Sitting of 20 October 1981

Preamble
The House met at half-past Two o'clock

European Community (Agriculture Ministers' Meeting)
The Minister of State, Ministry of Agriculture, Fisheries and FoodWith permission, Mr. Speaker, I wish to make a statement about the Council of Agriculture Ministers' meeting in Luxembourg on 19 October, which met under the chairmanship of my right hon. Friend the Minister of Agriculture, Fisheries and Food. I represented the United Kingdom.
The Council had a general debate on the Commission's guidelines for future decisions on the common agricultural policy contained in its report under the Council of Foreign Ministers' mandate of 30 May 1980. There was a constructive discussion, out of which widely differing views emerged. These issues will now be considered by the Foreign Affairs Council in preparation for next month's meeting of the European Council.
I emphasised the very real need both to contain the cost of the CAP and to deal with the problems of surpluses. We supported the Commission's recommendation for a strict policy on prices, particularly for products in surplus, and the need to relate these more closely to world prices. Regarding measures to discourage unwanted production, I opposed those levies on production which discriminate between producers.
I strongly supported the Commission's view that there must be much stricter controls on national aids.
One country, France, advocated restrictions on the import of certain feeding stuffs from third countries. I opposed this because of its adverse effect on food and feed costs.
The changes recommended by the Commission should continue to slow the growth in agriculture spending. I stressed that in our view the rate of growth in agriculture expenditure should be markedly below the growth in the Community's own resources.
The Commission reported on its further discussions in the Netherlands to eliminate rapidly the preferential gas tariff available to Dutch growers. The Commission had sought to remove this distortion from the start of the 1982 heating season. Supported by the great majority of member States, I emphasised again the serious difficulties faced by United Kingdom growers, and the urgency of a solution for the 1981 heating season about to start. Mr. Dalsager, the Commissioner, said that he would be presenting his proposals to the Commission this week, and that they would be for the current season.
The Council also discussed the recent Commission proposals on battery cages for hens. I said that after a reasonable transitional period the cage area for each bird should be increased to 600 square centimetres. I also made clear that there must be on-the-spot inspection to ensure fairness Community-wide. A number of differing views were expressed, but some countries supported the United Kingdom in the improvement of standards. We shall press for progress on this at the next Council.
The French requested adjustments in MCAs to help their pig industry. The Commission refused this.
Mr. Roy MasonI am obliged to the Minister of State for his report. I am sure that he is aware of the extreme anger that is felt in the British glasshouse industry, and in the House of Commons, registered by
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more than 250 Members who signed a motion dealing with the plight of the glasshouse industry. Is he aware that the industry has suffered considerably in recent times due to subsidised gas being provided to Dutch glasshouses, thereby creating unfair competition and cheap imports? Meantime, the Commission has not taken any action against the Dutch, leaving the problem to national Governments to solve as best they can. As a result of, I think, the Minister's pressure within the Council, the Commissioner is now looking at a formula which may equalise fuel costs in the glasshouse industries within the whole European Economic Community. Is that so? When is it likely to be agreed by Ministers? Who will pay?
On the question of battery hen cages, the animal welfare lobby will have to be recognised. There are growing pressures on the subject throughout the Community. I hope that the Minister will bring constant pressure to bear on the other Agriculture Ministers in the Council to achieve harmonisation on larger cage sizes. I believe that we have the best record in the EEC.
Reform of the common agricultural policy is still as urgent as ever. We must vigorously demand action to stop surplus food production, with its subsidised exports and high costs of storage. The latest example is sugar. The African, Caribbean and Pacific countries, already disturbed at the raw deal that they got in the price review, now witness millions of tons of surplus sugar being produced by beet growers in the EEC. They fear that this may be dumped on world markets at subsidised prices, thereby ruining their market.
Although that sugar is at present being stored, the threat will persist. Even now, the stocking of millions of tons of sugar is a further financial burden on the CAP and the Community budget. I therefore ask the right hon. Gentleman and his right hon. Friend, who is Chairman of the Agriculture Council, what they will do to get the guilty members of the EEC—not the United Kingdom, because we have cut back our beet quotas—to stop this absurd and costly process.
Finally, in view of the difficulties that the Minister experienced yesterday, does he visualise any progress being made on the mandate dealing with the reform of the CAP, either at the Foreign Ministers' meeting or even at the summit meeting in November?
Mr. Buchanan-SmithAs the right hon. Member and the whole House know, we are seriously concerned about the position of the glasshouse industry and the unfair competition with which it has to contend. We were not alone in the Council in this regard. We were strongly supported by almost every other country, and we shall continue to press very hard.
We do not yet know the proposals that the Commissioner intends to put forward. I repeat that the Commissioner intends to put forward the proposals this week and they would relate to the current season, not to the 1982 season, to which the Commission proposals related previously. That is a considerable improvement.
As I am sure the right hon. Gentleman knows, we have not stood aside from the problems of our glasshouse growers. In the interim period, until the matter is settled satisfactorily—and it can be settled satisfactorily only on a European basis—we have given £5.5 million towards the fuel costs of our glasshouse industry.
I am grateful for the support that the right hon. Gentleman gave to the line that I took in the Council on

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battery hen cages. Again, we are not alone. Germany and Denmark, in particular, joined us in pressing for higher and improved standards. We shall continue to work for them.
On the matter of reform of the CAP, I was interested in what the right hon. Gentleman said about sugar. However, I remind him that last year, because of the effect of the common agricultural policy, we protected British consumers from prices in world markets that were higher than in the Community. The CAP acted directly in the interests of British consumers.
As regards negotiations with the ACP countries, I beg the right hon. Gentleman to look at the effect on British refiners. What we agreed in April was a package which raised the prices for ACP producers and which also increased the margin for refiners in this country. I know that the right hon. Gentleman shares my concern for the protection of jobs in the sugar refining industry. Therefore, I hope that he will support the line that we have taken.
As to the mandate discussions going to the Foreign Ministers Council and the European Council, a great divergence of view was expressed yesterday, yet I believe that we had a constructive discussion in which a number of very useful points were put. This matter must now go to the Foreign Ministers and then to the European Council. I believe that we made a very good start on this yesterday.
Sir Derek Walker-SmithIs not the subsidisation by the Dutch of energy for their horticulture proving to be a very protracted and slow-moving saga? Is it not time that concern was reflected in action, and, in particular, what are the Commission's intentions for bringing the appropriate proceedings in the European Court of Justice to quash the infringement of distortion of competition, the prevention of which is specified as one of the cardinal principles of the EEC Treaty?
Mr. Buchanan-SmithAs my right hon. and learned Friend knows, the Commission did not propose to bring forward harmonisation until the autumn of 1982. I and other Ministers there regarded this, as my right hon. and learned Friend does, as totally unsatisfactory. That is why we pressed the Commissioner for earlier action. He has been in discussion with the Netherlands Government, and, given the fact that he will be bringing forward proposals this week in relation to the current heating season, I think that we should wait to see what those proposals are. If we find that those proposals are not satisfactory, we shall certainly press the Commissioner regarding action in the European Court.
Mr. Robert MaclennanI understand the Minister's arguments against the extension of State aids and the continuing pressure downwards on prices as the Government's general approach to the reform of the CAP, but is he quite confident that in taking the line that he has he will not be putting at risk some British marginal farmers who may be dependent upon State aids in the future?
Mr. Buchanan-SmithI ask the hon. Gentleman to make a distinction between those aids which originate within the actual State and those which undoubtedly distort competition between different countries and create gross unfairness, particularly for many United Kingdom producers.
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I accept the hon. Gentleman's point regarding the effects of restriction on prices. What we discussed yesterday was that, in relation to those areas that had difficulties as a result of price policies, one had to look at income aids in particular sections of agriculture in difficulty. That is part of the mandate discussion, but we believe that that must be dealt with on a Community basis and not through national aids.
Mr. John WellsWill my right hon. Friend give an assurance that if the proposals that are to be laid this week, to which he has referred two or three times, do not produce any goodies for some considerable time, our Government will take unilateral action on the glasshouse question? We are all grateful for the £5½million, or slightly more, that has been found, but that money has now gone. My right hon. Friend has referred to the current season starting now. The British grower is in great difficulty, and we must have swift action.
Is my right hon. Friend aware that British confectionery manufacturers are having to pay considerably more for their sugar than is paid by their competitors in Europe, which is therefore having a very adverse effect on British confectionery manufacturers?
Mr. Buchanan-SmithI shall look into the second point. If my hon. Friend has more details, I should be grateful if he would give them to me.
As regards the major point about glasshouse growers, I hope that there will not be need for unilateral action, because on this issue the United Kingdom is by no means alone. Every other country in Northern Europe feels just as strongly as we do. I am sure that if the Commission comes forward with unsatisfactory proposals we shall not be alone in trying to seek a quicker and swift solution. We shall be in the van of that.
Mr. Colin ShepherdIn my right hon. Friend's quest to deal with the matter of surpluses in the forthcoming proposals, and his expressed anxiety in that respect, will he remember that surplus is beaten only by shortage, and that good housekeeping calls for the provision of a modest excess of production over requirements if there are not to be shortages which will cause stress?
Mr. Buchanan-SmithI certainly agree with my hon. Friend about that. One of the responsibilities that I stressed in the Council yesterday is to maintain the security and stability of supplies to the housewife. Indeed, I say to those who criticise the CAP that this has been one of its achievements. We must not be misled—I am afraid that some people are misled—into believing that small quantities of food available in the world at cheap prices are the right way to found an agricultural policy or food policy for the producer or the housewife.
Several Hon. Members rose—
Mr. SpeakerOrder. If hon. Members are good enough to co-operate with me by asking brief questions, and if the answers are brief, I hope to be able to call all those who have been rising.
Mr. Geraint HowellsWhich products that we produce in this country are in surplus now? How much does it cost to keep them in the intervention system? Will the Minister comment on the marginal land survey and the

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Government's proposals to help in relation to hill and marginal land? Will those proposals be made known this year?
Mr. Buchanan-SmithIf the hon. Gentleman wants precise figures on the costs of storing what surpluses there are, I shall be happy to provide them. As he knows, for the Community as a whole, the two major products are milk and sugar. I very much commend the good efforts of the milk marketing boards and dairy companies in extending the markets for United Kingdom produce abroad, and in substituting United Kingdom produce for imported produce in this market. That is an area in which we need a considerably greater effort.
The question of marginal land production was not covered at yesterday's Council.
Mr. Albert McQuarrieWas the question of the regulations introduced by the Minister of Agriculture on the question of the turkey and poultry industries and the banning of imports from France on the grounds of environmental health and Newcastle disease raised at the meeting? If it was, will my right hon. Friend give an assurance that in no circumstances will those regulations be eased so long as diseases are liable to occur, especially when our turkey and poultry industries are so desperately in need of assistance and we are coming to the time when their trade will be beneficial to the nation?
Mr. Buchanan-SmithYes, the question was raised. There was no substantial discussion on it because the Commission has asked the United Kingdom to comment on what it is doing. We shall be presenting our comments on this matter before the end of this month.
We would not have introduced this measure if we did not believe that it was necessary for the protection of the health of British poultry stocks. Having introduced that policy, we shall continue to defend it vigorously.
Mr. Stanley NewensDoes the Minister recognise that the longer that effective action to rectify the position of British glasshouse growers is delayed, the greater the damage that will be done to them, because at present they are having to make decisions about next year? Therefore, will the Minister make it clear that the Government will in no circumstances be prepared to stand by and allow the British glasshouse industry to collapse, and, if necessary, that they will take unilateral action to see that it does not collapse?
Mr. Buchanan-SmithOn the first part of the hon. Gentleman's question, he could not have put the point better than I did at yesterday's meeting of the Council of Ministers. I hope that he will at least acknowledge the improvement that we have so far achieved. The Commission is bringing forward proposals not for the 1982 season but for the current season. I accept that growers are now planning their crops for this season. In reply to earlier supplementary questions, I said that if the Commission did not come up with satisfactory proposals we should strongly press for whatever action might be needed.
Mr. Robin Maxwell-HyslopWill my right hon. and hon. Friends get together with their counterparts in Germany, Belgium and France so that all of them put on countervailing duties, as they are entitled to do under the Treaty of Rome? Would not that consolidate and
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concentrate the mind of the Agriculture Commissioner quite remarkably and enable him to produce an alternative way of dealing with the problem?
Mr. Buchanan-SmithWe are already working in close touch with our colleagues in those countries. If we receive unsatisfactory proposals from the Commissioner, we shall get in touch with them to see what further action may be needed and we shall co-operate with them.
Mr. Thomas TorneyDoes the Minister agree that since its inception the common agricultural policy has been prejudiced against the United Kingdom farmer, food producer and consumer? Would it not be better if the hundreds of millions of pounds that Britain pours into the CAP were used in direct aids to farmers, food producers and consumers?
Mr. Buchanan-SmithI do not agree with the hon. Gentleman. As I hope he will acknowledge, the CAP has brought considerable benefits in terms of security of food supply. I hope that he will recognise that over the years of the CAP we have seen a considerable improvement in Britain's self-sufficiency as regards the foodstuffs that we grow. I hope that the hon. Gentleman will stop such sniping at the CAP and that he will acknowledge some of the benefits to both producer and consumer alike.
Sir Walter CleggIs my right hon. Friend aware that he will gain immense support from both sides of the House and from the country for the tough line that he is taking on the growers' problem? Will he tell the public—through the medium of this House—that English tomatoes, especially Fylde tomatoes, are much tastier than Dutch tomatoes?
Mr. Buchanan-SmithI should like to add that Scottish tomatoes are extremely tasty as well.
Several Hon. Members rose—
Mr. SpeakerOrder. If I were not completely impartial, I would mention another tomato.
Mr. Nigel SpearingDid the Council of Ministers discuss the degree to which the common agricultural budget is going under or over target? Does not the right hon. Gentleman agree that, whichever way the budget is going, it is impossible to budget for this matter and that if it is under budget it could be over budget next year?
Mr. Buchanan-SmithI am sure that the hon. Gentleman will be disappointed to know that the CAP is under budget. We are currently running at about 0.87 of the 1 per cent. of the VAT ceiling. Therefore, the CAP is well within the budget. The hon. Gentleman will also be disappointed to be reminded that during the last three years of the Labour Government, from 1976 to 1979, expenditure grew by 87 per cent., whereas in the three years from 1979 to 1982 it rose by only 33 per cent. I assure the hon. Gentleman that we shall continue with our policy to contain that expenditure, because we have proved that it can be done.
Miss Janet FookesMay I remind my right hon. Friend that the animal welfare lobby, both in this country and in other European countries, will be satisfied with nothing less than the orderly phasing out of the battery system, as advocated by our Select Committee on Agriculture?
Mr. Buchanan-SmithI am aware of the views held on this subject. I am sure that my hon. Friend would acknowledge that the effect of completely going out of battery production would be to have a dramatic impact on the price of eggs. First, we must try to ensure that we have better-sized cages for battery hens and we must follow the recommendations of some of the bodies that have investigated the matter. Secondly, we should continue to pursue the study of alternative means of production to that of the battery cage. I made that point yesterday in the Council of Ministers.
Mr. Norman AtkinsonThe point that the Minister has made about battery hen cages goes in the right direction, but does he not realise that 600 square centimetres is little bigger than the size of the Order Paper? In any language, to imprison a bird within such a small floor space must constitute absolute cruelty. If the Minister is not prepared to pay the price for the abolition of cruelty to birds, he should be firm in demanding that the floor space in battery cages should be four, five or even six times the size of the bloody Order Paper.
Mr. Buchanan-Smith rose—
Mr. SpeakerOrder. I am not quite sure whether I heard the hon. Gentleman, but if he said what I rather fancy he did say I should tell him that that is not parliamentary language and is not the language used in this House.
Mr. AtkinsonYou are right, Mr. Speaker. I withdraw the adjective that I used, and I accept that it was not parliamentary language. At least it makes the point.
Mr. SpeakerI am much obliged to the hon. Gentleman.
Mr. Buchanan-SmithAs the hon. Gentleman will have realised from my statement, we are pressing strongly for improvements in standards and we shall continue to do so. I am glad to say that we have support from other countries. Although we want to improve the standards in relation to battery hens, we must be aware of the likely effects, particularly on the price of eggs. If we abolished the battery cage system and moved to a system of free-range hens, there might be an 80 per cent. increase in the price of eggs. The Government are also responsible for looking after the needs of consumers.
Mr. David MylesGiven that the increase in production of milk and milk products has decreased to a trickle, and given that export restitution on milk products costs much less, will my right hon. Friend consider abandoning the collection of the milk co-responsibility levy, which is an increased burden on producers and which could cause the price of milk to consumers to increase?
Mr. Buchanan-SmithThe level of the co-responsibility levy is decided at the annual price review. At the next price review I shall bear in mind my hon. Friend's point. Yesterday, at the Council of Ministers, we made it clear—my hon. Friend was right to point this out—that it makes no sense to have a flat rate levy that the producer has to pay and which in turn raises the price to the consumer. It would be far better to hold down the price of the commodity instead of having the flat rate levy.
Sir Frederick BurdenAlthough I accept the problems associated with abolishing battery cages at present, may I ask my right hon. Friend to give
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an assurance that every other method of egg production will be considered? Today my right hon. Friend has shown that the Government are concerned about the size of battery cages. Will he therefore introduce regulations to ensure that we at least expand the size of battery cages so that the worst cruelty that is now accepted is abolished first in this country?
Mr. Buchanan-SmithI accept my hon. Friend's point about alternative forms of production. As he knows, this subject is being pursued by the Agriculture Departments in the United Kingdom. Consideration is also being given on a European scale. Yesterday I particularly asked the Commission to co-ordinate the efforts made in the different countries so that the results of research carried out in the different areas could be properly co-ordinated.
Mr. Geoffrey Johnson SmithMy right hon. Friend has told the House about the pressure being brought on the Government to drop the ban on the imports of French poultry. Is any pressure being put on the French Government to stop their unscrupulous subsidising of the French poultry industry?
Mr. Buchanan-SmithI raised that point yesterday in relation to the different national aids that countries give. As my hon. Friend knows, the Commission has declared that some of the French national aids are illegal and others are still under investigation. I assure my hon. Friend that we shall continue to press that point.
Mr. John TownendIs my right hon. Friend aware that his statement will be welcomed by the glasshouse industry, particularly as he said that the Commission's proposals are imminent and will apply to the current season? However, is he aware that unless action is taken quickly much of the industry will be unable to survive another 12 months like the last 12 months?
Mr. Buchanan-SmithYes. Precisely because of the urgent state of the industry, my right hon. Friend introduced an aid scheme involving over £5½ million. I believe that money speaks better than words, and we have done it.
Mr. Barry HendersonAfter my right hon. Friend's contacts with Ministers and Commissioners in and out of the Council chamber, did he come away from Brussels more or less optimistic of being able to deliver before Christmas a package marked "Common Fisheries Policy"?
Mr. Buchanan-SmithThere was no discussion about the common fisheries policy at the meeting of Agriculture Ministers. There is to be a meeting of Fishery Ministers next week. I might be in a better position to answer that question then.
Mr. Tony MarlowI am delighted that my right hon. Friend is fighting so vigorously for reform of the common agricultural policy. I anticipate that he is not over-optimistic that he will be successful. It will take a long time, but in the meantime will he consider asking the Community for compensation for that part of our food which we buy from the Continent at common agricultural policy prices and above world market prices, which my right hon. Friend himself said yesterday will involve a bigger gap in the future than it has in the past and is a burden additional to that of the budget and support for our own agriculture?
Mr. Buchanan-SmithI should be interested if, in return, my hon. Friend would suggest giving back to the Community money that Britain gained in instances when prices in Britain were lower than in the world market.
Mr. Gavin StrangI should like to comment on the Minister's reply to my hon. Friend the Member for Harlow (Mr. Newens). Is the right hon. Gentleman aware that we accept that he is concerned about the position of the glasshouse industry and hope that EEC action will end the unfair competition from the Netherlands? If that does not succeed, does the Minister accept that there is no alternative to national action, either by a comprehensive national energy policy or national protective measures? Will he give an assurance that the Government will address themselves to these matters quickly if necessary?
Mr. Buchanan-SmithIn relation to national action, money speaks better than words. The Government have already proved that they will not stand aside. The hon. Member for Edinburgh, East (Mr. Strang) has experience in these matters. He will know that it is foolish to anticipate publicly at this stage what we might do when, in the course of this week, the Commission is making proposals to meet our objections.

Companies (Transfers to Channel Islands and Isle of Man)
4.4 pm
Mr. George FoulkesI beg to move,
That leave be given to bring in a Bill to prohibit the transfer of funds from companies registered in the United Kindgom to subsidiaries of those companies or to companies of which they are subsidiaries registered in the Channel Islands or the Isle of Man otherwise than in settlement of bargains at arm's length.
You and I, Mr. Speaker, are paying more tax than might otherwise be necessary because of tax dodgers. Even more important, my constituents are paying more tax. Even worse, they are suffering public services of a much poorer standard because of tax dodgers. The Cabinet might have been saved this morning's discussion if, instead of examining the further cuts, it pursued the tax dodgers.
The hon. Member for Aberdeen, South (Mr. Sproat) has often made it his business to highlight the so-called social security scroungers. I make it clear that we do not condone illegality in claiming social security or other benefits, but public attention and Government resources concentrated on that abuse far outweigh its size and importance compared with the scandal of tax evasion and tax avoidance.
Illegal tax evasion needs to be tackled more vigorously by the Government, but there is also a need for much greater effort to tighten up on currently legal tax avoidance. This Bill is intended to deal with one small aspect of that. The Bill deals with tax avoidance through the Channel Islands and the Isle of Man. That does not mean that I am not equally concerned with money lost to the United Kingdom Revenue through other tax havens such as the Cayman Islands. There is an equal need for urgent action on all tax avoidance.
Indeed, taking up the challenge of the island Governments earlier this month, I visited Jersey and Guernsey to see the position for myself. Nothing that I saw convinced me that I was wrong about my intentions. Indeed, the reverse was true. I was preceded on my visit by two Tory Members who attacked me for introducing my Bill. The hon. Member for Thanet, East (Mr. Aitken), however, cannot be said to be a disinterested observer, since he has just bought a Guernsey bank. The hon. Member for Aberdeenshire, East (Mr. McQuarrie) seemed to think that it was all right for Tory Members to pursue private interests in Gibraltar but not for Labour Members to pursue the public interest in the Channel Islands.
I remain convinced that the use of the Channel Islands and the Isle of Man as tax havens is doubly disturbing because they depend so much on the United Kingdom and its services, yet they provide an easily accessible, English-speaking, comfortable bolthole for every type of avoidance of United Kingdom tax which could and should help to pay for those services. The islands rely upon the United Kingdom for defence. Islanders travel abroad on British passports, yet only the Isle of Man pays a token contribution towards the services. For any education, health, prison and other services beyond the basics, residents of the islands have to come to the United Kingdom.
A visitor to the islands can see that almost every aspect of life relies on the relationship with the mainland. However, the Governments on the islands actively

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encourage their use for tax avoidance. The level of tax is kept down to 20 per cent. to attract evaders, despite deteriorating public services on the islands which are already causing disquiet among native islanders, as I discovered when I visited them. The profits on which tax is levied are negotiable with the island authorities.
So-called stability is provided on the islands by feudal electoral systems that stifle potential opposition. Many of the islands' Government members are made directors of the banks and companies that are increasingly flocking to the islands.
For some time now, the islands have been tax havens for individuals—some of the less respectable novelists, sportsmen and entertainers who built their fortunes through the British public but who do not want to contribute towards our services.
Increasingly, the setting up of trusts to avoid United Kingdom tax has been developed. Sir Charles Clore's attempt to avoid capital transfer tax on the sale of his Hertfordshire estate is the subject of detailed legal action.
However, my principal concern today is the way in which companies are being set up to avoid United Kingdom tax by various means. If I describe the methods adopted, hon. Members might be made aware of the need for urgent action.
New companies are being set up on Jersey at the rate of about 50 a week. That is not bad for an island of about 70,000 people. However, the islands do not allow individuals to become resident to conduct business on the islands, so nominees from among the island lawyers and bankers are appointed to run the companies. It is inconceivable that United Kingdom or multinational companies would allow major decisions to be taken by the nominees. The sham company, therefore, receives so-called recommendations from the real owners, which of course, "acting on their own discretion", they nearly always approve.
Such island lawyers can receive as much as £500 or £1,000 for each company for which they become nominees. Some firms can take on hundreds and sometimes thousands of companies, thus earning hundreds of thousands of pounds each year for acting as fronts for tax avoidance.
The situation is farcical in the case of Sark, which has a population of only 600. Many companies register there. Boatloads of directors arrive for meetings to satisfy the requirement that a company is deemed to be managed and controlled where the directors meet.
There are many other examples that are too numerous to mention. They are besmirching the name of the offshore British Islands. One wonders why nothing has been done about it by successive British Governments, including Labour Governments. It has been argued that the tax havens benefit the United Kingdom by attracting foreign funds. However, of about £2,000 million held on deposit in Jersey banks, less than 10 per cent. is derived from outwith the United Kingdom or Channel Islands. Indeed, there is little advantage anyway for many foreign investors using the islands rather than the United Kingdom, and the only foreign funds likely to be attracted are of doubtful origin, such as the proceeds of crime, or of investors who wish to evade tax in their own country. As rumoured recently, the islands are used as a conduit for funds from South Africa.
I concede that the Revenue has partly recognised the problem. It has highlighted it in two consultative papers
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produced in January. However, we need action now. We need action to change the definition of "residence" or "domicile" of a company to stop the operation of sham companies. We need action to give power to the British Government to obtain information about companies registered on one of the islands with United Kingdom interests.
It is indicative of the island Governments' attitude that companies are not required to make annual accounts public, as they are in the United Kingdom. The required secrecy for tax dodgers is thereby guaranteed.
We need action to give the Inland Revenue powers to obtain information from the Channel Islands and the Isle of Man for United Kingdom tax collection purposes. Above all, we need action to limit the transfer of funds between United Kingdom companies and linked companies on the islands to prevent the avoidance of United Kingdom tax in preference to the favourable tax rates on the islands.
The proposed Bill is intended as a small contribution towards that. The real action must come from the Government. The Kilbrandon Commission recognised the abuses in 1973 and Lord Crowther-Hunt and Professor Peacock expressed concern that it did not look in detail at that matter. Since then, the growth of the islands as tax havens has mushroomed, with the Isle of Man now in open competition with the Channel Islands to attract tax dodgers that bleed off vital revenue from the United Kingdom.
All hon. Members should support the Bill. My colleagues on the Labour Benches will do so on grounds of equity and social justice. Equally, Conservative Members should bear in mind the now immortal words of the former Minister of State, Treasury, the hon. and learned Member for Dover and Deal (Mr. Rees), who is with us today. He said "We need the money." It is much better to get the money that his Government need from the tax-dodging millionaires than from the increase in taxes that the hon. Member for Aberdeenshire, East says he will revolt against, or from the forecast further attack on the standard of living of our pensioners.
4.13 pm
Mr. Albert McQuarrieI declare that I have no financial or other interest in companies that are registered in the Channel Islands, the Isle of Man or Gibraltar. The hon. Member for South Ayrshire (Mr. Foulkes) took the liberty of mentioning Gibraltar and said that private interests could have companies there. It is obvious that he has not done his homework. He should know that Gibraltar has never been classified as a tax haven. It pays as much tax as the United Kingdom. [HON. MEMBERS: "He did not say that"].
I oppose the motion because it is an intrusion into the rights that have been vested in the Parliaments of the Channel Islands. The hon. Gentleman is well aware that it is within the power of those States to decide which ordinances should be legislated for, the registration of companies within their territories and the nature of tax collection.
The hon. Gentleman made great play of the fact that there was insufficient legislation in the United Kingdom. Section 482 of the Income and Corporation Taxes Act 1970 has been the main provision for counteracting international tax evasion in the corporate sector for many years. That section makes unlawful company registrations, transfers of trade abroad and certain transactions

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relating to overseas companies in a United Kingdom group without Treasury consent. The penalties for infringement include imprisonment and fines. In addition, the Board of Inland Revenue has powers under section 17 of the Finance Act 1975 to obtain information about overseas companies, including shareholdings, accounts and details of their underlying transactions. There appears to be adequate legislation in Britain to cater for any attempt made to transfer companies to those alleged tax havens.
Mr. Dennis CanavanWho wrote the hon. Gentleman's speech?
Mr. McQuarrieI wrote my speech. If the hon. Gentleman needs any help with speech writing at any time, I shall be glad to help him.
The hon. Member for South Ayrshire is ever ready to pounce on any issue at home or abroad that is abhorrent to his Socialist doctrines. He should adopt the measures that he recommended to hon. Members when he was quoted in the Jersey Evening Post on 23 September 1981.
He said:
"Those MPs who seem to spend more time on their own financial interests than the interests of the constituents they were elected to represent do a great disservice to our democratic system".
That newspaper also quoted the hon. Gentleman as saying that the last Bill that he attempted to introduce to the House on the subject of space invaders
"was voted down by the Tory majority currently in the House of Commons because of their vested interest in supporting the "quick-buck' merchants at any price."
He did not have the common decency to say that many Conservative Members supported his Bill that would have taxed space invader and other machines. If he is good enough to criticise, he should equally be good enough to compliment. Unfortunately, he does not do so. The hon. Gentleman would be well advised to take that advice, rather than endeavouring to interfere in the affairs of a friendly State that is perfectly capable of passing its own legislation without his intervention.
I oppose the motion and hope that the House will see it as a mere publicity stunt that has no substance or merit. I hope that the House will reject it and leave the Channel Islands and the Isle of Man to conduct their own affairs.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 134, Noes 151.

Division No. 304]

[4.16 pm

AYES

Allaun, Frank

Coleman, Donald

Anderson, Donald

Conlan, Bernard

Ashley, Rt Hon Jack

Cook, Robin F.

Ashton, Joe

Cowans, Harry

Atkinson, N.(H'gey,)

Craigen, J. M. (G'gow, M'hill)

Bennett, Andrew(St'kp't N)

Crowther, Stan

Booth, Rt Hon Albert

Cryer, Bob

Bottomley, Rt Hon A.(M'b'ro)

Cunliffe, Lawrence

Bray, Dr Jeremy

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

Brown, Hugh D. (Provan)

Dalyell, Tam

Buchan, Norman

Davis, Clinton (Hackney C)

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

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

Campbell-Savours, Dale

Dean, Joseph (Leeds West)

Canavan, Dennis

Dewar, Donald

Carmichael, Neil

Dixon, Donald

Clark, Dr David (S Shields)

Dobson, Frank

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

Dormand, Jack

180

Douglas, Dick

Mitchell, Austin (Grimsby)

Douglas-Mann, Bruce

Mitchell, R. C. (Soton Itchen)

Dubs, Alfred

Morris, Rt Hon A. (W'shawe)

Eadie, Alex

Morris, Rt Hon C. (O'shaw)

Eastham, Ken

Morton, George

English, Michael

Mulley, Rt Hon Frederick

Evans, loan (Aberdare)

O'Neill, Martin

Ewing, Harry

Orme, Rt Hon Stanley

Fletcher, Ted (Darlington)

Palmer, Arthur

Foster, Derek

Parry, Robert

Foulkes, George

Pavitt, Laurie

Garrett, John (Norwich S)

Powell, Raymond (Ogmore)

Garrett, W. E. (Wallsend)

Prescott, John

Graham, Ted

Race, Reg

Grant, George (Morpeth)

Radice, Giles

Hamilton, James (Bothwell)

Richardson, Jo

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

Roberts, Albert (Normanton)

Hardy, Peter

Robinson, G. (Coventry NW)

Harrison, Rt Hon Walter

Rooker, J. W.

Hattersley, Rt Hon Roy

Ross, Ernest (Dundee West)

Haynes, Frank

Sandelson, Neville

Healey, Rt Hon Denis

Sever, John

Homewood, William

Sheldon, Rt Hon R.

Howell, Rt Hon D.

Silkin, Rt Hon J. (Deptford)

Hoyle, Douglas

Silverman, Julius

Huckfield, Les

Skinner, Dennis

Hughes, Robert (Aberdeen N)

Smith, Rt Hon J. (N Lanark)

Hughes, Roy (Newport)

Snape, Peter

Jay, Rt Hon Douglas

Soley, Clive

John, Brynmor

Spearing, Nigel

Johnson, Walter (Derby S)

Spriggs, Leslie

Kaufman, Rt Hon Gerald

Stewart, Rt Hon D. (W Isles)

Kinnock, Neil

Stoddart, David

Lamond, James

Strang, Gavin

Leighton, Ronald

Straw, Jack

Lewis, Arthur (N'ham NW)

Taylor, Mrs Ann (Bolton W)

Lewis, Ron (Carlisle)

Thorne, Stan (Preston South)

Lyon, Alexander (York)

Tilley, John

McCartney, Hugh

Torney, Tom

McDonald, Dr Oonagh

Urwin, Rt Hon Tom

McElhone, Frank

Watkins, David

McGuire, Michael (Ince)

Whitehead, Phillip

McKay, Allen (Penistone)

Willey, Rt Hon Frederick

McMahon, Andrew

Wilson, Gordon (Dundee E)

McNally, Thomas

Winnick, David

McNamara, Kevin

Woodall, Alec

McTaggart, Robert

Woolmer, Kenneth

McWilliam, John

Young, David (Bolton E)

Marshall, Jim (Leicester S)

Mason, Rt Hon Roy

Tellers for the Ayes:

Maynard, Miss Joan

Mr. John Maxton and

Millan, Rt Hon Bruce

Mr. John Home Robertson.

NOES

Adley, Robert

Chapman, Sydney

Alexander, Richard

Clark, Sir W. (Croydon S)

Ancram, Michael

Clegg, Sir Walter

Aspinwall, Jack

Cockeram, Eric

Atkins, Robert(Preston N)

Colvin, Michael

Baker, Nicholas (N Dorset)

Cope, John

Beaumont-Dark, Anthony

Corrie, John

Beith, A. J.

Costain, Sir Albert

Bennett, Sir Frederic (T'bay)

Cranborne, Viscount

Berry, Hon Anthony

Dorrell, Stephen

Biggs-Davison, Sir John

Dover, Denshore

Blackburn, John

Dunn, Robert (Dartford)

Boscawen, Hon Robert

Durant, Tony

Bottomley, Peter (W'wich W)

Edwards, Rt Hon N. (P'broke)

Braine, Sir Bernard

Eggar, Tim

Brinton, Tim

Eyre, Reginald

Brooke, Hon Peter

Fairgrieve, Sir Russell

Brotherton, Michael

Fell, Anthony

Brown, Michael(Brigg & Sc'n)

Finsberg, Geoffrey

Browne, John (Winchester)

Fisher, Sir Nigel

Bruce-Gardyne, John

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

Bryan, Sir Paul

Fletcher-Cooke, Sir Charles

Budgen, Nick

Fookes, Miss Janet

Burden, Sir Frederick

Fox, Marcus

Butcher, John

Freud, Clement

Cadbury, Jocelyn

Fry, Peter

181

Garel-Jones, Tristan

Rees, Peter (Dover and Deal)

Goodlad, Alastair

Rhodes James, Robert

Gorst, John

Rhys Williams, Sir Brandon

Gower, Sir Raymond

Roberts, M. (Cardiff NW)

Grieve, Percy

Roberts, Wyn (Conway)

Grimond, Rt Hon J.

Ross, Stephen (Isle of Wight)

Gummer, John Selwyn

Rossi, Hugh

Hamilton, Michael (Salisbury)

Rost, Peter

Hawkins, Paul

Scott, Nicholas

Henderson, Barry

Shaw, Giles (Pudsey)

Higgins, Rt Hon Terence L.

Shaw, Michael (Scarborough)

Hill, James

Shepherd, Richard

Holland, Philip (Carlton)

Sims, Roger

Hordern, Peter

Smith, Dudley

Howe, Rt Hon Sir Geoffrey

Speller, Tony

Hunt, David (Wirral)

Spence, John

Jessel, Toby

Spicer, Jim (West Dorset)

Johnson Smith, Geoffrey

Stainton, Keith

Jopling, Rt Hon Michael

Stanbrook, Ivor

Kershaw, Sir Anthony

Stanley, John

Kitson, Sir Timothy

Steel, Rt Hon David

Knight, Mrs Jill

Stevens, Martin

Knox, David

Stewart, Ian (Hitchin)

Lawrence, Ivan

Tebbit, Rt Hon Norman

Lloyd, Ian (Havant & W'loo)

Temple-Morris, Peter

Lloyd, Peter (Fareham)

Thomas, Rt Hon Peter

McCrindle, Robert

Thompson, Donald

MacGregor, John

Thornton, Malcolm

McQuarrie, Albert

Townend, John (Bridlington)

Mates, Michael

Townsend, Cyril D, (B'heath)

Mather, Carol

Trotter, Neville

Maude, Rt Hon Sir Angus

Vaughan, Dr Gerard

Mellor, David

Viggers, Peter

Miller, Hal (B'grove)

Waddington, David

Mills, lain (Meriden)

Wainwright, R.(Colne V)

Moate, Roger

Walker-Smith, Rt Hon Sir D.

Monro, Sir Hector

Wall, Sir Patrick

Morrison, Hon P. (Chester)

Waller, Gary

Mudd, David

Walters, Dennis

Myles, David

Warren, Kenneth

Neale, Gerrard

Watson, John

Needham, Richard

Whitney, Raymond

Nelson, Anthony

Wickenden, Keith

Neubert, Michael

Wiggin, Jerry

Newton, Tony

Williams, D.(Montgomery)

Onslow, Cranley

Winterton, Nicholas

Osborn, John

Wolfson, Mark

Page, John (Harrow, West)

Prentice, Rt Hon Reg

Tellers for the Noes:

Price, Sir David (Eastleigh)

Mr. Bill Walker and

Proctor, K. Harvey

Mr. Christopher Murphy.

Rathbone, Tim

Question accordingly negatived.

Orders of the Day

  Companies (No. 2) Bill [Lords]
  As amended (in the Standing Committee), further considered.
  Mr. SpeakerCertain minor corrections are necessary to five of the Government amendments. A list of the corrections is available in the Vote Office and the amendments will be moved in their correct form.

  Companies (No. 2) Bill [Lords]
    Clause 1
      GENERAL PROVISIONS WITH RESPECT TO THE FORM AND CONTENT OF ACCOUNTS
      Amendment made: No. 1, in page 3, line 20, leave out '(within the meaning of the Companies Act 1980)'.—[Mr. Eyre.]
    Clause 3

      EXTENSION OF REQUIREMENTS OF SECTION 4 OF THE 1967 ACT
      Mr. Clinton DavisI beg to move amendment No. 167, in page 5, line 13, leave out 'one tenth' and insert 'one twentieth.'
      Mr. SpeakerWith this it will be convenient to take amendment No 168, in page 6, line 23, leave out 'one-fifth' and insert 'one-tenth'.
      Mr. DavisThe Opposition approve of the basic purpose behind the clause, which is designed to secure an extension of the requirements of section 4 of the 1967 Act. We feel that the figure that the Government have included represents too high a threshold. The Government said in Committee that they would consider the figure without any commitment to change it. However, we have had no indication from the Government that they are prepared to reconsider the issue.
      The consequence of the Government's insistence on their own figure is that a minority holding of between 5 and 10 per cent. could in itself represent a substantial holding, especially in substantial and large companies. As we have learnt from recent history, that sort of holding can involve a large investment that might be located abroad. We ask the Government to consider that afresh.
      We think that the provision of one-fifth in amendment No. 168 is too high. The Government accepted the maximum criteria that were laid down in the directive and there are circumstances, which were vividly illustrated by my hon. Friend the Member for Norwood (Mr. Fraser) in Committee, in which, on paper, a relatively small shareholding of even less than 20 per cent, in one pair of hands could represent a powerful block, capable of wielding vast influence over the appointment of the board, policies and control of the company.
      It is influence, not control, that I am talking about in this respect. The Minister will recognise that one does not have to control voting shares to be able to wield influence. If the Minister argues that that relates simply to financial participating interest and not to control, I make the point as emphatically as I can that it is this measure of influence that is equally important.
      4.30 pm
      The Under-Secretary of State for Trade (Mr. Reginald Eyre)I appreciate the way in which the hon. Member for Hackney, Central (Mr. Davis) has moved the amendment.
      The principle underlying amendment No. 167 was discussed in Committee when my right hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) explained that the Government had decided to set at 10 per cent. the threshold for disclosure of non-financial information in respect of holdings other than subsidiaries required by article 43.1(2) of the directive in order to bring the threshold into line with the comparable disclosures required already under section 4 of the 1967 Act.
      We noted carefully the reasonable remarks of the hon. member for Coventry, North-West (Mr. Robinson) in Committee. I reassure Opposition members that the Government will keep the question of the threshold under review. However, I am sure that hon. Members will appreciate the need to consider carefully any proposals to extend disclosure requirements to ensure that users of accounts are not swamped with large volumes of information of doubtful value and that too heavy a burden is not placed on accounts preparers. The Bill, as required by the fourth directive, adds to that burden. We are strongly of the view that now is not the time to add further straws to the camel's back.
      Amendment No. 168 was also considered in Committee. The background to the Government's decision to establish the threshold for disclosure of financial information in respect of holdings at 20 per cent. was explained. Existing legislation requires such financial information only in the limited circumstances set out in paragraph 5A of the present schedule 8 to the Companies Act 1948. The Green Paper proposal that that provision should be repealed was generally welcomed.
      The provisions of clause 4 have as their sole objective implementation of article 43.1(2) of the directive because in practice most companies are likely to take advantage of clause 4(5) by including investments in bodies corporate other than subsidiaries by way of the equity method of valuation in their accounts or in a note thereto. This would avoid the necessity of providing financial information holding by holding. In the limited number of cases in which we expect companies to give their financial information, we have considered it unnecessary to extend the requirement beyond the minimum level set in the directive.
      Against those considerations, I have considered the remarks made in Committee by the hon. Member for Norwood (Mr. Fraser), referred to again today by the hon. Member for Hackney, Central. Those remarks concerned a holding of less than 20 per cent. of the share capital but which represented a significant proportion of the holding company's assets. At the end the day, this is a matter of judgment. In the Government's view, in such circumstances, it is likely that a company and its auditors would feel obliged to make appropriate disclosure of the circumstances, although we have concluded that it is not necessary to extend the exacting requirements of clause 4 to those fairly exceptional cases. As in relation to the thresholds under clause 3, I assure the hon. Member for Hackney, Central that we will continue to keep this question under review.
      184
      With that assurance, I trust that the hon. Member will feel able to withdraw his amendment.
      Mr. Clinton DavisThe Government have said that they will keep a hell of a lot under review. The Minister will have to keep his eyes and ears open over the next six months. However, having regard to what he has said, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 8

      SMALL AND MEDIUM-SIZED COMPANIES
      Mr. Clinton DavisI beg to move amendment No. 170, in page 14, line 6, leave out '£1,400,000; and insert '£250,000.'
      Mr. Deputy SpeakerWith this it will be convenient to take the following amendments:
      No. 171, in page 14, line 7, leave out '£700,000' and insert '£125,000'.
      No. 172, in page 14, line 10, leave out 'fifty' and insert 'ten'.
      No. 173, in page 14, line 14, leave out '£2,800,000' and insert '£600,000'.
      No. 175, in page 14, line 17, leave out 'two hundred and fifty' and insert 'fifty'.
      No. 176, in page 14, leave out lines 23 to 37.
      Mr. DavisThese amendments go to the heart of this part of the Bill. We do not oppose the classification of companies with a view to the disclosure requirements which are imposed upon them. We were the authors of that idea in the 1977 Green Paper, although we did not disclose at that stage the definitions and criteria that we wished to use because they were subject to discussion. I argue strenuously on behalf of the Opposition that the definitions which have been used for describing large, medium and small companies are wrong.

      The Government say that they are implementing the EEC directive in this regard. They are going to the maximum limits which have been defined by the directive. They are under no obligation to do that. If they accepted our amendments, they would still be complying with the directive. I want to get that counter-argument that might be used by Government supporters out of the way.
      The definitions of a small company are contained in clause 8(2). Anyone who is a little sceptical about the Government's definitions will have his anxieties reinforced by the way in which the Government have reacted since the Green Paper consultations. The qualifying conditions for a small company are, first:
      "the amount of its turnover must not exceed £1,400,000".
      That is hardly a small company if one is dealing with the upper echelons of that figure. The second condition is:
      "its balance sheet total must not exceed £700,000".
      That is not insubstantial. The third criterion is:
      "The average number of persons employed by the company in the financial year in question (determined on a weekly basis) must not exceed fifty."
      I do not believe that that is a small company, although small companies are included within that definition. The figures which I have put forward in my series of amendments still include companies which, in previous definitions, would hardly be regarded as small. However, my figures are substantially less than the Government's. I am suggesting that instead of a figure of £1,400,000,

      185
      there should be one of £250,000 for the turnover. We are suggesting that instead of the balance sheet total of £700,000 provided for in the Bill, we would insert £125,000. Instead of 50 employees we should have 10 employees. Similar changes are made for the medium-sized companies. That applies to the other three amendments.
      In substance, we are saying that the Government have the figures wrong. By no stretch of the imagination could a company which comes within the top levels of the definition of a small company in clause 8 be regarded as small. The Government have extended the criteria which they laid down in their Green Paper in September 1979. At the time, they suggested a turnover figure of £1,300,000 and a balance sheet total of £650,000. They have increased those figures. They say that they have done so because there ought to be a 10 per cent. leeway.
      Really small companies—this is the gravamen of our case—should be able to gain some exemption from the full rigours of the company law requirements relating to disclosure. Indeed, we went even further in Committee, because we argued that tiny companies—the small shop carrying on a fish and chip business or confectionery business on the street corner—ought to be able to claim exemption from audit. We are not arguing that today. We were defeated on that proposal. That establishes our bona fides about the matter.
      We believe that it is entirely wrong for the same principle to apply to a large number of companies which cannot by any stretch of the imagination be regarded as small, and which will qualify for exemption under these provisions.
      About two years ago, the Amalgamated Union of Engineering Workers carried out a survey and found that about 60 per cent. of companies in the engineering industry employed fewer than 50 persons, and that 50 per cent. employed fewer than 25 persons. That indicates the scale of the problem that we shall encounter in this respect.
      The accountancy profession itself expressed very serious reservations about these definitions. The Minister has been full of praise for the accountancy profession. Last night he waxed as eloquenty about that profession as he did about the contribution made by the hon. Member for Kensington (Sir B. Rhys Williams) on the question of audit committees. He was over the moon about the profession. But, over the moon though he may have been on that occasion, members of the profession do not like what he is doing. They believe that the criteria for the small company—in the Green Paper it was called a proprietary company, and the title has been changed—are far too high. The criteria have been extended since 1979.
      The accountancy profession and the trade unions, which have expressed great reservations about the small and medium-sized companies in this regard, are right to do so. The effect of the Government's proposals is that small companies will no longer be under any requirement to file profit and loss accounts at Companies House for public information. They will be obliged to do no more than file an abridged balance sheet. They will not have to file any information concerning the aggregate remuneration of the directors. They will not have to meet the same rigorous accounting standards as they are required to meet today.
      The information that is no longer to be made available to the public is, for the higher echelons of a company within the definition, information that should be readily
      186
      available to the public. It is stretching the imagination a little to say that the information can be made available voluntarily by the companies. Blocks will be put in the way. Some information that is currently available will no longer be available to trade union negotiators who customarily search the records.
      It is no use the Minister's saying, as he did in other respects, that the company records are irrelevant to trade union negotiators, to the work of investigative journalists or to the public as a whole, because the historic information is frequently of the greatest importance. A good deal of that information will not be made available in future because the companies, in the event, will be the arbiters of what is to be disclosed and of the extent of the disclosure.
      How did the Government arrive at these strange conclusions? We have received scant information from the Minister. He said, in one remarkable intervention, that company law provisions must be limpid, clear and simple
      Mr. Eyre indicated dissent
      4.45 pm
      Mr. DavisIf the Minister disagrees, I shall have to find the reference, because it will be relevant to many other debates on the Bill. I think he said that it was an aim—that the provisions had to be made limpid, clear and simple—but that it could not always be achieved. He has certainly not achieved it. The Bill is so complicated that it will tax the ingenuity of professional advisers beyond all reason, and it will cost the public a great deal of money for professional advisers to exercise their ingenuity and skill in advising their clients.
      When the Minister says these strange things, on what evidence are they based? What surveys has he undertaken? No hon. Member is more conscious than the Minister of the need for surveys. Nobody is more diligent about going down back streets and talking to people about whether a business names register is needed than the hon. Gentleman, who sits so benignly on the Government Front Bench. We all love him. But I ask him to tell us what evidence was examined. What surveys did his officials undertake?
      I should rather see them at work in the Department of Trade than going down all those dusty roads to carry out these funny surveys of which he is so fond. Did they do anything in this instance? Did they question the CBI? Did they look at any statistical information that might be relevant? The Minister was very coy about that when we were discussing the matter in Committee.
      The Minister is fond of saying that all these provisions are designed to secure great savings and an avoidance of bureaucracy. What savings does he envisage will be achieved? I argued in Committee that the benefits that he seeks to confer are likely to be largely cosmetic. One very large firm of accountants with which I have conferred in this matter—a company of the highest reputation in the profession and with no political axe to grind—argues that companies within the particular categories might have to spend rather more money, because they will require to have audited accounts. Banks and the tax authorities will require audited accounts from them. Creditors might require audited accounts from them if there is to be some realistic discussion about debts. So what will be the saving at the end of the day?
      It is perfectly true that some companies which may wish to hide certain information from the public at large will

      187
      take advantage of the provisions of the Act and publish abridged accounts, despite the additional cost in which they might be involved. But I do not believe the argument that the Minister repeatedly adduces about the onerous nature of the task that companies have to undertake in publishing the information which they are currently required to publish at Companies House. I do not accept that their task is so appalling or so difficult. Indeed, I wonder whether many companies made representations to him, within the spheres that we are discussing, about reducing those tasks.
      I expressed another anxiety in Committee. I received no answer from the Minister, so I return to the question. If companies seek some advantage in non-disclosure and are prepared to face the additional cost of the Government's requirements—I believe that that is what will happen in practice—might there not be a possibility that companies will be prompted to fragment in order to take advantage of the lower thresholds related to disclosure?
      I realise that there is provision affecting companies which are linked to a holding company, but it is perfectly possible for separate entities to be established and to take advantage of the framework of the Bill. That would compound the secrecy which I believe is implicit in the consequences of the Government's proposals.
      The Government have also used the argument that there is information which companies wish to hide from their competitors and that it is therefore undesirable that they should be compelled to publish the information at Companies House. In that respect, the Minister seeks to have the argument both ways. On the one hand, he has argued that the information is largely irrelevant to the public interest because it is historical. On the other hand, he argues that competitors, particularly international competitors, will be deeply interested in it. He cannot have it both ways.
      What evidence is there that the information which companies have had to publish hitherto has been gravely damaging to their competitive abilities? What requests have been made by what would now be described in the Minister's proposals as small and medium-sized companies to carry out the change on those grounds? Does he really think that competitors will be persuaded one way or the other or will be tremendously assisted by the information which they now obtain? As my hon. Friend the Member for Coventry, North-West (Mr. Robinson) forcefully pointed out in Committee, competitors are interested in the state of industrial relations which may beset a company at any given time. They want to discover secret processes and new developments and new processes. They are far more interested in those matters than in the formalities of accounting.
      The burden of proof in establishing the need for change is firmly on the Minister's shoulders. In my submission, he has not come within a hundred miles of discharging that onus in our debates so far. In a large area of that which is within the definition prescribed in clause 8, information which is important to creditors, to outside interests, to trade unionists and to the public will not be disclosed or will be abridged. A mask will be placed over it. That is not right. Secrecy is a bad criterion for business and a bad
      188
      criterion for management. Yet it is one for which the Government have opted, and they have failed to indicate to the House the grounds upon which they have so opted.
      Mr. James HillMy hon. Friend the Minister wi11 realise that it is a matter of opinion what is a small, medium or large business. My experience in business, mainly in small business, suggests to me that the figures at which he has arrived are fairly sensible. To my mind, it would certainly be a small business which employed 50 or fewer staff. That seems very much a commonsense view. Turnover may be in penny washers or in items of considerable value, but I do not think that these days £1.4 million is a high turnover. The balance sheet must not exceed £700,000.
      If the amendments were accepted, the paper work, the bureaucracy and the amount of money that the companies involved would have to spend on additional staff to produce all these statistics would be incredible. I have operated a small business for many years. Certainly a turnover of £1.4 million is no indication of a large business. For the medium-sized business, turnover must not exceed £5.75 million; that is about right. We wish this legislation to date itself for at least another three to five years. Regardless of what the hon. Member for Hackney, Central (Mr. Davis) has said about the figures of 50 and 250 staff for small and medium-sized businesses, I hope that my hon. Friend will resist the amendments, because if there is one thing that small businesses do not need at this time it is further paper work or further reasons to take on additional staff to advise the Department.
      Mr. EyreThe amendments relate to the accounting exemption provisions of the Bill. I was, frankly, disappointed when the Opposition tabled them, as I believe that both the nature and the extent of the exemptions have been widely welcomed. Taking the profession as a whole, I do not accept the view of the hon. Member for Hackney, Central (Mr. Davis) about accountants. Moreover, for reasons which I shall make clear, I strongly disagree with the views that he expressed about the role and relationships of small businesses.
      Mr. Clinton DavisThe CCAB strenuously opposed the criteria laid down in the 1979 Green Paper. Did it not continue to oppose the Government's proposals, particularly when they were extended in the Bill?
      Mr. Eyre: There were more than 150 responses to the Green Paper, meetings with the CBI, the CCAB, the Law Society, chambers of commerce, the Institute of Directors and bodies representing small businesses. The overall result of those consultations was approval of the necessarily complicated balance which the Government have to strike in determining these matters.
      Mr. Clinton DavisI am obliged to the hon. Gentleman. Will he answer my question? What was the view of the CCAB? I am not interested in the other 150. I do not know who they were. I want to know about the CCAB.
      Mr. EyreAs the hon. Gentleman knows, it is not customary to disclose precise details of consultations with bodies of this kind. We are most grateful to the CCAB for the tremendous amount of consultative work it did in assisting us. I do not think that it is accurate for the hon.

      189
      Gentleman to explain the CCAB's views on the total balance struck in these complicated matters in the terms that he did.
      I shall explain my reasons for disagreeing so strongly with some of the views expressed by the hon. Gentleman today. As I said when we debated this matter in Committee, the Government regard these proposals as misguided and unacceptable because they would significantly reduce the number of small and medium-sized companies able to take advantage of the accounting exemptions available to companies listed in clause 6.
      I am most grateful to my hon. Friend the Member for Southampton, Test (Mr. Hill), who made a number of strong practical points in referring to the definition of small businesses. I agree entirely with the view that he expressed.
      5 pm
      Our policy is to assist the smaller company sector wherever it is possible and reasonable so to do. Thus, the thresholds for determining the size of small and medium companies for this purpose have been set at virtually the maximum permitted by the fourth directive for the classification of such companies in order that the maximum number of companies can take advantage of the accounting exemptions. This will help to protect their competitive positions in relation to larger companies and groups. However, under the amendments, companies would have to be very much smaller indeed before they could take advantage of the exemptions.
      Mr. Clinton DavisThe Minister says that this will enable such companies to protect their interests against larger groups. What does he mean? What evidence is there to support that proposition? The Minister makes many bare assertions that are backed up by no evidence.
      Mr. EyreIf the hon. Gentleman contains himself, I shall explain what I mean by these exemptions; but he knows very well, and it is only his prejudice that does not permit him to take account of the arguments deployed earlier.
      In response to the thrust of the hon. Gentleman's arguments, there are several points that need to be explained about the accounting exemption provisions. First, they relate only to what is filed with the Registrar of Companies. All companies are still required to draw up full accounts for shareholders. That is a perfectly proper provision, and these are the accounts on which auditors pronounce a true and fair view. The modified accounts filed with the registrar are not required to give such a true and fair view, although safeguards are available in the form of a directors' statement and supplementary auditors' report.
      Secondly, we accept that the provision of modified accounts may involve some additional cost to the company, but we consider that the company concerned should be allowed to judge whether that cost is disproportionate to the longer-term cost of disclosing information that might be harmful to its competitive position. I maintain that the requiring of an audit is a right and proper decision that is very much in the interest of company shareholders as well as the proper arrangement for credit. At the same time, we acknowledge the special need of a company to protect confidential information, and it need not disclose that information in a way that would harm its competitive position.
      190
      Nor do the exemptions affect the provision of information to major creditors who may well require full accounts before giving credit, but this is a matter between the company and the provider of credit.
      Mr. Clinton DavisWe are coming to the end of this debate, and this point is at the heart of the matter. I am perturbed by what the Minister has just said, because it appears that the modified accounting system could be more expensive. It will be left to the company to decide whether it is in its overall interest to provide abridged accounts, which would be more expensive, or to file the full accounts. He has also said that the modified accounts are not required to give a true and fair view. We said that in Committee. Is it not right to say that the company to be the sole arbiters of what is to be made available to the public? Can it not hide behind the guise of abridged accounts other information which is not strictly harmful to its competitive ability?
      Mr. EyreThe hon. Gentleman is exaggerating this out of proportion. As I have said, if abridged, the accounts that are filed would be accompanied by the directors' statement and supplementary auditors' reports. That completely answers the hon. Gentleman's point. The point that I made about the preparation of these more limited accounts is entirely reasonable, because it will be for the company to decide whether it wishes to incur the cost of producing abridged accounts. It will do so if it is in its commercial interest or if its competitive position may be harmed. That is a perfectly reasonable decision for the company to make, but for the reasons that I have explained it in no way prejudices the public situation.
      We have attempted to strike a balance between the various parties who have an interest in the accounts information. We believe that the package in the Bill in relation to both the criteria we have set and the exemptions we have given is fair to all parties. If medium-sized and small companies wish, they will be able to file abbreviated accounts. We feel that such an approach fully justifies our enabling as many companies as possible, subject, of course, to the fourth directive constraints, to take advantage of exemptions. The hon. Gentleman is trying to have it both ways by saying that if the disclosure advantages prove to be popular it will lead to fragmentation. That is an exaggerated view. The disclosure provisions will not lead to fragmentation nearly as much as would the two amendments, which would do a lot more harm in that respect.
      We have struck a balance. For medium-sized companies, the exemptions are relatively modest. In particular, such companies are permitted—not required—to omit a breakdown of their turnover in the accounts filed with the registrar. Nevertheless, the exemptions are important to a number of medium-sized companies, particularly those engaged in one-product lines where knowledge of turnover can be of significant commercial advantage to large competitors or groups which, because of the diversity of their operations, will not give a smaller company similar beneficial information.
      Mr. Clinton DavisWhat evidence has been forthcoming about damage to the competitive position of companies as a result of the present requirements of the law?
      Mr. EyreThe hon. Gentleman will know that a number of representations were received from companies

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      precisely in that position. They made the perfectly fair point that by having one main line of production the accounts could reveal information which could be unfairly helpful to competitors and damaging to their interests. That point was fairly and properly taken into account by the Government in determining the accounting rules relating to medium-sized companies.
      These exemptions are important to a number of medium-sized companies. We consider that we were quite justified in setting the thresholds as high as that permitted by the directive, so that the maximum number of our medium-sized companies could take advantage of the exemptions if they so wished.
      The total package of exemptions contained in the Bill has been arrived at only after extensive consultation. Naturally, there were differences of view, but we believe that the overall package meets the concerns of smaller companies while catering adequately for others which have an interest in the accounts. In short, we believe that the balance struck is fair to all parties.
      Mr. Clinton DavisIf the Minister's argument is that small and medium-sized companies may have their competitive position eroded by revealing information, what is the position of large companies? After all, much of our export trade and much of Britain's ability to perform in the industrial world is undertaken by extremely large enterprises. Is the Minister arguing that they should be entitled to exemption from disclosure as well?
      Mr. EyreThe hon. Gentleman is again questioning basic principles in a way that surprises me after our debates. He knows that one purpose of the directives is harmonisation with the EEC market, which is generally accepted. The harmonisation measures in the second and fourth directives are regarded as reasonable. The harmonisation that we have carried out in company law is proper and justifiable, even with the complexity that the hon. Gentleman complained of. We believe that it is justified in the long-term interests of companies and of industrial and commercial activity.
      Within the total situation, which relates to big companies operating within the market, competition and free trade are a valuable stimulus, but we have said that we shall take special account of the difficulties of medium and small companies and make special provision for them. It is that consideration that the hon. Gentleman carps about. He is wrong to do so. He is taking a very limited view. The balance that we have struck and the provisions that we have made which are favourable to medium and small companies are entirely justified and will be very valuable in the long run.
      Sir Albert CostainWould not the amendment of the hon. Member for Hackney, Central (Mr. Davis) stop small companies expanding? It is part of our policy to cure unemployment by helping small companies to expand. Perhaps the hon. Gentleman is putting forward the amendment to maintain the unemployment figures so that he can have something to shout about.
      Mr. EyreI agree, and I appreciate my hon. Friend's intervention. The hon. Gentleman shows that he does not realise the enormous contribution that small and medium
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      companies can make to our economy, to the creation of new jobs and to progress and development generally. He makes a serious mistake in putting down the amendment and pursuing his arguments.
      Finally, I make the same point as I made in Committee. The thresholds proposed in the Opposition amendments would very likely put our companies at a competitive disadvantage with certain of their European counterparts which are likely to adopt the maximum threshold allowed by the directives. It is therefore important that the levels should be kept as high as possible, as we have done in clause 8.
      Amendment No. 176 is put down because of references to the complicated nature of clause 8(5) and (6), which I admit are complex. As I have said, the implementation of the second and fourth directives, which are of long-term value to our position in the EEC, are inevitably complex, but by doing my duty in the 1980 Act and in this Bill to implement the legislation I am taking steps along the road to worthwhile harmonisation, which will be of benefit in the long term to our commercial and industrial structure.
      The concept introduced by article 11 of the directive whereby the fact of a company exceeding or ceasing to exceed the thresholds will affect the application of the accounting exemptions only if it occurs in two consecutive financial years in itself raises complex issues. One could not have dealt with such complicated circumstances without complicated provisions. However, the initial proposition that a company must comply for two consecutive financial years is dealt with fairly simply in clause 8(1). The complexity arises only when a company changes category in a third and possibly a fourth year also, and subsections (5) and (6) of clause 8 are necessary to deal with the complexity. They allow for the flexibility of changing circumstances, so that a company can pass from one category to another if its trading circumstances so require and justify it in the company's interests.
      5.15 pm
      For the reasons that I have given, I ask the hon. Gentleman to consider withdrawing the amendment. His reference to medium and small companies does not justify them. If he does not withdraw the amendments, I urge the House to reject them.
      Mr. Clinton DavisIt is a bit rich for the Minister to accuse me of not caring about the contributions that small and medium-sized companies make to this country, when his Government have destroyed the hopes of many people in small and medium-sized companies on a scale hitherto never experienced. His care about small companies is minuscule. In fact, he wishes to promote secrecy. Listening to him, one would assume that small companies were going into bankruptcy on such an enormous scale because they had to reveal information to Companies House. If he believes that, he will believe anything.
      The hon. Gentleman has not answered my arguments in a number of material particulars. He says that representations were made to the Department, presumably on the thresholds to be employed. He has not begun to disclose the nature of the information. He has not told us whether the Government have checked on it. As far as we know, he has undertaken no surveys.
      Most surprising of all, the hon. Gentleman concedes that the modified accounting procedures can be more expensive for small companies. They will have to provide to their creditors in some instances, to their bankers in

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      others and to the tax authorities in others full audited accounts. As I said before, they will therefore be the sole arbiters of what is to be disclosed.
      Mr. EyreIf a company wished to incur extra professional expense in providing abbreviated accounts, it would do so only in circumstances that were to its commercial advantage. As that was the point in making the provision, does the hon. Gentleman not see the good sense of it?
      Mr. DavisWhat may be to a company's commercial advantage may not necessarily be in the public interest. Does the Minister not see that? Over the years a great deal of information has been ferreted out in investigation after investigation at Companies House, because information has to be properly filed—information which I imagine the Minister was interested to receive from time to time—and that may not be in the commercial interest of the company concerned. Is there not another motive? Companies may not wish to reveal information because they do not believe that it may be considered to be conducive to the public good.
      Mr. EyreThe hon. Gentleman is exaggerating terribly. For years there was a system of exempt companies that did not register any information. Progressively, more information has been required, and the amount of information now to be provided by small companies is entirely reasonable in the public interest. The essential information supplied is perfectly adequate in the public interest and enables a small company in particular circumstances to protect its competitive position if it is reasonable to do so but, I emphasise, without prejudice to the total disclosure of information justified in the public interest.
      Mr. DavisThe Minister cannot have it both ways. At the end of the day he will have his way, but he must realise that in practice some companies, sheltering under the mantle of not revealing matter that may be damaging to their competitive interests, will carry out abuses by not revealing information that does not genuinely fall under that head. My concern is that the Minister is enabling far too extensive a number of companies to obtain that sort of haven. I do not want that to happen.
      The hon. Member for Folkestone and Hythe (Sir A. Costain) made an intervention, I think, for the first time in these debates. I do not wish to do the hon. Gentleman an injustice: he is an old friend of mine. He has intervened in other debates in which I have taken part. I think, however, that he would have done better not to have intervened today. He said that my proposals would stop small companies expanding. Does he really think that a small company will be deflected from expanding because of a requirement to carry out the current law on the disclosure of accounts? The hon. Gentleman is much too wise to believe that.
      Sir Albert CostainSmall companies are worried about the accounting side. That is my practical experience. They are scared to death of it. It is wrong that they should have to take on extra staff for it.
      Mr. DavisThe hon. Gentleman is wrong. Companies will have to do so in any case. They will need to have audited accounts available. All that they will be given is an option to file abridged accounts at the companies registry rather than the full accounts that they will need to
      194
      have available anyway. What extra work is involved? As the Minister says, they could be going to more expense. He is providing a cloak for the avoidance of disclosure which, in the higher company echelons, is wrong.
      The Minister has, in effect, conceded that his proposals are to a large extent cosmetic and to some extent likely to be damaging to the public interest. I do not believe that he has carried out the burden of proof that falls on him in proposing this change to establish it beyond reasonable doubt. I believe that open government is desirable. It should be extended to companies. There lies the difference between the Government and the Opposition.
      The Government do not believe that there should be available to the public fully information that is relevant and that can be tested against the criterion of being true and fair to the public, to employees and to society as a whole. The Government do not, in fact, believe in industrial democracy. That is one of the arguments that relates to what we are discussing. There is a distinction between the Opposition believing in open government and the Government believing in secrecy. I believe that secrecy is a bad counsellor for business, for management and for industrial relations. I have therefore no hesitation in asking my hon. Friends to divide against the Government.
      Question put, That the amendment be made:—
      The House divided: Ayes 142, Noes 189.

      Division No. 305]

      [5.23 pm

      Allaun, Frank

      English, Michael

      Archer, Rt Hon Peter

      Evans, loan (Aberdare)

      Ashton, Joe

      Ewing, Harry

      Atkinson, N.(H'gey,)

      Faulds, Andrew

      Bagier, Gordon A.T.

      Fletcher, Ted (Darlington)

      Bennett, Andrew(St'kp't N)

      Ford, Ben

      Bidwell, Sydney

      Forrester, John

      Booth, Rt Hon Albert

      Foulkes, George

      Boothroyd, Miss Betty

      Garrett, John (Norwich S)

      Bottomley, Rt Hon A.(M'b'ro)

      Garrett, W. E. (Wallsend)

      Bradley, Tom

      Graham, Ted

      Bray, Dr Jeremy

      Grant, George (Morpeth)

      Brown, Hugh D. (Provan)

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

      Buchan, Norman

      Harrison, Rt Hon Walter

      Callaghan, Rt Hon J.

      Hattersley, Rt Hon Roy

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

      Haynes, Frank

      Campbell-Savours, Dale

      Healey, Rt Hon Denis

      Canavan, Dennis

      Home Robertson, John

      Carmichael, Neil

      Homewood, William

      Cartwright, John

      Hooley, Frank

      Clark, Dr David (S Shields)

      Howell, Rt Hon D.

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

      Hoyle, Douglas

      Coleman, Donald

      Huckfield, Les

      Concannon, Rt Hon J. D.

      Hughes, Robert (Aberdeen N)

      Conlan, Bernard

      Hughes, Roy (Newport)

      Craigen, J. M. (G'gow, M'hill)

      Janner, Hon Greville

      Crowther, Stan

      Jay, Rt Hon Douglas

      Cryer, Bob

      John, Brynmor

      Cunliffe, Lawrence

      Johnson, Walter (Derby S)

      Cunningham, G. (Islington S)

      Jones, Rt Hon Alec (Rh'dda)

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

      Jones, Barry (East Flint)

      Dalyell, Tam

      Kerr, Russell

      Davies, Rt Hon Denzil (L'lli)

      Lambie, David

      Davis, Clinton (Hackney C)

      Lamond, James

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

      Leadbitter, Ted

      Deakins, Eric

      Lewis, Arthur (N'ham NW)

      Dean, Joseph (Leeds West)

      Lewis, Ron (Carlisle)

      Dewar, Donald

      Lyon, Alexander (York)

      Dixon, Donald

      Lyons, Edward (Bradf'd W)

      Dormand, Jack

      Mabon, Rt Hon Dr J. Dickson

      Douglas, Dick

      McCartney, Hugh

      Dubs, Alfred

      McDonald, Dr Oonagh

      Dunn, James A.

      McElhone, Frank

      Dunwoody, Hon Mrs G.

      McGuire, Michael (Ince)

      Eadie, Alex

      McKay, Allen (Penistone)

      Eastham, Ken

      MacKenzie, Rt Hon Gregor

      NOES

      Alexander, Richard

      Fisher, Sir Nigel

      Ancram, Michael

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

      Aspinwall, Jack

      Fletcher-Cooke, Sir Charles

      Atkins, Rt Hon H.(S'thorne)

      Fookes, Miss Janet

      Atkins, Robert(Preston N)

      Forman, Nigel

      Baker, Kenneth(St.M'bone)

      Fowler, Rt Hon Norman

      Baker, Nicholas (N Dorset)

      Fraser, Peter (South Angus)

      Beaumont-Dark, Anthony

      Freud, Clement

      Beith, A. J.

      Gardiner, George (Reigate)

      Bell, Sir Ronald

      Garel-Jones, Tristan

      Bendall, Vivian

      Goodhew, Victor

      Bennett, Sir Frederic (T'bay)

      Goodlad, Alastair

      Benyon, Thomas (A'don)

      Gorst, John

      Berry, Hon Anthony

      Gower, Sir Raymond

      Biggs-Davison, Sir John

      Gray, Hamish

      Blackburn, John

      Greenway, Harry

      Bonsor, Sir Nicholas

      Griffiths, Peter Portsm'th N)

      Boscawen, Hon Robert

      Grimond, Rt Hon J.

      Bottomley, Peter (W'wich W)

      Gummer, John Selwyn

      Braine, Sir Bernard

      Hamilton, Michael (Salisbury)

      Brinton, Tim

      Hannam, John

      Brown, Michael(Brigg & Sc'n)

      Haselhurst, Alan

      Bryan, Sir Paul

      Hawkins, Paul

      Budgen, Nick

      Hawksley, Warren

      Burden, Sir Frederick

      Hayhoe, Barney

      Butcher, John

      Henderson, Barry

      Cadbury, Jocelyn

      Higgins, Rt Hon Terence L.

      Carlisle, John (Luton West)

      Hill, James

      Carlisle, Kenneth (Lincoln)

      Hogg, Hon Douglas (Gr'th'm)

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

      Holland, Philip (Carlton)

      Chapman, Sydney

      Hordern, Peter

      Clark, Sir W. (Croydon S)

      Hunt, David (Wirral)

      Clarke, Kenneth (Rushcliffe)

      Hunt, John (Ravensbourne)

      Cockeram, Eric

      Jessel, Toby

      Colvin, Michael

      Jopling, Rt Hon Michael

      Cope, John

      Kaberry, Sir Donald

      Costain, Sir Albert

      Kershaw, Sir Anthony

      Cranborne, Viscount

      King, Rt Hon Tom

      Dickens, Geoffrey

      Knight, Mrs Jill

      Dorrell, Stephen

      Knox, David

      Dover, Denshore

      Lawrence, Ivan

      Dunn, Robert (Dartford)

      Lee, John

      Eden, Rt Hon Sir John

      Lennox-Boyd, Hon Mark

      Edwards, Rt Hon N. (P'broke)

      Lloyd, Ian (Havant & W'loo)

      Eggar, Tim

      Lloyd, Peter (Fareham)

      Eyre, Reginald

      Lyell, Nicholas

      Fairgrieve, Sir Russell

      Macfarlane, Neil

      Faith, Mrs Sheila

      McNair-Wilson, M. (N'bury)

      Fell, Anthony

      McQuarrie, Albert

      Fenner, Mrs Peggy

      Major, John

      Finsberg, Geoffrey

      Marlow, Antony

      196

      Mates, Michael

      Shaw, Giles (Pudsey)

      Mather, Carol

      Shaw, Michael (Scarborough)

      Maude, Rt Hon Sir Angus

      Shepherd, Colin (Hereford)

      Mawby, Ray

      Sims, Roger

      Mawhinney, Dr Brian

      Smith, Dudley

      Maxwell-Hyslop, Robin

      Speller, Tony

      Mellor, David

      Spence, John

      Meyer, Sir Anthony

      Spicer, Jim (West Dorset)

      Miller, Hal (B'grove)

      Stainton, Keith

      Mills, lain (Meriden)

      Stanbrook, Ivor

      Moate, Roger

      Stanley, John

      Monro, Sir Hector

      Steel, Rt Hon David

      Morgan, Geraint

      Steen, Anthony

      Morrison, Hon C. (Devizes)

      Stevens, Martin

      Morrison, Hon P. (Chester)

      Stewart, Ian (Hitchin)

      Mudd, David

      Tapsell, Peter

      Murphy, Christopher

      Taylor, Teddy (S'end E)

      Myles, David

      Tebbit, Rt Hon Norman

      Neale, Gerrard

      Temple-Morris, Peter

      Needham, Richard

      Thomas, Rt Hon Peter

      Nelson, Anthony

      Townend, John (Bridlington)

      Neubert, Michael

      Townsend, Cyril D, (B'heath)

      Newton, Tony

      Trippier, David

      Onslow, Cranley

      Trotter, Neville

      Osborn, John

      van Straubenzee, Sir W.

      Page, John (Harrow, West)

      Viggers, Peter

      Page, Richard (SW Herts)

      Waddington, David

      Pattie, Geoffrey

      Wainwright, R.(Colne V)

      Peyton, Rt Hon John

      Walker-Smith, Rt Hon Sir D.

      Pollock, Alexander

      Wall, Sir Patrick

      Prentice, Rt Hon Reg

      Waller, Gary

      Price, Sir David (Eastleigh)

      Warren, Kenneth

      Proctor, K. Harvey

      Watson, John

      Pym, Rt Hon Francis

      Wells, John (Maidstone)

      Rathbone, Tim

      Wells, Bowen

      Rees, Peter (Dover and Deal)

      Wheeler, John

      Rees-Davies, W. R.

      Wickenden, Keith

      Renton, Tim

      Wiggin, Jerry

      Rhodes James, Robert

      Wilkinson, John

      Rhys Williams, Sir Brandon

      Williams, D.(Montgomery)

      Roberts, Wyn (Conway)

      Wolfson, Mark

      Ross, Stephen (Isle of Wight)

      Young, Sir George (Acton)

      Rost, Peter

      Royle, Sir Anthony

      Tellers for the Noes:

      Sainsbury, Hon Timothy

      Mr. Peter Brooke and

      Scott, Nicholas

      Mr. Donald Thompson.

      McMahon, Andrew

      Skinner, Dennis

      McNally, Thomas

      Snape, Peter

      McTaggart, Robert

      Soley, Clive

      Marshall, Jim (Leicester S)

      Spearing, Nigel

      Mason, Rt Hon Roy

      Spriggs, Leslie

      Maxton, John

      Stewart, Rt Hon D. (W Isles)

      Maynard, Miss Joan

      Stoddart, David

      Milian, Rt Hon Bruce

      Stott, Roger

      Mitchell, R. C. (Soton Itchen)

      Strang, Gavin

      Morris, Rt Hon C. (O'shaw)

      Thomas, Mike (Newcastle E)

      Mulley, Rt Hon Frederick

      Thorne, Stan (Preston South)

      O'Halloran, Michael

      Walker, Rt Hon H.(D'caster)

      O'Neill, Martin

      Watkins, David

      Orme, Rt Hon Stanley

      Welsh, Michael

      Owen, Rt Hon Dr David

      Whitlock, William

      Palmer, Arthur

      Wigley, Dafydd

      Parry, Robert

      Willey, Rt Hon Frederick

      Powell, Raymond (Ogmore)

      Williams, Rt Hon A.(S'sea W)

      Race, Reg

      Wilson, Gordon (Dundee E)

      Richardson, Jo

      Wilson, William (C'try SE)

      Roberts, Albert (Normanton)

      Winnick, David

      Roberts, Ernest (Hackney N)

      Woolmer, Kenneth

      Robertson, George

      Young, David (Bolton E)

      Rooker, J. W.

      Sandelson, Neville

      Tellers for the Ayes:

      Sever, John

      Mr. George Morton and

      Silkin, Rt Hon J. (Deptford)

      Mr. James Hamilton.

      Question accordingly negatived.
      Mr. Martin StevensI beg to move amendment No. 174, in page 15, line 45, at end insert—
      '(13) Notwithstanding sub-section (1) of section 161 of the Companies Act 1948 (Disqualifications for appointment as auditor), but subject to sub-sections (2) to (4) thereof, a person shall be qualified for appointment as auditor of a small or medium-sized company as defined in section 8 (2) and (3) of this Act who is a member of the Society of Company and Commercial Accountants Limited (by Guarantee), the British Association of Accountants and Auditors Limited (By Guarantee), or of any other body of accountants established in the United Kingdom and for the time being recognised for the purposes of this provision by the Department of Trade and who is in receipt of a valid Practising Certificate issued by that member's qualifying body.'.
      Under section 161 of the 1948 Act professional bodies may apply for recognition as auditors of public companies and private limited companies. Only two bodies are currently recognised—the Institute of Chartered Accountants in England and Wales, and its equivalent bodies in other countries, and the body representing certified accountants. No professional body has applied for, or been accorded,. recognition since the 1948 Act was passed.
      The British Association of Accountants and Auditors was established in 1923, the Institute of Company Accountants was set up in 1928, the body representing cost and industrial accountants was set up in 1936, and the

      197
      Society of Commercial Accountants was established in 1942. Three of those bodies merged in 1974 to form the Society of Company and Commercial Accountants and were joined in 1980 by the British Association of Accountants and Auditors.
      The joint organisation has 10,000 members and 5,000 student members—about the same number as belong to the body representing certified accountants. Not many practise as public auditors—only about 2,000—and they cannot act as auditors to public companies, but only to partnerships, sole traders and non-limited companies, many of which, however, are considerably larger than the small and medium-sized companies that we are discussing.
      I am asking my hon. Friend the Under-Secretary to consider broadening the choice of auditors for small and medium-sized companies. He will say—and I know that he is sympathetic to the arguments that I am advancing today—that auditors of public companies and private limited companies must have and must be seen to have the best possible qualifications. The Society of Company and Commercial Accountants has taken great strides in recent years to demonstrate that its members have such qualifications. It issues practice regulations and a code of conduct. It has its own disciplinary committee. It has a very full examination procedure, which involves 60 hours of examinations. It is pledged to accept the European Commission's eighth directive on professional training. Incidentally, it was stated in a number of publications that the British Association of Accountants and Auditors, which has now joined the society, withdrew an application for recognition. In fact, it was not withdrawn; it lapsed when the association merged with the society.
      The argument could be advanced—I know that my hon. Friend would rebut it vigorously—that we should develop one body for auditing and another body for company accounting, the reason being that in looking for qualifications the experience of the auditor is at least as important as the basic training that he has received. The auditing of company accounts for small and medium-sized organisations calls ideally for a fairly wide experience in that field.
      One could ask "Why do not young men and women wishing to become professional auditors join the two existing bodies? Why should they join the society?" There are, of course, differences in training. The Institute of Chartered Accountants in England and Wales requires that a candidate should serve articles. This is not so with certified accountants. Nor do certified accountants insist on candidates being university graduates, although the institute would like to insist, and hopes to insist, on a graduate-only entry. The Institute of Chartered Accountants of Scotland already does so.
      The certified accountants ask that candidates should undertake a period of training with a principal. They are trained to work in industry and to work as auditors and accountants for larger companies. The society does not require graduate candidates. It accepts the need for a master-pupil period, but treats its candidates as persons who are capable of earning their living in the ordinary way during this period.
      Incidentally, when we talk about a graduate entry, no one questions what the subject is in which the graduate should have earned his degree. It may therefore be thought that the requirement or a future requirement from the institute for a graduate entry may not perhaps alter the
      198
      professional character of its members as substantially as it may hope. The society also takes many overseas students.
      5.45 pm
      So the society is fulfilling an important role. It is increasingly fulfilling the role of training—I hope that I have shown that it is quite a severe and rigorous programme—young men and women do not have university degrees and who do not want to go through a period of articles. It is clearly right, in my opinion, that our country should offer this alternative channel for entry into the profession.
      The society would claim that it offers special knowledge of smaller company accounts. It does not aim to audit the accounts of enormous public companies. It would accept that, if recognition were given in the terms of my amendment, it would mean that it would be recognised not for those purposes but only for the purpose of auditing the smaller companies which we are now discussing.
      It is spurious to argue that smaller companies now have the benefit, and should not be denied the benefit in the future, of the services of chartered and certified accountants whose qualifications are better than those of members of the society. After all, smaller companies never see the principals. They see only the articled clerks. Many of the big firms of chartered accountants have so many principals that the currency in that respect may have been debased.
      We can also argue that the House wishes to help the smaller business man, and the smaller accountant is himself a smaller business man. In granting recognition to the society, we should be ensuring, first, that the smaller business man would have access to principals where he now does not; that he would have access to the services of auditors with a much more genuine knowledge of the needs of small companies than often happens under the present arrangements; and that the door would be held open for candidates for the profession who cannot or do not wish to obtain university degrees or to serve a period of articles.
      It would not be very difficult to confer recognition on the restricted terms that I have described, and I greatly hope that my hon. Friend may see fit to accept the amendment and confer the recognition that I am seeking.
      Mr. John FraserI strongly support the amendment standing in the name of the hon. Member for Fulham (Mr. Stevens). It is about time that the Government made a move to enfranchise a much wider body of people in accounting and auditing. I say that for a number of reasons.
      There is always a danger with qualifications. The current fashion seems to be to get a job, give it a name, invent a qualification for it, and then make the doing of the job exclusive to those who carry the qualification. Then, if too many people are getting in, one introduces a degree or diploma as a necessary preliminary, even before people start training in the profession. Professional life becomes rather like an Olympic high jump. The better that people become, the higher the opening standards.
      There are dangers in that. I am not for a moment inveighing against high standards in the professions. They are absolutely necessary. However, one must view with suspicion the possibility that some professions—and,

      199
      indeed, the Government—impose too high a standard in terms of those who can audit the books of smaller and medium-sized companies.
      Mr. Nicholas BakerHow does the hon. Gentleman square the argument that he is putting now for widening a class of people who advise and have to do with companies with the arguments that were put from the Opposition Benches about the secretaries of limited companies under the Companies Act of last year?
      Mr. FraserPerhaps I should not go into that matter. There is possibly some inconsistency, but I am advancing a view that I have advanced in the House for a long time and certainly when I was a Minister. The danger exists inside one's own profession. I remember that when I started to become a solicitor one had to have, I think, only O-levels. Then many working-class people seemed to become solicitors, so the requirement was raised to A-levels. Many working-class people went on to get A-levels. So then there was a move inside the profession to make it an all-degree profession. The same trends are present in relation to architecture, and so on. When I was an employment Minister an organisation came to me—I think that they were careers officers—suggesting that a degree should be a necessary pre-qualification for becoming a careers officer. I do not say that it was a majority view.
      One must weigh those arguments very carefully and match the necessity for high standards of training and high academic qualifications with the need to have deep practical experience. Sometimes the deep practical experience—I emphasise "sometimes"—is a better qualification than high academic standards.
      I am not trying to lay down a rule, and I am certainly not attempting to be anti-academic. I am simply saying that there is a danger in setting standards too high, and there is also the danger of a waste of manpower. A perfectly respectable argument which is put forward by well-known and distinguished members of the accountancy profession is that it is not really necessary to audit the books of some smaller companies at all, and that it is a complete waste of manpower and simply means paying people to do what becomes a routine job. I do not know whether such arguments bear weight, but I believe that we may be excluding necessary manpower by preventing responsible and respectable accountancy bodies from carrying out the audits of books of smaller companies, and taking off them work which they used to perform perfectly adequately.
      As the hon. Member for Fulham said, the bodies that he has mentioned have a particularly good record in training people who come from overseas and, I believe, in training those whose chances of getting into some of the other professions are inhibited, perhaps because of family background or educational disadvantage at the beginning. Incidentally, in saying that, I do not wish in any way to reflect upon people who are members of the bodies that the hon. Member has mentioned and who have impressive qualifications and experience. In short, looking at other areas such as the medical profession, one finds grades of qualifications. There are consultants, doctors, sisters, State registered nurses, State enrolled nurses, and so on.
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      I see no reason why one should not look at a gradation of qualifications to carry out the auditing of the accounts of a company.
      I hope that the Minister will make a sympathetic response to the case which has been consistently put to him during this debate and in past debates on Companies Bills.
      Mr. EyreAs I expected, my hon. Friend the Member for Fulham (Mr. Stevens) put his case in an attractive and persuasive style. I am very sorry to have to tell him that I cannot accept his amendment, but I hope that I shall be able to give him some helpful information.
      Auditors of companies have to say whether in their view the accounts give a true and fair view and comply with the Acts. Shareholders, creditors and other users of accounts place considerable reliance on the auditor's report. Shareholders are entitled to place the same degree of reliance on audited accounts regardless of the size of the company concerned. The importance of shareholdings does not vary according to the size of company. For that reason, the Government believe that the auditors of companies of all sizes must have a similar level of qualification.
      Shareholders need to know that auditors are properly trained and are subject to proper ethical standards. It is widely accepted that the requirements of the four recognised bodies reflect informed opinion of what is appropriate, but there is no reason why only these four bodies should have recognised status. It is certainly our policy that any accountancy body that has suitable standards will be recognised. It will need appropriate educational requirements. By that, I do not mean a false measure of educational requirements. I take the point made by the hon. Member for Norwood (Mr. Fraser). Such bodies must have appropriate educational requirements, training arrangements and examination standards, as well as ethical rules, disciplinary arrangements, technical standards and procedure—all a necessary part of the professional standards about which we have been talking.
      I am certainly ready to give the most careful consideration to any application for recognition. My Department will be glad to discuss the matter in detail with either of the bodies named in the amendment if they wish—the Society of Company and Commercial Accountants and the British Association of Accountants and Auditors.
      The hon. Member for Norwood is a solicitor, and he understands the need for high professional standards in these respects. I do not think that his comparison was quite right. He mentioned the medical profession but then moved into other bodies which are not medically qualified. I believe that he dealt with a higher grade, at least of professional distinction, within the medical profession, and then went on to talk about nurses, and so on. I do not think that that argument is quite sustainable in these matters.
      Mr. John FraserI think that it is very fair. For a long time we used to waste doctors' time in giving them jobs that nurses could perfectly adequately perform by themselves. There is increased recognition of the fact that one can dilute a job. I do not mean that in any pejorative sense. I think that it is a perfectly fair comparison.
      Mr. EyreI understand exactly what the hon. Member has in mind. I do not think that it was entirely accurate to

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      put all the people that he mentioned into the category of the medical profession. That is the only point that I am making. Again, I take his point with regard to education. I take my hon. Friend's point about the opportunity to join a body and to qualify and to obtain a full professional qualification. I promise the most careful consideration of any application for recognition.
      I also recognise that the British Association of Accountants and Auditors applied for recognition some years ago and has not withdrawn its application. I take my hon. Friend's point. If that association or the Society of Company and Commercial Accountants wishes to pursue this matter, my Department is at their disposal.
      Mr. StevensI am most grateful for the outspoken and staunch support from the hon. Member for Norwood (Mr. Fraser) and for the friendly response from my hon. Friend the Under-Secretary. I know that both the society and the association will heed the Under-Secretary's words and will be as grateful as I am for the spirit in which they were uttered. As my hon. Friend the Minister is to be the guest of honour, in two or three weeks' time, at the society's annual dinner, I have no doubt that that occasion will afford him the opportunity of learning more about it. It will also afford him an opportunity to heed its aspirations in a more human and relaxed fashion than is possible in the Chamber tonight. I shall ensure that his words are conveyed to the society. No doubt it will take advantage of the invitation that my hon. Friend has extended.
      In those circumstances, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

      Clause 23

        INDEX OF NAMES
        6 pm
        Mr. EyreI beg to move amendment No. 2, in page 30, line 34, at end add
        "or the Industrial and Provident Societies Act (Northern Ireland) 1969.'
        Mr. Deputy SpeakerWith this it will be convenient to take Government amendment No. 3.
        Mr. EyreThis amendment will include in the classes of bodies whose names are to form the statutory index to be kept by the Registrar of Companies societies registered under the Industrial and Provident Societies Act (Northern Ireland) 1969.
        Amendment No. 3 seeks to prohibit the Secretary of State from removing from the index the names of 1948 Act companies and overseas companies.
        Amendment agreed to.
        Amendment made: No. 3, in page 30, line 42, after "body', insert
        "except any within subsection (1)(a) or (b) above'.—[Mr. Gummer.]

      Clause 24

        CHANGE OF NAME
        Mr. EyreI beg to move amendment No. 4, in page 31, line 15 leave out from 'within' to 'period' in line 16 and insert 'such'.
        Mr. Deputy SpeakerWith this, it will be convenient to take Government amendments Nos. 5, 6 and 7.
        Mr. EyreGiven the substantial amendments already agreed in Committee, these further amendments to the proposed regime for the future control of company names demonstrate the flexible approach that the Government have sought to maintain on this subject. I am grateful for the constructive suggestions that have been made throughout our debates. I am sure that, as a result, we have evolved a framework within which the administration of this particular aspect of company law can proceed more efficiently while maintaining the necessary measures of protection for established commercial interests.
        As a result of discussion in Committee concerning the damage that could in certain cases be caused by a company registering a name the same as or "too like" that of another company already on the register, or with a name which has been obtained as a result of misleading information having been given, it was considered that the Secretary of State should have powers to direct a company to change its name as soon as possible. This amendment removes the minimum period which must be given for such change to take place from six weeks to such period as the Secretary of State may specify.

        Although the change of name must be made by special resolution of the company and will normally involve the giving of 21 days' notice of the meeting to pass the resolution, nevertheless the proviso to section 141(2) of the 1948 Act makes it clear that this need not always be the case and accordingly we consider that there is no need to specify a minimum period for a change of name.
        A further point arises regarding the period during which a change of name could be required. The Bill presently provides that a direction to change a name can be made only within a period of 12 months after the company has been registered by the name in question. We have brought forward amendments to cover the case where a name has been obtained by the provision of misleading information to the Secretary of State.
        We consider that a distinction should be drawn between cases involving "identical" and "too like" names and ones involving misleading information being given to the Secretary of State. In the former case we consider that after 12 months a company should be entitled to certainty in its name. In the latter case, which could involve an element of dishonesty, we feel that the power to direct a change of name should be available for as long a period as is reasonably practicable. In these circumstances, we propose that the Secretary of State should be able to exercise his power to direct the company to change its name at any time within five years of the date of registration. Five years has been chosen as a reasonable period during which the registrar will retain pre-incorporation documents.
        Mr. John FraserThe amendments are welcome because they recognise the fears expressed by the Opposition in Committee during debate on the clause. I am grateful for the fact that there is a longer period in which to put right any mischief. Will the Minister confirm something that he may have confirmed in Committee—namely, that he and the registrar will be receptive in informally looking at genuine complaints from members of the public or companies with similar names and that the initiative will not be left entirely to

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        companies and to the practice of non-company law, such as slander of title? I hope that the Minister and the registrar will be receptive to any genuine weighty complaints that may be brought by members of the public who feel that their business reputations are being damaged by those who have falsely assumed their names and thereby misled the public.
        Mr. EyreThe hon. Member for Norwood (Mr. Fraser) will understand that the registrar cannot accept a legal obligation in this respect. However, the registrar wishes to be as helpful as he can in providing his general service, as well as in the aspect mentioned by the hon. Gentleman. The registrar will want to discharge his duties in as helpful a way as possible.
        Amendment agreed to.
        Amendments made: No. 5, in page 31, line 26, leave out 'twelve months' and insert 'five years'.
        No. 6, in page 31, line 28, leave out from 'within' to 'period' in line 29 and insert 'such'.
        No. 7, in page 31, line 32, leave out from 'period' to end of line 35 and insert
        'within which the company is to change its name, at any time before that period expires.'.—[Mr. Gummer.]

      Clause 29

        DISCLOSURE OF NAMES OF PERSONS USING BUSINESS NAMES
        Mr. EyreI beg to move amendment No. 8, in page 37, line 28, after 'letters', insert
        'written orders for goods or services to be supplied to the business,'
        The amendment extends the scope of the documents on which the details of persons using a business name must appear to include all written orders for goods or services to be supplied to the business. The amendment arose from a debate in Committee. I appreciate many of the points that were put forward by hon. Members. The amendment represents an improvement to the alternative system, and I hope that it will be welcomed by the hon. Member for Hackney, Central (Mr. Davis).
        Mr. Clinton DavisIn so far as one can support an improvement to a hopeless system, I support the amendment.
        Amendment agreed to.
        Mr. EyreI beg to move amendment No. 9, in page 38, line 3, after 'above', insert
        'or which would have been so required but for subsection (3) below'
        The amendment clarifies an apparent anomaly regarding the provision of details of proprietors where partnerships of more than 20 persons are concerned. The amendment makes it clear that subsection (2) applies to require details of proprietors to be furnished in writing immediately for partnerships of more than 20 persons to any person with whom anything is done or discussed in the course of a business and who asks for such names and addresses.
        Amendment agreed to.
        Mr. EyreI beg to move amendment No. 10, in page 38, line 8, leave out 'sent out' and insert 'issued'.
        It has been suggested by the Law Society that it would be preferable to avoid the use of different wording when
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        describing identical actions. I accept the points made by that society and I hope that the House will agree to this amendment.
        Amendment agreed to.

      Clause 34

        PRELIMINARY PROVISIONS
        Mr. EyreI beg to move amendment No. 11, in page 41, line 14, leave out from 'account)' to end of line 18 and insert
        'in the circumstances mentioned below in this section'.
        Mr. Deputy SpeakerWith this we may discuss Government amendments Nos. 12 and 13.
        Mr. EyreBefore we consider the amendments, it might be helpful if I remind the House of the background to them and in particular of the revised proposals introduced by the Government in Committee.
        Section 56 of the 1948 Act deals with the treatment of premiums on issue of shares for cash or otherwise. In certain forms of acquisitions and mergers shares are issued for shares. The application of section 56 in such cases has, since 1948, given rise to two distinct schools of thought. One favours the strict interpretation of section 56, so that share premium account is recognised in all cases and pre-acquisition profits are locked up. The other sees scope for a more liberal interpretation whereby no share premium account may be recognised and pre-acquisition profits remain available for distribution.
        In early 1980 a decision in the High Court in the case of Shearer v. Bercain involved a strict interpretation that resulted in fairly restrictive prospective relief from section 56.
        In response to proposals, the CBI convened a working party comprising CCAB and Law Society representatives to consider whether a consensus in favour of a broader prospective relief could be established. Such a consensus was established and the proposals were submitted to the Government in June. In essence, the working party proposed, and the Government accepted, that relief from section 56 should be available in the case of any share or share transactions involving the issue of equity shares by one company as a result of which it becomes the holder of 90 per cent. of the equity shares in another company.
        The working party made other recommendations which have been taken into account. Apart from the forthcoming regulations, the provisions in the Bill follow closely the CBI working party recommendations.
        Clause 35 gives effect to the working party's main recommendation in respect of prospective relief. The retrospective provisions of clause 37 remain largely unchanged.
        Clause 36, dealing with infra-group reconstruction, like the previous clause 38, is maintained as providing useful separate circumstances for which relief is to be made available.
        Representations have been made to the Department that there is some ambiguity in the wording of clause 34 that may lead to the conclusion that the prospective relief by clauses 35 and 36 is available only in respect of qualifying transactions effected between 4 February 1981—the date of the Bill's publication—and the date of Royal Assent. This is not correct, but the Government have introduced these amendments to clarify the objective of this clause.

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        Amendment agreed to.
        Amendments made: No. 12 in page 41, line 20, leave out from 'company' to 'only' in line 22 and insert
        "issues or has issued shares in circumstances to which either of those sections applies, but in the case of an issue which took place before the section in question came into operation'.
        No. 13, in page 41, line 27, at end insert—
        '(4) References in sections 35 to 37 of this Act to the issuing company are references to the company issuing the shares as mentioned in subsection (2) or (3) above.'—[Mr. Eyre.]

      Clause 35

        MERGER RELIEF
        Mr. EyreI beg to move amendment No. 14, in page 41, line 28 at beginning insert—
        "Subject to section 36(5) of this Act'.
        Mr. Deputy SpeakerWith this we may discuss Government amendment No. 15.
        Mr. EyreThese amendments make it clear that clause 36 takes precedence over clause 35 where shares are issued in circumstances in which both clauses would otherwise apply. That is because clause 36 provides slightly more restrictive relief from section 56 of the 1948 Act than that offered by clause 35, to take account of the particular characteristics of intra-group reconstructions.
        Amendment agreed to.

      Clause 36

        RELIEF FROM SECTION 56 IN RESPECT OF GROUP RECONSTRUCTIONS
        Amendment made: No. 15, in page 43, line 14 at end insert—
        '(5) Section 35 of this Act shall not apply in any case to which this section applies.'.—[Mr. Eyre.]

      Clause 37

        RETROSPECTIVE RELIEF FROM SECTION 56 IN CERTAIN CIRCUMSTANCES
        6.15 pm
        Mr. EyreI beg to move amendment No. 16, in page 43, leave out lines 33 to 36.
        This amendment deletes a provision in terms of the retrospective relief from section 56, which limits that relief to any part of the premium on shares issued in relevant circumstances that has been so applied that it does not, at the date of the Bill's publication—4 February 1981—form an identifiable part of the issuing company's reserves.
        Amendment agreed to.

      Clause 38

        PROVISIONS SUPPLEMENTARY TO SECTIONS 35 TO 37
        Mr. EyreI beg to move amendment No. 17, in page 44, line 2 leave out from first 'shares' to 'to' and insert "or other consideration provided for the shares issued is'.
        I am glad to say that this amendment is consequential to the amendments to the merger relief clauses.
        Amendment agreed to.

      Clause 40

        CERTAIN ASSISTANCE FOR ACQUISITION OF SHARES PROHIBITED
        Mr. EyreI beg to move amendment No. 18, in page 45, leave out lines 22 to 42 and insert—
        ' —(1) Subject to the following provisions of this section and sections 41 and 42 of this Act, where a person is acquiring or is proposing to acquire any shares in a company it shall not be lawful for the company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of that acquisition before or at the same time as the acquisition takes place.
        (1A) Subject to the following provisions of this section and sections 41 and 42 of this Act, where a person has acquired any shares in a company and any liability has been incurred (by that or any other person) for the purpose of that acquisition it shall not be lawful for the company or any of its subsidiaries to give any financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.
        (2) Subsection (1) above shall not prohibit a company from giving any financial assistance for the purpose of any acquisition of shares in the company or its holding company if—

        the company's principal purpose in giving that assistance is not to give it for the purpose of any such acquisition or the giving of the assistance for that purpose is but an incidental part of some larger purpose of the company; and

        the assistance is given in good faith in the interests of the company.

        (2A) Subsection (1A) above shall not prohibit a company from giving any financial assistance if—

        the company's principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of any shares in the company or its holding company or the reduction or discharge of any such liability but is an incidental part of some larger purpose of the company; and

        the assistance is given in good faith in the interests of the company.'.

        Mr. Deputy SpeakerWith this we may discuss Government amendments nos. 19, 21 to 32, 35, 41 and 162.
        Mr. EyreClause 40 is included in the Bill to repeal and replace section 54 of the 1948 Act, which prohibits financial assistance by a company for the purchase of or subscription for its shares or those of its holding company, if it has one. The basic purpose of the clause is to redefine that prohibition and to maintain existing exemptions while providing new exemptions.
        The new exemptions are intended to take account of the effect of the decisions of the courts in two cases in 1979 and 1980—Belmont Finance Corporation v. Williams Furniture and Armour Hick Northern Ltd v. Whitehouse and others. They drew attention to the breadth of the section 54 prohibition and caused the financial community and its advisers to be concerned that it needed to be interpreted much more widely than had previously generally been thought.
        Section 54 had long been criticised as being avoidable by the unscrupulous and an unnecessary inconvenience for the honest. The attention that has been drawn by the recent cases to the breadth of the clause has caused great concern because it is thought that it interferes unnecessarily with many legitimate commercial arrangements, particularly in the sphere of group finance after a new subisidiary has been acquired.
        The problem can be illustrated by the case of an acquiring company with a debenture existing before an

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        acquisition, which has as one of its terms that the assets of all subsidiaries of the acquiring firm will be charged to secure the debenture.
        It is considered that the security thus provided by a newly acquired company may fall within the scope of the section 54 prohibition, although the security is purely a consequence of the acquisition and is not instrumental in bringing it about.
        Mr. Clinton DavisI do not ask the Minister to answer my question immediately, but when were the amendments tabled? That is important in relation to the measure of consultation that could have taken place.
        Mr. EyreI shall have to inquire. I appreciate the importance of the hon. Gentleman's point. There has been considerable and intense concentration on this extremely complex aspect. I hope that I shall be able to assure the hon. Gentleman that much time has been allowed for consideration of what is now the final form of the amendments. My Department has consulted the interests concerned and co-operated with them with the aim of getting this complicated matter as correct as possible.
        I shall provide more information in the hope that I can answer the hon. Gentleman's query in greater detail. A subsidiary company may provide funds to its parent, possibly some years after its acquisition, to effect a more efficient disposition of assets within the group or to improve its financial position. The provision of those funds may relieve the parent of indebtedness incurred for the purpose of acquiring the subsidiary, but, if the primary purpose of the subsidiary in providing funds is other than to provide such relief, it is considered that the arrangement should be allowed as a desirable commercial activity.
        Intensive consultations have proceeded throughout the passage of the Bill to find a satisfactory form for provisions that will exempt activities and arrangements that are in the interests of an acquired company, its members and creditors and the group and its lenders but will not help an acquired whose sole purpose is to strip an acquired company of its assets to make good his expenditure in his acquisition.
        I understand that it may take some time to answer the query raised by the hon. Member for Hackney, Central (Mr. Davis).
        The amendments reflect the outcome of the consultations. I am pleased to inform the House that they have the approval of those whom we consulted, including not only those who advise companies on the legality of the proposed arrangement, but—I think it may interest the hon. Member for Hackney, Central—Finance for Industry Limited, which shares the Government's concern to ensure that the obstacle to the management buy-out that section 54 presently represents should be removed. Our consultations on what probably has been the most difficult of all the provisions in the Bill have been detailed and time-consuming. The Government are grateful to those who have contributed.
        The most important of the amendments to clause 40 is amendment No. 18. It comprises a more radical restatement of the basic prohibition against a company giving financial assistance and of the exemption for assistance when the primary purpose is not to give assistance for the purpose of the acquisition. The essential change from the provision in the Bill, which follows
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        closely the words of section 54, is that the reference to "financial assistance" given in connection with acquisition has been dropped. The expression "in connection with" could be interpreted as referring only to financial assistance given after an acquisition, but it has given rise to great uncertainty of interpretation and has been a major element in spreading so wide the net created by the prohibition.
        The amendment distinguishes between financial assistance given before or at the same time as an aquisition and that given after the event. Financial assistance given directly or indirectly for the purpose of an acquisition before or at the same time as the acquisition is prohibited in new subsection (1). Financial assistance given after the acquisition to relieve any persons of a liability incurred for the purpose of the acquisition is prohibited by subsection (1)(a). As the offence has now been divided into two, so the defence provided for a company that can show that financial assistance for the acquisition is not its principal purpose has been divided in subsections (2) and (2)(a) to apply respectively to financial assistance before or at the same time as acquisition and after acquisition.
        The additional condition, that the assistance is given in good faith in the interests of the company, is retained. The resulting provisions deal with the uncertainties arising from both the Belmont Finance Corporation v. Williams Furniture and the Armour Hick Northern Ltd. v. Whitehouse and others decisions. They will be of considerable help to companies and their advisers and will promote legitimate commercial activity.
        Amendment No. 26 introduces two new subsections into clause 40 that complement new subsections (1)(a) and (2)(a), which are concerned with financial assistance after the acquisition. Subsections (6)(a) and (6)(b) provide definitions respectively of incurring a liability for the purpose of an acquisition and reducing or discharging such a liability. Incurring a liability is defined to include any change in a person's financial position, and reducing or discharging the liability is defined as
        "wholly or partly restoring his financial position".
        The amendments make clear that in deciding whether the financial assistance has been given after an acquisition, it is necessary to look at the overall financial position of any person involved. The use of the word "liability" is not confined to the normal strict legal meaning. Given the diversity of ways in which financial assistance might be given, it is considered that that broad definition is essential if the purpose of prohibition in the clause is not simply to be avoided.
        Amendment No. 24 deals in the simplest possible terms with the diversity of ways in which financial assistance might arise. It provides a replacement definition of "financial assistance" for that already contained in subsection (6) of the clause, which our continuing consideration and comments of consultees has suggested is not entirely effective in fulfilling its purpose. The amendment provides a simpler formulation. "Financial assistance" is defined as arising by way of gift or guarantee, security or indemnity, release or waiver or
        "a loan or any other agreement under which any of the obligations of the person giving the assistance are to be fulfilled at a time when…any obligation of any other party to the agreement remains unfulfilled."
        That last provision ensures that financial assistance includes any sort of agreement that affords any form of credit. The exemption in paragraph (b) for an indemnity

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        in respect of the indemnifier's own neglect or default is to permit a company to indemnify an underwriter of a new issue of the company's shares against neglect or default on the company's part associated with the new issue. That is a normal commercial practice that is unobjectionable and should be allowed to continue.

        Amendment No. 25 amends existing paragraph (c) of the definition of "financial assistance" contained in subsection (6). It provides that any financial assistance taking a form other than those specified in amendment No. 24 that reduces the company's net assets to a material extent is financial assistance for the purpose of clause 40. The amendment provides for the case of a company that has no net assets and deems any other financial assistance given by such a company to be relevant for the purposes of the clause. It also makes it clear that the expression "net assets" in that subsection has the same meaning as it has for the purposes of the 1980 Act. That has the effect that the questions whether a company has net assets and whether they are reduced to a material extent must be determined by reference to actual value of assets and liabilities rather than book values.
        Amendment No. 27 provides that, for the purposes of subsection (5) only, the question whether net assets are reduced is to be determined by reference to book values. I emphasise that that is for the purpose of subsection (5) only. Subsection (5) restricts any assistance given by a public company under the exemptions in subsection (4) for general lending, which is part of the ordinary course of business, to provision of funds in accordance with an employee share scheme and for lending to employees, and to such assistance as does not reduce net assets or that is provided from distributable profits. In applying the less rigorous standard based on book values, as given in the company's accounting records, the amendment adopts the policy of the European Community's second directive on company law. That is justified in the case of the limited types of payment permitted under subsection (4) that are unlikely to give rise to abuse.
        Amendments Nos. 19, 21, 28, 29, 31, 32 and 35 are consequential upon amendment No. 18.
        6.30 pm
        Amendment No. 22 applies to the definition of an employee share scheme that is contained in the 1980 Act in clause 40(4). The definition has been lost from subsection (7) as a consequence of amendment No. 27. The purpose of amendments Nos. 23 and 30 is to make clear that a company that has no net assets may not give financial assistance for the acquisition of its own shares by virtue of these provisions. A publicly owned company which has no net assets will have no distributable profits which it can use to give financial assistance. Our policy in permitting financial assistance in these cases is that it should always be found from distributable net assets to protect the interests of creditors.
        Amendment No. 41 provides a replacement subsection (8) for clause 42. It provides definitions of the expressions "financial assistance" and "net assets" for the purposes of clause 41. The change is partly consequential upon changes made to earlier amendments to clause 40.
        One change of policy has been made—namely, whether a company can be said to have net assets and, if so, to what extent. That is to be determined by reference to book value rather than the actual value of assets and liabilities.
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        Clause 41 allows a private company to provide financial assistance if it has net assets. Most private companies are small. It is considered unnecessary for the protection of creditors to require that such companies have assets and liabilities valued before they can provide financial assistance. Reliance on book values provides an adequate basis for determining whether such companies may do so.
        Amendment No. 162 deletes regulation 10 from table A of schedule 1 to the 1948 Act. The regulation provides an optional standard form of articles for public companies that largely duplicates the provisions of section 54 of the 1948 Act. Section 54 is repealed by clause 40. The deletion of regulation 10 is consequential.
        We have sought by these amendments to clarify and simplify a long-standing provision of company law in a way which retains a necessary prohibition against undesirable activities while allowing reasonable scope for commercial development and flexibility.
        I shall answer as speedily as I can the questions posed by the hon. Member for Hackney, Central. The equivalent of clause 40, with a limited new defence to clarify the position, was included in the Bill when it was introduced in another place. The clause was considerably criticised and on Report in another place the Government's spokesman said that the Government were open to persuasion on the appropriate way of dealing with these problems.
        In response to that invitation, the Government received a considerable body of representations from a number of organisations and individuals. As a result, the Government introduced in Committee the special relief for private companies in clauses 41 and 42. The clauses were debated on 30 June. At the same time, we added to the list of exclusions in clause 43, an action that has been widely welcomed. I know that the hon. Gentleman and I have vivid memories of the detail of the discussion that took place in Committee.
        The amendments before us, on which we held consultations during August and September with representatives of the Law Society, the banks, Finance for Industry Ltd. and those representing certain bodies concerned in management buy-outs, were tabled on 8 October. The purpose of the amendments is further to refine the basic principle of the clauses as tabled in Committee.
        Representations were made that the clauses were not as clear as they might be. The hon. Member for Hackney, Central seems surprised. The hon. Gentleman will understand that we are dealing with a difficult matter. The problems have been notorious for many years. I am happy to assure him that those concerned are generally content with the amendments as tabled.
        A most tremendous effort has been made to work with the bodies that I have mentioned, which have played such a helpful part in the negotiations. Those bodies include especially the Law Society, the Bar and representatives of financial bodies. Those representatives are generally content. I hope that the hon. Gentleman will be able to accept that as reassuring news.
        Against the background of these complicated matters, he and I are both much dependent on the ability of expert advisers to grapple with the details. I believe that the result of these efforts is an improved Bill. We discussed at an earlier stage the principles that are involved and I know that they have found agreement with the hon. Gentleman.

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        I hope that he will be able to approve all the efforts that have been made to get in correct form the ensuing detailed arrangements.
        Mr. Clinton DavisI do not want to discuss the principles underlying the changes in the law which the Minister has enunciated and with which he dealt more specifically earlier in our considerations. However, I am deeply disturbed at the way in which the House is being asked to deal with what is admittedly complex legislation.
        The Minister says that he is simplifying formulae and clarifying and simplifying the Bill. I suppose that everything has to be regarded relatively. If he thinks that at the end of the day we shall emerge with a simple formula, I cannot share his opinion, to put it at its most polite. If our considerations on Report were followed by considerations on super Report and by further considerations on super, super Report, I expect that more changes would be made as we went along.
        I wish that I had the same confidence as the Minister has displayed. He has suggested that he has now found the magic formula. This is the Government's third attempt. I remind the Minister that he said in Committee on 30 June:
        "In the light of the representations received, the Government have decided upon a radical revision of section 54 rather than the simple clarification which we sought initially. As regards private companies, we have tabled amendments in the spirit of the approach of the Jenkins committee, to permit a company to assist the acquisition of its own shares subject to proper safeguards for creditors and minority shareholders. This is the purpose of new clauses 11 and 12."
        The Minister continued to talk about the consultations that had taken place. He commented on how everybody at that stage appeared to be satisfied. The same sort of representatives had been consulted then. The Minister provided the Committee with a powerful peroration. He said:
        "We all realise the importance of the measures and I am grateful for the contributions made by hon. Members."
        The Minister is unfailingly polite to all hon. Members. In fact, the contributions had been limited. If we had had a full-scale debate, the Minister's plaudits would have been more deserving. He was kind to us even when we were failing in our duties. He added:
        "I believe that the Government's proposals meet the needs. They have, after all, followed the most tremendous and worthy efforts in consultations to get the proposals right and take account of good points. The proposals are now in an acceptable form, which I commend to the Committee."—[Official Report, Standing Committee A, 30 June 1981; c. 296–317.]
        The Minister said the same today. What worries me is whether the Government can be right. Exactly the same people said that they were right before, and then they had second thoughts. It would be wrong for me to complain. I do not complain that people should have second thoughts in matters as complex as this one. However, I am not satisfied that the second thoughts are necessarily right in matters as complex as this.
        I am sure that the way in which Parliament is permitted to scrutinise this form of legislative proposal is hopelessly and utterly inadequate. That proposition could not be more demonstrably true than in this instance. In effect, Parliament has been effectively cut out of the process of properly considering these proposals. We could not have considered the proposals which were laid before the Committee as they were laid at a late stage. The Minister will be the first to concede that. He generously conceded
        212
        it when we dealt with the matter in Committee. Now we know that, following those detailed consultations, the new proposals were laid on 8 October.
        One of the most important features of proper scrutiny of legislation is that the Opposition and Government Back Benchers should be involved. Perhaps we have a contribution to make. However, the reality is that when professional bodies and other bodies such as those which have been involved in the consultation have been up to their eyes in trying to get the situation right with departmental officials, there is no time for that broader consultation to take place. That is grossly unsatisfactory.
        I have made that plea in Committee and on the Floor of the House on a number of occasions. I thought it right to seize this opportunity because the example of the inadequacies of our procedures was so clear that I could make that complaint again. I cannot plead not guilty to the same charge. When in a Minister's position and undertaking complex legislation, and when relying heavily on professional expertise, one cannot avoid those concerned saying that they are dissatisfied with the proposals, although they had vetted them before, and that they are therefore now advancing a different proposition. One must listen favourably to them.
        Mr. Nicholas BakerWill the hon. Member accept that the commercial company world is changing fast—for example, in management buy-outs? That is happening on an increasing scale. I understand why the representations that were made recently about how section 54 might affect such transactions would be different from the representations that were made only six months ago.
        Mr. DavisI dare say that the hon. Member is right. That demonstrates more forcibly the inadequacies of procedures so antiquated that they cannot possibly deal with the challenges of legislative requirements which are imposed upon us. I do not believe that the Select Committee procedure that is currently employed is the right way to deal with this matter. We should employ the statutory instrument formula more readily. We discussed that formula yesterday. Although the statutory instrument cannot be amended in its present form, subsequently it can be changed much more easily.
        If this proposal is all wrong and found to be totally impracticable, what shall we do? The poor Minister has to persuade his colleagues to give him more time. If the situation becomes demonstrably wrong, he must persuade his colleagues to give him more time for another Companies Bill to deal with that situation. What happens then? We have another major Companies Bill because he cannot stop that happening.
        Therefore, we are living in an Alice-in-Wonderland world when dealing with company or patent legislation—anything that is complex, and most of which is non-contentious. The Minister should try to persuade his colleagues to see that in this area of the law we are able to deal with changing circumstances much more rapidly and effectively than our present formulae permit us to do. I think that I carry the few hon. Members in the House with me on that.
        6.45 pm
        I only wish that the Minister's confidence in the present situation would be realised. I genuinely believe that change is necessary and that the Minister is trying to get this matter right. I wish to correct one possible

        213
        misunderstanding. I acquit his officials of any blame in this respect. I do not believe that it would be right to charge them with any lack of diligence. I know them well enough, although the individuals have changed since I was in the Department. That Department has always gone to great lengths to consult. The officials are not without criticism. No one is. However, they do their job with care and skill, particularly when one realises that most of them are not lawyers. They have to grapple with those horrendous problems with no legal background.
        However, other Members of Parliament need to be involved in the process. Coupled with the suggestions which I have made previously, there is no reason in the world why interested Members from all parties with an interest in a technical subject in which political overtones are not involved should not be called in by the Minister and told at an early stage that their co-operation is desired. I believe that this Minister would welcome that approach, but perhaps the mores to which we are accustomed will not permit him to do that. We must break down those reserves. That is never truer than in this range of company legislation.
        In the Bill we will come across more and more second, third and even fourth thoughts. I am prepared to understand why that happens. The Minister is right to think again about propositions which have been shown by those who are expert to be likely to founder. Of course, he is right to be flexible. That is being realistic. However, I hope that he will think again about the procedural follies in which we are engaged. They are almost pantomimes when we consider such Bills when, because we are given such short notice to consider the matters in detail, we are caught out of our depth. That is wholly wrong. However, having said that, I do not object to the propositions which the Minister has put forward.
        Mr. Neville TrotterThe hon. Member for Hackney, Central (Mr. Davis) made some interesting points in his philosophising about the way in which the House considers a Bill of this magnitude and complexity. I suppose that it is because of the lack of briefings that so many hon. Members are absent tonight. One might have thought that there would be general interest in such a Bill. Obviously, there is not. Perhaps it is significant that it is being debated in the week of an important by-election. No doubt many hon. Members are in Croydon tonight.
        One wonders whether the time scale of the annual parliamentary procedure is appropriate for a Bill of this nature and magnitude. There must always be the problem of a Bill failing completely if it does not complete its passage through the House within a year. Does a Bill of such a technical nature really need to be subjected to the usual cut-off procedure at the end of the parliamentary Session? Could it not be allowed to go on into the next Session? There would then be more time at each stage for the necessary consultation.
        I cannot help reflecting on whether it is necessary in this modern age to have the detailed discussion of every technical amendment on the Floor of the House in this way, and whether it might not be better to have amendments tabled, with the right of hon. Members to select those that they wish to debate. It puts a very heavy burden on the Minister to have to go through every one of the technical amendments in detail when obviously most of them are not controversial.
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        I was involved in one discussion on amendments in Committee. It was, in fact, a colleague in my own firm—a man of great eminence in his field—who pointed out that the wording that had been incorporated initially would produce some practical and serious problems that could prevent the clause from having the desired effect. The amendments before the House tonight will, I think, deal satisfactorily with his objection. But in general the concept of supporting and enabling management buy-outs is one on which the Government are to be congratulated. Finance for Industry Limited was very concerned that company and tax law are making it almost impossible for management buy-outs—which would save companies and provide a secure future for them—to take place.
        There were two prongs of attack on the problem. In so far as one was involved in trying to obtain amendments at the Treasury end of the Government, one met with no success whatever. There were tax situations on which liabilities arose that were in no way reflecting real events. They were completely artificial tax liabilities that were arising in the attempts that were being made to get round the existing company law that prevented management buyouts. I know that Finance for Industry Limited was as pleased as I was that my hon. Friend was able to solve this problem by means of the clause that we are debating tonight. I should like to record my appreciation, and that of my profession, for the ready way in which he has enabled this problem to be overcome. It is one of the most beneficial clauses in the whole of the Bill.
        Mr. EyreI have a good deal of sympathy with the views expressed by the hon. Member for Hackney Central (Mr. Davis) on the need for the involvement of Back Benchers, both Government and Opposition, in the preparation of legislation. The hon. Gentleman knows—and was kind enough to say in his speech—that there are specially difficult factors in this area of company law, and that those difficulties, in the case that we are now discussing, have been greatly intensified by limitations of time. They have also been made more difficult by virtue of the fact that the House has been in recess while much of the slogging work has had to be done and the refinements developed.
        The hon. Gentleman will have noted that the amendments in question were tabled on 8 October, but we both understand that at about that time of year there are other demands upon the time of hon. Members who are involved in these complicated matters. Within all this complexity, I accept that more time would have been most desirable, but I much appreciate the hon. Gentleman's entirely justified tribute to the efforts of officials in my Department. Like myself, they have been doing everything they can, under pressure, to get this legislation as right as possible.
        I should also like to express my appreciation to my hon. Friend the Member for Tynemouth (Mr. Trotter) for his kind remarks. He emphasised the need for the great expertise that has to be developed in so many areas of the subject for a person to be able to offer an informed opinion on a current problem or to get anywhere near solving it. We all appreciate that and are humiliated by the complexity of the considerations involved.
        My hon. Friend the Member for Dorset, North (Mr. Baker), in an intervention, made an important practical point when he emphasised the rapidity with which change

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        takes place in commercial law. The pressure that then develops for something to be done in the legislative field is enormous and difficult to resist.
        Taking account of all these factors, I shall bear very much in mind the procedural points made by the hon. Member for Hackney, Central, and I am grateful to him for the way in which he has accepted the amendments.
        Amendment agreed to.
        Amendment made: No. 19, in page 46, line 1, leave out 'Subsection (1)' and insert 'Subsections (1) and (1A)'.—[Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 20, in page 46, line 3, leave out 'paid or' and insert 'made or any distribution'.
        The purpose of the amendment is to clarify the drafting of paragraph (a) of subsection (3) of clause 40.
        Amendment agreed to.
        Amendments made: No. 21, in page 46, line 20, leave out 'Subsection (1)' and insert 'Subsections (1) and (1A)'.
        No. 22, in page 46, line 25, after 'scheme', insert
        'within the meaning of section 87(1) of the 1980 Act)'.
        No. 23, in page 46, line 34, leave out 'company's net assets' and insert
        'company has net assets which'.
        No. 24, in page 46, leave out from beginning of line 39 to end of line 5 on page 47 and insert—

        'financial assistance given by way of gift;

        financial assistance given by way of guarantee, security or indemnity, other than an indemnity in respect of the indemnifier's own neglect or default, or by way of release or waiver;

        (ba) financial assistance given by way of a loan or any other agreement under which any of the obligations of the person giving the assistance are to be fulfilled at a time when in accordance with the agreement any obligation of any other party to the agreement remains unfulfilled or by way of the novation of or the assignment of any rights arising under any loan or such other agreement; or'.
        No. 25, in page 47, line 6, leave out from 'company' to end of line 7 and insert
        'the net assets of which are thereby reduced to a material extent or which has no net assets.
        In this subsection "net assets" has the same meaning as it has for the purposes of the 1980 Act.'.
        No. 26, in page 47, line 7, at end insert—

        'Any reference in this section to a person incurring any liability shall be read as including a reference to his changing his financial position by making any agreement or arrangement (whether enforceable or unenforceable and whether made on his own account or with any other person) or by any other means.

        Any reference in this section to a company giving financial assistance for the purpose of reducing or discharging any liability incurred by any person for the purpose of the acquisition of any shares shall be read as including a reference to the company giving financial assistance for the purpose of wholly or partly restoring his financial position to what it was before the acquisition took place.'.

        No. 27, in page 47, leave out lines 8 to 10 and insert—
        '(7) For the purposes of subsection (5) above—

        "net assets", in relation to the giving of financial assistance by any company, means the amount by which the aggregate amount of the company's assets exceeds the aggregate amount of its liabilities taking the amount of both assets and liabilities to be as stated in the company's accounting records immediately before the financial assistance is given; and

        "liabilities" includes any amount retained as reasonably necessary for the purpose of providing for any liability or loss which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise;'.—[Mr. Eyre.]

      Clause 41

        RELAXATION OF SECTION 40 RESTRICTIONS FOR PRIVATE COMPANIES
        Amendments made: No. 28, in page 47, line 20, after '(1)', insert 'and (1A)'.
        No. 29, in page 47, line 21, leave out 'for the' and insert
        'in any case where the acquisition of shares in question is or was an'.
        No. 30, in page 47, line 27, leave out 'company's net assets' and insert
        'company has net assets which'.
        No. 31, in page 47, line 32, leave out 'for the' and insert
        'in any case where the acquisition of shares in question is or was an'.
        No. 32, in page 47, line 40, leave out 'for the' and insert
        'in any case where the acquisition of shares in question is or was an'.— [Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 33, in page 48, line 12, leave out from 'contain' to first 'of' in line 13 and insert
        'such particulars of the assistance to be given and'.
        Mr. Deputy SpeakerWith this it will be convenient to take Government amendment No. 34.
        Mr. EyreAmendment No. 33 permits the particulars of financial assistance that a private company plans to give under clause 41, and which must be stated in the statutory declaration made by the directors, to be prescribed by the Secretary of State.
        Amendment No. 34 adds an alternative basis for the directors' statutory declaration, that the company will remain able to pay its debts for a year after financial assistance for the purpose of acquisition of its shares is given. Their declaration will still have to be based on the present requirement in subsection (7)(b)(i) of clause 41 as to the company being able to pay its debts immediately after the assistance is given.
        The new provision is intended to provide an alternative to the present requirement concerning solvency over the following year.
        Amendment agreed to.
        Amendments made: No. 34, in page 48, line 22, leave out from 'debts' to end of line 27 and insert
        'and either—
        () if it is intended to commence the winding up of the company within twelve months of that date, that the company will be able to pay its debts in full within twelve months of the commencement of the winding up; or
        () in any other case, that the company will be able to pay its debts as they fall due during the year immediately following that date.'.
        No. 35, in page 48, line 43, leave out
        'for the acquisition of any shares'.—[Mr. Eyre.]
        Mr. Eyre Mr. Eyre: I beg to move amendment No. 36, in page 49, line 6, leave out 'each such resolution' and insert
        'that resolution (or, if more than one, each of them)'.
        The amendment provides a justifiable exception to the requirement that a period of four weeks shall elapse between the passing of a resolution and the giving of assistance under the clauses that we have been discussing.
        Amendment agreed to
        Mr. Eyre Mr. Eyre: I beg to move amendment No. 37, in page 49, line 14, leave out 'seven' and insert 'eight'.
        The amendment increases the maximum length of time, after the directors have made their statutory declaration, during which the company can give the financial assistance, from seven weeks to eight weeks.
        Mr. Clinton DavisWill the Minister explain briefly why that period has been extended?
        7 pm
        Mr. EyreI am glad to do so. The amendment is put forward following comments that various representative bodies have made about the short amount of time allowed by these provisions for a company to complete a transaction involving the giving of financial assistance. There is a need to ensure that the statutory declaration by the directors is as recent as possible at the time when assistance is given, as this is often an important safeguard for creditors. However, the Government consider it reasonable to allow a little more time by this amendment, increasing the present seven-week period for the statutory declaration to eight weeks. This will allow the same maximum as those provisions permitting a company to purchase its own shares out of capital. The company will thus have a maximum of three weeks in which to give the financial assistance, because one week is allowed after the declaration for the assistance to be authorised by the company and a further four weeks must elapse before any payment can be made, to allow time for any application to the court for cancellation of the authority. The hon. Gentleman will realise that that makes eight weeks.
        Mr. Clinton DavisI think that this is a useful proposal The standardisation of the procedure is also helpful as it tends to the avoidance of doubt and difficulty about the time scale for many of these matters. I therefore support the proposal.
        Amendment agreed to.

      Clause 42

        PROVISIONS SUPPLEMENTARY TO SECTION 41
        Mr. EyreI beg to move amendment No. 38, in page 49, line 26, leave out within the week immediately following' and insert 'on'.
        Mr. Deputy Speaker (Mr. Bernard Weatherill)With this it will be convenient to take Government amendment No. 39.
        Mr. EyreThese amendments make clear that the special resolution authorising the giving of financial assistance may be passed on the same day as the directors make the statutory declaration or within the week immediately following that day.
        Amendment agreed to.
        Amendment made: No. 39, in page 49, line 29, at end add
        'or within the week immediately following that date.'.—[Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 40, in page 50, line 19, after 'is', insert 'required to be'.
        This amendment changes subsection (5)(b) of clause 42 to make it clear that it applies only where no special resolution authorising financial assistance is required to be passed because the company is a wholly owned subsidiary.
        Amendment agreed to.
        Amendment made: No. 41, in page 50, leave out lines 36 to 38 and insert—
        '(8) In section 41 of this Act, "financial assistance" and "net assets" have the meaning given by subsections (6) and (7) of section 40 of this Act respectively.'.—[Mr. Eyre.]

      Clause 43

        POWER OF COMPANY TO ISSUE REDEEMABLE SHARES
        Mr. EyreI beg to move amendment No. 42, in page 50, line 43, leave out from 'are' to end of line 44 and insert
        'to be redeemed or are liable to be redeemed at the option of the company or the shareholder'.
        This amendment makes express provision for a company to issue shares that are redeemable at the option of either the shareholder or the company.
        Amendment agreed to.
        Mr. Eyre Mr. Eyre: I beg to move amendment No. 43, in page 51, line 8, leave out 'section 50' and insert
        'sections 50 and 55(4)'.
        Mr. Deputy SpeakerWith this it will be convenient to take Government amendments Nos. 54 to 56.
        Mr. EyreIn the hope that I shall be able to assist the House, I shall endeavour to summarise the effect of the amendments.
        The amendments Swill change the remedies that are to be available against the company where the company has failed to purchase or redeem shares. At present clause 55 provides that any general remedy that would normally be available for a breach of contract will be available against the company for failure to purchase or redeem but that in a winding-up the claim of a shareholder in respect of such failure is to be postponed to all other debts and liabilities of the company but is to have priority over the rights of other shareholders in a winding-up. Clause 55 as amended will provide, first, that a company shall not be liable to pay damages in respect of a failure to purchase or redeem but that other remedies are to be available; secondly, that where a shareholder brings an action in court for specific performance of the contract of purchase or terms of redemption no order is to be made if the company shows that it could not pay the price out of distributable profits; and thirdly, that in a winding-up the shareholder may enforce the terms of the contract or the terms for redemption provided that the due date for purchase or redemption was before the date of the commencement of the winding-up.
        I believe that that deals with the essence of the amendments.
        Amendment agreed to.

      Clause 46

        CONTINGENT PURCHASE CONTRACTS
        Amendments made: No. 44, in page 55, leave out line 6.
        No. 45, in page 55, line 15, leave out subsection (4).—[Mr. Eyre.]

      Clause 48

        DISCLOSURE OF PARTICULARS OF PURCHASES AND AUTHORISED CONTRACTS.
        Mr. EyreI beg to move amendment No. 46, in page 56, line 25, leave out 'transferred' and insert 'delivered'.
        Mr. Deputy SpeakerWith this it will be convenient to take Government amendments Nos. 47 to 49.
        Mr. EyreThese amendments replace references to shares being "transferred" to the company with references to their being "delivered" to the company or purchased by it. This is to remove any implication that a stampable instrument of transfer is necessary to effect a purchase of own shares and that stamp duty is payable.
        Mr. Clinton DavisI am glad that the Minister has seen fit to do this. I think that the Law Society made the initial representations, which we reiterated in Committee. I think that this is a sensible series of amendments.
        Amendment agreed to.
        Amendments made: No. 47, in page 56, line 29, leave out 'transferred' and insert 'delivered'.
        No. 48, in page 56, line 37, leave out 'transferred' and insert 'delivered to the company'.
        No. 49, in page 57, line 8, leave out
        'transfer of all shares purchased'
        and insert
        'purchase of all the shares'.—[Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 50, in page 57, leave out lines 17 to 20 and insert
        'without charge—

        of any member of the company; and

        if the company is a public company, of any other person.'.

        Mr. Deputy Speaker Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 84.
        Amendment No. 190, in clause 75, page 88, line 37, after 'prescribe' insert
        'which shall not exceed £5,',
        Government amendment No. 85,
        Amendment No. 191, in clause 75, page 88, line 40, after 'prescribe' insert
        'which shall not exceed £5,',
        and Government amendment No. 86.
        Mr. EyreThese amendments prevent a company from charging for inspection of certain documents, whether by members of the company or by non-members, and specify the maximum fee which a company can charge for providing copies of the documents.
        Mr. Clinton DavisI am very glad that the Government have reacted in the way in which they have on this matter. The Minister will recall that we were somewhat concerned about the situation. I think that he has met our proposals perfectly reasonably and that he has devised a solution to the difficulties to which we referred in Committee that is preferable to our own amendment No. 190.
        He will recall that the reason for our concern about the situation was that companies could easily be the sole arbiters of what the charge ought to be. I believe that it was prescribed that the company should make only a reasonable charge but the word "reasonable" can mean almost anything. We were concerned that a company that did not wish to provide the information might impose a
        220
        charge that one could not realistically challenge even though it was unreasonable. It was therefore necessary to define more specifically what the company could charge.
        I believe that what the Government now propose is very satisfactory indeed. It is possible that a company may not find the charge wholly acceptable, because it may find itself a little out of pocket. However, I believe that companies have a duty to the public as a whole and that the point is met by the Minister's recognition of that fact.
        I therefore warmly support the Government's proposals.
        Amendment agreed to.

      Clause 50

        POWER OF PRIVATE COMPANIES TO REDEEM OR PURCHASE OWN SHARES OUT OF CAPITAL
        Amendment made: No. 51, in page 58, line 43 leave out from 'the' to end of line 44 and insert—
        'price of redemption or purchase'.—[Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 179, in page 59, leave out lines 31 to 46 and insert—

        The reference in subsection (2)(a) above to available profits of the company is a reference to the company's profits which are available for distribution (within the meaning of Part III of the 1980 Act), but the question whether a company has any profits so available and the amount of any such profits shall be determined for the purposes of this section in accordance with the following provisions of this section instead of in accordance with section 43 of the 1980 Act.

        Subject to subsection (9) below, that question shall be determined by reference to the relevant items (within the meaning of section 43 of the 1980 Act) as stated in the relevant accounts for determining the permissible capital payment for any shares under this section; and those accounts are such accounts, prepared as at any date within the period for determining the amount of that payment, as are necessary to enable a reasonable judgment to be made as to the amounts of any of those items.

        For the purposes of determining the amount of the permissible capital payment for any shares under this section, the amount of the company's available profits (if any) determined in accordance with subsection (8) above shall be treated as reduced by the amount of any distributions lawfully made by the company after the date of the relevant accounts and before the end of the period for determining the amount of that payment.

        The reference above in this subsection to distributions lawfully made by the company shall be read as including any financial assistance given by the company as mentioned in subsection (1)(a) or (b) of section (Supplementary provisions relating to Part III of the 1980 Act) of this Act and any payment of a description within subsection (1)(d) or (e) of that section lawfully made by the company.

        References in this section to the period for determining the amount of the permissible capital payment for any shares are references to the period of three months ending with the date on which the statutory declaration of the directors purporting to specify the amount of that payment is made in accordance with section 51(3) of this Act.'

        Mr. Deputy SpeakerWith this we may take Government amendments Nos. 155 and 156.
        Mr. EyreThese amendments replace subsections (7) and (8) of clause 50 with provisions that are much clearer and easier to understand. The existing provisions, and those which replace them, provide a method for determining the amount, if any, of a company's distributable profits as these must be used in a purchase or redemption of its own shares before it may draw upon capital reserves. The amendment makes only one change of policy of any significance. It requires the accounts by reference to which available profits are determined to be

        221
        such as to enable a reasonable—rather than a proper, as at present—judgment of the amount to be made. This imposes a less rigorous but reasonable standard by which the matter can be judged.
        Amendment agreed to.

      Clause 51

        REQUIREMENTS FOR REDEMPTION OR PURCHASE OUT OF CAPITAL: SPECIAL RESOLUTION APPROVING PAYMENT
        Mr. EyreI beg to move amendment No. 53, in page 61, line 5, at end insert 'on or'.
        This amendment to clause 51(6) permits the special resolution authorising a payment out of capital for a purchase or redemption of own shares to be made on the same day as the making of the directors' statutory declaration, while retaining the existing requirement that it may also be made within one week immediately following the date of the declaration.
        Amendment agreed to.

      Clause 55

        EFFECT OF COMPANY'S FAILURE TO REDEEM OR PURCHASE OWN SHARES
        Amendments made: No. 54, in page 65, leave out from beginning of line 25 to end of line 16 on page 66 and insert—

        Where on or after the appointed day a company—

        issues shares on terms that they are or are liable to be redeemed; or

        agrees to purchase any of its own shares; the following provisions of this section shall apply in relation thereto.

        A company shall not be liable in damages in respect of any failure on its part to redeem or purchase any of the shares.

        Subsection (2) above is without prejudice to any right of the holder of any of the shares other than his right to sue the company for damages in respect of its failure; but the court shall not grant an order for specific performance of the terms of redemption or purchase if the company shows that it is unable to meet the cost of redeeming or purchasing the shares in question out of distributable profits.

        Where the company is wound up and at the commencement of the winding up any of the shares have not been redeemed or purchased then subject to the following provisions of this section the terms of redemption or purchase may be enforced against the company; and when shares are redeemed or purchased under this subsection they shall be treated as cancelled.

        Subsection (4) above shall not apply if—

        the terms of redemption or purchase provided for the redemption or purchase to take place at a date later than the date of the commencement of the winding up; or

        during the period beginning with the date on which the redemption or purchase was to have taken place and ending with the commencement of the winding up the company could not at any time have lawfully made a distribution equal in value to the price at which the shares were to have been redeemed or purchased.

        There shall be paid in priority to any amount which the company is liable by virtue of subsection (4) above to pay in respect of any shares—

        all other debts and liabilities of the company (other than any due to members in their character as such);

        if other shares carry rights whether as to capital or as to income which are preferred to the rights as to capital attaching to the first mentioned shares, any amount due in satisfaction of those preferred rights; but, subject to that, any such amount shall be paid in priority to any amounts due to members in satisfaction of their rights (whether as to capital or income) as members.'.

        No. 55, in page 66, line 23, leave out '(5)' and insert '(6)'.
        No. 56, in page 66, leave out lines 24 and 25.—[Mr. Eyre.]

      Clause 56

        RESTRICTION ON COMPANY'S POWERS TO REQUIRE MEMBERS TO SELL BACK SHARES
        Mr. EyreI beg to move amendment No. 57, in page 66, line 26, leave out clause 56.
        This amendment amends the definition of distributable profits provided in clause 57 for the purpose of part III of the Bill, and provides an additional definition of distribution—
        Mr. Clinton DavisAre we on amendment No. 57?
        Mr. EyreYes. The amendment has the effect of ensuring that all the provisions of part III of the 1980 Act, which determines the legality of a distribution, apply to any payment in connection with the purchase or redemption of own shares or any financial assistance which is required by the Bill to be paid out of distributable profits.
        Mr. Clinton DavisI am sorry for interrupting. Perhaps I am mistaken, but amendment No. 57 seeks to leave out clause 56 and so far I do not think that the Minister has addressed himself to that point.
        Mr. EyreI apologise to the hon. Gentleman. My hon. and learned Friend the Minister for Trade was to deal with the precise terms of the amendment that the hon. Gentleman has in mind, but it may be for the convenience of the House if I turn to the argument that my hon. and learned Friend would have developed.
        7.15 pm
        The amendment that the hon. Gentleman has in mind proposes the deletion of clause 56. The clause prevents any company, with power to alter its memorandum or articles so as to require the transfer of a share to the company or any other person, from exercising such a power in relation to any share allotted before such an alteration is made, subject to two exceptions. First, a company may exercise such a power with the consent of the Secretary of State. Secondly, a company is permitted to take a power of pre-emption requiring a member proposing to transfer shares to offer them first to the company or another member on the same or more favourable terms as those of the proposed transfer.
        The clause has been the subject of continuing consultations with outside bodies, both on the need for it in principle and on the difficulties of drafting satisfactorily an exception for powers or pre-emption while preserving the basic safeguard for shareholders against compulsory purchase of shares that the clause is intended to provide. In the light of the further representations received since Committee stage, the Government have concluded that on balance the clause should best be deleted.
        Mr. Clinton DavisI do not blame the Minister for speaking to the wrong amendment. I always find Amendment Papers extremely confusing. One must look all over the place for the amendment and the consequential amendments that are being discussed. While talking about

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        changes in our procedures, perhaps we should consider doing something about the way in which amendments are printed.
        The hon. Gentleman has said that representations have been made to him to delete the clause. Perhaps he will be more specific as to what motivated those who made this challenge to clause 56. What sort of representations were made and where did they come from?
        Mr. EyreI want to be as helpful as I can. It may assist the hon. Gentleman to know that our original purpose in introducing this provision was to safeguard holders of shares issued on terms which did not envisage the possibility of compulsory sale to the company. We thought this a valuable complement to the power of a company to purchase its own shares. A company may already take powers by amendment to its articles to compel a sale to another person, and the existing case law indicates that the exercise of such a power will be upheld by the court if it is in good faith, in the interests of the company as a whole.
        The availability to companies of a power to purchase their own shares seemed to us to give rise to the likelihood of similar powers being taken to compel sale to the company. Where someone was willing to purchase shares issued on such terms we saw no reason to prevent it, but we thought objectionable the imposition of such a power by a majority on a minority shareholding that had not been applied on such terms. We therefore sought to prohibit alteration of rights attaching to shares so as to compel sale to the company.
        It was illogical to prohibit only a transfer to the company, and the clause as drafted also prohibits an amendment to rights that would require transfer to any other person. It was, however, apparent to us that the clause should allow for an exception for cases in which the alteration of rights was in the national interest. Subsection (1) provides for this in permitting alteration with the consent of the Secretary of State. It was also clear that it was desirable for us to exempt a right of pre-emption exercisable by the company or any other person when a shareholder was proposing to transfer his shares, so long as the effect was not to make the shareholder incur some disadvantage as compared with his proposed sale. Subsection (2) attempted to provide for this.
        We have identified a number of defects in the clause. However, the extensive consideration that the clause has received, both within the Department and outside it, has failed to suggest a satisfactory way of defining the circumstances in which a pre-emption right should be permitted and which would strike a proper balance between the legitimate rights of the company and the shareholder. Those words go to the root of the difficulty.
        The choice is, therefore, between enacting the basic prohibition or deleting it. The balance of opinion among those whom we have consulted is strongly in favour of deletion. The Law Society of England and Wales, for example, has expressed itself strongly in favour of deletion and the Government have been persuaded that this is the right course. A shareholder who is aggrieved by the rights attaching to his shares will be able to have recourse to the courts to protect his interest under section 75 of the 1980 Act, which specifically provides for a member of a company to seek relief from any proposed act done by the
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        company on the basis of unfair prejudice or under common law, on the ground that it was not bona fide in the interests of the company as a whole.
        I hope, as a result of that information, that the hon. Gentleman will now be better able to understand the difficulties. I believe that the consultation with the Law Society is persuasive as to why the difficult decision to delete the clause was made by the Government.
        Mr. Clinton DavisThe knight in armour—less than shining armour—has arrived a little late, but we are glad to see the Minister for Trade, and I think that I speak for hon. Members on both sides of the House.
        This experience shows how valuable consultation is. However, the Minister will also recognise that I was left uncertain as to why this was happening. I am grateful to him for expressing so clearly the reasons why the Government felt impelled to make the change.
        Perhaps the Minister might be encouraged to use his red pencil a little more liberally on the rest of the Bill. I say that as one who might be asked to advise upon it from time to time. No doubt when he ceases to be a Minister he will be in the same position and he will then have viewed his failure to use the red pencil with concern. However, I am grateful to him for his explanation and I believe that his conclusion is right.
        Amendment agreed to.

      Clause 57

        INTERPRETATION OF PART III, REPEAL OF SECTION 58 OF THE 1948 ACT AND SAVINGS
        The Minister for Trade (Mr. Peter Rees)The Minister for Trade (Mr. Peter Rees): I beg to move amendment No. 180, in page 67, line 6, leave out from 'to' to end of line 9 and insert
        'the making of any payment or the giving of any financial assistance (within the meaning of section 40(6) of this Act) by any company means those profits of which it could lawfully make a distribution equal in value to that payment or assistance, including in any case where the financial assistance is or includes a non-cash asset (within the meaning of section 87 of the 1980 Act) any profit which, if the company were to make a distribution of that asset, would by virtue of section 43A of the 1980 Act (distributions in kind) be available for that distribution; "distribution" has the meaning given by section 45(2) of the 1980 Act; and'.
        This is a technical amendment that changes the definition of distributable profits in clause 57 to ensure that all the provisions of part III of the Companies Act 1980, which determine the legality of a distribution, apply to any permit in respect of a purchase or redemption of a company's owned shares or any financial assistance that is required by the Bill to be made out of distributable profits. It also provides a definition of distribution, which is a term used in new clause 37.
        Amendment agreed to.
        Amendment made: No. 58, in page 67, line 28, leave out subsection (4).—[Mr. Peter Rees.]

      Clause 58

        OBLIGATION TO NOTIFY KNOWN INTERESTS IN VOTING SHARES IN A PUBLIC COMPANY
        Mr. Peter ReesI beg to move amendment No. 59, in page 70, line 16, at end insert
        '; and it is hereby declared for the avoidance of doubt that the temporary suspension of voting rights in respect of shares

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        comprised in issued share capital of a public company of any such class does not affect the application of this Part of this Act in relation to interests in those or any other shares comprised in that class'.
        Mr. Deputy SpeakerWith this, we may take Government amendment No. 87.
        Mr. ReesThe amendment is designed to cover a drafting point made by the Law Society, which I believe was foreshadowed, with his usual perception, by the hon. Member for Hackney, Central (Mr. Davis) in Committee. Clause 58(10) defines relevant share capital for the purposes of part IV of the Bill as share capital
        "carrying rights to vote in all circumstances at general meetings of the company."
        The hon. Gentleman and the Law Society pointed out that there might be cases where the voting rights were suspended temporarily. One example is where a direction has been issued by the Secretary of State under section 174 of the 1948 Act. It is to meet that point, which is obviously a point of substance, that we have put down this amendment and amendment No. 87.
        Mr. Nicholas BakerI support the amendment, but it has been suggested to me that the welcome clarification made still produces a clause that is extremely complex and unlikely to be easily understood by company secretaries whose job it will be to examine the disclosure provision.
        Will my hon. and learned Friend consider issuing a consultative document to explain the disclosure provisions, on the lines that he has done frequently in tax legislation? That would be a great help.
        Mr. ReesI know of the close practical attention that my hon. Friend pays to these matters and I should like to respond to his point. I am not sure that a consultative document is entirely the right way, but I shall take the problem away and see how we can publicise the views of the Department. There is, or should be, a certain diffidence by Ministries in publishing these explanatory documents. As my hon. Friend and the House will readily know, such documents do not have the force of law in the courts, which are the final arbiters on these matters once they have passed out of the care of Houses of Parliament and Her Majesty. The mere view of the Department as to what the legislation might be thought to mean is not decisive.
        However, having given what might be thought to be a pedantic constitutional lawyer's point, I hope that in practical terms I have given some reassurance to people who have to construe these matters, because this is the way in which the provisions might have to be applied in practice in extremity. I shall take away the point and see how far we can offer an expanded layman's view of how the disclosure provisions operate. Subject to that, I commend the amendments to the House.
        Mr. Clinton DavisI am a little perturbed by what the Minister has just said. I should like the Department of Trade to have a blind shot at what it believes some of these provisions might mean. It might be better than humble solicitors such as the hon. Member for Dorset, North (Mr. Baker) and myself having a blind shot at it. Perhaps the Department's blind shot and our blind shot might combine to give the right view. I urge the Minister not to dismiss the matter quite so lightly simply on the basis of tradition, and perhaps to think a little more about the proposition that was advanced. Thai would be helpful.
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        I do not believe that the courts would feel that they were impelled to consider an explanatory memorandum that was issued by a Government Department. It might be hopelessly wrong. It would not be the first time that the Department of Trade was wrong. After all, the purpose of this legislation is to help the business man and the professional adviser to arrive at the right construction of the law. The more help that they can get, the better. The Minister may say that they could be misled, but the help that professional advisers can get by considering another point of view is always desirable. It could still mean that they would come to a different conclusion in advising their clients. I hope that the hon. and learned Gentleman will reconsider what he said.
        Amendment agreed to.

      Clause 59

        THE PRESCRIBED PERCENTAGE
        7.30 pm
        Mr. Peter ReesI beg to move amendment No. 60, in page 70, line 34, leave out 'fourteen' and insert 'ten'.
        Mr. Deputy SpeakerWith this it will be convenient to take Government amendments Nos. 68, 80, 88, 89, 148 and 149.
        Mr. ReesThe amendments relate to certain of the time periods laid down for fulfilment of obligations imposed by the Bill. I believe that the point was in part stressed by the Opposition in Committee. It is thought more appropriate to have shorter periods for the discharge by companies of their obligations under the Bill.
        Mr. Anthony NelsonI am interested in the reasoning behind the amendment to reduce the time period from 14 to 10 days. It is proper that there should be an obligation for people who acquire interests in companies at or above the relevant amount to do so within the five days set out in clause 58(6). In clause 59 it is proposed that, where the Secretary of State makes a regulation that has the effect of reducing the percentage and thus bringing within the category a number of people who have shareholdings in excess of that amount, they will have an obligation to declare their interests, albeit that the interest was acquired previously and did not have to be notified.
        I suppose that the reduction from 14 tp 10 days is reasonable, but on the face of it it seems a little arbitrary. It is only a minor point, but what led the Government to make the change?
        Under clause 59 the Secretary of State can by regulation made by statutory instrument from time to time prescribe different percentages in the case of companies of different classes or descriptions. What criteria may be applied in deciding what companies or categories of company will have various percentages applying to them?
        In the past I have been critical of the extent to which shareholdings can be built up covertly or even openly in major companies or sensitive or strategic industries. In companies that have interests of national importance or where, for example, a considerable number of employees are involved, it is proper to ensure that the shareholding built up by an investor either from within or outside the country is at a level that requires notification and publication at an early stage.

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        I fear that the regulations in clause 59 may not be used sufficiently stringently. I seek an assurance that Ministers will consider from time to time using the important provisions to ensure that major, strategic and large employing companies are protected from potential predators by the insistance that, if shareholdings are built up to a fairly small percentage, in certain instances it will be necessary for them to be notified publicly.
        Mr. Peter ReesI did not have the privilege of serving on the Standing Committee, but I have taken the pleasurable precaution of reading the debates and I noticed the powerful contribution of my hon. Friend the Member for Chichester (Mr. Nelson) on the question of concert parties.
        I feel that it would be wrong for any Administration to tie themselves too closely to the kind of situation in which the Secretary of State might feel disposed to introduce this kind of regulation. It will, after all, be open to challenge and debate in the House. As my hon. Friend knows, we are in a highly fluid and fast-moving situation where the Secretary of State must balance many considerations before weighing into the matter. To tie himself in advance to a statement on the kind of criteria that he wishes to apply might be rash. However, I shall take away my hon. Friend's point to see whether it might be prudent and helpful to evolve some useful guidelines.
        There is no disposition in this Government or, I am sure, the previous one to spring a change on the market. One likes these matters to be pondered carefully in advance. One would also like to feel that certain principles could be distilled, but I am a little hesitant to tie the hands of any Secretary of State. Although the guidelines would not have the force of law, once published they would have a certain sanctity.
        My hon. Friend rightly challenged whether there was a deep underlying rationale for reducing 14 to 10 in four or more cases and 21 to five in amendment No. 80. The answer is "No". One has to try to balance various factors. After the informed debates in Committee, it was felt that the period should be shortened, and I am happy to concede that the precise number of days, weeks or years was slightly arbitrary. It is better to be candid. No doubt an equally good intellectual case could be made for 11 days or nine. These are practical matters.
        Although I do not wish to hold out the awful prospect of another Companies Bill within a measurable space of time, these matters are subject to review. If the House feels we have it badly wrong, sometime—not perhaps in the lifetime of this Parliament—we could come back to it. However, I believe that a fair balance has been struck, and I hope that the amendments will commend themselves to the House.
        Amendment agreed to.

      Clause 62

        NOTIFICATION OF GROUP INTERESTS OF PERSONS ACTING TOGETHER.
        Mr. Peter ReesI beg to move amendment No. 61, in page 72, line 20, leave out 'subsection (10) below' and insert
        'the following provisions of this section'.
        Mr. Deputy SpeakerWith this it will be convenient to take Government amendments Nos. 62, 63 and 64.
        Mr. ReesThe amendments all relate to the same point.
        When clause 62 was reviewed after the close debates in Committee, the Government came to the conclusion that the use of the words "or arrangement" in subsection (2) was superfluous and, indeed, might introduce an element of ambiguity. "Arrangement" is defined in various ways in other parts of the Bill, and it was thought that this might indicate that there was another form of arrangement not within the definition. It was thought that this would make for greater clarity. On that basis, I can commend the amendments to the House.
        Mr. NelsonThis set of amendments takes us to the heart of the provisions of the Bill which attempt to deal with concert parties. I should like to use this opportunity to raise a number of points directly relevant to the amendments and perhaps to probe more than I did on the previous set of amendments. I am worried particularly that the amendments now under discussion, which admittedly result from a full debate and discussion in Committee, appear to introduce rather more restrictive or legal terms on the sort of agreements that will be notifiable.
        I shall try to explain this more simply. We are trying to prevent groups of people acting together, either formally or informally, but with the definite understanding that they will all benefit from such co-ordination, to acquire shareholdings in companies that are above the level that has to be notified publicly and that may subsequently be injurious to other shareholders or employees in those companies. It is a matter of some significance. It is proper for us to ensure that the terms of this legislation are cast sufficiently wide to become an adequate deterrent to those who will seek by informal means to evade the responsibilities that these provisions would otherwise imply.
        What really concerns me is the matter I raised on Second Reading. We are concerned not only with people in this country who may play by the rules and who may play the game. We are increasingly concerned with interests and individuals abroad who are looking more actively to companies in this country and acquiring substantial stakes almost day by day in household name companies. They are not subject to the jurisdiction of British law. There is nothing even in this Bill—sadly, in my judgment—which will take away the rights of any investment that they make in these companies. I have to admit that even if we are to cast this legislation tighter in preventing such activities, we would not wholly prevent the possibility of them arising. The difficulties that certain major British public companies have experienced even investigating who has built up a shareholding in them, let alone whether that investor has acted in concert with another party, demonstrate the real problems faced by companies in pursuing investigations outside this country. They also demonstrate the improbability that those individuals, companies, nominees and agents outside this country will necessarily observe British law in this respect.
        Nevertheless, we must do our best to ensure that our legislation is cast sufficiently wide and that it is sufficiently specific to ensure that such activities are deterred so far as possible. I have referred at length on previous occasions to the case of Consolidated Gold Fields

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        where a dawn raid was preceded by the building up of a covert purchase of a substantial interest in the company by a number of foreign and domestic corporations acting in concert. Since that time and, indeed, since this Bill was introduced or discussed in Committee, there have been further examples of companies in this country that have been acquired suddenly early in the morning by predator companies acting from within or without our shores.
        I recognise that dawn raids on companies in which there is an open market operation and where shares are acquired quickly and suddenly and in substantial numbers are different from the building up of a share interest in the company and where there is a requirement, as laid down in this legislation, for an interest to be notified. But these two activities often go together. Companies or individuals will build up an interest and sometimes, if they can, sadly, they will do so covertly. They will go into the market early one morning to bring their interest well above that which has to be notified and at a price that is much lower than would perhaps have been the case if they had made a general offer to all shareholders. In so doing, they act very much to the detriment of other shareholders who do not necessarily have the opportunity to subscribe to shares at the same price.
        7.45 pm
        Since the matter was discussed in Committee, a number of companies have been subject to this sort of activity. It was interesting to see that one major Malaysian company—I think that it was called Permodalan—took a major interest in the Guthrie Corporation here. Subsequently and, in fact, I believe only today, that same Malaysian company is bidding against Preussag for its shareholding in the Amalgamated Metals Corporation. The significance of these two events is that a major corporation, in this case in Malaysia, has sought to repatriate or re-buy the interests in certain national holdings in tin mines, smelting and other interests. We find increasingly that the nationalism in other countries, combined with the prodigious sums of money available to international investors, has made them look much more acquisitively at opportunities offered by the free market available in the City of London. On the other hand, if we look at what is happening in our own market, we see that the low level of share prices at present, combined with the relatively low exchange rate, makes it doubly attractive for foreigners to come and examine the possibility of acquiring shares in British companies.
        I do not believe, that there is necessarily something more prejudicial about a foreign shareholding than a domestic one. I believe however, that we have to be careful about the possibility that we and the employees of certain major companies employing substantial numbers of our people and with very important interests involving raw materials and production in extractive industries may wake up one day to find that an effective controlling interest has been acquired on top of an initial interest built up somewhat covertly.
        Mr. Nicholas BakerWill my hon. Friend agree that the problem is that an offence may be committed under what will be section 67 of the Act, but, because an overseas concert party goer is involved and the offence is not a United Kingdom offence, the overseas party goer will not be guilty of a United Kingdom offence? There will be no sanction against an overseas party in those circumstances. Does my hon. Friend consider that there

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        should be power to freeze the shares in circumstances where a conviction for the offence has not been obtained but where the evidence exists that an offence may have been committed?
        Mr. NelsonI understand that under this legislation there is a power where someone refuses to comply with an investigation to impose in the last resort a freezing in accordance with section 174 of the Companies Act 1948. There is a power to provide a freezing where someone refuses to comply. I agree with my hon. Friend, who makes a most important point that the arm of the law is exceedingly short when trying to tackle such people abroad. That is why during Second Reading I suggested that we should go further and that companies should be able to cancel the shares involved. Even though a foreign investor may be acting illegally and even though a British investor may be acting illegally and convicted of acting illegally, this does not destroy financially what they have done. Although their interests in the company may be temporarily frozen, as provided under this and other legislation, they can subsequently obtain the full value of benefits of that shareholding.
        Therefore certain firms, particularly foreign companies, are prepared to take that risk, because it is probable that they will benefit from it and realise the full profit at the end of the day. It would be a sufficient sanction—indeed, I fear it may be the only sanction—if we hung over foreign companies the sword of Damocles that in the last resort shares that they had acquired and failed to disclose, or those that they had acquired improperly, could be cancelled so that the benefit arising from them would disappear.
        Mr. Clinton DavisThe hon. Member participated in our debates on this matter last year and we were in almost total accord on the subject, but he will recall that the Opposition's new clauses, which the Government refused even to consider in principle, encompassed precisely the points that he is raising. Like the hon. Gentleman, I regret that a more stringent regime is not included in the Bill.
        Mr. NelsonI have much sympathy with that point. It was a particular source of regret to me, and partly explains why I am speaking at a little more length than I would normally do, that personal circumstances, of which some hon. Members are aware, prevented me from attending the Standing Committee when we were discussing these matters. I had hoped to contribute to those debates.
        However, we have legislation which attempts to deal with the problem. I congratulate the Government on that. It was thought initially that it would be too difficult, which is why the provisions were introduced as new clauses. I do not wish to be churlish about what the Government have done and I welcome the fact that they have brought forward new proposals, but I still fear that they do not go far enough and that many foreign companies have the resources and incentive to take effective controlling interests in major British companies, public and private, with strategic interests and many employees. We should be the proper defenders not only of the national interest but of the interests of other shareholders who may be adversely affected by such events.
        As a Conservative I believe in freedom, but it must be balanced with responsibility. I believe in more freedom in

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        economic and social policies than do Labour Members, but I attach to that freedom a desire to ensure that individuals and corporations act responsibly.
        We have derived great benefit from having free markets, a free Stock Exchange and an ability to go into the market and acquire shareholdings in companies. But responsibilities are attached to such freedoms and if those who use the freedoms fail to observe the responsibilities the freedoms will surely be curtailed in the long run.
        It is a sad reflection on recent events in the City and recent practices of some of our best-known names that have histories of integrity in this country and elsewhere that their actions and the way that they have set about acquiring companies overtly and without declaring their interests make it necessary for us to consider legislation. We are introducing measures, and I hope that if we find that they are inadequate we shall actively consider the possibility of tightening them up in ways which I believe to be necessary now.
        Mr. Clinton DavisI pay tribute to the hon. Member for Chichester (Mr. Nelson), because he has spoken with knowledge and expertise on this subject on a number of occasions. It was a pity that, for understandable reasons, he could not contribute to our debates on this topic in Committee. He would have had some valuable advice to offer.
        Like the hon. Member, I do not wish to be churlish about the Government's attempts to deal with a serious situation which was highlighted in the Consolidated Gold Fields case, but I am not confident that they have devised a system which will overcome the perils that may confront British companies in future.
        The hon. Member for Chichester seized on the difficulty of dealing with overseas interests. I wish that the Government had been bolder and had accepted the philosophy that the hon. Member for Chichester and I adumbrated, in uncommon unison, when we discussed these matters last year.
        Experience will determine whether the Government's confidence that they have got the answer is justified or whether we are right in our lack of confidence in their proposals. I hope that the Government will be proved right. We all hope that the loophole will be plugged, and I do not underestimate the problems and difficulties that confronted the Government and their advisers on this extremely difficult topic.
        I shall say something more on the subject later and I will leave it there for the moment, but the House is indebted to the hon. Member for Chichester for his observations.
        Mr. Peter ReesI echo the appreciation of the hon. Member for Hackney, Central (Mr. Davis) of the contribution of my hon. Friend the Member for Chichester (Mr. Nelson), who has obviously thought long and profoundly about these complex clauses.
        However, I should emphasise that the purpose of the clauses is not to defend British companies in any narrow nationalistic sense. We rightly pride ourselves on having an open economy and we have taken advantage of other open economies. My hon. Friend the Member for Chichester hardly needs reminding that British companies have moved in the American market, particularly when the dollar was weak, to make suitable acquisitions there. Therefore, who are we to complain, in a general sense,
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        when people inside or outside our economy make use of our stock market legitimately to take over British companies?
        There may be circumstances in which the national interest is involved in a security sense, but I suggest that those should not be dealt with through the medium of Companies Acts which are designed to regulate and protect the position of shareholders, employees and creditors. We must proceed in that broad sense. We should not cloud the issue, and I do not suggest that my hon. Friend the Member for Chichester or the hon. Member for Hackney, Central has attempted to do so, by introducing questions of national security on these important but tightly defined issues.
        The question to which we must address ourselves is the protection of a minority shareholder who may be put at a disadvantage by a dawn raid. He may not have sufficient time to reflect on whether he should accept offers being made in the market place.
        Concern over this matter has been stimulated by a number of incidents going back to the Consolidated Gold Fields case. It is not necessary to go into the details of any particular case and, indeed, we may put the wrong construction on one case, but we must identify the problem and consider whether the Bill deals with it adequately.
        The hon. Member for Hackney, Central expressed a natural scepticism about whether we have resolved the problems. I come very new to Companies Bills, but I have lived on the Back Benches and Front Benches in both Government and Opposition with many Finance Bills, when we have dealt with problems of comparable complexity. I have never been dogmatic about the ability of Governments, whether Labour or Conservative, to get it right, but we hope that we get it right.
        8 pm
        Mr. Clinton DavisThe difference is that in a Finance Bill one can try again the year after. There has been that precedent in company legislation over the past two years, but we are anxious that it should not be repeated. There is that difference, which perhaps comes back to what I said yesterday.
        Mr. ReesI appreciate that, of course. It is a very telling point. I should be the last person in my present position to want to inflict another Companies Bill on a long-suffering House in 1982. We hope that this legislation will stand as long as some of the earlier companies legislation did. Of course we want to get it right. We do not want to have to go on refining the provisions, but, as I said, I hope that we have got it right.
        It is to deal purely with the protection of the smaller shareholder, who is less versed in these matters and who does not have the necessary information, that we introduced this complex of provisions. We do not seek to build a wall around British companies to prevent their takeover by outside interests. Strategic interests may be involved, which we can consider on another occasion in the context of other legislation, but a Companies (No. 2) Bill 1981 is not the appropriate medium to devise such protection.
        These amendments are designed to clarify what we mean by "arrangement". They provide a convenient peg for a far-ranging and perhaps helpful and interesting debate, but that is all we are tending to do. We realise that there may be many arrangements that fall short of anything

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        that would be enforced in a British court of law which may, none the less, open the door and provide the basis for a concert party, a dawn raid, whatever one may call these unattractive operations. The purpose of the amendments, which I commend with suitable modesty, is purely to clarify and elucidate.
        However, there is a further point that was raised by both my hon. Friend the Member for Chichester and by the hon. Member for Hackney, Central, seeking to say that there is no way to enforce these against the extra-territorial offeror. Both hon. Members, who by now have probably a considerably deeper understanding of the Bill than I do, having sat through the debates in Committee, will realise that under clause 85 the Secretary of State has power to direct that the shares should be sold. There is no extraterritorial limit there. I can reassure all hon. Members that there is a remedy that can apply equally to those who abuse the provisions from inside or outside our jurisdiction.
        We can identify a community of aim here. We can all have reservations, even those on the Front Bench, about whether we have absolutely hit the target, but I hope that on that basis the House will accept the amendments, which are designed only to clarify and elucidate what was in the draft Bill and which has been subject to much close scrutiny in Committee upstairs. I hope that we can leave it there, and that we shall not need to inflict any further elucidation on the House in the later years of this Parliament.
        Amendment agreed to.
        Amendments made: No. 62, in page 72, line 42, leave out 'or arrangement'.
        No. 63, in page 73, line 16, leave out
        'Subject to subsection (5) below'.
        No. 64, in page 73, leave out lines 26 to 29 and insert—
        '(5) this section shall not apply to an agreement which is not legally binding unless it involves mutuality in the undertakings, expectations or understandings of the parties to it.'.—[Mr. Peter Rees.]

      Clause 63

        OBLIGATION OF PERSONS ACTING TOGETHER TO KEEP EACH OTHER INFORMED OF RELEVANT FACTS
        Amendment made: No. 65, in page 76 leave out lines 4 to 7 and insert—
        "(6) A person who is a party to an agreement to which section 62 of this Act applies shall be under an obligation to notify each other party to the agreement, in writing, of his current address—

        on his first becoming subject to the requirements of this section; and

        on any change in his address occurring after that time and while he is still subject to those requirements.'—[Mr. Peter Rees.]

      Clause 65

        INTERESTS TO BE NOTIFIED
        Mr. Clinton DavisI beg to move amendment No. 182, in page 77, line 40, leave out 'is entitled to exercise' and insert 'in practice exercises'.
        I raised this matter during the "clause stand part" debate in Committee. It arose because the Council for the Securities Industry expressed concern about some inadequacy in the drafting of the Bill and thought that the words "in practice exercises" were an improvement on the Bill.
        234
        The Minister has had an opportunity to consider the matter, and I am somewhat disappointed that the Secretary of State did not do what he has done on other occasions and gently and almost without notice add his name to our names against certain amendments. Why did he not do so on this occasion? I am bound to say that there is some force in the representations that were made by the CSI. The expression "is entitled to exercise" is one with which I am not familiar in company legislation. I hope that the Minister will tell us, as he has been given notice of the matter, whether it has been used elsewhere in company legislation or whether it is a novel phrase. Is there the ambiguity in the expression that the CSI says there is? Why does the wording of our amendment not eliminate the ambiguity which the CSI considers lies in the wording of the Bill?
        During our debates the Under-Secretary said that the wording that I have proposed in the amendment, and which I merely suggested on Second Reading, would damage the interests of investment protection committees. I expressed surprise that the CSI, which I should have thought would have been concerned about the question of investment protection committees, nevertheless still considered that these words were preferable. Apparently, the CSI did not believe that what the Minister said was valid.
        Perhaps the matter could be put in a more recent context. I am not familiar with the discussions that have taken place between the Department's officials, perhaps the Minister, and the CSI and other bodies. Therefore, I hope that the Minister will tell us what the reaction was. If the Minister's reply is forthcoming, I may hesitate to encourage hon. Members who normally would be impelled to support the amendment to go into the Division Lobbies tonight. It is up to the Minister. He can avoid that calamity.
        Mr. Peter ReesI fully understand the motives which led the hon. Member for Hackney, Central (Mr. Davis) and his hon. Friends to table the amendment. As he rightly says, it was foreshadowed in Committee, and the matter was touched on in consultation prior to the Committee stage by the Council for the Securities Industry. However, the amendment, which presumably was designed to enlarge rather than narrow the existing definition, might have the contrary effect, in that it would seem to exclude those who were entitled to exercise any right conferred by the holding of shares if they did not exercise that right in practice. Beyond that, I think that it would introduce a measure of ambiguity as to what in fact constituted the practical or consistent exercise of a right.
        We have therefore felt, on reflection, that it would be better to limit it to those who are entitled to exercise the right because that would cover those who habitually exercise it and those who are entitled to do so but do not do so. In other words, the present definition is a practical definition for which there are many precedents. Although I think that we have scrutinised as best we can the statute books and the cases, I do not think that there are any precedents—perhaps I should cover my flank by saying "no respectable precedents"—for the phrase "in practice exercises".
        Having, I hope, establshed that there is an identity of objective here, and having recognised the assiduity which obviously the hon. Member has exercised in trying to devise a solution to this problem, I hope that on reflection

        235
        the hon. Member will recognise that possibly, with all its limitations, the phrase to be found in the clause will suit the purpose for which it has been designed.
        Mr. Clinton DavisSo engaging, so beguiling, so siren-like is the voice of the hon. and learned Gentleman that all those hundreds of Members who have been waiting with bated breath to see whether they would be called to go into the Division Lobbies may sigh a breath of relief. I do not propose to challenge the matter in a Division. I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

      Clause 66

        INTERESTS TO BE DISREGARDED
        Mr. Peter Rees Mr. Peter Rees: I beg to move amendment No. 66, in page 79, line 27, leave out from 'section' to 'has' in line 28 and insert
        '444 of the Income and Corporation Taxes Act 1970'.
        This is a technical amendment to cure what is in effect a defect of drafting. The original clause was meant to refer to a provision in the Taxes Act which defined "settlor". In fact, the reference should have been to the Income and Corporation Taxes Act 1970, section 444. It was not. It was to cure this error that the amendment was put down. On that basis, I hope that the House will accept it.
        Amendment agreed to.
        Mr. Peter Rees Mr. Peter Rees: I beg to move amendment No. 67, in page 80, line 9, leave out from first 'by' to 'which' in line 11 and insert
        'way of security only either by the Bank of England or by the Post Office for the purposes of a transaction entered into in the ordinary course of that part of the business of the Post Office'.
        The effect of the amendment is to ensure that interests held by the Bank of England by way of security only shall be disregarded for the purposes of clauses 58 to 60. I am sure that on that basis it will commend itself to the House.

        Amendment agreed to.

      Clause 68

        REGISTER OF INTERESTS IN SHARES
        Amendment made: No. 68, in page 82, line 18, leave out 'fourteen' and insert 'ten'.—[Mr. Peter Rees.]
        Mr. Peter ReesI beg to move amendment No. 69, in page 82, line 23, leave out 'ten' and insert 'six'.
        Mr. Deputy SpeakerWith this it will be convenient to discuss Government amendments No. 77 and 79.
        Mr. ReesA number of commentators in this context have said, both during and subsequent to the Committee stage, that 10 years in this context, even 10 calendar years as defined, is too long for this period, and I think that this view commended itself to the Committee. It was therefore in deference to the Committee's views that we put down these amendments, which are designed to reduce the period of 10 years to six years.
        Amendment agreed to.

      Clause 71

        INVESTIGATION AND REPORT ON REQUISITION OF MEMBERS
        Mr. Peter ReesI beg to move amendment No. 70, in page 85, line 10, leave out from 'period' to 'after' in line 11.
        Mr. Deputy Speaker Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments:
        Government amendment No. 71.
        Amendment No. 184, in page 85, line 12, at end insert—
        5(A)(a) If any investigation carried out by a company in pursuance of a requisition under this section has not been concluded within a period of fifty-six days from the date of the requisition the company or the requisitionists may give notice in writing to the company to prepare within fourteen days an interim report on the investigation and, in the event, the provisions of sub-sections (5) (7) and (9) of this section shall apply to the interim report save that for the purposes prescribed by subsection (5) the interim report shall be made available within a period of fourteen days from the date of the completion of the report.
        (b) The procedures set out in paragraph (a) of this sub-section may be invoked for each successive period of 56 days from the date of the requisition'.
        Government amendments Nos. 72 to 76, and Government amendment No. 78.
        Mr. ReesWhen the clause to which these amendments relate was discussed in Standing Committee, the hon. Member for Hackney, Central (Mr. Davis) made what I think my hon. Friend the Under-Secretary described at the time as a "hopeful and interesting" suggestion that companies should be required to make an interim report within a certain period if they had not made a final report. It was in deference to this suggestion that we put down our amendments. I hope that they will commend themselves to the House.
        Amendment agreed to.
        Amendments made: No. 71, in page 85, line 12, at end insert—
        '(5A) Where—

        a company undertakes an investigation in pursuance of a requisition under this section; and

        that investigation is not concluded before the end of the period of three months beginning with the date immediately following the date of the deposit of the requisition;

        it shall be the duty of the company to cause to be prepared, in respect of that period and each successive period of three months ending before the conclusion of the investigation, an interim report of the information received during that period in pursuance of the investigation, and each such interim report shall be made available at the registered office of the company within a reasonable period after the end of the period of three months to which it relates.
        (5B) The period for making any report prepared under this section available as required by subsection (5) or (5A) above shall not exceed fifteen days.'.
        No. 72, in page 85, line 13, leave out 'in pursuance of subsection (5) above' and insert 'under this section'.
        No. 74, in page 85, line 20, leave out 'the report' and insert 'any report prepared under this section'.
        No. 75, in page 85, line 25, leave out 'subsection (5) above' and insert 'this section'.
        No. 76, in page 85, line 34, after '(5)' insert 'or (5A)'.
        No. 77, in page 85, line 35, leave out 'ten' and insert 'six'.
        No. 78, in page 85, line 39, at end insert '(5A)'.—[Mr. Peter Rees.]

      Clause 73

        PROVISION FOR REMOVAL OF CERTAIN ENTRIES IN REGISTER
        Amendments made: No. 79, in page 87, line 4, leave out 'ten' and insert 'six'.
        No. 80, in page 87, line 18, leave out 'twenty-one' and insert 'fifteen'.—[Mr. Brooke.]

      Clause 74

        PROHIBITION OF REMOVAL OF ENTRIES IN REGISTER
        8.15 pm
        Mr. Peter ReesI beg to move amendment No. 81, in page 88, line 21, at end insert—
        '(1A) If an entry is deleted from a company's register of interests in shares in contravention of subsection (1) above the company shall restore that entry to the register as soon as is reasonably practicable.'.
        Mr. Deputy SpeakerWith this it will be convenient to discuss Government amendments Nos. 82 and 83.
        Mr. ReesAs the House will know, clause 73(1) enables a company in certain circumstances to remove an entry from its register of interests in shares. Clause 74(2) makes it an offence for a company to remove an entry except in certain specified circumstances. As drafted, the offence created by clause 74 is a continuing offence, but the removal of an entry is, of its nature, a single act which cannot be continued. It was felt, therefore, that this was rather unreasonable, and therefore it is to limit the operation of the offence that these amendments are set down. I hope that the House will accept them on that basis.
        Amendment agreed to.
        Amendments made: No. 82, in page 88, line 22, after '(1)', insert 'or (1A)'.
        No. 83, in page 88, line 25, after 'contravention', insert 'of subsection (1A)'.—[Mr. Peter Rees.]

      Clause 75

        INSPECTION OF REGISTER AND REPORTS
        Amendments made. No. 84, in page 88, line 35, leave out from 'company' to 'or' in line 38 and insert
        or of any other person without charge.
        (2) Any such member'.
        No. 85, in page 88, line 40, leave out from 'or to 'and' and insert
        'ten pence or such less sum as the company may prescribe, for every hundred words or fractional part thereof required to be copied'.
        No. 86, in page 89, line 13, at end insert—
        '(5) The Secretary of State may by regulations made by statutory instrument substitute a sum specified in the regulations for the sum for the time being mentioned in subsection (2) above.'.—[Mr. Peter Rees.]

      Clause 77

        INTERPRETATION
        Amendments made: No. 87, in page 90, leave out lines 1 to 5.
        No. 88, in page.90, leave out lines 6 to 9 and insert—
        '(4) Where the period allowed by any provision of this Part of this Act for fulfilling any obligation is expressed as a number
        238
        of days, any day that is a Saturday or Sunday or a bank holiday in any part of Great Britain shall be disregarded in reckoning that period.'.—[Mr. Peter Rees.]

      Clause 78

        REPEALS, TRANSITIONAL PROVISIONS AND SAVING
        Amendment made: No. 89, in page 90, line 40, leave out 'fourteen' and insert 'ten'.—[Mr. Peter Rees.]
        Mr. Peter ReesI beg to move amendment No. 90, in page 91, line 4, leave out '(2)' and insert '(1)(b)'.
        This is purely a drafting amendment. Clause 78(6) contained a wrong reference. This amendment cures that error.
        Amendment agreed to.

      Clause 85

        AMENDMENT OF SECTION 174 OF THE 1948 ACT
        Mr. EyreI beg to move amendment No. 91, in page 95, line 42, at end insert—
        (2A) The following subsections shall be inserted after subsection (2)—

        "Where shares are subject to the restrictions imposed by subsection (2)(a) of this section any agreement to transfer the shares or in the case of unissued shares the right to be issued with the shares shall be void except an agreement to sell the shares on the making of an order made under subsection (3A)(b) of this section.

        Where shares are subject to the restrictions imposed by subsection (2)(c) or (d) of this section any agreement to transfer any right to be issued with other shares in right of those shares or to receive any payment on those shares (otherwise than in a liquidation) shall be void except an agreement to transfer any such right on the sale of the shares on the making of an order made under subsection (3A)(b) of this section".'.

        Mr. Deputy SpeakerWith this it will be convenient to discuss Government amendments Nos. 97 and 100.
        Mr. EyreThese amendments to clause 85 make void, subject to one qualification, first, any agreement to transfer shares which are subject to restrictions imposed under section 174 as it is to be amended, and, secondly, any agreement to transfer any right to be issued with shares arising from the ownership of restricted shares or any right to receive any payment on those shares other than in a liquidation. The qualification is that agreements which are made contingent upon restrictions being lifted on the ground specified in the new subsection (3A)(b) to be introduced into section 174 by clause 85 are not invalidated. Agreements made before the new provisions come into force will not be invalidated.
        Amendment agreed to.
        Mr. EyreI beg to move amendment No. 92, in page 96, line 6, leave out "subsection (3B) below" and insert "subsections (3B) and (4A) of this section'.
        Mr. Deputy SpeakerWith this it will be convenient to discuss Government amendments Nos. 95 and 98.
        Mr. EyreThese amendments achieve three ends concerned with the implications in detail of restriction of shares under section 174 of the 1948 Act as amended by the clause. First, they provide that in circumstances in which an order has been made lifting the restrictions imposed under section 174(2)(a) and (b)—on transfers of shares and on voting rights respectively—but continuing

        239
        those imposed under section 174(2)(c) and (d), on issue of further shares and on payments from the company respectively, it will not be necessary to establish either of the grounds set out in what will be section 174(3A), as already contained in clause 85, before an order can be made lifting the continued restrictions. Second, they enable the court to direct that the costs of a person who has made an application under what would be section 174(3B) or (3C) should be paid out of the proceeds of sale of the shares. Finally, they make it clear that when the court directs that shares be sold it may continue the restrictions imposed by paragraphs (c) and (d) of section 174(2) if the court thinks fit.
        Amendment agreed to.
        Mr. EyreI beg to move amendment No. 93, in page 96, line 31, after 'under', insert 'subsection (3B) of'.
        This amendment makes it clear that the proceeds of sale of restricted shares will be paid into court only when the court has ordered a sale under what will be section 174(3B) of the 1948 Act and not when the court or the Secretary of State has ordered that restrictions be lifted in order to facilitate a sale that has been approved under what will be section 174.
        Amendment agreed to.
        Mr. EyreI beg to move amendment No. 94, in page 96, line 33, after 'are', insert 'beneficially'.
        Mr. Deputy SpeakerWith this, it will be convenient to take Government amendment No. 96.
        Mr. EyreThese amendments to the new subsections (3D) and (3E) of section 174 already contained in clause 85 make it clear that only a person who had a beneficial interest in shares that have been sold in pursuance of an order of the court made under section 174, new subsection (3B), may apply for payment to be made to him out of the proceeds of sale. As presently drafted, the clause would allow a purely nominee holder to apply for payment.
        Amendment agreed to.
        Amendments made: No. 95, in page 96, line 37, after 'shall', insert
        'subject to subsection (3F) of this section'.
        No. 96, in page 96, line 39, leave out 'an' and insert 'a beneficial'.
        No. 98, in page 96, line 43, at end insert—
        '(3F) On granting an application for an order under subsection (3B) or (3C) of this section the court may order that the costs of the applicant shall be paid out of the proceeds of sale; and, where an order under this subsection is made, the applicant shall be entitled to payment of his costs out of the proceeds of sale before any person interested in the shares in question receives any part of those proceeds.'".
        "(3A) In subsection (4) (continuation of subsection (2)(c) and (d) restrictions) after the words "those shares" there shall be inserted the words "or which is made under subsection (3B) of this section".
        "(3B) The following subsection shall be inserted after subsection (4)—"
        "(4A) Subsection (3A) of this section shall not apply in relation to any order of the court or of the Secretary of State directing that shares shall cease to be subject to any restrictions which have been continued in force in relation to those shares by virtue of subsection (4) of this section.".
        No. 97, in page 96, line 43, at end insert—
        240
        '(3C) in subsection (5) (criminal offences) the following paragraph shall be inserted after paragraph (c) "or'
        "(d) being the holder of any such shares, or being entitled to any such right as is mentioned in subsection (2B) of this section, enters into any agreement which is void by virtue of subsection (2A) or (2B) of this section;".'.—[Mr. Brooke.]"
        Mr. EyreI beg to move amendment No. 99, in page 97, line 3, leave out from 'any' to 'subject' in line 5 and insert
        'shares which on the appointed day are'.
        The purpose of the amendment is to make it clear that the application of the existing provisions of section 174 for the purpose of restrictions applying to shares on the day the provisions of clause 85 are brought into force is preserved.
        Amendment agreed to.
        Amendment made: No. 100, in page 97, line 5, at end insert
        'and subsection (2A) above shall not apply in relation to any agreement made before the appointed day'.—[Mr. Brooke.]

      Clause 86

        POWERS OF SECRETARY OF STATE UNDER SECTION 334 OF THE 1948 ACT
        Mr. EyreI beg to move amendment No. 101, in page 97 line 19, at end insert—
        '(1A) In section 334, the following subsection shall be inserted after subsection (3)—'
        "(3A) An answer given by a person to a question put to him in exercise of the powers conferred by subsection (3) of this section may be used in evidence against him."
        The amendment provides that an answer given by a person to a question put to him in the course of an investigation under section 334 of the 1948 Act—as it is to be amended by clause 86 of the Bill—may be used in evidence against him.
        Amendment agreed to.

      Clause 87

        DISQUALIFICATION OF DIRECTORS AND OTHERS FROM MANAGING COMPANIES ETC.
        Mr. EyreI beg to move amendment No. 102, in page 98, line 32, after 'the', insert 'promotion, formation or'.
        Mr. Deputy SpeakerWith this, it will be convenient to take Government amendments Nos. 103 to 107, 141, 152, 163, 164, and 165.
        Mr. EyreThese amendments will make further small improvements to those parts of the Companies Acts which provide for the disqualification of directors from taking part in the management of companies.
        Amendment agreed to.
        Amendments made: No. 103, in page 99, line 10, at end insert—
        'Subject to subsection (1C) of this section, subsection (1)(c) of this section shall apply in relation to any offence committed or other thing done before the date on which section 87 of the Companies Act 1981 came into force but a disqualification order made on the grounds of such offence or other thing done shall not be made for any period in excess of five years.'.
        No. 104, in page 100, line 5, leave out 'and' and insert—
        '() in relation to the granting of leave to promote or form a company, means any court with any jurisdiction to wind up companies; and'.
        No. 105, in page 100, line 17, leave out 'lay' and insert 'deliver'.
        No. 106, in page 101, leave out lines 11 to 14 and insert—
        '(2) The following subsection shall be substituted for subsection (4) of section 188—'
        "(4) An application to a court with jurisdiction to wind up companies for the making of a disqualification order against any person may be made by the Secretary of State or the official receiver or by the liquidator or any past or present member or creditor of any company in relation to which that person has committed or is alleged to have committed an offence or other default; and on the hearing of any such application made by the Secretary of State or the official receiver or the liquidator or of any application for leave made by a person against whom a disqualification order has been made on the application of the Secretary of State, official receiver or liquidator, the Secretary of State, official receiver or liquidator shall appear and call the attention of the court to any matters which seem to him to be relevant, and may himself give evidence or call witnesses."
        No. 107, in page 101, line 27, leave out from 'made' to end of line 29 and insert—
        'under section 28 shall have effect as if made under section 188 of the 1948 Act and any application made before the appointed day for such an order shall be treated as an application for an order under section 188.'.—[Mr. Brooke.]

      Clause 94

        REGISTRATION OF PARTICULARS OF MEMBERS' CLASS RIGHTS
        Mr. EyreI beg to move amendment No. 108, in page 103, line 40, leave out
        'more than one class of members'
        'and insert—
        'any class of members with such rights as are mentioned in subsection (1) above,'.
        Mr. Deputy SpeakerWith this, it will be convenient to take Government amendment No. 109.
        Mr. EyreThese amendments correct an error in the drafting of clause 94, which requires a company that has created a class of members with rights that are not stated in its memorandum and articles to deliver to the Registrar of Companies a statement of the rights.
        Mr. Les HuckfieldI do not seek to detain the House, but I should like an assurance from the Minister. I understand that the amendments would affect section 110 of the 1948 Act. I seek the Minister's assurance that we shall not take a backward step after having taken what I and many others consider to be a step forward. As I interpret clause 93, and particularly clause 94, the provisions will affect companies limited by guarantee. The Minister will know that I have been much exercised by a company limited by guarantee called the Performing Right Society. I do not wish to go into the details of that society's activities, but the Minister will recall that when I last raised the need for an inquiry into the PRS during an Adjournment debate, he pointed me in the direction of the amendment to section 110 of the 1948 Act, represented in clause 94.
        I seek the hon. Gentleman's assurance that we shall not undermine the importance of clause 94. The Minister knows the criticisms that I and many others have made of
        242
        the PRS. An oligarchic few—a hidden 4 per cent. of the total membership—control the society. That means that they control the fate of Great Britain's entire music manufacturing industry as well as the economic fate of those working within it. Therefore, the provision is important. I should not like amendments Nos. 108 and 109 to detract from that.
        As the clause stands, I understand that it will provide that non-share companies such as the PRS will be obliged to reveal to their respective memberships, as well as to the public, which of their members have votes and how many. In that way members and the public will know who controls non-share companies. That does not go as far as many of us would like. We should like many of the PRS's internal abuses to be corrected. As it stands, clause 94 will not do much to control such abuses.
        I should not like to witness any backtracking on clause 94 and I should like an assurance to that effect from the Minister. Backtracking or undermining of the significance of clause 94 will not help us to do something about these internal abuses. The chief internal abuse about which I have been much exercised is that the governing council of the Performing Right Society has awarded as many as 20 votes to a selected 400 of its 12,000 membership. That gives them effective control of the society. It would help many of us to know who has those 20 votes and how they exercise them.
        The amendment goes part of the way and I welcome it. I should welcome even more the Minister's assurance that amendments Nos. 108 and 109 will not undermine the step forward. Although it is a small step forward, I hope that it is not the last step forward. I shall continue to press the Minister to take that direction.
        8.30 pm
        Mr. EyreI remember the interest in this matter by the hon. Member for Nuneaton (Mr. Huckfield). I have listened carefully to him. I assure the hon. Gentleman that the amendments will not detract from the effect of clause 94. The purpose of the amendments is to correct a drafting error which would have resulted in unnecessary duplication in the provision of information. The hon. Gentleman takes a personal interest in clause 94. I appreciate its importance to him. I was glad to note that the hon. Gentleman shares our view that clause 94 will result in a useful addition to the information disclosed by companies.
        It is not for me to comment on the internal affairs of a particular company. I emphasise that the clause was not drafted with one particular company in mind. It has general application for companies without a share capital. It should be read in that general context in relation to company law. I repeat my assurance that the amendments do not detract from the effect of clause 94.
        Amendment agreed to.
        Amendment made: No. 109, in page 103, line 43 leave out 'each' and insert 'any such'.—[Mr. Eyre.]

      Clause 96
        AMENDMENT OF SECTION 283 OF THE 1948 ACT
        Amendment made: No. 110, in page 105, leave out lines 24 to 26.—[Mr. Eyre.]
      Clause 99

        EXCLUSION FROM SECTION 48 OF THE 1980 ACT OF ARRANGEMENTS MADE BETWEEN CERTAIN GROUP COMPANIES OR BY COMPANIES IN LIQUIDATION
        Mr. EyreI beg to move amendment No. 111, in page 107, line 31 leave out '(6) and (7)' and insert '(6), (7) and (8)'.
        Mr. Deputy SpeakerWith this we may discuss Government amendments Nos. 112 and 113.
        Mr. EyreAmendments Nos. 111 and 112 are consequential amendments made necessary by the addition of a new subsection to clause 99.
        Amendment No. 113 ensures that the requirement in section 48 of the 1980 Act to submit arrangements of substantial value between a company and one of its directors for approval by a general meeting is waived if the director concerned acquires the assets solely by virtue of being a shareholder of that company.
        Amendments agreed to.
        Amendments made: No. 112, in page 107, line 32 leave out first 'subsection' and insert 'subsections'.
        No. 113, in page 108, line 3 at end add—
        '(8) Subsection (1)(a) above shall not apply in relation to any arrangement whereby a person is to acquire an asset from a company of which he is a member if the arrangement is made with that person in his character as such member.'.—[Mr. Eyre.]

      Clause 105
        INTERPRETATION
        Amendment made, No. 114, in page 109, line 40, leave out "'public company" and "the statutory maximum"' and insert 'and "public company"'. —[Mr. Eyre.]
      Clause 106

        CITATION AND COMMENCEMENT, ETC.
        Mr. EyreI beg to move amendment No. 115, in page 110, line 12[Clause 106], after 'except', insert
        'sections (Temporary extension of power to require company to change its name) and (Conversion of creditors' voluntary winding up to members' voluntary winding up in certain circumstances) and'.
        The amendment provides that clause 34 and 35 shall come into effect on Royal Assent.
        Amendment agreed to.
        Mr. EyreI beg to move amendment No. 116, in page 110, line 14, after 'instrument', insert
        'and different days may be appointed for different purposes'.
        This amends clause 106(3) which provides for the commencement of the provisions of the Bill on days to be appointed by statutory instrument, except in the case of those provisions that come into force on Royal Assent. The amendment allows different days to be appointed for different purposes in respect of any particular provision of the Bill. That will provide flexibility to permit, for example, the provisions in part I to be commenced for overseas companies at a different time from their commencement for British companies. The amendment will facilitate the process of commencement.
        Amendment agreed to.

      Schedule 1
        (SCHEDULE TO BE INSERTED IN THE 1948 ACT AS SCHEDULE 8)

          ACCOUNTS
          Mr. EyreI beg to move amendment No. 117, in page 115, line 5, at end insert '(8A)'.
          Mr. Deputy SpeakerWith this we may take Government amendments Nos. 118 to 120.
          Mr. EyreThe amendments require the amount for creditors in respect of taxation and social security to be shown separately from the amount for "other creditors". The European Commission pointed out that procedure to the Government as it is required by the text of the original directive.
          Amendment agreed to.
          Amendments made: No. 118, in page 115, line 17, at end insert '(8A)'.
          No. 119, in page 117, line 24, at end insert '(8A)'.
          No. 120, in page 118, line 41, at end insert—
          '(8A) Other creditors including taxation and social security (Format 1, items E.8 and H.8 and Format 2, item C.8)'
          The amount for creditors in respect of taxation and social security shall be shown separately from the amount for other creditors'.—[Mr. Brooke.]
          Mr. EyreI beg to move amendment No. 121, in page 129, line 17, at beginning insert
          'Subject to sub-paragraph (4A) below'.
          Mr. Deputy SpeakerWith this we may take Government amendments Nos. 122 and 123.
          Mr. EyreThe effect of the amendments is that in determining the "relevant alternative amount" for the purpose of paragraph 27(3)(b) of schedule 1, the most recent actual purchase price or production cost is to be used only if it is more appropriate than the replacement cost.
          Amendment agreed to.
          Amendments made: No. 122, in page 129, line 23, leave out from 'date' to end of line 28.
          No. 123, in page 129, line 28, at end insert—
          '(4A) The relevant alternative amount may be determined by reference to the most recent actual purchase price or production cost before the balance sheet date of assets of any class included under the item in question instead of by reference to their replacement cost as at that date, but only if the former appears to the directors of the company to constitute the more appropriate standard of comparison in the case of assets of that class.'.—[Mr. Brooke.]
          Mr. EyreI beg to move amendment No. 124, in page 130, line 20, leave out
          'either item B.III or item C.III'
          and insert 'item B.III'.
          Mr. Deputy SpeakerWith this we may take Government amendment No. 125.
          Mr. EyreThe amendments allow current asset investments to be included in the accounts at current cost as opposed to the present draft of paragraph 31(3) of schedule 1 which allows them to be included at either market value or a valuation considered appropriate by the directors.
          Amendment agreed to.
          Amendment made: No. 125, in page 130, line 29, at end insert—

          245
          '(3A) Investments of any description falling to be included under item C.III of either of the balance sheet formats set out in Part I of this Schedule may be included at their current cost.'.—[Mr. Brooke.]
          Mr. EyreI beg to move amendment No. 126, in page 134, line 29, leave out from 'item' to end of line 29 and insert 'either—'.
          Mr. Deputy SpeakerWith this we may take Government amendments Nos. 127 and 128.
          Mr. EyreThe House will be pleased to know that the amendments clarify that the table of fixed asset movements should disclose the gross amount of assets rather than the net book amounts.
          Amendment agreed to.
          Amendments made: No. 127, in page 134, line 32, leave out 'and' and insert 'or'.
          No. 128, in page 134, line 33, at end insert—
          '(leaving out of account in either case any provisions for depreciation or diminution in value)'.—[Mr. Brooke.]
          Mr. EyreI beg to move amendment No. 129, in page 136, line 11, at end insert—
          '(3) Particulars shall be given of each provision included in the item "other provisions" in the company's balance sheet in any case where the amount of that provision is material.'.
          The amendment requires provisions shown in the balance sheet under "other provisions" to be disclosed in the notes on the accounts if they are material.
          Amendment agreed to.
          Mr. EyreI beg to move amendment No. 130, in page 136, line 17, leave out from 'sheet' to 'are' in line 19 and insert
          'there shall be stated—'
          (a) the aggregate amount of any debts included under that items which'.
          Mr. Deputy SpeakerWith this it will be convenient to take Government amendments Nos. 131 and 132.
          Mr. EyreThese are minor technical amendments which, to comply fully with the provisions of the directive, make it clear that the aggregate amounts of the debts payable by instalments and other than by instalments are to be disclosed separately.
          Amendment agreed to.
          Amendments made: No. 131, in page 136, line 22, leave out from 'year' to 'are' in line 23 and insert
          'and
          (b) the aggregate amount of any debts so included which'.
          No. 132, in page 136, line 25, leave out 'shall be stated'.—[Mr. Eyre.]
          Mr. EyreI beg to move amendment No. 133, in page 138, line 14, after '(c)', insert 'or 41'.
          Mr. Deputy SpeakerWith this it will be convenient to take Government amendment No. 138.
          Mr. EyreThese amendments are minor additions to paragraph 51(2) and schedule 2.
          Amendment agreed to.
          Mr. EyreI beg to move amendment No. 134, in page 141, line 38, leave out from first 'of' to end of line 39 and insert
          'any of the following provisions, that is to say—

          sections 3 and 4 of the Companies Act 1967 (statement in notes to a company's accounts of proportion of share capital of subsidiaries or certain other bodies corporate held by that company, etc.);

          sections 54 and 56 of the Companies Act 1980
          246
          (particulars of certain loans etc. to directors and others to be disclosed in notes to a company's accounts); and

          paragraphs 42 and 46 above.'.

          By adding to paragraph 58(3), the amendment provides for further items in respect of which corresponding amounts for the preceding financial year are not required to be disclosed.
          Amendment agreed to.
          Mr. EyreI beg to move amendment No. 135, in page 147, line 36, after 'to', insert '(a)'.
          Mr. Deputy SpeakerWith this it will be convenient to take Government amendment No. 136.
          Mr. EyreThese are minor clarifying amendments which extend the declaratory provision in paragraph 90 of schedule 1 on realised profits to make it clear that that provision is without prejudice to any specific provision for the treatment of profits as realised.
          Amendment agreed to.
          Amendment made: No. 136, in page 147, line 38, after 'practice', insert
          'or (b) any specific provision for the treatment of profits of any description as realised'.—[Mr. Eyre.]
          Mr. EyreI beg to move amendment No. 137, in page 149, line 13, at end add—
          'Wholly owned subsidiaries
          95. In this Schedule, "wholly owned subsidiary" has the same meaning as it has for the purposes of section 150 of this Act.'.
          This is merely a clarifying amendment.
          Amendment agreed to.

      Schedule 2

        PREPARATION OF ACCOUNTS UNDER SCHEDULE 8A TO THE 1948 ACT
        Amendment made: No. 138, in page 150 line 12, at end insert—
        '() in paragraph 8(1)(c) for the words from "provisos (b) and (c)" to the end there shall be substituted the words "section 40(4)(b) or (c) or 41 of the Companies Act 1981;";'.—[Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 193, in page 152, line 10, leave out '43, 44, 45' and insert '43(1)(a), 44, 45(a)(i) (b) and (c)'.
        Mr. Deputy SpeakerWith this it will be convenient to take Government amendments Nos. 185, 186 and 187.
        Mr. EyreThese amendments have the effect of confirming the relaxations made to section 39(4) of the 1980 Act by paragraphs 43(1)(b), 43(2) and 45(bb) of schedule 3 on companies drawing up schedule 8(A) accounts—that is the old schedule 8 of the 1948 Act as amended by schedule 2. These are minor and technical amendments.
        Amendment agreed to.

      Schedule 3

        MINOR AND CONSEQUENTIAL AMENDMENTS
        Amendments made: No. 139, in page 153, line 8, at end insert—
        '3A. In both section 124 and section 125 the following subsection shall be substituted for subsection (3)—
        "(3) If a company fails to comply with this section, the company and every officer of the company who is in default shall be liable on summary conviction to a fine

        247
        not exceeding the statutory maximum or on conviction after continued contravention to a default fine not exceeding one-tenth of the statutory maximum."
        This paragraph shall not have effect in relation to any offence committed before the appointed day.'
        No. 140, in page 153, leave out lines 27 and 28.
        No. 141, in page 153, line 28, at end add—
        '8A. In section 187 (restrictions on undischarged bankrupts acting as directors, etc.) after the words "acts as director" there shall be inserted the words "or liquidator" and after the words "is concerned in the" there shall be inserted the words "promotion, formation or".'.—[Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 142, in page 153, line 29, leave out 'of the 1948 Act'. This amendment deletes the superfluous reference to the 1948 Act at line 29, page 153 as all the minor and consequential amendments in the first part of schedule 3 relate to the 1948 Act.
        Amendment agreed to.
        8.45 pm
        Mr. Geoffrey RobinsonI beg to move amendment No. 192, in page 153, line 39, leave out paragraph 10.
        This amendment seeks to retain a requirement for directors' names to be shown on business letters and certain other documents, together with their nationality if they are not British or citizens of another EEC country, and any former names.
        It appeared a relatively minor matter in this enormously long piece of legislation but we have raised the matter again because the Under-Secretary specifically said in Committee on the question of liability and damages, when the point was put to him succinctly by my hon. Friend the Member for Hackney, Central (Mr. Davis):
        "I find it difficult to answer that point but obviously there is something in it."
        He said later:
        "There is a good deal that I would like to say about that matter."—[Official Report, Standing Committee A, 9 July 1981; c. 545.]
        I hasten to add that I am not inviting him to say a great deal tonight, although he might have something more relevant to say than he did when we debated the matter in Committee.
        We shall not push the amendment to a vote. In Committee the reasons given for refusing the amendment were the usual ones—it would be tiresome, there would be too much trouble and expense and it would not be in the national interest. There was neither a genuine argument nor an answer to the anomaly that was being created in respect of the unincorporated businesses that now have to register under the Registration of Business Names Act.
        Recently a small company was started in my constituency. It is concerned with the transfer of technology from universities to manufacturing industry. When deciding how to show my name as a director of the company, I thought it proper, as I had one of the most common surnames in the country, that "G. Robinson" would perhaps not be clear enough and that "Geoffrey Robinson, MP" would be best. The people trading with the company should know that they are trading with Geoffrey Robinson as a director.
        Companies have a right to know with whom they are dealing. I do not know whether the Minister can say
        248
        anything about this matter tonight, although I doubt it. It is a substantial point. It is also important that companies should know with whom they are not dealing. Whilst one might say that if Lord Weinstock were to resign from the GEC there might be jubilation on Opposition Benches, many suppliers, shareholders and others would be anxious. But they would know about it without having to have his name struck off the notepaper of the GEC. There are many mini-Weinstocks—people on whom directly, and perhaps absolutely, the wellbeing of the company depends. It would be relevant if the name of such a person were suddenly to disappear from the company's notepaper in an exchange of correspondence. Many of these companies are limited liability companies although very small.
        The Minister brought forward the rather pathetic argument about the requirement that EEC nationals need no longer be named. We can accept that, and as long as we are members of the EEC the position will remain. But to bring up the Jenkins report—the Jenkins committee reported in about 1962—as the reason for the change when so much of the Jenkins report is rejected on other issues, as it pleases the Minister, is rather choice. At that rate of progress, my hon. Friend the Member for Keighley (Mr. Cryer)—we are very pleased to see him with us—might have some chance of seeing the Bullock report enacted in about the year 2000.
        I should like to reflect for a moment on the answers that we have had to the amendments and on the way in which this huge Bill has been dealt with. I do not think that Ministers, Opposition spokesmen, or Back Benchers on either side of the House, would consider the procedure to be very satisfactory. The fact that there is some directive from the EEC is not a good enough reason to force on companies this maze of legislation. We have had 40 new clauses and 200 amendments. In any complicated legislation there are bound to be times when the Ministers cannot readily find the notes which have been written for them in advance. Those who have to try to make sense of this sort of legislation and who are affected by its provisions daily in the real world do not thank us for it, and it does not do much credit to the House. I do not know what better system might be devised, but clearly we should not try to force this sort of burden on officials, Ministers or the House in the way that we have on this occasion.
        There are no acceptable arguments for the proposed change. The arguments about reducing travel and expense, and the invocation of the national interest, are minimal when compared with the complexities that will arise with the enactment of the measure.
        We believe that the amendment should be accepted by the Government. If the Minister has not had any second thoughts about it, perhaps he will tell us whether he has any new thoughts. If he has neither second thoughts nor new thoughts, I hope that he will say very little.
        Mr. EyreI always enjoy listening to the managerial style of the hon. Member for Coventry, North-West (Mr. Robinson). He concluded his speech by seeking to direct what should be done in response to the amendment. I suppose that is how things are done in the British motor car industry. However, I am sorry to have to say to the hon. Gentleman that I must ask the House to reject the amendment.
        The amendment seeks to retain the requirement for directors' names to be shown on business letters and

        249
        certain other documents—including, for example, showcards. A director would also have to give his nationality, if not British or a citizen of another EEC country, and any former names.
        The present requirement, contained in section 201 of the Companies Act 1948, is of similar origin to the Registration of Business Names Act 1916. It was introduced in 1916 as a means of ensuring that the connection of enemy nationals with business enterprises in this country could be readily identified.
        The effectiveness of the provision has been steadily eroded. However, since 1974, companies are not required to show the nationality of nationals of other EEC member States, and the Secretary of State has always had discretion to grant exemption from all the requirements "in special circumstances". As the hon. Gentleman knows, that is where the difficulty comes. The Department has always taken a liberal view of "special circumstances"—in the time of the hon. Member for Hackney, Central (Mr. Davis) and in my own—and has granted exemptions regularly. Applicants normally claim that the movement of directors is likely to cause frequent alterations to their letter headings, but the argument that, for example, export opportunities may be lost by disclosure of directors' names or nationality is also accepted as grounds for a direction.
        In 1962 the Jenkins committee recommended that section 201 should be repealed. The committee contended that while it was convenient for persons dealing with the company to see the names of the directors on the company's letter paper, it was not essential. The information was available in a fuller and more up-to-date form, either in the records available to the public in the Companies Registration Office or from the company's own registered office. That information is, of course, the answer that I must give to the question raised by the hon. Gentleman when he said that people want to know. That is how they can find the information that they want. The committee contended, moreover, that it was an unduly onerous task, particularly for large companies where changes of directors might be frequent, to keep letter headings up to date. It also took the view that since so many exemptions had been, and are being, granted by the Department every year, with no evidence of harm arising therefrom, the section served little purpose.
        It is now a statutory requirement under the European Communities Act 1972—and the hon. Gentleman will appreciate the importance of this—that companies should disclose on their letter paper particulars of their registered office, registration number and place of registration. An up-to-date list of directors will be available there. The provision made by section 201 is no longer essential for the purpose that it was intended to serve and the need to consider applications for dispensation from it places an avoidable burden on the Department of Trade. In our view, it should therefore be repealed.
        Mr. Geoffrey RobinsonThe hon. Gentleman still has not answered the very specific point made by my hon. Friend the Member for Hackney, Central (Mr. Davis), which I shall put again without repeating it at tedious length and in great detail, namely, that small businesses fall into a completely different category and there is the problem of liability in relation to them.
        The Minister took the point in Committee and said that he would return to it on Report. I rather sense that he has not given it consideration, but we put on record that it is
        250
        a valid point and that he conceded it as a valid point in Committee. We were hoping that he would deal specifically with it on this occasion.
        Mr. EyreIt is a point of difficulty, but I am sorry that I am not able to add anything here. It is very difficult to find a solution to the problem. I should point out, however, that the hon. Gentleman regards it as more of a problem than other people do, as we have received no other representations on this point. I am sorry, but I cannot meet the hon. Gentleman on that point.
        Amendment negatived.
        Mr. EyreI beg to move amendment No. 143, in page 154, line 14, after 'Act)' insert—
        '(a) in subsection (3), the following words shall be inserted after paragraph (b), that is to say, "and
        (c) in an appropriate case, if the company wishes to be registered with the Welsh equivalent of "public limited company" or, as the case may be "limited" as the last words or word of its name, a statement to that effect."; and"
        "(b)'.
        Mr. Deputy SpeakerWith this we may take Government amendments Nos. 144 and 145.
        Mr. EyreThese amendments permit a joint stock company registering under part VIII of the 1948 Act to use the Welsh equivalent of "public limited company" or "limited" as the last part of its name if its registered office is to be situated in Wales. It is considered that, as drafted, paragraph 13 of schedule 3 makes the use of the Welsh equivalent compulsory in such cases.
        9 pm
        Mr. Clinton DavisThe Minister is always keen on phonetics and he told me how to pronounce St. Piran. Perhaps he will say whether the word "cwmni" in the first line of amendment No. 144 is a typographical muddle or whether it can be pronounced by him. I think the word "cyfyngedig" in amendment No. 145 is pronounced "sifin-geddig". My memory takes me back to the days when we were discussing this matter, and I think that I am right.
        Mr. EyreThe hon. Gentleman's pronunciation of that word sounds reasonably satisfactory.
        Amendment agreed to.
        Amendments made: No. 144, in page 154, line 24 leave out from 'if' to 'cwmni' in line 27 and insert

        'the company has delivered a statement under section 382(3)(c) of this Act to the registrar'.
        No. 145, in page 154, leave out lines 32 to 34 and insert
        'if the company has delivered a statement under section 382(3)(c) of this Act to the registrar, "cyfyngedig".'.
        No. 146, in page 155, line 14, at end insert—
        '17A. In section 455 after the definition of "share warrant" there shall be inserted the following definition—
        ""statutory maximum" has the meaning given by section 87(1) of the Companies Act 1980;".'.—[Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 147, in page 157, line 41, after 'shares', insert 'or debentures'.
        This is a drafting amendment to correct an omission to a reference here, as elsewhere in the paragraph, to interest in debentures as well as in shares.
        Amendment agreed to.
        Amendments made: No. 148, in page 158, line 5, leave out 'fourteen' and insert 'ten'.
        No. 149, in page 158, line 9, at end insert
        '(disregarding in reckoning that period any day that is a Saturday or Sunday or a bank holiday in any part of Great Britain)'.—[Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 150, in page 158, line 22, at end insert
        '(whether as it has effect in relation to an investigation under any of sections 164 to 166 of the principal Act'.
        This is a drafting amendment to make it clear that an answer given by a person to a question put to him in exercise of powers conferred by section 167 of the 1948 Act, as amended by clause 81, in investigations under sections 164 to 166 of the 1948 Act, section 172 of that Act and section 32 of the 1967 Act is admissible in evidence against him.
        Amendment agreed to.
        Amendments made: No. 151, in page 158, leave out lines 29 to 31.
        No. 152, in page 158, line 42, at end insert—
        '34A. In section 29(1) of the 1976 Act (register of disqualification orders)—

        for the words from "that a person" to "in the order" there shall be substituted the words "under section 188 of the Act of 1948 or section 9 of the Insolvency Act 1976;"; and'

        the words from "This subsection' to the end shall cease to have effect.'.—[Mr. Eyre.]

        Mr. EyreI beg to move amendment No. 154, in page 159, line 19, at end insert
        'and the following subsection shall be added at the end of that section—'
        "(13) In relation to any offer to allot any securities required by subsection (1) above or by any provision to which subsection (3) above applies references in this section (however expressed) to the holder of shares of any description shall be read as including references to any person who held shares of that description on any day within the period of twenty-eight days ending with the day immediately preceding the date of the offer."
        This amendment to section 17 of the 1980 Act, which secures the pre-emption rights of existing shareholders of a company when shares are allotted by the company, provides that for the purposes of the section the shareholders may be any persons who held shares within a 28-day period preceding the offer date for the new allotment.
        Amendment agreed to.
        Mr. EyreI beg to move amendment No. 153, in page 159, line 26, leave out paragraph 40 and insert—
        '40.—(1) In section 24 (valuation of non-cash consideration before allotment), for the words from the beginning of subsection (2) to "that class" there shall be substituted the words "(2) Subject to subsection (2A) below, subsection (1) above shall not apply to the allotment of shares by a company in connection with—
        "(a) an arrangement providing for the allotment of shares in that company on terms that the whole or part of the consideration for the shares allotted is to be provided by the transfer to that company or the cancellation of all or some of the shares, or of all or some of the shares of a particular class, in another company (with or without the issue to that company of shares, or of shares of any particular class, in that other company);".
        "(2) The following subsection shall be inserted after subsection (2) of that section—"
        "(2A) Subsection (2)(a) above does not exclude the application of subsection (1) above to the allotment of shares by a company in connection with any such arrangement as is there mentioned unless it is open to all the holders of the shares in the other company in question or, where the arrangement applies only to shares of a particular class, to all the holders of shares in that other company of that class, to take part in the arrangement."
        "In determining whether that is the case, shares held by or by a nominee of the company proposing to allot the shares in connection with the arrangement, or by a nominee of a company which is that company's holding company or subsidiary or a company which is a subsidiary of its holding company, shall be disregarded."
        252
        "(3) In subsection (3) of that section—"

        for the words from the beginning to "those purposes" there shall be substituted the words "For the purposes of subsection (2)(b) above"; and

        after the word "shares", in the last place where it occurs, there shall be inserted the words "or other securities".

        "(4) The following subsection shall be inserted (11) of that section—
        "(11A) It is hereby declared for the avoidance of doubt that subsection (1) above does not apply by reference to the application of an amount for the time being standing to the credit of any of a company's reserve accounts or to the credit of its profit and loss account in paying up (to any extent) any shares allotted to members of the company or any premiums on any shares so allotted; and in relation to any such allotment references in this section to the consideration for the allotment do not include any such amount so applied.".
        (5) In subsection (12) the following paragraph shall be inserted before paragraph (a)—
        "(aa) In this section "arrangement" means any agreement, scheme or arrangement (including an arrangement sanctioned in accordance with section 206 or 287 of the 1948 Act)."
        This amendment provides a relaxation from the requirement in section 24 of the 1980 Act for an independent valuation of a non-cash consideration in a takeover or merger for schemes of arrangement, as defined in clause 38, for the purposes of merger accounting and for mergers in which securities other than shares are involved.
        Amendment agreed to.
        Amendments made: No. 185, in page 160, line 10, at beginning insert '(1)'.
        No. 186, in page 160, line 18, at end insert—
        '(2) The following subsection shall be inserted after that subsection—
        "(4A) Subject to section 43(7A) of this Act, any consideration by the directors of a company of the value at any particular time of any fixed asset of the company shall be treated as a revaluation of that asset for the purposes of determining whether any such revaluation of the company's fixed assets as is required for the purposes of the exception from subsection (4) above has taken place at that time; but where any such assets which have not actually been revalued are treated as revalued for those purposes by virtue of this subsection that exception shall only apply if the directors are satisfied that their aggregate value at the time in question is not less than the aggregate amount at which they are for the time being stated in the company's accounts."
        No. 155, in page 160, line 25, after '(2)', insert '(i)'.
        No. 156, in page 160, line 26, at end insert
        'and (ii) in paragraph (b) for the word "proper" there shall be substituted the word "reasonable".'.
        No. 187, in page 160, line 28, leave out 'and' and insert—
        '(bb) the following subsection shall be inserted after subsection (7)—
        "(7A) Where subsections (3)(a), (5)(a) or (6)(a) above applies to the relevant accounts, section 39(4A) of this Act shall not apply for the purposes of determining whether any revaluation of the company's fixed assets affecting the amount of the relevant items as stated in those accounts has taken place, unless it is stated in a note to those accounts—

        that the directors have considered the value at any time of any fixed assets of the company without actually revaluing those assets;

        that they are satisfied that the aggregate value of those assets at the time in question is or was not less than the aggregate amount at which they are or were for the time being stated in the company's accounts; and

        that the relevant items affected are accordingly stated in the relevant accounts on the basis that a

        253
        revaluation of the company's fixed assets which by virtue of section 39(4A) included the assets in question took place at that time.";and'.—[Mr. Eyre.]

        Mr. EyreI beg to move amendment No. 157, in page 162, line 10 after 'accounts)', insert—
        (a) the following subsection shall be inserted after subsection (2)—"
        "(2A) Subsection (2) above does not apply, in relation to the accounts prepared by any company in respect of any relevant period, to transactions, arrangements and agreements made by the company or any of its subsidiaries for any officer of the company if the aggregate amount outstanding at the end of that period under the transactions, arrangements and agreements so made for that officer does not exceed £2,500.";and
        '(b)'.
        Mr. Deputy SpeakerWith this it will be convenient to take Government amendment No. 158.
        Mr. EyreThe amendment provides a de minimis exemption from section 56 of the Companies Act 1980, which requires disclosure in the accounts of the aggregate amounts outstanding under certain credit and loan arrangements made by the company or any of its subsidiaries for officers other than directors.
        Amendment agreed to.
        Amendment made: No 158, in page 162, line 14, at end insert—
        '50A. In section 58 (transactions, etc. excluded from sections 54 and 57) the following subsections shall be substituted for subsection (3)—
        "(3) Subsections (1)(c) and (2)(c) of section 54 above do not apply, in relation to any accounts prepared by a company in respect of any relevant period, to any transaction or arrangement with a company or any of its subsidiaries in which a director of the company or of its holding company had, directly or indirectly, a material interest if—"

        the value of each transaction or arrangement within subsection (1)(c) or (2)(c), as the case may may be, in which that director had, directly or indirectly, a material interest and which was made after the commencement of that relevant period with the company or any of its subsidiaries; and

        the value of each such transaction or arrangement which was made before the the commencement of that period less the amount (if any) by which the liabilities of the person for whom the transaction or arrangement was made have been reduced;

        did at any time during the relevant period exceed in the aggregate £1,000 or, if more, did not exceed £5,000 or one per cent. of the value of the net assets of the company preparing the accounts in question as at the end of the relevant period for those accounts, whichever is the less.".—[Mr. Eyre.]
        Mr. EyreI beg to move amendment No. 159, in page 162, line 22, at end insert—
        '51A. In section 64(4) (application of section 28 of the 1967 Act to section 64(3)) for the words "subsection (3)(b)" there shall be substituted the words "subsections (4A) and (4B)".'.
        This is a technical amendment and is consequent upon the amendment to section 28 of the Companies Act 1967 being made to schedule 3.
        Amendment agreed to.
        Mr. EyreI beg to move amendment No. 160, in page 162, line 36, at end insert—
        '54A. In section 72 (penalties for breach of sections 68 and 69 of the 1980 Act) for the words "or 69", in both places where they occur, there shall be substituted the words "69 or 70".'.
        The amendment rectifies an omission from section 72 of the Companies Act 1980.
        Amendment agreed to.

      Schedule 4

        REPEALS
        Mr. EyreI beg to move amendment No. 161, in page 164, line 32, column 3, at end insert—
        'In section 283(4), the words "and delivered" in each place where they occur.'.
        This is a technical amendment and includes in schedule 4 the words that clause 96 deletes from section 283(4) of the 1948 Act.
        Amendment agreed to.
        Amendments made: No. 162, in page 164, line 37, column 3, at end insert—
        'In Schedule 1, Regulation 10 of Table A.'.
        No. 163, in page 164, line 37, column 3, at end add—
        'In Schedule 1, in Regulation 88 of Table A and Article 38 of Table C, the words "or under section 28 of the Companies Act 1976".'.
        No. 164, in page 165, line 5, column 3, at end insert—
        'In section 29(1), the words from "This subsection applies" to the end.'.
        No. 165, in page 165, line 13, column 3, leave out from 'of' to end of line 14 and insert—
        'the 1948 Act, Regulation 88 of Table A and Article 38 of Table C in Schedule 1 to that Act and Schedule 14 to that Act.'.
        No. 166, in page 165, line 32, column 3, leave out '18 and 19' and insert
        '18, 19, 124, 125 and 200'.
        Order for Third reading read.
        [Queen's Consent and Prince of Wales's Consent signified.]
        Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Jopling.]
        9.8 pm
        Mr. Clinton DavisWe have almost reached the final stage in this saga—the Companies Bill 1981. I cannot remember when it began.
        First, I thank the outside bodies which made massive contributions to improving the Bill—it certainly needed improvement—and assisted us in scrutinising the clauses, notably in Committee and on Report. I also thank in particular my hon. Friends the Members for Norwood (Mr. Fraser) and for Coventry, North-West (Mr. Robinson). They took a great deal of the burden from my shoulders. I also thank the Minister and his Minister of State for their great courtesy in these struggles. They have been helpful in a variety of ways. The Minister has added to his reputation as a kindly and generous man to whom we all

        255
        enjoy listening sometimes. I should also like to thank his officials, who at one time were my officials, because they have assisted him to assist us.
        We voted against the Bill on Second Reading because we found, in particular, that the provision to abolish the Register of Business Names was, in our opinion and in the opinion of virtually everyone else, apart from the Minister and one or two Back Benchers, a regressive measure. We sought to take every possible step to dissuade the Minister from the destructive course that he has regrettably pursued.
        In other respects, as a matter of principle, I think that the Government have sought to engage themselves in trying to deal with a number of prolific and difficult problems. The end product is regrettably a bewilderingly complex Bill. It will create great difficulties for those who advise professionally on these matters and for business men. The Minister says that there is no simple way out of this situation. The hon. Gentleman had a vivid phrase to describe these complexities. It was something along the lines that the Bill cannot be limpid, simple and brief. There are large tracts of the Bill which for many will be incomprehensible. That does not add to the value and the esteem in which the law will be held by many if my view is correct. Maybe, however, the Minister is right. Maybe it is impossible to grapple with these difficult problems without being as complex and sometimes as convoluted as the Bill.
        Some brave attempts have been made to deal with a number of abuses and to rectify certain situations. The ability of a company to purchase its own shares subject to suitable qualifications is an advance. So, too, is the effort to deal with concert parties, even though the Minister did not initially wish to handle the matter and wanted to leave it to the self-regulatory bodies which, however, did not want the task. It is possible that the Opposition played some part in changing the Minister's mind. Notwithstanding the remarks I have made about the complexity of the Bill, it is an effort to grapple with a real problem that could have devastating effects on British businesses if not dealt with successfully. The Consolidated Gold Fields case revealed the dangers all too well.
        I have complained from time to time about the inadequacies of our procedures for dealing with these matters. I shall not make that speech again. I wish simply to underline that when dealing with this type of legislation involving the sort of changes that are demanded in our business and industrial life and the sort of changes that workers are entitled to request, a method can surely be found that is far more rapid and far more flexible than that permitted by our present techniques in the Chamber, which are wholly antiquated. We have to devise a more sensible system that can deal with the changing demands of a modern industrial society. Some start to that effect has been made by embracing the idea that one can legislate by statutory instrument.
        We should not go too far in that respect, because there would be a danger of the House being debased, but when we are dealing with this sort of legislation which involves technical changes, the use of statutory instruments could be invaluable, subject always, of course, to suitable safeguards. I welcome the speech of the hon. Member for
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        Tynemouth (Mr. Trotter), who said earlier that it would be useful if limitations of time did not impress themselves on us so much when we are considering these matters.
        We have debated a massive number of amendments to the Bill. The Opposition are not guiltless, because we tabled some of our amendments late in the day. We had thought that it would be best to deal with them all at once and we were waiting to see whether the professional organisations wished us to table amendments, but perhaps they were satisfied with the consultations that have taken place.
        However, it is grossly unsatisfactory that Government amendments and new clauses were put down at the last moment. That was not the fault of the Ministers or their officials. It was caused by the constraints of time.
        It was wrong that we should have been driven along as we were because the Government had to get the Bill through Committee by a particular time and out of the House just before the end of the Session. There were many technical provisions and they could easily have been stood over to the next Session, as the hon. Member for Tynemouth suggested.
        We have seen another demonstration that our procedures are ill-equipped to deal with Bills such as this. If we had a little more time we could avoid some of the gobbledegook that passes for legal requirements in so many statutes, and not least in the Bill.
        The abolition of the Register of Business Names is a retrograde step. The changes on which the Minister has embarked may operate as a rogue's charter. Time will tell. I hope that he is right and I am wrong, but I do not believe that the matter was carefully thought out by the Government.
        I do not know what my constituents would think if they knew that I was talking in the House about concert parties. I do not know what will happen at my reselection and whether I shall be asked about my attitude towards concert parties. It is an important matter, but I wish that he had a better name to describe the abuses that have taken place. The accountancy bodies still believe that the clauses are too complex.
        My hon. Friend the Member for Norwood said in Committee that we should allow the company court a little more discretion. Perhaps we should rely more on civil remedies, because we have to be stringent when applying criminal sanctions and ensure that judges are able to exercise discretion more along the old equity lines. That would be a useful approach. It is certainly something which we should contemplate, because we are bogged down by extremely complex and possibly unenforceable procedures.
        We included in the previous Companies Act insider dealing sections that are so complex and difficult to operate that I doubt whether we shall get any successful prosecutions. There are so many hurdles for the prosecution to surmount that I fear that those sections will be found to be unworkable.
        All that the Minister can hope for is the creation of an atmosphere in which this abuse will not be perpetuated. However, it will go on. Insider dealing will go on, and it will go on unpunished, largely because there are no effective civil sanctions to deal with it, and the criminal sanctions cannot operate. The same, I fear, will happen with concert parties. I wish that there were more draconian steps, the kind of steps that we outlined previously. In my view, the Minister's contribution in this connection was

        257
        inadequate. We need more draconian steps to destroy the effects of illegal action taken by persons abroad. Time will tell whether the Government have taken the proper and adequate steps.
        I do not believe that the legislation covers satisfactorily the case where two or more people act together by procuring a third person to buy shares but do not inform him of their agreement. Apparently, the Department has considered the matter but is not persuaded that it accords with the practical aspects of planned share purchases. What happens if the Department is wrong? What happens if considerable damage is done? How quickly can the defects be remedied?
        Another important defect is that although companies undertaking their own investigation into the ownership of shares have extended powers under the Bill, I doubt very much whether those powers would enable them to look to third parties to carry out the investigations that they require. So our view is that the Bill has many deficiencies.
        In conclusion, not only must we look to the House of Commons to try to remedy abuses in the way that the Bill seeks to do, and improve upon that but we must try to change the whole self-regulatory system that is applied at present in this country. I shall not go into the matter, beyond saying that the self-regulatory system has been shown to have failed in case after case in our recent history—not only the Dowgate case, but many others like it. We need our own form of Securities and Exchange Commission, based upon our own experiences and requirements. I believe that a Labour Government should feel impelled to do that and show that the whole miserable and flimsy structure that we have in this country for dealing with abuse must be rectified. I am sure that that is right. Having said that, we do not propose to vote against the Bill tonight.
        9.23 pm
        Mr. Bill WalkerI wish to speak to a new schedule that I tabled, but which regrettably we were unable to debate. It refers to public companies.
        Mr. Deputy Speaker (Mr. Bryant Godman Irvine)Order. I have not had the advantage of being present throughout the Bill's proceedings. Is this in the Bill? If it is, it is in order.
        Mr. WalkerI simply want to place on record my thanks to the Minister for the consideration that he gave me when I raised the matter. It is unfortunate that we were alerted to the difficulties so late. I refer to the description of a public company in the Companies Act 1980. Public companies are required to change their name and to delete the word "Limited" as the concluding word of their name and substitute the words "public limited company", or the abbreviation PLC.
        That requirement gives rise to considerable administrative expense, particularly in re-registering patents and trade marks, where registration fees become payable. Difficulties may also arise from the name of the goods and products in existence before the change of name.
        However, my main concern is for the companies which have many places of business abroad, or that have trade marks and patents throughout the world. My new schedule was designed to provide the companies with the opportunity of adding after their existing name the description "public limited company".
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        In my judgment that would have been sufficient to comply with the directive, which would mean straight descriptions rather than changed names. A person who purchases a product or commodity is not usually worried about whether the supplier is a public or a private company. The same applies to names embossed on plant and machinery.
        Many of our major firms with extensive activity abroad might be faced with costs involved in the re-registration of patents and trade marks. The fees will have to be paid overseas to patent offices and foreign Governments. That could involve a sterling outflow of between £10 million and £20 million and could create a problem in terms of cash flow out of the United Kingdom. In addition it could place a financial burden upon companies whose funds are already savagely and sorely affected by inflation and world depression. I look to the Government either to introduce legislation soon or to do what they can to mitigate the effects.
        I have no doubt that in Europe the effects will not be so savage. My concern is for what might happen in other parts of the world, particularly the Third world where companies will be required to re-register their patents as they come up for renewal. There will be questions about the change of name. The problems will not be easily resolved unless the Government can find ways to smooth the path.
        9.26 pm
        Mr. EyreI am obliged to Opposition Members for their personal courtesy during the long passage of the Bill and for providing an opportunity to reflect on the Bill as a whole. I commend it to the House.
        The last two years have been remarkably productive for company law. The hon. Member for Hackney, Central (Mr. Davis) and I spent much effort on the subject in that time. I am conscious that two successive Bills of the size and range of those that we have considered have tested to the full, and at times strained, the capacity of the House and people outside to give the legislative proposals the fullest scrutiny. That is Parliament's function. The Bills will be our battle honours.
        All hon. Members will wish to pay tribute to the people outside the House who interest themselves in company law. I refer to the law societies, accountancy bodies, the CBI, other representative organisations and to the many individuals who have taken a keen interest in particular aspects of our work. The hon. Member for Hackney, Central paid tribute to them. I am glad that he did. We know from our experience how deserved that tribute is. Such input is indispensable. It ensures that we are not allowed to forget or ignore the practical impact of our measures. The expertise and experience available are formidable. I like to think that my colleagues and I and the Department are open and responsive in our approach to company law. Of particular benefit to me on this Bill has been the advice of the advisory panel on company law which was established last year, and of Professor Gower, who was appointed in 1979 as the Department's research adviser on company law.
        A number of references were made yesterday to the prospect of an annual Companies Bill. We have no intention of introducing another such Bill in the immediate future. The hon. Member for Swansea, East (Mr. Anderson) referred to a pipeline of legislation in Brussels. The obligation to implement the second and fourth

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        directives has been among the factors, but not the sole factor, in triggering off both the previous Bill and this measure. A number of Community instruments are at various stages of consideration in Brussels. Community legislation is a new factor which we have to take into account.
        We have made our views on the company law harmonisation programme clear. We believe that it should concentrate on instruments that fulfil a real and practical need for harmonisation and that the Community must temper its ambitions to the capacity of the national legislatures and administrations to cope with new and additional requirements. There are signs that that view is meeting with increasing sympathy in the Community.
        The hon. Member for Hackney, Central referred to the broader question whether our parliamentary procedures were capable of providing adequate scrutiny of complex and technical Bills. That raised far wider issues than it would be appropriate for me to discuss tonight. The hon. Gentleman's sentiments will have struck a chord with hon. Members who have been closely involved in both this and the previous Bill. Perhaps they will provide food for thought for the House as a whole. I thank the hon. Gentleman for the efficient and considerate manner in which he has conducted business during our protracted proceedings. I also thank the hon. Members for Norwood (Mr. Fraser) and Coventry, North-West (Mr. Robinson) for their useful contributions.
        My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) raised the problems of patents, trade markings and so on, resulting from the requirement of the 1980 Act that old public companies should change their names to include "public limited company" if they wished to remain public companies. That matter was raised in Committee by my hon. Friend the Member for Dorset, North (Mr. Baker). I assure the House that the Government are sensitive to the possible additional burden on industry. That problem has been identified only during the past few months. It would not have been appropriate to make the radical change to the basis of re-registration that was set out in the 1980 Act in the middle of the transitional period for the new arrangements, especially as so many companies had already acted on that basis.
        The Government are taking measures that we are advised will resolve any problems in the area mentioned by my hon. Friend the Member for Perth and East Perthshire. As to potential difficulties with certain overseas patent offices, we cannot legislate to ensure that they deal sympathetically with those matters. We shall use our influence both in the Community and on a national basis to seek to minimise the problems for British industry and commerce. I hope that that will provide some reassurance for my hon. Friend.
        The hon. Member for Hackney, Central raised the question of insider dealing. He will be relieved to know that a conviction has been secured already. I shall be glad to let him have further details of that if he wishes.
        The immediate future does not hold the prospect of further primary legislation. However, in the near, if not

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        the immediate future—and it is of tremendous importance as it arises from the Bill—there is the prospect of consolidation. I am pleased to say that under clause 103 the process of consolidation is well under way. Both the 1980 Act and the Bill make consolidation imperative, and that is recognised by the Government. To that end, an experienced former parliamentary counsel was appointed last year to undertake what is by now a Herculean labour. Clause 103 introduces an important new provision under which amendments to the Acts may be made by Order in Council if the Law Commission recommends that they are desirable for the achievement of a satisfactory consolidation. My Department will be consulting shortly on whether the consolidation should take the form of one mammoth Act or, for better management, several Acts, and, if the latter, how the Acts should be divided. I saw the eyes of the hon. Member for Coventry, North-West light up at the prospect of serving on the Committees that will deal with those measures.
        In due course we shall also be consulting on the contents of the consolidation, on which I understand that the draftsman is making excellent progress. All in all I can now offer a much more concrete proposal of consolidation actually taking place. It is, of course, a mammoth exercise. I am advised that it is the largest consolidation ever. However, I share the wish of all concerned with company law that it should be achieved as soon as possible and that this will be a major priority for the future.
        We have had good debates on the Bill. We have had our differences on some of the provisions in the Bill as well as on what is not in it. However, for the most part—as happily remains characteristic of Companies Bills—there is a large measure of agreement on both sides of the House on the objectives of different parts of the Bill. It will come as no surprise to the House if I say that, in my view, it is a good Bill. What I like about it is the practical contribution that it will make in its own way to the development of commerce and industry in this country and to the restraint of malpractices which have adversely affected industry and commerce.
        I greatly look forward to the enactment, very shortly, of a measure that will enable small and medium-sized companies to take advantage of reduced accounting disclosure requirements, streamline the registration of company names, replace an inadequate system for the registration of business names with a more direct self-policing system of obligations, enable companies to purchase their own shares, remove undue commercial impediments imposed by sections 54 and 56 of the 1948 Act, strengthen the law on the disclosure of interests on company investigations and with regard to the proper practice of directors and at the same time pave the way to the much-needed consolidation of the Companies Acts. That is a notable list of virtues and they can reasonably and properly be claimed on behalf of the Bill. I commend it to the House.
        Question put and agreed to.
        Bill accordingly read the Third time and passed, with amendments.

    Grant-Aided Colleges (Scotland)
    9.37 pm
    Mr. Martin J. O'NeillI beg to move,
    That a humble Address be presented to Her Majesty, praying that the Grant-Aided Colleges (Compensation) (Scotland) Amendment Regulations 1981 (S.I., 1981, No. 1054), dated 22nd July 1981, a copy of which was laid before this House on 24th July, be annulled.
    In moving this prayer against the order the Opposition are aware that it could well be the first of many such orders. The purpose of the order is to start dismantling the Crombie code. The code has been in operation since 1948 and was at first the basis for the National Assistance (Compensation) Regulation. Since then, whenever there has been a statutory reorganisation of public services, the Crombie code has provided the basis for recompense in the form of redundancy payments for staff who have been affected.
    The decision to end the code was taken by the Government and transmitted to the TUC in September last year. In the initial stages, when the code was being established, the TUC was involved in drawing it up. Given the nature of the code, the trade unions have been involved in every stage in its expansion to cover a whole range of public services. To say that the trade union movement was surprised by such a unilateral declaration by the Minister would be an understatement. The then Minister for the Civil Service, the right hon. Member for Southend, West (Mr. Channon), spelt out in his declaration what has become the Government's line, namely, that the Crombie code contains too many anomalies. Therefore, Ministers decided that detailed negotiations should be held to determine the basis of compensation most appropriate for the particular groups of staff concerned. However, there was to be no major departure from previous practice. The objective was that representatives of staff and management should arrive at a mutually agreeable term of compensation.
    This is all a matter of record and was minuted at a meeting with the TUC on 19 November 1980. When the unions offered to participate in an exercise to eliminate the anomalies of the Crombie code on the basis of the adoption of the best practice that was provided, the Minister rejected it out of hand.
    In the initial stages of Crombie the code was a forerunner of the redundancy schemes that are now current. There has been a constant recognition of governmental responsibility towards staff who are affected by statutory reorganisation. Public servants who are no longer required by the Government because of legislative decisions are often unlikely to obtain alternative employment in their own specialties. It has been recognised that they need special protection. In many instances the recognition has gone beyond that. It has become a point of reference to provide long-term protection for staff. It has provided a mechanism whereby lump-sum payments are arrived at in the determination of redundancy payments.
    There are many organisations which do not fall technically within the statutory obligations of the Government but which are affected by legislation. Very often these organisations, especially when trade unions have not been involved, have been able to use the Crombie code as a guideline. The Government have failed so far to
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    offer any of the groups that I have mentioned the financial recompense that is offered by the Crombie code. For example, in the regulations that are the subject of the Prayer, the Crombie code would take effect for staff over the age of 40 years. The regulations provide that only staff aged over 50 years will be eligible for remuneration under the redundancy scheme suggested by the Minister.
    Over the past four or five years there have been redundancies amounting to 30 per cent. overall in college of education staffing. It is relevant to refer to the former colleges of Callendar Park and Hamilton, which are being absorbed into Moray House and Jordanhill colleges. The staff who have come through the Callendar Park and Hamilton experience may be made redundant yet be subject to inferior redundancy provisions to those which were enjoyed by their former colleagues. The irony is that those who fought to protect the right to work and who have more years of service will get a poorer deal than their former colleagues.
    The regulations go beyond college of education staff and cover all the staff of grant-aided colleges in Scotland. These colleges embrace central institutions such as Robert Gordon's institute of technology, the Queen Margaret college in Edinburgh and the Paisley technical college. None of these colleges has so far been dramatically affected by staffing cuts. However, if the warnings that are given in today's copy of The Guardian are to be heeded, their English counterparts, to the extent that they are counterparts—I concede that there are certain differences—such as polytechnics may be assumed to be the next targets for cuts on the Government's hit list. I cannot see the gutless Scottish Office resisting a call for further savings in further education when it has been so assiduous in implementing Government cutbacks in other areas of education.
    The position of many of the academic staff who will be affected by the dismantling of the Crombie code may be compared with the staff of colleges of education and university lecturers.
    The benefits offered under the Crombie code are better in many respects than those offered to school teachers and the differential can be seen as a recognition of the inability of colleges to offer what has hitherto been the province of the universities, namely, security of tenure for life, which has been one of the cornerstones of academic freedom in our universities.
    If the individuals with whom we are concerned are roughly similar to university staff in many respects, it is obvious that we are considering nothing less than a blatant attempt to undermine potential claims by university staff who could be made redundant by the University Grants Committee cuts.
    It seems ridiculous that at a time of widespread unemployment, when the opportunities for alternative employment in education are even more limited than they have been for many years, the Secretary of State should consider even the possibility of worsening the severance conditions of staff.
    The Government have a responsibility to their staff and should be trying to set an example as the best sort of employer. But in every case the new provisions will be worse than those that have prevailed before.
    Why have the Government taken this action? Is it to save money? If so, what is the size of the savings? Have any costings been done? Do the Government know how many anomalies will be removed by the dismantling of the

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    Crombie code? If we are to have a piecemeal approach to the replacement of the Crombie code by other systems of redundancy payment, there is no guarantee that there will be any consistency in the new system.
    The fundamental objection that the Minister has made in correspondence with various organisations is that there are anomalies in the Crombie code. When the TUC met the Civil Service Department last year at the outset of the consideration of the problem it said that an attempt should be made to work out a scheme that would iron out the anomalies. The Minister rejected that, and from what I have read of his replies to interested bodies and hon. Members, it is clear that he is not interested in trying to work out an improvement in what is admittedly an unsatisfactory situation in some respects, but one which the trade union movement is willing to work to improve.
    Not the TUC, any organisation representing staff, whether lecturers in colleges of education, lecturers in Scottish central institutions or higher academic staff, who have not been well known for militancy in the past, the Educational Institute of Scotland or NALGO have had any satisfactory answers to their questions. Perhaps the Minister will tell us what is the rationale behind the dismantling of the Crombie code.
    Mr. Robin F. CookMy hon. Friend has mentioned a number of organisations which have complained about the order. He will be aware that the national joint committee governing conditions of staff in colleges of education is among the bodies that have protested, but is he aware that the committee was left to read of the proposals in the press, even though it had met the Minister and his officials only a few days before the order was made?
    Does not that attitude to the staff display a contempt for those who are most affected by the order and reveal the cynicism that the Government have shown in bringing the order before the House?
    Mr. O'NeillI could not agree more. In the short time I have been an hon. Member it has been clear that the Minister's handling of Scottish education matters has resulted in those most affected by cuts or staff reductions always being the last to hear about them. Indeed, they usually hear of them in a way that is almost insulting to the House, because such matters are almost invariably pushed through at the end of a Session, or, as in the case of the colleges of education closures, at a time when it is difficult for the Minister to be pursued and questioned.
    The Opposition believe that the Minister must answer the points that I have put to him concerning why the Crombie code is being dismantled, why the trade union's offer to smooth out the anomalies has been refused and, if there are any savings, how much will they amount to. If the Minister is unable to answer, I must ask my right hon. and hon. Friends to join me in the Lobby to oppose the regulations.
    9.50 pm
    Mr. George RobertsonThis evening we are debating what can only be called a fairly obscure and mystifyingly titled document—"The Grant-Aided Colleges (Compensation) (Scotland) Amendment Regulations 1981." However, those regulations again display this Government's same sharp practice, the same
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    parliamentary tricks and the same shabby, short-sighted and insensitive attitude to educational training and those who work in it that has characterised their handling of the whole issue from their antics in 1977 to the present day.
    Those who work in the further education sector should look carefully at this miserable episode and the way in which the Government have gone about the shady dealings with Scottish colleges of education. They should learn the sinister lesson from that.
    Today the colleges of education in Scotland get the hatchet, then the scalpel and now the brush-off. Tomorrow the vandals will move on to the rest of the educational system. The regulations are not specifically about the closure of Hamilton college of education in my constituency. They are an act of calculated, cynical educational destruction and an act that rightly gained no support in the whole Scottish community. Of course, it arises out of the Government's so-called miserable "success" in that chapter of Scottish political history. This little postscript is just one more addition to the continued agony and uncertainty of the staff of the destroyed Hamilton college of education.
    I shall make one specific point about the conditions that apply to those who are affected by the closure of Hamilton college of education as well as those in the other colleges of education who are also affected by the regulations and by the Government's policy in this area.
    The Scottish education department sent a letter to a variety of people involved in the so-called consultation exercise, including Mr. Robin Lobban, the chairman of the Association of Lecturers in Colleges of Education in Scotland. This standard letter was entitled "Dear Sir or Madam". With the perception that can come only from years in the Scottish Office, it had managed at least to score out "or Madam." before the letter was sent. The letter said:
    "College staff who suffer loss of employment or loss or diminution of emoluments, attributable to the operation of the Teachers Colleges of Education (Scotland) Regulations 1981, which were made on 14 July and laid before Parliament on 16 July, and which provide for the dissolution of four colleges of education, will still be entitled to be considered for payment of Crombie compensation."
    Any sensible and objective reader of those words issued in the name of the Minister would believe that that was a categorical assurance that those who are affected by the Minister's educational vandalism in the four colleges of education would at the very least have the protection of the Crombie system, the demise of which we are seeing thanks to the silent majority who are so glaringly absent from the Government Benches tonight.
    Mr. George FoulkesWhere is the non. Member for Aberdeenshire, East (Mr. McQuarrie)?
    Mr. RobertsonI am not surprised that my colleagues are drawing attention to the scanty attendance on the Conservative Benches. In the grim days of 1977, when the Conservatives made much of Scottish education in their propaganda, the Conservative Benches were crowded for any debate which had anything to do with Scotland's colleges of education. It is a symptom of the cynicism and the splits in the Conservative party that we see so few Conservative Members here this evening to support the Minister in this last act of betrayal of Scottish education.
    Referring specifically to Hamilton and the other doomed colleges, the question that arises from the letter to which I have just referred is: what will happen to

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    members of staff who, in the next few weeks, accept the blandishments of the new colleges of education to which they are transferring for employment, and sign the documents that are being put before them, offering them new contractual arrangements to work in those colleges? Will their signature on those documents signify that they are accepting a change in their conditions of employment that would mean that their rights, as mentioned in the Minister's letter, are to be arbitrarily and needlessly withdrawn?
    The Minister must answer those questions this evening, for time after time and in debate after debate on this subject he has given assurances about the conditions that apply to people who worked in the colleges that he aimed to remove from the Scottish college system. Yet it is now clear that some of the staff, who have stayed loyally within the system, are now being put into a "Catch 22" position, having either to accept the Crombie compensation and leave the system now or to sign these documents, the need for which was never advertised before and the need for which was specifically excluded by the conditions set out in the letter from the Scottish education department. If the lecturers sign these new contracts, will they be covered by the assurance that was given on the Minister's behalf in the letter sent to Mr. Robin Lobban on 24 July? The Minister must answer that question this evening, because it matters to a very large number of people in the doomed colleges.
    What is at issue this evening is not just the matter of compensation for redundancy in the public sector. As my hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. O'Neill) has said, we are seeing here, disguised by an obscure title, the thin end of a very thick wedge of compensation for large numbers of people in the public sector who will be the next candidates for the Tory executioners.
    How will the Minister, with his responsibility for the Scottish education system, achieve in the future a rundown in the numbers of staff in colleges of education, or in any other part of the public sector, with the same degree of cooperation that he has previously enjoyed, if he now undermines and demolishes the whole basis of cooperation that has been enjoyed before? The Government seem to have rushed into this decision in a bid to satisfy the demand of the public sector borrowing requirement, and with no thought for the future structure of colleges of education in Scotland or any other part of the educational and public sector to which the Government might look in the future.
    There are a large number of areas of public concern—[Interruption.] Although we now welcome to our midst two former Tory Ministers, whose demise from the Government was perhaps related to their rebellious support for policies against those of the Government—[Interruption.] On this side of the House, it can sometimes be said that we allow people to die before we bury them. We welcome them to this important debate.
    This is an important subject. For those affected by the Government's policy in this sphere, the questions that I have asked deserve serious answers from the Minister today.
    The whole sorry catalogue illustrates the entirely callous approach of the Government to the human aspect of this. It illustrates yet again the twisted way in which they go about things in the new, harsh Tory world being paraded before us. When the time comes for the
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    Government to go before the electorate, the message from the people of Scotland, who have seen this whole sad spectacle before, will be swift, sure and definite.
    10.1 pm
    Mr. Gordon WilsonThe adjectives that have just been used and the speeches that we have heard aptly describe the background to this affair.
    I received a letter from Ms. Mollie Abbott, chairman of the Association of Higher Academic Staff in Colleges of Education in Scotland, dated 7 August. She said:
    "To have given notice now for a change consequent upon the 1982 intake could not be taken as disreputable but to do it at this stage in relation to the 1981 intake is incredibly underhand and politically inept."
    It is interesting to note the language deployed by those who have been in these higher institutions when they consider the actions taken by Government over a period of years.
    In a written answer on 6 August 1980, the Secretary of State himself expressed the belief that
    "we should be putting increasing emphasis on the quality of the teaching force"
    and proposed
    "to examine ways of improving the standards of pre-service training"
    and
    "further development of in-service training."—[Official Report, 6 August 1980; Vol. 990, c. 88.]
    In the paper "Future of the College Education System in Scotland" he also made the point that the internal organisation of colleges of education should be flexible and that links among the colleges and between the colleges and other tertiary institutions should be strengthened. He also indicated that the Government were seeking a reduction in capacity in certain colleges.
    We know what has happened since then. Throughout the changes that the Government have made their actions have been characterised by promises about consultation which have not been kept. The staff of these institutions may have had a strong complaint about the way in which the colleges of education were being treated, but even more reprehensible has been the manner in which the Government have sought to make the changes.
    Again, on 27 July 1981, in relation to the proposals now before us, Thomas Rae, principal of Callendar Park, complained about the lack of consultation over the closures, which were announced on the second to last day of Parliament and after the academic holidays had begun. Now the Minister has again shown insensitivity and tactlessness in dealing with the colleges. Throughout the period of college contraction, the principle of "Crombie compensation" was accepted. There was no opportunity then for parliamentary discussion, and because it has been forced upon them, only with difficulty, by the Opposition, these matters have had to be argued out in Committee and on the Floor of the House. It is not so much the abolition of the Crombie code which has annoyed many of the people concerned as the lack of consultation and the heavy-handedness involved.
    On 31 July, the Joint Committee of Colleges of Education in Scotland expressed "the gravest concern" over the abolition of the regulations. It urged the Secretary of State to enter into discussions about the code and, pending discussion, to allow the existing arrangements for compensation under the Crombie code to apply for the session 1981–82, as he had already set the quota for student intake on which that staffing entitlement was based.

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    As has been indicated in previous speeches, considerable anger has been expressed by those employed in the colleges about the cancellation of the code. It came as a complete shock to them. They were given absolutely no indication that such a drastic change was imminent. Governor Members were convinced of two things: first, that the Crombie regulations would continue to apply for 1981–82 and reductions in staffing levels still to be made could be obtained with relative ease and efficiency with the effect of the compensation provisions; and, secondly, that the financial saving which would result from the cancellation of the code would be minimal and would be more than offset by the deterioration of management-staff relationships.
    So far, those people and the House have been given no reasonable excuse why the decision was taken with such suddenness and secrecy. The Association of Lecturers in Colleges of Education in Scotland protested that no notice had been given to college authorities or to the appropriate unions or professional organisations. It further points out that the reorganisation of the college system has been operating smoothly, including the rundown of staff, under the Crombie system and sees no need whatever to change the arrangements.
    There are at least three specific points of criticism arising from the decision that has been taken by the Minister. The first is the strange way in which the decision was taken, including its timing and the lack of consultation involved. Secondly, there is the financial difficulty that might be caused to those under 50 who might be placed in an invidious situation as a result of this sudden change without proper consultation or realisation of what was in effect.
    The third criticism, which is equally important, relates to the ability of the colleges to introduce further changes which the Government might require of them. The Government, particularly the Scottish education department, must bear this in mind. If they unilaterally change arrangements that have been settled for a period of years without consultation, they will destroy the prospects of future co-operation between those involved in the administration of teaching within the colleges of higher education. They may not be able to get the changes they want because they will have destroyed the basis of trust and removed the possibility of co-operation which might have emerged as a consequence.
    These regulations represent crass insensitivity. They are no more than a bureaucratic juggernaut which the Minister and his associates in the SED seem to have unleashed on this one sector of higher education. Based on the examples given to us over the past two years, we wonder and fear what they may now do to the rest of the Scottish higher education system.
    10.7 pm
    Mr. John MaxtonI declare an interest in the regulations. In 1977, when the parent regulations were drawn up, I was the national chairman of the Association of Lecturers in Colleges of Education in Scotland. Before the regulations were put to the House, I took part in negotiations to ensure that they protected the best interests of my members.
    At that time, of course, my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) was
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    responsible for the proposals affecting the colleges of education. I did not always agree with what he was proposing, but at least my right hon. Friend and my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) were always prepared to listen and consult us on the issues. If they felt that we had made a case, they were prepared to change their mind and take a different view. My right hon. Friend did so, and one of the results was the so-called Crombie regulations, which have allowed for a smooth rundown in the numbers of staff in colleges of education since 1977.
    There was a smooth rundown following that consultation—at least until the present Minister came into office. In July last year, without any consultation or thought, he decided to butcher two colleges and to merge two more. Once again, on this issue, we have a total lack of consultation.
    I was on the committees and know that there is a clear procedure in the colleges of education system. The employee organisations are represented on the committees almost entirely by the Association of Lecturers in Colleges of Education in Scotland. Ministers will tell us that the employers are the governing boards. They are not. If we told the Government that they were the real employers in the colleges of education, they would throw up their hands in horror and state that it was the governing boards.
    However, the amendment to the regulations is essentially retrospective to 14 August, and the employers were not consulted. The Minister did not even call a meeting with the chairmen of the boards of governors. He is represented on every committee in the colleges—on the conditions of services committee by advisers and on the salaries committee by members of the management side—but he did not even send his representatives to put the proposal to those properly constituted committees to allow them to discuss the regulations and the change. He made no effort to consult either the employers or employees. He should at least have ensured that the changes were made in a way that benefited the whole system.
    I was about to say that what the Minister did created further distrust, but it is no longer possible to do that. He is utterly discredited in education circles in Scotland. The Minister was high on my list of those who I believed should go in the Prime Minister's reorganisation. He is incompetent and totally distrusted in every education circle in Scotland.
    Perhaps the Secretary of State after my words is shaking in his boots. No one believes the Under-Secretary of State any longer or trusts his word. They know that he will not consult even though he has said that he will. If he says that he will do one thing he does another. The hon. Members for Edinburgh, South (Mr. Ancram) and for South Angus (Mr. Fraser) are new, young and able Members. They must wonder how much longer they must remain on the Back Benches and see that incompetent on the Front Bench. Even the hon. Member for Perth and East Perthshire (Mr. Walker) must sometimes feel that, and by God, if that is so, it really is something. That is the situation we are in.
    The retrospective nature of the legislation is serious. In May the Secretary of State issued figures on the number of students that each college would take in October. Following discussion and consultation, he wrote to each

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    college. I have a letter sent to Professor Baillie Ruthven, the then principal of Moray House college of education, signed by the Minister's civil servant. It states:
    "After carefully considering the comments which he has received on his proposals from all the governing bodies, the Secretary of State has decided that he would not be justified in making any alterations to the college quotas which were set out in his statement of 30 April."
    To my mind, that is a clear statement that there would be no change and that the colleges have no alternative but to take the number of students that the Secretary of State has stated. Then this instrument comes along. What lecturers want to know is this. If a college has surplus staff as a result of the decrease in the number of students entering in October this year and has to declare redundancies, will they be covered by the compensation regulations, or will they be overtaken by the regulations and will not receive compensation? The regulations come into effect on 14 August. When that question was put, the answer from the Minister's advisers was that they would not be covered because the Secretary of State has issued no directive on the numbers in terms of laying it before the House. Although he has told the colleges that they must take a certain number of students, he will withdraw compensation from anyone who may be declared redundant as a result of the letter.
    A slightly different tone enters into later letters. I have a letter from the Minister which gives a slightly different position. The Minister says:
    "It is true that colleges have had an advance indication of the levels of student intakes for the 1981–82 academic session which are likely to be prescribed."
    That seems to adopt a very different tone from the letter received by the principals about the numbers they would have to take.
    If lecturers are declared redundant and do not receive compensation based on student figures issued by the Secretary of State in April and are refused compensation on the basis of regulations coming into force on 14 August, it will be a despicable act and one of which the Minister should be ashamed. I hope that even at this late stage he will assure the House that anyone affected by the student figures in October this year issued on the basis of the Secretary of State's figures in April will be covered by the former regulations and will not be overtaken by the new regulations. If the Minister fails to give such an assurance, he will once again be proved untrustworthy.
    This is not just a debate about colleges of education in Scotland or grant-aided colleges in Scotland. This is the first Government attack on all public employees, who should be made aware of the fact. Only yesterday the Government announced legislation to be introduced in the coming Session to sell off a large number of public organisations. What will happen to those employees? I can guarantee they will not get Crombie. More public employers will find that compensation, traditional since 1947 for public employees, will cease. The Government will find that public employees who voted for them in the last general election will not be voting for them next time. They will be turned out because of their underhand action.
    10.18 pm
    Sir Hector MonroI do not intend to follow the colourful language and criticism of Opposition Members. This is, however, a serious issue. All hon. Members representing Scottish constituencies will have received a great number of letters and telegrams. It is right
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    that hon. Members should pose questions. I had hoped that my hon. Friend the Minister would speak earlier. He might have covered some of the questions that I wished to put. I am sure that he will answer them in his winding-up speech. I wish to speak particularly on behalf of those at Craigie college which services my constituency and Dunfermline from the PE point of view. I also have, like many hon. Members, letters from other colleges as well.
    How many people does my hon. Friend the Under-Secretary expect to be affected by these regulations? What difference will it make in financial terms to those who will be affected?
    As my hon. Friend knows, I wrote to him in August, subsequent to the letter that I received from Mollie Abbott, which has already been mentioned. In reply, on 3 September, my hon. Friend said:
    "College staff who are not eligible for Crombie compensation in future will qualify for statutory redundancy payments under the terms of the Employment Protection (Consolidation) Act 1978."
    Will my hon. Friend give an indication of the financial difference that there would be between the Crombie code and the 1978 Act? I hope that he will also explain how many people will be affected. I suspect that he will be able to say that relatively few will be affected by the regulations.
    I shall listen to my hon. Friend's remarks with keen anticipation. I hope that he will be able to allay the fears about lack of consultation which run through a number of the letters. I am sure that he will be able to convince the House that he has given those involved adequate notice and has discussed this matter in detail with all concerned. I know that he will not have embarked upon these regulations without very sound reasons. We shall all listen with care to his winding-up speech. I particularly want him to allay the fears that have been deployed in all the letters. I hope that he will be able to show that the regulations are not only fair but are in the best interests of all concerned.
    10.22 pm
    Mr. Dennis CanavanWhat we are seeing tonight is yet another disgraceful chapter in the sorry saga of Scottish colleges of education. The main author of it all is the Minister sitting on the Government Front Bench, the Minister responsible for education in Scotland, who, ironically, is also the Minister responsible for industry in Scotland. This is one of the worst examples of industrial relations that we have ever seen on the part of anyone called a Government Minister.
    Having attacked and, in some cases, destroyed the job security of many people who have been prepared to dedicate their whole life's service to education, the Minister is not content with merely doing that but is now attacking their entitlement to redundancy benefit by means of these mean and petty regulations.
    It is significant that so far only one Back-Bench Tory has contributed to the debate; and even that contribution did not seem to be a very wholehearted defence of what the Minister is trying to do. Perhaps that is an indication of why the hon. Member for Dumfries (Sir H. Monro) is now a good knight rather than the Minister responsible for sport.
    Mr. FoulkesDoes my hon. Friend agree that what we heard from the hon. Member for Dumfries (Sir H. Monro) was a coded message, and that what he was actually saying was that the Minister has botched the whole thing?
    Mr. CanavanYes, I think that that is so. The former Minister responsible for sport, the hon. Member for Dumfries, would possibly have been even more vociferous in his opposition were he not, perhaps, afraid that the Queen might change her mind between now and the dubbing ceremony.
    I notice, too, that no members of the Liberal Party or the SDP are either here or participating in the debate. That may have something to do with the fact that Shirley Williams is their self-appointed spokesman on education. When she was Secretary of State for Education and Science she had the worst record of any Secretary of State for Education and Science, worse even than that of the present Prime Minister. Shirley Williams will go down in the history of British education as having closed down more colleges of education than any previous Secretary of State or any Secretary of State since. So much for the Liberal and SDP interest in education, Scottish or otherwise.
    I come back to this mean and petty measure. Its timing is particularly inept, although perhaps from the Government's point of view it may be apt because, as usual, just as on previous occasions when we were discussing Scottish colleges of education, the Tories attempted to sneak it through a few days before the parliamentary recess in the hope that Opposition Members would not see it and be unable to oppose it by means of this prayer. It seems to be a favourite tactic of the Government to try to push things through secretly at the fag end of parliamentary Sessions. I congratulate the Opposition Front Bench on having the nous to see what was going on and on bringing forward this Prayer in an attempt not merely to voice our opinion against it but to vote against it.
    It seems to me that what lay behind the Government's timing was an attempt to push through the measure before the official direction on student intake for the current academic year, 1981–82, in a deliberate attempt to exclude from the Crombie code some of those who might be affected by it. It seems that it has been normal practice and the practice has continued this year for letters about the student intake numbers to be sent out in June.
    Following representations from constituents and others, I wrote to the Minister at least twice in August about what I considered at the time to be attempted sharp practice. I received a reply dated 3 September, and it was signed by the Minister. I wrote again on 18 September, enclosing a copy of a letter from Robin Lobban, the chairman of ALCES. I told the Minister that I was very dissatisfied with his previous replies and that I expected a better reply next time. All that I got was an insulting reply from the Minister. It was virtually the same regurgitated reply that I had already had. Moreover, it was not even addressed to me. It was a copy of the reply to Dr. Lobban. Enclosed was a two-paragraph letter from the Minister to me saying at the end:
    "I am afraid that I do not understand your reference to an earlier reply".
    There is something wrong at the Scottish Office, and it is about time that the Minister sorted things out or sorted out the Civil Service. My secretary can keep files on letters from the Scottish Office, although the Scottish Office apparently denies that they exist. I have here copies which I can show the Minister of the reply to the letters that I wrote to the Scottish Office in August. Yet the Minister signs letters denying that he received any representations
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    from me, or at least denying that he had made an earlier reply. While on the matter, may I say that I strongly resent the Minister addressing me "Dear Dennis" and signing his letter "Yours ever, Alex". He has never been mine. If he ever was mine, I would certainly disown him. Therefore, if the Minister is going to write to me such an offhand and inaccurate letter, I would appreciate it if he would do so in more formal terms.
    I am not the only person to criticise the Minister's behaviour. If I were to relate the contents—without quoting—of some of the letters in my possession I would probably be thrown out of the Chamber. I have a letter from the former principal of Callendar Park college, Mr. Tom Rae. He is now the assistant principal of Moray House college of education. He wrote:
    "Apart from the injustice of the action in removing Crombie compensation in the middle of drastic alterations to the college staffing structure, the way in which it was done was dishonest and dishonourable."
    Tom Rae is not alone in his castigations of the Minister. He is accompanied by Mollie Abbott, who is not only the principal of Dunfermline college of education but also chairman of the Association of Higher Academic Staff in Colleges of Education in Scotland. She said:
    "To have given notice now for a change consequent upon the 1982 intake could not be taken as disreputable but to do it at this stage in relation to the 1981 intake is incredibly underhand and politically inept…This is not the conduct one should have reason to expect from any Minister of Her Majesty's Government."
    Mollie Abbott is the principal of Dunfermline college of education. I remember standing shoulder to shoulder with the Minister three or four years ago, when he was an ordinary hon. Member for Edinburgh, North. At that time the future of the college was being questioned. The hon. Gentleman and I turned up at a meeting and made many promises, both publicly and privately, to Mollie Abbott to the effect that we would fight to save not only Dunfermline college of education but the whole 10-college system. We promised to fight to try to protect the job security of the staff and to protect redundancy entitlements. Once again, the Minister seeks to go back on his word.
    At that meeting the Minister was not the only Tory present. The hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), who has the college in his constituency, was also there. He fought courageously and vociferously to save Dunfermline college of education. I am sorry that he is not in the Chamber, because he and I had the pleasure of making a return visit to Dunfermline college of education during the recess. Believe it or not, we shared the same platform. The occasion was the annual general meeting of the Scottish Spina Bifida Association. I do not know whether it was coincidence, but a few days later I picked up the paper and discovered that the hon. Member for Edinburgh, West had been sacked. He did not even get a knighthood to go with his title.
    The wrong Minister was sacked. The hon. Member for Edinburgh, North should have been sacked. By his behaviour on this and many other aspects of Scottish education and industry he has proven himself the worst and most inept member of a dishonest, deceitful and discredited Government. The only honourable course open to him is to resign.
    10.35 pm
    Mr. David LambieI must intervene briefly to speak in support of my constituents

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    who work in Craigie college of education and who will be affected by the order. I shall also speak, as we usually do in Ayrshire, on behalf of my two colleagues, my hon. Friends the Members for South Ayrshire (Mr. Foulkes) and Kilmarnock (Mr. McKelvey). If this debate had taken place before May 1979, I should also be speaking on behalf of the right hon. Member for Ayr (Mr. Younger). He and I took part in a series of meetings with Ministers dealing with Scottish colleges of education. It seems that promises made when in Opposition are forgotten when in office. I should also be speaking on behalf of the Member who represents North Ayrshire. It is such a long time since I have seen him that I cannot remember his name. I do not know whether he is still the hon. Member for Bute and North Ayrshire. [HON. MEMBERS: "Cheap."] It is not cheap. I am making a serious allegation. I am sorry that the hon. Member is not here to reply.
    I do not accept the allegation by my hon. Friends that the Minister in control of education in Scotland is dishonest. My view is that the Minister is punch drunk. He has closed so many factories, schools and colleges of education in Scotland that he does not know what he is doing.
    My hon. Friend the Member for West Stirlingshire (Mr. Canavan) complained that he had not received any letters. The Under-Secretary cannot write letters, because he does not know what is happening. Wherever he goes in Scotland, he is met by deputations and demonstrations against his policies. Once we were faced with the Highland clearances when the crofters were hunted from the Highlands. Now we are faced with clearances of workers from industrial Scotland.
    My main criticism is that there has been no consultation about the order. It is strange that a Crombie code which has been in existence since the 1940s should be changed in a matter of days, especially at the end of a parliamentary Session. It is strange that the Minister should make the excuse that we no longer need Crombie codes to deal with redundancies during major reorganisations because there are statutory redundancy payments under the relevant Act.
    In the private sector most employers pay well above the statutory minimum in redundancy payments. The Minister knows about the factory in Irvine which is to close. Employers are paying two-and-a-half times the statutory minimum in redundancy payments. Most private sector employers do that. The Government are attacking public sector workers.
    My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) said that he was afraid that the order was the start of an attack on public sector workers. I am not afraid: I know that it is the start of an attack on public sector workers by the Government. Like my hon. Friend the Member for West Stirlingshire, I have received a letter from the Under-Secretary. It states:
    "Corresponding action is to be taken to disapply the Crombie code in a number of other public sector areas where it applies or could apply to a future reorganisation."
    The Minister has given warning to other public sector workers in the universities, local authorities, the teaching profession and nationalised industries that corresponding action will be taken to disapply the code. It means that be will take the same action against other public sector workers that he is taking against those who work in the colleges of education.
    That is why I think that, even at this late date, the Minister should listen to the appeal of the hon. Member
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    for Dumfries (Sir H. Monro), reconsider the position and, by withdrawing the order, give us an opportunity to return to the negotiating table and attempt to achieve a settlement that will be not only fair to those who work in the colleges of education but might go some way to restore some of the Government's honour.
    10.41 pm
    The Under-Secretary of State for Scotland (Mr. Alexander Fletcher)I have listened carefully to the points raised in the debate. I am happy to have the opportunity to respond to the comments that have been made. The hon. Member for Central Ayrshire (Mr. Lambie) suggested that the Government should reconsider the matter. I hope that when I have explained the position about the Crombie code, Opposition Members will reconsider the attacks that they have made on the Government. I say that in all seriousness, although I know that such points usually amuse the hon. Member for South Ayrshire (Mr. Foulkes). As I have said to him before, there is something funny about the air in South Ayrshire, considering what happened to his two predecessors.
    Mr. FoulkesWhat does the Minister mean by that remark?
    Mr. FletcherThat is self-evident considering what happened to the hon. Gentleman's predecessors.
    Mr. Foulkes rose—
    Mr. FletcherI shall not give way.
    Mr. FoulkesI want to defend Emrys Hughes, not the other one.
    Mr. FletcherThe hon. Gentleman's predecessor but one could at least boast that he had a certificate to prove his sanity, which is more than the hon. Gentleman can do. The Crombie code was introduced in the 1940s——
    Mr. Foulkes rose——
    Mr. Fletcher—to compensate workers——
    Mr. FoulkesOn a point of order, Mr. Deputy Speaker. I have been specifically named by the Minister. It is a convention in the House that when an hon. Member is named the person speaking gives way to allow the hon. Member to reply, especially when the remarks are made in such a slighting manner both to myself and my predecessor but one. He served the House honourably for many years, which is more than the Minister can claim.
    Mr. Deputy Speaker (Mr. Bernard Weatherill)It is supposed to be a point of order. The hon. Gentleman's point was more in the form of comment.
    Mr. FletcherThe Crombie code was introduced in the 1940s to compensate workers made redundant as part of statutory reorganisation. It was designed in the context of the wave of nationalisation that followed the last war. Nearly 40 years have passed and the Government have decided, as a matter of general policy and not as a specific matter relating to the colleges of education in Scotland, that the code is not appropriate in present day circumstances. First, we consider that it is unjust that the extremely generous terms of the code should apply only to those involved in statutory reorganisations and not to others. Secondly, the code is complex and difficult to operate. Thirdly, and perhaps most important, alternative redundancy benefits are now available that were not

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    available in the 1940s. We have therefore decided as a matter of general policy that the Crombie code should be phased out from the public sector. That is what the regulations are deemed to do.
    Mr. O'NeillWill the alternative schemes be as generous as the Crombie code?
    Mr. FletcherI shall deal with that in due course. My hon. Friend the Member for Dumfries (Sir H. Monro) and the hon. Members for Glasgow, Cathcart (Mr. Maxton) and Dundee, East (Mr. Wilson) objected to there having been no consultation or prior warning despite the hon. Member for Clackmannan and East Stirlingshire (Mr. O'Neill) having made it clear that there had been consultation. The Government decided over a year ago to discontinue the Crombie code. At that time they informed the CBI and the TUC of their intentions.
    Mr. Maxton rose——
    Mr. FletcherSubsequently the Government held discussions with the TUC. It was not until mid-July this year that firm decisions were taken on the application of the policy to the colleges of education.
    Mr. Maxton rose——
    Mr. FletcherIt was not until July that we were able to give the colleges details of the changes that were pending. After mid-July we informed the colleges and their staff associations at the earliest possible moment.
    The hon. Member for West Stirlingshire (Mr. Canavan) asked why, as he put it, we were withdrawing the code in the middle of statutory reorganisation. That is not the position as each statutory intervention by a Minister—in this instance new regulations or a fresh intake direction—constitutes a new statutory reorganisation. I am cognisant of the groans of the right hon. Member for Glasgow, Craigton (Mr. Millan), but he of all people should know that.
    Mr. MaxtonThat is nonsense and the hon. Gentleman knows it.
    Mr. FletcherThe hon. Member for Central Ayrshire (Mr. Lambie) asked about the Scottish colleges and their English counterparts. There are no arrangements for the continuing award of Crombie compensation to teacher training staff in England when staff in Scottish colleges will not receive it. The staff of the Scottish colleges are being treated in the same way as their colleagues south of the border.
    Mr. MaxtonThat is not quite true.
    Mr. FletcherThat is true. It has been suggested that there is some forfeiture of good will in our negotiations with the colleges. The hon. Member for Edinburgh, Central (Mr. Cook) asked about the objections that have been raised to the procedure. He will appreciate that all the objections come from within the college system. That is understandable. However, other parts of the public sector have not been complaining to my right hon. Friend that the Crombie terms are being withdrawn, least of all other members of the teaching profession in Scotland or elsewhere in the United Kingdom. Teachers who are made redundant are subject to quite different terms from those that are available under the Crombie scheme.
    Mr. CookThe national joint committee first read of these regulations in the press. However, a few days before the details were released it had met the Minister and his officials for consultation. On that occasion the regulations, which were laid only a few days later, must have existed in draft and must have been in at least the Minister's red box. When he knew that he was meeting the committee, why did he not take the opportunity to acquaint it with what it was about to read in the press?
    Mr. FletcherI saw the committee a few days in advance of the decision being made. When I saw it, no decision had been made, despite the imagination of the hon. Gentleman.
    The position of staff who are made redundant as a result of the dissolution of the colleges in Falkirk and Callendar Park, in Craiglockhart at Edinburgh, at Hamilton and at the Notre Dame college of education at Glasgow is safeguarded in respect of entitlement to the Crombie provisions. The redundancies which can be attributed to the closure regulations are unaffected by the regulations that are now under discussion. Similarly, any staff who are surplus as a result of directions limiting intake for the 1980–81 academic session or any previous session will be eligible for Crombie compensation.
    Mr. George RobertsonI asked a specific question. In addition to saying what he has said just now, which was included in the letter from the Scottish Education Department which I read out, will the Minister say how staff in those affected colleges will be affected by the new contracts of employment that are being given to them by their new employers? Will the assurance that the Minister has just given continue to apply if they sign these documents, which were specifically excluded from the original closure regulations?
    Mr. FletcherI understand the point that the hon. Member has made. In a meeting with the college principals some months ago, I raised that point because I foresaw the difficulties of staff in colleges: for example, with the transfer from Hamilton to Jordanhill, a senior lecturer at Hamilton undertaking the responsibilities of a junior lecturer at Jordanhill, or a similar arrangement.
    The Crombie conditions are extremely complicated. I am not able to give a general assurance. I would like to give a simple explanation to the House. At this time, it is not a matter of taking advice from my officials. The matter has been gone into carefully. All I can say to the hon. Member for Hamilton (Mr. Robertson) is that the matter of the contractual arrangements is essentially between the governing body of the college and the staff.
    The best description that I can give is that, if someone who is affected by the conditions of redundancy today undertakes a job in a new college such as Jordanhill to meet the requirements of the transitional arrangements, it would appear from the best advice that we have available that his entitlement to Crombie redundancy would not be affected. I regret having to say that every case must be considered on its merits. I have taken the best legal advice available to me on this matter. That is the qualification that I must make. When Opposition Members complain about the terms of Crombie, they are making my point—it is complex. That is one of the reasons why it is now being taken out of use.
    Mr. George RobertsonThis is an extraordinary interchange in which the Minister is involved. He has not

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    departed much from a brief in which there is an assurance that is almost word for word the assurance that was given to the organisations which were supposedly consulted at the beginning of this process. Asked the simple question that has been asked all summer by the people involved and affected by the measure, he tells us from the Dispatch Box of the House of Commons just before the regulations are pushed through that he still does not know what the words which he has just read out mean.
    What are we supposed to take from that? What are the people affected supposed to take from the assurance that the Minister has repeated? It is a parcel of words put together as a cosmetic and palliative to try to persuade some people who are still in a precarious position that they will be in no more a precarious position tomorrow.
    Mr. FletcherThe hon. Member expresses his deep concern for those people. Together with other Opposition Members, not least the hon. Member for West Stirlingshire, he joins in general abuse with great levity. However, he should remember that these are legal requirements affecting individual lecturers at those colleges according to the agreements which they make with their governing bodies. No general rule can be applied to it.
    At my instigation a letter was sent to all the colleges, explaining as well as we could what the effect of the arrangements would be. The hon. Gentleman has referred to that letter. I can only repeat this evening that each case has to be considered on its own merits. But I made the point that is would be reasonable to assume that any lecturer who is entitled to Crombie compensation today and who, in order to deal with a temporary situation at the college, undertakes another post, would not have his redundancy entitlement affected. But one has to emphasise the qualification that I made earlier, that each case has to be considered not just on its own merits but on the details of that case and the contractual arrangements made between the college and the individual lecturer. [Interruption.] I can assure the House that that is the best possible explanation that is available at this time. If Labour Members do not like it, they are simply underlining the fact that they do not like the Crombie arrangements and the Crombie compensation.
    Mr. O'NeillIs the Minister telling us that the statutory instrument is so imprecise that in individual cases of dispute people will have to go to the courts in order to get the position properly defined? If that is what he is saying he should withdraw the statutory instrument tonight.
    Mr. FletcherI have always been doubtful of the hon. Gentleman's understanding of these things. He only emphasises his lack of understanding by the point that he has just made.
    My hon. Friend the Member for Dumfries (Sir H. Monro) asked about the 1981–82 intake and how many people would be affected by the fact that lecturers who are covered by that direction will not receive Crombie compensation. It is not possible at this time to estimate how many will be affected by it, but we would expect that it would not be a large number. Nevertheless, he will be interested to know that the other terms which are available to lecturers, to which I shall refer shortly, will alleviate the problem of senior members of staff to the maximum possible extent.
    Mr. MaxtonWill the Minister give way on that point?
    Mr. FletcherThe main form of redundancy compensation for college staff will in future take the form of a scheme of compensation for premature retirement, and this scheme brings the colleges into line with practice in local government, including teaching. The scheme has advantages over the Crombie arrangement in that compensation may be paid not only to staff who retire prematurely on the ground of redundancy but also to staff who retire prematurely in the interests of efficiency of their employers' functions. This will give college governors the opportunity to redress some of the structural imbalances which have crept into the college system over the last few years. Although the compensation given is less generous than Crombie, in effect it provides for an enhanced pension calculated on up to 10 years' additional service. It is, nevertheless, likely to be attractive to some college staff. In addition, colleges of education staff made redundant will, of course, like redundant staff in any type of employment, qualify for statutory redundancy payments in terms of the employment protection legislation.
    There have been many mutterings on the Labour Benches when I have referred to the new scheme that will be available. The hon. Member for West Stirlingshire (Mr. Canavan), in referring to the order, said that it was the worst ever example of industrial relations. The hon. Member for Central Ayrshire said that it was an attack on the public sector. I hope that they will listen to a couple of figures describing how a lecturer—I am talking now of a senior lecturer, aged, say, 51, with 30 years' service—would be affected. [Interruption.] The levity again astounds me. Labour Members should at least know that the people who are most vulnerable in a situation such as this are 50-year-old lecturers and not people of 30, 35 or 40.
    Mr. CanavanHow many?
    Mr. FletcherI am talking of people with 30 years' service under Crombie. The figure is a lump payment of over £22,000 under Crombie and a continuing annual payment of £9,400. That, I suggest, is most generous.
    With regard to compensation for premature retirement, under the new scheme the same individual will receive not £22,700 but £21,100 and an annual sum not of £9,400 but of just over £7,000. I suggest that that is generous payment in any circumstances for the kind of service to which I have referred.
    Mr. MaxtonWill the Minister give way?
    Mr. FletcherI would also say to the House that it is not too generous in the circumstances. I believe that it is perfectly legitimate. [HON. MEMBERS: "Give way."] I hope that Opposition hon. Members who listen rather than shout abuse all the time will bear in mind the point that I have made. For the benefit of those who may have missed it—
    Mr. MaxtonWill the Minister give way?
    Mr. Deputy SpeakerOrder. The Minister is patently not giving way.
    Mr. FletcherI repeat that the lump sum payment is only about £1,500 less under the new scheme. The annual payment, admittedly, is £2,400 less, but it is still a sum in excess of £7,000 and it is still a generous recompense for the service involved.
    Mr. Maxton rose——
    Mr. FletcherLabour Members have, as usual, attacked the measure without giving it any proper consideration. Their speeches have generally been full of abuse rather than any thoughtful consideration of the matter. When the figures are understood, at least by people other than Opposition Members, it will be seen that there is no way in which the Government have been mean in the regulations.
    I therefore happily recommend to my hon. Friends that they oppose the prayer.
    11.2 pm
    Mr. O'NeillI had not intended to speak again, but it is necessary to say that the Minister's answers have been so unsatisfactory that I do not think that anyone could justify support for the regulations.
    The example that the Minister chose to give of the alleged generosity of the alternative to Crombie is ridiculous. The chances of finding a lecturer aged 51 with 30 years' service who could be employed in a college of education are virtually nil. Had he chosen a lecturer aged 49, it would have been made quite clear that he would not have been eligible for the scheme.
    When we asked the Minister about anomalies, he said that the matter was so complicated that each individual anomalous case would have to be brought before the courts.
    The statutory instrument is completely and utterly worthless. It is just another example of the incompetence of the Education Department and of the Under-Secretary of State. I urge my hon. Friends to oppose the regulations.
    Question put:
    The House divided: Ayes 60, Noes 111.

    Division No. 306]

    [11.02 pm

    AYES

    Allaun, Frank

    Hooley, Frank

    Alton, David

    Hughes, Robert (Aberdeen N)

    Bagier, Gordon A.T.

    Lambie, David

    Beith, A. J.

    Lyons, Edward (Bradf'd W)

    Bennett, Andrew(St'kp't N)

    McCartney, Hugh

    Booth, Rt Hon Albert

    McElhone, Frank

    Boothroyd, Miss Betty

    McKay, Allen (Penistone)

    Brown, Hugh D. (Provan)

    MacKenzie, Rt Hon Gregor

    Buchan, Norman

    Maclennan, Robert

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

    McTaggart, Robert

    Campbell-Savours, Dale

    Marshall, Jim (Leicester S)

    Canavan, Dennis

    Maxton, John

    Carmichael, Neil

    Milian, Rt Hon Bruce

    Conlan, Bernard

    Newens, Stanley

    Cook, Robin F.

    O'Neill, Martin

    Crowther, Stan

    Penhaligon, David

    Cryer, Bob

    Robertson, George

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

    Ross, Ernest (Dundee West)

    Dalyell, Tam

    Skinner, Dennis

    Dewar, Donald

    Soley, Clive

    Dormand, Jack

    Stewart, Rt Hon D. (W Isles)

    Dubs, Alfred

    Stott, Roger

    Eadie, Alex

    Strang, Gavin

    Eastham, Ken

    Walker, Rt Hon H.(D'caster)

    Ewing, Harry

    Welsh, Michael

    Forrester, John

    Wilson, Gordon (Dundee E)

    Foulkes, George

    Wilson, William (C'try SE)

    Grant, George (Morpeth)

    Woolmer, Kenneth

    Hamilton, James (Bothwell)

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

    Tellers for the Ayes:

    Harrison, Rt Hon Walter

    Mr. George Morton and

    Home Robertson, John

    Mr. Frank Haynes.

    NOES

    Alexander, Richard

    Maude, Rt Hon Sir Angus

    Ancram, Michael

    Mellor, David

    Aspinwall, Jack

    Meyer, Sir Anthony

    Atkins, Robert(Preston N)

    Mills, lain (Meriden)

    Baker, Kenneth(St.M'bone)

    Moate, Roger

    Baker, Nicholas (N Dorset)

    Monro, Sir Hector

    Bennett, Sir Frederic (T'bay)

    Morgan, Geraint

    Benyon, Thomas (A'don)

    Morrison, Hon C. (Devizes)

    Berry, Hon Anthony

    Murphy, Christopher

    Blackburn, John

    Myles, David

    Boscawen, Hon Robert

    Neale, Gerrard

    Braine, Sir Bernard

    Needham, Richard

    Bright, Graham

    Neubert, Michael

    Brinton, Tim

    Newton, Tony

    Brotherton, Michael

    Onslow, Cranley

    Brown, Michael(Brigg & Sc'n)

    Osborn, John

    Bruce-Gardyne, John

    Page, Richard (SW Herts)

    Budgen, Nick

    Proctor, K. Harvey

    Butcher, John

    Rathbone, Tim

    Cadbury, Jocelyn

    Rees-Davies, W. R.

    Carlisle, Kenneth (Lincoln)

    Rhodes James, Robert

    Chapman, Sydney

    Rhys Williams, Sir Brandon

    Clarke, Kenneth (Rushcliffe)

    Roberts, Wyn (Conway)

    Colvin, Michael

    Rost, Peter

    Cope, John

    Sainsbury, Hon Timothy

    Dorrell, Stephen

    Scott, Nicholas

    Dover, Denshore

    Shaw, Giles (Pudsey)

    Dunn, Robert (Dartford)

    Shaw, Michael (Scarborough)

    Edwards, Rt Hon N. (P'broke)

    Shelton, William (Streatham)

    Fairgrieve, Sir Russell

    Shepherd, Colin (Hereford)

    Faith, Mrs Sheila

    Speller, Tony

    Fenner, Mrs Peggy

    Spicer, Jim (West Dorset)

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

    Spicer, Michael (S Worcs)

    Forman, Nigel

    Stanbrook, Ivor

    Fraser, Peter (South Angus)

    Stevens, Martin

    Garel-Jones, Tristan

    Taylor, Teddy (S'end E)

    Goodhew, Victor

    Thomas, Rt Hon Peter

    Goodlad, Alastair

    Thompson, Donald

    Gower, Sir Raymond

    Townend, John (Bridlington)

    Gray, Hamish

    Trotter, Neville

    Griffiths, Peter Portsm'th N)

    van Straubenzee, Sir W.

    Hannam, John

    Viggers, Peter

    Hawksley, Warren

    Waddington, David

    Hill, James

    Wakeham, John

    Hordern, Peter

    Wall, Sir Patrick

    Hunt, David (Wirral)

    Waller, Gary

    Hunt, John (Ravensbourne)

    Wells, John (Maidstone)

    Jopling, Rt Hon Michael

    Wells, Bowen

    King, Rt Hon Tom

    Wheeler, John

    Knight, Mrs Jill

    Wickenden, Keith

    Lawrence, Ivan

    Wilkinson, John

    Lloyd, Peter (Fareham)

    Wolfson, Mark

    Macfarlane, Neil

    Young, Sir George (Acton)

    McNair-Wilson, M. (N'bury)

    McQuarrie, Albert

    Tellers for the Noes:

    Major, John

    Mr. Peter Brooke and

    Marlow, Antony

    Mr. Selwyn Glimmer.

    Mather, Carol

    Question accordingly negatived.

    COMPULSORY PURCHASE (VESTING DECLARATIONS) BILL [Lords]
    Ordered,
    That, in respect of the Compulsory Purchase (Vesting Declarations) Bill [Lords], notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a Second time.

    TRUSTEE SAVINGS BANK BILL [Lords]
    Ordered,
    That, in respect of the Trustee Savings Bank Bill [Lords], notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a Second time.

    BROADCASTING BILL [Lords]
    Ordered,
    That, in respect of the Broadcasting Bill [Lords], notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a Second time.—[Mr. Thompson.]

    BROADCASTING BILL [Lords]

      ADJOURNMENT
      Resolved, That this House do now adjourn.—[Mr. Thompson.]
      Adjourned accordingly at fourteen minutes past Eleven o'clock.

PRIME MINISTER

  Engagements
  Mr. Winnick
  asked the Prime Minister if she will list her official engagements for 20 October.

  Mr. Dormand
  asked the Prime Minister if she will list her official engagements for 20 October.

  Mr. Moate
  asked the Prime Minister if she will list her official engagements for 20 October.

  Mr. Temple-Morris
  asked the Prime Minister if she will list her official engagements for Tuesday 20 October.

  Mr. Colin Shepherd
  asked the Prime Minister if she will list her official engagements for Tuesday 20 October.

  Mr. Robert Atkins
  asked the Prime Minister if she will list her official engagements for 20 October.

  Mr. Aitken
  asked the Prime Minister if she will list her official engagements for 20 October.

  Mr. Ashley
  asked the Prime Minister if she will list her official engagements for 20 October.

  Mr. Thomas Cox
  asked the Prime Minister if she will list her official engagements for 20 October.

  Mr. Neubert
  asked the Prime Minister if she will list her official engagements for 20 October.

  Mr. Stanbrook
  asked the Prime Minister if she will list her official engagements for Tuesday 20 October.

  Mr. Alan Clark
  asked the Prime Minister if she will list her official engagements for Tuesday 20 October.

  The Prime Minister:
  This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others, including one with the Romanian Foreign Minister. In addition to my duties in the House I shall be having further meetings later today.

  Youth Unemployment
  Mr. Andrew F. Bennett
  asked the Prime Minister if she will list all those measures Her Majesty's Government have taken since 1 August to reduce youth unemployment.

  The Prime Minister:
  On 27 July I announced further measures which the Government are taking to help reduce youth unemployment, including the new young workers scheme. These are being introduced progressively. Since 1 August 1981 the number of young people covered by existing special measures has risen by more than 90,000.

  Perthshire
  Mr. Bill Walker
  asked the Prime Minister if she has any plans to visit Perthshire.
  92
  The Prime Minister:
  I have at present no plans to do so.

HOME DEPARTMENT

  Commissioner of Police of the Metropolis
  Mr. Arthur Lewis
  asked the Secretary of State for the Home Department when he last met the Commissioner of Police of the Metropolis; and when he expects to have a further meeting.

  Mr. Whitelaw:
  Yesterday; tomorrow.

  Mr. Barry Prosser
  Mr. Christopher Price
  asked the Secretary of State for the Home Department if he will now set up a public inquiry into the death of Mr. Barry Prosser in Winson Green prison, Birmingham, in 1980.

  Mr. Whitelaw:
  I understand that the matter is under consideration by the Attorney-General, and it would not be proper for me to comment further at this stage. I shall make a further statement as soon as possible.

ENERGY

  National Coal Board
  Mr. Chris Patten
  asked the Secretary of State for Energy what was the average output per man in the National Coal Board in each of the last five years and at the latest date for which figures are available; and what are the comparable figures for output per man in coal mines in the United States of America, West Germany, France and Belgium.

  Mr. John Moore:
  Information on a consistent basis is readily available only for countries in the European Community and then only on the basis of output per man underground. The latest available information is given in the table which follows. The figures should be interpreted with caution since mining conditions vary widely in the different countries and there may be variations in definitions.

  Output Per Man-Hour Underground*

  Kilograms

  1977

  1978

  1979

  1980

  United Kingdom

  363

  376

  385†

  384†

  Germany, Federal Republic of

  521

  533

  546

  539

  France

  325

  332

  337

  352

  Belgium

  283

  281

  276

  279

  * Figures for 1976 are not shown because the previous statistical series from Eurostat is not comparable.† These figures for the United Kingdom relate to 1979–80 and 1980–81. Because the National Coal Board changed the method of calculating productivity from April 1979, the figures are not comparable with those for 1977 and 1978.Source Eurostat Coal Monthly Bulletins, except for United Kingdom.

  Policy Studies Institute
  Mr. Field
  asked the Secretary of State for Energy on what date the Policy Studies Institute study into the fuel supply industries' code of practice will be completed; on

  93
  what date it will be published; what period of time will be allowed for comment between publication and any decisions; and what are the dates of meetings of the full review group of the study's sponsors between now and the publication of the study.

  Mr. Viggers
  asked the Secretary of State for Energy what action he proposes to take in the light of the recently published report by the Policy Studies Institute on its review of the gas and electricity industries' codes of practice on the payment of bills; and if he will arrange for a copy of the report to be placed in the Library.

  Mr. Mellor:
  I presided at a meeting on 13 October of the parties concerned in setting up the PSI review. The meeting decided on immediate publication of the study in order to give interested parties every opportunity to make their views known to the industries.
  The PSI report finds that in general the industries operate in accordance with the provisions of the code of practice and that breaches occur only occasionally and accidentally. But the report points to areas of the industries' debt collection procedures in which there is room for improvement.
  The industries have accordingly agreed to consider changes in the operation of the code in the light of the report. I have asked them to report back to me after consultation with the Gas and Electricity Consumers Councils by February 1982. The aim will be to introduce any changes to the code and its operation by March, when consumers will be receiving their main winter fuel bills. I shall maintain a close interest in the progress of the discussions on the code.
  For the present the gas and electricity industries will continue to stress to their staffs the need for strict observance of both the letter and the spirit of the code. In particular, attention will be paid to the need for the industries to offer repayment arrangements to people with fuel debts and to the availability of prepayment meters.
  I have arranged for a copy of the PSI report to be placed in the Library of the House.

DEFENCE

  American Service Personnel (Drugs)
  Mr. Arthur Lewis
  asked the Secretary of State for Defence, in view of the official statement by the Government of the United States of America that large numbers of American Service men, including those overseas, are under the influence of drugs, if he will take whatever action is necessary, including legislation, to enable him to investigate the extent to which this is happening at American Service bases in the United Kingdom, especially those housing nuclear weapons.

  Mr. Blaker:
  No. The United States Forces in this country have a comprehensive programme to counter drug abuse and there are special screening procedures for personnel engaged in sensitive areas.

NATIONAL FINANCE

  European Community (Payments)
  Mr. Teddy Taylor
  asked the Chancellor of the Exchequer what is the latest total of the payments which the United Kingdom has received and paid into the EEC
  94
  since the United Kingdom joined the EEC; and if he will express the totals as a ratio and also as a net amount per day, including Saturdays and Sundays.

  Mr. Ridley:
  Gross payments made by the United Kingdom to the Community budget from 1 January 1973 to 30 June 1981 amounted to £7,676 million. Receipts from the Community budget in the same period amounted to £4,510 million in accordance with the following table. The difference expressed as a ratio is 1:7:1 and about £1 million as a net amount per day.
  After the 30 May 1980 agreement our net payments were dramatically reduced. The figures for receipts include £336.5 million paid in the first quarter of this year under the supplementary measures scheme and £210·5 million paid in January 1981 under the financial mechanism.

  £millions

  Gross Receipts Payments

  Receipts other then refunds

  Refunds

  Net Total

  1973

  181

  79

  —

  102

  1974

  181

  150

  —

  31

  1975

  342

  398

  —

  -56

  1976

  463

  296

  —

  167

  1977

  737

  368

  —

  369

  1978

  1,348

  544

  —

  804

  1979

  1,606

  659

  —

  947

  1980

  1,767

  963

  98

  706

  1981*

  1,051

  408

  547

  96

  Total

  7,676

  3,865

  645

  3,166

  * 1 January to 30 June.(Number of days between 1 January 1973 and 30 June 1981=3, 103)
  Mr. Teddy Taylor
  asked the Chancellor of the Exchequer what have been the actual net payments made to the EEC in the year to date, and what were the comparable figures in the same period of each of the past eight years.

  Mr. Ridley:
  The United Kingdom made net payments to the EC budget totaling £96 million in the period 1 January to 30 June 1981. Comparable figures for each of the last eight years are shown in the following table.

  Net payments to the EC budget for the first six month of each year

  £ million

  1973

  72

  1974

  24

  1975

  -57

  1976

  61

  1977

  186

  1978

  434

  1979

  342

  1980

  346

  1981

  96

  Peers (Daily Allowance)
  Mr. Ernie Ross
  asked the Chancellor of the Exchequer what was the total attendance claimed by members of the House of Lords in the latest year.

  Mr. Francis Pym:
  I have been asked to reply.
  Members of the House of Lords do not receive an attendance allowance, but they may claim reimbursement of expenses within specified daily limits. Those eligible

  95
  to make such claims may do so in respect of expenses actually and necessarily incurred in attending sittings of the House of Lords.
  The total sum paid in settlement of claims from Members of the House of Lords in the 1979–80 financial year, the latest year for which figures are available, was £501,500.

CIVIL SERVICE

  Non-departmental Public Bodies
  Mr. Philip Holland
  asked the Minister for the Civil Service whether further guidance is to be given to Departments about the implementation of the Government's policies towards non-departmental public bodies.

  Mr. Hayhoe:
  I am today publishing "Non-Departmental Public Bodies: A Guide for Departments". The guide emphasises the responsibilities of Departments to ensure that these bodies achieve the highest standards of effectiveness, efficiency and economy. To this end it discusses the systems of control and accountability required by Departments and also internally by non-departmental public bodies.
  I believe that by defining the regime under which these bodies operate, we can help them to be more effective in achieving the purposes for which they were established and in minimising calls upon the public purse.

SOCIAL SERVICES

  Mentally Handicapped Persons
  Mr. Ashley
  asked the Secretary of State for Social Services what progress has been made in recent months in transferring patients from mental handicap hospitals to small community units.

  Mr. Fowler:
  The report of the review of mental handicap services since 1971—"Progress, Problems and Priorities", published last year—demonstrated the shifting balance of care from hospitals to residential homes and, while we have no precise numbers, I believe that residential provision for the mentally handicapped in small community units—including those provided by the Health Service—is continuing to increase. The total number of patients in mental handicap hospitals continues to fall. As I made clear in my speech at Blackpool last week, we intend that this shall continue to be a priority area.

  St. George's Hospital
  Mr. Thomas Cox
  asked the Secretary of State for Social Services whether he will make a statement on the future of St. George's hospital.

  Dr. Vaughan:
  I cannot yet go beyond my previous replies on this subject. The possible future use of the site, which governs its sale value, is currently being considered by Westminster city council.

  Overseas Visitors (Medical Charges)
  Mr. Robert Atkins
  asked the Secretary of State for Social Services if he is satisfied with the progress of the scheme to charge tourists for using National Health Service facilities.
  96
  Mr. Fowler:
  I now expect to receive next month the report of the working party on hospital procedures announced in June. It was hoped to introduce the scheme early in 1982. This is still my intention.

  Benefits (Uprating)
  Mr. Andrew F. Bennett
  asked the Secretary of State for Social Services if he will make a statement about the uprating of benefits in November.

  Mr. Rossi:
  Social security benefits are to be increased in the week beginning 23 November in accordance with the order and regulations which were approved by the House on 31 July.

  Mr. Ennals
  asked the Secretary of State for Social Services whether he is still satisfied with his estimate that the year-on-year inflation rate at the time of the November benefit uprating will be 10 per cent.

  Mr. Fowler:
  It is now clear that the year-on-year increase in prices will be higher in November than was envisaged earlier this year. What is uncertain is by how much; we will not know this until December.

  Consultants (Contracts)
  Mr. Colin Shepherd
  asked the Secretary of State for Social Services what representations he has had concerning whether consultants' contracts in the National Health Service should be held at regional or district level.

  Mr. Fowler:
  There have been some 845 representations from individuals and groups in the health services and elsewhere on this matter. Following these I have decided that regional health authorities and those districts designated for teaching will hold these contracts after 1 April 1982, and I have written to the chairmen of regional health authorities and the leaders of the professions informing them of this.

  Drugs (Assessment)
  Mr. McCrindle
  asked the Secretary of State for Social Services if he is satisfied with the time delays in new drug assessment by the Committee on Safety of Medicines.

  Dr. Vaughan:
  I am satisfied that the time taken by the Committee on Safety of Medicines to offer its advice to the licensing authority on product licence applications for new drugs is reasonable.

  Supplementary Benefit Claimants (Capital Ceiling)
  Mr. Foulkes
  asked the Secretary of State for Social Services what representations he has had regarding the effect of the £2,000 ceiling of capital on supplementary benefit claimants and on the inclusion of the surrender value of insurance policies in the calculation of this ceiling.

  Mrs. Chalker:
  My right hon. Friend has received a number of representations about the £2,000 capital rule from people who have been directly affected by the change, from those representing them, from other interested organisations and from hon. Members. They have mainly been concerned with the level of the disregard and its sharper impact as compared with that of the

  97

  previous sliding scale. A small number of the representations related to the treatment of insurance policies, and these included representations from the Life Offices Association and the Industrial Life Offices Association. We were able to reassure these organisations that very few people were likely to be affected; subsequent experience has shown this to be the case.

  Unemployment and Mortality
  Mr. Campbell-Savours
  asked the Secretary of State for Social Services whether he will make a statement on the recent progress of the research at Queen Mary college into the correlation between unemployment and mortality.

  Dr. Vaughan:
  The research team at Queen Mary college is examining the work of Professor Harvey Brenner, who has suggested a link between unemployment and mortality in Britain for the period 1936–1976. The work so far calls into question the validity of the statistical model used by Professor Brenner since it fails to take account of relevant factors such as improvements in diet and medical care which occurred during the period. The work also suggests that for other periods, for example 1922–1976, no statistically significant relationship between unemployment and mortality can be shown. Copies of the article in The Lancet in which the findings are discussed have been sent to the Social Services Committee.

  Disabled Persons (Benefits)
  Mr. Hardy
  asked the Secretary of State for Social Services if he will take steps to develop integration of benefits available for the disabled.
  98
  Mr. Rossi:
  The Government remain committed to the long-term aim of introducing a coherent system of benefits for disabled people. But, as we have made clear, there is no prospect of progress towards this objective until the economy has improved.

  General Practitioners (Retirement and Re-employment)
  Mr. Pavitt
  asked the Secretary of State for Social Services how many general practitioners in the North West metropolitan regional health authority have taken 24 hours retirement and returned to medical practice drawing both remuneration and pension; and if he will make a statement.

  Dr. Vaughan:
  Data collected from all family practitioner committees in England as part of the review of the retirement arrangements for general practitioners are now complete and are being analysed by the Department. I shall write to the hon. Member as soon as the information he requires becomes available.

  Allowances (Take-up)
  Mr. Leadbitter
  asked the Secretary of State for Social Services how many people are drawing social security allowances for each category of allowance including supplementary benefit.

  Mrs. Chalker:
  The latest available information for Great Britain—except where otherwise stated—is as follows

  Benefit

  No. of recipients (Great Britain)

  Date of latest information

  Notes

  Attendance allowance

  295,000

  30 September 1980

  Estimate

  Child Benefit

  7,241,750

  22 July 1981

  Provisional

  Child's Special Allowance

  878

  31 December 1980

  Death Grant

  592,282

  —

  Number of awards in year ending 31 December 1980

  Family Income Supplement

  97,000

  31 December 1980

  Guardian's Allowance

  3,499

  31 December 1980

  Housewives' Non-Contributory

  44,700

  31 May 1980

  Invalidity Pension

  Industrial Injury Benefit

  36,900

  31 May 1980

  Industrial Death Benefit

  30,748

  30 June 1981

  Industrial Disablement Gratuity

  159,210

  —

  Number of awards in year ending 30 September 1979 excluding late awards but including overseas castes

  Industrial Disablement Pension

  197,850

  30 September 1979

  Includes overseas cases

  Ivalid Care Allowance

  6,949

  30 September 1981

  Invalidity Benefit

  614,500

  31 May 1980

  Includes overseas cases

  Maternity allowance

  114,650

  31 March 1980

  Estimate

  Maternity grant

  663,500

  —

  Number of awards in year ending 31 March 1980

  Mobility allowance

  203,600

  30 September 1981

  Includes special mobility allowance

  Non-contributory Invalidity Pension

  125,900

  31 May 1980

  One Parent Benefit

  464,125

  22 July 1981

  Provisional

  Pneumoconiosis, Byssinosis and Misc.

  1,714

  30 September 1980

  Diseases

  Retirement Pension

  8,918,000

  28 November 1980

  Includes old person's pension and overseas cases

  Sickness Benefit

  384,000

  31 May 1980

  Includes overseas cases

  Supplementary allowance

  1,423,000

  3 December 1980

  Supplementary pension

  1,694,000

  3 December 1980

  Unemployment Benefit

  940,000

  12 February 1981

  99

  Benefit

  No. of recipients (Great Britain)

  Date of latest information

  Notes

  War Disablement Pension

  266,450

  26 December 1980

  Includes overseas cases

  War Widows Pension

  76,500

  26 December 1980

  Includes overseas cases

  Widow's Allowance

  35,000

  30 November 1979

  Estimate

  Widowed Mother's Allowance

  118,900

  30 November 1979

  Includes overseas cases

  Widows Pension

  333,400

  30 November 1979

  Includes overseas cases and age related pensions

  Workmen's Compensation

  4,291

  30 September 1980

  Elderly and Disabled Persons (Telephones)
  Mr. O'Halloran
  asked the Secretary of State for Social Services how many elderly and disabled people are supplied with telephones by local authorities under the Chronically Sick and Disabled Persons Act; how many are entitled to such provision; and what steps he is taking to see that local authorities give priority to providing this service where necessary.

  Mr. Rossi:
  In the year ending 31 March 1980, local authorities supplied telephones in some 13,000 cases and at that date some 95,000 rentals were being paid. It is up to each local authority to assess the needs of individuals for this service and to make the necessary provision.

  Small Cars (Power Steering)
  Mr. Carter-Jones
  asked the Secretary of State for Social Services if the report of the MIRA study on the fitting of power steering into small cars has been completed; and if he will make a statement.

  Mr. Rossi
  Yes. The study has shown that it would be technically feasible to fit conventional power assisted steering to a number of small and medium sized production cars. Copies of the report have been sent to the appropriate motor car manufacturers. The technical development committee of Motability which is currently undertaking research, financed by a research and development grant from our Department, into the development of a hand control system for production cars using modern electronic technology has been asked to consider the MIRA report as part of its continuing programme.

  Disabled Persons (Mobility)
  Mr. Carter-Jones
  asked the Secretary of State for Social Services if the survey on the different mobility problems of disabled people in urban and rural areas has been completed; and if he will make a statement.

  Mr. Rossi
  There have been two studies. The first on urban areas was completed and published by the Royal Association for Disability and Rehabilitation in 1978. The recent study on rural areas is near completion and we hope to have it shortly. It is to be published by RADAR and it is hoped that it will be available by the end of the year.

  Children's Wheelchairs
  Mr. Carter-Jones
  asked the Secretary of State for Social Services if he will list the main conclusions of the report on children's wheelchairs mentioned in paragraph 35 of House of Commons Paper 401, "Research and Development Work on Equipment for the Disabled 1980"; why it was decided that no further action should be taken; who made this decision; and if he will make a statement.
  100
  Mr. Rossi
  This development of children's wheelchairs was initiated by a consultant and helped financially by the Department. Primarily the aim was to enable easier propulsion, particularly for children with weaker arms by centring the propelling wheels; balance was maintained by adding a further two small wheels. Trials showed that there was some improvement in propulsion for weaker children but it was at the expense of the loss of sideways transfer—as the propelling wheel got in the way—more difficulty on slopes and some loss of facility in folding. Out of the normal processes of consideration a consensus emerged that few children would benefit from the development and most of these could be better helped with a powered wheelchair already available.

  Invalid Care Allowance
  Mr. Carter-Jones
  asked the Secretary of State for Social Services what is the earnings limit for people in receipt of invalid care allowance; when this limit was fixed; to what amount it would need to be raised to keep pace with inflation; and if he will make a statement.

  Mr. Rossi:
  The weekly earnings limit of £6 was fixed when the benefit was introduced in July 1976. To keep pace with inflation the earnings limit would need to be raised to £11.50. However, invalid care allowance is not intended to be a subsidy to earnings, even from limited part-time employment. To qualify for the allowance a person must be regularly and substantially engaged in caring for a severely disabled person for at least 35 hours a week. Any marked increase in the earnings limit would change the nature of the benefit, and I have no plans for any increase.

  Sir David Price
  asked the Secretary of State for Social Services how many single women, single men and married men, respectively, are in receipt of the invalid care allowance; and what is the total cost on an annual basis.

  Mr. Rossi
  At 30 June 1981, there were about 3,300 single women—including widows—and 3,150 men in receipt of invalid care allowance. I regret that separate figures for single and married men are not available. The estimated cost for 1981–82 is £8 million.

  Geriatric Patients (Sandwell)
  Miss Boothroyd
  asked the Secretary of State for Social Services whether he has discussed with the West Midlands regional health authority the reasons for the delay in the provision of long-stay accommodation for geriatric patients in the Sandwell area; and whether he will make a statement.

  Mr. Geoffrey Finsberg:
  I am fully aware of the work done by the West Midlands regional health authority in planning long-stay accommodation for geriatric patients in the Sandwell area. The provision of service facilities for

  101
  client groups is, however, a matter for health authorities to determine in the light of local and national priorities and available resources.

  Chronically Sick and Disabled Persons Act 1970
  Mr. Carter-Jones
  asked the Secretary of State for Social Services if he will seek to amend section 22 of the Chronically Sick and Disabled Persons Act 1970 so that the Secretary of State is required to state whether he is satisfied with the research and development work carried out by each Minister of the Crown on which he is required to report to the House.

  Mr. Rossi:
  No, but I am always willing to listen to constructive criticism of the current research programmes or concrete suggestions for extending them.

  Dental Care
  Mrs. Renee Short
  asked the Secretary of State for Social Services (1) what consideration is being given to paying dentists a capitation fee for children regardless of the treatment given;
  (2) if he is satisfied that enough attention is being given to preventive as opposed to corrective dental care; and if he will make a statement;
  (3) what reviews there have been of dental strategy in 1981; if he will publish these; and if he will make a statement.

  Dr. Vaughan:
  The Dental Strategy Review Group's report "Towards Better Dental Health" was published on 22 September 1981. Among the many recommendations in the report was one advocating a voluntary capitation fee system for maintaining dental fitness of young children. The group saw this as part of an overall preventive dental strategy and I very much welcome the emphasis in the report on preventive dental care. We are consulting widely on the report, a copy of which is in the Library.

  Supplementary Benefit (School Leavers)
  Mr. Winnick
  asked the Secretary of State for Social Services what representations have been received over the changes in the payment of supplementary benefit to school leavers; whether he will now consider reverting to the former position over payments; and if he will make a statement.

  Mrs. Chalker:
  Since the new scheme started we have received about 270 letters from hon. Members, educational, careers and local authority interests, and members of the public. There have also been some 20 parliamentary questions and an Adjournment debate on the subject. The matter is currently under consideration.

  Pharmacists Review Panel
  Mrs. Renée Short
  asked the Secretary of State for Social Services, pursuant to his reply to the hon. Member for Wolverhampton, North-East on 16 July, if he is yet able to make a further statement on the Pharmacists Review Panel and the references that he is putting to it.

  Dr. Vaughan:
  The membership of the Pharmacists Review Panel is now complete and consists of Mr. Edward Gibbons, solicitor, as chairman, with, as members, Mr. G. Carter, an accountant, Miss P. L. Cook, an economist,
  102
  Mr. J. G. Grindle, representing retail trade experience and Professor G. F. Thomason, an expert in industrial relations. The panel will shortly be asked to consider references on the subjects of profit and property costs in relation to pharmacies in contract with the National Health Service.

  Industrial Injuries Scheme
  Mr. Rooker
  asked the Secretary of State for Social Services when he expects to announce the result of the review of the industrial injuries scheme.

  Mr. Rossi
  The responses received to the Government's consultative document are still under consideration but I hope to be in a position to make an announcement in the near future.

  Social Security Benefits
  Mr. Rooker
  asked the Secretary of State for Social Services if he proposes to reduce or eliminate discrimination of treatment between the sexes in the system of social security benefits.

  Mr. Rossi
  Changes in the treatment of men and women in social security which were made in the Social Security Act 1980 are due to come into effect in November 1983 and November 1984. As the hon. Gentleman knows, the Department is also reviewing the household duties test for married women claiming non-contributory invalidity pension.

  Child Benefit
  Mr. Rooker
  asked the Secretary of State for Social Services if he will restore child benefit to its level of purchasing power in April 1979.

  Mrs. Chalker
  No. Child benefit will be increased next month by 50p a week and this will restore its November 1980 value. We shall review the rate again next year in the normal way and in the context of the Budget strategy as a whole.

  Retirement Pension
  Mr. Gwilym Roberts
  asked the Secretary of State for Social Services what are the latest figures available for the net cost of reducing the pensionable age of men to 64, 63, 62, 61 and 60 years, respectively; and if he will make a statement.

  Mr. Rossi
  On the assumption that the numbers deferring retirement would be higher than is presently the case amongst men aged 65 to 69 years, that only two-thirds of the jobs vacated by men in employment retiring earlier were actually filled, and that of those jobs filled only three-quarters would be filled by persons on the unemployment register, the net cost to central Government funds for a full year and at average 1981–82 rates is estimated to be of the order of

  Reduction of pension age to

  Cost £ million

  64

  400

  63

  900

  62

  1,400

  61

  2,000

  60

  2,600

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  These estimates take account of the net cost to the national insurance fund, the loss of national insurance surcharge, National Health Service, redundancy fund and maternity pay funds income, a broad estimate of the loss of income tax revenue and a saving in supplementary benefit. In addition to the above costs there would be important financial implications for occupational pension schemes. The net cost would be higher with lower levels of unemployment.

  Mr. Rooker
  asked the Secretary of State for Social Services what is the current purchasing power of the retirement pension compared to (a) November 1978 and (b) November 1979.

  Mrs. Chalker:
  The single person's basic retirement pension at September 1981 is £27·15. Taking account of movements in the general index of retail prices up to September 1981, the value of the pension rates introduced in November 1978 and 1979 would, at September 1981 prices, be £28·99 and £29·50 respectively.

  Vaccine Damage Payments Act 1979
  Mr. Foulkes
  asked the Secretary of State for Social Services if he is satisfied with the operation of the Vaccine Damage Payments Act 1979.

  Dr. Vaughan:
  I am satisfied that the scheme provided for by the Act is being operated in the way that Parliament intended.

FOREIGN AND COMMONWEALTH AFFAIRS

  Mr. Josif Noll
  Mr. Dobson
  asked the Lord Privy Seal if he will make representations to the Romanian Government about the imprisonment of Mr. Josif Noll, a Romanian of German extraction who was sentenced to three years' imprisonment for attempting to leave Romania without official permission, in contravention of his fundamental right under article 13(2) of the Universal Declaration of Human Rights.

  Mr. Humphrey Atkins:
  We frequently take suitable opportunities to make clear to other Governments our strong views on matters affecting individual rights, for instance, in the context of the implementation of the Helsinki Final Act. But it is not in general our policy to make public the details of individual approaches since in our experience that can undermine the effectiveness of our representations.

  Consular Officers (Legal Advice)
  Mr. Michael Marshall
  asked the Lord Privy Seal to what extent consular officers are able to offer legal advice or assistance to inquirers overseas.

  Mr. Luce:
  Consular officers are not qualified to give legal advice; it is in any event no part of the function of Government to do so. However, posts are normally able to provide a list of lawyers practising locally who will, of course, be familiar with local law and procedures.

  Foreign Affairs Council
  Mr. Lee
  asked the Lord Privy Seal if he will make a statement on the outcome of the Foreign Affairs Council held on 14 September.
  104
  Mr. Humphrey Atkins:
  My right hon. and noble Friend chaired the 14 September Council. My hon. Friend the Member for Mid-Oxon (Mr. Hurd) represented Her Majesty's Government.

  The Council discussed the implementation of the decision of the EC/Cyprus Association Council on 24 November 1980 that negotiations should take place this year on a new trade regime between the European Community and Cyprus to cover the years 1982 and 1983. No decisions were taken and the Council will consider the matter again at its meeting on 26 and 27 October.

  Ministers discussed the Community's position in preparation for the next ministerial meeting with Spain in the context of the negotiations for Spain's accession to the Community. Agreement was reached on some important elements.

  There was a brief review of recent international developments and of the prospects for the Cancun summit. Italian ideas on food and agriculture received a general welcome, and further papers on this subject will be submitted by the Commission. The Council agreed on a management regulation for the Community's programme of food aid for developing countries. The regulation should help improve the administration and effectiveness of the European Community's large food aid programme. The text agreed will now be considered by the European Parliament.

  Ministers also discussed the implications for the Community of the recent establishment of the Gulf Cooperation Council and agreed that preliminary informal contact would be established with a view to considering the scope for co-operation.

  The Council took note of a statement by the United Kingdom Presidency on the political importance of agreeing a mandate for negotiations for a possible accession by the Community to the International Sugar Agreement, and discussed the state of negotiations with supplier countries on imports of manioc into the European Community.

  The Council took note of statements made by a number of member States, including the United Kingdom, stressing the political importance of the Community's relationship with Yugoslavia. The Council expressed the hope that negotiations with Yugoslavia, due to begin later in September, on a protocol to adapt the 1980 EC/ Yugoslavia co-operation agreement to take account of Greek accession to the Community would be speedily concluded.

  Finally, the Council had a first discussion of the issues raised in the Commission's report on the 30 May 1980 mandate. All member States set out their initial positions on the mandate. For the United Kingdom, my hon. Friend emphasised the need to give a real impetus to the Community's development by improving existing policies and developing new ones; the need for improvements in the common agricultural policy, with a view to curtailing the rate of growth in expenditure on it; the importance of maintaining the 1 per cent. VAT ceiling; and the need for the Community to take conscious decisions on how the budget should affect individual member States with the aim of ensuring a defensible pattern of net contributions and receipts.

  The Council agreed that future discussions should proceed in parallel on the three broad areas identified in the Commission's report: development of Community policies—other than the CAP—improvements to the CAP,

  105
  and the question of a budgetary corrective mechanism. The arrangements for further discussions in the period leading up to the European Council meeting on 26–27 November were approved.

  Passports
  Mr. Cyril Smith
  asked the Lord Privy Seal how many applications for cash refunds in respect of visitors' passports which were charged for during the unavailability of full passports during the recent Civil Service dispute were received up to 31 July 1981; and whether he will consider making refunds for the unexpired period of the visitors' passports concerned.

  Mr. Luce:
  No statistics are available of the number of inquiries about refunds of fees for British visitors' passports which were obtained because applications for standard passports had been delayed by industrial action at the passport offices. The statutory fee for a visitor's passport does no more than cover the cost of issue of the document and is not related to its period of validity. Refunds cannot, therefore, be authorised in respect to the remaining period of validity of British visitors' passports that are replaced by standard passports.

OVERSEAS DEVELOPMENT

  Inter-American Development Bank
  Mr. Hooley
  asked the Lord Privy Seal whether the United Kingdom is represented on the governing body of the Inter-American Development Bank; and, if not, by what means Her Majesty's Government are able to influence the allocation of British aid funds channelled through that bank.

  Mr. Hurd:
  Yes. My right hon. Friend the Minister for Overseas Development is the United Kingdom's governor for the bank. We are also represented on the board of directors, together with seven other non-regional members with whom we form a single constituency, by an executive director.

  Mr. Hooley
  asked the Lord Privy Seal what allocations have been made from the British aid programme in 1979, 1980 and 1981 to the Inter-American Development Bank; and what information he has as to disbursements by the bank during that period to Cuba, Guatemala, Nicaragua and El Salvador.

  Mr. Hurd:
  The United Kingdom disbursed £6·098 million in 1979 and £7·004 million in 1980 to the bank. It is not yet possible to indicate how much will be disbursed in 1981.

  Cuba is not a member of the Bank. Disbursements to the other three countries from the Bank's funds to which the United Kingdom now contributes were as follows:

  1979 £ million

  1980 £ million

  El Salvador

  11·8

  9·7

  Guatemala

  13·6

  14·5

  Nicaragua

  13·0

  16·9

  Disbursements for 1981 will not be available until the bank's 1981 annual report is published early next year.
  106

TRADE

  South Africa
  Mr. Colvin
  asked the Secretary of State for Trade what was the value of trade between the United Kingdom and South Africa for the financial years 1970–71 to 1980–81, broken down into visible and invisible trade.

  Mr. Peter Rees:
  Estimates of the United Kingdom's total invisible transactions with South Africa are not available, nor are details of visible trade in the financial year 1980–81. The value of visible trade in the earlier years in question was as follows:

  £ million

  Financial year

  United Kingdom Imports cif

  United Kingdom Exports fob

  1970–71

  252.87

  356.42

  1971–72

  263.42

  371.83

  1972–73

  321.83

  312.32

  1973–74

  440.59

  385.62

  1974–75

  598.70

  586.51

  1975–76

  618.60

  671.40

  1976–77

  820.38

  599.67

  1977–78

  993.79

  584.51

  1978–79

  831.43

  643.18

  1979–80

  655.65

  779.64

  Note: All figures are on the current (1981) statistical basis, seasonally adjusted.

  Manufactures
  Mr. Teddy Taylor
  asked the Secretary of State for Trade (1) what surplus or deficit occurred in the United Kingdom's trade in manufactures with the EEC and with the rest of the world, respectively, in the period from the beginning of 1981 to the most recent date for which figures are available; and what were the comparable figures, respectively, in the same period of each of the previous 16 years;
  (2) if he will list in the Official Report the five nations with which the United Kingdom had the largest positive balance of trade in manufactures in 1972 and 1980, respectively; and if he will also publish a table showing the five countries with which the United Kingdom had the largest negative balance of trade in manufactures in these years, respectively.

  Mr. Peter Rees:
  I shall reply to my hon. Friend as soon as possible.

  Mr. Teddy Taylor
  asked the Secretary of State for Trade by what percentage the United Kingdom deficit in trade in manufactures with West Germany has increased or decreased since 1972.

  Mr. Peter Rees:
  The United Kingdom's crude deficit on trade in manufactures with the Federal Republic of Germany increased from £0·3 billion in 1972 to £2 billion in 1980. This is a change of about 550 per cent. However, the ratio of exports to imports for this trade£which makes some allowance for inflation£ showed little change at around 60 per cent. in both years.

  Trade Promotion (Departmental Expenditure)
  Sir David Price
  asked the Secretary of State for Trade what is his latest estimate of his Department's expenditure

  107
  for 1981–82 in respect of trade promotion and in support of public sector industry and private industry, respectively.

  Mr. Biffen [pursuant to his reply, 19 October 1981]:
  Preliminary estimates of my Department's figures are as follows

  £ million

  Trade Promotion

  27·8

  Support for the public sector

  32·4

  Support for the private sector

  61·4

  INDUSTRY
  High Technology Industries
  Mr. Chris Patten
  asked the Secretary of State for Industry how much financial assistance, including provision for training, has been given to high technology industries in each of the last five years; what is the expected level of assistance in 1981; and what are the comparable figures for the United States of America, West Germany, France and Japan.

  Mr. Patrick Jenkin:
  In each of the last five financial years the Department of Industry's financial assistance to high technology industries, excluding payments of regional grants and selective assistance under the Industry Act 1972, amounted to

  1980 survey prices * £ million

  1976–77

  332

  1977–78

  205

  1978–79

  254

  1979–80

  318

  1980–81

  329

  * This includes scientific and technological support, part of NEB assistance and project assistance in the aerospace sector.Source: "The Government's Expenditure Plans"; Cmnd 8175.
  The level of such assistance in 1981–82 is expected to be £385 million—in 1980 survey prices. Some provision for training is included in the above figures but the Department of Employment is the main source for such funding.

  Assistance to high technology industries in the form of regional development grants and selective assistance under the Industry Act 1972, amounted to:

  Current prices £ million

  1976–77

  171

  1977–78

  170

  1978–79

  217

  1979–80

  219

  1980–81

  282

  1980–81

  282

  Sources: Annual Reports of the Industry Act 1972.Department of Industry.
  The RDG estimates do not include aerospace but it is thought that RDG expenditure in this sector is relatively low.

  No comparable figures on the above basis are available for the United States of America, West Germany, France and Japan.
  108

  British Telecom
  Mr. Chris Patten
  asked the Secretary of State for Industry what was the increase in productivity achieved in the telecommunications division of the Post Office in each of the last five years; and what increase has been achieved by British Telecom at the latest date for which figures are available.

  Mr. Wakeham:
  The annual productivity increase of the telecommunications division of the Post Office measured by the increase in real sales income per employee in the last five years is as follows:

  Productivity Increase (per employee)

  Year

  per cent.

  1976–77

  8·6

  1977–78

  11·4

  1978–79

  7·3

  1979–80

  3·6

  1980–81

  1·6

  There are no more recent figures.

  British Shipbuilders
  Mr. Chris Patten
  asked the Secretary of State for Industry what was the average output per man in British Shipbuilders' main shipyards in each year since nationalisation and at the latest date for which figures are available; and what are the comparable figures for major shipyards in Japan, Korea, Sweden, Brazil, the United States of America, West Germany and France.

  Mr. Norman Lamont:
  The following table gives throughput per employee figures for British Shipbuilders' merchant yards. Information about throughput per employee at individual British Shipbuilders' yards is commercially confidential. Comparable information about overseas yards is not available. Throughput per man figures are affected both by changes in productivity and changes in the industry's work load and, during the period covered by the table, the loading of British Shipbuilders' yards has been affected by the shipbuilding recession.

  Throughput per employee year in merchant yards

  Year

  Compensated gross registered tons

  1978

  15·3

  1979

  13·2

  1980

  15·0

  Source:British Shipbuilders.Note:Throughput is completions allocated according to man hours worked per quarter.

  British Leyland (Chairman's Salary)
  Mr. Cadbury
  asked the Secretary of State for Industry what will have been the average annual increase in the cost to British Leyland of Sir Michael Edwardes' salary and pension contribution over the period of his chairmanship of the company.

  Mr. Patrick Jenkin:
  The cost to BL of Sir Michael Edwardes' remuneration will have increased at an annual

  109
  rate of 5·1 per cent. compound over the five year period of his service, excluding early retirement arrangements. BL's auditors have verified this figure.

  EDUCATION AND SCIENCE
  School Leavers
  Dr. Edmund Marshall
  asked the Secretary of State for Education and Science what percentage of pupils entitled to leave school in England at Easter 1981 did so then.

  Dr. Boyson:
  This information is not yet available.

  EDUCATION AND SCIENCE

    Education Expenditure
    Mr. Chris Patten
    asked the Secretary of State for Education, and Science what was the level of education spending per child in 1979–80 and 1980–81; and what is the expected level in the current financial year.

    Dr. Boyson:
    The net institutional recurrent expenditure per primary and secondary pupil in 1979–80 and the corresponding sum allowed for in the Government's expenditure plans for 1980–81 and 1981–82, are as follows—at 1980 survey prices:

    1979–80 £

    1980–81 £

    1981–82 £

    Primary

    422

    429

    427

    Secondary

    601

    613

    609

    Private Education
    Mr. Hill
    asked the Secretary of State for Education and Science how many children are educated outside the State education system; and what would be the cost to the Exchequer if they were educated within the State system.

    Dr. Boyson
    There were about 527,000 pupils in independent schools in England in January 1981. The average recurrent cost of educating that number of pupils in maintained schools is nearly £400 million a year at current prices. There would also be the initial capital costs of providing additional school places: depending on the geographical distribution of the pupils concerned and the extent to which currently surplus school places could be used, those could amount to around £2,000 million.

  Independent Schools (Teachers' Pensions)
  Mrs. Renée Short
  asked the Secretary of State for Education and Science, pursuant to his reply to the hon. Member for Wolverhampton, North-East on 16 July, if he is yet ready to bring forward proposals to charge independent schools for membership of the national teachers pension fund.

  Dr. Boyson:
  My right hon. Friend will address himself to this issue as soon as possible.

  University Graduates (Technology)
  Mrs. Renée Short
  asked the Secretary of State for Education and Science, pursuant to his reply to the hon. Member for Wolverhampton, North-East on 16 July, if he is now able to list all those universities which had students graduating from them in technological subjects in 1980, with the numbers involved; and what information there is on what percentage of them in each case subsequently got jobs.
  110
  Mr. Waldegrave:
  The following table gives the total number of first and higher degree graduates in engineering and technology from each university in the United Kingdom during the academic year 1979–80. Information is collected in respect of the first known destination of these graduates between graduation and 31 December 1980. Not all graduates will seek employment directly, many will enter further education, while overseas graduates may return home. For all universities together, 64 per cent. of the first degree and 42 per cent. of the higher degree graduates were in employment by 31 December 1980. However, the corresponding percentages, excluding those entering further education or students from overseas returning home, were 92 per cent. and 97 per cent. respectively. It has not in the past been the policy of the University Grants Committee to disclose such information for individual universities. However, I am informed that its policy committee is to consider later this month whether to make this information available in the future. I shall write to the hon. Member in due course when its decision has been made.

  Graduates in engineering and technology from universities in the United Kingdom—1979–80

  University or College

  First Degree

  Higher Degree

  Aston

  526

  203

  Bath

  233

  28

  Birmingham

  374

  190

  Bradford

  290

  133

  Bristol

  161

  10

  Brunel

  173

  80

  Cambridge

  359

  86

  City

  281

  66

  Durham

  59

  2

  East Anglia

  —

  4

  Essex

  74

  38

  Exeter

  62

  5

  Hull

  22

  1

  Keele

  —

  —

  Kent

  53

  36

  Lancaster

  53

  31

  Leeds

  577

  213

  Leicester

  61

  8

  Liverpool

  267

  44

  London Graduate School of Business Studies

  —

  —

  London University

  821

  561

  Loughborough

  438

  140

  Manchester Business School

  —

  —

  Manchester

  260

  49

  University of Manchester Institute of Science and Technology

  353

  268

  Newcastle

  307

  119

  Nottingham

  327

  58

  Oxford

  113

  46

  Reading

  183

  76

  Salford

  481

  95

  Sheffield

  226

  140

  Southampton

  260

  146

  Surrey

  270

  93

  Sussex

  78

  22

  Warwick

  68

  21

  York

  —

  —

  Aberystwyth U.C.

  2

  Bangor U.C.

  52

  12

  Cardiff U.C.

  191

  33

  St. David's Lampeter

  —

  —

  Swansea U.C.

  179

  42

  Welsh National School of Medicine

  —

  —

  University of Wales Institute of Science and Technology

  139

  20

  Aberdeen

  56

  6

  Dundee

  69

  20

  111

  University or College

  First Degree

  Higher Degree

  Edinburgh

  89

  9

  Glasgow

  183

  22

  Heriot-Watt

  222

  49

  St. Andrews

  —

  —

  Stirling

  5

  17

  Strathclyde

  373

  100

  Queen's Belfast

  137

  —

  Ulster Coleraine

  —

  —

EMPLOYMENT

  Manufacturing Industry
  Mr. Nicholas Winterton
  asked the Secretary of State for Employment what percentage of those persons normally engaged in manufacturing industry are currently employed; and what is the percentage of those currently engaged in manufacturing industry as a percentage of total employment.

  Mr. Peter Morrison:
  The information is not available in the form requested.

  However, it is estimated that in Great Britain, at June 1981, about 89 per cent. of manufacturing employees—defined as those, at that date, employed in manufacturing industries plus the unemployed who last worked in those industries—were in employment. At that date 29 per cent. of all employees in employment were engaged in manufacturing industries.

  Work Experience on Employers' Premises
  Mr. Colvin
  asked the Secretary of State for Employment whether steps are being taken by the special programmes division of the Manpower Services Commission to persuade large firms to sponsor more places on the work experience on employers' premises part of the youth opportunities programme.

  Mr. Alison:
  The Manpower Services Commission's special programmes division has always encouraged large companies to expand their participation in the youth opportunities programme. Large sponsors are constantly being urged to offer more work experience places.

  Disabled Persons (Occupational Aids)
  Mr. Carter-Jones
  asked the Secretary of State for Employment what progress has been made in setting up a computer-based data bank of occupational aids for disabled people following research by the Production Engineering Research. Association; and if he will make a statememt.

  Mr. Peter Morrison:
  I shall reply to the hon. Member as soon as possible.

  West Midlands (Statistics)
  Mrs. Renée Short
  asked the Secretary of State for Employment how many people aged 20 and under in (a) Wolverhampton and (h) the West Midlands have never had a job; and what were the comparable figures for April 1979.

  Mr. Alison:
  At 8 October 1981 the provisional number of registered unemployed young people aged 18 and under
  112
  in the Wolverhampton employment office area and the West Midlands region who had not entered employment since completing full-time education was 2,788 and 31,028 respectively. The corresponding figures at April 1979 were 330 and 2,621, respectively. Information for the precise age range requested is not available.

  The April 1979 count excluded Easter school leavers. In contrast, October figures include many of the large number of school leavers who register each summer.

  The Government have expanded the youth opportunities programme, which exists to help unemployed young people with appropriate training and work experience, to provide 550,000 places in the current financial year.

  Mrs. Renée Short
  asked the Secretary of State for Employment if he will list the industries in (a) Wolverhampton and (b) the West Midlands in which there have been increases in unemployment since May 1979; and if he will give the percentage increase.

  Mr. Peter Morrison:
  I shall reply to the hon. Member as soon as possible.

  Mrs. Renée Short
  asked the Secretary of State for Employment what are the latest unemployment numbers and rate amongst ethnic minorities in (a) Wolverhampton and (b) the West Midlands; and what were the comparable figures for April 1979.

  Mr. Peter Morrison:
  The numbers registered as unemployed are analysed by ethnic origin in February, May, August and November.

  The following is the information for May 1979 and August 1981. Figures for August are normally higher in any one year than in May, partly because of the registration of summer school leavers.

  Unemployed ethnic minority group workers*

  May 1979

  August 1981

  Wolverhampton employment Office area

  1,220

  3,079

  West Midlands

  10,558

  30,740

  * Unemployed people born in, or whose parents were born in, the New Commonwealth and Pakistan.
  Unemployment rates for ethnic minorities cannot be calculated as there are no estimates available of the numbers of employees for this group of workers.

  Wolverhampton (Employment and Training Measures)
  Mrs. Renée Short
  asked the Secretary of State for Employment how many people in Wolverhampton are covered by the special employment and training measures at the latest date.

  Mr. Peter Morrison:
  The information requested is given in the following schedule:

  Special Employment and Training Measures Wolverhampton

  Measures

  Numbers Supported

  Temporary short time working compensation scheme

  *1,476

  Job release scheme

  †172

  Youth opportunities programme

  †2,100

  Community enterprise programme

  **400

  Community industry

  ††Not known

  113 NB Unless otherwise stated, the figures relate to the Wolverhampton travel-to-work area which comprises Wolverhampton, Bilston and Wednesfield.Notes:* The figure relates to the number of potentially redundant employees who were supported under the TSTWCS at the end of September.†Number supported at 13 October 1981.† The figure relates to the number of entrants to the programme between 1 April 1981 and 31 August 1981 in the Wolverhampton local authority district.** The figure comprises the number of people who were on projects funded under the programme at the end of August in the Dudley, Sandwell, Walsall and Wolverhampton local authority districts.†† At present there is no community industry unit in Wolverhampton. The nearest units are in Birmingham and Coventry-Nuneaton where there may be young people from Wolverhampton participating in the programme.

  Wolverhampton (Statistics)
  Mrs. Renée Short
  asked the Secretary of State for Employment what is the latest unemployment number and rate amongst males and females in Wolverhampton; and how this compares with May 1979.

  Mr. Peter Morrison:
  I shall reply to the hon. Member as soon as possible.

  Wolverhampton (Redundancies)
  Mrs. Renée Short
  asked the Secretary of State for Employment how many redundancies have been notified to his Department in Wolverhampton for each month since May 1979.

  Mr. Peter Morrison:
  There are no comprehensive statistics of redundancies. The numbers of redundancies, involving 10 or more employees, reported to the Manpower Services Commission as due to occur in the Wolverhampton travel-to-work area between May 1979 and September 1981 are as follows:

  Month

  1979*

  1980

  1981†

  January

  —

  —

  400

  February

  —

  210

  559

  March

  —

  29

  498

  April

  —

  1,288

  205

  May

  —

  157

  388

  June

  1,800

  377

  235

  July

  —

  343

  104

  August

  251

  223

  †156

  September

  —

  357

  †88

  October

  —

  751

  —

  November

  —

  330

  —

  December

  313

  410

  —

  Notes:* Prior to January 1980 figures relate to redundancies notified within the month concerned rather than redundancies taking place in the month. † Figures for February 1981 and later are not fully comparable with those for January 1981 and earlier because of improvements in data collection designed to secure a better coverage of reported redundancies which are actually expected to take place.† Provisional.

  Apprenticeships
  Mr. Winnick
  asked the Secretary of State for Employment what was the percentage of school leavers during 1980 and so far in 1981 who obtained apprenticeships for a period of three years and more; and if he will give figures for 1977, 1978 and 1979.

  Mr. Alison:
  The information is not available in the form requested.
  114
  However, from results of a survey started in 1978 it is estimated that in England and Wales about a quarter of 16-year-olds entering employment, both in 1978 and 1979, had a first job that involved an apprenticeship or similar skilled training lasting two years or more. Information for 1980 is not yet available.

  Unemployment Statistics (International Comparisons)
  Mr. Teddy Taylor
  asked the Secretary of State for Employment what are the current unemployment percentages in Austria, Norway, Sweden, Switzerland and the United Kingdom, respectively; and what were the comparable percentages at the same time in the year before the United Kingdom joined the EEC.

  Mr. Alison:
  The unemployment rates for August 1972 and August 1981, the latest available common date for the countries requested, are given below. The rates for different countries are not directly comparable because of differences in concepts and coverage.

  August 1972

  August 1981

  Austria*

  1·3

  1·4

  Norway*

  0·6

  1·6

  Swedent†

  3·0

  2·6

  Switzerland*

  0·1

  0·2

  United Kingdom*

  3·8

  12·2

  * Registered unemployed as a percentage of total employees.† Labour force survey figures as a percentage of total labour force. Source OECD main Economic Indicators—except United Kingdom, supplemented by labour attache reports, etc.

  Mobility of Labour
  Mr. Teddy Taylor
  asked the Secretary of State for Employment, pursuant to the reply to the hon. Member for Southend, East on 3 July, Official Report, cols. 524—5, whether he can make an assessment of the effect on unemployment in the United Kingdom of the admission of Spain and Portugal to the European Economic Community with their nationals enjoying normal freedom of movement and employment under European Economic Community rules.

  Mr. Alison:
  As my hon. Friend indicated in his reply on 3 July, it is not possible to quantify with certainty the employment effects of membership of the European Community. This applies equally to the future effect of the free movement of labour provisions in relation to Community enlargement. The employment effects of Spanish and Portuguese accession will in any case to some extent depend on a number of factors which have yet to be determined, including the timing of entry and the terms of the Treaty of Accession.

  European Community (Statistics)
  Mr. Teddy Taylor
  asked the Secretary of State for Employment if, pursuant to his reply to the hon. Member for Southend, East on 3 February, Official Report, c. 110, he will outline the main reasons why Norway and Austria have suffered from a substantially lower percentage increase in unemployment compared with the United Kingdom and other EEC countries since 1972; and if he will make a statement.

  Mr. Alison:
  I have nothing to add to the reply given by my hon. Friend on 3 February.
  115
  Mr. Teddy Taylor
  asked the Secretary of State for Employment what are the main reasons for the United Kingdom suffering from a more substantial percentage increase in unemployment than other members of the EEC since 1972; and if he will make a statement.

  Mr. Alison:
  The United Kingdom has in fact since 1972 experienced a smaller percentage increase in unemployment than several other member States of the European Community. Circumstances vary a good deal between individual member States; the United Kingdom's unemployment problems largely reflect our lack of competitiveness as well as the effects of world-wide recession.

  Mr. Teddy
  Taylor asked the Secretary of State for Employment (1) if he will list the main positive and negative factors which have influenced unemployment levels in Great Britain in consequence of United Kingdom membership of the EEC in 1973; and if he will make a statement;
  (2) if the information available to him indicates that the net effect of the United Kingdom's joining the EEC on unemployment levels since 1973 has been positive or negative.

  Mr. Alison:
  Levels of unemployment in Great Britain since 1973 have been influenced by many factors. Some important factors, such as increases in oil prices, are quite independent of Community membership. It would be neither possible nor realistic to isolate from all influences bearing on employment any which are solely due to our membership of the European Community and to quantify or assign relative weights to them. Factors influencing employment are interactive and it is impossible to demonstrate their effects separately, particularly in relation to the entirely hypothetical situation of the United Kingdom having remained outside the European Community.

  Disabled Persons
  Mr. Hannam
  asked the Secretary of State for Employment how many people were removed from the disabled persons register from October 1979 to October 1980 because they were classified as unable to work; and what percentage this was of the total register.

  Mr. Peter Morrison:
  I shall reply to my hon. Friend as soon as possible.

  Youth Employment (Statistics)
  Mr. Strang
  asked the Secretary of State for Employment what percentage of males and females, under 20 years of age, respectively, are finding employment after participating in a youth opportunities programme scheme at the latest available date in the United Kingdom.

  Mr. Alison:
  I shall reply to the hon. Member as soon as possible.

SCOTLAND

  Dundee (Depopulation)
  Mr. Gordon Wilson
  asked the Secretary of State for Scotland if he will take measures to reverse the continued
  116
  movement of population out of the city of Dundee; and if he will take steps to encourage young people in particular to stay in the city by improved job provision.

  Mr. Alexander Fletcher:
  Dundee enjoys special development area status whereby maximum incentives are available to encourage the establishment and expansion of industry and the Scottish Development Agency is undertaking a major development programme in the City. Young people in the city of Dundee will benefit, in addition, from the expansion of the Government's programme of special employment measures announced on 27 July, which included a further major allocation of resources to the youth opportunities programme and other schemes aimed at alleviating unemployment amongst the young and improving the opportunities available to them to undertake skill training or further education.

  Import Penetration
  Mr. Ernie Ross
  asked the Secretary of State for Scotland if he will make a statement on import penetration of the manufacturing sector of the Scottish economy.

  Mr. Alexander Fletcher:
  Statistics of imports of foreign goods into Scotland are not kept separately. Current figures for the United Kingdom are not available because of the recent Civil Service dispute.

  Certain sectors of the economy have indeed suffered from growth in imports as a direct result of the loss of competitiveness by United Kingdom manufacturers. The Government's fiscal and economic policies are designed to help United Kingdom industry reverse this trend and to create a climate in which our industry can succeed in domestic and overseas markets.

  Science Pupils
  Mr. Ernie Ross
  asked the Secretary of State for Scotland what is his estimate of the number and percentage of girls who do not study science after the age of 14 years at school.

  Mr. Alexander Fletcher:
  Information based on the age of pupils is not available. From a sample survey of school leavers from session 1975–76, it is estimated that 18,600, or 42 per cent. of girls ceased to study the main sciences, that is physics, chemistry and biology, after the second year of secondary education.

  Colleges of Education (Places)
  Mr. Ernie Ross
  asked the Secretary of State for Scotland what was the number of both men and women (a) applying for and(b) accepting places at colleges of education in each of the past five years; and if he will express these figures in percentage terms.

  Mr. Alexander Fletcher:
  The available information in relation to full-time pre-service teacher-training courses is as follows:

  Session

  (a) Number of applications* (as at 1 June each year)

  (b) Number of students taking up places

  Percentage (b) of (a)

  1976–77

  8,850

  4,360

  49

  1977–78

  6,200

  2,430

  39

  117

  Session

  (a) Number of applications* (as at 1 June each year)

  (b) Number students taking up places

  (b) Percentage (b) of (a)

  1978–79

  5,998

  2,401

  40

  1979—80

  6,759

  2,959

  44

  1980–81

  6,065

  2,354

  39

  * Separate figures for men and women are not available.

  Teaching Posts (Women)
  Mr. Ernie Ross
  asked the Secretary of State for Scotland what percentage of the following posts are held by women (a) primary school heads, (b) all promoted posts in secondary schools and (c) secondary school heads.

  Mr. Alexander Fletcher:
  At September 1979, the latest date for which the information is available, the percentage of the following posts in education authority schools that were held by women were:

  per cent.

  (a) primary school headteachers

  50·6

  (b) all promoted posts in secondary schools

  28·9

  (c) secondary school headteachers

  3·2

  Mr. Ernie Ross
  asked the Secretary of State for Scotland if he will express in percentage terms the number of women employed in the following sectors (a) full-time nursery teaching staff, (b) primary school teaching staff, (c) secondary teaching staff, (d) lecturers in colleges of education and (e) lecturers in central institutions.

  Mr. Alexander Fletcher:
  On the dates indicated the percentages of women in each of the five sectors were as follows:

  per cent.

  (a) Full-time nursery teaching staff

  99·7*

  (b) All primary teaching staff

  88·7*

  (c) All secondary teaching staff

  43·9*

  (d) Full-time lecturers in colleges of education

  32·9†

  (e) Full-time lecturers in central institutions

  17·2†

  118

  1975–76

  1976–77

  1977–78

  1978–79

  1979–80

  Scotland

  14

  17

  21

  23

  25

  England

  11

  15

  17

  18

  20

  Wales

  26

  28

  —

  30

  32

  Community Enterprise Programme (Lothian)
  Mr. Strang
  asked the Secretary of State for Scotland how many people were covered by the community enterprise programme in the Lothian region in June 1981.

  Mr. Alexander Fletcher:
  There were 394 people taking part in community enterprise programme schemes in Lothian region in June 1981.

  Short-time Working Compensation Scheme (Lothian Region)
  Mr. Strang
  asked the Secretary of State for Scotland how many people were covered by the temporary short-time working compensation scheme in the Lothian region in each June since the scheme started.
  * At September 1979.† At September 1980.

  Psychiatrically Disturbed Children
  Mr. Gordon Wilson
  asked the Secretary of State for Scotland if he will ensure that resources are available for research into the incidence of psychiatric disturbance among children in substitute care in institutions—outwith the list D school system—to assess their treatment needs and to determine staffing and other resource requirements.

  Mr. Allan Stewart:
  Applications for Government funding of research projects are considered on their merits and on the availability of resources within planned budgets. The treatment needs of children in care and the staffing and other resource requirements involved are the responsibility of the local authority or other governing body of the appropriate social work establishment.

  Nursery Education
  Mr. Ernie Ross
  asked the Secretary of State for Scotland if he will publish a table showing the percentage of children receiving nursery education in Scotland below the age of five years in each of the past five years; and how this compares with England, Wales and other European Economic Community countries and Sweden and Norway.

  Mr. Alexander Fletcher:
  Information in the form requested is not readily available for European Economic Community countries, Sweden or Norway and could not be provided except at disproportionate cost. Total numbers of pupils receiving pre-school training in European countries are given in the "Eurostat— Education and Training Statistics" and in the "Educational Statistics in OECD Member Countries", copies of which are available in the Library.

  The following table shows children below the age of 5 receiving nursery education from education authorities in Scotland, England and Wales, expressed as a percentage of the total 3 and 4-year-old home population.

  Mr. Alexander Fletcher:
  The number of potentially redundant employees in Lothian region covered by applications current in June of each year was as follows:

  June

  Number

  1979

  118

  1980

  539

  1981

  2,161

  Vacancies (Edinburgh)
  Mr. Strang
  asked the Secretary of State for Scotland how many notified vacancies there were in the Edinburgh travel-to-work area in each June of the past three years.

  Mr. Alexander Fletcher:
  The information is set out in the following table.
  119

  Number of vacancies notified to

  Employment Offices

  Careers Offices

  June 1979

  3,161

  276

  June 1980

  2,931

  144

  June 1981

  1,815

  48

  Notes:1. The figures are not a measure of total vacancies but represent only the number of vacancies notified to employment offices and careers offices and remaining unfilled on the day of the count.2. Because of possible duplication the two series should not be added together.

  Unemployed Persons (Edinburgh)
  Mr. Strang
  asked the Secretary of State for Scotland what percentage of people were registered as unemployed in the Edinburgh travel-to-work area in June of the past three years; and what were the corresponding figures for males, females and young people, respectively.

  Total registered unemployed

  EO Area

  July 1979

  Males 18 and over

  Females 18 and over

  Young people under 18

  Total

  Edinburgh (1)

  1,670

  1,193

  1,521

  4,384

  Edinburgh (2)

  3,108

  821

  93

  4,022

  Edinburgh (3)

  419

  286

  13

  718

  Leith

  2,000

  609

  88

  2,697

  Portobello

  1,165

  361

  80

  1,606

  Dalkeith

  741

  347

  358

  1,446

  Loanhead

  416

  189

  10

  615

  Musselburgh

  633

  354

  290

  1,277

  Penicuick

  150

  167

  75

  392

  Tranent

  244

  111

  8

  363

  Total

  10,546

  4,438

  2,536

  17,520

  EO Area

  July 1980

  Males 18 and over

  Females 18 and over

  Young People under 18

  Total

  Edinburgh (1)

  1,933

  Edinburgh (2)

  3,555

  1,069

  93

  4,717

  Edinburgh (3)

  514

  302

  22

  838

  Leith

  2,271

  706

  118

  3,095

  Portobello

  1,416

  432

  125

  1,973

  Dalkeith

  908

  459

  423

  1,790

  Loanhead

  431

  157

  17

  605

  Musselburgh

  773

  332

  372

  1,477

  Penicuick

  210

  199

  128

  537

  Tranent

  320

  165

  13

  498

  Total

  12,331

  5,035

  3,273

  20,639

  EO Area

  July 1981

  Males 18 and over

  Young people under

  Total

  Edinburgh (1)

  2,838

  1,714

  1,896

  6,448

  Edinburgh (2)

  5,057

  1,644

  104

  6,805

  Edinburgh (3)

  757

  482

  34

  1,273

  Leith

  3,163

  972

  119

  4254

  Portobello

  2,101

  569

  152

  2,822

  Dalkeith

  1,433

  629

  454

  2,516

  Loanhead

  675

  208

  19

  902

  Musselburgh

  1,268

  529

  406

  2,203

  Penicuick

  327

  216

  125

  668

  Tranent

  562

  238

  25

  825

  Total

  18,181

  7,201

  3,334

  28,716

  120
  Mr. Alexander Fletcher:
  Percentage unemployment rates for males, females and total registered unemployed in the Edinburgh travel-to-work area are set out in the following table. It is not possible to calculate percentage rates for particular age groups.

  Percentage rates

  Males

  Females

  Total

  June 1979

  7·4

  4·1

  5·9

  June 1980

  8·4

  4·7

  6·8

  June 1981

  11·8

  6·2

  9·3

  Mr. Strang
  asked the Secretary of State for Scotland how many people were registered as unemployed in each employment exchange in the Edinburgh travel-to-work area in June of the past three years; and what were the corresponding numbers of males, females and young people, respectively.

  Mr. Alexander Fletcher:
  The information is not available in the precise form requested. An age analysis of the unemployment register is carried out quarterly in January, April, July and October. The following table shows the numbers registered as unemployed in July in each of the past three years.
  121 Note:Edinburgh 1—South St. Andrew Street Jobcenter.Edinburgh 2—Shandwick Place Jobcenter.Edinburgh 3—Wester Hailes Jobcenter.

  Educational Expenditure
  Mr. Ernie Ross
  asked the Secretary of State for Scotland if he will express the educational expenditure per pupil for both Tayside and Scotland for each year since 1976; and if he will also express the figures at current prices.

  £(Out-turn prices)

  1976–77

  1977–78

  1978–79

  1979–80

  Tayside

  414

  452

  520

  627

  Scotland

  422

  459

  549

  651

  £(November 1980 prices)

  1976–77

  1977–78

  1978–79

  1979–80

  Tayside

  760

  763

  785

  825

  Scotland

  777

  772

  825

  852

TRANSPORT

  British Railways (Productivity)
  Mr. Chris Patten
  asked the Secretary of State for Transport what was the increase in productivity achieved by British Railways in each of the last five years and at the latest date for which figures are available.

  Mr. David Howell:
  Productivity on British Rail is traditionally expressed in terms of passenger miles and net freight tonne miles per member of staff employed per year. The performance indicators in the board's annual report and accounts for 1980 include the following:

  Passenger milesinet freight tonne miles per member of staff employed ('000s)

  end of year

  '000s

  1976

  137·2

  1977

  140·9

  1978

  144·7

  1979

  147·8

  1980

  142·9

  The recent decline is partly attributable to a drop in freight carryings as a result of the three months' steel strike and a falling off in industrial activity.

  British Rail is making vigorous efforts to match services to the reduced demand and to reduce staff numbers. The total number of staff employed by the railway business of British Railways, including corporate and common services but excluding British Rail Engineering Ltd., in each of the last five years is as follows:

  Number of staff

  31 December 1976

  186,833

  31 December 1977

  182,336

  31 December 1978

  182,198

  31 December 1979

  182,031

  31 December 1980

  178,059

  13 June 1981

  174,809

  122
  Mr. Alexander Fletcher
  Net school —as that term is used in "Rating Review"—per pupil is as follows:

  Road Safety (Car Design)
  Mr. Hooley
  asked the Secretary of State for Transport whether his Department will ensure that research on car design aspects of road safety is carried out now that the vehicle occupants injury team of Birmingham university, partly funded by the Government, has been disbanded.

  Mr. David Howell:
  Yes. This is an important area, on which we shall continue research.

ENVIRONMENT

  Direct Labour Organisations
  Mr. Thornton
  asked the Secretary of State for the Environment if he will give, for each of the last 10 years, for England and Wales, the figures of expenditure carried out by direct labour organisations and the proportion which this represents of similarly defined total expenditure of local authorities in each of those years.

  Sir George Young:
  Information is collected from local authorities for the first and third quarters only in respect of the value of their direct labour organisations' new construction and repair and maintenance work. The relevant quarterly figures for local authority DLOs in England and Wales for the last 10 years are in the following table.

  Value of Work done* by Local Authority Direct Labour

  (†)

  £M, Outturn Prices England

  Wales

  April 1971

  87·0

  7·3

  Oct. 1971

  90·9

  7·7

  April 1972

  98·8

  8·2

  Oct. 1972

  102·1

  8·7

  April 1973

  121·2

  9·9

  Oct. 1973

  120·7

  10·0

  April 1974

  129·7

  11·2

  Oct. 1974

  138·8

  12·4

  123

  (†)

  £M, Outturn Prices England

  Wales

  April 1975

  186·5

  14·6

  Oct.1975

  193·9

  17·2

  April 1976

  224·7

  16·2

  Oct. 1976

  216·5

  17·5

  April 1977

  250·8

  21·5

  Oct. 1977

  252·2

  17·6

  April 1978

  277·8

  23·0

  Oct. 1978

  275·5

  23·2

  April 1979

  284·8

  25·9

  Oct. 1979

  317·8

  27·4

  April 1980

  362·5

  29·2

  Oct. 1980

  371·4

  32·1

  April 1981

  400·9

  34·9

  * On construction new work and repair and maintenance. 'New Towns' construction work is excluded.&dagger; 3 months ending 31 March and 30 September.Figures on a directly comparable basis are not available for similarly defined total expenditure of local authorities.

  Local Authorities (Staff)
  Mr. Thornton
  asked the Secretary of State for the Environment if he will give the total figures for local authority employment for each of the past 10 years showing separately the figures for (a) educational staff, (b) law and order staff and (c) direct labour organisations.

  Mr. King:
  The following table sets out the available information for England and Wales. Employment in local authority direct labour organisations is not separately distinguished in the surveys.

  June

  Education Lecturers and teachers

  Full-time

  Part-time

  Total

  1971

  429,132

  149,097

  578,229

  1972

  453,180

  161,599

  614,779

  1973

  476,554

  175,850

  652,404

  1974

  505,242

  171,481

  676,723

  1975

  517,102

  160,611

  677,713

  1976

  527,935

  144,601

  672,536

  1977

  532,748

  136,508

  669,256

  1978

  534,741

  141,778

  676,519

  1979

  543,071

  149,986

  693,057

  1980

  540,772

  145,703

  686,475

  1981

  529,608

  134,672

  664,280

  June

  Education—others*

  Full-time

  Part-time

  Total

  1971

  188,986

  387,225

  576,211

  1972

  201,332

  400,619

  601,951

  1973

  207,422

  421,754

  629,176

  1974

  210,935

  443,911

  654,846

  1975

  222,055

  490,353

  712,408

  1976

  222,547

  495,415

  717,962

  1977

  217,756

  495,879

  713,635

  1978

  213,196

  496,857

  710,053

  1979

  213,585

  503,127

  716,712

  1980

  201,015

  484,239

  685,254

  1981

  187,869

  472,641

  660,510

  * Education—Others—e.g. administration, secretarial, clerical and manuals.124

  June

  Police—all ranks

  Full-time

  Part-time

  Total

  1971

  95,086

  —

  95,086

  1972

  98,600

  —

  98,600

  1973

  100,372

  —

  100,372

  1974

  100,952

  —

  100,952

  1975

  103,564

  —

  103,564

  1976

  108,473

  —

  108,473

  1977

  109,338

  —

  109,338

  1978

  107,875

  —

  107,875

  1979

  111,905

  —

  111,905

  1980

  115,152

  —

  115,152

  1981

  118,550

  —

  118,550

  June

  Other Law and Order Services

  Full-time

  Part-time

  Total

  1971

  ·

  ·

  ·

  1972

  ·

  ·

  ·

  1973

  ·

  ·

  ·

  1974

  ·

  ·

  ·

  1975

  55,475

  10,830

  66,305

  1976

  55,435

  10,690

  66,125

  1977

  53,533

  10,936

  64,469

  1978

  52,070

  11,329

  63,399

  1979

  53,995

  10,405

  64,400

  1980

  55,505

  11,054

  66,559

  1981

  57,448

  11,654

  69,102

  · not included in 1971–74 surveys

  June

  Total—All Services· (excl. "other law and order")

  Full-time

  Part-time

  Total

  1971

  1,506,242

  728,201

  2,234,443

  1972

  1,569,928

  770,290

  2,340,218

  1973

  1,628,917

  824,606

  2,453,523

  1974

  1,598,465

  844,856

  2,443,321

  1975

  1,659,961

  895,907

  2,555,868

  1976

  1,681,878

  891,982

  2,573,860

  1977

  1,668,483

  887,735

  2,556,218

  1978

  1,665,196

  903,081

  2,568,277

  1979

  1,686,920

  923,936

  2,610,856

  1980

  1,661,364

  902,868

  2,564,232

  1981

  1,623,209

  879,748

  2,502,957

  · Figures for "other law and order services" have been excluded from the totals for June 1975-June 1981 to enable comparisons from 1971–1981 to be made on a common basis.Sources:1971–1974—Department of Employment Gazette.1975–1981—Joint Manpower Watch.

  Local Government Expenditure
  Mr. Thornton
  asked the Secretary of State for the Environment (1) if he will give, for each of the last 10 years, for England and Wales, the figures for local government current expenditure showing the target expenditure as set by the Government immediately before the year began and the outturn of expenditure for that year, both on a comparable price basis;
  (2) if he will give, for each of the last 10 years, for England and Wales, the figures for local government capital expenditure showing the target expenditure as set out by the Government immediately before the year began and the outturn of expenditure for that year, both on a comparable price basis.

  Mr. King:
  I refer my hon. Friend to the answer given to him yesterday by my right hon. Friend the Chief Secretary to the Treasury.
  125

  Manod Slate Quarry
  Mr. Frank Allaun
  asked the Secretary of State for the Environment what is the purpose of the extensive work now being undertaken at the Manod slate quarry, Blaenau Ffestiniog; how much it will cost; whether it is intended to shelter persons as well as art treasures; and why lawn mowers and computers have been installed.

  Sir George Young:
  The Department is not engaged in any work of the nature described by the hon. Member.

  EC Exports of Foodstuffs to the Soviet Union and East European countries (a) ECU million (b)

  SITC Codes

  1973

  USSR

  Eastern Europe

  1974

  USSR

  Eastern Europe

  1975

  USSR

  Eastern Europe

  1976

  USSR

  Eastern Europe

  1977

  USSR

  Eastern Europe

  00

  1·6

  14·9

  2·6

  15·3

  2·8

  9·0

  2·1

  16·1

  4·8

  13·4

  01

  4·9

  16·9

  77·1

  13·6

  57·5

  11·1

  35·6

  20·5

  65·2

  37·2

  02

  75·7

  13·4

  1·1

  8·8

  2·0

  5·5

  10·6

  5·4

  40·6

  25·1

  03

  0

  14·7

  0

  18·4

  0

  14·2

  0·1

  18·1

  0·2

  22·8

  04

  91·3

  87·6

  57·0

  74·9

  59·6

  98·9

  66·5

  172·9

  18·0

  31·1

  05

  2·5

  46·6

  5·9

  53·7

  5·6

  60·9

  9·6

  73·1

  10·0

  70·1

  06

  0

  44·8

  0·3

  20·7

  0·6

  16·2

  73·2

  15·2

  65·8

  34·7

  07

  5·3

  14·4

  16·8

  14·3

  17·6

  14·2

  21·6

  15·2

  20·8

  15·5

  08

  0·6

  162·7

  1·3

  162·9

  0·2

  46·9

  0·2

  52·2

  2·3

  89·7

  09

  0·2

  10·9

  0·6

  15·7

  0·6

  12·1

  0·7

  15·9

  3·9

  24·1

  Wine (Hectolitres)

  2,306

  N.a.

  1,845

  164,892

  2,764

  110,605

  1,421

  148,787

  1,391

  100,596

  SITC Codes

  1978

  USSR

  Eastern Europe

  1979

  USSR

  Eastern Europe

  1980(c)

  USSR

  Eastern Europe

  1981 (January-June)

  USSR

  Eastern Europe

  00

  3·7

  13·6

  10·9

  9·5

  2·7

  25·2

  01

  5·5

  18·0

  113·1

  76·6

  169·9

  174·3

  02

  18·0

  15·7

  126·9

  47·5

  181·8

  34·6

  03

  7·1

  36·8

  19·7

  33·6

  10·8

  31·6

  04

  81·6

  208·7

  40·1

  284·6

  187·7

  499·6

  05

  6·3

  52·6

  7·3

  76·6

  5·8

  31·8

  Not Available

  06

  12·6

  7·0

  48·9

  8·7

  286·1

  22·8

  07

  3·1

  16·5

  0·7

  19·7

  1·1

  14·3

  08

  0·2

  66·0

  5·1

  61·3

  81·3

  62·3

  09

  9·4

  22·8

  4·4

  25·5

  6·6

  23·4

  Wine (Hectolitres)

  100,373

  133,659

  276,132

  122,845

  1,490,263

  76,067

  911,094

  126,572

  United Nations Standard International Tariff Classification Division: 00—Live Animals 01—Meat and Meat Preparations 02—Dairy Products and Birds Eggs 03—Fish, etc.04—Cereals and cereal preparations 05—Vegetables and Fruit 06—Sugar, sugar preparations and honey 07—Coffee, tea, cocoa, spices etc.08—Animal feedingstuffs 09—Miscellaneous edible products and preparations(a) German Democratic Republic; Poland; Czechoslovakia; Hungary; Romania; Bulgaria; Albania (only from 1973–1977); Yugoslavia.(b) Converted from US dollars at the annual average $/ECU rate.(c) Excluding exports from Belgium/Luxembourg and Italy (unavailable).Sources: OECD Trade by Commodities Series B, 1973–1980.Exchange rates from Eurostat–Selling Prices of Crop Products 1–1981.EC Statistics Doc. 10993/80 126

  AGRICULTURE, FISHERIES AND FOOD
  European Community Exports
  Mr. Teddy Taylor
  asked the Minister of Agriculture, Fisheries and Food what are the totals of each foodstuff and the total of wine exported by the EEC to the Soviet Union and the rest of East Europe, respectively, in the year to date; and what were the comparable figures, respectively, in the same period of each of the past eight years.

  Mr. Buchanan-Smith:
  I regret that the figures are not available in the form requested. The following table summarises comparable information available on food and wine exports to Russia and Eastern Europe since 1973:
  127

  Intervention Board
  Mr. Teddy Taylor
  asked the Minister of Agriculture, Fisheries and Food what are the totals of foodstuffs and fish which have been destroyed or otherwise disposed of in consequence of the activities of the Intervention Board in the year to date.

  Mr. Buchanan-Smith:
  In the 12-month period 1 October 1980 to 30 September 1981 the following quantities bought into intervention or withdrawn from the market in the United Kingdom were sold, supplied as food aid, or given away as food:
  Beef—20,554 tonnes Butter—28,114 tonnes Skimmed Milk Powder—502 tonnes Breadmaking wheat—32,199 tonnes Fruit and vegetables—252 tonnes
  Other disposals in the period were as follows:
  Fruit and vegetables—5,788 tonnes supplied free for

  Quantities held in European Community Intervention Stores European Community Totals

  (thousands of tonnes)

  Community

  1973

  1974

  1975

  1976

  1977

  1978

  1979

  1980

  1981

  Beef

  *22

  *488

  262

  307

  307

  217

  219

  235

  170

  Butter

  156

  98

  64

  194

  172

  213

  319

  179

  12

  Skimmed Milk Powder

  174

  318

  1,037

  1,294

  1,078

  882

  353

  231

  344

  Wheat

  N/A

  N/A

  1,951

  1,496

  604

  743

  1,332

  3,494

  2,577

  Barley

  N/A

  N/A

  529

  150

  54

  155

  54

  864

  830

  Rye

  N/A

  N/A

  285

  160

  324

  487

  508

  469

  324

  Durum

  N/A

  N/A

  1

  371

  213

  63

  152

  147

  225

  Oilseed Rape

  —

  —

  —

  8

  1

  —

  1

  92

  13

  Olive Oil

  N/A

  N/A

  14

  46

  49

  99

  63

  67

  132

  Note* End of year figures.N/A Not available.The European Community mainly disposes of surplus sugar by subsidised exports to the world market. Intervention is rare and no reliable figures are available.

  Council of Agriculture Ministers (Meeting)
  Mr. Body
  asked the Minister of Agriculture, Fisheries and Food what was the outcome of the Council of Agriculture Ministers' meeting on 19 October; and if he will make a statement.
  128 animal feed and 19,532 tonnes returned to the soil or otherwise destroyed;Fish—41,053 tonnes sold for use in fishmeal, 693 tonnes sold for pet food and 1,298 tonnes returned to the sea.

  Intervention Stores
  Mr. Teddy Taylor
  asked the Minister of Agriculture, Fisheries and Food what are the current levels of surplus food and wine in intervention stores under EEC arrangements; and what were the comparable totals, respectively, in each of the previous eight years.

  Mr. Buchanan-Smith:
  The following table lists stocks of foodstuffs held in public intervention stores within the European Community at comparable dates from 1973 to 1981:

  Mr. Buchanan-Smith:
  I refer my hon. Friend to the statement that I made in the House earlier today.

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Lincoln.
The Lord Bagot—Sat first in Parliament after the death of his half-brother.

Northern Ireland: Use of Plastic Bullets
Lord Brockway: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will reconsider the use of plastic bullets by the security forces in Northern Ireland and in Great Britain.
The Minister of State, Northern Ireland Office (The Earl of Gowrie): My Lords, in answer to a Question yesterday, my noble friend Lord Belstead set out the guidelines which will govern any future use of baton rounds in Great Britain. In Northern Ireland, baton rounds have been available to the security forces since 1969. In circumstances where there is risk of loss of life or of widespread destruction of property, the chief constable and the general officer commanding consider that baton rounds are the most effective means of controlling riots consistent with the principle of minimum force. The Government agree with that view. I hope the decline in rioting following the end of the hunger strike will continue, thereby reducing the need for such forms of control.
Lord Brockway: My Lords, may I ask the Minister whether it is the case that the plastic bullet was introduced because the rubber bullet was thought to be too lethal? But is it not the case that the plastic bullet, has in fact, proved to be more lethal than the rubber bullet? Has he seen the published figures of one person killed from 18,000 rubber bullets fired, and one person killed from 5,000 plastic bullets fired? Does that not show that the plastic bullet is three times more deadly than the previous rubber bullet?
The Earl of Gowrie: My Lords, the plastic baton round was introduced because it was considered to be more effective in crowd control than the rubber bullet. I took the precaution before this Question of going to the forensic laboratory in Belfast to examine plastic bullets. It is a very unpleasant weapon, indeed. It has been effective in reducing violence, and I very much hope that the need for its use will continue to be curtailed.
Lord Underhill: My Lords, may I ask the Minister to confirm that the guidelines to which he referred were drawn up by a Home Office working party, on which I understand there were no members of local authority police committees, and has that led to protests from local authorities?
The Earl of Gowrie: My Lords, that is not the case in Northern Ireland. I will look into the position in respect of Great Britain and let the noble Lord know.
Lord Paget of Northampton: My Lords, is not the trouble with plastic bullets, first, that they are very inaccurate and, secondly, that they lack stopping power? In the old days, a riot squad used to have a marksman. The officer's job was to spot the ringleader and point him out, and then the marksman shot him when there was nobody behind him who was likely to get hurt. That was highly effective and it meant that the ringleader soon learned what was happening and started trying to lead from behind, which was very ineffective. So often, by using what is apparently a rougher method, there is much less injury.
The Earl of Gowrie: My Lords, other times other customs. I have to say that I believe that very few security forces in the world could have dealt with disorder on the scale that we have seen in Northern Ireland in the last 10 years with so little loss of life.
Noble Lords: Hear, hear!
Lord Paget of Northampton: But, my Lords, after 10 years it is still going on.
Lord Gisborough: My Lords, can my noble friend say why there is not much greater use being made of the water cannon?
The Earl of Gowrie: My Lords, water cannon are available to the Royal Ulster Constabulary and they are used on occasion. But, as I said in my original Answer, this is the most effective form of crowd control.
Lord Brockway: My Lords, does the Minister appreciate that my Question refers not only to Northern Ireland, but to the use of plastic bullets in Great Britain? Incidentally, may I congratulate him on what he has been doing in Northern Ireland. But the main question is: Does not the use of this weapon and other lethal weapons by the police—in the words of the Home Office working party—indicate
"a significant departure from the traditional police image"
destroying its civilian unarmed state?
The Earl of Gowrie: My Lords, I am most grateful to the noble Lord, Lord Brockway, for his kind remarks. I am, of course, aware that he addressed the Question to issues concerning Great Britain as well as Northern Ireland. But, as I pointed out in my original Answer, my noble friend Lord Belstead has just dealt with this in a Question. The guidance given to the security forces in Northern Ireland is basically the same as that given to police in Great Britain. Everyone regrets that the police should have to use any weapons on any occasion. My own judgment, for what it is worth, is that the presence and the knowledge about this weapon has reduced the need for the police to use other kinds of arms which could be more lethal.

Homes for the Mentally Handicapped: Inspection
Lord Renton: 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 steps are being or will be taken to ensure that residential establishments for mentally handicapped people, whether run by public authorities or charitable or private bodies, are regularly inspected in order to ensure that high standards are maintained.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Elton): My Lords, the maintenance and monitoring of standards in mental handicap hospitals and local authority residential homes is the responsibility of the health or local authority concerned. It is for the authorities themselves to decide how this should be done, including the frequency of any visits to be made for this purpose.
Both private and voluntary homes for mentally handicapped people are subject to registration and inspection by local authorities under the provisions of the Residential Homes Act 1980, and officers of the department have powers to inspect local authority and other residential homes for the mentally disordered. The department has recently reviewed the current system for registration and inspection of private and voluntary residential homes, and will shortly be issuing a consultative document containing suggestions for improvements.
Lord Renton: My Lords, I thank my noble friend for that very full and satisfactory reply. In the development of this matter, would he bear in mind that it is now the policy of the Government to get thousands of people, including 3,000 mentally handicapped children, out of long-stay hospitals and living in the community in smaller homes and hospitals, and that it will be essential when they do so to achieve the highest standards?
Lord Elton: My Lords, I am grateful to my noble friend for his supplementary question. It is indeed the Government's policy to introduce as high a level of care in the community as is possible. My noble friend will know that the department's Social Work Service already performs an extremely useful watchdog function and is independent of local authorities, and that the principal powers of entry, examination and inspection available to it are set out in Annex 3 to circular DSWS(79)1, a copy of which is in your Lordships' Library. I will happily send a duplicate to my noble friend. When he has studied it, I hope he will agree that the provision already made is sufficient for the system which we have at present.

Care Proceedings: Legal Aid for Parents
2.44 p.m.
Lord Jacques: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will bring into force the whole of Sections 64 and 65 of the Children Act 1975 so as to put an end to the injustice to parents of meagre means not being properly represented in court in care proceedings.
Lord Elton: My Lords, the Government recognise the desirability of enabling parents to be represented in care proceedings and intend to implement Section 64 of the Children Act in full as soon as sufficient resources become available. Section 65 is already in force, but its effect is limited until Section 64 is fully implemented.
Lord Jacques: My Lords, I thank the Minister for his reply. Will he bear in mind that, in the opinion of many magistrates who hear these cases, there are occasions when there are grave injustices? Is the Minister aware that the cost of eliminating this injustice is so small and that the cost of keeping children in care is so great that there might actually be a saving in total expenditure?
Lord Elton: No, my Lords, I am not aware of that hypothetical situation. I do not think that we should be justified in authorising certain expenditure by the Legal Aid Fund on the basis of a saving which it has not yet been found possible to quantify with any certainty at all and which would in any case accrue only gradually over a number of years.
Lord Jacques: My Lords, is the Minister aware that it is really impossible to have certainty when forecasting future income and expenditure?
Lord Elton: Yes, my Lords.
Lord Wells-Pestell: My Lords, in view of the fact that it does cause very grave dissatisfaction that a certain number of people are in some way or other debarred, is it not a fact that to put this matter right would not cost at the very most more than about £1 million a year?
Lord Elton: No, my Lords, I would not give that figure with confidence. However, I should like to say to the noble Lord, whose concern I largely share, that where solicitors are aware of a conflict of interest between parents and child they are advised not to take instructions from the parents. Parents can get virtually every assistance, short of representation in court, from their own solicitor under the legal aid and advice scheme, and some of them may also have recourse to law centres. For the child, the solicitor is advised to obtain an independent assessment. Increasingly in practice this is made by an independent social worker and is used by the solicitor who will make the child's case in court to determine what will be in the child's best interest.
Lord Hooson: My Lords, leaving aside the question of cost, is it not wrong in principle that the decision whether or not the child is put in care is often determined by a court without the parents having legal representation? If they happen to be inarticulate parents, it

693
does not matter what advice they have obtained beforehand. They cannot put over the case. Is this not a glaring example of an injustice which should be put right?
Lord Elton: My Lords, the case to which I have been referring is one where there is a discrepancy between the interests of the parents and the interests of the child. The provision I have described is relative to that case. I do not think that the noble Lord has made a case beyond that.
Lord Elwyn-Jones: My Lords, is the child represented in the case to which the noble Lord has referred or is it merely a question of a report—I am not dismissing it as being valueless—from somebody in the social services department?
Lord Elton: My Lords, what happens is that, if there is an apparent conflict of interest between parent and child, it is clearly not right that the solicitor should take instructions from the parent on behalf of the child. The child is not capable of giving instructions. The solicitor therefore has to have an independent assessment of the case—not very often from the local authority social workers because they are parti pris, if that is the term. He therefore goes to an independent social worker for an assessment. That assessment will show to him what he believes to be in the best interests of the child and he will make the child's case accordingly.
Lord Elwyn-Jones: My Lords, would it not be much simpler and better for the child to be represented by a solicitor? This second-hand procedure, this hearsay procedure, does not seem to be very convincing.
Lord Elton: My Lords, it is not a hearsay procedure. The child does have the benefit of representation by the solicitor who makes his case in the courts but I share, as do we all, the noble and learned Lord's anxiety that we should proceed to full implementation. But I cannot give a date for that while the resources are not available.

Index-Linked Pensions: Increased Cost
2.49 p.m.
Lord Orr-Ewing: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is their estimate of the total increased cost this year of fully indexing the pensions of all those now retired from the public sector who have been granted statutory or discretionary immunity from price rises.
The Chancellor of the Duchy of Lancaster (Baroness Young): My Lords, there are about 1·6 million public service pensioners whose pensions are index-linked by statute. The first year cost of the increases due to these pensions on 23rd November will be about £232 million. I am circulating in the Official Report a table showing the main groups of public service pensioners concerned, together with the cost in each case.
694
There are in addition about 700,000 former employees of other public sector bodies whose pensions are index-linked either under the rules of the relevant pension schemes or on a discretionary basis. I regret that information is not available centrally about the cost of increasing these pensions this year, which is met in the main from the pension funds concerned and not directly from central Government expenditure.
Following is the table referred to:

Public Service

Number of pensions '000

First year cost of 1981 increase £ million

Armed Forces

281

40

Civil Service

384

52

Teachers

183

44

National Health Service

205

30

Police and Fire

101

19

Local Government

356

37

Overseas

57

10

Total

1,567

232

Lord Orr-Ewing: My Lords, while thanking my noble friend for that reply, may I ask whether she is aware that the commitment to pay fully indexed pensions to 1·6 million public service pensioners, and in addition some ·7 million, making a total of 2·3 million, is a very considerable burden which in the long run must fall on the taxpayers and industry of this country? Will she, therefore, in the next round of pay adjustments for the Civil Service consider negotiating out this commitment? Otherwise, you will continue to have a burden year on year as inflation, albeit greatly reduced, will continue to impose this responsibility on Governments of all persuasions in the future.
Baroness Young: My Lords, the Government are aware of the undertakings that were given to the public service pensioners at the time of the last election. My noble friend will be aware that we set up the Scott inquiry into this matter, and we hope that the Government's conclusions on it will not now be too long delayed. We have also instituted another inquiry to look at Civil Service pay, and I have no doubt the points my noble friend has raised will be included in the discussions on that.
Lord Shinwell: My Lords, may I ask the noble Baroness the Leader of the House who are these highly favoured people who are immune from price rises? Are there any Members of your Lordships' House in that category, and, if so, who are they?
Baroness Young: My Lords, the short answer to the noble Lord is that about a quarter of the working population is covered by index-linked pension schemes. Although I would not like to say that this applies in the case of the noble Lord himself, I believe Members of another place are also covered by such schemes.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that in the private sector very few pension schemes indeed are able to afford index-linking? Will she,

695
therefore, in considering demands for pay increases in the public sector, take full account, for the purpose of comparability, of the fact that in the public sector the persons concerned enjoy this very substantial benefit not available, on the whole, to their opposite numbers in the private sector?
Baroness Young: Yes, my Lords. We are, of course, aware that public sector pensioners are generally better protected than those in the private sector. The Government have in mind the points that my noble friend has made and will certainly bear them in mind in the current review of the arrangements.
Lord Glenamara: My Lords, can the noble Baroness form any estimate of the cost of indexing in the private sector, where a great deal of it takes place, not by indexing written into the pension scheme but by a decision taken each year to increase the pensions by an amount equal to the increase in public sector pensions?
Baroness Young: My Lords, I have not got the information available on private sector schemes. I recognise that there are private sector schemes which give a high degree of protection to their pensioners, but one must recognise that not all of them do.
Lord Rochester: My Lords, in order to allay public anxiety on this matter, will the Government consider whether there is any practical way of making more widely available information such as that in the Scott Report on the relative value of index-linked pensions to their recipients?
Baroness Young: My Lords, I will certainly take note of that suggestion.
Lord Plant: My Lords, will the noble Minister agree that the figures she has given are the gross cost and that after deduction of tax the net cost would be very much less? Further, will the noble Baroness agree that the average index-linked pension of public servants is less than £30 per week?
Baroness Young: My Lords, the first point the noble Lord made is, of course, quite correct. Pensions will of course be subject to tax. On the noble Lord's second point, it is true that the average weekly pension, after the November increase, will be £36 a week, and that the average extra pension increase will be just about £3 a week.
Lord Orr-Ewing: My Lords, is my noble friend aware that the Scott Report recommended that this burden be added to all pensions, and that that means for all those working in manufacturing industry? Will she bear in mind that manufacturing industry is already carrying many burdens, and it will not be competitive in the export field if this added burden, which is already on the public sector, is added to its responsibilities?
Baroness Young: Yes, my Lords, I certainly take note of that point. As I indicated earlier, the Government have not yet reached their conclusions on the Scott Report.
Lord Davies of Leek: My Lords, whatever questions may come from either side of the House, will the noble Baroness bring a little compassion to this problem, because many of these people have fought for this country and in their old age deserve to be protected from inflation? Without them Britain might not have been what it was after the war.
Baroness Young: My Lords, I had not recognised that in any of the remarks I have made I was anything other than compassionate about both groups, those who are indexed and those who are not. What we are trying to elucidate in this question is the facts of the case.
Lord Pargiter: My Lords, having regard to the fact that the indexation is for the purpose of providing against hardship among pensioners, will the noble Baroness say whether or not there ought to be a cutoff point where the hardship no longer applies?
Baroness Young: My Lords, that is another suggestion of which I will take note.
Viscount St. Davids: My Lords, will the noble Baroness not agree that the most compassionate thing she can do in this very difficult set of circumstances is to put an end to inflation?
Baroness Young: My Lords, that is a major objective of this Government.
Lord Bruce of Donington: My Lords, is the noble Baroness aware that the amount involved per annum which has been a charge on public funds is a very minute fragment indeed of the vast expense that has been incurred as a result of the pursuit by the Government of their monetarist policies and the creation of mass unemployment?
Baroness Young: My Lords, I do not think I will follow the noble Lord down that line of argument. I think it important to recognise that the taxpayer cannot afford to pay an unreasonable share of the cost of public service pensions, and that is why the Government set up the Scott inquiry.

Dinner
Lord Denham: My Lords, it may be for the convenience of your Lordships if I announce that dinner will be available at the usual time this evening.

British Transport Docks Bill
2.57 p.m.
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Aberdare).
On Question, Bill read 3a.
Lord Aberdare Lord Aberdare moved Amendments Nos. 1–3:
Clause 14, page 10, line 1, leave out from ("by") to ("or" in line 2 and insert ("British Telecommunications");
Clause 17, page 10, line 38, leave out ("twenty pounds") and insert ("£20");
Clause 22, page 12, line 17, leave out from ("substituted") to the end of line 18 and insert (""1985"").
The noble Lord said: My Lords, with your Lordships' permissions I will move Amendments Nos. 1 to 3 en bloc. Unless any noble Lord would like an explanation, I will simply add that they are all drafting amendments. I beg to move.
Moved accordingly, and, on Question, amendments agreed to.
Lord Aberdare: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Aberdare.)
On Question, Bill passed, and returned to the Commons with the amendments.

London Transport (No. 2) Bill
Lord Aberdare: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Aberdare.)
On Question, Bill read 3a.
Lord Aberdare Lord Aberdare moved Amendments Nos. 1 to 20:
Clause 8, page 8, line 13, leave out from ("by") to end o line 14 and insert ("British Telecommunications").
Clause 15, page 12, line 16, after ("if") insert ("for the reference to the Post Office there were substituted a reference to British Telecommunications and as if").
Clause 17, page 12, line 34, leave out ("the Post Office") and insert ("British Telecommunications (in this section referred to as "the corporation")")
Clause 17, page 12, line 36, leave out ("Post Office") and insert ("corporation")
Clause 17, page 12, line 40, leave out ("Post Office") and insert ("corporation")
Clause 17, page 13, line 3, leave out ("Post Office") and insert ("corporation")
Clause 17, page 12, line 6, leave out from ("the") to ("for") in line 7 and insert ("corporation")
Clause 17, page 12, line 8, leave out ("Post Office") and insert ("corporation")
Clause 17, page 12, line 11, leave out ("Post Office") and insert ("corporation")
Clause 17, page 12, line 19, leave out ("Post Office") and insert ("corporation")
Clause 17, page 12, line 21, leave out ("Post Office") and insert ("corporation")
Clause 17, page 12, line 27, leave out ("Post Office") and insert ("corporation")
Clause 17, page 12, line 32, leave out ("Post Office") and insert ("corporation").
Clause 18, page 14, line 23, leave out ("company") and insert ("companies")
Clause 17, page 12, line 29, leave out ("then")
Clause 17, page 16, line 4, leave out ("arising") and insert ("arise")
Clause 17, page 12, line 8, leave out("of") and insert ("for"
Clause 19, page 19, leave out lines 11 and 12 and insert) ("Executive's drawing numbered D 49970")
Clause 19, page 20, line 31, after ("women's") insert ("public")
Clause 20, page 21, line 43, leave out ("said works") and insert ("works to which this section applies").
Lord Aberdare: My Lords, the same applies to these amendments. There are 20 of them, but the
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first 13 are simply to substitute the title of British Telecommunications for what was previously the Post Office. The other amendments, Nos. 14 to 20, are once again all simply drafting amendments or corrections to make the text rather clearer. Therefore, I think it might be for the convenience of the House if I moved Amendments Nos. 1 to 20 en bloc. My Lords, I beg to move.
Moved, That Amendments Nos. 1 to 20 be agreed to.—(Lord Aberdare.)
Lord Underhill: My Lords, although these are apparently only drafting amendments, can the noble Lord say whether they have been made available for noble Lords?
Lord Aberdare: Yes, my Lords; they are available in the Printed Paper Office. As is normal with a Private Bill, it is not thought to be worthwhile to print them, but they are always available; and on the Order Paper, as noble Lords see, it does say that amendments will be proposed.
On Question, amendments agreed to.
Lord Aberdare: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Aberdare.)
On Question, Bill passed, and returned to the Commons with the amendments.

British Nationality Bill
Read 3a, with the amendments.
[Amendment No. 1 not moved.]
Clause 6 [Right to registration by virtue of residence in U.K. or relevant employment]:
3 p.m.
Lord Elwyn-Jones Lord Elwyn-Jones moved Amendment No. 2:
Page 6, line 23, leave out ("subsection (6)") and insert ("subsections (6) and (6A)").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 2 and to speak to Amendment No. 3. These amendments appear on the Order Paper in the name of my noble friend Lord Pitt of Hampstead. The significant amendment—Amendment No. 3—is at once, I submit, more liberal and at the same time more limited than similar amendments to this clause which have been suggested so far. I see that my noble friend has now arrived. Perhaps he will permit me to conclude my few words of commendation of his amendment because I shall not take up too much of the time of the House. It is a helpful amendment to a small group of young people who need every assistance that we can give them. I beg to move.
Lord Pitt of Hampstead: My Lords, I must apologise for not being in my place when the amendment was called. It is obvious that the amendment of the noble Lord, Lord Drumalbyn, did not take the House very

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long to deal with, because I was in the Salisbury Room when I saw the notice on the television screen and, between then and coming here, the noble Lord's amendment had gone and mine was being dealt with.
I am grateful to my noble and learned friend for moving the amendment and I am glad that the Government intend to accept it. Indeed, the Minister has indicated to me that the Government will accept it, and I am very grateful to them for that. As your Lordships will remember, I have argued throughout this Bill that it is wrong to take away an entitlement that already exists. That was the point about not accepting the five years. On the other hand, since the Government were determined that a cut-off point was necessary then a cut-off point should be chosen which did not adversely affect anyone who had the entitlement at the time. The only people who would have been adversely affected by the cut-off point which was chosen by the Government were the youngsters who, because they were not of full age when the date arrived, were not able to claim their entitlement as of right.
The Government accepted an amendment from me earlier which reduced the number who would suffer in that way, but there was still a three-year group—children born after December 1968, or after January 1969 or after January 1970, depending on when the Government intend to have the commencement of the Bill; children who, when the Bill came into effect, would be 15, 16 and 17—who would have been adversely affected had this amendment not been accepted.
I am grateful to the Government for being willing to accept this amendment. Although it may be only a small number who would be affected, they would be the type of group who would feel the greatest amount of injustice. We are talking about kids who have grown up in this country and who know no other.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, I am pleased to be able to support this amendment put down by the noble Lord, Lord Pitt of Hampstead. I regret that it was not possible for me to communicate with the noble Lord until this morning. I think that if I had been a little quicker off the mark then the noble Lord would perhaps have been able to be even earlier into the Chamber. However, we are indebted to the noble and learned Lord, Lord Elwyn-Jones, for moving the amendment.
The amendment seeks to ensure that Commonwealth citizens' children settled in this country before 1st January 1973 will be able to benefit from the entitlement to British citizenship conferred by Clause 6(1)(a) of the Bill. I should like to add to what the noble Lord, Lord Pitt, has said that we are concerned here with those who were born abroad, who were brought here as very young children and who were probably only about two or three years old when 1st January 1973 arrived. We have always taken the view in the Government that no great hardship would arise if those children were not brought into the entitlement to citizenship in Clause 6(1)(a) because they could, if their parents so wished, have been registered during their minority under the Home Secretary's discretionary power to register children under Clause 3(1)
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of the Bill. Incidentally, of course, at the moment children are not within the entitlement under the present law.
However, it has been put to the House by the noble Lord, Lord Pitt, on more than one occasion during the various stages of the Bill that there may be children whose parents have not been registered because the parents did not realise that they could do so, or for other reasons. The noble Lord has suggested, again on more than one occasion, that that would cause resentment and we have taken seriously the view of the noble Lord in this matter.
The earlier amendments proposed by the noble Lord would, as the noble and learned Lord, Lord Elwyn-Jones, said, have gone wider than this one. This amendment concentrates exclusively on children and young people and we are able to support it. I should just like to add that I think that it is possible that acceptance of the noble Lord's amendment may need one or more consequential amendments purely for drafting purposes and for no other reasons. If that is the case, it can be attended to in another place. However, here I am glad to support the noble Lord on this matter.
On Question, amendment agreed to.
Lord Pitt of Hampstead Lord Pitt of Hampstead moved Amendment No. 3:
Page 7, line 40, at end insert—
("(6A) In the case of any person who is a minor at commencement, the reference to five years after commencement in subsection (1) above shall be treated as a reference to five years after the date on which he attains the age of majority.").
The noble Lord said: My Lords, I beg to move Amendment No. 3, which has already been spoken to.
On Question, amendment agreed to.
Clause 10 [Right to registration by virtue of United Kingdom nationality for European Community purposes.]
Lord Bethell Lord Bethell moved Amendment No. 4:
Page 10, line 36, leave out from second ("of") to ("shall") in line 39 and insert ("any of the pre-Accession Treaties listed in Part I of Schedule 1 of the European Communities Act 1972").
The noble Lord said: My Lords, I beg to move Amendment No. 4. This amendment is a drafting amendment which does not, I believe, affect the principle which was established at the Committee stage of this Bill by a substantial vote of your Lordships' Committee to the effect that Gibraltarians should be included in the Bill and should have the rights, when this Bill becomes law, to apply for registration as British citizens and he granted British citizenship.
Subsequent to the acceptance of this amendment at the Committee stage, it became clear that there were certain drafting flaws in the amendment which your Lordships were good enough to approve, and it became necessary to clarify what exactly was meant by the term used in the amendment:
"United Kingdom national for European Community purposes".
I wish now to express my gratitude to my noble friends Lord Belstead and Lord Renton, who raised this matter and brought it to my attention. I should like to thank my noble friend Lord Belstead for his help in enabling me to reconsider the wording of this new

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clause and my noble friend Lord Renton for being kind enough to withdraw his amendment at the Report stage a few days ago. I have consulted with both my noble friends and I believe that the new clause, as proposed, will meet the objections put forward.
Your Lordships will, I am sure, be aware, since this matter was very carefully debated in July, that there is a declaration annexed to the Treaty of Accession of the United Kingdom to the European Community making it clear that Gibraltarians are United Kingdom nationals for European Community purposes. This declaration was part of the Treaty of Accession; it was annexed to that treaty, and it was part of the treaty, which was debated in your Lordships' House and in another place, and approved and ratified during 1972. It was, of course, on the basis of this principle that I invited your Lordships to approve the amendment in the first place in July of this year.
I know that my noble friend Lord Belstead still has his doubts about the principle which enabled myself, my noble friends and the noble Lord, Lord Hughes, to put forward the amendment in July; but in his contribution today I hope that my noble friend will agree that at least this amendment clarifies the principle. What one then makes of it is, of course, up to my noble friend and another place to decide. However, the principle should be clarified, and I believe that it is clarified by the amendment which I put forward today. I beg to move.
Lord Belstead: My Lords, the amendment of my noble friend Lord Bethell will materially improve Clause 10 in one important respect—the right of abode in Gibraltar will no longer be one criterion for access to British citizenship under that clause. It is clearly undesirable that merely because someone held the right of abode in a dependent territory—a matter that was determined exclusively by local immigration ordinances—he or she should in consequence have an unqualified entitlement to British citizenship. Such an arrangement would mean that access to British citizenship was effectively in the hands of the Gibraltar legislature; if that legislature decided to alter the ambit of the right of abode, then this would decide who had an entitlement to British citizenship under Clause 10. From my noble friend's remarks I do not think that this was his intention, and the House would not consider it appropriate.
Therefore, I would reply to my noble friend saying that I believe the amendment as it is now drafted is workable. However, I do not think that it is necessarily technically absolutely correct. But that is as may be, for the drafting would be a matter for another place which, of course, will also be considering the merits of my noble friend's new clause.
On Question, amendment agreed to.
Clause 14 [Meaning of British citizen "by descent"]:
The Lord Advocate (Lord Mackay of Clashfern)The Lord Advocate (Lord Mackay of Clashfern) moved Amendments Nos. 5 and 6:
Page 14, line 33, after ("Kingdom") insert ("(a)") line 35, at end insert—
("; or
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(b) in service under a Community institution, his recruitment for that service having taken place in a country which at the time of the recruitment was a member of the Communities.").
The noble and learned Lord said: My Lords, if may, I shall take Amendment No. 6 with Amendment No. 5. These amendments are essentially consequential on one that we brought forward on Report. The House will recall that on Report your Lordships agreed an amendment to Clause 2(2) which provided that after commencement a child born overseas would be a British citizen if, at the time of his or her birth, the child's parent was a British citizen serving outside the United Kingdom in service under a Community institution and had been recruited for that service in a country which was at the time of recruitment a member of the Communities. Such a child is to be a citizen otherwise than by descent and is to be able to transmit his or her citizenship automatically to any children he or she may have abroad. This amendment thus puts children born abroad after commencement to British citizens working in Community institutions in specified circumstances on the same footing as children born abroad after commencement to Crown servants under the Government of the United Kingdom, or those serving in service designated under Clause 2(3), and who had been recruited for such service in the United Kingdom. In moving that amendment I explained that the Government considered that our unique and special links with the Community justified this special provision for the children of British citizens working for Community institutions.
Thus, we have dealt with the position after commencement. It seems right that we should also deal with the position before commencement. Accordingly, we have brought forward this provision which ensures that persons born abroad before commencement who become British citizens on commencement will be citizens otherwise than by descent if at the time of their birth their father was serving under a Community institution and had been recruited for that service in a country which was at the time of recruitment a member of the Communities. Those concerned will, therefore, enjoy the same status as children born before commencement to fathers in Crown service under the Government of the United Kingdom and recruited for that service in the United Kingdom.
Your Lordships will appreciate that this provision applies only to those born abroad before commencement whose fathers meet the specified requirements, as at the time of their birth our citizenship was transmissible only in the male line. With that explanation, I hope that your Lordships will feel able to approve these amendments. I beg to move Amendments Nos. 5 and 6 en bloc.
Lord Elwyn-Jones: My Lords, at least it can be said that this amendment maintains the total complexity of the Bill. The explanation that the always lucid noble and learned Lord the Lord Advocate has given is yet another illustration of how almost impossible it is to follow a great deal of the Bill itself.
Baroness Elles: My Lords, before this short debate is terminated I should like to reassure the noble and learned Lord that this amendment is anything but unclear to those whom it affects. Judging by the

703
correspondence and pressure that we have had from those who are serving this country abroad in institutions of the European Community, I know that they will be extremely grateful to both the Government and this House for accepting these amendments.
On Question, amendments agreed to.
Clause 15 [Acquisition by birth or adoption]:
3.18 p.m.
Lord Geddes Lord Geddes moved Amendment No. 7:
Page 15, line 5, leave out ("citizen of the British Dependent Territories") and insert ("British Dependent Territories' citizen").
The noble Lord said: My Lords, to the best of my knowledge the phrase:
"citizen of the British Dependent Territories"
appears exactly 100 times in this Bill as amended on Report; that is, excluding any reference in the Arrangement of Clauses. Your Lordships will have noted—doubtless with relief—that I have not tabled the necessary 100 amendments this afternoon, not least because we have now (dare I say it?) gasped our way as far as the Third Reading of this highly complex and more than somewhat controversial Bill.
However, I am advised that it is the duty of both Government and Parliament to ensure that a Bill is complete, which in this context I understand could be interpreted as "correctly drafted". I, therefore, trust that if this amendment is approved, the consequential amendments, which I believe to be 99, can be formally tabled and approved, preferably in another place or, failing that, when amendments from another place are discussed later in this House. Therefore, this amendment is solo and is placed as the first substantive appearance of the phrase:
"citizen of the British Dependent Territories".
In fact, I think that that phrase appears once only earlier in the Bill, in Clause 4(1), which as it happens chronicles four of the five categories of an individual's British status. Perhaps, as it very neatly highlights the purpose of this amendment, your Lordships will permit me to read that subsection. It reads:
"This section applies to any person who is a citizen of the British Dependent Territories, a British Overseas citizen, a British subject under this Act or a British protected person".
The one remaining category is, of course, that of a British citizen. Thus, as presently drafted, four of the five categories start with the word "British"; namely, British citizen, British overseas citizen, British subject and British protected person. The odd one out at the moment is:
"citizen of the British Dependent Territories".
Many of your Lordships will have been in the Chamber during the debate on 13th October on my Amendment No. 117A, which endeavoured to give the status of British nationality to the three categories of citizenship created by this Bill. This amendment was defeated, albeit very narrowly, and my noble friend on the Front Bench will be glad to hear that it is not my intention to resurrect that subject today. Indeed, it would be improper for me so to do, not least because manifestly it would be an abuse of this House's time.
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Nevertheless, I hope that I shall not be out of order in referring to remarks made in that debate as appropriate to this amendment. My basic aim, as I said at that time, was,
"To underline the Britishness of each category of citizenship".
My intention was not to wreck the Bill, nor to make any material alteration to it. This amendment is drafted to achieve the same end in a different way—albeit this time the amendment refers only to a,
"citizen of the British Dependent Territories",
or perhaps I should say,
"British Dependent Territories' citizen",
since all the other categories already have "British" as the first word of their title. In this context, I am delighted, as I am sure are all your Lordships, to see my noble friend Lord Kadoorie in his place today. I am sure we are all keenly awaiting his maiden contribution to our debate later this afternoon, which I am confident will underline the very real importance which the British Dependent Territory that he knows so well attaches to its British connections.
Again to the best of my knowledge, but this time of the English language, it is optional whether a phrase includes the words "of the" or whether an apostrophe is placed in the relevant position before or after the letter "s" of the primary noun concerned, depending of course whether that noun is singular or plural. Thus, from the point of view of this Bill, my amendment, I contend most strongly, is neutral. The words "British Dependent Territories' citizen" means precisely the same in English grammar as "citizen of the British Dependent Territories". However, from the point of view of the individuals concerned, it is very positive and very important that the word "British" shall stand first in the title of their citizenship category. Indeed, my noble friend Lord Trefgarne said in reply to my Amendment No. 117A on 13th October,
"Neither can there be any doubt, in the Government's view, that the status of citizen of British Dependent Territories is a 'British' status".
I very much hope that this amendment will be approved. I beg to move.
Baroness Wootton of Abinger: My Lords, I should like warmly to support this amendment. Verbal niceties often have more importance than it appears at first sight. If all other categories of British citizenship have the word "British" at the front, I believe it would be wrong and anomalous if this particular category had the word "British" later in its title.
Lord Pitt of Hampstead: My Lords, I hope that the Government will support this amendment. The amendment does not in any way undermine the principles on which this Bill is based, and I have no doubt that it will have a very good effect.
Lord Tanlaw: My Lords, I hope that the Government will follow the advice of other noble Lords on this side of the House and will accept this amendment, which will go a very long way to satisfying some of the doubts and worries which British overseas citizens have.
Lord Elwyn-Jones: My Lords, I, too, should like warmly to support this amendment. It is a much

705
smaller proposal than the one moved earlier, but I believe it will prove to be very helpful for those concerned to be able to write the word "British" not only in a hotel register but, more importantly, when making visa or similar applications. I hope that the mood of accommodation which has been reflected so far from the Government Front Bench will be met again on this occasion.
Lord Donaldson of Kingsbridge: My Lords, may I also support this amendment from this Bench?
Lord Belstead: My Lords, in reply to this amendment, I should first like to repeat a view which was expressed by my noble friend Lord Trefgarne to which I believe my noble friend Lord Geddes alluded; that this Bill in no way alters the present constitutional relationship between the United Kingdom and its dependencies. The Government nonetheless accept the force of the argument made by my noble friend Lord Geddes that many people in the dependencies may well prefer that their citizenship title should begin with the word "British". In principle, therefore, we accept the amendment. I must just add one point about the nuts and bolts. When moving his amendment, my noble friend pointed out that the consequential amendments which he reckons would be needed amount to exactly one hundred. At this late stage of the Bill it is perfectly understandable that my noble friend has not attempted to draft those amendments, and it would be asking a lot of the other place to do so instead. The Government would therefore wish to suggest that my noble friend's amendment be replaced in the other place with a provision that would make the term" British Dependent Territories' citizen" interchangeable with "citizen of the British Dependent Territories." I hope that your Lordships will agree that that is a reasonable way in which to proceed, and, subject to that, the Government are pleased to accept this amendment.
Lord Elwyn-Jones: My Lords, I am not sure about the use of the word "interchangeable". What is the person concerned to do? Is he to make his choice? Would this not add to bewilderment? I am trying to be helpful, but I wonder whether the proposed solution will not cause a great deal of confusion. Apparently there are 100 references. We are very anxious that this change should be made, and I do not want to obstruct matters at all, but I am not at all happy about the dual meaning which the phrase will have throughout the Bill.
Lord Belstead: My Lords, I believe that if it is made perfectly clear in the Bill that "citizen of the British Dependent Territories "shall be" British Dependent Territories' citizen" as an interchanged definition, this would wholly meet the point which has been made by my noble friend Lord Geddes. The noble and learned Lord, Lord Elwyn-Jones, may ask, "Why are the Government responding in this way?" when we are accepting, as indeed we are, my noble friend's amendment. The answer is, although it would be impertinent of me to suggest that I have any understanding of the rules of procedure in another place, that I doubt whether an amendment of this kind would
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be accepted at Third Reading in another place—although I am delighted that the rules in your Lordships' House allow us to accept a valuable amendment of this kind. The inevitable consequence, if we do not go about things in the sort of way the Government are suggesting, is going to be a major job of work involving a great number of people, who would have to go through the whole Bill to transpose the term "citizen of the British Dependent Territories" to "British Dependent Territories'" citizen—which, I underline, I accept on behalf of the Government and wish to insert by a declaration instead of making 99 other amendments.
Lord Elwyn-Jones: My Lords, I do not wish to crab. We welcome this amendment and, if this is the only way in which it can be done, so be it—although it is unfortunate that legislation is going through in this untidy form. The pressure of time which the Government have brought upon themselves makes this, alas, inevitable.
The Earl of Lauderdale: I wonder whether my noble friend would say how long it would take physically to do the reprinting that is necessary. Would it take one day, two days, three days, or a week?
Lord Belstead: My Lords, as I am not a printer, I cannot answer that question, and as I am not an official member of my right honourable friends department, neither can I answer how long it would take to go through the Bill and physically do the homework of getting it ready for the printer.
Lord Garner: My Lords, may I remind the House that "British subjects" and "Commonwealth citizens" were interchangeable for a number of years without any obvious embarrassment.
Lord Belstead: I am most grateful to the noble Lord, Lord Garner.
The Lord Bishop of London: My Lords, if the course which is proposed by the noble Lord is necessary, what I believe would make a considerable difference would be if the title in line 2 on page 15 could be changed and brought into line with the other titles. That is, after "Part II" instead of "Citizenship of the British Dependent Territories", that line alone could be altered to "British Dependent Territories' citizenship". That would make eminently clear what is intended by the other amendment.
Lord Belstead: My Lords, if, with the leave of the House, I may speak once more, of course I will take on board on behalf of the Government what the right reverend Prelate has said on this particular point. But we have looked at it, again with some speed, because quite naturally the noble Lord, Lord Geddes, was not able to give either himself or the Government a great deal of time—that was no fault of my noble friend at all; it was a question of' the time factor. All I can say to the right reverend Prelate is that, if your Lordships accept this amendment as I very much hope you will do, we will look carefully so far as another place is concerned at the points that have been made.
Lord Jenkins of Putney: My Lords, being fairly fresh from another place, I am wondering whether the advice which has been given to the noble Lord on the difficulty of the proposed amendments is not a little bit heavy? I wonder whether the noble Lord might be able to go this far: can he give us an undertaking that, if he finds it possible, he will substitute these amendments, or will ask his friends in another place to substitute these amendments, for the one now proposed?
Lord Renton: My Lords, may I make a further suggestion in a constructive hope that, when this interchangeability is introduced into the Bill by amendment, it should be done so as soon as possible in the Bill so that those who read it will understand it for the rest of their reading of the Bill? If it gets tucked into a definition clause at the end, it will not have as good effect. I would have thought that perhaps the right place to put it is in Clause 4(1).
Lord Belstead: My Lords, if your Lordships will bear with me yet one further time, the reason why I replied in single negative to my noble friend Lord Lauderdale was that the one thing we are sure about, having looked at the amendment of my noble friend Lord Geddes, is that it really does entail quite a lot of work. There are the two limbs. There is both the printing and the sheer work of going through the Bill and getting it right before you can get it to the printer. If I am not sure of very much, at least the one thing I was sure about was that I could not accede to what my noble friend said to me, which was that it ought to be done and done pretty quickly.
This leads me to the noble Lord, Lord Jenkins. For the reason that I have given to my noble friend sitting behind me, I do not think I can give the undertaking which the noble Lord has asked for. We have looked as carefully as we can at Lord Geddes's amendment and we felt, at least at the start of this short debate on this amendment, that the only way to go about it was to put a declaration into the Bill without the Government flooding another place with 99 other amendments. Of course, we will take into account, in looking at it again, what the noble Lord, Lord Jenkins, has said, but that was the reason for it.
Finally, there is the important point which has been made by my noble friend Lord Renton. I should like to give my noble friend an assurance that we shall certainly look at that point very carefully indeed.
Lord Avebury: My Lords, may I ask the noble Lord a question? I understood that we were now in the twentieth century and using word processors for the drafting of successive prints of a Bill. If that is so, most word processing packages have a facility on them for finding particular words or sequences of words even if there are numbers of repetitions of them. If that were so, and this Bill had been produced on a word processor, then it would be a matter of a few seconds to find all the instances of "British Dependent Territories".
Lord Leatherland: My Lords, the noble Minister suggested that if Lord Geddes's amendments were adopted it would cause great difficulty between the
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authors of the Bill and the printers. I think he exaggerated those difficulties. It used to be my delightful job every night to put through with the printers half a dozen different editions of a morning newspaper. Printers are very able and competent people, and I am quite sure that it would not be beyond the wit and wisdom of the printers to comply with any of these alterations which were suggested.
Lord Geddes: My Lords, I should like to say first, and most genuinely, a very real "Thank you" to my noble friend on the Front Bench for agreeing, at least at this stage, to the principle behind this amendment. I cannot in all fairness—and I think my noble friend is already aware of this—give my unqualified thank you, because I, too—and it will not surprise your Lordships—cannot see any practical reason why these amendments should not be put through.
Indeed, if I may reply indirectly, if your Lordships will give me leave, to my noble friend Lord Lauderdale, I am pleased to say that I have every single necessary amendment marked in my copy of the Bill and I could give it to the Front Bench this evening. So, with great respect to my noble friend Lord Belstead, that is not a problem. I do not again, like my noble friend Lord Belstead, claim to be a printer so I can only stand by the words of the noble Lord opposite who clearly has much more experience that I.
More seriously, I feel most strongly on behalf—I must not say that; in the interests of British dependent territories' citizens that they must see this particular amendment as a full-blooded one so far as it goes and not in any way a diluted one. I ask one question only of my noble friend Lord Belstead at the moment, and it is a question asked out of ignorance: that is, if it is possible for a clause of interchangeability to be inserted in the Bill, is it possible for a clause of substitution to be inserted in the Bill? Would that particular possibility get round the problem that he referred to? To an extent this is an enlargement of the suggestion from the right reverend Prelate of changing the title of the Bill. I wonder whether my noble friend could answer that point?
Lord Belstead: My Lords, if the House will give me leave, that of course is a matter for another place. The second point which I ought to make is that I do not think in my reply to my noble friend I talked about a clause of interchangeability. What I was suggesting to your Lordships' House I envisage may be done in another place by a simple amendment.
May I finally say to my noble friend that of course the difficulty of discussing this question in this way is that we are at the very final stage of the Bill; and of course constitutionally the only House which could now make amendments, the next group of amendments at any rate to the Bill, would be another place. Having said that, may I thank my noble friend for the reception which he has given to my acceptance of his amendment. May I underline that on behalf of the Government I am accepting his amendment.
Lord Geddes: My Lords, I must confess that I am now somewhat confused. I thought I had understood my noble friend to say that he was accepting the principle behind the amendment rather than the amendment itself. Am I correct?
Lord Belstead: I am accepting the principle.
Lord Leatherland: My Lords, the Minister has indicated his assent to that question by nodding his head. Can we ask—I ask it as an old reporter—how that will be recorded in Hansard?
Lord Swinfen: My Lords, I just wonder whether there is a way round this. Can my noble friend Lord Geddes, who already has his copy of the Bill marked, not put a manuscript amendment on all the amendments on the Table at the moment? Is that a matter that would be procedurally correct?
Lord Skelmersdale: My Lords, I perhaps should inform my noble friend that manuscript amendments are not allowed on Third Reading of Bills.
Lord Geddes: My Lords, I shall be very brief. I should like again to thank my noble friend on the Front Bench, and indeed every noble Lord who has spoken. We have all tried hard to find a way round this. I would be unfair to the principle behind this amendment if I did not say that I must reserve the right, if the Bill is not satisfactorily amended in another place, to bring the consequential amendments again if the opportunity should arise. But I do most appreciate the acceptance by my noble friend on the Front Bench, and I beg leave to withdraw the amendment.
Several noble Lords: No!
Lord Geddes: I beg your Lordships' pardon. I do nothing of the sort.
On Question, amendment agreed to.
3.40 p.m.
Lord Belstead: My Lords, I beg to move that this Bill do now pass. Despite the fact that a piece of important work at the very end of the Third Reading stage was nearly not completed, I am glad of this opportunity to express my thanks to your Lordships for the work which has been done on the Bill. The House has taken great care over the details of the Bill and has shown yet again concern that the individual should be properly protected in his or her dealings with the state. I will not attempt to detail one by one the amendments we have made, but perhaps I could say a few words about the major changes which the House has made and about some of the changes which, although they are less important, will be looked at as of great significance by particular people.
First, of course, there are the changes in the arrangements for the transmission of citizenship. We have greatly simplified these arrangements and have ensured that the children of British citizens by descent will be entitled to British citizenship if they are in the second generation born abroad and their parents can meet an absolutely clear residence requirement which, I think it is fair to say, was recognised both as desirable and reasonable when we discussed that matter on Report. And beyond the second generation, there will still be opportunities for children to acquire British citizenship. There is the entitlement under Clause 3(1) if the family returns to live in this country for three
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years, and the Home Secretary also has discretion under Clause 3(1) where the child continues to live abroad. In those cases the nature of the links with this country obviously needs to be assessed before our citizenship, and the right of abode, can be granted. In that context, it will obviously be right for any business or employment connection with this country to be fully and sympathetically taken into account.
Secondly, there are the changes that have been made to clarify a person's right of access to the courts where an application for citizenship as an entitlement has been refused. The House has made it clear that people may go to the courts to challenge such a refusal and that nothing in the Bill prevents that. We have removed references in entitlements in the Bill which might have implied that no entitlement could have been held unless the Secretary of State was satisfied that specified requirements were met. And as I have said, the requirements for entitlement to citizenship by descent have been greatly clarified and simplified. We hope that these changes will he recognised as a positive contribution to a clearer Bill.
As to the other changes, which will be much welcomed by particular groups, there is the discretion to allow longer periods of absence during the first 10 years of the life of someone born in this country who applies for citizenship in his or her own right under Clause 1(4). I am glad that we were able to devise a way of meeting the concern which was expressed by many of your Lordships on that point. Then there is the recognition of the special position of those of our citizens employed by European Community institutions, reflected in the addition to Clause 2 agreed on Report, a measure which owes much to the advocacy of my noble friend Lady Elles. The Government are glad that it has been possible to recognise the service such people give to the United Kingdom and our partners in the European Community in that way.
I speak on behalf of the House as a whole—because the suggestions came from all parts of the House—when I say that your Lordships have made a number of useful changes in the language requirement for applicants for naturalisation under Clause 5. The requirement has now been removed altogether for husbands and wives, a measure which could greatly help women from the third world who may not have opportunities for learning English. There will now be a discretion to waive the language requirement on grounds of mental condition—a matter which was brought to our attention by my noble friend Lord Renton—a measure which will, we believe, help to relieve the particularly painful situaion of parents of mentally handicapped adults who are anxious that their child should be able to secure citizenship.
Finally, your Lordships will remember that the House admitted Scottish Gaelic to the language test, a measure which was, I know, greatly welcomed in Scotland. I will not conceal the fact that I am glad we were able to meet the noble Lord, Lord Pitt, on changes to the preserved entitlements in Clause 6, which will particularly benefit young people in the ethnic minority communities and will ensure that those of them who have been long resident here but born elsewhere will be able to secure British citizenship, when they are of age, as an entitlement. Where appropriate, these changes have been carried into

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the scheme for the British dependent territories citizenship—I hope my noble friend Lord Geddes notices the form of words I have just used—and that will be to the benefit of that scheme, too. I reiterate the Government's total commitment to the maintenance of our existing very strong links with the British dependencies. Nothing in the Bill in any way weakens our constitutional relationship with them or our right or commitment to represent their interests internationally.
But, despite those and many other improvements, there appears on the Order Paper in the name of the noble and learned Lord, Lord Elwyn-Jones, an amendment which refers in terms of the Bill to injustice, statelessness, uncertainties, insecurity and racial tension. I am surprised because, as I have good reason to express in gratitude, the noble and learned Lord has thrown all the weight of his knowledge and experience into improving this endeavour to modernise our nationality law, an endeavour which, after all, the Labour Party has previously recognised as being necessary and overdue. Of course, the noble and learned Lord has expressed criticisms of the Bill, but he was good enough to say at the start of the Report stage that the procedures of the Bill through your Lordships' House had established the value of the House as a revising Chamber.
I will not anticipate any speech in support of the amendment, but for the first time this is a Bill which will give us British citizenship, carrying with it, without question, the right of abode in this country. That, of itself, surely must be good for race relations, and it marks a long-overdue reform of our nationality law. My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Belstead.)
3.48 p.m.
Lord Elwyn-Jones Lord Elwyn-Jones rose to move, as an amendment to the Motion, That the Bill do now pass, at end to insert ("but this House deplores that, if enacted, the Bill will result in injustice, greatly increase the number of stateless men, women and children, create new uncertainties and feelings of insecurity and exacerbate racial tension").
The noble and learned Lord said: My Lords, we did not call for a Division on the Third Reading, the Bill having previously been passed by the elected Chamber. But, as has been done before, we have thought it right for the House to have an opportunity, if it thinks fit, to express its disapproval of the Bill at its valedictory stage on the Motion, That the Bill do now pass. My noble friends and I believe—and I hope we shall be supported from all parts of the House—that, much as it has been improved during its progress through Parliament, the Bill as it stands is still so objectionable as to merit special condemnation.
Of course we welcome the amendments to which the noble Lord, Lord Belstead, referred—and earlier I paid tribute to the part that he played in the success of those endeavours. But in my submission the substance of the objections to the Bill that were announced on its publication remains. Indeed, seldom has a piece of legislation been so generally, so widely, and, if I may
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say so, so responsibly condemned. It was condemned by the Roman Catholic Archbishops of England and Wales:
"out of concern for everyone involved, but particularly for the minority community in our midst, and for those who are vulnerable and insecure".
They added:
"Far from responding to this concern, the Bill creates new uncertainties, and if it becomes law, will sharply increase feelings of vulnerability and insecurity".
We have sought to diminish the extent of that potential damage; we have not sufficiently succeeded. That was said when the Bill first appeared. I submit that it can be said about the Bill now.
The General Synod of the Church of England also expressed its concern about the Bill; and it is a great pleasure to see included on the list of distinguished speakers who are to take part in the debate the name of the Head of the Church. The list also includes the name of the noble Lord, Lord Kadoorie, and we very greatly look forward to hearing him.
A great variety of organisations have also expressed alarm about the provisions of the Bill: the TUC; numerous ethnic minority organisations; the Action Group on Immigration and Nationality (for whose assistance we are particularly grateful); the Commission for Racial Equality (the body set up by the Government to promote racial harmony and equality)—a fierce critic of the Bill; Justice (the all-party British branch of the International Commission of Jurists); and many more bodies. So far as I am aware, there has been no welcome to the Bill from other Commonwealth countries, no welcome from the dependencies, no welcome from the European Communities' institutions. On the contrary, what comment has come from those sources has been critical. The press, too, has voiced a great many doubts. The Economist commented on the scheme in the White Paper of July 1980, which is now embodied in the Bill, that it demonstrated
"the increasingly racial loading of the concept of British citizenship".
That racial loading still exists in the Bill.
We have of course welcomed the non-discrimination provision—Clause 44(1)—of the Bill. We have also welcomed the leaving out of the phrase:
" if the Secretary of State is satisfied that…"
which we came to know as the "Gifford amendment", providing an opening of the doors to the courts in relation to issues arising from entitlement to registration.
But the Government rejected the modest proposal introduced by the noble Viscount, Lord Colville of Culross, in regard to the unfettered discretion given to the Secretary of State to reject applications for naturalisation. The noble Viscount's proposals were modest. All they did was to allow a circumscribed right of appeal against the Minister's decision, still giving the last word to the Secretary of State. Unfortunately by a small majority, the Government's objection was maintained.
In truth, the Bill remains seriously unbalanced. The Government have not yielded an inch on the principle of jus soli—the acquisition of British citizenship by the simple fact of being born in this country. In my submission—and we view this point very firmly on this side

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of the House, as has been done in other places—it should have been retained. It is simple, it is clear, it is familiar. It avoids statelessness on our soil, and it encourages the integration and the confidence in this country of all who live here.
Instead it has been replaced by a complicated provision which is a mixture of birth, descent and immigration status. For the first time in our history a number of children born in the United Kingdom will be stateless, running quite contrary to our national traditions. This fundamental change in our law has perhaps caused more alarm and anxiety among Britain's ethnic minorities than has any other provision in the Bill, because it introduces a new uncertainty into an important area of our law. Because the definition of "settled" in Clause 50 relies on factors that are too variable and unclear—what constitutes "ordinarily resident" and who is without doubt free of conditions regarding his stay under the 1971 Immigration Act—many children will grow up without it being clear whether or not they are citizens. The 10-year rule in Clause 1(4), to which the noble Lord might refer in reply, does not overcome that uncertainty. Whether it offers any remedy at all will not he clear until we see the new immigration rules that are yet to be laid. If they are so drafted that the children concerned are deportable, Clause 1(4) will have little value in practice.
I tried to get an assurance on that point on the first day of the Report stage of the Bill when, at the end of the debate, I asked the noble Lord, Lord Belstead, whether he would give an undertaking that under the immigration rules no stateless child would be deported from this country. The Minister gave no answer, and the Government have persisted in rejecting an amendment proposing that none of the children born here would actually be stateless. Perhaps we shall have an advance on that position before the end of the day's debate; I sincerely hope so.
As the noble Lord has said, it is the case that major changes in the Bill introduced in this House—and I gladly pay tribute to the skilful performance of the revisory powers of this House—greatly liberalised the provisions on citizenship by descent for British citizens. It is also true that the emphasis on citizenship by descent was greatly increased as the Bill progressed. We welcomed and supported those basic proposals because our guiding principle has been that people who at commencement are British nationals should all have a national status that gives some protection to themselves and their children and that preserves existing rights. But that guiding principle, which we have sought to maintain at every stage, to be followed for all existing British nationals, has been rejected by the Government whenever we have raised the question of what is to happen to those who receive British overseas citizenship. They would not be able to pass on citizenship to their children, even for one generation. Under the Bill there will be disturbing contrasts in entitlement, and perhaps I may be permitted to give one or two illustrations.
In future a child born in, say, the Argentine to a father and a mother both born in Argentina, and one of whose four grandparents was born in the United Kingdom, will be entitled to register as a British citizen if his father once spent three years here, say as a student.
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That is provided for in, I think, Clause 3, as amended. But a child born in Malawi to parents who are both British overseas citizens will be born stateless because, unhappily, Malawi limits citizenship to the child of a Malawian citizen parent of African race. That, I fear, is a reversal of racial prejudice which one is unhappy to see emerging in Malawi. The first child in that situation will be Argentinian as well as British; it will have two citizenships; the second child will have nothing.
One might take another example of this difference of treatment under Clause 39 of the Bill. A Canadian citizen whose mother was born in this country, even if he has no British passport but only a Canadian one, will have the right of abode here under Clause 39 of the Bill. He will have an absolute right of entry and employment in the United Kingdom. He will have the right of abode and the right to work in two countries. But a British man from Uganda who fled from the persecution of Amin, was not admitted here at the time and so went (as he thought, temporarily) to India, will have no right of abode or employment anywhere. So that this gross difference of treatment to different categories of people is still maintained in the Bill; and I regret to say it is the black people who will be most adversely affected.
My Lords, we began consideration of this Bill as a Bill which was unbalanced. It is still unbalanced, and its confusion and complexity do not obliterate that unhappy fact. Last week the Government saw fit to reject an amendment by the noble Lord, Lord Geddes, which would at least have declared and clarified who were British nationals. It would have affirmed an undeniable fact; namely, that all the categories of being British in the Bill—being a British citizen, being a citizen of the British dependent territories (now happily reversed in its order of description) and being a British overseas citizen—have at least one thing in common: they all denote British nationality in some degree or other. It would have denoted that they would all be British nationals. I submit, without covering the whole of the ground that we covered before, that to declare this not only would have clarified the law for our own purposes but would have been of great value to those affected in their dealings with the authorities and inhabitants of other countries. It would have been an affirmation of continuing British responsibility and of British connection.
The Government response was to say that to declare that people who undoubtedly are British nationals actually are so under this Bill would (I quote) "serve only to generate confusion". I quote from the noble Lord, Lord Trefgarne. Is it surprising that such a response has added to anxieties that already existed? The tragedy is that this Bill comes before Parliament at a time of increasing racial tension which we fear the Bill will exacerbate. It is a moment when this country's commitment to racial equality needs to be affirmed and confirmed. The Bill fails to rise to that challenge. It should have offered encouragement and a sense of security to British people. It has done neither. My Lords, I beg to move the amendment which stands in my name.
Moved, as an amendment to the Motion, That the Bill do now pass, at end to insert ("but this House deplores that, if enacted, the Bill will result in injustice,

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greatly increase the number of stateless men, women and children, create new uncertainties and feelings of insecurity and exacerbate racial tension".)—Lord Elwyn-Jones.)
4.5 p.m.
Lord Avebury: My Lords, the noble Lord the Minister devoted a great part of his remarks to an analysis of the concessions which were extracted so painfully from the Government during the many hours that we spent considering this Bill, and I share his pleasure in welcoming the improvements that your Lordships have seen fit to make. But I must agree with the noble and learned Lord, Lord Elwyn-Jones, that these changes do not alter the fundamental objections that we had to the Bill when it first appeared in your Lordships' House. The concessions, it seems to me, were mainly ones that were designed to placate white middle-class opinion; and, indeed, the main defeat of the Government was occasioned by a coalition of sentimental imperialists, Europeans and those who would like to see the whole scheme of citizenship in the Bill undermined.
So, with respect, this House has not been able to play the role, which is frequently assigned to it by its defenders, of the dispassionate and acute critic of legislation. We have succeeded in altering some words here and there, as the noble Lord, Lord Belstead, has explained, but we have left the edifice of the Bill untouched. As Pope said:
"So well-bred spaniels civilly delight In mumbling of the game they dare not bite".
My Lords, it is simple to outline in a few words the issues which divide us from the Government. We do not agree that citizenship of the United Kingdom and Colonies should be replaced, as it is, by a three-tier system, the bottom rung of which is occupied by people whose so-called citizenship does not confer on them the right to live in any part of the globe. We deplore, as the noble and learned Lord did, the abandonment of the jus soli, which for the last 700 years has meant that every child born on the territory of this country has been one of our citizens; and we very much regret the Government's failure to heed the criticisms of this aspect of the Bill which were advanced by the most reverend Primate on behalf of the Church of England as well as by, I think, every single other Christian denomination as well.
Third, we do not accept that in a matter as important as naturalisation the Executive should have a virtually unfettered discretion, subject to the right of access to the courts. We believe it would have been much better, as we said originally in 1977, if there had been a system of objective tests of citizenship in place of the subjective and complicated tests, including the test of character, which we have retained in this Bill. At the very least, we believe that there should have been the modest rights of appeal, both on entitlement and on discretionary decisions, which were proposed last week by the noble Viscount, Lord Colville.
My Lords, on these three issues the Government have been totally obdurate. But even the minor changes, which in many respects would have simplified the Bill and alleviated anomalies, have in many cases been summarily rejected by the Government. Ministers
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would not entertain the idea that citizens of the United Kingdom and Colonies already here should become British citizens on commencement, or even that those persons should have the right of abode. They turned down most of the suggestions for reducing statelessness—a point which has rightly been emphasised by the noble and learned Lord—and they declined to give any assurances on the question of fees, which is not a trivial matter for many of the people who face naturalisation in place of the present system of registration.
I do not think it can be contested by the Government that in passing this Bill they will be causing uncertainty and insecurity, as the Motion suggests. The evidence of the Citizens' Advice Bureaux has already been quoted several times in the course of our proceedings, but many of us know more directly, both from our own postbags and from conversations we have had with people in the communities, how widespread are the fears aroused among people belonging to ethnic minorities particularly. These fears are not concerned simply with the actual contents of this measure, and therefore cannot be removed by explanation, however desirable that may be in itself. They stem, I think, from the perception of the trends of immigration and nationality legislation over the years: the successive tightening of the screw by way of restrictions on the right of entry which were imposed in the 1962 Act, the 1965 White Paper, the 1968 Act and the 1971 Act, to which must be added, of course, the expanding interpretation by the courts of the term "illegal entry".
Now, on top of all that, we have this Bill, which removes citizenship from people who enjoy it now and makes it harder for Commonwealth citizens to acquire our citizenship in the future. So brown and black people ask themselves; where is this process ultimately going to lead? And although I should say that most of them recognise that Mr. Whitelaw would not travel very much further down the road, they can hear the demands for his removal from the extreme Right, and they can read about the policies of the Monday Club, which are not always easy to distinguish from those of the National Front; and then say, "Where will this process lead to in the end?"
The present Government have given a pledge that certain United Kingdom passport holders formerly resident in East Africa will continue to be admitted to this country under the special quota voucher scheme notwithstanding the fact that they become British overseas citizens on commencement. However, it has been made as difficult as possible for them by reducing the number of voucher allocations to only 500 a year and by requiring dependants who reach the age of 18 to apply separately; so that, without any increase in the numbers in the queue, it gets longer and longer. If a young person gets married, he or she is instantly struck off the list and, of course, there are those old people who die during the waiting period. There is attrition of the numbers of people wanting to come here and yet the queue gets longer.
Now, the people in this tiny group can see all too plainly that the Tory Government have done their best to stop them from entering Britain—short of repudiating the longstanding undertakings which have been repeated several times since they were given initially by the late lain Macleod. Therefore, people

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may be excused for wondering whether there is any guarantee that at the end of six, seven or eight years' wait they will still be allowed to come here whether there will be a further turn of the screw with one of Mrs. Thatcher's more lunatic Right-wingers taking the place of Mr. Whitelaw as Home Secretary and battening down the hatches against people who, under this legislation will no longer be citizens of this country. Thus the British Nationality Bill will be seen by those people as a preparatory step which would be necessary to the denial of entry in future so that we could not be accused of imposing restrictions on people who were our own citizens.
Similarly, with the abandonment of jus soli, the immediate consequences may be quite small in terms of the numbers of persons affected but the principle of jus soli having been violated there would be less of an obstacle in the way of any future Government which may decide to limit citizenship more overtly to those of European descent. We did not see any immediate need for legislation on citizenship although it would have been necessary in the long run to revise the schemes of the 1948 Act. So the noble Lord, Lord Belstead, is wrong: there is a necessity for nationality legislation but it was certainly not overdue.
We consider that Britain should have honoured, first, the promise made many years ago to our own citizens that we would admit them to our country; we should have undertaken consultations with our partners in the Commonwealth and the leaders of the dependent territories, particularly Hong Kong, which has been so clearly lacking; and there should have been a public debate in this country based on the comments made in answer to the previous Government's Green Paper, comments which were never published. In particular, we should have been ready to listen to the clearly expressed opinions of the ethnic minorities who are alarmed by the attitudes and assumptions which shape this Bill. Because none of these things has been done and because the forceful criticisms made in both Houses have been largely ignored, we say that the country is left with a bad and unnecessarily complicated system of nationality law.
My Lords, we associate ourselves with the protest of the noble and learned Lord and we bitterly regret that the reasoned arguments of the Churches and of the other religions, the criticisms of the ethnic minorities and of the Commission for Racial Equality and the united force of the Opposition parties in this House have not moved the Home Office from their basic plan. One of the great leaders of the party opposite, Lord Salisbury, 100 years ago said:
"By a free country, I do not mean a country where six men may make five men do exactly as they like".
We object to this Bill which embodies that principle.
4.15 p.m.
The Lord Archbishop of Canterbury: My Lords, when I spoke in the debate on Second Reading I explained why the leaders of the Churches in this country felt that they must oppose this Bill and expressed the hope that this House would be able to remove some of those aspects which had caused the deep concern that I tried to voice. I am glad to join with others in acknowledging the changes which the Government have been
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willing to make at the Committee and Report stages, notably the very substantial concessions on Clause 3 of the Bill. These changes are helpful and welcome and I take this opportunity to congratulate the noble Lord the Minister on his astonishing patience and courtesy throughout these debates. But I have to say that the main criticisms of the Bill which I and others made on Second Reading still stand.
It was a complicated and bad Bill then and it is a bad Bill now; for the changes which have been made have not altered the basic principles on which the Bill was based nor removed the objections which had been put forward by those of us who felt that we must voice the fears of those, particularly among our ethnic minorities, to whom this Bill has spelt doubt and uncertainty. Someone from one of these communities said to me last week in Hackney, that concessions for Gibraltarians and missionaries do not meet the real fears of the British members of our long-established Asian and West Indian communities. That may be unfair comment on the scope of the concessions, and I believe it is, but it reveals how things are seen from that angle.
At this late stage I do not want to go over all the reasons why the Churches of this country have felt that they must oppose this Bill and which led the bishops in this House to support so many of the amendments that were proposed; but I want, once again, to place on record our deep concern that on so fundamental a matter as nationality we seem about to pass into law a measure which, in the view of the leaders of all our Churches—and we are increasingly working together in these matters—is questionable when judged by moral principles and the effects of which will be to sow doubts in an area where reassurance is desprately needed.
This is an occasion when I speak not for a single denomination. The bishops' assertions have not been academic, theoretical or party political; nor do we claim any monopoly of moral sensitivity; but they arise from our deep pastoral concern and extensive local knowledge. History, I suspect, will judge that this was a great opportunity missed. This is a Bill of which future generations will not be proud. This could have been a better Bill if some amendments, narrowly lost in certain cases, had been passed.
I naturally regret the loss of the amendment to Clause 1 moved in the name of myself and three other bishops, to retain the principle of jus soli. A much simpler Bill it would have been if that fundamental change has been accepted. I regret particularly the loss of the amendment proposed by the noble Lord, Lord Pitt, and the noble and learned Lord, Lord Elwyn-Jones, which would have treated generously those who had been British for many years but who came from colonies which have since achieved self-government and who therefore ceased to be citizens of the United Kingdom and colonies without, in many cases, realising that change in their status.
I am sorry that the modest amendment proposed by the noble Viscount, Lord Colville of Culross, on the question of appeals was narrowly lost; for that would have done something to improve what I regard as one of the most serious defects of the Bill.
I want to conclude by saying a word about the future. The Churches, for reasons that I have referred to, remain profoundly unhappy about this Bill. I

719
shall wish to register this by voting for the amendment in the name of the noble and learned Lord, Lord Elwyn-Jones, tonight. But if, and when, this Bill becomes law, we shall seek to help people to understand it and to claim their rights under it, until such time as I hope a new Bill, based on sounder principles, can be introduced. That is the democratic way. We will have no truck with those who are determined to make mischief and never to be satisfied.
I believe, however, that the Government can help very greatly if the administration of this legislation can be characterised by qualities of generosity and understanding. I have never for one moment questioned the sincerity of either the Home Secretary or the noble Lord the Minister in their claim that they introduced this Bill to give people greater security. I hope that in drawing up future regulatons there will be the closest consultation with the Commission for Racial Equality and with the organisations which represent the ethnic minorities, and in using the channels offered by such bodies and their publications.
The Bill provides for a high degree of ministerial discretion—too much, some would say. But that can be used helpfully and I appeal to the Government to use it in that way. I ask them to do so particularly on behalf of our immigrant communities for whom the Churches have felt bound to speak because of our experience in inner cities to which I have referred. As we all know, there is a growing sense of alienation and of discrimination among this section of our people to which the indignity of unemployment has contributed and which those who unhelpfully talk about repatriation as a possible course of action have increased. This Bill has added to the sense of insecurity and rejection.
The test will come in the way in which the legislation is operated. I pray that Ministers, and the officials who operate in their name, will bear this in mind, for this is an area where sensitivity and humanity are desperately needed. We remain convinced that this is a defective Bill, but I hope that if the legislation can be carried out in that spirit that I have just mentioned our worst fears may in practice be mitigated.
4.23 p.m.
Lord £Kadoorie: My Lords, on this, the first time that I have the honour to address your Lordships, my instructions are clear: "Your maiden speech may be informative but not controversial". That I have chosen today, the occasion of the Third Reading of the British Nationality Bill, is coincidental and will not prejudice these instructions. Since Hong Kong is so far away from here that one cannot go any further without coming back, it is not too surprising to meet with misconceptions as to the past, present and future of this city.
In attempting to present the picture as seen through the eyes of one of its citizens—and an old "China-hand"—I trust that I may be forgiven for telling your Lordships much that you may already know. To understand the Hong Kong of today, and the importance of continued strong and friendly ties to China, one must look into the past. According to Britain, the United Kingdom owns the island of
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Hong Kong and the Kowloon peninsula, while China owns the remainder of the colony but will not exercise effective sovereignty over it until the New Territories' lease expires on 1st July 1997. In China's view, the status of this unique territory is quite different. The agreements under which the island and the peninsula were ceded to the British were unequal treaties extorted by force from a weakened China incapable of defending its territories.
Today, de facto, Hong Kong has become the free zone of China under British management. It is a neutral point of contact between East and West. It enables China to regulate the flow of expertise required to fuel its four modernisations programme. From a devastated colony, said to have been the most looted city in the world, Hong Kong has risen like a phoenix from the ashes to become a prosperous industrial centre boasting of little unemployment. Today, with a population of over 5 million people in an area of fewer than 400 square miles, Hong Kong continues to fill its traditional role providing asylum for thousands of refugees, the majority of whom will have to be absorbed into the economy.
In no place in the world have the Government done so much to improve the lot of their people. This does not mean that we are living in Utopia—far from it. However, what has been achieved in the post-war period is remarkable. Hong Kong's unique value as a neutral point of contact between East and West leads me to believe that the future holds a real possibility of merging interests to mutual benefit. There is no doubt that China intends to use to fullest advantage the facilities and expertise of the West that are concentrated in this area, and that of all the Western powers the United Kingdom is best placed to assist in this process.
Now I propose to move into the realm of, "Let us see ourselves as others see us". How does a Hong Kong citizen, one who is born in Hong Kong or who has become British through naturalisation in Hong Kong, see the United Kingdom? We are puzzled why a change in the political status of former colonies should create an apparent lack of self-confidence. Britain's assets are inherent in its people and the vast experience that they have gained in constructive management over the past century. It is very noticeable that so much of the initiative to preserve Britain's export trade comes from its citizens overseas. An example of this that has been apparent since the war is that Hong Kong has placed very substantial orders in this country. For a new power station alone, orders have been placed in the United Kingdom which, over an eight-year period, will amount to £2 billion and will provide about 7,000 jobs for seven years in the Midlands and the North-West—areas which I understand are in much need of employment.
To many Hong Kong citizens the proposal that we are no longer to share a common citizenship with those of the United Kingdom and colonies gives an impression of rejection, a feeling that at this important stage in our history Britain is distancing itself from Hong Kong and that we are losing our Britishness. The majority in Hong Kong are satisfied with their present status. They are not seeking refuge or the right to live and compete with your working population. We in Hong Kong do not regard the words "United Kingdom

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and" which appear on our present passports as being of practical significance in terms of the right of abode in the United Kingdom. What Hong Kong's citizens are asking for is that in any eventuality and at all times they and their children born in British Hong Kong can rely on world recognition of the international benefits inherent in the British passport. They require the assurance that Great Britain, a country they have come to trust, will not let them down.
I have endeavoured in these few words to show you the Hong Kong of today, its raison d'ëtre and the unique position that the country occupies as a neutral point of contact between East and West. It is well to remember that this link is British, that it enjoys the friendly acquiescence of China and that this places the United Kingdom in a very special position not available to any other Western power. Hong Kong's influence and the attitude of the Hong Kong people to the United Kingdom can play a vital part in the future of Sino-British relations and the development of British trade in the Western Pacific area. Hong Kong's relationship with both the United Kingdom and China has never been better. Surely the goodwill of its citizens is a valuable asset which it is in the interests of Britain to preserve. Governments tend, quite naturally, to concentrate on matters of law and fact, but human feelings can often be more important.
My Lords, I am indeed privileged to have had the opportunity to speak to your Lordships today. I thank you for your patience in listening to me and I hope that I have not strayed too far away from non-controversy. May I in conclusion ask: why alienate the goose that has the potential to lay so many golden eggs?
Several noble Lords: Hear, hear!
4.34 p.m.
Lord Aylestone: My Lords, it is a considerable pleasure to me and a great privilege to follow the maiden speech of the noble Lord, Lord Kadoorie of Kowloon, who joined us so recently. He comes to us with perhaps as great, if not greater, knowledge of the Far East, and especially of Hong Kong, as any other person. We have listened very carefully, and I am impressed with his peroration, because never at any time have I or my colleagues felt that there were something like millions of Hong Kongese anxious to get on to boats and to come to reside in this country. That was never true. They are happy where they are. All they wanted was to be associated with this country, to have British passports and to feel that in 1997 this country was behind them in the negotiations which, whether we like it or not, will have to take place. His membership of this House brings among us one whom we ought to recognise as a great intellectual power in the affairs of the Far East. We have listened to his speech with great consideration and I am sure it will be a pleasure to us to listen to him on many occasions again.
My Lords, on the Second Reading of this Bill I said from this Bench, and I remember it although probably nobody else does, that I felt this Bill was quite unnecessary. I still think that. It was unnecessary to introduce it at this time. The former Administration felt, as did the present Government, that it was necessary to do some tidying up—but why now,
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immediately following the racial tensions and problems we have had in this and almost every other country? It could have waited. The Bill does not add one single immigrant to the people of this country and it does not take one single immigrant away. What it does do is to add disturbance and fear in the minds of many immigrants who are already living in this country. Maybe much of it is unnecessary; maybe they should not have felt that way; but nevertheless they do.
However, we are coming to the end of the Bill and it would be ungracious of me not to thank the Government for taking out some, if not all, of the power of the Secretary of State, which they have done, and permitting us in this House to do what I consider to be the right thing about Gibraltar. I sincerely hope the Government have no intention of putting that back in another place, or maybe we shall have a constitutional problem here the like of which we have not seen for a very long time. It is, in the view of my colleagues and myself, something which ought perhaps to have been done at some time, but not now, and I support the amendment on behalf of the official Opposition. This cannot do anything other than exacerbate the position. Perhaps more than anything else I regret the disappearance of the system we have over many generations known as jus soli. For that reason, my noble friends and I on this Bench will support the amendment.
4.38 p.m.
Lord Geddes: My Lords, I should like first to join with the noble Lord, Lord Aylestone, in congratulating my noble friend—and I use that word most deliberately—Lord Kadoorie on a quite outstanding maiden speech. If one of the younger Members of your Lordships' House may be permitted to make such comments, it was short but far from indecently so; it was succinct but none the less full of quite impeccable English; it was not controversial but it was highly relevant to this Bill. My only regret—and I hope that many of your Lordships will agree with me—has been that he was not able to open his account slightly earlier and therefore lead me in the constant endeavour I have tried to achieve in looking out particularly for the interests of the British dependent territories and particularly of Hong Kong. What could I personally not have done with him in front of me?
The noble Lord, Lord Kadoorie, is a very remarkable man, as I personally know from the years that I have known him, with an amazing and most impressive list of commercial achievements which it would be invidious to repeat in this House. Nevertheless I should like to mention the quite remarkable park, if that is the right word, which the noble Lord and his brother Horace have started and have now enlarged considerably in the New Territories of Hong Kong, with an amazing variety of flora and fauna on display for the whole world, and in particular those in Hong Kong, to see. The noble Lord is a multi-educated man in all manner of seats of learning, both in this country and, indeed, in Shanghai. He is a man who has been honoured not only by this country but by Hong Kong, the United States, the Philippines, Belgium and France. We are, I suggest, most fortunate in having the noble Lord, Lord Kadoorie, with us and I, too, look forward to his future contributions to our debates.

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As to the Bill itself, I have been privileged in sitting through each day of the deliberations of the House or the Committee on the subject. I should particularly like to thank—and I am sure that this is the overall feeling of the House as well—my noble friend Lord Belstead for the very graceful and tactful way in which he has handled the Bill throughout. While on different sides of the House there may have been strong disagreements with the line that he was putting forward, nevertheless his manner in dealing with the Bill has been faultless.
I should like to comment on only two points. On Clause 3 of the Bill, I should again like to thank my noble friend, and, through him, the Government, for the tremendous improvement on the original drafting of Clause 3, about which many of your Lordships, including myself, had considerable debate on Second Reading. The other point—and I feel it only right that I should make it—is on the amendment put down by the noble and learned Lord, Lord Elwyn-Jones, and I should like to add my support to the expression that he used about creating feelings of insecurity.
The noble and learned Lord was kind enough to instance the amendment that I had down, which was narrowly defeated last week. I do not wish to go on to that subject again, but I strongly believe that the Bill, as it leaves your Lordships' House, will create feelings of insecurity for whatever reason and however logical or illogical that may be. The fact is that those feelings of insecurity do exist and will continue to exist, and that is an area of the Bill which I personally deplore.
4.43 p.m.
Lord Tanlaw: My Lords, I should not normally have intervened in this debate if I did not feel so uncomfortable about the passing of this Bill, mainly because of the misunderstandings that will arise overseas as a result of its passing. There are very great worries in that we can pass a Bill in this country, which concentrates entirely and solely on what appears to be a British problem and which the Bill sets out to solve, but which, inadvertently perhaps, creates great doubts and uncertainties for some of our friends—and, indeed, our best friends—overseas. I want to add my congratulations to the noble Lord, Lord Kadoorie, of Kowloon, on his remarkable maiden speech to which I shall have great pleasure in referring later.
One of the uncertainties of this Bill is the creation of legal doubts about the team "nationality". These were well covered during the Committee stage. I hope that some definition will be given to this term in another place, not just in the context of this Bill but because of what will happen as a result of its passing. For example, I was alarmed by a newspaper report yesterday, which stated that 10 hospitals have been selected by the Department of Health for a pilot scheme, under which a patient's nationality must first be established before National Health Service treatment is offered.
We have been asking how one establishes nationality in regard to this Bill, yet here the National Health Service is asking people to define their nationality before they can get treatment. This is just another loose end. I am particularly upset about this in a personal way. Is it really the fact that, because somebody does not look British—for instance, my wife is
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Chinese—she will have to be asked to establish her nationality at one of these hospitals, although she is a British citizen?
Do the Government realise some of the problems and difficulties? The most reverend Primate the Archbishop of Canterbury is worried about community relations, as we all are. Is this a helpful step towards improving them? I do not think that it is, because it is a fact that the Government will not define the word "nationality". We have warned enough on this and this is not the time to warn any more; there comes a limit.
There is the other effect on people overseas. Warnings on another Bill came from these Benches. My noble friend Lord Gladwyn, and many others, warned the Government about the effect that the Government's policy on education of overseas students is having overseas. The connection with the British Nationality Bill may not be immediately apparent, but in an article in the Financial Times on Friday, 16th October, the following statement was made by the Foreign Minister of Malaysia, Tan Sri Ghazali Shafie, who said:
"Now British companies will have to compete on a par with everyone else. The 'bias for' has now been taken away".
I do not want to develop this aspect, because it has all been said before. But here is an example of another Government—in this case, the Malaysian Government—who have been good friends of this country of very long standing, saying: "We have given you a bias before. The British connection meant something to us. But a Bill which is passed by you, and which you are entitled to pass, is affecting our future relationships and affecting the young men and women who want to be educated in your country. So we will not give you the bias that we gave you before."
I want to come to what the noble Lord, Lord Kadoorie, said, in a most elegant, intellectual and polite way. It could have been said in many other ways. It has been said to me, and to many others, by good friends in Hong Kong in many other ways, which it would not be profitable to put forward in this House. The British connection means something to people living many thousands of miles away, but if it is to mean something it has to mean something tangible. This Government have based their policy on economics, monetarism and so on. That is very important. They say that they are concerned about unemployment and the regeneration of British industry, and yet they are passing Bills the side effects of which will not enhance British industry or help reduce unemployment, but will lose very great friends of long standing. This is something which does not arise in a Committee stage. I am talking about the side effects of a Bill which were not properly considered before the Government asked us to pass this Bill.
Finally, I have a very small and trivial point. At an earlier stage, I mentioned the example of a citizen of the Pitcairn Islands. I thought of the smallest common denominator of the British dependent territories which will be affected by this Bill. I took the trouble of ringing up the Treaties and Nationality Department of the Foreign Office, to see whether all 61 or so of the Pitcairn Islanders had been informed of the effects of this Bill on that small and isolated community, 9,000 miles away from where I stand.

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They assured me that the islanders had been informed. The Governor, who is the High Commissioner in New Zealand, had despatched letters and they have three letter drops a year by sea.
But how it is that an amateur radio operator in the Nottingham area received a call on his short-wave set from Mr. Tom Christian, who sits on the council there, saying that Mr. Christian had heard that there was a Bill passing in London which might affect his community? He had heard nothing about it. I am not blaming the Government, but I ask that they try to find out a little more carefully whether consultations could have gone through in far greater depth on the commercial and emotional sides, so that these small communities are not dismissed on the basis that they are bound to accept everything that is done. There is a perfectly good short-wave radio connection with the Pitcairn Islands, and Tom Christian operates the radio for the cable service, as well as having his own amateur radio status. Yet the Government are unable to say definitely whether the Pitcairn Islanders have received a copy of the letter, White Paper and explanatory memorandum of their Bill. I just mention this in passing, in the hope that the Government will delay the passing of this Bill and therefore delay the effects about which so many of us have so many doubts and uncertainties—in which case I shall support the noble and learned Lord's amendment with great pleasure.
4.50 p.m.
Lord Auckland: My Lords, first I must apologise to your Lordships for not being in my place when the debate on Third Reading started this afternoon. A very important business engagement kept me away. I think that the Government are to be congratulated on at least endeavouring to tackle this very difficult and inevitably controversial subject of nationality. Whether they have tackled it in the right way is quite another matter. There are Members of your Lordships' House, from all sides, who can speak on that topic With far more expertise than I can. However, I am particularly worried about the effect of this Bill on the Commonwealth.
Having strong connections with New Zealand and having been to a number of Commonwealth countries, in particular the new Commonwealth countries, I am concerned that this Bill at least gives the impression that there is one rule for the EEC and another rule for the Commonwealth. In correspondence which I have had and in views which have been put to me, this is the message which has been passed. Whether or not this is fair comment is for others to say. However, I am bound to say that there are some very serious anomalies—in particular, for example, for the children of a family going out to a country like Tanzania. I understand that the wife's citizenship is protected, but I am still quite uncertain, as I am sure many of your Lordships are, about the position of the children. This is a matter of tremendous importance for the future.
As I said at Second Reading, the real trouble with the Bill is that it is too lengthy and too legalistic. Although I am not a member of the legal profession, I have friends and acquaintances in that profession who
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have made just that comment: that it is a very difficult Bill to understand. However, given that the Government have at least tried to seize this almost poisoned nettle of controversy and have tried to do something about overcoming the problems of British nationality, I shall support the Third Reading. But the Bill will be watched, even by those of my noble friends and others who support the Third Reading, with a certain degree of scepticism. Obviously we must have some kind of control over those who have complete British nationality, but let us not forget that throughout the Commonwealth there are those who have helped us over the years, in peace and in war, and who, through their achievements, deserve British nationality in full. Whatever happens to this Bill when it passes into law, I hope that this Government and other Governments will give this matter very serious thought.
4.55 p.m.
Baroness Elles: My Lords, with the permission of your Lordships, I should like to add a few words and to speak both to the Motion and to the amendment tabled by the noble and learned Lord. I apologise to your Lordships for not having put down my name beforehand, but I returned from Brussels only at lunchtime today and found that the list had already been prepared.
I feel somewhat like the odd man out, in that I very warmly welcome this British Nationality Bill. I think it is time that we recognise what a very great contribution it is making to British legislation. The fact is that for the first time we in this country will have a British Nationality Act which depends upon nexus with this country, regardless of colour, race, creed or religion. It is the right of every sovereign state to define its own nationality based on connection with the territory of that country. The Bill also removes about 18 different types of nationality which have developed since the British Nationality Act 1948. If this Bill is considered by noble Lords to be complex, surely they will admit that the present situation concerning British nationality, British citizenship, is far more complex than anything which any other country or any other citizen or non-citizen has had to tolerate. I hope this point will be recognised by your Lordships' House.
This Bill is evidence of the fact that we are no longer an Empire, that we have very few dependencies left and that every Commonwealth country has introduced, in full right, its own nationality law and its own immigration rules. This fact must be taken into account, even in the example given by the noble and learned Lord regarding the situation of a child born in Malawi. It is the Malawi law which is at fault. It has nothing to do with British nationality law. If this kind of situation is to arise between Commonwealth countries, it is precisely what should be discussed on an equal basis at a Commonwealth conference, because every Commonwealth country has its own rules regarding the acquisition of citizenship, naturalisation and so on.
In no case that I know of is this British Nationality Bill providing harder terms than apply in any of the independent Commonwealth countries. Even the removal of jus soli, which has been practised in this country for the last 100 years—not 700 years, with

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respect—follows the trend of the nationality laws of most states, particularly those of the United Nations. I would point out that there is no provision in the Bill which goes in any way against the provisions which guarantee the human rights of individuals on the basis of race, colour, creed or national origin.
I should like to thank my noble friend Lord Belstead in particular for two amendments which have been introduced into the Bill. The first relates to the only case where there was a question of discrimination on religious grounds, to which I drew the attention of my noble friend. It was only a very small but nevertheless very important point for individuals. It related to the definition of the word "terminated". That has now been changed and I am very grateful to my noble friend for that amendment. The other point might appear to be very small to many Members of your Lordships' House. Nevertheless, it is of very real concern to the many Asian families with which I have close connections in this country, where the women have difficulty in learning English because of the kind of life style that they lead in this country. Provision for these people has also been made by my noble friend and the Government.
I rather resent the attitude which has been evident in this debate—the non-recognition of the very real attempt by the Government to meet these very many difficulties which concern a great many individuals in this country who would have been affected by the terms of the Bill as it came here from another place.
In conclusion, it should be recognised that minorities—by which I do not mean ethnic minorities, although that is the normal term given to regional groupings (I am sure that the noble and learned Lord would not consider the Welsh, the Scots and the Northern Irish to be ethnic minorities in the sense in which he has used the term in his amendment) but rather those groups of people who have come from other parts of the world and who now live in this country as citizens of the United Kingdom—are for the first time being guaranteed British citizenship on equal terms with any other British citizen. With that British citizenship they have the right of abode and the right to transmit their citizenship to their children, if they are born abroad, on precisely the same terms and conditions as any other British citizen. Surely the Government are to be congratulated upon that. This is something which has never happened before.
No Government up to now have had the courage to introduce this kind of Bill. I would implore all those sections of society who deal with minority groups to explain to them the benefits of the Bill, and to assure them that those living in this country have equal rights, regardless of colour, regardless of race, and regardless of creed. I beg to support the Motion.
5.1 p.m.
Lord Walston: My Lords, I, too, apologise for speaking without having put my name down earlier. I am moved to do so by a profound sense of sadness. This—I agree with virtually all the speakers to whom I have listened today—is a bad Bill, albeit that it is not quite so bad as when it first came to this House. But it is a bad Bill and it is a sad Bill for this country. I base that statement on four grounds: on the grounds
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of history, on the grounds of Commonwealth, on the grounds of pragmatism, and on the grounds of justice.
Historically, as we all know, this has been a country that has by and large kept its gates open, very much to our own advantage, whether it was in the time of the first Elizabeth, to people like Holbein and Erasmus, whether it was to the Huguenot refugees from France, or to the Jewish refugees from Germany and from Russia and Poland. We have this long tradition of welcoming people who want to come here. It has been very much to our advantage and it has been to their advantage. This Bill is not by any means a major step in retreat from that, but it is just one more nail in the coffin of free access and the welcoming of strangers and foreigners. So on historical grounds it is a sad Bill.
So far as the Commonwealth is concerned, the noble Lord, Lord Auckland, quite rightly reminded us of that, and, in a somewhat different way, in his remarkable speech so did the noble Lord, Lord Kadoorie; and the noble Lord, Lord Tanlaw, mentioned the case of Malaysia. We are, after all, the home of the head of the Commonwealth; we are the originator of the Commonwealth, and whether we like it or not, we cannot divorce ourselves from a rather special position, not as leader in any formal sense, but as the country to which all other members of the Commonwealth look. This Bill is not going to strengthen the bonds of the Commonwealth, it is not going to strengthen our influence. Rather it will loosen them and diminish such influence as we have.
Thirdly, on purely pragmatic grounds, again, we have already heard from other speakers, the noble and learned Lord, Lord Elwyn-Jones, and my noble friend Lord Aylestone, of the effect that this is going to have, is already having, upon race relations in this country. I do not for a moment believe that it is the intention of Her Majesty's Government that it should have that effect. I do not believe that the noble Lord, Lord Belstead, or any of his colleagues in the Government are in any way opposed to our immigrant population. I believe that they wish to do all they can to help to integrate them into our society.
But this is something that has been with us now for over 20 years—we have been aware of the problems. It has been necessary—and I believe it was necessary and right to do so—to put some restriction on immigration, as much in the interest of the immigrants as in that of ourselves, the natives. We have made progress, thanks very largely to a great number of anonymous, unsung people, social workers, members of the police force, academics and others, and Members of your Lordships' House, too, who have worked to improve race relations. Progress has been made. But, alas, that progress is now in jeopardy. It is in jeopardy very largely because of the economic circumstances of this country, because of the enormous number of unemployed and the way this affects the immigrants, even second and third generation immigrants, more than those who consider themselves to be natives. So the tensions are higher, and this Bill cannot fail to exacerbate those tensions and to make a difficult problem yet more difficult.
Fourthly, and very briefly, I come to justice. This is an unjust Bill. The noble and learned Lord, Lord Elwyn-Jones, pointed out some of the inequities that arise from it; ridiculous, ludicrous, as we sit here and

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listen to him, but painful, heartrending for the people who are affected by the inequities of this Bill. To see this country, this House, enacting a Bill which is basically unjust, which is going to cause increased hardship, increased suffering, increased inequities, for no good purpose whatsoever, is indeed a sad experience. For those reasons, I shall certainly support the amendment of the noble and learned Lord, Lord Elwyn-Jones.
5.6 p.m.
Lord Pitt of Hampstead: My Lords, like previous speakers, I have to apologise for my name not being down on the list of speakers. Unlike previous speakers, the reason in my case is that I had not realised a list was being made. I came here with a half-an-hour speech and your Lordships will have noticed that I have been busy cutting it down. I have instructions to make it two minutes. I cannot make it two minutes, but I will try to make it about five minutes. I had intended to divide the House and invite the House to reject this Bill on Third Reading, but I have been persuaded that it would be better to support the amendment in the name of my noble and learned friend Lord Elwyn-Jones, and I shall do so.
My Lords, the Bill is wrong in principle and it is discriminatory in practice. It will increase statelessness and insecurity. One feature of the Bill that has worried me is the cavalier attitude of the Government to the fact that it will increase statelessness. For the first time, people will be born in this country stateless. For the first time, children in British schools will be stateless. When a teacher has to take a class to the Continent, she will have to worry about the citizenship of the children in her class. This is one of the consequences of this Bill. Noble Lords who have been attending the debates during Committee and Report stage know that I have tried to see to what extent could ameliorate it, without success.
The Bill also breaks an important Commonwealth link. I have discovered that the Commonwealth High Commissioners in London made representations to the Government, to the Foreign Office and to the Home Office, in this matter, but they seem to have had no effect. I have been a little saddened by that. One of the things they asked was that persons who qualified for British citizenship but who were born in a British dependency or former colony should not be subjected to unnecessary difficulties in establishing this newer British citizenship. This is what I was asking your Lordships to agree to, but your Lordships would not do so.
My Lords, all over the world, there are people, many of them now adults, like me, who grew up to regard themselves as British and who were proud to regard themselves as British. Most of them were taught British history at a time when they were not taught the history of their own country. Most of them know more of British geography than of the geography of their own country. Most of them know the flag of Britain and sing the National Anthem and "Rule Britannia" with pride. Those are the people who are, in fact, discovering that Britain does not interpret their relationship in the way in which they interpret it. I go further and say that thousands of them came here and volunteered to fight for Britain and to defend Britain during the war. To none of
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them was that a peculiar action because they regarded themselves as intimately involved. Britain was at war and so they were also at war. They could see it no other way because, as your Lordships know, their economy was tied to this country and the laws under which they were ruled were inherited from Westminster. As I said earlier, they were taught not only to regard themselves as British but to be proud to be British.
I do not want to speak for too long—because I said that I would cut my speech down—on the de-merits of the Bill. I merely wish to say to the noble Baroness, Lady Elles, that of course after the Bill you will no longer be in breach of the European Convention on Human Rights as regards citizenship, because what you have done is to take away the citizenship from the people whom you were told by the Commission you were discriminating against. Now they are no longer citizens of the United Kingdom and Colonies and since they no longer have United Kingdom citizenship you cannot be condemned for not allowing them to come into the United Kingdom. That is how you have solved that particular problem. It is no use being proud of the fact that you have done that.
I want to look at the Bill as it would affect people after it has been passed. What will happen in practice? I mentioned earlier about the children in school. Another noble Lord has mentioned people going to hospital. When the hospital clerk has to put down the nationality of a child and the child is black he will not automatically put "British". The child's parents will be cross-examined as to their immigration status. If they tell a lie there will be serious problems that could accrue to them for telling that lie. Alternatively, they may make a genuine mistake and, as many of your Lordships know, genuine mistakes in immigration matters have often been regarded as outright lies.
I should like to refer to the point which I raised on Second Reading. When the first British overseas citizen passport is presented for the first time to an immigration officer abroad how will that officer react? Will he treat the passport as worth anything whatever? Will he treat the holder as someone who enjoys the protection of the British Government or as someone whom the Government explicitly and categorically refused last week in the debate on the amendment of the noble Lord, Lord Geddes, to call a British national at all? I must confess to your Lordships that I regarded the rejection of the amendment of the noble Lord, Lord Geddes, last week as the most disgraceful act ever committed in this House. It was shameful. This Bill is a shameful measure. It can bring us only disrepute in the eyes of people at home and abroad. The only right which a British citizen has in this Bill is the right of abode in the United Kingdom. That right, of course, is denied to people who at present are as British in law, in personal history and in sentiments as those who are given that right of abode. However, there is an anomaly, because while those people are denied that right of abode, that right of abode is given to many people who are citizens of other countries, who do not live here, who have never lived here and who have no intention of living here.
We could have had a simple Bill—a Bill which would have been vastly simpler and some would say more rational. It would not have been odd if we had merely given citizenship to the people who have it

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now. That is what the French have done. As consequence a black Martinican man has more rights in this country than a black man from Montserrat. Montserrat is a British colony and because that black man comes from Montserrat which is a British colony he will not have any right of abode here—he will have no right to enter this country. However, the black man from Martinique, because he is a Frenchman and France is in the EEC and Britain is in the EEC, will have a right to come here and look for work and to stay. That is the difference.
One realises—I am very sad about this—that this country is in the process of repudiating its history. That is a very sad sight for any country. I believe that Great Britain was great, is still great and will still be great. I wish that the Government could believe that.
5.17 p.m.
Lord Boyd-Carpenter: My Lords, I do not begin by apologising for seeking to address your Lordships without my name being on the list of speakers, because I did my best last week to put it there but apparently something went wrong. It is a mistake in this House, as no doubt elsewhere, to think that anyone remembers one's speeches except oneself. But those of your Lordships who were present as long ago as the Second Reading may possibly be reminded that I did say in an intervention then that I thought that this was a pretty poor Bill and that I might have some difficulty in supporting it at later stages if improvements were not effected. It is only fair to say that considerable improvements have been effected.
In the first place, the highly restrictive provisions of Clause 3 in respect of our fellow countrymen working abroad in private employ or self-employed have been very greatly improved. Although there is still some disparity which I regret between the automatic rights of those in Crown service, which are given in Clause 2, the disparity between their treatment and that of the non-Crown servants covered by Clause 3 has been very substantially reduced and I welcome that.
There have been a number of other improvements resulting from the interventions, pressures and speeches of noble Lords in all quarters of the House and, if I may be allowed to say so, this Bill has been a classic example of the value of this House as a revising Chamber. There has been also a further amendment carried against the wishes of the Government—the amendment referred to by the noble Lord, Lord Aylestone, in respect of Gibraltar. I do not know what the Government's intentions in another place may be, but I do hope that my noble friend will take very seriously the warning given by the noble Lord, Lord Aylestone. This is a matter on which some of us in both Houses feel very strongly. I would only differ from the noble Lord, Lord Aylestone, when he suggested that if the Government acted foolishly in this matter there might be a constitutional crisis. There will be nothing of a sort. If the Government like to wait a year and use the machinery of the Parliament Act they can get their way, but, of course, this particular Bill would be lost.
As I see it, there is no question of a constitutional crisis. This House has a right to its view on any
732
provision of this Bill, subject, of course, to the Parliament Act procedure, with a year's delay. After long debate this House came to a view on the Gibraltar question. Perhaps some noble Lords will attach weight to the fact that a substantial majority voted to put in what is now Clause 10 against the strong efforts of the former Leader of the House, a most formidable and admirable character, and against the arguments of the noble and learned Lord the Lord Chancellor who, in my personal view, is the greatest advocate of the day. So no one can say that this was not a carefully considered decision, and I venture to express the opinion that it is a decision that this House would be unlikely to be persuaded to reverse.
It would be only fair when we are talking of these improvements—apart from the particular one which my noble friend Lord Belstead did his best to prevent—that I should join with other noble Lords in expressing my enormous admiration for the way in which my noble friend Lord Belstead has handled this Bill. First, he argued the unarguable and defended the indefensible with superlative skill, as did, let me say at once—for I do not wish to be discriminatory—my noble and learned friend the Lord Advocate. But my noble friend Lord Belstead, having defended with great vigour, then always did what he promised: he went back, I hope and believe bullied his officials, and has certainly returned with a remarkable number of improvements. I hope that I am not guilty of impertinence when I say that my noble friend's conduct of this Bill has been a classic example, which I hope Ministers will follow in the future.
Several noble Lords: Hear, hear!
Lord Boyd-Carpenter: My Lords, having said that, I must admit that this is still not a very good Bill. One cannot ignore the general expressions of criticism, regardless of party alignment or of party questions, which it has aroused, can one? I, for one, cannot help being impressed by the attitude of the Churches. We all listened this afternoon with very great respect—a respect due both to his office and to his personality—to the most reverend Primate. One cannot overlook the fact that opinion outside, academic opinion, opinion among the ethnic minorities, opinion in the press and opinion generally is still intensely critical of the Bill.
It is perfectly fair to say—as my noble friend Lord Belstead has sometimes said—that a good deal of that criticism is still founded on misunderstanding of its effect. However, we are almost at the end of the road with this Bill. It has had its proceedings in the Commons. It has had proceedings in this House, which no one has criticised on the ground of brevity. If it has been impossible for the Government to satisfy opinion outside—opinion in the Churches and impartial opinion in many quarters—if the Government, with all their powers of advocacy and all their technical means of persuasion, have been unable to convince people, perhaps it must raise a doubt even in their minds as to whether this is a particularly good Bill or whether, indeed, there may not still be very substantial defects in it.
I am unhappy about many aspects of it, with which I shall not weary your Lordships at this stage. However, I was very struck by one remark in the very

733
impressive maiden speech of the noble Lord, Lord Kadoorie, when he said, speaking of the Hong Kong that he knows so well, that they liked their citizenship of the United Kingdom and Colonies and saw no reason to change it. I wonder why the Government have thought it necessary to change it. It was that that raised the Gibraltar issue; it was that that raised the Falkland Islands issue, which my noble friend Lady Vickers very nearly succeeded in rectifying. We are told that to make those exceptions is contrary to the main scheme of the Bill. So be it. But if that is so, does it not raise a doubt as to whether the main scheme of the Bill itself is right, whether a system of three different types of citizenship£I forbear to say tiers or classes—is necessarily right? If the Bill causes unhappiness, for example among the loyal citizens of Hong Kong, does that not raise a question in your Lordships' minds as to whether this system is right?
I cannot help feeling that if anything were to go wrong in the next few stages of the Bill, and the Bill were not to pass into law this Session, it might be a blessing in disguise to the Government. No doubt to my noble friend Lord Belstead the disguise would be pretty thick, but it might give the Government a chance to think again and at least to apply their minds to this question, which troubles me, as to why it is that there is so much unhappiness about this Bill and the whole of its structure in so many people's minds.
Having said that, as one who is probably as loyal a Conservative and as loyal a supporter of this Government as anyone in this House, I am presented with a problem as to what I should do about the amendment tabled by the noble and learned Lord, Lord Elwyn-Jones. I must say at once that I can see no point or value in that amendment at all. It proposes to give the Bill its Third Reading while at the same time saying, in the nastiest way possible, what an awful Bill it is. I really do not think that that is the right posture for your Lordships' House. I cannot think that we should give the Bill a Third Reading and then send it forth, with all the handicap and disadvantage of this House having said that it is bad in the various ways listed. Whatever we think of this Bill—and I have made my views pretty clear—if it passes into law, if it goes over the hurdles that are still ahead of it, I am sure that we all want it to work as well as possible; I am sure that we all want our doubts and anxieties about it to prove to be exaggerated; and, above all, I am sure that we want to ensure that the anxieties of those concerned and involved, which have been aroused, should be quieted.
I can think of no better way of stimulating those anxieties than at the same time to say: "This Bill shall become the law of the land, but we all think that it is a most terrible Bill which will create injustice and ill-feeling". Therefore, the one thing that I am sharp and clear about in my own mind on this issue is that, much as I dislike the Bill, I dislike the amendment of the noble and learned Lord, Lord Elwyn-Jones, even more.
5.28 p.m.
Lord Harmar-Nicholls: My Lords, the last words of the noble Lord, Lord-Boyd-Carpenter, have put on the record the sort of thing that was disturbing me.
734
I think that it has been a most unbalanced debate and, in view of all that has gone on, a most unfair debate. If it was not for the refreshing intervention by my noble friend Lady Elles, I do not think the debate would have reflected what was intended and what has gone on. I hope that what she has to say will be read.
We should keep in mind that the Government have tackled this very difficult problem, this hot potato, from which so many other Governments in the past have run away. It is not only recently that there has been known the need to have a clearer distinction as to what "nationality" means as regards Britain; it has been known for years. It has been in the knowledge of all of us, and I should have thought nowhere more so than in the knowledge of those who represent us in the Churches, that the uncertainty of the past causes and creates many of the difficulties.
I believe that at this last stage in your Lordships' House we ought to be prepared not only to congratulate my noble friend on the excellent way in which he has piloted this Bill through, but also to congratulate the Government on having the courage to tackle this and to try to do something about it: they have tackled it with sincerity and with a genuine desire to try to arrive at the right answer.
One could not have arrived at an answer that would have satisfied everyone. This was an issue which was positively incapable of being committed to print and being able to satisfy all the diverse views, emotions and reactions which surround it—that was an impossibility. I do not believe that we are dealing with the matter by accepting this amendment, which has been put on the Order Paper by the noble and learned Lord; I do not believe that we are dealing with it as parliamentarians. I do not believe that it is the job of Parliament, acting in their capacity as parliamentarians, to add a rider such as this to a Bill which they recommend be passed.
I was appalled—I think that is the right word—to hear the most reverend Primate say that he was going to vote in support of this amendment. I accept his arguments and I respect his point of view. I believe he did his duty through all the stages in putting on record the point of view he truly believed, but to say that he is prepared by his voting to have it on record that he is allowing to go through a Bill that in the words of the amendment "will exacerbate racial tension" is virtually inviting the people who intend to exacerbate racial tension (in any case) to use the Bill as an excuse to go on doing just that. To go to the extent of the vote following the voice of the right reverend Primate is dangerous in the extreme. I am glad that he said he was only talking for the bishops because as a practising member of the Church I do not believe he was talking for the whole of his flock.
Although I agreed with his closing words, I should also like to take issue with my noble friend Lord Boyd-Carpenter. Who says that this is "the end of the road"? When one is dealing with a matter such as this one does not think of it in terms of only one Parliament. This Government has had the courage to set something on its way. This Government has had the courage to try to commit to paper something which will overcome many of the problems which we have all been aware of for so many years past and have

735
done nothing about. It may well be that this Bill is not perfect. It may well be that there are still many matters that will have to be looked at and dealt with. Other Parliaments can do that; this is not the end of the road. If it is proved that the Bill will result in injustice, such as the amendment says, then future Parliaments—perhaps a future Parliament led by the same Government—can deal with it. What an idea—that it is the end of the road because a Bill dealing with a matter that has been bubbling under for years brings us to that very definite end. I do not believe that the noble and learned Lord, Lord Elwyn-Jones, is doing a service by moving this amendment. I do not believe that he is being a good parliamentarian by putting such an amendment at this stage of the Bill.
Several noble Lords: Oh!
Lord Harmar-Nicholls: I echo the words of my noble friend Lord Boyd-Carpenter when I ask: How can we at one and the same time say that we agree to pass a Bill which we say is full of injustice and which will exacerbate racial relations and which will do that amount of harm?
Lord Elwyn-Jones: My Lords, I hope that the noble Lord, Lord Harmar-Nicholls, will be here at the end of the debate because he was not here at the beginning. Had he been here at the beginning he might have heard my explanation that it is not the convention in this House on Third Reading of a Bill which has passed in the elected Chamber to vote against it on Third Reading. Had that not been the convention, then of course I would have invited the House to do so on this occasion.
Lord Harmar-Nicholls: My Lords, of course I heard the noble and learned Lord say that at the beginning, but I doubt whether it is the convention that in passing a Bill one should add words such as those which exist in the noble and learned Lord's amendment. I would like the noble and learned Lord to produce a similar amendment from the past. Is he aware that he may well be setting a precedent and a dangerous one at that? The whole idea of the parliamentary system is that one fights to try to get the right answer in a Bill and battle hard through all the stages of Second Reading, Committee, Report and Third Reading. The whole idea behind parliamentary government among civilised people is that if one has lost the argument, one allows the Bill one has lost to have a fair run. This amendment is not giving the Bill a fair run. I believe that is absolutely against the principle of parliamentary government as I have experienced it. It is because I feel so strongly that I wanted to add my words to those of my noble friend Lady Elles in a debate which has been so unbalanced. I hope that even at this late stage many of your Lordships who thought of supporting this amendment will have second thoughts. I believe that the amendment is dangerous, unnecessary, and, in the words of the noble and learned Lord himself, is against the conventions of the way in which this House passes its Bills.
5.36 p.m.
Baroness Trumpington: My Lords, I too should like to associate myself with the words spoken by my noble friend Lady Elles in supporting this Bill at all stages. I find myself in the impertinent position of disagreeing with the most reverend Primate and others of great eminence. This Bill was entirely necessary and despite what the noble and learned Lord who moved this amendment has said, his party certainly did recognise the need for change when they were in Government. It is rather like the days when the Commonwealth Bill was opposed by the Labour Party and then brought in by them two years' later; a switch when it seems necessary to them.
I believe that the fears which have been expressed have been exaggerated. Ninety-five per cent. of the population will continue their lives without any qualms and I find it irresponsible to fan the flames of disquiet about the remaining 5 per cent., who anyway have various avenues open to them through which to obtain British citizenship if their reasons for so doing are right and proper. We seem to be forgetting that whatever a person's colour may be, a person who holds a British passport now and who has been here for more than five years will be British. I was glad to hear the most noble Primate say that the Church would undertake the task of reassurance because unfortunately doubts will have been raised by the very nature of today's debate.
I am glad we have gone through the process of defining our own citizenship for the first time. To do so is not racist by my definition. I would like to join those who have congratulated my noble friend Lord Belstead, not only for the way in which he has presented his Bill but also, and I must use the word popular on the opposite side of this House, for his compassionate attitude which I am sure has been responsible for many of the amendments which are now included in the Bill and which, despite criticisms on other issues, have pleased many speakers here today. Life goes on and, as the last speaker said, this is not the end of the road.
5.38 p.m.
Lord Belstead: My Lords, before replying to this debate may I welcome the noble Lord, Lord Kadoorie, of Kowloon, and say that I know how much the whole House appreciated his speech. I hope that your Lordships will take the Government's acceptance of the principle of the amendment moved by my noble friend Lord Geddes today as proof of the Government's total commitment to maintaining our strong links with the British dependent territories. So long as distinguished representatives of those territories are prepared to come to Westminster and to speak their feelings in this matter, as the noble Lord, Lord Kadoorie, has done so effectively this afternoon, so I believe our links will remain firm and unbroken.
At the start of this afternoon's debate I sought to set out the need for this Bill and to remind your Lordships of some of the many improvements which have been made by your Lordships' House and to which many of your Lordships have most generously alluded during the speeches that have been made. The need for the Bill is simply that the present law does not provide for British citizenship. As it stands the

737
law provides for a citizenship of the United Kingdom and Colonies, which does not necessarily allow many of those citizens to enter either the United Kingdom or the colonies.
Therefore, I reject the charge in the amendment that this Bill will create uncertainty. Under this Bill British citizenship will carry the certainty of the right of abode in this country: a provision from which incidentally the children of people settled here will benefit, which must include many children in the ethnic minorities. Such a provision in my book spells reassurance and certainty. I think it is worth noting that on Third Reading in another place Mr. Alexander Lyon, the honourable Member for York in another place, who is the chairman of the United Kingdom Immigrants Advisory Service and who had opposed the Bill from the Opposition Benches, expressed approval that at last we had in this Bill defined our citizenship.
This acknowledgment was scarcely surprising, for the Opposition have recognised for several years the need for a new law of nationality. As my noble friend Lady Elles showed so clearly in her speech, this however is not an easy task. The previous Government in the final event did not feel equal to the task at all, and indeed the problems of legislating afresh on nationality are considerable.
It is not that the present law is so framed that we leave it with regret, because after all the law as it stands today is illogical and very complicated. For example, how can it be defensible to deny, as the present law does deny, women the right to transmit citizenship? And how can it be defensible to restrict, as the present law does restrict, the right to transfer citizenship overseas to children born beyond the first generation in foreign but not, I say to my noble friend Lord Auckland, in Commonwealth countries? Both those anomalies are rectified by this Bill; scarcely the injustice to which the amendment refers.
Nonetheless, however desirable a new nationality Bill may be, there are, I admit, bound to be difficulties. But this is where the work of your Lordships' House comes in, for in this House we have built upon the work which has been done in another place. For instance, the 10-year provision in Clause 1 has, in your Lordships' House, been further eased. Your Lordships have brought clarity and certainty to the difficult area of citizenship by descent in Clause 3; a matter with which my noble and learned friend the Lord Advocate dealt. We have clarified the rights of those seeking entitlements throughout the Bill. We have greatly improved the entitlement to register of young Commonwealth citizens settled here before 1st January 1973, and the House has removed entirely the language requirement for husbands and wives who apply for naturalisation. These changes made by your Lordships are the antithesis surely of the "injustice", "uncertainties" and "insecurity" to which the amendment refers.
My right honourable friend the Home Secretary gave an undertaking on Second Reading in another place that the Government would consider constructively the case for amendments to this Bill, and I think the House will agree that my right honourable friend has been as good as his word. I would just like to end by referring
738
to one or two specific points. There is no justification for the allegation that the Bill will greatly increase statelessness. Many of our European neighbours, whose provisions for passing on citizenship by jus sanguinis are more restrictive than the proposals in this Bill, have a greater problem to face in this respect than we do.
This Bill complies with our obligations under the United Nations Convention on the reduction of statelessness, and I am very glad that in several respects it goes a great deal further than the convention; and as a result of amendments made by your Lordships we have specifically guarded against statelessness arising with children born in the second generation overseas, while of course there always remains in reserve the general discretion of the Home Secretary to register children.
Nor is there justification for the accusation of creating racial tension. The Bill gives clear entitlements to registration, and specifically provides a declaration that decisions which are at the Home Secretary's discretion are to be taken without regard to a person's race, colour or religion. The most reverend Primate the Archbishop of Canterbury made a specific point during the speech which he made about consultation with interested organisations. The Government certainly welcome at any time views from those organisations who would be involved in race relations and the bringing in of this Bill. But may I respond to the most reverend Primate by saying that I shall ask my right honourable friend to consider whether their views should be invited on some of the procedures necessary for bringing this new legislation into force.
My noble friend Lord Boyd-Carpenter was not only kind in his personal remarks but also characteristically downright in the views which he expressed on the Bill and also upon this amendment. To launch legislation, in essence my noble friend said, with such an amendment tied around its neck would create the very situations of uncertainty and tension to which the amendment refers. And surely—and I add this, my Lords—this would not be a wise course to follow in trying to promote good race relations.
This is a Bill which will give British citizenship which, for the first time, will carry with it the right of abode. It will make secure the position of many people who come and settle here from overseas. After many weeks of work in your Lordships' House, in contradiction of the amendment, the Bill will bring people together; it will not divide them. For that reason, I ask your Lordships to reject the amendment and to approve the Motion, That the Bill do now pass.
5.48 p.m.
Lord Elwyn-Jones: My Lords, this has been a serious debate, conducted, with one notable exception, in accord with the usual high standards of this honourable House. The exception was the intemperate, somewhat menacing, and arrogant speech of the noble Lord, Lord Harmar-Nicholls. That I should suffer the indignity of being lectured to about parliamentary correctness by the noble Lord really does undermine my confidence in the institution of the other place where we were together for many years. But I do not want to embark

739
upon personal abuse of the kind that he embarked upon, but to return to the merits of this matter.
I should like to express, as one who had the responsibility of moving the amendment, gratitude for the fact that it has been supported from all parts of the House. With regard to the procedure that has been followed—and I noted the enjoyment with which the noble Lord, Lord Boyd-Carpenter, my old friend, made something of a mockery of the procedure—it is one which has been well established by convention since 1945. It has been recognised by all parties that this House does not divide against Bills passed by the elected Chamber, nor against Bills introduced in this House. That has been the practice ever since the agreement in 1945, I understand, between Lord Addison, the then Leader of the House, and Lord Salisbury.
In that situation if, nevertheless, it is desired to express a hostile view about a Bill, as in this case, there are at least three precedents for doing so. Curiously, I did that very thing on Second Reading and I noticed no lofty constitutional objection on that occasion, even from the noble Lord, Lord Boyd-Carpenter, who is the custodian of constitutional propriety, if I may say so, and who, as the Lord High Steward of Kingston-upon-Thames, one would expect him to be. Thus, while I agree it has given him a bon quart d'heure of enjoyment, attempting to make something of a mockery of what has happened, what has happened is a very serious challenge to the provisions of the Bill from all parts of the House.
The most reverend Primate the Archbishop of Canterbury not only opposed it but made a suggestion which I hope will be communicated to the Home Office; that at any rate if the Bill receives the Royal Assent, those who have to apply its provisions and exercise the massive quantity of discretion—which rests nominally in the Secretary of State, in practice in them—will see that it is exercised as humanely and liberally as possible. That is the least we can ask. But there is no time now to go through the whole argument.
To say, as the noble Lord, Lord Belstead, did at the end, that this is a Bill which has achieved or may achieve harmony is, I regret to say, in the view of those who live near this problem and have worked in the communities concerned, a piece of total misunderstanding of the deep anxieties the Bill has already raised. I make no apology for having introduced an amendment stating that the Bill, if enacted, will result in injustice: we have traversed some of that ground already. The amendment goes on to say that it will,
"greatly increase the number of stateless men, women and children".
That it will increase the number is undoubted; there would have been no stateless children born in this country if we had not abolished jus soli. Even if 100 or 1,000 children born in this country are now, as a result of this Bill, to be stateless, that is a shame and is quite contrary to the traditions of this House. Then the amendment says there will be created,
"new uncertainties and feelings of insecurity",
and that has been voiced by organisations connected with and working in this field throughout the course of the Bill, and it still comes through to us. Alas—and it gives me no pleasure to say this in the amendment—
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the Bill may also be likely to exacerbate racial tension at a most difficult time in our country's history in regard to race relations. Therefore it is with no joy but with regret that I feel it would be right for this House on this occasion to send the Bill away with the message contained in the amendment.
5.54 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 92; Not-Contents, 149.

DIVISION No. 1

CONTENTS

Amherst, E.

Lichfield, Bp.

Ardwick, L.

Lincoln, Bp.

Avebury, L.

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

Aylestone, L.

Bacon, B.

Lloyd of Kilgerran, L.

Balogh, L.

Longford, E.

Banks, L.

Lovell-Davis, L.

Bernstein, L.

McCluskey, L.

Beswick, L.

McGregor of Durris, L.

Bishopston, L.

McNair, L.

Blease, L.

Milford, L.

Blyton, L.

Milner of Leeds, L.

Briginshaw, L.

Noel-Baker, L.

Brockway, L.

Ogmore, L.

Brooks of Tremorfa, L.

Oram, L.

Bruce of Donington, L.

Peart, L.

Canterbury, Abp.

Phillips, B.

Carlisle, Bp.

Pitt of Hampstead, L.

Chelmsford, Bp.

Ponsonby of Shulbrede, L.—[Teller.]

Chitnis, L.

Cledwyn of Penrhos, L.

Reilly, L.

Cooper of Stockton Heath, L.

Rhodes, L.

Rochester, Bp.

Darling of Hillsborough, L.

Rochester, L.

Davies of Leek, L.

Ross of Marnock, L.

Donaldson of Kingsbridge, L.

Sainsbury, L.

Sefton of Garston, L.

Elwyn-Jones, L.

Segal, L.

Evans of Claughton, L.

Shepherd, L.

Ewart-Biggs, B.

Shinwell, L.

Fisher of Rednal, B.

Sligo, M.

Fulton, L.

Stewart of Alvechurch, B.

Gifford, L.

Stewart of Fulham, L.

Glenamara, L.

Stone, L.

Hale, L.

Tanlaw, L.

Hampton, L.

Taylor of Gryfe, L.

Hanworth, V.

Taylor of Mansfield, L.

Hayter, L.

Tordoff, L.

Hooson, L.

Underhill, L.

Houghton of Sowerby, L.

Wallace of Coslany, L.

Jacques, L.

Walston, L.

Jeger, B.

Wells-Pestell, L.

Jenkins of Putney, L.

Whaddon, L.

John-Mackie, L.

White, B.

Kadoorie, L.

Wigoder, L.

Kilmarnock, L.

Winterbottom, L.

Lawrence, L.

Wootton of Abinger, B.

Leatherland, L.

Wynne-Jones, L.

NOT-CONTENTS

Abinger, L.

Boothby, L.

Airey of Abingdon, B.

Boyd-Carpenter, L.

Alexander of Tunis, E.

Brabazon of Tara, L.

Ampthill, L.

Brougham and Vaux, L.

Auckland, L.

Caccia, L.

Avon, E.

Cairns, E.

Baker, L.

Camoys, L.

Bathurst, E.

Campbell of Alloway, L.

Belstead, L.

Campbell of Croy, L.

Benson, L.

Carrington, L.

Bessborough, E.

Cawley, L.

741

Chorley, L.

Macleod of Borve, B.

Cockfield, L.

Malmesbury, E.

Colville of Culross, V.

Mancroft, L.

Colwyn, L.

Margadale, L.

Constantine of Stanmore, L.

Marley, L.

Marshall of Leeds, L.

Cork and Orrery, E.

Mersey, V.

Cottesloe, L.

Monson, L.

Craigavon, V.

Montagu of Beaulieu, L.

Craigmyle, L.

Montgomery of Alamein, V.

Crathorne, L.

Croft, L.

Mottistone, L.

Cullen of Ashbourne, L.

Mowbray and Stourton, L.

Daventry, V.

Murton of Lindisfarne, L.

Davidson, V.

Napier and Ettrick, L.

de Clifford, L.

Northchurch, B.

Denham, L.—[Teller.]

Nugent of Guildford, L.

Derwent, L.

Nunburnholme, L.

Dilhorne, V.

Onslow, E.

Ellenborough, L.

Orkney, E.

Elles, B.

Pender, L.

Elton, L.

Penrhyn, L.

Energlyn, L.

Peterborough, Bp.

Exeter, M.

Plummer of St. Marylebone, L.

Fairfax of Cameron, L.

Faithfull, B.

Portland, D.

Ferrers, E.

Rankeillour, L.

Foley, L.

Rawlinson of Ewell, L.

Fortescue, E.

Redmayne, L.

Fraser of Kilmorack, L.

Reigate, L.

Gainford, L.

Renton, L.

Garner, L.

Renwick, L.

Geddes, L.

Robbins, L.

Gisborough, L.

Rochdale, V.

Gardner of Parkes, B.

St. Aldwyn, E.

Glendevon, L.

Saint Oswald, L.

Glenkinglas, L.

Sandford, L.

Gore-Booth, L.

Sandys, L.—[Teller.]

Gormanston, V.

Savile, L.

Gowrie, E.

Seebohm, L.

Greenway, L.

Selkirk, E.

Gridley, L.

Shannon, E.

Grimston of West bury, L.

Skelmersdale, L.

Halsbury, E.

Spens, L.

Harmar-Nicholls, L.

Stamp, L.

Hawke, L.

Strathcarron, L.

Hives, L.

Strathcona and Mount Royal, L.

Holderness, L.

Hylton-Foster, B.

Sudeley, L.

Kemsley, V.

Swinfen, L.

Killearn, L.

Terrington, L.

Kilmany, L.

Teviot, L.

Kimberley, E.

Thomas of Swynnerton, L.

Kinloss, Ly.

Thorneycroft, L.

Lane-Fox, B.

Tranmire, L.

Lauderdale, E.

Trefgarne, L.

Lindsey and Abingdon, E.

Trenchard, V.

Linlithgow, M.

Trumpington, B.

Lloyd-George of Dwyfor, E.

Tweeddale, M.

Vaux of Harrowden, L.

Long, V.

Vivian, L.

Loudoun, C.

Wakefield of Kendal, L.

Lucas of Chilworth, L.

Ward of Witley, V.

Lyell, L.

Westbury, L.

McFadzean, L.

Windlesham, L.

Mackay of Clashfern, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
On Question, Bill passed, and returned to the Commons.
Lord Denham: My Lords, before moving that the House do now adjourn, I wish to mention that I said earlier that dinner would be available. It is now just after six o'clock and I have my doubts as to whether many of your Lordships will be remaining here. So if no noble Lord objects too strongly, I think it would be better if we cancel the dinner arrangements for tonight.

  THE ROYAL COMMISSION ON GAMBLING REPORT: POLICY
  THE ROYAL COMMISSION ON GAMBLING REPORT: POLICY
  THE DERBY
  THE DERBY
  HORSERACE BETTING LEVY BOARD: 20th ANNUAL REPORT
  HORSERACE BETTING LEVY BOARD: 20th ANNUAL REPORT
  AINTREE RACECOURSE AND THE GRAND NATIONAL
  AINTREE RACECOURSE AND THE GRAND NATIONAL
  PRISONERS: RESTORATION OF LOST REMISSION
  PRISONERS: RESTORATION OF LOST REMISSION
  MERSEYSIDE DISTURBANCES: SPECIAL CONSTABLES
  MERSEYSIDE DISTURBANCES: SPECIAL CONSTABLES
  WARTIME HEADQUARTERS
  WARTIME HEADQUARTERS
  UNITED KINGDOM AND COLONIES: CITIZENSHIP STATISTICS
  UNITED KINGDOM AND COLONIES: CITIZENSHIP STATISTICS
  >OVERSEAS ADMISSIONS TO UNITED KINGDOM
  >OVERSEAS ADMISSIONS TO UNITED KINGDOM
  PRISON ESTABLISHMENTS
  PRISON ESTABLISHMENTS
  STATELESS PERSONS: TRAVEL DOCUMENT PROCEDURES
  STATELESS PERSONS: TRAVEL DOCUMENT PROCEDURES
  THE CHARITY COMMISSION: ADVICE TO TRUSTEES
  THE CHARITY COMMISSION: ADVICE TO TRUSTEES
  NAIROBI CONFERENCE ON ENERGY SOURCES
  NAIROBI CONFERENCE ON ENERGY SOURCES
  INVESTMENT TAXATION
  INVESTMENT TAXATION
  NATO BUDGET: UK CONTRIBUTION
  NATO BUDGET: UK CONTRIBUTION
  ROAD CONSTRUCTION: COMPARATIVE COSTS
  ROAD CONSTRUCTION: COMPARATIVE COSTS