
Page 30, line 34, at end insert—
(" and
(g) societies registered under the Industrial and Provident Societies Act 1965.").
The noble Lord said: My Lords, I beg to move Amendment No. 58. I can be quite brief about this amendment. It deals with the introduction, with Government consent, of registration under the Industrial and Provident Societies Act 1965. I beg to move. I am sorry, my Lords, I am at fault and I apologise. I should not have moved Amendment No. 58 because of the success of the Government's own amendment, No. 57.
The Deputy Speaker (Baroness Wootton of Abinger): My Lords, the noble Lord did move the amendment. Does he now wish to withdraw it?
Lord Lloyd of Kilgerran: Yes, my Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 59 to 61 not moved.]
Clause 28 [Certificate of registration]:
Lord Trefgarne Lord Trefgarne moved Amendment No. 62:
Leave out Clause 28 and insert the following new clause:
("Control of business names
.— (1) This section applies to any person who has a place of business in Great Britain and who carries on business in Great Britain under a name which—

(a) in the case of a partnership, does not consist of the surnames of all partners who are individuals and the corporate names of all partners who are bodies corporate without any addition except an addition which is permitted by subsection (3) below;

(b) in the case of an individual, does not consist of his surname without any addition except an addition so permitted;

(c) in the case of a company, being a company which is capable of being wound up under the 1948 Act. does

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not consist of its corporate name without any addition except an addition which is so permitted.

(2) Subject to subsections (4) and (5) below, a person to whom this section applies shall not, without the written approval of the Secretary of State, carry on business in Great Britain under a name which—

(a) would be likely to give the impression that the business is connected with Her Majesty's Government or with any local authority; or

(b) includes any word or expression for the time being specified in regulations made under section 30 of this Act.

(3) The following are permitted additions for the purposes of subsection (1) above—

(a) in the case of a partnership, the forenames of individual partners or the initials thereof or, where two or more individual partners have the same surname, the addition of "s" at the end of that surname; or

(b) in the case of an individual, his forename or the initial thereof;

(c) in any case, any addition merely indicating that the business is carried on in succession to a former owner of the business.

(4) Subsection (2) above shall not apply to the carrying on of a business by any person—

(a) to whom the business has been transferred on or after the appointed day; and

(b) who carries on the business under the name which was its lawful business name immediately before that transfer;

during the period of twelve months beginning with the date of that transfer.
(5) Subsection (2) above shall not apply to the carrying on of a business by any person who—

(a) carried on that business immediately before the appointed day; and

(b) continues to carry it on under the name which immediately before that day was its lawful business name.

(6) In this section—
"initial" includes any recognised abbreviation of a name; and
"lawful business name", in relation to any business, means a name under which the business was carried on without contravening subsection (2) above or the Registration of Business Names Act 1916.
(7) Any person who contravenes subsection (2) above shall be guilty of an offence and liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum or on conviction after continued contravention to a default fine not exceeding one-fiftieth of the statutory maximum.
(8) Where an offence under this section committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, he as well as the body corporate shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(9) Where the affairs of a body corporate are managed by its members, subsection (8) above shall apply in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.").
On Question, amendment agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 63:
After Clause 28, insert the following new clause:
("Disclosure of names of persons using business names
.— (1) Any person to whom section (Control of business names) of this Act applies shall—

(a) subject to subsection (3) below, state in legible characters on all business letters, invoices and receipts issued in the course of the business and written demands for payment of debts arising in the course of the business—

(i) in the case of a partnership, the name of each partner;

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(ii) in the case of an individual, his name;

(iii) in the case of a company, its corporate name; and

(iv) in relation to each person so named, an address at which service of any document relating in any way to the business will be effective; and

(b) in any premises where the business is carried on and to which the customers of the business or suppliers of any goods or services to the business have access, display in a prominent position so that it may easily be read by such customers or suppliers a notice containing such names and addresses.

(2) Any person to whom section (Control of business names) of this Act applies shall secure that the names and addresses required by subsection (1)(a) above to be stated on his business letters are immediately given, by written notice to any person with whom anything is done or discussed in the course of the business and who asks for such names and addresses.
(3) Subsection (1)(a) above shall not apply in relation to any document sent out by a partnership of more than twenty persons which maintains at its principal place of business a list of the names of all the partners if—

(a) none of the names of the partners appears in the document otherwise than in the text or as a signatory; and

(b) the document states in legible characters the address of the partnership's principal place of business and that the list of the partners' names is open to inspection at that place.

(4) Where a partnership maintains a list of the partners' names for the purposes of subsection (3) above, any person may inspect the list during office hours.
(5) The Secretary of State may by regulations require notices under subsection (1)(b) or (2) above to be displayed or given in a specified form.
(6) Any person who without reasonable excuse contravenes subsection (1) or (2) above or any regulations made under subsection (5) above shall be guilty of an offence and liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum or, on conviction after continued contravention, to a default fine not exceeding one-fiftieth of the statutory maximum.
(7) Where an inspection required by any person in accordance with subsection (4) above is refused, any partner of the partnership concerned who without reasonable excuse refused that inspection or permitted that inspection to be refused shall be guilty of an offence and liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum.
(8) Subsections (8) and (9) of section (Control of business names) of this Act shall have effect in relation to offences under this section as they have effect in relation to offences under that.").
On Question, amendment agreed to.
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendment No. 64:
After Clause 33, insert the following new clause:
("Disclosure of substantial individual interests in share capital carrying unrestricted voting rights: parties acting in concert
.— (1) The Secretary of State may by regulations made by statutory instrument make and from time to time vary such provisions as appear to him to be appropriate for ensuring that the obligation of a person under section 33 of the 1967 Act (obligation of persons to notify company of acquisition, changes in amounts of, and disposal of shares in the company carrying unrestricted voting rights) shall apply to any one or more persons who are (or, under such regulations, are deemed to be) acting with a common purpose as if such one or more persons were a single person.
(2) Regulations under this section may make provisions for different cases or classes of case and may contain such incidental and supplementary provisions as the Secretary of State thinks fit.
(3) No regulations shall be made under this section unless a draft of the instrument containing the regulations has been laid before Parliament and has been approved by resolution of each House of Parliament.").
The noble Lord said: My Lords, this is an amendment which was discussed very fully at the Committee stage in regard to concert parties; that is, groups of people who were combining together not to disclose their ownership in the shares of incorporated companies. Since the Committee stage I have received a number of letters asking me to draw the department's attention to certain acts of concerting together which have affected various companies. But at this stage I have not done so.
I also understand that amendments will be tabled in another place, and if that is the position, I shall withdraw the amendment. Simply to put the matter on the record, I beg to move this amendment
Lord Trefgarne: My Lords, I think that it was in reply to the same amendment moved at the Committee stage that I announced that the Government now intend to bring forward their own proposals to amend the law relating to the disclosure of interests in shares, and that these proposals would cover concert parties. Had we been ready to do so, we would, of course, have tabled our clauses for this debate, and I am sorry that we have not yet been able to do that. I hope that the noble Lord and the House will be patient. We are working intensively on this matter, and we shall bring forward our proposals just as soon as possible, but f fear that it may not be possible to do so before the Bill leaves your Lordships' House.
I have nothing further to add to that matter, except to take up one point which the noble Lord, Lord Lloyd of Kilgerran, made when he said that he had received a number of representations from various people about what these clauses ought to contain. I would ask the noble Lord to let us have whatever views have been represented to him, so that we can take them into account in reaching our final conclusions on this matter.
Lord Lloyd of Kilgerran: My Lords, I am very grateful to the noble Lord the Minister for his statement. In view of his reference to the large amount of work that has been done, I should like to take this opportunity to congratulate him and his staff on the vast amount of work that they have undertaken in preparing and dealing with the amendments put forward in this Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 34 [Preliminary provisions]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 65:
Leave out Clause 34 and insert the following new clause:
("Exceptions for s. 56 of 1948 Act
34.— (1) Section 56 of the Companies Act 1948 shall not apply and shall be deemed never to have applied where a company ("the issuing company") issues or has issued shares in pursuance of a share-for-share arrangement—

(a) to members of another company which thereby becomes or became a subsidiary of the issuing company; or

(b) to members of a company which is, or was at the time of the arrangement, its subsidiary or a subsidiary of its holding company.

(2) In this section "share-for-share arrangement" means any agreement, scheme or arrangement (including an arrangement under section 206 of the 1948 Act) providing for the allotment
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of shares in the issuing company on terms that the shares in question are to be paid up by the issue or transfer to the issuing company of shares or securities carrying the right to conversion to shares in another company.").
The noble Lord said: My Lords, with the permission of the House, I should also like to speak to Amendments Nos. 66, 67, 68 and 69. Perhaps I should explain at the outset that Amendment No. 65 is in essence a probing amendment. If it were to be tabled in its final form about 20 consequential amendments would be needed in later clauses of the Bill. My purpose in raising this matter this afternoon is to deal with the situation that arose from the case of Shearer (Inspector of Taxes) v. Bercain, which was heard in the Chancery Division on 19th and 20th February and 7th March 1980, and which starts at page 359 of Simon's Tax Cases. This may provide yet another example of an instance where tax legislation very often raises matters of importance in so far as they affect company legislation. Indeed, yesterday I ventured to give some illustrations of that linkage when we came to discuss the whole question of realised or earned profits, when your Lordships enabled me to refer to certain tax cases where points of importance and interpretation had arisen.
The effect of the Bercain case was simply that when a company acquired shares in another company and the consideration, whether in cash or otherwise, was smaller than the actual value of the assets that were transferred and comprised in the shares that were taken over by the new company, a share premium account had to be taken; and from that share premium account nothing could be paid out by way of distributable dividends to the company which acquired the other company, notwithstanding the fact that the company taken over had certain distributable reserves at its disposal at the date of acquisition.
The whole purpose behind this amendment is designed to remedy that state of affairs, to produce the state of affairs that when a company takes over another company and it is forced, by the ordinary process of Section 56 of the old Companies Act, to create a share premium account, the proportion of that share premium account which relates directly to the amount of distributable reserves in the company that was taken over shall, in fact, be available for distribution as distributable dividends in the hands of the company taking over. The Government have already gone a considerable way towards meeting the situation that has arisen from the case of Shearer v. Bercain, but in the opinion of many bodies— including the Consultative Committee of Accountancy Bodies, the Confederation of British Industries, and others— they have not gone far enough.
The amendment itself may be imperfectly worded, and I have already pointed out to your Lordships that it is in the nature of a probing amendment and that if moved seriously, as it may well be in another place, a whole string of consequential amendments would be required to the Bill. So the Government are quite at liberty to point out the imperfections of the amendment as it stands; these are freely admitted.
The Government have been quite co-operative with the professions and with the Confederation of British Industries, in discussing the practical problems that arise from mergers and acquisitions, bearing in mind

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not only the taxation aspects but the desirability that where the effective capital of a company is, in fact, reduced, the procedures in the Bill obtaining to a reduction in capital shall apply. I am given to understand— and I am, of course, quite open to correction— that there have been discussions by the interested bodies with the Department of Trade. I am also given to understand— and this may not be entirely accurate, but the noble Lord can correct me if I am wrong— that it is proposed to set up a working party to examine in detail all these problems.
Therefore, the amendment has been moved as a probing amendment in order that the Government can state quite clearly at this stage, before the Bill goes to another place, just exactly what is their attitude towards the principal problem that I have raised. I am quite sure that they will be mindful of the taxation considerations, with which I have already dealt and which were dealt with in the case itself. There is the wider question as to whether it is desirable when one company acquires another, or when a merger takes place between companies and as part of the merger or the acquisition distributable reserves are in fact taken over, that the acquiring company or the new holding company should be entitled to distribute reserves which, had the company taken over or merged been a completely free agent it would have been entitled to distribute anyway. Perhaps the point is a little academic, but I make no apology for that. There are experts in commerce and industry throughout this House— in fact, one might say that the House is replete with experts upon this subject— and it is in the spirit of acquiring further information rather than raising an issue of contention that I beg to move the amendment.
4.52 p.m.
The Lord Advocate (Lord Mackay of Clashfern): My Lords, I am very content to take this amendment with Amendments 66 to 69, and I am also content to look at the matter as one of principle and not examine the details of the amendment that the noble Lord has proposed, and rather to approach the questions by giving the background to the Government proposals and our attitude so far as we have gone.
The background is this: Section 56 of the 1948 Act deals with the treatment of premiums on issues of shares for cash or otherwise. In certain forms of acquisitions or mergers, shares are issued for shares, and these clauses seek to resolve certain difficulties which have arisen in the application of Section 56 in such cases. Over the years, as the noble Lord said, two distinct accounting methods have developed. They are known as "acquisition accounting"— based on an interpretation that Section 56 required a share premium account to be created in all such cases, and pre-acquisition profits to be locked up; and "merger accounting", based on an interpretation that Section 56 permitted the recording of shares acquired at their nominal value, thus avoiding the necessity of creating a share premium account or the locking up of pre-acquisition profits. The Jenkins Committee in 1962 considered Section 56 and concluded that acquisition accounting should be, and was regarded as, the norm, but that a form of merger accounting should be permitted in certain defined cases. These cases included, in particular, mergers affected by formation
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of a new holding company, and intra-group reconstructions. These recommendations were not implemented but attention has been focused on the problem in the United Kingdom and Europe in the past two years.
First, Europe. The Seventh Directive on Group Accounts is now under negotiation in Brussels. If the present draft of Article 12 were to be in the final version of the directive, it would effectively stop the use of certain aspects of the merger accounting method. The Department of Trade issued a consultative document early in 1980 which sought views in particular on the relative merits of merger and acquisition accounting, and on the efficacy of the Jenkins recommendations as a means of removing any unfairness caused by the general application of acquisition accounting through a strict interpretation of Section 56.
At about the same time came the very relevant decision in the High Court in the case to which the noble Lord referred. The decision in this case confirmed that Section 56 required an approach based on so-called acquisition accounting. In other words, merger accounting was now, and had since 1948 been, inconsistent with Section 56. In consequence, all past failures to recognise share premiums accounts would have to be rectified, and acquisition accounting would be required in all cases in the future of mergers such as I have mentioned. So far as the past is concerned, the Government accept that for companies not only to recast their accounts as required by Section 56 but also to reconsider all distributions subsequent to the amalgamation in question to see whether pre-acquisition profits have been distributed, would give rise to severe practical and commercial problems. Exceptionally, therefore, the Bill provides in Clause 38 in effect for a retrospective amnesty. I think up to this point there is probably a fairly general agreement that this is the correct approach. What the régime should be for the future is a different matter. The responses to the department's consultations indicate that there is at least a minimum of consensus among those concerned that the exemptions to Section 56 proposed by the Jenkins Report are justified, and in practice cover many of the cases where so-called merger accounting would be appropriate. The Government have also had to bear in mind that the outcome of the negotiations on the Seventh Directive is by no means certain at this stage.
These, then, are the general considerations which underlie the Government's proposals in Clauses 34 to 40. The noble Lord's proposed amendments have as their starting point the conviction that this Bill should do no more than establish a legal framework within which accounting practice should be free to determine the most appropriate treatment of business combinations. This is a view which has been strongly represented to the Government by the Confederation of British Industry. However, I have to say to your Lordships that at this stage the Government have yet to be convinced that this is a feasible solution to the problems.
The Government must have regard to the fact that this is one of those matters on which, at least so far, there is no standard accounting practice. The profession itself has tried once to agree upon a standard, but was unsuccessful. Practice has diverged. The responses

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to the department's consultative document revealed that very different views were held— and your Lordships will not be surprised in this area— and held rather strongly. I say this not by way of criticism but just to recognise the state of fact. The Government are by no means dogmatic on this matter. Clause 40, providing for extension of the reliefs by regulations, testifies to this. But having regard to the lack of consensus and the uncertain position in the Seventh Directive, they are bound to be moved by a certain caution, and that is the keynote of what we have proposed so far.
As the noble Lord, Lord Bruce, said, the Department has been in touch with the CBI and we understand that the CBI is consulting urgently with the legal and accountancy professions in an effort to identify some common ground which allows more flexibility than the Government's present proposals. This, I think, may be the working party arrangement to which the noble Lord referred. The CBI, as we understand it, had in view consulting the CCAB and the Law Society, and a working party may be the best method of bringing that forward. The department as such is not involved at this stage in that particular part of the initiative, but we await with interest the results of the study.
We welcome this initiative, and obviously the Government would be willing to consider amending the Bill if any generally agreed proposals came forward from this initiative. I hope your Lordships will recognise from what I have said— unfortunately at rather great length— that the Government's proposals for relief from Section 56, as set out in the present clauses, reflect in our view, on the basis of information at the moment, a reasonable basis for dealing with a very difficult problem. The results of any initiative such as I have mentioned will of course be carefully considered, and we shall remain anxious to consider carefully what effect they might have on the Bill's proposals. I hope that, in the light of that explanation, the noble Lord will be able to withdraw these amendments.
Lord Boyd-Carpenter: My Lords, before the noble Lord, Lord Bruce, responds to that invitation, may I, as one who suffers from the disadvantage of not having accountancy qualifications, ask my noble and learned friend to clarify the position on the Bill as it stands? Am I right in understanding him to say that although the Bill as drafted, in Clauses 34 to 40, reverses the effect of Shearer v. Bercain in so far as past cases are concerned, for the present and future the Bill leaves that decision in full effect? If so, does that mean that without some of the possible amendments— which I was glad to hear my noble and learned friends suggest the Government were considering— it will not be possible in future in a take-over situation for the company taking over to distribute assets of the company taken over even though they be assets which, prior to the take-over, would have been distributable? If that be the effect, which I thought I understood my noble and learned friend to say, I should be grateful if he would confirm it. If so, I find it very disturbing because it seems that the decision in Shearer v. Bercain was unworldly to a point even beyond the normal level of unworldliness of the Chancery Division.
Lord Mackay of Clashfern: My Lords, it would be inappropriate for me to comment on the unworldliness of the Chancery Division. The present proposals of the Government are, first, to give a retrospective amnesty so far as past mergers are concerned— that is Clause 38— but also to provide for the future specific exemptions on the lines of those which commended themselves to the Jenkins Committee. We believe there is a minimum of consensus for exemptions going that far, so the answer to my noble friend's question is that we are not leaving Shearer v. Bercain in full effect for the future but are modifying it in certain respects. The proposals of the noble Lord, Lord Bruce, would go very much further.
We understand that the present proposals have support from the CCAB and the Law Society as proposals that could be acceptable to them. That does not mean of course that they might not be prepared to agree to more ample proposals, and that is the purpose of the CBI initiative. Therefore, we have moved forward from the Chancery Division decision to some extent, and I think the only question between the noble Lord and ourselves is whether we should move further for the future.
Lord Bruce of Donington: My Lords, I thank the Minister for his informative and detailed response, which will be welcomed by those concerned. Am I to understand from him that in the event of the three bodies to which he referred coming to an agreed and reasoned conclusion while the Bill is still in progress in another place, he or his department will be able to have consultations with them with a view to ensuring that, if their agreed solution finds favour with the Minister, an appropriate amendment could be made in another place so that this question may be resolved while the Bill is going through its normal parliamentary process? If the noble and learned Lord would give that assurance it would undoubtedly convey a sense of urgency to the three bodies concerned— the lawyers, accountants and the CBI— who I am sure would get down to energetic discussions with a view to its being accomplished.
I cannot forbear commenting on the remarks of the noble Lord, Lord Boyd-Carpenter, on the lack of worldliness of Mr. Justice Walton in Shearer v. Bercain. If the noble Lord will read the judgment he will find— I am sure that noble Lords who are familiar with this subject will agree with me— that it is a very clear judgment, couched in impeccable terms, and endorses fully the case stated by the Special Commissioners, whose views on the question were equally clear.
Lord Mackay of Clashfern: My Lords, the whole purpose of encouraging this initiative is in the hope that we could give effect to an agreed solution. I know the lawyers are very forward in these consultations, and I hope the others involved will be equally quick, because obviously the sooner an agreed solution comes forward the easier it will be to incorporate it in the Bill during its passage through another place.
Lord Bruce of Donington: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
[Amendments Nos. 66, 67, 68 and 69 not moved.]
The Deputy Speaker: My Lords, in calling Amendment No. 70, I have to call your Lordships' attention to the fact that No. 71 is an amendment to that amendment. Immediately No. 70 has been moved, the House will proceed to consider No. 71.
5.6 p.m.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 70:
After Clause 40, insert the following new clause:
("Financial assistance for purchase of own shares, etc.
.— (1) Subject to the following provisions of this section, it shall not be lawful for a company to give any financial assistance for the acquisition of any shares in the company or, where the company is the subsidiary of another company, in its holding company, whether the financial assistance is given before, at the same time as or after the acquisition.
(2) Subsection (1) above shall not prohibit a company from doing anything if—

(a) the company's purpose or principal purpose is not to give financial assistance for the acquisition of any shares in the company or, if it is a subsidiary, in its holding company; and

(b) the thing done is contemplated by the instrument or resolution conferring the power in exercise of which it is done; and

(c) it is done in good faith in the interests of the company.

(3) Subsection (1) above shall not prohibit—

(a) where the lending of money is part of the ordinary business of the company, the lending of money by the company in the ordinary course of its business;

(b) the provision by a company in accordance with an employees' share scheme of money for the acquisition of fully paid shares in the company or its holding company by the trustees of the scheme;

(c) the making by a company of loans to persons, other than directors, employed in good faith by the company with a view to enabling those persons to acquire fully paid shares in the company or its holding company to be held themselves by way of beneficial ownership.

(4) Subsection (3) above shall authorise a public company to give financial assistance to any person only if the company's net assets are not thereby reduced or, to the extent that those assets are thereby reduced, if the financial assistance is provided out of distributable profits.
(5) References in this section to a company's giving financial assistance for the acquisition of any shares shall be construed—

(a) as references only to—

(i) the company's giving such assistance by way of loan or gift, guarantee or security or by way of any transaction under which the company transfers (whether absolutely or not) or provides anything (of any character whatsoever) to or for any other person on terms that payment for that thing is to be deferred; or

(ii) the company's giving any other financial assistance being assistance which reduces the company's net assets to a material extent; and

(b) as including the giving of such assistance, directly or indirectly, for the purpose of or in connection with any such acquisition.

(6) In this section, "employees' share scheme" and "net assets" have the same meanings as they have for the purposes of the 1980 Act.
(7) If a company acts in contravention of this section the company and any officer who is in default shall be liable—

(a) on conviction on indictment, to a term of imprisonment not exceeding two years or a fine or both;

(b) on summary conviction, to a term of imprisonment not exceeding six months or a fine not exceeding the statutory maximum, or both.

(8) Section 54 of the 1948 Act, which is superseded by the preceding provisions of this section, shall cease to have effect.").
The noble and learned Lord said: My Lords, it might be convenient if, in moving this amendment, I gave some explanation of the matter and dealt to some extent with the amendments which affect it. I am sorry that it will be rather a lengthy story, but it is a complicated subject, as those who are familiar with it will be aware.
This amendment proposes the introduction of a new clause to replace Section 54 of the Companies Act 1948. Noble Lords will recall that in urging my noble friend Lord Selkirk to withdraw the amendment to Section 54 which he moved in Committee, I referred to consultations which were in train between the Department of Trade and a range of bodies, including the Law Societies of Scotland and of England and Wales and the Committee of London Clearing Bankers. I also undertook to bring forward an amendment to deal with the problem which Section 54 now presents for financial institutions and legal and other professional advisers. The amendment now before the House reflects the conclusions reached by the Government on the scope for amending the provision of Section 54 in the light of comments received from the bodies whom we have been consulting.
Section 54 prohibits financial assistance by a company to a third party for the purchase or subscription of its shares. The original purpose of the provision currently contained in Section 54 of the 1948 Act, when it was introduced in 1928, was to prevent a person relying on the assets of a company in order to assist his acquisition of shares of the company. The extension of the prohibition to financial assistance given by a subsidiary company for the purchase of or subscription for shares of its holding company in the Companies Act 1947 took this provision of the law further into the area of transactions within groups of companies.
Section 54 has been criticised over the years as an unnecessary inconvenience to the honest and as being widely ignored or circumvented by the unscrupulous. The Jenkins Committee in 1962 made that criticism and pointed out that some transactions which it regarded as innocent were prohibited. The committee put forward alternative provisions based on the view that the danger involved in permitting a company to give financial assistance for the acquisition of its shares was that minority shareholders and creditors might be prejudiced. That recommendation was rejected in the White Paper published by the Conservative Government in 1973 on the ground that Section 54 in its current form fulfilled a useful purpose in preventing unscrupulous transactions and that the Jenkins Committee proposals would not be effective in preventing such transactions.
The present Government maintain that view, based on the continuing evidence of the relevance of Section 54 to unscrupulous conduct revealed by a series of company inspectors' reports published during the 1970s. We also take account of the fact that Article 23 of the ECC Second Directive on Company Law prohibits a public company from advancing funds, or making loans, or providing security with a view to the acquisition of its shares by a third party. It was with those considerations in mind that we significantly increased the penalty for breach of Section 54 in the Companies Act 1980.
Since the decisions of the Court of Appeal last year in the case of Belmont Finance Corporation v. Williams Furniture, there has been intensified concern among financial institutions and legal advisers about the effect of Section 54. Those decisions have caused uncertainty about the application of the section, and have led to the conclusion that the definition of financial assistance must be interpreted very much more widely than had been generally assumed previously. That has had the effect of impeding some types of transaction which the Government acknowledge might he entirely innocent of unscrupulous intent, and which may indeed be desirable from the point of view of commercial efficiency and effective management of resources. As I have said, we have therefore been consulting interested bodies with a view to amending the provision of Section 54 to clarify its intent following those decisions. The resulting proposal not only is intended to achieve that result, but will also have the effect of exempting some, but not all, of those transactions which the Jenkins Committee thought to be innocent.
The new clause before your Lordships' House takes a somewhat different form from that of Section 54, but its basic purpose is to restate the prohibition against the giving of financial assistance by a company, while maintaining existing exemptions and also providing new exemptions. These new exemptions are as follows. First, the prohibition is not to prevent a company from doing anything if its sole or principal purpose is not to give financial assistance for the acquisition of its shares or those of its holding company, if it has one. In order to be exempt, such action must be a proper exercise of the powers of the company and done in good faith in the interests of the company. That will allow companies to undertake transactions which may have the incidental effect of putting someone in funds which are used to purchase its shares but which do not have this outcome as their sole or principal purpose.
Secondly, a company will not be considered to have given financial assistance if it provides assistance which does not reduce its net assets to a material extent and which does not take the form of a loan, gift, guarantee, security, or transaction involving deferred payment. That will allow companies to rearrange or change the form of their assets in order to facilitate a takeover, or group reorganisation, if the rearrangement or change does not involve a significant reduction of assets. It will also allow a company to provide assistance to someone wishing to acquire its shares by provision of information or payment of minor costs associated with the acquisition not already permitted by other provision of company law.
The proposed provision applies the prohibition and exemptions to "acquisition" of shares rather than, as in Section 54, to "purchase of or subscription for" shares. The term "acquisition" is preferred because, while it includes purchase and subscription, which are generally taken to apply only when payment is in cash, it clearly also includes subscription and transfers when payment is not in cash. The difficulty arises, for example, in the case of share exchange transactions, in which similar abuses could arise as in cash transactions, and to which it is therefore considered appropriate to extend the coverage of the provisions.
I am sorry to have spoken at such length on the amendment, but this is a matter of considerable commercial significance and of great difficulty. It is important that the Government's position should be made clear, and I hope that I have succeeded in doing that. There is just one other aspect of the proposal with which I should like to deal, if your Lordships will allow me. The amendment to Section 54 moved in Committee by my noble friend Lord Selkirk proposed that an exemption from the prohibition should depend upon the directors of a company having made a statutory declaration confirming certain expectations. I know that one consideration which my noble friend had in mind was that lenders to a company would be able to rely on the declaration as having the effect that any loan provided could not he made void. At present, if it subsequently comes to light that a transaction was in breach of Section 54, a bank or other lender to a company may find that a loan made to facilitate the transaction is irrecoverable. The precise form of the declaration proposed by my noble friend was unacceptable to the Government for reasons which I explained in Committee.
However, the Government believe that the form of a proposal now before your Lordships' House would provide a basis on which banks and other lenders could seek assurances in an appropriate form from companies which would normally ensure that the duties of the lender were satisfied, safeguarding the validity of a loan. We believe therefore that our proposal would provide the banks, who expressed support for my noble friend's amendment, with a similar degree of assurance in commercial lending. When my noble friend speaks to his amendment perhaps we can look at the matter in a little more detail. But our view is that the present law, with its provisions for statutory declaration, would go as far as it is reasonable to go in dealing with this matter. My Lords, I beg to move.
The Deputy Speaker: My Lords, amendment proposed, after Clause 40 to insert the clause as printed on the Marshalled List. We now proceed to take the amendment to this amendment, Amendment No. 71, in the name of the Earl of Selkirk.
5.18 p.m.
The Earl of Selkirk The Earl of Selkirk moved, as an amendment to Amendment No. 70, Amendment No. 71:
After subsection (6) insert—
("( ) Where any thing is proposed to be done by a company in reliance upon subsection (2) the directors, or in the case of a company having more than two directors the majority of the directors, may, at a meeting of the directors make a statutory declaration to the effect that the requirements of paragraph (a) and (b) of that subsection have been complied with and that in their opinion the thing will be done in good faith in the interests of the company; and any person dealing with a company shall be entitled to rely upon such a declaration and any transaction entered into by any such person in reliance on such a declaration shall be valid and enforceable by him.").
The noble Earl said: My Lords, I should like to thank the noble and learned Lord for putting forward the amendment, which without doubt is a very great improvement on the previous position. I am very glad that he recognised quite frankly that Section 54, as it previously existed, was a very considerable

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restraint on trade, contrary to the interests of the economy of this country, and no doubt prevented certain perfectly legitimate transactions from taking place. At a time when we want development, in particular in the capital market, it is wrong, and it is a pity, that that should be the case.
The problem that I have with regard to the new amendment is as follows. A company can accept advances if its principal purpose is right, and it can do so if it is acting in good faith. That is covered by paragraph (c) of subsection (2) of the proposed new clause. However, I regret to say that I find it quite impossible to understand what paragraph (b) of the subsection is trying to say. Paragraph (b) states:
"…the thing done is contemplated by the instrument or resolution conferring the power in exercise of which it is done …".
I do not know what is the instrument that is referred to; it might be simply something in writing. I do not know what the resolution is. I presume that it is a resolution of the board of directors, though I do not know that for certain.
I have here sought to make it abundantly clear that the situation as it involves the company is fully covered. First, there is a requirement for two directors at least. Well I should not mind if it were to be a universal acceptance by all the directors. The directors then have to make a statutory declaration of what they propose to do, and it must be done in good faith in the interests of the company— not contrary to the interests' of the shareholders, whether minority or majority shareholders, the creditors, or for that matter the employees. When the directors have done that they will be assured that they can make an advance without having redress and possibly losing the money that they have advanced.
If the noble and learned, Lord is refusing to accept what I propose, I would ask him to understand the implication of what he is saying. He is saying that perjury is taking place; if following the statutory declaration the proposed procedure is not followed, then perjury is taking place. But the noble and learned Lord is going farther than that. He is saying that the banks are actually conniving at perjury. If he is not in fact saying that, then he should accept my amendment. Those are the two implications that the Government are putting forward in refusing to accept my amendment. I can see no justification for that. If the banks in this country really are to connive at perjury, then goodness knows where we shall end up. I ask the Government to consider very carefully whether this is really a fair proposition to put forward.
But primarily I am saying that I do not know what subsection (2)(b) really means, and if this is going to be effective then the meaning if what is required in subsection (2)(b) should be carefully spelled out. It is possible that some parts of the amendment that I am moving could be included in subsection (2)(b). That may be possible— I do not know— or there might be some other way. But I think that the banks and others who do this work should have no doubt whatever as to what those words mean. I myself find them extremely difficult, and it is possible that that is my defect, but it may be that other people do not find them easy, either. It is in those terms that I move this amendment to the amendment.
Lord O'Brien of Lothbury: My Lords, I should like to follow the noble Earl, Lord Selkirk, in thanking the noble and learned Lord the Minister for the changes which he has proposed in place of the nefarious Section 54 of the 1948 Act, which has long been a thorn in the flesh of bank lenders— to no good purpose, as I see it. However, I also agree with the noble Earl, Lord Selkirk, in what he said about the new proposals, which I observe followed consultation with many parties, including the Committee of London Clearing Bankers, although the noble and learned Lord the Minister did not say whether they give satisfaction to the clearing bankers. I should doubt whether they do. I think it is important that the bankers should receive satisfaction on this point, and I believe they would do so if the amendment to the amendment proposed by Lord Selkirk were accepted.
As is well known, I have spent more than half a century in the company of bankers, and I may be thought to express their view without sufficient detachment; but I do not express these views so much on behalf of bankers as on behalf of a more sensible approach to a problem which concerns industry and commerce in the country. It is not an enormously important matter, perhaps, but it impedes to some extent the successful development and creative evolution of our industry and commerce if banks are to be inhibited from making loans in these circumstances because of the excessive fears of the legal premises and indeed, the loss which they may suffer. I urge it upon the Government to give satisfaction to the banking community here, which will be to the wider benefit of industry and commerce. Therefore, I very strongly support the noble Earl's amendment.
Lord Mishcon: My Lords, there is not the slightest doubt but that Section 54, whether coming before the judges of the Chancery Division (to whom the noble Lord, Lord Boyd-Carpenter, made such a touching reference a moment ago) or whether coming before lawyers who are endeavouring to advise those who lend and those who borrow, has been a devastating section— not necessarily devastating for the legal profession, but certainly for their clients. It has been extremely difficult to advise on what transactions are caught by Section 54 and what are not; and the decisions which have so far come down to us have, if anything, added a tortuous element to what is already an extremely difficult clause to interpret.
I equally have no doubt that the total removal of the protections which Section 54 was supposed to give would be quite wrong. What I find myself in some difficulty about at this moment is that, not having been a party to the consultations which have taken place— and this I think refers also to many of my noble friends who would like to take a view upon this matter— and this amendment having come upon us, very understandably, at a rather late hour, I think it is not quite possible without further consideration to say that this has our entire blessing. I think it has to be looked at further. I share with the noble Earl, Lord Selkirk, some dubiety as to the clear English meaning of subsection (2)(b) of Amendment No. 70, to which the noble Lord, Lord O'Brien, also referred. Indeed, cannot believe that the Government are not capable of introducing clearer wording, one hopes, at Third

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Reading, whatever be our general view about this amendment, instead of the rather extraordinary terms of subsection (2)(b), which not only are vague but, again, are capable of various interpretations, I would have thought, in exactly the same way as the old Section 54 was bad for that very good reason.
So I give a cautious welcome to the fact that Section 54 is not to go in its entirety and in regard to the protections it was supposed to give. I give it, again, a cautious welcome because Section 54 was so incomplete and, as the noble and learned Lord said, capable of being used with such care by those who were honourable that, indeed, transactions which were never meant, one assumes, to have been stopped by Section 54 were being stopped because of the very proper caution which was being used, and it was also giving rise to a lot of trickery by those who were endeavouring, most improperly, to evade the principle behind which Section 54 stood. So, as I said, I want further time to consider all the implications of this; and, indeed, of the amendment which was so eloquently moved by the noble Earl. At the moment I must satisfy myself with those observations, at least on behalf of myself and my noble friends on these Benches.
Lord Seebohm: My Lords, I must say that I welcome this Amendment No. 70 to remove Section 54, which has always been such a nuisance, but I find paragraphs (a) and (b) of subsection (2), although incomprehensible, entirely subjective, and I would have thought that that was had law. From the discussions that I have had with the CLCB, they believe it will make the situation so far as the banks are concerned even worse than it is now; and I believe that the amendment put forward so eloquently by the noble Earl, Lord Selkirk, is in fact really justified and should be adopted. There may be some other way of dealing with it, by altering subsection (2)(a) and (b). I do not know; but unless they are altered I think it is going to be extremely difficult for the clearing banks to operate.
Lord Wedderburn of Charlton: My Lords, this is an amendment which in my submission your Lordships should treat as one of the most important that is being made to this Bill. For many decades it has been accepted by practitioners and writers alike that the financing of the acquisition of its own shares is one of the most objectionable features of company malpractice. It has been known for many years that Section 54 of the 1948 Act, which attempted to ban it, was inadequate: and, indeed, that it sometimes hit the innocent and failed to deter the guilty. But that it should be thought of as a nuisance is a novel concept. It is a necessary protection for those who put their trust in a company, be it as investors or creditors; and when the noble and learned Lord the Lord Advocate suggested that this amendment on the part of the Government was introducing satisfactory barriers to misuse of the practice, I would submit to your Lordships that that is the opposite of the truth.
The Jenkins Report in 1962 (Cmnd. 1749) considered Section 54 very carefully, and in paragraph 187 put forward a scheme of reform for Section 54 which would keep the overall ban, as the Government's clause does, upon financing the acquisition of shares
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but would create exceptions under five very special conditions: there should be a special resolution passed by the general meeting; there should be a declaration of solvency; there should be a right for the dissident minority of shareholders to apply to the court and a 28-day period for them to do it; and, most important of all, there should be a presumption that financial assistance should be deemed to be given by a company if within 12 months of acquisition of a controlling interest any asset were purchased by the company from the controllers.
It may be said that the Second Directive prohibited the Government from putting forward what I might call a modern version of the Jenkins scheme. If that argument is to be used— and I notice that the noble and learned Lord the Lord Advocate did not use it, if I understood his opening remarks— I would ask this. Are the Government sure that their scheme is permitted by the Second Directive, anyway? I do not find in Article 23, at least, of the Second Directive, a clear indication of the conditions for legality which this clause includes in the directive to which I would like to come. But Section 54, rendering with the normal exceptions which are expressed in subsection (3) of Amendment No. 70— which are common ground and approved by the directive and not controversial— appears to prohibit what subsection (1) prohibits; financial assistance for the acquisition of shares.
The courts have interpreted that provision of the 1948 Act very strictly in the cases to which the noble and learned Lord the Lord Advocate refers: in the Belmont Corporation and Williams Furniture cases which went to the Court of Appeal twice, a strict interpretation was placed. Indeed, in a subsequent judgment in the High Court (the case of Ulner Hick Northern Limited v. Whitehouse this year) such a strict interpretation was placed that it was the vendor of the shares who, paradoxically enough, was found giving financial assistance to the purchaser to whom financial assistance was given in the respect of the shares. But it is not true, in my interpretation of the judgment, that these interpretations by the judges are tortuous.
It is sometimes said that I have an inclination to suggest that the judgments of the High Court are tortuous. In this respect, I would decline to make that judgment. It is true that certain points are left open. It is true that Lord Justice Buckley in the Belmont Finance Corporation case leaves open the question whether if a company buys from someone else assets in its own commercial interest, knowing that the money may be used to purchase shares, that offends against the present Section 54. If it does, then the matter should be clarified in favour of the company because the section plainly does not aim at a mischief within that compass. The question becomes how to keep Section 54 and yet at the same time allow for ordinary commerce and no improper burdens being placed upon those who, by any standards, are innocent.
The idea that the present Section 54 and the Government's proposal are the only two ways to do it, or even that the present Section 54, the Government's proposal and an update of Jenkins are the only ways to do it, is surely fallacious. When one compares the spectrum of possible approaches, the Government's

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comes out very badly. Let me add a fourth to the Jenkins updated, 54 as it is, and the Government proposal. It is a fourth derived, to some extent, from the article of Mr. Ralph Instone, a practitioner of authority in this field, in the Journal of Business Law for 1980. In an interesting article on Section 54 he concludes (on page 108):
"There is therefore no real case for a repeal of Section 54. It is unsatisfactory that the question whether or not a contravention of the section as occurs should depend upon a court's view of a director's intentions or dominant intentions or on the suitability of an asset to the company's business. I consider that there should be exempted from the scope of the section by means of additional provisos, first, applications of the funds of the company before consideration received by it and, secondly, the discharge of a liability repayment of capital or distribution of dividend not otherwise unlawful".
That is obviously a plan, but one which would have to be filled in in detail. It is a plan of retaining the prohibition, spelling out specific transactions which are clarified by statute as clearly not falling within it.
That is not the Government's plan. The Government's plan is to put forward three conditions of legality, having first enacted the illegality. What are they? In this respect I have deep sympathy with the noble Earl, Lord Selkirk, although I disagree with his amendment. The Government's proposals are, I would submit, first of all, difficult to understand; but, much more important, they are a much easier hurdle for the crook to surmount than the present law or any of the other options. What do they depend on? Subsection (2)(a): that the company's purpose or principal purpose is not to give financial assistance for the acquisition of shares. The company's principal purpose! Everybody who has any acquaintance with company law knows that finding out the purpose of a company or the intention of a company is a very difficult matter, because it has no mind and no body to be kicked, at least in England, as Chief Justice Cooke called it once. It is only to the directors you can usually look and, as Lord Justice Denning made clear in a famous judgment in 1957, you can look at them outside the boardroom as much as in.
What is the reality of these situations where Section 54 frequently becomes important? It is a reality where certain persons within the boardroom have acquired a dominant position. A director or a group of directors are, in fact, controlling affairs with the unduly passive acquiescence of others. I come to the case in a moment but it is true. It is so very important in terms of company administration, and, indeed, of the reputation of company administration, in this jurisdiction. Who is going to show what the purpose of the company is? Who is going to have control of the minutes? Who is going to have the best evidence on what the purpose of the company is— and not just the purpose but the principal purpose? Of course, the people controlling the boardroom, the people controlling the corporate machinery.
So, on the first hurdle, those who at the moment might find it difficult will find it easier. And they include a large number of people who feature in the reports of the Department of Trade. I do not expect him to answer now, but I invite the noble and learned Lord to say on Third Reading of this Bill whether it would have been easier or more difficult for Mr. Selham in the report of the inspectors on Ferguson and General Investment, the Dowgate case, under
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this clause or under the present law. What would have been the comparison of Dr. Wallersteiner in the Hartley Baird case? What would have been the position in three of the six cases in 1974. The average involving Section 54 is about two a year. This year there were three. In the Burnholme case, in the Land and General Developments and Neppit Securities case and the London Capital and British Bangladesh case, would it have been easier or not so easy for the miscreants to engage in corporate malpractice? I suggest, in respect of paragraph (a), it is sometimes clear that it would have been easier.
Then we come to paragraph (b). Paragraph (b) requires that the thing done is contemplated by the instrument or resolution conferring the power, add my voice to those who ask, what resolution? Is it a general meeting resolution, directors' resolution? I concentrate on one of the six or seven points in paragraph (b) which could be contemplated. The thing done, not authorised— it does not say that— not referred to, not described, but contemplated. The cases which deal with contemplation, be they in labour law or anywhere else, are just in the mind; they may not be on paper. How easy for someone to say, "Oh, well, we did not actually describe it but, of course, it is contemplated". It may be said that all of this is being governed by it being done in good faith in the interests of the company. If that is true, why have the others? It may be enough, if that is the fallback position.
Again, I say that today when the interests of the company include the interests of the shareholders, of the employees, as the Government's excellent Section 46 of the Companies Act 1948 insisted, and now, according to the noble and learned Lord, Lord Diplock, in a recent case, quite properly no doubt, the creditors, the test of what is done in the interest of the company paradoxically is easier for those who engage in malpractice than when we thought the interest of the company was to be judged by the shareholders alone. If you tell me that I must look at the interests of the shareholders, sometimes I make a mistake, I get it wrong, the minutes are wrong; but if you tell me I can just engage in a balancing act between the interests of three or four groups of people, it is very much harder to shake in the witness box. And it is a question of witness box, as the noble and learned Lord knows. The crime is being committed under subsection (7) and the defendant will get away with it if he satisfies the three paragraphs I have described.
It is my contention that the defence will be easier in respect of the mischief which is aimed at here under this clause than it was before. I cannot support the noble Earl's amendment because, as he will have noticed, coming to the matter in a different way I find it defective in two ways. If my premise is true, one of the problems with the Government's clause is that the miscreant will be controlling what goes on inside the company and then of course the noble Earl's amendment does not give me enough protection against that.
The Earl of Selkirk: My Lords, would the noble Lord repeat that sentence? I did not hear it clearly.
Lord Wedderburn of Charlton: My Lords, the noble Earl's amendment does not satisfy me because the

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whole matter is in the hands of the directors. I understand that that is a sensible way of doing things if the premise is that the whole transaction is innocent— and I accept that Section 54 at the moment attacks some transactions which are innocent— and makes the position of some third parties undesirable. I accept that and it deals with that in a certain way. But it does not help me because it relies even more than the Government's clause upon what the directors say is happening. Indeed, more than that: what the majority of the directors say is happening. It therefore does not deal with my type of case. In other words, I say to the noble Earl that we are not necessarily in disagreement because he is dealing with the case where everyone is innocent; I am trying to make the clause deal with the case where those are indeed engaging in the mischief at which one should aim.
I applaud the sentiment of his amendment in the sense that I hope that the Government will take this clause back again. If they do not take it back again— I understand what my noble friend Lord Mishcon said about the short time that we have had to consider this— I hope that my honourable and right honourable friends in another place will give this clause a rough ride because it is not good enough in 1981.
In 1962, the Jenkins Report in paragraph 176, spoke about the scandalous malpractices which have this feature in common: that an acquirer finds himself in control of a company with large liquid assets when he is under an obligation to pay for that control and has no prospect of paying for it except out of the company's funds. That was the 1960's style. The idea that that problem has gone away, the idea that it does not still exist but has got rather more complex and rather changed its style, is absurd.
Section 54 should be kept. It should be kept in a strict form. Subject to what is allowed under the second directive, there should be a clear and controlled list of situations such as the payment of a dividend where it is stated by statute that that transaction is not included within the prohibition. Subject to that, Section 54 should clearly be absolute. The list would no doubt grow over the years. I suspect there would be much common ground about such a list which would not offend the directive and would still keep the mischief under surveillance.
We are asked to operate with this clause put forward by the Government with no civil remedy for breach— and why not?— and with nothing said about the status of securities in respect of loans, and so on, a large number of matters. This is on Report; it is not Committee stage, but it will obviously have to be looked at. This is a clause put forward on the basis of an acceptance that Section 54 must be retained, as the noble and learned Lord put to us, yet including subsection (2), which is a back door through much of what is meant to be kept out will enter into corporate malpractice.
It is I believe, if it is passed in this form, a clause which will slip the legal leash from the fleet-footed fiddler and the corporate poacher. It is not strong enough to put it in those terms. This is an area where the Government have been called by the bad logic of some of the provisions of their clauses on a company buying its own shares. It was not necessary, as the
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Gower Report made clear, to go this far or anything like this far in reforming Section 54.
Those of us who in Committee said that the Government must be thinking of reforming Section 54 in certain respects as consequent upon the new clauses, reversing the case of Trevor v. Whitworth, had no idea that the Government would come up with this. I join with the noble Earl in this respect: it does not do enough in a sense for the innocent. But I add to it— and I hope that he will agree with me after my remarks— that it also does not do enough to deter the guilty.
5.45 p.m.
Lord Mackay of Clashfern: My Lords, as I understand the situation at the moment, we are dealing with Amendment No. 71, and whether it should be incorporated in what we are proposing in our Amendment No. 70. If I may deal first of all with the question raised by the noble Lord, Lord O'Brien of Lothbury, I said that this clause that the Government proposed had resulted from consultations. I am not of course claiming that the Government have been able to please everyone whom they consulted; but they feel that they have gone as far as it is reasonable to go to meet these in the light of the consultations so far. But we are open to consider further the points which have been raised this afternoon.
May I direct my attention to the point on subsection (2) which my noble friend Lord Selkirk raised. The intention of subsection (2)(b) is this: the Act in question must be something which is done in exercise of a power which the company has. Therefore one looks to see where that power is contained. That power must be contained in an instrument or resolution either in the constituting documents of the company or possibly in a resolution of the company giving this power in exercise of more general powers contained in its constituting documents. So one looks back into the source of the power and one identifies it in that way.
What this subsection is saying is that once one has identified the power, the act which is done and which one is testing must be an act which is contemplated in that instrument or resolution. In other words, the mere fact that it happens to be in a literal sense within the terms of the power or resolution will not be good enough if it is not something which is contemplated by that particular instrument or resolution. This is just an attempt to express the test of proper purpose which is reasonably well known in the field of company law. That is to say that the exercise in question must be an exercise of the power of the company as that power is properly understood.
Lord Wedderburn of Charlton: My Lords, is the noble and learned Lord saying then that the Bill wants to say that the thing is implicitly or expressly authorised by the constitutional documents or resolutions?
Lord Mackay of Clashfern: Yes, my Lords, that is putting the matter reasonably, I would say. That is to say, on a true construction of the instrument of resolution, this particular exercise is a proper exercise of the power contained in that instrument or resolution.
Lord Mishcon: My Lords, I hesitate to be a nuisance to the noble and learned Lord, but, following upon the

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answer which he has just given so clearly to my noble friend, and following upon the plea made by various people— including myself— about the necessity to have clear language here, is there any reason why the wording is not the thing about to be done instead of the thing done, for example? It is the thing about to be done which has to be authorised. Is there any reason why the plain English word "authorised" is not used instead of "is contemplated" by the instrument or resolution conferring the power? There is one simple word, I would have thought, and that is "authorised". Is not the present wording capable of being misunderstood and misinterpreted?
Lord Mackay of Clashfern: My Lords, it is always possible to consider that one's own formulation is better than that of another. So far as I am concerned at the moment, I prefer the formulation of Parliamentary Counsel to any that I might attempt myself and, with all respect to the suggestion made by the noble Lord, I also hold that view so far as his proposal is concerned.
The other matter I should like to go on to, assuming I have satisfied my noble friend on that point is this: the main point which his amendment covers is the manner in which a financial institution may be satisfied upon this question. Of course the Government are aware of the concern felt in the financial community, and particularly by the clearing banks, about the combined effect of decisions in the courts on the application of the provisions of Section 54 of the 1948 Act. That is one of the reasons why we put forward our Amendment No. 70, but we have stopped short of going to quite the lengths of my noble friend for this reason. in so far as the steps he wants to take is desirable, we consider it to be unnecessary. The reason is because under Section 18 of the Statutory Declarations Act 1835 anyone may already make a voluntary declaration. Section 5 of the Perjury Act 1911 provides a penalty of imprisonment for up to two years, with the addition or alternative of an unlimited fine for anyone who makes such a declaration falsely. The provision proposed by the noble Earl's amendment would in principle duplicate those provisions, and duplication in the law is at best unnecessary and, I should have thought, not a thing to be encouraged. In other words, there are already provisions of the law which could allow, for example, a lender to a company to seek assurances in an appropriate form from companies which would normally ensure that the duties of the lender or banker were satisfied, so safeguarding the validity of the loan; so, if the bank wishes to be cautious and asks for a voluntary statutory declaration from its customer, it will have this measure of protection.
To that extent we agree that the protection sought in the amendment is desirable, but we say that it already exists. In so far as the amendment would go beyond that, we have reservations about it. First, it is proposed that anyone dealing with a company should be able to rely on a declaration made by a majority of the directors of a company having more than two directors. This might be intended for administrative convenience. I see the force of that perfectly, but is it also intended that a person dealing with a company should be absolved from any responsibility if they have
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ignored the views of a minority of directors which suggested, for example, that declaration was false?
The exemption from responsibility conferred upon anyone entering into a transaction with a company would in our view be unacceptably wide. It would appear to relieve him of any duty to take account of any information he might have which tended to cast doubt on the truth of a declaration, and we would not think that correct. We take the view that a lender or other person who has anxieties about a particular transaction should not be able to rely on such a sweeping provision but should be required at least to judge the transaction on its merits and seek whatever assurances seemed necessary in the circumstances. I have said that one of these is by way of statutory declaration, if that is what they wish to do.
The noble Lord, Lord Wedderburn, has pointed out that certain abuses in company administration may consist of infringements of the existing Section 54, and might consist of infringements of the new provision, if that is passed. In our view it is very undesirable, with that background, to go the full length proposed by my noble friend's amendment. Accordingly, we feel, on the basis of our consultations and of what we have heard so far, that we have gone as far as is reasonably possible to meet the administrative difficulties to which the noble Lords, Lord O'Brien and Lord Seebohm, referred.
Lord O'Brien of Lothbury: My Lords, may I ask the noble and learned Lord, why, if the statutory declaration gives complete protection to the lender, he feels that the protection afforded by the amendment put forward by the noble Earl, Lord Selkirk, is excessive?
Lord Mackay of Clashfern: My Lords, I did not say that it afforded complete protection but that I thought it afforded the protection that is desirable. In other words, if a bank could show that it had investigated the matter to the extent of requiring a statutory declaration from the borrower and had no reason to doubt the accuracy of that, then it would be protected. If, on the other hand, one is thinking of a situation where all the pointers are against the transaction and all tend to suggest that the transaction is a bad one, but all the bank has to do is to hold it up and say, "We have a statutory declaration: we are all right. It does not matter how many doubts there may be, this statutory declaration which we have is the answer to them all", we say that that goes too far and we have concluded that our amendment goes far enough to deal with that or with any reasonable requirement that a lending institution might have. So far as—
Lord Seebohm: My Lords, may I ask for a little more clarification on that? If as a banker, which I used to be, I am lending money in the ordinary course of business to a company and they then use it for improper purposes, am I in the clear?
Lord Mackay of Clashfern: My Lords, I would refer the noble Lord to subsection (3) of the new clause, which provides—
"Subsection (1) above shall not prohibit—

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(a) where the lending of money is part of the ordinary business of the company, the lending of money by the company in the ordinary course of its business".
If the bank is lending money in a situation which does not itself constitute a breach of Section 54, or of that section as amended by this provision, then I would not see how it could be struck at by the provisions we are dealing with.
Turning to the observations of the noble Lord, Lord Wedderburn, which I think for the most part are related more to Amendment No. 70 than to Amendment No. 71, I would say first that we have looked at this in relation to Article 23 of the Second Directive and, as our views have gone so far— and nothing that the noble Lord has yet said has persuaded me that we are wrong about this— this is in accordance with the provisions of Article 23.
So far as concerns his series of questions to me, which he kindly allowed me time to answer in full, I would say that his analysis does not take full account of the cumulative effect of (a), (b) and (c). I think it is particularly important to bear in mind the first part of (c)—
"it is done in good faith in the interests of the company".
As I read this clause, subsection (1) is a general prohibition and subsection (2) is an exception to that; so in accordance with the ordinary rules of interpretation it would be for the person asserting that to bring himself outside the prohibition. Accordingly, we have considered this matter as carefully as we can in the light of the consultations, and we consider that we have struck a reasonable balance. We are certainly open to consider the matter further, and I hope that in the light of that consideration my noble friend Lord Selkirk will feel able to withdraw his amendment and that your Lordships will be prepared to approve Amendment No. 70.
The Earl of Selkirk: My Lords, I should like very much to thank the noble Lords, Lord O'Brien and Lord Seebohm, who have supported me, and I am grateful to the noble Lord, Lord Mishcon, for referring to the wedding— he always speaks in such clear and forceful language— on subsection (2)(b). Of course he is absolutely right and I quite agree. The noble and learned Lord is rather obstinate, in that he will not go any further. But he made a number of points; for instance, he said that the majority of the directors would be against the proposition. Why not make it unanimous? There is no reason why we should not do that, and I should be perfectly happy. All the directors could sign the document and that would not cause any difficulty.
The noble and learned Lord gave an answer to the noble Lord, Lord Seebohm. I wonder whether he has considered the case of Belmont. So far as I know, that is exactly what happened in the ordinary course of business. I am told that nothing was lent, but the interpretation of constructive trusteeship brought in other people who had not even lent any money. I think that the noble and learned Lord must try to go a little further; at least, to make it clear that there is support from a statutory declaration. There is no reason why that should not be referred to in paragraph (b).
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I was interested to listen to the noble Lord, Lord Wedderburn. I felt overwhelmed by his learning. I could not follow all his points, but I think he is correct in saying that he was looking after the crooks and I was looking after legitimate business. I realise that there is a division between the two which we are seeking, as best we can, to correct.
May I ask the noble and learned Lord to do this? I do not think that the situation is satisfactory as it stands. I shall not press this amendment today, but will he give us the opportunity of considering all that he has said today and see whether we can either incorporate this into his amendment, or put down an amendment ourselves? May I ask him to do that— because I do not think we are going far enough— in order to meet the point and to enable legitimate business to be conducted in the interests of the economy of this country, and to take away the frustration to trade which exists at the present time? That is important. May I ask the noble and learned Lord to do that, because, at the moment, I do not want to press this amendment to a Division?
Lord Mackay of Clashfern: My Lords, I think I have said already that this is a rather difficult area, and we are certainly not closing our minds to any progress we can make in improving this matter further. If that is the undertaking that my noble friend has in mind, then, of course, I am very content to give it. We are very open-minded on this matter, and anything that we see as a reasonable improvement on what we have done, we shall be very glad to consider for incorporation.
Lord Wedderburn of Charlton: My Lords, before the noble and learned Lord resumes his seat, may I just intervene? In keeping his and his colleagues' minds open in respect of the innocence of the noble Earl— and, again, I have great sympathy— will he consider, with a tiny chink of an open mind, the introduction of a rather more objective test in subsection (2), in view of what I believe we shall find when we read his remarks— which I shall do with care— which is the great reliance which he placed upon the subjective test of subsection (2)? Perhaps he could do that in that respect in regard to the guilty, as well as to the innocent.
Lord Mackay of Clashfern: Certainly, my Lords, the openness of our minds is not directed in any particular way. It is a very general kind of openness. However, I have to say to the noble Lord that, before putting down this form of the amendment, we considered fairly carefully the broad choices that were open to us, and the list idea, which I think is what the noble Lord has in mind, did not commend itself to us as being particularly satisfactory.
The Earl of Selkirk: My Lords, I am going to take the noble and learned Lord's interpretation as being that he agrees with the House— every noble Lord has said so— that subsection (2)(b) is unsatisfactory. The noble and learned Lord may not say that explicitly, but I am assuming that that is incorporated in his words. It is with that thought that I beg leave to withdraw the amendment.
Amendment to the amendment, by leave, withdrawn.
On Question, amendment agreed to.
Clause 41 [Power of Company to issue redeemable shares]:
6.5 p.m.
Earl Grey Earl Grey moved Amendment No. 72:
Page 42, line 27, at end insert—
("(6A) Notwithstanding any provisions of the articles of the company, any partial redemption must be either—

(a) available to all holders of shares of the class to be redeemed pro rata to their holdings; or

(b) effected by drawings.").

The noble Earl said: My Lords, the purpose of this amendment is to ensure that, where any redeemable shares are redeemed, all shareholders are treated alike. It therefore provides— overriding pro tanto the provisions of the articles of association of the company concerned— that such redemption should be either pro rata to holdings, or by drawing or ballot. This seems to me an appropriate provision to safeguard the interests of the redeemable shareholders against selective treatment by the directors, and I am advised that it is, in fact, in accordance with current practice. My Lords, I beg to move.
Lord Mackay of Clashfern: My Lords, the noble Earl, Lord Grey, has done a service to the House in speaking to an amendment which draws attention to an important aspect of a company's power to issue and redeem redeemable shares. The purpose of his amendment is to prevent a company from being able to give deliberately preferential treatment to particular holders of redeemable shares. This is an objective with which the Government have every sympathy. However, we doubt that this is a matter which need be dealt with in statute.
It has, of course, been possible since 1929 for a company to issue and redeem redeemable preference shares, and I am not aware that there has ever been any suggestion that such redemptions need to be regulated by statute in the way that the amendment proposes. The provisions of Clause 41 correspond very closely to those of Section 58 which the Bill repeals, as to the aspects of redeemable shares which are to be regulated by statute. In particular, Clause 41 provides for the terms and manner of redemption to be set out in the articles of association of a company, as is required under Section 58.
The detailed procedures to be adopted when shares are to be partially redeemed are often determined by the articles providing for such matters as drawing of tickets to decide which shares shall be redeemed against payment of an annual instalment of a sinking fund. But it is by no means unusual for the terms on which shares may be redeemed to allow for market purchases. The effect of the amendment would be to prevent such purchases, which would involve excessive restriction of commercial activity. Such purchases do not necessarily involve deliberately preferential treatment of particular holders.
Accordingly, our view is that the basis on which redeemable shares are issued constitutes a contract between the company and a shareholder. We believe, in principle, that it can and should be left to the parties to that contract to determine its terms for themselves. No one is obliged to buy redeemable shares if he does not like the terms on which they are issued. Accord-
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ingly, our view is that this amendment is not a desirable addition to the Bill.
Earl Grey: My Lords, I thank the noble and learned Lord for his answer to the amendment. I shall refer what he has said to my noble friend Lord Lloyd and see what he says. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 73 not moved.]
Clause 43 [Authority for off-market purchase]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 74:
Page 46, line 36, leave out ("concluded") and insert ("entered into").
The noble Lord said: My Lords, it may be for the convenience of the House if I speak to Amendments Nos. 74, 75, 76, 77, 78 and 79 together, although, depending on the noble and learned Lord's attitude, these amendments may have to be moved separately. These are purely drafting amendments. The Consultative Committee of Accountancy Bodies have considered Clause 43 and the words which they propose to insert are ones which, after having taken legal advice, they consider to be more appropriate. This is not at all a controversial matter and we are just trying to be helpful. My Lords, I beg to move.
Lord Lyell: My Lords, we are very grateful to the noble Lord, Lord Bruce, for moving this amendment. I hope that it will be to the convenience of the House and the noble Lord, Lord Bruce, if I attempt to deal with the six amendments— three to Clause 43 and three to Clause 44— together. I noted what the noble Lord, Lord Bruce, said about taking legal advice. As he is no doubt aware, the Government also took legal advice. Once both the noble Lord and the Government take legal advice, there is no knowing where we might end up. The noble Lord said these are plain drafting amendments and that he hopes they will clarify some aspects, in particular Clauses 43 and 44 of the Bill. Our legal advice is that, for reasons which I think I should briefly explain to the noble Lord, the existing drafting is to be preferred.
The first amendment which was moved by the noble Lord, Lord Bruce of Donington, Amendment No. 74, together with Amendments Nos. 76 and 77, seeks to substitute the two words "entered into" for the one word "concluded" in relation to the references in both Clauses 43 and 44 to the point in time at which a contract becomes binding. Our legal advice is that a contract is "concluded" where a settlement is reached and the terms are agreed between the parties.
We understand that the two words proposed by the noble Lord, "entered into", give the wrong flavour because they stress the unilateral step which is taken by each party to the contract. We believe that it is more appropriate in a case where taking steps to enter into a contract is an offence. The expression is used with this meaning in Part IV of the Companies Act 1980. The idea of "conclusion" of the contract is used elsewhere in the clauses with the same meaning. I would draw the attention of the noble Lord to Clause 45(4) which he will find at line 37 on page 48. We

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believe that "conclusion" in that reference is correct.
The noble Lord also spoke to Amendments Nos. 75 and 79 which seek to substitute the word "completed" for "executed" in relation to the references to the carrying out or performance of the contract in Clauses 43 and 44. "Executed" is in fact the correct term here to refer to performance. But in both Clauses 43 and 44 the reference is to executed "wholly or partly". We believe that a contract is "completed" only where the final act of performance takes place. Moreover, there is considerable ambiguity as to whether "completion" of the contract has the same meaning as its "conclusion". We believe that "completed" would on that ground be inappropriate.
The last amendment which was spoken to by the noble Lord is Amendment No. 78 which seeks to substitute the two words "enter into" for "make". The expression "enter into" is, in our opinion, every bit as good as "make" in this context where of course what is at issue is the unilateral position of the company making the contract. But we would suggest to the noble Lord that there is nothing to choose between the two words in this context.
If the noble Lord feels particularly strongly about the matter— I hope that he does not because we do not want tonight to go into legal cases without further advice— we would be happy to consider again his views. Nevertheless, I hope I have been reasonably convincing and that the noble Lord will feel we have taken his suggestions to heart. I hope that on balance he will agree that the present wording which the legal advisers on this side of the House have suggested is better.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord. Having listened to him, he is halfway towards persuading me. I should need to call in aid the wisdom of my noble friend Lord Mishcon in order to be able to come back to him on such a matter. As I say, he has half convinced me. My problem now is to convince the legal people who sought to convince me in the first place! In the circumstances, I think it would be entirely judicious— I use that word advisedly— to ask for the leave of the House to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 75 to 79 not moved.]
6.15 p.m.
Earl Grey Earl Grey moved Amendment No. 80:
After Clause 44, insert the following new clause:
("Offer to purchare own shares
.— (1) Any offer by a company to purchase its own shares must, other than in the circumstances permitted by subsection (2) of this section, be made to all holders of the class concerned either—

(a) pro rata to their holdings; or

(b) by tender.

(2) The circumstances referred to in subsection (1) of this section are where the terms of the proposed purchase shall have been authorised by an extraordinary resolution of the holders of the shares of the class concerned (to which resolution the provisions of subsection (8) of section 43 of this Act shall mutatis mutandis apply) and the notice convening the meeting to consider such resolution shall have been accompanied by a statement mutatis mutandis in the form required by subsection (1) of section 207 of the 1948 Act.").
The noble Earl said: My Lords, this amendment is parallel to that which I moved to Clause 41. In that case, in relation to redeemable shares I argued that all shareholders should be treated alike. I wish to extend that principle to the power of a company to purchase as opposed to redeem its own shares. Therefore, I propose that in principle any offer to purchase must be either proportionate to holdings or by tender. I recognise, however, that there may be circumstances where this is not necessarily desirable and that a specific purpose may be served by another method. While I would not wish to impede flexibility, nevertheless I think it important that shareholders of the class concerned should have effective control.
Subsection (2) of my proposed new clause therefore provides that the requirements of an offer which is either proportionate or by tender can be waived only with the sanction of an extraordinary resolution of the holders of the class of shares concerned, with a disfranchisement for this purpose of the shares proposed to be purchased. This follows the Government's own provisions in subsection (8) of Clause 43, and after the provision of the information comparable to that required by virtue of Section 207 of the 1948 Act in relation to a similar arrangement. Again the purpose of the amendment is to ensure fair treatment of shareholders and I commend it to your Lordships' House accordingly. I beg to move.
Lord Mackay of Clashfern: My Lords, the questions raised by this amendment, I regret to say, are fairly complicated and the explanation will take me some little time because we have had to examine the matter in some detail. In prescribing authorisation procedures for a purchase by a company of its own shares, we have distinguished an off-market purchase from a market purchase. For this purpose, a market purchase is confined to one effected through the listed or unlisted securities markets of the Stock Exchange. Our distinguishing transactions in this way is primarily determined by a practical consideration: that it is impracticable for the precise terms of a deal effected through these markets to be determined in advance of the time at which the deal must be concluded. In other words, it is not possible to deal on the listed or unlisted securities markets on a conditional basis.
In this amendment the noble Earl is concerned to ensure fairness between one shareholder and another in a purchase of a company's own shares, whether or not this is effected through a market. This is a concern which in principle the Government share. We have anticipated the possibility of making a selective purchase, treating differently shareholders of the same class of shares, in our authorisation procedure for an off-market purchase contained in Clause 43. Such purchases would involve preferential treatment of some shareholders as regards distribution of profits, so it is clearly important that there should be proper safeguards for shareholders not benefiting from preferential treatment. In providing an appropriate procedure we have had in mind particularly private companies, which have the greater need of a power to purchase their own shares, and which are more likely to wish to exercise such a power by making selective purchases to buy out particular shareholders.

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However, the off-market procedure is also available to public companies, including those with listed shares or shares traded on the unlisted securities market. The off-market procedure requires that the terms of a proposed purchase be authorised by a special resolution of votes attaching to shares other than those proposed to be purchased. I am pleased to note that in this amendment the noble Earl shares our conclusion on a difficult question of principle, that it would be wrong for shares proposed to be purchased to have votes on such a resolution.
The only additional requirement which would be imposed by the noble Earl's new clause in such off-market purchases would be that a statement of directors' interests in such purchases would be sent to shareholders. The existing provisions of the 1948 Act which the noble Earl has invoked as a basis for this obligation is concerned with a much broader class of transactions than that of a purchase by a company of its own shares: that provision concerns compromises reached with creditors and members in connection with rearrangements or reconstructions, in which directors of a company may be interested as members or creditors or in other ways. We are concerned here only with the narrower conception of a purchase by a company of its own shares. A director of a company must already disclose any interest in its shares under Section 27 of the 1967 Act and this information must be available on a special register to members and other persons. So the information which the noble Earl's new clause would seek to provide is already available to those who would be able to vote on the resolution.
As regards market purchases, under Clause 44 a company would be able to obtain a general authority to carry out purchases of its own shares over a period of up to 18 months within certain prescribed limits as to quantity of shares purchased and price paid. The authority thus given would be for an entirely different type of purchasing operation. The authority would be given by ordinary resolution and no shareholder would be disqualified from voting, because it is not envisaged that the company would have identified from which shareholders it might buy over that period. No doubt the question in the noble Lord's mind is whether the market purchase procedure could be used to circumvent the more stringent authorisation procedure prescribed for off-market purchases which will typically be selective purchases.
There are certain existing provisions of the law which have a bearing on this question. First, the insider dealing provisions of the 1980 Act will apply. If a planned market purchase is sufficiently large to be likely to influence market price, the company would be well advised to disclose the fact that it was about to buy. If it then excluded some shareholders wishing to sell from participating, those shareholders would have grounds for application to the court under Section 75 of the 1980 Act on the ground of unfair prejudice. Even if the size of the purchase were not significant enough to require prior disclosure, a shareholder might well have grounds for an application tinder Section 75 if it was apparent from subsequent disclosure of purchases required under Clause 45 that a purchase had been clearly deliberately selective, rather than a simple purchase in the market in the normal way. And a director who was party to a
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purchase giving deliberately unfair preference to one shareholder over another would be in breach of his fiduciary duties.
However, the Government acknowledge that, while these safeguards are appropriate company law measures for regulating market purchases, they are not necessarily as stringent as those applied to off-market purchases in safeguarding the interests of shareholders other than sellers. But we feel able to rely on The Stock Exchange and the Council for the Securities Industry to provide additional guidance or regulation to ensure the proper conduct of market purchases. These will after all be dealings in securities, and the normal pattern of supervision of such dealings is for those aspects concerning market practices to be controlled by self-regulation. The noble Earl's new clause, in prescribing particular market practices, would extend the purview of statute law into matters which the Government believe should properly be the preserve of the market authorities.
Officials of the Department of Trade have already met officials of the administration of The Stock Exchange and of the Council for the Securities Industry to discuss aspects of market purchases, with the risk of deliberately preferential purchases being effected through the market particularly in mind. The Stock Exchange in submitting its comments in response to our consultative document on the purchase by a company of its own shares assured the Government of its vigilance in respect of market transactions. We are therefore confident that the authorisation and disclosure procedures prescribed in our clauses, together with proper vigilance on the part of shareholders and the market authorities, will be sufficient to prevent the sort of abuse which the noble Earl has in mind in moving this new clause. I hope that he will share our confidence and, in the light of these assurances, that he will be prepared to withdraw this new clause.
Earl Grey: My Lords, t am most grateful to the noble and learned Lord for going to great lengths to explain his thinking with regard to our amendment. I should like to read his answer carefully, because I must admit I am not an expert in this matter. It is a technical amendment, and in view of that I should like to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 47 [Power of private companies to redeem or purchase own shares out of capital]:
Earl Grey Earl Grey moved Amendment No. 81:
Page 50, leave out line 23.
The noble Earl said: My Lords, with the leave of the House I should like to speak also to Amendment No. 82. In moving Amendment No. 81 I think it would be helpful if I were to suppy a certain amount of background information. The Green Paper, Cmnd. 7944, at paragraph 37, referred to the possibility of shares which had been redeemed or purchased not being cancelled but being available for re-ssue— what are known as Treasury shares— and in its evidence on the Green Paper the Liberal Party supported this proposal, not least in the context of the profit-sharing

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schemes approved under legislation in the Finance Act 1978.
We also urged that, to the extent of the actual net proceeds of a re-utilisation of Treasury shares, profits previously transferred to a non-distributable reserve should be released back to distributable reserves. Unfortunately, the Government have not seen fit to take the Treasury shares approach. Accordingly, the provisions of Clause 47 mean that in the event of a redemption or purchase of shares a private company which wishes, within the stringent safeguards laid down by the present Bill, to effect such purchase or redemption out of capital must, as a precondition of so doing, first utilise all its distributable reserves. This will inevitably have a detrimental effect on private companies by reducing their distributable profits and to that extent will reduce the impact of what the Government are trying to achieve.
The purpose of my amendment therefore is to remove this restriction in other words to give private companies the power themselves to decide in the case of a purchase or redemption to what extent to utilise capital. Given, as I say, that shareholders and creditors will be subject to the protection accorded by Clauses 48 to 51 in the present Bill, I believe this to be an appropriate course to take. I beg to move.
Lord Mackay of Clashfern: My Lords, the question of whether or not the provisions for purchase of own shares should allow for shares in Treasury is a matter that was discussed in connection with the job ownership companies and I think we were able to satisfy the noble Lord, Lord Lloyd of Kilgerran, at the meeting that we had with him and with the noble Lord, Lord Seebohm, that that was an unnecessary complication in the Bill and that so far as job ownership companies were concerned he would be able to achieve his objectives by using our procedures without that additional complication.
So far as the present amendment is concerned, it seeks to remove the restriction which in our view is necessary in the interests of creditors. The company ought not to be allowed in effect to reduce its capital without going through the procedures for the reduction of capital which are prescribed in Section 66 of the 1948 Act, which of course requires a special resolution and is subject to confirmation by the court. In our view this provision, which this amendment seeks to remove, is a necessary provision for that protection. I hope that in the light of that explanation the noble Earl will feel able to withdraw the amendment.
Earl Grey: My Lords, I cannot totally answer for my noble friend Lord Lloyd of Kilgerran. Perhaps in view of the fact that he has tabled his amendment he may still not be satisfied but it will be up to him to decide, and in the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 82 not moved.]
Clause 48 [Requirements for redemption or purchase out of capital: Special resolution approving payment]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 83:
Page 52, line 26, leave out ("any of the matters") and insert ("the matter").
The noble Lord said: My Lords, with the leave of the House I should like to discuss Amendments Nos. 83 and 84 together. It will be recalled that Clause 47 of the Bill deals with the powers of private companies to redeem or purchase their own shares out of capital and that Clause 48, against which these amendments have to be set, sets out the requirements for redemption or purchase out of capital and of the special resolution approving payment. Clause 48 provides in subsection (3):
"The directors of the company must make a statutory declaration specifying the amount of the permissible capital payment for the shares in question and stating that, having made a full inquiry into the affairs and prospects of the company, they have formed the opinion—

(a) that there will be no ground on which the company could be found to be unable to pay its debts immediately after the date on which the payment out of capital is proposed to be made; and

(b) that, having regard to their intentions with respect to the management of the company's business during the year immediately following that date and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to continue to carry on business as a going concern throughout that year; and

(c) that accordingly the company will be able to pay its debts as they fall due throughout the year".

Those are the requirements which are laid upon the directors. Subsection (5) of the same clause states this:
"The statutory declaration made by the directors must have annexed to it a report addressed to the directors by the auditors of a company stating that—

(a) they have inquired into the company's state of affairs; and

(b) the amount specified in that declaration as the permissible capital payment for the shares in question is in their view properly determined in accordance with section 47 of this Act; and"—

This is a crucial point so far as the auditors are concerned—
"(c) they are not aware of anything to indicate that the opinion expressed by the directors in that declaration as to any of the matters mentioned in subsection (3)(a) to (e) above is unreasonable in all the circumstances".
All this amendment seeks to do is to leave subsection (3)(b) and (c) out of the consideration of the auditors. That means to say that if this amendment is carried the auditors would not be required to state that they are aware of nothing that conflicts with, or to cast any opinion on, subsection (3)(b) and (3)(c). This arises because of the anxiety in the accountancy profession that they should be required to state, by the report annexed to the declaration, that they are not aware of something of which presumably they ought to be aware. What the auditors would prefer would be to be given a specific responsibility rather than merely to state, in regard to the intentions of the management of the company's business during the year following, that according to the company it will be able to pay its debts as they fall due throughout the year. They prefer to be directed to pass a positive opinion as to that and to be given powers to investigate that, rather than required to state that they are not aware of anything in conflict with those two particular requirements.
If an auditor, for example, is not informed about these

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matters— he may be kept deliberately uninformed— he certainly is not aware and can quite cheerfully say he is not aware of these particular circumstances. Of course, the initial part of the certificate states that he shall certify that they have inquired into the company's state of affairs and that the amount specified is correct. That is perfectly all right so far as the auditors are concerned. But to ask the auditors, in regard to the remainder of the matters which are concerned with the directors' intentions and the future fortunes of the company, merely to state that they are unaware of anything in conflict with what the directors say is, we feel, not the right way of laying the responsibilities on the auditors. If, for example, subsection (5)(a) had stated as a requirement: "having inquired fully into the affairs and prospects of the company", instead of merely "inquired into the company's state of affairs", that would present a completely different situation. But the accountancy profession generally does not really ever like to be placed in the position where it has to say that it is not aware of anything to the contrary. We regard that as rather a negative approach. My profession is at all times prepared to undertake full responsibility for anything it is required to do positively. It merely does not like the negative approach which has been adopted in this subsection (5).
For that reason, and purely for the purpose of eliciting the Government's response to what I have said, these amendments are put down. I feel that since I have voiced this matter here, if noble Lords opposite think it worth while, it may be a matter that ought to be the occasion for further consultation between the Department of Trade and the Consultative Committee of Accountancy Bodies, in order that the doubt which has been voiced in the profession may be resolved. I beg to move.
Lord Lyell: My Lords, I can hardly be surprised that there is no Member of your Lordships' House who wishes to follow into the intricate discussion the noble Lord, Lord Bruce, has set before us as to the duties of auditors, although all that he said was very relevant. I wonder whether he is correct in thinking that the auditors' risk is any less in carrying out a positive duty as opposed to a negative duty. If an auditor expresses an opinion and his opinion is found to be ill-founded, as the noble Lord knows, and indeed I know, the legal profession are on to him fairly quickly.
The Government's view of the two amendments which the noble Lord has moved is that they do not regard as unreasonably burdensome the matters to which the auditors of the company must address their minds under Clause 48. Of course, we acknowledge that the auditors would have to look ahead for a period of up to one year in including in their report the matters which the noble Lord in his persuasive way seeks to remove. The noble Lord did mention positive and negative attitudes. The only assurance the auditors are required to give under subsection (5)(c) is a negative one. The assurance is that they are not at that time aware of anything to indicate that the opinion expressed by the directors under subsection (3) about the future of the business over the next year is unreasonable in all the circumstances. That is all we propose.
We certainly do not suggest that the company's auditors are supposed to be some form of wonderful
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prophets or indeed to gaze into a crystal ball. But the purpose of paragraph (c), and indeed paragraph (b), of subsection (3) is that we believe that if the auditors come to know something about the company— through their discussions with the directors; through their examination of the books; though their methods of accountancy and, indeed, through carrying out their duties as auditors— which casts doubts in their minds on its stated expectations about its ability to carry on business in the following year, then that should be brought into account in determining whether or not the company should be allowed to reduce its capital reserves in order to purchase its shares. That is all that we are asking.
It is at the time when a company might foresee failure that controlling shareholders or indeed wicked men might be tempted to withdraw funds from a company and just leave it. Indeed, we believe that in such cases persons might be willing to run the risk of criminal penalties, but of course their auditors would have no reasons to be similarly tempted and, indeed, are not subject by this particular section to a criminal penalty for any negligence in this particular matter.
The judgment which the auditors would have to exercise in deciding whether a particular piece of knowledge was relevant would be entirely within their competence and consistent with their existing duties as auditors to the company. In practice, we believe that any decisions of this nature which have to be made by the auditors would be as clear cut as any of the other decisions which are required of auditors in their normal duties, quite apart from Clause 48(3) or, indeed, (5). So it is for that particular reason that we do not see the entire merits of Amendments Nos. 83 and 84.
However, I would assure the noble Lord and indeed the House— I hope that I could assure the accountancy profession— that the Department of Trade will be having further discussions of this and of other aspects of the proposals with representatives of the accountancy profession who we hope will have, and will seek to use, every opportunity to express their views on this rather risky matter.
The department had preliminary discussions of this matter with the representatives of the accountancy profession, but I understand that it was only last Friday that the considered and detailed views of the profession were received. But we shall certainly seek to convince the accountancy profession that this is a matter in which that profession can reasonably be expected to express a view on the basis of the terms which are set out in the clause. Above all, we believe that it would be in the wider commercial and public interest that the auditors should accept this responsibility and that the public would indeed expect them to carry out the additional duties that we have set out. I hope that that last point is one which would commend itself to the noble Lord and I hope that I have been as encouraging as I can be.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord for his response. I should like to emphasise that the accountancy profession is never reluctant to be put into a position where it has to express a positive opinion, because in expressing a positive opinion it means that it is required to make a detailed investigation of all these matters in order that

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it is put into a position where it can give positive approval. For example, circumstances arise on public flotation where it is well known that investigating accountants have not only to go through the company's affairs in the past, but to examine very carefully the directors' forecasts of the future, the sales projections, the projected cash flows and so on. They have to be satisfied positively before their names go on the prospectus.
The only anxiety that we have in this particular case is that we are asked, in a way, to express a view by default— not a positive opinion, but to say that we are not aware of something. Of course, although what the noble Lord says is a completely accurate and sincere version of what the Government believe as regards this matter, we must bear in mind that, if these matters ever come before the courts— as, indeed, I mentioned yesterday— the courts are not entitled to take into account Governmental explanations reproduced in Hansard. The courts look only to the words of the Act itself. That is why we are very anxious that the point may be clarified.
However, I should like to emphasise that the accountancy profession generally is anxious to be of as much assistance as possible as regards the correct working of these particular sections. It does not shrink from having any positive responsibilities enthrust upon it: it merely has a disinclination to give, as it were, approval by default by saying, "We are not aware of anything that makes something unreasonable". That is all. However, in view of the noble Lord's assurance and in the light of discussions that are taking place or will shortly take place, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 84 not moved.]
Clause 61 [Disqualification of directors and others from managing companies, etc.]:
Lord Lyell Lord Lyell moved Amendment No. 85:
Page 67, line 9, leave out ("No application shall be made under").
The noble Lord said: My Lords, I beg to move Amendment No. 85 and I hope that it will be for the convenience of the House if I speak also to Amendments Nos. 86 and 112. The House will be aware that we have come now to Clause 61 which deals with the disqualification of persons from participating in the management of companies which is currently provided for by Section 188 of the Companies Act 1948 as well as Section 28 of the Companies Act 1976.
Section 28 of the 1976 Act enables the High Court on the application of the Secretary of State to disqualify a person who is persistently in default in submitting returns to the registrar. Clause 61 of the Bill would transfer this power to magistrates— and we find that in the new subsection 188(1A)— and also to courts with jurisdiction to wind up (and we find that in new subsection 188(1) paragraph (b)). Section 28 would therefore become redundant and as currently drafted subsection (5) of Clause 61 would prevent further applications being made under it.
We had further reflections about the drafting of the Bill which suggested to the Government that it would be better to repeal the whole of Section 28 with a saving to preserve the effect of current orders and indeed of any orders made after repeal as a result of applications which had been made beforehand. That is what the two amendments to Clause 61 are designed to achieve.
Amendment No. 112 is consequential upon Amendment No. 85 and merely includes Section 28 in the list of repeals in Schedule 4 to the Bill. I must apologise if the subject-matter is a little obtuse, but I have done my best to clarify the situation. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 86:
Page 67, line 12, leave out ("after the appointed day") and insert ("shall cease to have effect; but any order made by virtue of section 28 on an application made before the appointed day shall have effect as if made under section 188 of the 1948 Act.").
The noble Lord said: My Lords, I beg to move Amendment No. 86. I have already spoken to this amendment.
On Question, amendment agreed to.
6.49 p.m.
Lord Monson Lord Monson moved Amendment No. 87:
After Clause 62, insert the following new clause:
("Amendment of s. 136 of 1998 Act
Section 136 of the 1948 Act shall be amended as follows— after subsection (2) insert the following new sub-section—
"(2A) A reply-paid form of proxy shall be enclosed with every notice calling a meeting of a Public Limited Company; and if default is made in complying with this subsection as respects any meeting, every officer of the company who is in default shall be liable to a fine not exceeding fifty pounds."").
The noble Lord said: My Lords, I beg to move Amendment No. 87 and with the leave of the House I should like to speak at the same time to Amendment No. 88. Your Lordships will have noticed that the latter is an alternative to Amendment No. 87. I have put it down, although with some hesitation, because it May possibly be more acceptable to those of your Lordships who were woried about the paper-work that this proposed requirement would impose upon the very smallest quoted companies.
Against this it could, of course, be argued that shareholders in the smaller companies are those who are most at risk, although I do not believe that this is actually so, having investigated 12 companies whose shareholders, and in some cases their loan stockholders lost virtually all the money that they had invested following the traumatic events of 1974 and 1975. Of those 12, only two had an issued share capital of less than £500,000; another two had an issued capital just exceeding the £500,000 mark, while most, including such well-known names as Court Line and Fairey, had an issued share capital of between £5 million and £20 million.
That then is the background to, and the raison d'être of, Amendment No. 88. It is for your Lordships to indicate which of the two you prefer. As for the rest, I have taken note of the very minor criticisms voiced in Committee by the noble Lord, Lord Lyell, and also of the helpful and constructive advice proffered

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by the noble Lord, Lord Bruce of Donington. Accordingly, I have altered the amendment so that it directly amends Section 136 of the 1948 Act, which seems logical, as it is Section 136 which already imposes penalties upon companies which fail to fulfil certain requirements in relation to shareholders' proxies. I have taken the advice of the noble Lord, Lord Bruce, to confine the obligation to public limited companies. Of course, the concept of a public limited company, or at any rate the title "public limited company", did not exist in 1948, but I am assured by parliamentary draftsmen that this is no barrier to amending that Act in this way in this Bill.
Finally, the noble Lord, Lord Lyell, rather implied in Committee that my previous subsection (2), which would have deferred the implementation of the amendment for six months after the passing of the Act, was in some way rather sinister or Machiavellian. I can assure the noble Lord that I had no sinister intent. That subsection was simply meant to be helpful to company secretaries and to registrars who might welcome the extra time in order to make arrangements and set things in motion. However, in order to smooth the path for this amendment, I am happy to defer to the Government's suspicions and have accordingly deleted that subsection.
I do not want to bore the House by repeating all those arguments which I advanced in Committee in favour of making reply-paid proxies obligatory. Suffice it to say, in my view, that it would provide a modest and useful extra element of shareholder protection. The practical consequences might be limited; it might increase only marginally the number of occasions on which an undesirable or in some way unsatisfactory resolution was defeated at a meeting of the shareholders, given the general tendency towards institutional apathy, particularly if the directors' own shareholdings happen to be substantial.
However, the really important effect would be the symbolic one. It would demonstrate to the small, individual shareholder, who has come very much at the end of the queue in recent years, that Parliament, after all, cares about him or her; that Parliament does not want to see shares, shareholders' votes and, therefore, power concentrated into Fewer and fewer hands; but that instead Parliament believes in the widest possible spread of ownership and decision-making, without which a free enterprise system must have less and less validity in the eyes of the public.
The Stock Exchange has told me today that it is adopting a neutral attitude to this amendment; it is not prepared publicly to endorse it, but nor does it oppose the amendment. It points out that there could be a slight snag as regards overseas shareholders; but this is no more than a technical difficulty that could easily be remedied on Third Reading or, indeed, in another place.
If the sending of reply-paid proxy forms was the exception rather than the rule, my amendment would be a highly radical one and I would certainly have thought twice before introducing it into this Bill. But this is very much the reverse of the case. I have compiled a list— which I should be delighted to show to any of your Lordships who are interested— of 67 large and medium-sized public companies chosen at random, including nine investment trusts, or invest-
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ment companies, as they now prefer to be called, which reveals that no fewer than 53 of those companies— that is, 79 per cent.— send reply-paid proxy forms to their shareholders of their own free will, because they consider it a fair and proper thing to do. I am not implying for a moment that the other 21 per cent.— the other 14 names— are bad companies which ride roughshod over the interests of their shareholders— not at all. But I think that in this one respect they are not being as fair as they might be. I believe that they should take the not very onerous step of falling into line with the vast majority of public companies. For that reason, I beg to move Amendment No. 87.
Lord Lyell: My Lords, I fear to tread down the same path as we trod at the Committee stage, but we have certainly been over some of these arguments before, although, as the noble Lord, Lord Monson, will remember, at an earlier stage we had all sorts of extraneous discussions as to whether glossy reports should or should not be sent out at the company's expense to the shareholders each year.
However, the noble Lord has moved this amendment, which he hopes that the Government might look at, and has spoken to the second, alternative, slightly longer amendment. He has done so with admirable clarity this evening. One understands that the amendments seek to require public limited companies to send out reply-paid proxy forms with every notice calling a meeting of the companies. I must say to the noble Lord that his tremendous diligence in examining the records in this respect of 67 varying— sized companies has not yet persuaded the Government to do other than to give the same answer as we gave last time. When speaking to the noble Lord's previous amendment at an earlier stage, it was our contention that regulation of a company's administration in this albeit small but important detail was not the business of the statute book.
To forestall any argument that the Bill already goes into considerable detail— and one example would certainly be in setting out the precise form of company accounts— we might accept that Part I is very detailed. But Part I fulfils obligations which are laid upon the Government by the Fourth Directive of the European Community. Indeed, the details in Part I are concerned with questions of public disclosure of details of company affairs. We submit that this is a different matter from using statute law to determine the detailed internal administration of company affairs, which, after all, is the entire matter which is at the heart of the amendment in the name of the noble Lord, Lord Monson.
The noble Lord and, indeed, the House may believe that company law already obliges a company to issue proxy forms, but I must tell the noble Lord that that is not so. Section 136 of the Companies Act 1948 provides a member of a company with a right to appoint a proxy. Section 136 also ensures that this right is advertised and that the right may not be improperly infringed by the company's articles or, indeed, any actions by the company.
All these are proper functions of the law in conferring and in securing rights. The law certainly allows for the fact that companies may issue instruments of proxy, and Table A of the 1948 Act offers examples of such

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instruments which may be adopted in a company's articles. But these are merely permissive; they are in no way obligatory. The form of a company's articles is a matter for its members, but of course it would be unusual if even these regulated the day-to-day conduct of the company in such detail as both of these amendments propose for the statute book.
The only external obligation on a company to issue a form of proxy in any particular form is that which arises under The Stock Exchange conditions of listing agreement, and of course this obligation arises only as a result of an agreement which is freely entered into between the company and the Council of The Stock Exchange. We heard from the noble Lord what I think he called the neutral opinion of The Stock Exchange. I am afraid that it remains the Government's view that the law has no business in determining how this matter shall be determined within companies, and above all in imposing what we believe to be a burden on companies with certainly significant cost consequences for the larger companies.
We do not regard what the noble Lord, Lord Monson, is advocating as necessarily bad practice, nor are we any less enthusiastic than he is about encouraging active participation by the small shareholders in the conduct of company affairs however large or small that company. Our attitude, which may disappoint the noble Lord, is based on a view of the proper functions of state law in a field which your Lordships will already have found to be subject to a vast and elaborate system of regulation. I hope I have said enough to show why I am afraid that we continue to resist Lord Monson's amendment.
The noble Lord informed the House in Committee that a large proportion of companies— indeed he mentioned a sample of, I think, 53 out of 67— already send out reply-paid proxy forms. We believe that this seems to be as good an argument for leaving the matter to companies themselves to decide as it is for the noble Lord's amendment in either of its forms. I have stated the Government's objection in general terms. This is a small but of course important detail of company administration which we do not consider the function of company law to enforce. I am sorry to disappoint the noble Lord a second time, but I really cannot recommend the amendment tonight.
Lord Monson: My Lords, I am grateful to the noble Lord, Lord Lyell, for that full reply. He implied that I was ignorant of the law as it stands; that I was under the impression that the law required the sending out of proxy forms. If he cares to check with my speech made in Committee he will see that I specifically mentioned that I was well aware that it was not the law, and that it was merely a Stock Exchange requirement. The noble Lord went on rather to contradict himself by referring in some detail to Section 136 of the 1948 Act which, as he said, imposes obligations upon companies as regards proxies. It makes it an offence punishable by a fine of £50 to send a proxy form to some shareholders but not to others, so to that extent the law already concerns itself with, to quote the noble Lord, "the detailed administration of company affairs".
The noble Lord also spoke of the significant cost consequences on companies if an amendment such as
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this were to pass into law. To take companies undertaking the same business of a comparable size: if Trust House Forte can send out reply-paid proxy forms without worrying about the cost then surely Grand Metropolitan can. If one chemical company, Croda, can do so, why not Holt Lloyd? I think I have said all I could say. I had hoped to receive a great deal more support from various quarters of the House, and had I done so I think I would have pressed this. The amendment may be imperfect as it stands, but it is a matter which ought to be examined by the other place. With the pressure of business it is unlikely that anyone would have time to press an amendment of their own there, and it would have been better to have come from this House and the other place could then have accepted it or rejected it as they wished. However, in view of the rather disappointing lack of support on this matter, all I can do is beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 88 not moved.]
Clause 67 [Identification in register of different classes of shares]:
7.5 p.m.
Lord Trefgarne Lord Trefgarne moved Amendments Nos. 89 to 93:
Page 68, line 17, leave out ("(a)")
Page 68, line 19, after ("members)") insert—
("(a) in paragraph (a)—
(i)")
Page 68, line 21, leave out from second ("class",") to ("after") in line 22 and insert—
("(ii) the following words shall be added at the end, "and, in any other case, where the company has more than one class of members, the class to which each member belongs;"; and
(b) in the proviso to that subsection,")
Page 68, line 24, leave out first ("subsection") and insert ("subsections")
Page 68, line 29, at end insert—
("(6) Any liability incurred by a company by virtue of the making or deletion of an entry in its register of members or debenture holders or any failure to make or delete any such entry shall not be enforceable more than twenty years after the date on which the entry was made or deleted or, in the case of any such failure, the failure first occurred.
This subsection is without prejudice to any lesser priod of limitation.".").
The noble Lord said: My Lords, I beg to move Amendment No. 89, and I should like at the same time to speak to Amendments Nos. 90, 91, 92, 93 and 94. Indeed, as they are concurrent I think I am in order to move them en bloc. It may be for the convenience of your Lordships if I move the amendments that I have described because they bear a very close relationship with each other. Amendments 89 to 93 amend Clause 67, which itself amends Section 110 of the Companies Act 1948, on a company's register of members. The first four amendments deal with companies without a share capital, and the fifth with a company's liabilities in respect of its register. But the sixth, Amendment No. 94, the new clause, also concerns companies not having a share capital and has the effect of rounding off the provisions of an amended Section 110. I shall deal first with the issues relating to companies not having a share capital, and secondly with the question of a company's liabilities with respect to its register of members.
Section 110 requires that a company shall keep a register of members containing prescribed particulars. But in its present form it does not clearly require that the register shall have the effect of disclosing the class to which individual members belong. A particular register may indeed have this effect, but if it does this will be only an incidental consequence of the section's provisions. Your Lordships will remember that this is the reason for the amendment to Section 110 provided in the first part of Clause 67: that in the case of companies with a share capital shares held by members must be identified in the register inter alia by the class to which they individually belong.
The importance of disclosing the classes of shareholdings lies in the fact that different rights attach to different classes. A person inspecting the register, which is open to the public, will with this information be able to discern such important features of the membership structure as its voting pattern. He can do this because the Registrar of companies will have, for public inspection, documents disclosing the rights attaching to the company's different classes of membership. But these provisions are comprehensive only in the case of companies with a share capital.
The amendments now under consideration have the effect that a similar régime will be imposed on companies not having a share capital. An example of such a company is the Performing Rights Society, interest in whose activities has stimulated consideration of certain amendments in Section 110. Amendments 89 to 92 provide that a company without a share capital must include in its register of members a statement of the class of membership to which individuals belong, if the company has more than one class of members. Amendment 94 provides that a company without a share capital must deliver to the registrar details of class rights when these are not contained in documents already in his keeping, as required elsewhere in the legislation. It is drafted on the lines of Section 33 of the Companies Act 1980, which requires registration of the same details in the case of companies with a share capital. It therefore covers the creation of new classes of members, the variation of rights attaching to existing classes, and the naming or re-naming and designation or re-designation of a class of membership. It will apply to existing companies with more than one class of member as well as the future new creations of classes.
The combined effect of these provisions if enacted will be that an interested person will be able to inspect documents containing material relating to a company without a share capital which is effectively the same as the material available to a person interested in making his own investigations into a company with a share capital. This is therefore a useful rationalisation of this aspect of company law.
The remaining amendment, No. 93, concerns the liability of a company with respect to obsolete entries on the Section 110 register of members. At present no termination of liability is provided for, although Clause 67 already follows the general recommendation of the Jenkins Committee that obsolete entries on the register should be allowed to be deleted after a statutory period. This amendment follows up that provision and implements a related but separate recommendation
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of the Jenkins Committee. It provides that a company's liability in respect of entries and deletions made or not made, as the case may be, on the Section 110 register will not be enforceable after a period of 20 years. The 20-year period is deemed to have started when an entry or deletion is made or from the first occasion on which a failure to make or delete an entry occurred. The Jenkins Committee was convinced, as are we, after hearing evidence on this matter, that it was necessary to give this element of relief to companies in order to enable them to take advantage of the main provision enabling them to destroy old records relating to the register of members. This provision also covers a company's register of debenture holders, in the case of which the same considerations apply. I beg to move.
On Question, amendments agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 94:
After Clause 67, insert the following new clause:
("Registration of particulars of members' class rights
.— (1) Where a company which does not have a share capital (referred to below as "the company") creates a class of members with rights which are not stated in its memorandum or articles or in any resolution or agreement to which section 143 of the 1948 Act (registration of certain resolutions, etc.) applies, the company shall deliver to the registrar of companies within one month from the date on which the new class is created a statement in the prescribed form containing particulars of the rights attached to that class.
(2) Where the rights of any class of members of the company are varied otherwise than by an amendment of the company's memorandum or articles or by any resolution or agreement to which section 143 applies the company shall within one month from the date on which the variation is made deliver to the registrar a statement in the prescribed form containing particulars of the variation.
(3) Where a company (otherwise than by any such amendment, resolution or agreement as is mentioned in subsection (2) above) assigns a name or other designation, or a new name or other designation, to any class of its members it shall within one month from doing so deliver to the registrar a notice in the prescribed form giving particulars thereof.
(4) Where a company has on the appointed day more than one class of members the company shall within three months from that day deliver to the registrar a statement in the prescribed form containing particulars of the rights of each class of its members.
(5) If a company fails to comply with this section, the company and every officer who is in default shall be liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum or, on conviction after continued contravention, a default fine not exceeding one-fiftieth of the statutory maximum for each day until the statement or notice in question is delivered to the registrar.").
On Question, amendment agreed to.
The Earl of Selkirk The Earl of Selkirk moved Amendment No. 95:
After Clause 67, insert the following new clause—
(".Section 187 of the 1948 Act shall be amended as follows—

(a) in subsection (1) after the word "Bankrupt" where it appears in the first line insert the words "under the law of any part of Great Britain"

and

(b) in subsection (4) delete word "to" where it appears in the first line and substitute "in respect of a person who is an undischarge bankrupt under the law of".").

The noble Earl said: My Lords, I moved an amendment in these terms in Committee and I move it again

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because I did not get a satisfactory answer at that stage. It is decided law that an undischarged bankrupt in England has not committed an offence in Scotland. That is unquestionably unsatisfactory. The decision in this matter was reached by the High Court of Judiciary, from which there is no appeal on a criminal matter to the House of Lords. The decision was unanimous by three judges, as a result of which there is only one course— namely, statutorily to correct the situation. The only question I am asking tonight is: how do we correct the situation?
One may argue that it should be corrected in a separate Bill or I may be told that this Bill is not a satisfactory vehicle for dealing with the matter. If that is said, then I ask your Lordships to look at Clause 61, with which we have just dealt, in which it is clear that having been convicted of an indictable offence is a disqualification for acting as a director. Does that mean that an undischarged bankrupt in England who receives credit in Scotland has not committed an indictable offence? If so, he is fully entitled to be a director of a company, and if that is the case, it appears appropriate that this matter should be dealt with under a Companies Bill. Clearly something must be done by means of some statute. If this is not an appropriate statute, another must be used. I beg to move.
Lord Mackay of Clashfern: My Lords, my noble friend has raised a question which is particularly dear to my heart because the case on which he is founding was one in which I appeared as junior counsel for Mr. Kaye, who managed triumphantly to defeat the Lord Advocate of that time. However, the point in that case was whether an undischarged bankrupt in England— that is, a person who was made bankrupt in England and remained undischarged— on coming to Scotland was breaching a provision of the Scottish Bankruptcy Act by obtaining credit in Scotland. After careful consideration, as my noble friend said, the High Court of Judiciary, which is the Supreme Court of Criminal Appeal in these matters in Scotland, decided that he was not. But that case arose on a consideration of the Scottish Bankruptcy Act 1913 and did not arise on a consideration of the Companies Act 1948, and I believe that, cogent as the argument for Mr. Kaye was in the context of the 1913 Act, it would not have run on the 1948 Act.
To answer my noble friend's question, a person who obtained credit in Scotland, being an undischarged bankrupt in England, would not, I think, be guilty of an indictable offence, but that does not mean that this is the Bill in which that should be altered. Certainly I can see that the matter requires the attention of the legislature, but I respectfully suggest to my noble friend that the matter is one for the Scottish bankruptcy statute to deal with in due course. It may be relevant to remember that the Scottish Law Commission is engaged now in a quite extensive exercise on the reform of Scottish bankruptcy law, and I should think that consideration of its report, and possibly of the EEC bankruptcy convention, if it comes to be agreed, might provide a suitable legislative vehicle for dealing with this matter. I do not feel this is an appropriate
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Bill for that purpose and I hope that, with that explanation, my noble friend will feel able to defer consideration of the issue to another occasion.
The Earl of Selkirk: My Lords, in a matter which is obviously dear to the heart of my noble and learned friend, I should not want to press him unduly. If it is true, as it surely is, that an undischarged bankrupt in England cannot be convicted in Scotland, then although he is an undischarged bankrupt he can remain a director of a company, because he cannot be convicted of an indictable offence. My noble and learned friend says it is not a matter for a Companies Bill. It is, however, very much a matter concerning companies; if you have an undischarged bankrupt in England who is a director of a company, I should have thought that would be a gross breach of the principles on which this Bill is founded. However, I shall not press the matter, though I am sure my noble and learned friend will draw it to the attention of the appropriate department when the time comes. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.17 p.m.
The Lord Chancellor (Lord Hailsham of Saint Marylebone)The Lord Chancellor (Lord Hailsham of Saint Marylebone) moved Amendment No. 96:
After Clause 72, insert the following new clause:
("Amendment of Companies Acts in connection with their consolidation
.— (1) Her Majesty may by Order in Council make such amendments of the Companies Acts and of any other enactment relating to companies, whenever passed, as may be jointly recommended by the Law Commission and the Scottish Law Commission as desirable to enable a satisfactory consolidation of the whole or the greater part of the Companies Acts to be produced.
(2) An Order in Council under this section—

(a) shall not be made unless a draft of the Order has been laid before and approved by a resolution of each House of Parliament;

(b) shall not come into force unless there is passed either a single Act consolidating the whole or the greater part of the Companies Acts (with or without other enactments relating to companies) or a group of two or more Acts which between them consolidate the whole or the greater part of those Acts (with or without other enactments so relating); and

(c) if such an Act or group of Acts is passed, shall by virtue of this paragraph come into force on the day on which that Act or group of Acts comes into force.

(3) No Order in Council shall be made under this section after any Order in Council so made has come into force.
(4) In this section "the Companies Acts" means the Companies Acts 1948 to 1981 and any enactment passed after this Act for the citation of which together with those Acts provision is made by any enactment so passed.").
The noble and learned Lord said: My Lords, this is an important amendment and for that reason I am eager to explain it in perhaps a little more detail than I otherwise should. I hope that, when I have done so, although highly technical, it will prove uncontroversial. Because it is so technical, I took the liberty of consulting and explaining its objectives to the noble and learned Lord, Lord Elwyn-Jones, the noble Lord, Lord Wigoder, and the Law Lords, and I am now anxious to explain its purpose to the House.
In a sentence, its purpose is to pave the way to a consolidation of the Companies Acts when, and if,

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the present Bill comes into effect. The preparation for the consolidation is already in hand under a most distinguished retired parliamentary draftsman. The Companies Acts are urgently in need of consolidation, but the jungle of legislation which requires to be amalgamated into a consolidation Act is such that it cannot be accommodated within the ordinary framework of our present consolidation procedure.
The point was drawn to my attention in a general form originally by the Law Commission, one of whose principal functions, as your Lordships will be aware, is the consolidation of our statute law, as has been the case from the beginning. It is drawn to the attention of Parliament in its current annual report, and the point that it made was discussed and endorsed by the Statute Law Committee, a most distinguished body which meets once a year under the chairmanship of the Lord Chancellor. I should like to quote a sentence or two of what the Law Commission said. Among other things, it said:
"Work on the consolidation of Statute Law on a particular subject often brings to light anomalies and inconsistencies which cannot be remedied in a Consolidation Bill. Such Bills have the great procedural advantage that they are considered in depth only once, by the Joint Select Committee on Consolidation Bills. But they must not incorporate any changes in the law beyond those which result from the special procedures for amendment which are available".
These include the "minor amendments" which are allowed under the Act of 1949, or the analogous procedure involving recommendations made by either of the two Law Commissions, and which are referred to in the First Programme of the English Law Commission published in 1966.
I shall now once more quote the words of the Law Commission's report:
"If changes are necessary which cannot be effected … schedule of the necessary amendments is drafted for inclusion in an appropriate programme Bill and the Consolidation Bill is prepared on the assumption that the amendments have already been enacted".
Having gone on to draw attention to the difficulty of finding a suitable programme Bill as a vehicle for such amendments, the Law Commission go on to recommend— and I quote a third passage:
"In our view, this matter of the prior enactment of necessary but uncontroversial amendments in order to enable Consolidation Bills incorporating these to proceed through Parliament under the special procedure of the Joint Committee is one which requires serious consideration, and we therefore think that this is a matter which you may wish to draw to the attention of both Houses of Parliament".
Armed with the support of that recommendation of the Law Commission and the support of the Statute Law Committee, I have in fact already put general proposals before the Leaders of both Houses with a view to their consulting their opposite numbers and the Procedure Committees, because such proposals could not in fact be introduced without a general consensus.
In the meantime, before the general proposals can be enacted, the general problem has come forward in a particular form in relation to this Bill, and to meet it the retired parliamentary draftsman who is undertaking the consolidation work has, with the support of the Law Commission, put forward an ingenious solution which I hope will commend itself to the House and which I trust your Lordships will think is protected by adequate safeguards against abuse.
Good progress is being made with the consolidation, but the task is truly formidable; from the point of view of sheer bulk, the existing legislation covers more than 750 pages of the ordinary edition of the statutes. Its character is highly complex and technical. The styles in which it has been drafted and the problems which it has been designed to solve range from the antique, such as the regulation of tin mining companies in Cornwall, to more contemporary concerns with "insider dealing", "concert parties", and "shadow directors".
So your Lordships will see that the draftsman is faced with a herculean task, and while this body of law is not at all an Augean stable, it is clear to the draftsman that if a satisfactory consolidation, fit for use for many years to come, is to be made, a number of changes to the Acts will be desirable to remove anomalies and to reframe or dispense with provisions which have been found to be obsolete in form or substance. Otherwise, the consolidation when it comes would be a rather second-best affair.
When account is taken of the resources which will require to be involved in this work, I am sure that noble Lords will agree that a second-best consolidation would be rather a pity. In my mind it is difficult in this narrow field to exaggerate the importance of the matter. For practitioners, even with many years of experience in the field, the present law is complex, difficult to apply, and difficult to present; and to the uninitiated it is a maze. This is not the form in which to maintain our central law on business corporations.
It is also important, from the international point of view, that we should set out our law in a presentable shape. Our own company law is one of the most developed and sophisticated systems of business regulation in the world. Our method and care in implementing our Community obligations in this field are widely admired by our partners in the Community. But our methods and solutions will not influence our colleagues in the Community and elsewhere unless our law is in a form which is comprehensible, coherent, and up-to-date.
The orthodox solution to the problem of pre-consolidation paving amendment would be yet another Companies Bill later in the course of this Parliament, introduced by the Government as a programme Bill. But I fear that a Bill for this purpose would be likely to contain a series of minor but complex and recondite technical amendments. Other amendments, while of real substance, would not be controversial in a political or parliamentary sense. In view of the fact that over the last 24 years there has been such prolonged parliamentary debate on successive pieces of company legislation, I doubt whether my right honourable friend the Secretary of State for Trade would be able to obtain a legislative vehicle other than the present one, in the foreseeable future. Yet we wish to have consolidation on our statute book as soon as possible, and in the best possible shape, and therefore with the necessary amendments drafted and approved.
The existing procedures which I have described— namely, the 1949 Act procedure, and the more frequently used joint committee procedure— are unfortunately inadequate to achieve the purpose which we have in mind. The new clause which is the subject of this amendment is designed to deal with the difficulties

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subject, I hope, to adequate safeguards, by enabling the necessary amendments to be made by Order in Council on Affirmative Resolution. As is fitting when powers, however narrow, are taken to amend primary legislation by order, the safeguards, which are four in number, are fairly stringent.
The first is that the amendments which may be made are only such as are jointly recommended by the two Law Commissions (the English Commission and the Scottish Commission) as
"desirable to enable a satisfactory consolidation to be produced".
The scope is thus very severely limited. It is proper to assume that the Law Commissions will not recommend any amendment without first satisfying themselves that it would be unlikely to give rise to substantial controversy; and in order to satisfy themselves on that they would no doubt consult the Department of Trade as well as outside interests. If there should be any significant opposition from any quarter to a particular amendment, think it is hardly to be expected that the Law Commissions would persist in recommending it.
The second safeguard is as follows. It is provided in the new clause that the amendments are to come into effect only at the same time, or rather momentarily before then, to be exact, as the Consolidation Act itself. This is provided for by subsection (2)(c). This means that the Joint Select Committee will be able to scrutinise them when the consolidation goes through. In the third place the power lapses, and may not he exercised, after the Consolidation Act has come into force. Fourthly, as I have already indicated, any amendment made under this procedure will be subject to Affirmative Resolution in both Houses. That is contained in subsection (2)(a).
This is of course a legislative innovation. As I have said, before bringing it forward I have taken care to seek the views of a number of distinguished noble Lords, and I am happy to report to the House that their views were overwhelmingly in favour of the proposal. Certain points of detail have been raised. I have undertaken to consider them, and if necessary take account of them by amendments on Third Reading.
I am sorry to have taken up so much time on what is a highly complex matter, but I am very anxious to avoid any charge of putting through a legislative innovation by any form of constitutional impropriety. But I feel that this is more or less watertight; I believe it will be useful, and I hope it will commend itself to the House. I beg to move.
Lord Elwyn-Jones: My Lords, the House will be grateful to the noble and learned Lord for enlightening the darkness of the technicalities with which this matter abounds. I confess that when I first read the proposed new clause it filled me with more uncertainty than conviction, because I had a feeling that the process of consolidation has worked well, we have had a whole flow of consolidation measures through Parliament without difficulty, and I am reactionary enough not to want to disturb that which works well. But I very much see the force of the difficulties to which the consolidation procedures which we now have give rise. Of the value of consolidation there is no doubt. Unhappily, a great deal of our legislation is piecemeal and spasmodic— necessarily so, in a way, because it is
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a response to new developments in a changing society, in a changing economy, and particularly in the field of company law in respect of new practices and procedures in business and in commerce.
In respect of the Companies Acts, there is undoubtedly, as the noble and learned Lord the Lord Chancellor has said, a clear need for consolidation. Therefore, I think that any measure to make that task easier and more effective is to be welcomed. However, I think it is right— and, indeed, the noble and learned Lord has indicated that we are treading new constitutional ground here in some respects— that we should take note of the new procedures.
I venture to ask the noble and learned Lord this. Is this not the first time that statutory status and authority has been given to the recommendations of the Law Commissions? Since they were set up, of course, the Law Commissions' reports have carried very great weight, and often their draft Bills have been reproduced almost without modification, quite frequently as Government Bills or Bills taken up by Private Members, and I know we are all very grateful.
That procedure of Private Members being able to take up reform measures has been of great value, and they have been greatly assisted in that process by accepting the Law Commissions' reports, the immense value of which to Parliament, at any rate, has been that they have always contained, or almost always contained, a draft Bill. But whereas previously we have accepted the value and weight to be attached to the draft Bills and the recommendations of the Law Commissions, I do not think we have gone so far as to say, as does the clause, that a recommendation by one or other of the Law Commissions is a condition precedent to the acceptability of the type of Order in Council which is mentioned in subsection (1) of the new clause. I am not saying that by way of criticism, but it is worth noting that it effects a great step in acknowledgement of the authority of recommendations of the Law Commissions, at any rate in this field.
Now subsection (2)(b) of the clause provides that the Orders in Council shall not come into force unless there is passed one or more Acts consolidating the Companies Acts, and I should like to know— I am not clear in my mind about this— whether that means that the relevant Order in Council will have no effect until that point of major consolidation is reached. I imagine that that must be so; that, so to speak, they lie dormant until activated by the ultimate Companies (Consolidation) Act.
Then I should like perhaps a little more enlightenment on subsection (3), which reads:
"No Order in Council shall be made under this section after any Order in Council so made has come into force".
Does that mean that it is to be a once only Order in Council, and that after an Order in Council under the section has been made there can be no more? That I am not clear about, but perhaps the noble and learned Lord will enlighten us about it.
I ventured in my discussion with the noble and learned Lord the Lord Chancellor, who has been kind enough to take note of the views of others before bringing this before the House, to ask whether he was convinced that this would really serve a helpful purpose in assisting the process of consolidation. He is strongly of that opinion, and I have come round to the view that it

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may well achieve a beneficial effect. I am sorry to have sounded so hesitant about accepting change. On the contrary, I think that where change of this kind is beneficial we should accept it; but the restraints that there have been, and the confidence we have placed in the relevant parliamentary committees in this field in the past, are not unimportant. But the situation in the case of Companies Acts consolidation— and, as I understand it, this clause applies only to Companies Acts consolidation and to the consolidation of no other Acts— is that this is a clause which in my opinion merits the confidence of the House, and I certainly have no intention to oppose it.
Viscount Colville of Culross: My Lords, it is a long time since I was the chairman for a brief period of the Joint Consolidation Bills Committee, but during that period— and, indeed, beforehand, when I was an ordinary member— I appreciated very distinctly what an exceptionally important job was done, largely by the parliamentary draftsmen, in the process of consolidation of the law. I do not wish to depart in any way whatever from the comments which have been made by the noble and learned Lord, Lord Elwyn-Jones, in saying that this sort of innovation is something that one should certainly look at with benevolence. The existing systems are fraught with difficulty. Perhaps the last time there was a paving Bill for a general consolidation that I can remember was the process which concerned land drainage, which was a particularly technical and barren, if not and (which would be the wrong word), subject for such a matter.
So my noble and learned friend certainly has my support on the principle of introducing an innovation here, but I wonder whether he could tell me the answer to one question. He said that the result of the way in which this new clause is drafted would be to enable the Joint Committee on Consolidation Bills to look at the substance of the Order in Council. This is something which would mean this in practice, I think— and perhaps he would help me on this. The Joint Consolidation Bills Committee would of course not be seized of a Bill until after an Order in Council had been made and, I assume, approved by resolution of both Houses under subsection (2)(a). Of course, it would not conic into force at that stage. It would wait until the group or the single consolidation Bill was ready for the Royal Assent. But how is the Joint Committee on Consolidation Bills going to exert any influence over the amendments that are put forward, albeit as the result of the consultation with the two Law Commissions? The fact is— and I see the noble and learned Lord, Lord Simon, there; and I am sure that he will bear me out— that sometimes the technical problems do not surface until a comparatively late stage in the process of the draftsman's preparation and presentation of the Bill to the chairman and, later, to the Joint Committee itself.
The noble and learned Lord, Lord Elwyn-Jones, has pointed out that under subsection (3) no Order in Council shall be made after the initial Order in Council has come into force. Am I to think that what is meant by that is that if the Joint Committee, or, conceivably, Parliament, on recommittal of the Bill, comes to the conclusion that, after all, there is an error or an omission in the Order in Council that has been laid and approved,
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the Government are prepared under this new procedure to withdraw that Order in Council— because it will not yet have come into force; the Bill still being in the stage where it is before Parliament— and to lay a new Order in Council to take account of the defect discovered in the course of the deliberations of the Consolidation Bill Committee?
I should have thought that that followed from the way in which this is drafted; but also I would suggest that it is absolutely necessary that there should remain a degree of flexibility under this new procedure whereby, if some quite small technical mistake which has been dealt with by that time in the Order in Council is discovered, there should, as Orders in Council cannot be amended, be a method by which we should be able to go back and obtain a new Order in Council in time before the Bill comes up for Royal Assent. In that way, the technicality could be properly presented and then we should have a new and flexible procedure which would do justice to this important system. It seems to be an important qualification; and if my noble and learned friend can help, I shall be grateful.
The Lord Chancellor: My Lords, I am grateful to both noble Lords who took part in this debate for the great care with which they have scrutinised the matter. One should not lightly embark on legislative innovation and it is quite right that this should be closely examined. In fact, I invited that in advance. If I may deal in inverse order with the two speakers, I think that the first point raised by my noble friend Lord Colville was an extremely valid one. Probably what I did in presenting the amendment— and it may have been an error— was to telescope two different stages in the procedure.
Before Affirmative Resolution is sought for the Order in Council, it will be scrutinised by the Joint Select Committee on Statutory Instruments and they will make their comments to the House, in the light of which the House, or both Houses, will come to their conclusions. That would be an additional safeguard to those I enumerated. Therefore in response to my noble friend's second point, obviously, if there were an error— and I shall turn to that when dealing with some of the noble and learned Lord's points— which became apparent, one hopes that it would be detected at that stage and, if it could be put right, one could withdraw the Order in Council and substitute one in an amended form.
The Joint Consolidation Committee will examine the amendments only after the Order in Council has been passed; and when the consolidation Bill comes before the committee in the ordinary way, it will only be able to verify that the Bill consolidates the existing law, which, in that case, would include the Order in Council, and then it will be entitled to agree to minor amendments in the accepted sense. It is precisely because the Committee can agree only minor amendments in the accepted sense that one needs this procedure at all. In many ways, it would be much more convenient to put technical amendments of this kind straight to the Joint Consolidation Committee and let it scrutinise them in that way, but I am advised that this would probably not be practicable without primary legislation. However, there will be a double check on it. I certainly wish to give an undertaking that, should

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mistakes be found in an Order in Council and pointed out, then clearly one would withdraw it and substitute the same thing in an amended form with the mistakes cured.
I come to the careful speech of the noble and learned Lord, Lord Elwyn-Jones. The first thing he asked was this. Is it the first time that statutory status and authority are given to Law Commission reports? I think the strict answer is, no, because, under the minor amendments procedure, which has been known since 1966, the same kind of precondition is insisted upon— namely, that, before a minor amendment can be inserted in a consolidation Bill, it has first to go through the Law Commissions. What is new— it is an innovation that I am not trying to gloss over— is the fact that the Law Commission (not to give its recommendation statutory form, but as a precondition to the Government putting the amendments before the House of Lords or Commons at all) would have to recommend those amendments. That is an innovation or, rather, an extension in principle— not merely in detail— of the earlier procedure.
The next point he raised is this. Are the changes in the law dormant until momentarily before the Consolidation Act itself comes into force? The answer is, Yes. The intention, and, I think, the language, of the clause insists that they do not change the law until the commencement date, and that date will be the same but, I hope, prior by a few moments to the actual commencement of the Consolidation Act.
A third and very interesting point he raises is as to subsection (3). This brings me back to my noble friend Lord Colville. It is our intention to have only one Order in Council. Subsection (3) does not, as a matter of fact, so provide. What it provides is that the whole power lapses on the coming into effect of the Consolidation Act. It is our intention to have only one Order in Council. But, because of the kind of point which my noble friend is suggesting, one could conceive of circumstances where mistakes had been made or new difficulties appeared when more than one was necessary. But it is our intention to have only one and that very shortly before the consolidation legislation is introduced.
I am grateful to the House for the careful consideration they have given to this amendment. If anyone were to think that we were guilty of some grave constitutional error, I should have withdrawn it, but I believe what we have done is to take, perhaps in advance, notice of what the Law Commission has recommended in its annual report, applied to a particular and rather important statute.
On Question, amendment agreed to.
[Amendments Nos. 97 and 98 not moved.]
Schedule 3 [Minor and consequential amendments]:
7.50 p.m.
Lord Lyell Lord Lyell moved Amendment No. 99:
Page 115, line 17, after ("1980") insert (", in each place where they occur,").
The noble Lord said: My Lords, this is a minor and clarifying amendment which provides that in each place where the words "the Companies Act 1948
512
to 1980 "appear there shall be substituted the words "The Companies Act 1948 to 1981". It takes account of the fact that in certain of the sections and regulations of the 1948 Act referred to in paragraph 2 of Schedule 3 the words "the Companies Act 1948 to 1980" appear more than once and need to be updated by references to the 1981 Act. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendments Nos. 100 and 101:
Page 116, line 47, leave out ("the Welsh equivalent of those words") and insert ("cwmni cyfyngedig cyhoeddus")
Page 117, line 7, leave out ("the Welsh equivalent of that word") and insert ("cyfyngedig").
The noble Lord said: My Lords, if I may, I shall take Amendments 100 and 101 together. I was hoping that my noble friend Lord Trefgarne was going to address himself to these, particularly in view of his eminent position in what I understand is the Montgomeryshire Society. I understand that these amendments seek to clarify the Welsh wording which has to be used for what we in English say is "public limited company". I understand that the words in brackets are pronounced: "kumni kuff-ungedig kur-heed-us". I believe that singing is forbidden in your Lordships' House, but I have attempted to give a little of the rising and falling tone of the Welsh tongue. I understand that Amendments Nos. 100 and 101 will prevent the possibility of incorrect translation, although I am given to understand that "cwmni cyfyngedig cyhoeddus" translates from English as: "limited company public". This must be due to some peculiarities of Welsh syntax with which— it may surprise your Lordships— I am not yet familiar. I beg to move.
Lord Elwyn-Jones: My Lords, I always thought the noble Lord had courage; but I wish that he had taken more pains about this! It is perfectly obvious that those words, when spoken publicly, read "cwmni cyfyngedig cyhoeddus". It is very simple and so obvious! He has the noble Lord, Lord Trefgarne, beside him— another Welshman. I confirm that the translation from the English into Welsh is accurate and I say this: "yn gyhoeddus", which means "in public", too. I have no opposition to the amendment.
On Question, amendments agreed to.
Lord Lyell Lord Lyell moved Amendment No. 102:
Page 118, line 3, after ("and"") insert ("the").
The noble Lord said: My Lords, this is a minor amendment. It inserts the word "the" before the words "Eighth Schedule" in paragraph 20 of Schedule 3. I understand that the English translation would be better if we include the word "the". I beg to move.
On Question, amendment agreed to.
Lord Trefgarne Lord Trefgarne moved Amendment No. 103:
Page 119, line 31, at end insert—
("35A. In section 17(11) (interpretation of provisions relating to pre-emption rights)—

(a) in the definition of "relevant employee shares" for the word "under" there shall be substituted the words "by a person who acquired them in pursuance of"; and

(b) in the definition of "relevant shares" the following paragraph shall be substituted for paragraph (b)—

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"(b) shares which are held by a person who acquired them in pursuance of an employees' share scheme or, in the case of shares which have not been allotted, are to be allotted in pursuance of such a scheme;".").
The noble Lord said: My Lords, we are bringing this amendment forward in response to the amendment moved in Committee by the noble Lord, Lord Lloyd of Kilgerran, as Amendment No. 153. The noble Lord withdrew his amendment in response to our undertaking that we would bring forward our own amendment to meet his objectives.
This amendment will remove doubts which have arisen in some quarters about the effect of the section as presently drafted. Section 17 sets out the preemption rights of shareholders in a company when the company allots equity securities. Shares and share options allotted in pursuance of any scheme for promoting employee shareholding are intended to be exempt from such pre-emption rights. The definition of "relevant shares" may leave uncertain whether shares acquired under a share option scheme for employees are considered to be exempt, since it is drafted in terms of shares "held" under a scheme. Doubts have arisen from the fact that shares acquired under an option scheme are held, after the exercise of the option, as normal shares, free and clear of any connection with the scheme.
The amendment therefore makes it clear in paragraph (b) that all shares allotted in pursuance of an employees' share scheme, including a share option scheme, are excluded from the definition of "relevant shares"; so the allotment of all such shares is outside the ambit of the pre-emption provisions of Section 17. The amendment in paragrah (a) ensures that references to "relevant employee shares" which may benefit from pre-emption rights include shares allotted in pursuance of a share option scheme. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendments Nos. 104 and 105:
Page 120, line 37, leave out from the beginning to ("shall") and insert—
("(a) the words "or filed" in both places where they occur").
Page 120, line 43, at end insert ("and the words from "or, as" to "applicable)" shall cease to have effect.").
The noble Lord said: My Lords, I shall, if I may, take Amendments Nos. 104 and 105 together. They are consequential upon a series of amendments to which I spoke yesterday, beginning with Amendment No. 51. Unless any Member of your Lordships' House would wish to receive any further opinions from the Government upon these minor technical amendments, I beg to move.
On Question, amendments agreed to.
Schedule 4 [Repeals]:
Lord Trefgarne Lord Trefgarne moved Amendment No. 106:
Page 124, line 3, at end insert—

("1916 c. 58.

Registration of Business Names Act 1916.

The whole Act.

The noble Lord said: My Lords, this amendment is consequential. I beg to move.
Lord Ponsonby of Shulbrede: My Lords, we do not object to this amendment today— it is consequential upon the passing of an earlier amendment today by your Lordships' House— without any commitment that we may not wish to return to this again at a later stage.
On Question, amendment agreed to.
[Amendment No. 107 not moved.]
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 108:
Page 124, line 7, column 3, at end insert—

("Section 54.").

The noble and learned Lord said: My Lords, this is a technical, consequential amendment. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 109:
Page 124, leave out line 35.
The noble Lord said: My Lords, I spoke to this amendment yesterday. It is part of a series of amendments commencing with Amendment No. 48 to which I spoke. It is consequential. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 110:
Page 124, line 44, leave out ("11") and insert ("12(1)").
The noble Lord said: My Lords, this is a consequential amendment caused by the retention of Section 11 of the 1967 Act. Since Section 11 is being retained for Schedule 8A accounts— these are the accounts which will be permissible in the existing form for businesses like insurance companies, shipping companies and banks— it will continue to apply to unregistered companies by Section 54 of the 1967 Act. However, as Section 12 of the 1967 Act is to be repealed, the reference to Section 12(1) in Section 54 must also be repealed in order to disapply the measure from unregistered companies. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 111:
Page 124, line 46, column 3, at beginning insert—

("In section 9(1) the words "(subject to any prescribed exceptions or modifications).".").

The noble Lord said: My Lords, this technical and consequential amendment results from the repeal of certain words in Section 9 of the 1976 Companies Act made by Clause 19 (a) of the Bill before us tonight. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 112:
Page 124, line 47, column 3, at end insert ("Section 28").
The noble Lord said: My Lords, this is a consequential amendment to Amendment No. 43, to which I spoke last night. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 113:
Page 125, line 2, column 3, at end insert—

("Section 39(8).").

The noble Lord said: My Lords, this is consequential upon a number of amendments. I spoke to it last night and I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 114:
Page 125, leave out lines 6 and 7 and insert—

("In section 43, the words "or filed", wherever occurring, and in subsection (8) the words from "or, as" to "applicable)".").

The noble Lord said: My Lords, this is consequential upon Amendment No. 51. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 115:
Page 125, line 13, leave out from ("Act") to end of line 14.
The noble Lord said: My Lords, this is also consequential, and I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 116:
Page 125, line 15, leave out from ("paragraphs") to end of line 16, and insert ("2, 5, 13, 14, 19, 20(a), 24, 30, 36(6) and 46.").
The noble Lord said: My Lords, I hope I may speak briefly to Amendments Nos. 116 and 117 together. These are technical minor amendments and repeal the paragraphs of Schedule 3 to the 1980 Act which I have already specified. These have been superseded as a result of the provisions of this particular Bill. I beg to move.
The Lord Chancellor: My Lords, the noble Lord referred to Amendments Nos. 116 and 117. On my list No. 117 does not exist. Is that right or wrong?
Lord Elwyn-Jones: My Lords, perhaps I might say to the noble and learned Lord that in his absence the noble Lord had to engage in a certain amount of Welsh. It has obviously confused his mind!
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 118:
Page 125, line 28, leave out ("section 41(11)") and insert ("sections 39(8) and 41(11)").
The noble Lord said: My Lords, before moving Amendment No. 118, I must first apologise to my noble and learned friend. Against Amendment No. 117 there is a series of stars which normally in literature conveys the use of obscene or otherwise undesirable language. My noble and learned friend was entirely right: No. 117 does not exist. I regret to say I was speaking from the notes which arrived from the winged messengers and I am afraid I did not check. I beg to move Amendment No. 118. This is consequential upon a series of amendments, with No. 43, which I moved yesterday. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor: My Lords, I hope the House will accept that No. 117 never existed.
Lord Lyell Lord Lyell moved Amendment No. 119:
Page 125, line 30, leave out from first ("The") to second ("of") and insert ("repeals by this Act in section 43").
The noble Lord said: My Lords, this amendment is consequential upon a series of amendments with Amendment No. 51, which I moved yesterday. I beg to move.
On Question, amendment agreed to.

Forestry Bill
Brought from the Commons; read 1a, and to be printed.

Matrimonial Homes and Property Bill [H.L.]
8.4 p.m.
Lord Simon of Glaisdale: My Lords, I beg to move that this Bill be read a third time. In view of the fact that I have got three very minor amendments I will, with your Lordships' permission, postpone the few general words I have to say about this Bill until the Motion, That the Bill do now pass. I beg to move that the Bill be now read a third time.
Moved, That the Bill be now read 3a.— (Lord Simon of Glaisdale.)
On Question, Bill read 3a.
Clause 2 [Dwelling house subject to mortgage]:
Lord Simon of Glaisdale Lord Simon of Glaisdale moved Amendment No. 1:
Page 3, lines 6 and 7, leave out ("any person") and insert ("a spouse").
The noble and learned Lord said: My Lords, I beg to move the first amendment on the Marshalled List. It comes at the suggestion of the Building Societies Association, which has taken a close interest in this Bill, for which I am very grateful. I think probably the change does not affect the meaning of subsection (2) but it does ensure consistency of language since "a spouse" are the words used in subsection (1), for example, at line 22 on page 2; and it does obviate any danger of argument that "a person" might include, say, a cohabiting mistress or a child of the family, who are not intended to be covered by the words in subsection (2). I beg to move.
The Lord Chancellor: My Lords, perhaps I should say, both in connection with Amendment No. 1 and in connection with the following two amendments, that the Government advise the acceptance of all three.
Lord Elwyn-Jones: My Lords, we do on this side, too.
On Question, amendment agreed to.
Lord Simon of Glaisdale Lord Simon of Glaisdale moved Amendment No. 2:
Page 3, line 8, after ("1(5)") insert ("or (5A)").
The noble and learned Lord said: My Lords, this is consequential on the new subsection (5A) inserted by Clause 1, and is purely a drafting amendment. I beg to move.
On Question, amendment agreed to.
Schedule 2 [Protected tenancies, etc.]:
Lord Simon of Glaisdale Lord Simon of Glaisdale moved Amendment No. 3:
Page 13, line 21, leave out ("section") and insert ("Schedule").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 3. It is purely to correct a drafting slip: but even Solon nods, and so it is necessary to make the amendment at this stage. I beg to move.
On Question, amendment agreed to.
Lord Simon of Glaisdale: My Lords, I beg to move that the Bill do now pass. The great Victorian solicitor, Edwyn Field, used to say that those who dwell in and by the House of the Law should consider that they hold on a repairing lease. I have spent most of my adult life in and by the House of the Law, so I was gratified when my noble and learned friend who sits on the Woolsack yet again suggested that I might sponsor in your Lordships' House a Law Commission Bill. The previous one passed in one Session and very much hope that this may do so.
I do not claim, and have never claimed, that this is a major act of renovation of the law. The credit for that in this field belongs to the late Lady Summerskill and my noble and learned friend Lord Gardiner. But it does patch up parts which time has disclosed can be improved, and I hope that your Lordships will feel it is useful. I am most grateful for the encouragement that I have had in its passing.
Nor can I claim that this is the most important of the three Bills that were drafted by the Law Commission and annexed to their third report on family property. On the contrary, it is really the most minor and proved quite uncontroversial. To my mind, the most important is the Bill that I had the honour to introduce last Session, that I withdrew at the request of my noble and learned friend on the Woolsack, so that the Law Commission could reconsider it in the light of a decision of your Lordships' House. I hope that that reconsideration will soon be consummated. I hope that the Bill will be reintroduced, though I am bound to say my own view is that it ought to be a Government Bill. But, in the meantime, I commend this present Bill to your Lordships. My Lords, I beg to move.
Moved, That the Bill do now pass.— (Lord Simon of Glaisdale.)
8.10 p.m.
Lord Mishcon: My Lords, the noble and learned Lord has spoken with typical modesty, which is much beloved in this House, because it is associated so much with his name, as he has piloted this Bill to its first port of call. We on this side most certainly wish that it should go with all speed for the rest of its voyage into another place and on to the Statute Book.
I am going to take from the noble and learned Lord the Lord Chancellor my mission tonight, because on the Second Reading he made two remarks very pithily. The first was:
"Our view is that this should become the law with as little discussion as possible".
His second very pithy remark, in order to discourage
518
any amendments that might be put down by those who appear to love to put down amendments— and I plead guilty, at least, to participating in that extremely interesting game— was:
"After all, the drafting has been done by an expert and there should be no controversy about it".— [Official Report, 9/3/81; col. 63.]
So the less I say tonight the better, except that I thought, again, that it was typical of the noble and learned Lord that he should pay tribute to, first, the memory of my noble friend the late Lady Summerskill and, secondly, to the work that was done— not only in this connection, but in regard to law reform, too— by my noble and learned friend Lord Gardiner who is in his place tonight.
This is a good Bill. It may be a modest Bill in regard to family law, but it does some very fine things. It reforms the law in regard to occupation; it gives power to our divorce courts to deal with the very necessary matter of sale of the matrimonial home; it gets over the difficulty in regard to trustees who might own a house, too, and it therefore gives very valuable rights, especially to the wife of a marriage which has, unfortunately, gone to pieces.
For doing this job and for piloting the Bill, we are all very grateful to the noble and learned Lord, who has shown distinct courage in this field, supported in the past by a most distinguished career in family law, for which my profession is undoubtedly grateful. Those are the only observations that I have to make, beyond repeating that one wishes this Bill well in its future course.
The Lord Chancellor: My Lords, before we part with this Bill, I should like to add my word of gratitude to my noble and learned friend on the Cross-Benches to those of the noble Lord, Lord Mishcon. I can honestly say that if he had not undertaken this labour and pursued it with such industry and such skill, we could never have hoped to get it through this Session. As it is, it is at the mercy of another place, but I sincerely hope that no dissentient voice will be heard when it goes on its voyage. I hope that it may receive a fair wind and unruffled waters.
On Question, Bill passed, and sent to the Commons.

Interpretation of Legislation Bill [H.L.]
8.13 p.m.
Lord Simon of Glaisdale: My Lords, on behalf of my noble and learned friend Lord Scarman, I beg to move that this Report be now received.
Moved, That the Report be now received.— (Lord Simon of Glaisdale.)
The Lord Chancellor: My Lords, may I just say that my noble and learned friend Lord Scarman has a family anxiety at the moment and that is the reason for his absence tonight. I am sure that the House would wish me to express our sympathy and strong support for him.
On Question, Report received.

  VIETNAMESE REFUGEES: ACCOMMODATION
  VIETNAMESE REFUGEES: ACCOMMODATION
  IMMIGRANTS: DETENTION IN PSYCHIATRIC HOSPITALS
  IMMIGRANTS: DETENTION IN PSYCHIATRIC HOSPITALS
  PENSION AGE REDUCTION FOR MEN
  PENSION AGE REDUCTION FOR MEN
  THE CONGENITAL DISABILITIES (CIVIL LIABILITY) ACT 1976
  THE CONGENITAL DISABILITIES (CIVIL LIABILITY) ACT 1976
  AGE ESTIMATES: METHOD USED AT DACCA
  AGE ESTIMATES: METHOD USED AT DACCA
  JURY CHECKS
  JURY CHECKS