Sitting of 27 October 1981

Preamble
The House met at half-past Two o' clock
PRAYERS
MR. SPEAKER in the Chair
LONDON TRANSPORT (NO.2) (BILL
Lords amendments agreed to.

CUMBRIA BILL [Lords]
Ordered,
That so much of the Lords Message [22 October] as relates to the Cumbria Bill [Lords] be now considered.
Resolved,
That this House doth concur with the Lords in their Resolution.—[The Chairman of Ways and Means.]

Oral Answers to Questions
  EDUCATION AND SCIENCE

    Nursery Education
    Mr. Dormandasked the Secretary of State for Education and Science what proposals he has to increase the number of nursery school places; and if he will make a statement.
    The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson)There is provision in the Government's expenditure plans for modest capital expenditure to enable those authorities that wish to do so to increase their nursery accommodation, mainly by converting spare primary accommodation.
    Mr. DormandDoes the Minister agree that nursery school education is of great importance and that it can be of crucial importance to disadvantaged children? Is that not borne out by the fact that all Conservative Members ensure that their children have pre-school education? If, as is reported today, the Secretary of State proposes to charge for nursery school education, does he realise that that would be a disgraceful decision and that there would be total opposition to it from Labour Members?
    Dr. BoysonTwo-thirds of nursery provision comes in inner city and urban areas where there is social and economic deprivation. The Government and local authorities have given priority to such areas. I cannot say what percentage of Conservative Members have children in pre-school education, but I should imagine that it is the same as in the rest of the community.
    In answer to the hon. Gentleman's question about charging for nursery school education, section 61 of the Education Act 1944 prohibits the charging of fees in

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    respect of education provided in maintained schools. The Government have taken no decision to alter that provision relating to nursery education.
    Mr. FormanIs my hon. Friend aware that the first answer that he gave will be welcome to many Conservative Members? Is he further aware that about 85 per cent. of all young children come from homes where mothers go out to work, either full-time or part-time? Does that not strengthen the already strong argument that nursery education should be provided wherever possible?
    Dr. BoysonFew hon. Members on either side would advocate nursery school education for all. The most that any Government have done has been to increase provision for those who wished it. Many people feel that it is always satisfactory when the mother can be at home with the children. We realise that there is deprivation in various other areas, but I think that my hon. Friend will agree that the way in which nursery school education has developed is helping those who need it.
    Dr. McDonaldIs the Minister aware that many women who wish to go to work place the highest priority on nursery education for their children, not only for their benefit but for that of their children? Will the hon. Gentleman now firmly and finally rebut any belief that the Secretary of State may have that charges for nursery education may fall outside the 1944 Act and are therefore being seriously considered by the Government? Is he aware that such fantasies on the part of the Secretary of State or his Department have been firmly and totally rejected by the women and families of this country?
    Dr. BoysonI am sure that every hon. Member is aware that at times of economic recession all forms of education expenditure have to be examined to see whether there is a means of making economies or cut-backs. The hon. Lady is a member of a party which in 1975 and 1976 cut back heavily on education in many areas, probably with few shouts from Labour Members.
    Mr. FieldHas the Minister read the reports of the Secretary of State's speech yesterday suggesting that the Government might introduce charges for nursery education? Does he agree that poor children benefit most from nursery education? Is he aware that under any means-tested form of support large numbers of poor families fail to claim their help? Does he accept that if the Government introduce means-tested charges for nursery education that will be possibly a fatal blow to the educational attainment and, thereby, the job opportunities of many poor children?
    Dr. BoysonAs I have said, obviously the Government are looking at all areas of educational expenditure. I remind the hon. Member that over the last year 6,500 more children entered nursery education, under the present Government than in the previous year, and in the first year in which we were in office the number was 5,200.
    I have here two quotations from what my right hon. Friend said yesterday. The first is this:
    "I do have a slight feeling about the desirability of mothers of young children to be with them."
    I think that 95 per cent. of the people of this country would entirely agree with that.
    Secondly, my right hon. Friend said:
    "I do not see it as the duty of the Government to see that there is national provision for every child up to the age of five."
    Again, I think that 95 per cent. of the people of Britain would entirely agree with that.
    Mr. SpeakerI appeal to the House for briefer supplementary questions and answers.

    Secondary Schools
    Mr. Knoxasked the Secretary of State for Education and Science how much was spent per pupil in secondary schools in England in each of the past three years at constant prices.
    The Secretary of State for Education and Science(Sir Keith Joseph)Net institutional recurrent expenditure at 1980 survey prices for secondary pupils in England was £572 in 1977–78, £593 in 1978–79 and £601 in 1979–80.
    Mr. KnoxWill my right hon. Friend confirm that he expects expenditure per secondary pupil in England this year to be higher in real terms than it has ever been?
    Sir Keith JosephWe have no actual figures for last year or this year, but, taking into account the larger number of teachers who were engaged last year than was anticipated, I think that the answer to my hon. Friend is almost certainly "Yes".
    Mr. KinnockHas the Secretary of State yet replied to Mr. Bernard Barker, the head teacher of the Stanground school, Peterborough, who wrote to him a couple of weeks ago to inform him that in his, Mr. Barker's, opinion, due to the cuts, his school was now breaking section 8 of the Education Act 1944? If the Secretary of State will not accept Mr. Barker's practical illustration, will he accept his own evidence, as he said yesterday that many teachers were teaching age groups for which they are not trained in subjects for which they are not trained? If that is the case, how does the right hon. Gentleman think that the further cuts that he promised yesterday to assistant mistresses and masters will further improve standards of provision and performance in Britain's schools?
    Sir Keith JosephI have not yet answered Mr. Barker. I entirely accept that I have inherited a position that has prevailed under all Governments since the war of a dramatic mismatch, as it is called, between teachers teaching subjects and their training to teach those subjects, or indeed, in many cases, to teach the age group that they are teaching. There is a mismatch, and it is difficult to cure. The present Government inherited it from the previous Government.
    I did not say to the conference yesterday that there would be any cut in schools education. I said that at this time of the year all Governments normally examine all sectors of public spending.
    Mr. FlanneryDoes the Minister not realise that the cuts in education are now so drastic that they are eating deep into the fabric of education, while public funds are being siphoned off into private education, and that our children are being made to suffer so that private education can expand on taxpayers' money? That is the reality. Does he realise that a depleted and dedicated teaching force is now having to struggle because, as the Book Publishers Association and the equipment associations are coming to tell us—they are coming to our group tonight—sales of books have dropped and the schools do not have enough books or equipment with which to educate our children?
    Sir Keith JosephMany different factors affect the costs of education—both ways. Local education
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    authorities make their own decisions, both about resources and about how to spend them. The fact is that there is a sharp difference of effectiveness as between one LEA and another, both in the resources that they decide to spend and in the effectiveness of how they spend them.
    The party that destroyed the direct grant schools has no right to complain when, on behalf of those who are most able to benefit from education and least able to get good education in their areas, the present Government, through my right hon. and learned Friend, my predecessor, have introduced the assisted places scheme.

    Aston, Bradford and Salford Universities (Grant Reductions)
    Mr. Hal Millerasked the Secretary of State for Education and Science what representations he has received about the reductions in grant proposed for Aston, Bradford and Salford universities; and whether there have since been any changes in the grants for engineering and scientific subjects.
    Mr. Cryerasked the Secretary of State for Education and Science if he will make a statement on the representations received from Bradford university regarding future grant support.
    The Under-Secretary of State for Education and Science (Mr. William Waldegrave)Ministers have received over 1,000 letters about the allocation of grant to the universities of Aston, Bradford and Salford by the University Grants Committee. I am not aware that the UGC is proposing any change in allocation.
    Mr. MillerI congratulate my hon. Friend on his appointment—which I hope has removed any doubt about chips.
    From those 1,000 representations, has my hon. Friend understood the serious concern felt in the West Midlands that the reductions proposed by the University Grants Committee strike directly at the technological departments of the university and ignore those research efforts at the university funded by industrial firms?
    Mr. WaldegraveI hope that I understand the quite comprehensible concern expressed in the West Midlands. My hon. Friend's commitment to the University of Aston is well known. We must surely remember that the university system is to be regarded as a national whole. Overall, of the former colleges of applied technology, three have been asked to increase their engineering and two have been asked to diminish it. Understandably enough, we have heard more about the two than the three, but the increases are true, as well as the decreases.
    Mr. Cryer:Does the Minister accept that the reductions proposed at Bradford will diminish the opportunities for young people, place jobs at the university in jeopardy in an area of high unemployment, and undermine the potential viability of the university? Does he realise that the local authority, the university and local trade unions and people bitterly oppose the cuts? As a new Minister with a reputation for cultural achievement, so-called, is he not opposed to these philistine policies, and is he about to embark on a reversal of them?
    Mr. WaldegraveI am grateful for the hon. Member's kind words. It is the opinion of the UGC that after the cuts, which it has been compelled to make, no university will be unviable.

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    Of course the cuts are losing us valuable provision, and——
    Mr. CanavanResign.
    Mr. Waldegrave—no one would want to deny that, but at a time when all public programmes, even the most valuable, must have limited resources applied to them, not even the most valuable of all public provision—and the University of Salford is and will remain a fine institution—can be wholly protected.
    Sir William van StraubenzeeBehind the understandable anxieties of individual universities mentioned in this question and others, is not the point touched on by my hon. Friend of very great importance—that for virtually the first time the UGC has intervened positively and moved resources towards the technologies, in a way that very large numbers of people in the House and outside would very warmly applaud?
    Mr. WaldegraveMy hon. Friend is right. Within the reduced overall total of students the University Grants Committee has arranged for an increase of 1 per cent. in the sciences and in technology. It has also arranged for an absolute increase in numbers in engineering and technological subjects.
    Mr. WhiteheadI thank the new Minister for bringing a fresh mind to a stricken field. Will he consider the position of those universities that are sending out redundancy notices that will add to the overall bill of £250 million in redundancy payments? Will the hon. Gentleman note that students at Aston university are suing the university for breach of contract? What will happen to those legitimate claims from both staff and students? Will it be a matter of a supplementary grant, or will the Minister tell his Department to rethink the whole problem? Does the hon. Gentleman agree that the present situation has contributed to—as the hon. Gentleman has called it—the socially reactionary nature of this Government?
    Mr. Waldegrave:The hon. Gentleman—no less than I—knows the unpredictability of the extent of the redundancy problem. It would be foolish for Ministers or others to deny that there is a problem. However, we must tackle that problem when it comes. Since the cases involving the Aston students are being brought to court, the hon. Gentleman will not expect me to comment on them.
    Mr. HeddleIf my hon. Friend acknowledges the importance that technology, particularly as practised by Aston university, plays in industrial life, will he agree that the Government are courting unfair, unfortunate and unjustified criticism because of the decisions made by the so-called independent UGC? Will my hon. Friend consider consulting his right hon. Friend to see whether a breath of fresh air can be breathed into the UGC's independent decisions, thus restoring some emphasis on the technological institutions?
    Mr. WaldegraveI regret the use of the words "so-called". In its academic judgments the UGC is entirely independent of Ministers. In a recent book Lord Robbins called the institution—
    "one of the happiest of our constitutional inventions."
    It would be wrong for Ministers or for my hon. Friend to try to direct the UGC about its judgments on academic policies.
    Mr. BeithAlthough the Minister may not be able to comment directly on the Aston students who are suing the university, will he at least make it a principle that students who have been accepted on courses do not find them axed? Will he agree that, as at Brunel university, students who have started courses should not find them axed?
    Mr. WaldegraveThat is a matter for the individual institutions concerned.
    Mr. CryerOn a point of order, Mr. Speaker. In view of the totally inadequate nature of that reply, I give notice that I intend to take up the matter at the earliest opportunity.

    School Grants
    Mr. Skinnerasked the Secretary of State for Education and Science if he will now introduce school grants for all students between the ages of 16 to 19 years; and if he will make a statement.
    Dr. BoysonAs my hon. Friend the Member for Sutton and Cheam (Mr. Macfarlane) said in reply to the question asked on 14 July by the hon. Member for Bolsover (Mr. Skinner), the Government are keeping the arrangements for financial support for 16 to 19-year-olds under review, but have no plans at present for changes.
    Mr. SkinnerDoes the Minister accept that if it costs about £6,000 million to keep 1 million people out of work there is some sense in keeping more young people in that age group at school? At the very least that would keep them off the streets and give them some purpose in life. Is the hon. Gentleman aware that it would do more than that? It would provide several thousand jobs for school teachers at a time when at least 6,000 teachers are on the dole. Is the hon. Gentleman also aware that, in the midst of my hon. Friends, I think that I can say that this issue is part of our alternative strategy on which we are all united.
    Dr. BoysonI am sure that the country will be amazed when it reads that last statement. In future, people will follow Question Time even more closely than before. All the evidence shows that more 16 to 19-year-olds now stay at school. Local education authorities already have powers to pay maintenance grants to children aged between 16 and 19. According to the figures for last year, about £3·7 million was paid to 16 to 19-year-olds who attended school, and a further £3·7 million was paid to those in further education. Therefore, certain things are being done.
    Mr. KinnockDoes the Minister recall that during the "no confidence" debate on 27 July the Prime Minister announced that an additional £60 million was to be provided in the next financial year so that 50,000 more youngsters could stay on at school or college? Despite many requests from the many different authorities for information, the Department has failed to give an answer. Will the Minister tell us, for the first time, to whom the money will be given, how it will be spent, how it will be calculated and the policies that the Government have in mind regarding either the payment of 16 to 19-year-olds or the provision of facilities for the hundreds—possibly thousands—of young people who are turned away from further education because of cuts in this academic year?
    Dr. BoysonI am grateful to the hon. Member for Bedwellty (Mr. Kinnock) for having drawn our attention to the fact that just before the Summer Recess the Prime Minister said that £60 million more would be provided for England and Wales and that provision would be made for about 50,000 more 16 to 19-year-olds to stay at school. As yet I have not gone into the details, but I understand that the money will be given to the local authorities—after discussion with them—via the rate support grant. [Interruption.] The hon. Member for Bedwellty may not like that, but if the Government allocate the money direct it will cause uproar among the local education authorities, including most of those that are Labour-controlled.
    Mr. MadelFor the education and training of 16 to 19-year-olds, will my hon. Friend ensure that the Department co-operates even more closely with the Manpower Services Commission and the Department of Employment so that skillcenters can be opened up to young people aged between 16 and 19? Will he also ensure that we tackle the problem of the shortage of instructors in skillcenters?
    Dr. BoysonI am grateful to my hon. Friend for his comments and agree that such steps must be taken. There are obviously discrepancies in the sums paid to young people on youth opportunity programme schemes, to those receiving unemployment benefit or supplementary benefit, and to those at school. Those discrepancies must be looked at not only by the Department but by other Ministers.

    Overseas Students
    Mr. Beithasked the Secretary of State for Education and Science how many overseas students have enrolled in universities for the 1981–82 academic year; and how many enrolled for the 1980–81 academic year.
    Mr. WaldegraveInformation for 1981–82 is currently being collected and will be made available, we hope, by the end of the year. In 1980–81 there were 33,200 overseas student enrolments in the universities of Great Britain. This figure includes students from European Community countries who were charged home fees.
    Mr. BeithWhat merit can the Minister see in a reduction of 43 per cent. in the number of students from Caribbean countries and in a reduction of 46 per cent. in the number of students from Sri Lanka, where Her Majesty received such a warm welcome? How does he compare that with the substantial increases in the numbers of Third world students in the Soviet Union?
    Mr. WaldegraveEven within the overall drop there have been welcome increases from some countries. It is a correct Government decision that questions of foreign policy should be decided by the Foreign Office, which has £42 million available for expenditure in this area.
    Mr. DorrellDoes my hon. Friend recognise the importance of overseas students both in terms of export potential and of our image abroad? Will he undertake to monitor closely the numbers of overseas students in British universities to ensure that the numbers do not fall beyond a level that the Government believe reasonable?
    Mr. WaldegraveThe answer is "Yes". The Department is already engaged on such monitoring. As the information becomes available, the Department will analyse it closely.
    Several Hon. Membersrose——
    Mr. SpeakerOrder. Question Time is going very slowly indeed today. We must move on.

    School Leaving Dates
    Mr. Moateasked the Secretary of State for Education and Science what representations he has received about introducing greater flexibility into school leaving dates.
    The Under-Secretary of State for Education and Science (Mr. William Shelton):So far this year my Department has received some 30 letters from hon. Members and members of the public, mostly in respect of individual pupils who wish to leave school before the school leaving age.
    Mr. MoateMay I take this opportunity to congratulate my hon. Friend on his appointment? Does he agree that although many 16-year-olds would undoubtedly benefit from staying longer at school, others have jobs to go to, have alternative sources of education available, or have strong social reasons for being allowed to leave before they are 16 years old. Before the last election did we not promise that we would allow greater flexibility than before? Will my hon. Friend examine that proposal sympathetically?
    Mr. SheltonI know the interest that my hon. Friend has shown in this matter. There is a problem, but, given the high level of unemployment, we do not think it right to encourage youngsters to leave school for the work market. The recent joint working party concluded that where youngsters had finished their school courses but had not attained leaving age it might be possible to transfer them to full-time courses of further education. Consultations are taking place and the results of the consultations will be studied.

    Truancy
    Mr. Heddleasked the Secretary of State for Education and Science whether his Department is satisfied with the methods used by local education authorities to monitor and reduce higher levels of school truancy.
    Mr. William SheltonThese methods vary from area to area, and neither the authorities nor my Department can ever be fully satisfied that such a complex issue as truancy is being tackled in exactly the right way.
    Mr. HeddleI thank my hon. Friend for that answer. Does he agree that hard core truancy is the kindergarten of crime, particularly in the inner city areas? Has my hon. Friend considered the resolution passed by the National Association of Head Teachers at its annual conference, that parental condoned truancy is still on the increase? Has he had the opportunity to consider Her Majesty's Inspectorate's report, which suggests that parental condoned truancy exists in about 20 out of every 100 schools? Has he any suggestions about how that can be contained or reduced?
    Mr. SheltonMy hon. Friend has drawn attention to a serious problem. There is an increased problem of truancy condoned by parents. The short answer to my hon. Friend is that there is no way of tackling truancy nationally, other than by making courses in schools more

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    interesting. The Government have already taken the initiative by examining the school curriculum. Furthermore, there are plans to introduce pre-vocational examinations at 17-plus, with a move to pre-vocational training in a balanced curriculum in the fourth and fifth years. We believe that that will do much to reduce truancy.
    Mr. FreudPerhaps the Minister would care to examine the French system whereby child benefits are paid against satisfactory school attendance records —[Interruption.]
    Mr. SheltonI shall certainly take up the hon. Gentleman's suggestion.

    Primary Education
    Mr. Marlowasked the Secretary of State for Education and Science if he will carry out a study to identify why primary education in the Inner London Education Authority costs almost twice as much as it does in Northamptonshire; whether it achieves higher standards; and to what extent the additional cost is borne by the general taxpayer.
    Dr. Boyson:No, Sir. The Government have already carried out a comprehensive review of the ILEA and in February this year announced their conclusions. Because ILEA's expenditure this year of about £700 million is almost 50 per cent. above the Government's assessment of its needs, it is likely to receive no grant, whereas Northamptonshire will receive about £74 million grant on its total expenditure of £174 million.
    Mr. MarlowIs my hon. Friend satisfied that the ILEA, for all the money that it receives, provides as good education as that provided by other counties, such as Northamptonshire? If not, will he introduce a system whereby ILEA can produce that quality of education without subsidy, like the rather more efficient counties?
    Dr. BoysonThe HMI report, which came out just over a year ago, indicated that there were deficiencies in a number of secondary schools in London. In the ILEA 14·09 per cent. of 16-year-old school leavers passed five O-levels, whereas in Northamptonshire, in which my hon Friend has a great interest, the figure was 16·7 per cent. We have said that we shall watch what is happening in the ILEA and that it must have a better return for the money that is being put in in terms of achievement. Otherwise, the situation will have to be re-examined.
    Mr. Christopher PriceNow that at last the Minister has some responsibilities for the schools about which some of us had some fears, will he re-examine the complaints by Northamptonshire parents to the Secretary of State that the law is being broken in Northamptonshire? Will he review the decision by the previous Secretary of State and discover whether the decision in Northamptonshire fulfils the law under section 8 of the 1944 Act?
    Dr. BoysonAny complaint to my Department is examined by my right hon. Friend the Secretary of State. As Chairman of the Select Committee on the subject, the hon. Gentleman will know that inspectors are inspecting the schools. Any complaints will be examined carefully and answered to the satisfaction of right hon. and hon. Members.
    Mr. Dobson:Will the Minister explain to parents in London why he is willing to pay £70 million towards
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    expenditure on education in Northamptonshire where, in the opinion of parents there, there is an inadequate standard of education, but unwilling to provide one shilling towards inner London's education costs? Does he agree that his own malignant officials and his own malignant colleagues on the Front Bench have decided that the ILEA is providing a decent standard of education?
    Dr. BoysonI am grateful to the hon. Gentleman for asking that question. Inner London, for which the hon. Gentleman asks for more money, spends almost twice as much on the education of children—£925 per child—as Northamptonshire. I do not believe that it requires any more money to achieve the same standards.

    Pupil Numbers
    Mr. Chapmanasked the Secretary of State for Education and Science what are the figures of the total number of pupils in State primary and secondary schools, respectively, in this academic year; and how they compare with last year.
    Dr. BoysonThe total number of full-time and part-time pupils in maintained nursery and primary schools in England is projected to fall by 200,000, from 4,225,000, in January 1981 to 4,025,000 in January 1982. In maintained secondary schools the projected fall is 60,000 pupils, from 3,840,000 in January 1981 to 3,780,000 in January 1982.
    Mr. Chapman: Since those figures indicate a greater reduction than the modest cutbacks in the increase in expenditure on education in the last year, will my hon. Friend confirm that the cost per pupil in primary and secondary schools has risen in real terms in the past year? If so, does he accept that many people believe that that is an extremely welcome trend, given the economic realities and the fact that total Government expenditure this year will be 10 per cent. in excess of income?
    Dr. BoysonExpenditure on individual pupils has been rising in real terms in Britain for the last 30 years. Since the decrease in expenditure is only half that of the percentage decrease in the number of pupils in our schools in two or three years' time, as well as next year under present plans, more will be spent on the individual child than is being spent now.
    Mr. MarksWhy has the Department of Education and Science frustrated for so long the genuine attempt by the Manchester education authority to tackle the problem of falling rolls by the reorganisation of its schools? Is the Minister aware that it is nine months since the Department unnecessarily called in Manchester's scheme for examination? Is he aware that if the scheme is brought in next year it will produce many economies, but that the decision must be made by the end of this month? When will the decision be announced?
    Dr. BoysonI understand the concern felt by Manchester Members. The hon. Gentleman is wrong. The matter had to be called in by the Secretary of State because complaints had been made. The 1980 Act is specific. It states that if complaints are made the Secretary of State must call it in. I realise that the matter has been with us for nine months. There has been a change of Ministers in the Department in the last four or five weeks. We have been looking at the matter closely since then. I assure the hon. Gentleman that a decision will be made very soon.
    Mr. HannamWill my hon. Friend confirm that the pupil-teacher ratio has continued to improve during that period?
    Dr. BoysonI confirm what my hon. Friend the Member for Exeter (Mr. Hannam) says. At 1 January this year the pupil-teacher ratio was the lowest in British history—18·6 pupils per member of staff.
    Mr. R. C. MitchellDoes the Minister agree that the pupil-teacher ratio should not be used as a rigid guide for the staffing of any particular school? Is he aware, for example, that the loss of one teacher in a small primary school can have very serious effects on education in that school? Is he also aware that the loss of specialist teachers in a secondary school can have an equally serious effect?
    Dr. BoysonThe hon. Gentleman has distinguished teaching experience. I am well aware of what he says. That is why the reduction in staff numbers and money is less than the reduction in the number of pupils. We want schools to be able to operate their full curriculum despite falling rolls.

    Examination Achievements (Comprehensive and Grammar Schools)
    Mr. Neubertasked the Secretary of State for Education and Science what is the most recent evidence he has received on the comparative performance in terms of examination achievements of comprehensive and grammar schools.
    Sir Keith JosephEvidence shows that grammar schools as a whole have better examination results than comprehensive schools as a whole. This is not surprising, because grammar schools are selective and comprehensive schools are not. All of us must be concerned that more and more comprehensive schools should have as good results as some comprehensive schools already have.
    Mr. Neubert:Does my right hon. Friend share my concern that the rising curve of examination successes in 1971 seems to have been halted by the introduction of universal comprehensive education and that the abolition of the 11-plus, with over-large schools and mixed ability teaching, means that the education system increasingly fails to produce the right results? Would we not, as a country, do better if we maintained as wide a range of education as possible?
    Sir Keith JosephI agree with both propositions. The simultaneous destruction of direct grant schools and grammar schools, while comprehensive schools were installed as near universities as Labour Governments found possible without experiment, was tragic in educational and human terms.
    Mr. Robert C. BrownDoes the right hon. Gentleman agree that as long as independent, direct grant and grammar schools, in that pecking order, cream off the brightest children, the examination results must be in that order, too?
    Sir Keith JosephThat is precisely what I explained in my main answer.

    Overseas Students
    Mr. Dubsasked the Secretary of State for Education and Science what further representations he has received about the level of fees charged to students from overseas.
    Sir Keith JosephSince the beginning of May, 170 representations have been received from hon. Members, academic institutions, students and student associations and other interested national organisations.
    Mr. DubsDoes the right hon. Gentleman agree that the consequence of charging higher fees to overseas students is seen not only in lower numbers of such students, but, more especially, in the poorest students from the poorest countries being badly affected? How does that square with what the Prime Minister said yesterday on her return from the Cancum summit in Mexico?
    Sir Keith JosephThe hon. Gentleman is not stating the precise position. The Government have provided a substantial sum to help pay the fees of those who come to Britain from poor countries.
    Mr. HendersonWill my right hon. Friend tell the House how the numbers of overseas students in our universities now compare with what they were targeted to be under the previous Labour Governments' quota scheme?
    Sir Keith JosphThere are more.
    Mr. Christopher PriceHas the right hon. Gentleman noticed what has happened to trade between Britain and Malaysia in recent months? Is he aware that an all-party group of Members of Parliament that visited Malaysia recently was told that the reduction in trade had resulted largely from the discrimination that Malaysia felt over overseas students? For the sake of a small proportion of a £100 million saving in overseas fees, is it worth jeopardising billions of pounds of United Kingdom trade?
    Sir Keith JosephThe hon. Gentleman is being rather crude in assuming a single cause for a trend that may have many causes.
    Mr. Bill WalkerDoes my right hon. Friend agree that in this period of great difficulty, especially when cash is tight in every area, taxpayers are entitled to expect students from OPEC countries and other countries that have held Britain to ransom to pay full fees?
    Sir Keith JosephI agree entirely with my hon. Friend. There is a legitimate anxiety on both sides of the House to protect those who do not come from wealthy families or rich countries and who would otherwise benefit from education in Britain. Various reliefs have been provided by the Government to enable more students in that position to come here. The reliefs that the Government have provided should be welcomed by hon. Members on both sides of the House.
    Mr. WhiteheadThis year Sheffield university has lost fee income of about £1 million. Is the Secretary of State suggesting that the university should trawl the world for rich students or forgo that fee income and probably the courses associated with it? If he is making the former suggestion, may I ask how he squares that with the criticism properly made of it at the Mexico summit?
    Sir Keith JosephThe hon. Gentleman knows that Governments of both colours do not desire or achieve any

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    control over universities. The universities have been on a rising diet of taxpayers' money for more than 25 years. They now face one of the first adjustments that they have had to make, and many of them are finding ways to adjust.

    Science and Technology
    Mr. Gwilym Robertsasked the Secretary of State for Education and Science what figures are available for the impact of public expenditure cuts on higher education provision for science and technology; and if he will make a statement.
    Mr. WaldegraveIn the universities, despite a slight fall in the expected number of all science-based students, the University Grants Committee's allocation of grant for 1981–82 and provisional indications for later years provide for growth in student numbers in engineering and technology, mathematics and the physical sciences and for the support of important new developments in the biological sciences. Comparable information is not available for the non-university sector.
    Mr. Roberts:Does the Minister accept that, whereas cuts for the universities and polytechnics are bad enough, the real indictment of the Government's policy is that the growth that could be achieved in mathematics, computing, engineering and high technology generally is not being achieved? There is a great demand from industry, but that is not being met because of the Government's financial policies.
    Mr. Waldegrave:Perhaps the hon. Gentleman did not hear what I said.
    Mr. Roberts:I heard what the hon. Gentleman said.
    Mr. Waldegrave:There is growth in exactly the areas for which he is arguing.

    PRIME MINISTER

      Engagements
      Mr. Barry Jonesasked the Prime Minister what are her official engagements for 27 October.
      The Prime Minister (Mrs. Margaret Thatcher)This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.
      Mr. JonesBearing in mind the heavy levels of unemployment, does the right hon. Lady not owe it to the country to make significant changes in her economic policy? Is it not now the case that she no longer has a majority in the House for monetarism and unemployment?
      The Prime MinisterBy fighting inflation we are fighting unemployment. I thought that that was agreed on both sides of the House.
      Mr. Maxwell-HyslopHas my right hon. Friend heard that while she was away her right hon. Friend the Secretary of State for Trade signed an agreement worth £350 million for engineering exports from Britain to Brazil? Will she do all in her power to ensure that we have further successes of that sort by keeping our prices down?
      The Prime MinisterYes. I congratulate all who were involved in that very big deal of about £350 million for goods to Brazil. It will help British Shipbuilders, Northern
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      Engineering Industries, GEC and Ferranti. Much of the work will go to the North. I congratulate everyone involved.
      Mr. FootHas the right hon. Lady had a chance, since her return from Mexico, to consider the extremely critical situation in British Leyland? Will she undertake to use either her influence direct, or the influence of one of her Ministers, to intervene to ensure that serious negotiations take place? This firm is not on the verge of collapse. It could speedily be moving into a considerable situation of profits and success. I ask the right hon. Lady not to answer the question here and now, but to consider it afresh and to report to the House on Thursday on how the Government can assist in dealing with this situation.
      The Prime MinisterI should make it clear that the Government want British Leyland to succeed. We made that abundantly clear by the huge sums that the taxpayer invested in British Leyland in the past. The taxpayer has committed £990 million for 1981–82 and 1982–83. Industrial relations are matters for the company. The Government are not seeking to influence the company in that respect.
      Mr. FootMay I plead with the right hon. Lady, once again, on this matter? I hope that she will take account of what may be said to her by some of her hon. Friends. It would certainly be said by all my hon. Friends who represent parts of the country where British Leyland operates. I believe that anyone who considers the dispute will come to the conclusion that there are many other factors on which some independent assistance is needed. Anyone who talks to the management and to the unions, as we have done, could, I believe, come to the conclusion that there is a possibility of a settlement without victory or defeat for either side, but solely a victory for the nation as a whole. I plead with the right hon. Lady, once again, not to say "No" now, but to return to the House on Thursday, to see what the situation is then, and to consider whether the Government can use their mediating powers to assist in this situation?
      The Prime MinisterAll comments made by right hon. and hon. Members will be drawn to the company's attention. I must repeat that the Government want British Leyland to succeed, but they do not think it right to intervene in the handling of this matter by the company.
      Mr. FootI still hope that the right hon. Lady will make a statement to the House. She may not have fully appreciated the feeling throughout the country on this subject. If she looks at the matter afresh, she may wish to make a different statement to the House of Commons on Thursday.
      The Prime MinisterI have very much appreciated the feeling in the country. The taxpayer has invested a great deal of money in British Leyland. The sum of £990 million is allocated for this year and next year, so neither the taxpayer's nor the Government's good faith is in doubt.
      Mr. John CarlisleWhile Mrs. Gandhi deliberates over the fate of the British cricket tour, will my right hon. Friend make urgent representations to the Indian Prime Minister to allow the tour to go ahead? Will she condemn the latest United Nations black list that now seeks to prevent entertainers with a connection with South Africa from performing their arts?
      The Prime MinisterWe do not recognise the United Nations black list of individuals. It appears to us to conflict gravely with our ideas on individual liberty. I have not discussed the cricket tour with Mrs. Gandhi. We believe that we have honoured the Gleneagles agreement, and, naturally, we hope that the tour will go ahead for the benefit of cricket in both countries.
      Mr. David SteelIs the Prime Minister aware that while she was away a new Member of Parliament was elected for Croydon, North-West? Will she at any time allow the judgment of the people to affect her draconian policies on unemployment?
      The Prime MinisterI was just about aware of that. I remember when Liberal Members were elected for Orpington and Sutton and Cheam.
      Mr. Dubsasked the Prime Minister if she will list her public engagements for 27 October.
      The Prime MinisterI refer the hon. Gentleman to the reply which I have just given.
      Mr. DubsDoes the Prime Minister agree that the magnificent march last Saturday by about 200,000 people in protest against nuclear weapons is a sign of massive public revulsion against those weapons of death? Will she now review her defence policies to take note of public opinion?
      The Prime MinisterThe prospect of nuclear war is abhorrent to everyone. That is not in doubt. The purpose of our having nuclear weapons is to deter any aggressor who is a threat to this country from attacking this country. Many of us would look forward to the day when people were free to march in Moscow if they held that view.
      Mr. AlexanderWill my right hon. Friend spare a thought during the day for the unfortunate ratepayers of Nottinghamshire, who until May this year were in the lowest rated county in the country? Is she aware that since then an 18p supplementary rate has been imposed and that the Labour council is using nearly £10,000 of it for a basketball coach and £100,000 for a perfumed garden in Rufford Abbey?
      Mr. ConcannonWhat about the old-age pensioners?
      Mr. AlexanderIs my right hon. Friend aware of the anger of our ratepayers that the Association of District Councils——
      Mr. ConcannonWhat about the meals on wheels?
      Mr. AlexanderIs my right hon. Friend aware of the anger of our ratepayers that the Association of District Councils is implacably opposed to the reforms of my right hon. Friend the Secretary of State for the Environment to curb such excesses?
      The Prime MinisterI did not know the full facts about the increase in rates in Nottingham, but I know that ratepayers everywhere are angry at some of the increases in rates which they are facing. In particular, small businesses are angry because the increases cause the loss of jobs on a considerable scale. Many people are wishing that they had never elected Labour local authorities, which are extremely extravagant with ratepayers' money.
      Later—
      Mr. ConcannonOn a point of order, Mr. Speaker. As you will know, I do not habitually raise points of order. In fact, I cannot remember the last time when I did so.
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      However, serious allegations were made about Nottinghamshire county council this afternoon. I think that a reply should be given on behalf of the old-age pensioners, the sick, the disabled and the have-nots of Nottinghamshire, not to mention the manifesto commitments of the winners of the Nottinghamshire county council election. Surely that should have warranted a reply from the Prime Minister.
      Mr. SpeakerI listened to the right hon. Gentleman's remarks with tolerance, but, whatever else they were, they were not a point of order.
      Mr. Neubertasked the Prime Minister whether she will list her official engagements for 27 October.
      The Prime MinisterI refer my hon. Friend to the reply which I gave some moments ago.
      Mr. NeubertWill my right hon. Friend take the opportunity today to emphasise that if we are not to have higher taxes or higher borrowing leading to higher interest rates, calls for higher public expenditure can only mean printing money and that such debasing of the currency leads to chronic uncompetitiveness and loss of jobs? When production is increasing, when productivity is improving and when wages are taking an anti-inflationary trend, it would be folly to return to those discredited policies.
      The Prime MinisterI entirely accept that and agree with my hon. Friend. It is absolute folly ever to resort to printing money on the scale on which it has been printed in the past. It would do untold damage and ensure that we could not be competitive with our rivals in overseas countries. Any increase in public spending has to be financed either by taxation or by borrowing, and that could mean higher interest rates.
      Mr. Norman AtkinsonWill the Prime Minister confirm that when the Salt II talks were concluded it was announced officially that there was nuclear parity between the Soviet Union and the United States of America? Why do the Prime Minister and President Reagan now say that they must install Cruise and Pershing II missiles in Europe to bring about parity before nuclear disarmament talks can proceed? Will she explain that to the House?
      The Prime MinisterIt is remarkable that the hon. Gentleman should need an explanation, when the Soviet Union has so many SS20s targeted on Europe and when one comes into service every five days. It is remarkable that he should object to our having a deterrent to those.
      Mr. ColvinIs my right hon. Friend aware that Dr. Joseph Luns, the Secretary General of NATO, has estimated that about £6 million was spent by Russia on anti-nuclear propaganda in Western Europe last year and that 10 out of 40 members of the Campaign for Nuclear Disarmament national committee are Communists? Which country is likely to benefit most if Britain follows a policy of unilateral nuclear disarmament?
      The Prime MinisterI was aware of that sum. I hope that people are not taken in by it. Anyone who goes for unilateral disarmament is not likely to get the Soviet Union to the negotiating table on disarmament as a whole. They would put that in jeopardy.
      Mr. Robert HughesWill the Prime Minister have discussions with the Secretary of State for Education and Science about the difficulties faced by universities in

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      general, and Aberdeen university in particular? Is she aware that the medical school at Aberdeen is likely to lose 60 posts, many at consultant level, and that the principal has said that there is a danger that the university will go bankrupt? He has described the cuts as mindless and unthinking. Will she stop hiding behind the University Grants Committee and take a serious look at the damage that the Government's policy is doing to university education across the whole country?
      The Prime MinisterAs the hon. Gentleman knows, my right hon. Friend the Secretary of State for Education and Science has just answered questions for nearly three-quarters of an hour. The University Grants Committee is independent. It receives a global sum and decides how it shall be allocated. The Government do not decide that.
      Mr. Altonasked the Prime Minister if she will list her official engagements for 27 October.
      The Prime MinisterI refer the hon. Gentleman to the reply which I gave some moments ago.
      Mr. AltonI should be grateful if the Prime Minister would find time today to consider the latest calamity on Merseyside, which is the closure of the Speke motor car factory owned by British Leyland. Is it her intention to
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      intervene to save that latest loss of jobs? Will she comment on the gratuitous remarks of the Secretary of State for Employment about unemployed people in Merseyside getting on bicycles and trying to and non-existent jobs?
      The Prime Minister:My right hon. Friend did not make the exact remarks that the hon. Gentleman has attributed to him. If he had been here earlier, he would have heard my reply to the Leader of the Opposition. Industrial relations are a matter for the company. It is not my intention to intervene.
      Mr. Bill WalkerDoes my right hon. Friend agree that the high level of exports being attained by British manufacturing companies and the recent substantial orders that have been obtained are clear evidence that this country is becoming much more competitive and that we must do nothing to damage that competitiveness?
      The Prime MinisterThe export figures for this month were good. Admittedly, they were figures for only one month, but they were 6 per cent. in volume higher than the last figures that we had in January and February. That is a matter for congratulations to all the companies, both the management and the work force, and evidence that they are becoming much more competitive.

    Bomb Incidents (London)
    The Secretary of State for the Home Department (Mr. William Whitelaw)With permission, Mr. Speaker, I should like to make a statement.
    The House is aware that at about 4 pm yesterday afternoon a bomb exploded in a Wimpy bar in Oxford Street, killing Mr. Kenneth Howorth, a Metropolitan Police explosives officer. Mr. Howorth had entered the building following an anonymous phone call received by Reuters news agency at 2.50 pm warning that three bombs had been placed in shops in Oxford Street, the other two places being the department stores Debenhams and Bourne's. Subsequently an explosive device was found in Debenhams and made safe. Despite an intensive search, a third device has not been found. The Provisional IRA has said that it was responsible.
    The House will wish to express its revulsion at this vicious act. It will also I am sure wish to join in paying tribute to the courage and dedication to duty of Mr Howorth. Our deepest sympathy goes to his widow and family. We all owe a tremendous debt of gratitude to those who, like Mr. Howorth, risk their lives to protect us.
    This is the third bombing incident this month in London for which the IRA has said it is responsible. In the first, at Chelsea barracks, two people were killed. The second was the attack on Lieutenant-General Sir Steuart Pringle. The House will wish me to place on record our deepest sympathy with the relatives of the victims of the first attack and our tribute to the courage of Sir Steuart
    The emergency services have responded swiftly and efficiently on each of these occasions. I can assure the House that the police are taking all possible steps—as they have done with success in the past—to bring the criminals to justice.
    I should like to underline what the police have already said. They need help from the public and, above all, vigilance. Any suspicious objects or actions should be reported to the police immediately.
    Mr. Roy HattersleyWe join with the right hon. Gentleman in utterly and unequivocally condemning yesterday's outrage. As all such vicious acts are morally inexcusable, it is perhaps incorrect to draw a distinction between one outrage and another. However, for my part, I feel a particular revulsion at bombs being placed in a position and at a time which are likely to result in the death and injury of schoolchildren.
    I add our tribute to the courage and dedication of Mr. Kenneth Howorth. We offer our sympathy to his relatives, and we offer our gratitude to his colleagues who at great risk to themselves continue to protect innocent members of our society. The Opposition also offer their sympathy to Sir Steuart Pringle and to the relatives of Mrs. Nora Field and to Mr. John Breslin, the victims of the Chelsea bombing.
    Our hope is that the vigilance of the public and the determination of the police will both prevent future death and injury and bring the people responsible for these three murderous attacks to speedy justice.
    Mr WhitelawI am grateful to the right hon. Gentleman for what he has said, because it shows a considerable degree of unity throughout the House, which is of enormous importance in situations such as this. I am
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    particularly grateful for what he said, with which I entirely agree, about the risk to schoolchildren. I am sure that the House wholeheartedly supports his view.
    Dr. David OwenI and members of my party fully share the sympathy that the Home Secretary has extended to the victims of these tragic incidents. I assure him of our full support. The whole House recognises that once again we have been given an example of the selfless duty of those who work in the bomb disposal squad. Will the right hon. Gentleman also accept our assurance that we shall do everything possible to sustain the determination of people on the mainland, when faced with these bomb outrages, to follow the extraordinary example of the people of Northern Ireland who, unfortunately, have experienced similar occurrences for many years?
    Mr. WhitelawI agree with the right hon. Gentleman and I am grateful for his comments. It is worth recalling that since March 1974 Mr. Howorth has been with the Metropolitan Police bomb disposal unit. Before that he worked in Northern Ireland. He gave considerable service to this country in that respect.
    Sir Frederick BurdenWe all agree with my right hon. Friend's expressions of sympathy with the widow of this very brave man. However, will he look into the possibility of making a special grant to the wives of men who are killed in such circumstances? They suffer constant and considerable stress because they know of the threat which their husbands face almost every day.
    Mr. WhitelawMany people will have sympathy with what my hon. Friend has said. His suggestion raises wide issues, and it would be wrong of me to commit myself this afternoon.
    Mr. James MolyneauxMay we take it that the sympathy expressed by the right hon. Gentleman and the House extends to all victims of the Provisional IRA?
    Mr. WhitelawMost certainly, yes, as the hon. Gentleman would expect.
    Several Hon. Membersrose——
    Mr. SpeakerOrder. I propose to call those hon. Members who have constantly risen in their places, but I know they will realise that guillotined business is to follow.
    Mr. John FarrAs it is obviously the wish of both sides of the House properly to debate the matter and to pay tribute to the bravery of those concerned, will my right hon. Friend see whether this week—perhaps by doing away with some of Thursday's business—we can have a half-day debate on the recent run of terrorist bombings in London and the Home Counties?
    Mr. WhitelawThe arrangement of business is a matter for my right hon. friend the Leader of the House. However, if I were to hazard a view, it would be that the House should consider carefully what we gain by debates of that sort and whether we might make the situation more difficult by giving more succour to the terrorists, which is the last thing we intend to do.
    Mr. Robert Kilroy-SilkWhy is it necessary to insist on defusing such devices, thereby risking the lives of brave men, when the only danger is to property?
    Mr. WhitlawI would have to consider what the hon. Gentleman has said. However I should have thought that there was considerable danger at that moment not only to property but to life. I shall discuss the hon. Gentleman's point with the Commissioner of Police of the Metropolis. But, as I have said, I believe that there was considerable danger to life as well as to property at that time.
    Mr. Hugh DykesIs my right hon. Friend aware that the death of Mr. Howorth is a staggering tribute not only to his own bravery but to that of all bomb disposal officers, particularly in Northern Ireland? Without referring to any specific security measures, and bearing in mind the difficulties, can my right hon. Friend say anything which might reassure the public in the main streets and thoroughfares of London as the Christmas shopping season approaches?
    Mr. WhitelawOn the first point, with regard to the Army bomb disposal units, anyone who has had some of the experience that I have had, as many right hon. and hon. Members have, both in Northern Ireland and here, will be the first to recognise the enormous bravery of these officers in many very difficult situations.
    On the second point, I believe that our best safeguard against such attacks is vigilance, being very careful and at the same time reporting any suspicious incidents to the police. The other safeguard, of course, is what has been achieved by the police in the past in bringing the people who commit these crimes to justice. It is worth pointing out that at present there are some 69 IRA prisoners in English gaols who have been charged and convicted of serious offences.
    The police have had considerable success in the past, and we must be confident that they will succeed again.
    Mr. Arthur LewisOf course one willingly pays tribute to those who have suffered, whoever they may be. Without denigrating anybody, however, is not it a fact—and I can prove this to the right hon. Gentleman—that one may, as indeed I have, report suspicious circumstances to the police and it is weeks before they do anything?
    According to the press photograph, in the recent incident at Victoria, it looked as though the van was on the zig-zag line before a zebra crossing. It should not have remained there for five minutes. I have myself reported vehicles, but nothing is done about it. As we have the largest police force ever, with all the new electronic aids, why cannot the police take action sooner? Why does it take them weeks, if not months, to take action?
    Mr. WhitelawThey can and do take action immediately. If the hon. Gentleman tells me something is a fact, presumably I have to accept it, although I occasionally have my doubts. At the same time, I am perfectly prepared to look into what the hon. Gentleman says if he will give me what he alleges to be facts. Between us we can then ascertain whether they are indeed facts.
    Mr. Tony MarlowSince terrorism has gone on unabated to a large extent in Northern Northern Ireland and to an extent in the United Kingdom the last 12 years, would my right hon. Friend give serious consideration to the experimental reintroduction for a period of the death penalty? I am sure that there would be massive support for it.
    Mr. WhitelawThat is a matter upon which hon. Members have their own individual points of view. Those views have been expressed collectively in this Parliament. I do not think that I have anything further to say on that.
    Mr. David WinnickIs the Secretary of State aware that those of us who believe in the need for a thorough reappraisal of policies towards Northern Ireland have no hesitation in condemning these outrages and all the crimes and atrocities of the Provisional IRA and the other terrorist groups operating on the other side of Northern Ireland's political divide?
    Mr. WhitelawI am grateful to the hon. Gentleman for what he has said, particularly in so far as it shows that there is a united wish in the House to stand up for the people of Northern Ireland and to fulfil our duty to them whatever difficulties may confront us here.
    Mr. Michael BrownDoes my right hon. Friend accept that equally serious hazards at this time are the hoax calls that the police have been receiving? I understand that this morning many hoax calls have had to be dealt with in London. Will he make it clear to the general public that his Department will take very seriously this terrible waste of police time?
    Mr. WhitelawThe making of hoax calls and wasting police time is a specific offence and will certainly be regarded as such. At the same time, if we ask the public to report all suspicious circumstances, Scotland Yard must expect a large number of calls of this kind.
    Mr. David AltonI associate myself and my right hon. and hon. Friends with the expressions of repugnance and the condolences already expressed on both sides of the House. Can the Home Secretary tell us whether there is any evidence yet that those involved in the perpetration of these crimes are part of indigenous cells that have remained dormant in our cities for some years, or whether ports of entry such as Liverpool have been used as bolt holes by the terrorists concerned?
    Mr. WhitelawI do not think that I would serve the best interests of the country by speculating on such matters. I have information, of course, but I think that it would be wrong to speculate.

    NEW MEMBER
    The following Member took and subscribed the Oath: William Henry Pitt Esq., for Croydon, North-West.
    NEW MEMBER

      Police Complaints (Reform)
      3.47 pm
      Mr. Alfred DubsI beg to move,
      That leave be given to bring in a Bill to reform the procedures for making complaints about the police; and for connected purposes.
      The aim of the Bill is quite simply to establish an independent machinery for investigating complaints about the police. I am well aware that I am not the first hon. Member to raise this issue. Indeed, my research in Hansard shows that many hon. Members have raised the issue in the past. I pay tribute to their endeavours in publicising the need for a change in the present set-up.
      In recent months, however, more attention has been drawn to the operations of the police. The general public have become more worried, and the way in which complaints about the police are handled has been the subject of much more attention in the media and elsewhere. In the last few weeks, indeed, three chief constables have come out in favour of independent machinery for investigating complaints against the police. The chief constable of the Lancashire force, Mr. Albert Laugharne, said:
      "Investigations of complaints, whether they are of alleged crimes by policemen or serious disciplinary offences, I think, can only be done by an outside body responsible to a person independent of the police service."
      Mr. Peter Imbert, chief constable of Thames Valley force, spoke of the need for an independent complaints ombudsman. Mr. James Anderton, chief constable of Manchester, no less, said that the police had nothing to fear from an independent element in the system. It is also extremely probable that when Lord Scarman reports in a few weeks he, too, will come out in favour of independent machinery for investigating complaints against the police.
      The Bill is therefore in no sense an anti-police measure. Indeed, I suggest that if the Bill became law it would lead to more public confidence in the police, because there would be more belief on the part of the public that legitimate complaints against the police would have a fair hearing and justice would be done and would be seen to be done.
      The difficulty with the present method of investigating complaints is that it is seen and known by the public not to be independent, because the police themselves carry out the investigations. Accordingly, the public are reluctant to complain, partly because they feel that there is no purpose and partly because inevitably some of the complaints are of the way the police behave when the complainant may be under threat of prosecution.
      A Home Office research unit report, unpublished but quoted extensively in The Times some months ago, drew attention to serious defects in the way that complaints of assault were handled in the Metropolitan Police area. Last year the Police Complaints Board completed investigations into about 15,000 complaints, Of course, the board does not have an "independent" element in the full sense of the word. The board considers reports of investigations and recommendations by the police. The effect of the board's work is to rubber-stamp the police reports. That is evidenced by the fact that in 1979 the board referred the report back to the police for more information in only 31 instances. The figure increased to 110 in 1980. That is still a drop in the ocean when one considers the volume of complaints made about the police every year.
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      How would such an independent police investigating machinery operate? I shall call it the police ombudsman for short, because the public have come to accept that the other ombudsman machinery is truly independent of Whitehall, local government, or the service it may be investigating. I see the police ombudsman as having his own investigating staff. Some of them may be ex-police officers, but there would be no serving police officers in order to meet the need for a truly independent set-up in investigating complaints.
      It is sometimes said that such an ombudsman may be bogged down by many trival or ill-founded complaints. Under the present set-up, when the police feel that complaints are trivial or ill-founded, they can refer them to the Police Complaints Board to save time. Last year 433 complaints were dealt with in that way. It is difficult to believe that, out of 15,000 complaints, only 433 were deemed to be ill-founded or trivial. The answer is that, because the police know that the way they handle complaints is scrutinised and criticised, they are understandably reluctant to say "These complaints are trivial and ill-founded so we will pass them to the Police Complaints Board." The result is that the police have to spend a great deal of time investigating trivial and ill-founded complaints. One of the benefits—although not the main one—of having an independent police ombudsman is that his staff could investigate complaints and report quickly without too full an investigation if there were prima facie evidence that the complaints were trivial, ill-founded or vexatious.
      Furthermore, the police ombudsman could do something that is impossible under the present setup—that is, where appropriate, seek conciliation between the complainant and the police. That would be an enormous benefit and would lead to better relations between the police and local communities.
      However, in some instances there would have to be a full and thorough investigation by the police ombudsman. That should not be confined only to instances of serious physical injury to a member of the public allegedly caused by the police, because there is a point of principle in some complaints against the police. Although they may seem to deal with a trivial event, there may be a major point of principle. The police ombudsman should have the power, when appropriate, to investigate fully the whole range of complaints.
      The police ombudsman should have power to recommend, when appropriate, that the Director of Public Prosecutions institute proceedings against police officers or that the police disciplinary code be invoked. He would also have the duty to make a full report annually to Parliament. The Home Affairs Select Committee should have the power to deal in more detail with the reports and work of the police ombudsman. The police ombudsman should also have the power to make general recommendations to the police about overall policy and practice where that is appropriate in the light of one or more investigations.
      The time has come to legislate. There is overwhelming support for this proposal and there is worry and disquiet about the way in which the system operates now. I hope that the House will give me leave to introduce the Bill. We are nearing the end of the Session, but if I had the support of the House I should feel justified in reintroducing the Bill

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      in the next Session. Then I should have the authority to ask for the support of the Home Office in putting forward such legislation.
      Question put and agreed to.
      Bill ordered to be brought in by Mr. Alfred Dubs, Mr. Andrew F. Bennett, Mr. Michael Meacher, Mr. Ian Mikardo, Mr. Christopher Price, Miss Jo Richardson, Mr. Robert Kilroy-Silk, Mr. Clive Soley and Mr. Phillip Whitehead.

    POLICE COMPLAINTS (REFORM)
    Mr. Alfred Dubsaccordingly presented a Bill to reform the procedures for making complaints about the police; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 207.]

ALLOTTED DAY
Lords Amendments considered.
Lords Amendment: No. 1, in page 2, line 14, leave out
"the Secretary of State is satisfied that."
3.57 pm
The Minister of State, Home Office (Mr. Timothy Raison):I beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Speaker Mr. Speaker: With this it will be convenient to discuss Lords amendments Nos. 7, 10, 11 13, 15, 16, 17, 20, 21, 22, 26, 34, 38, 41, 44, 45, 46, 56, 57, 77, 78, 79 and 80.
Mr. RaisonThe amendments remove the stipulations in the Bill that applicants for citizenship as an entitlement must satisfy the Secretary of State that they have met various requirements. It was suggested in Committee in another place that the inclusion of those words might deter applicants from approaching the courts when they had been refused an entitlement to citizenship, because they might suppose that the entitlement did not exist where the Secretary of State was not satisfied that the requirements had been met. It was not our intention to put obstacles in the way of aggrieved applicants through such a proviso. We are not convinced that the words will act to restrict the ability of the courts to consider an approach by someone who had been refused citizenship to which he believed himself entitled.
Nevertheless, we have decided that it is possible to operate the provisions without specifying that the entitlement should depend upon whether the Secretary of State is satisfied. If the criteria are met, the entitlement should obtain even if the Secretary of State is not satisfied. We accept, too, that the present form of words may lead to fears. There should be no ambiguity about what is demanded of applicants for citizenship as an entitlement. Accordingly, we have decided to remove that possible cause of anxiety and friction.
The amendment applies this decision to clause 1(4), but what I have said should be taken as applying the necessary variations to the many other amendments in the group. I ask the House to agree to the amendment.
Mr. John TilleyThe Opposition welcome this amendment, as we do all the amendments from the other place. We support the amendment especially because it came originally from Lord Gifford, who is a Labour peer. A whole series of entitlements throughout the Bill—it is not only clause 1 that is under discussion—can now be claimed through the courts. We hope that they will be effectively claimed where the Home Office refuses to grant the entitlement, so that they become a right rather than a concession, as they were seen to be before—although I accept the Minister's point that that was not the intention.
We hope that the courts will determine the facts of cases where there is a dispute over entitlement and not merely consider, as they do in some cases, whether the Secretary of State took reasonable steps to determine the facts. We also hope that the change will shift the burden of proof away from the applicant to some degree.

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The test of the amendments will be in the eating—once they get to the courts. However, we are happy to agree to amendment No. 1 and the numerous similar amendments throughout the Bill.
4 pm
Mr. J. Enoch PowellBefore the House agrees with the Lords in the amendment, I hope that the Minister of State can remove a cause of anxiety that occurs on studying the effect of the removal of the words whereby it appears that we may have created a new cause of jeopardy while seeking to remove a difficulty that might have stood in the way of rendering the Secretary of State's decision justiciable. I agree with the object of rendering these matters as little as possible—even apparently—dependent on the Secretary of State's discretion.
The problem that I pose is this. Let us suppose that, after a person had been registered, it appeared that, not as a result of fraud, which is provided for elsewhere in the Bill, but as a matter of fact he has been absent from the United Kingdom in the relevant period for a number of days exceeding 90. Would it not be possible, if the words were omitted, for it to be construed that, as a matter of fact, he was not entitled at the time he applied to be registered and that, accordingly, he had not been validly registered? Had we retained the existing words, presumably that could not arise since the statement would be, and would be certified, that at the relevant time the Secretary of State was satisfied, that, therefore, the entitlement existed and that, therefore, the registration was properly made.
I hope that without labouring the point I have made the difficulty clear to the Minister of State. My desire is not to render the matter more doubtful from the point of view of the applicant but to be quite sure that, by removing the Secretary of State's satisfaction from the wording here and elsewhere, we are not opening a possibility whereby registration might subsequently be placed in jeopardy.
Mr. RaisonAs was often the case in Committee, the right hon. Member for Down, South (Mr. Powell) has asked a searching question to which he is obviously entitled to an answer. My understanding is that the matter is arguable. The Lords took the view that, on balance, it was better to remove the possible obstacle to the applicant. As I say, we have come to that view. I am not advised that there is a serious problem.
I accept that we are at a late stage in the progress of the Bill. I can only hope that the right hon. Gentleman will accept that the Bill as it stands is satisfactory. No doubt if the problem arose and the matter came to the courts, the strong probability is that they would interpret the legislation in accordance with the obvious intention.
Mr. PowellSince the House will be returning later today to the question of justiciability in a wider although perhaps not identical context, if the question that I posed has taken the Minister of State somewhat unawares, he may be able in his reply at that time to include a more considered—I mean no reproach by that word—and fuller rebuttal of the anxiety that I endeavoured to formulate.
Mr. RaisonI am grateful to the right hon. Gentleman for that suggestion. I note what he says.
Question put and agreed to.
Lords amendment: No. 2, in page 2, line 23, leave out subsections (6) and (7) and insert—
"( ) Where an order in consequence of which any person became a British citizen by virtue of subsection (5) ceases to have effect, whether on annulment or otherwise, the cesser shall not affect the status of that person as a British citizen."
Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy Speaker (Mr. Bernard Weatherill)With this we may take Lords amendment No. 35.
Mr. RaisonThis amendment is designed to simplify and clarify a particularly complicated part of clause 1. The amendment seeks, first, to delete subsections (6) and (7) of clause 1, which seek to re-enact in terms of British citizenship the provisions of section 40(3) of the Adoption Act 1976. That subsection provided that, if a convention adoption order—or a specified order—ceased to have effect, a child would not cease to be a citizen of the United Kingdom and Colonies on that account.
There was no similar provision in the 1976 Act for any other adoption orders which may be revoked. It is in fact unlikely that a child would lose citizenship if adoption orders other than those defined in clause 1(7) were to be revoked, particularly since orders can be revoked only in very limited circumstances.
However, we have considered this matter following amendments which were put down in Committee in another place and we believe it right to take steps to remove any possible ambiguity that there might be. Accordingly, this amendment seeks to replace clause 1(6) and 1(7) with a more general saving. This would ensure that if any adoption order made by a court in the United Kingdom or islands which, under clause 1(5), has conferred British citizenship, ceases to have effect, that shall not affect the claim of the subject of the adoption order to British citizenship. Thus the saving currently found in clause 1(6) and 1(7) for certain types of adoption order will, under this amendment, extend to all types of adoption order made by any court in this country where such orders have conferred British citizenship under the provisions of clause 1(5). This will, we believe, be much more straightforward and simpler and will avoid the complexities of the present provisions. I ask the House to accept the amendment.
Amendment No.35 is identical in effect. It is the equivalent provision in the scheme of British citizenship. Its purpose is to add to the Bill a similar safegaurd in the case of citizenship of the British dependent territories. I hope that the House will agree that that is right.
Question put and agreed to.
Lords amendment: No. 3, in page 2. line 34, at end insert—
"( ) If in the special circumstances of any particular case the Secretary of State thinks fit, he may for the purposes of subsection (4) treat the person to whom the application relates as fulfilling the requirement specified in that subsection although, as regards any one or more of the first ten years of that person's life, the number of days on which he was absent from the United Kingdom in that year or each of the years in question exceeds 90."
Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy SpeakerWith this we may take Lords amendment No. 36.
Mr. RaisonClause 1(1) provides that a child born in this country after commencement shall be a British citizen

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only if one of his parents is a British citizen or is settled. Where neither parent is such a citizen or settled, clause 1(4) provides an entitlement to registration to a child who spends the first 10 years of his life here, provided that his absences from the country during his first 10 years do not exceed 90 days in any one year.
The new subsection (8), which this amendment introduces, enables the Secretary of State, if he thinks fit in the special circumstances of a particular case, to register someone under subsection (4) in cases where the applicant's absence or absences may exceed 90 days in any one year. This would introduce flexibility into the arrangements in subsection (4). It would enable registration to be effected in deserving cases where an applicant had exceeded his 90-day-a-year allowance through no fault of his own—a serious illness, for example.
I am sure that this amendment will be generally welcomed, and I call upon the House to agree to it.
Amendment No. 36 is the equivalent for citizenship of the British dependent territories. Again, I hope that the House will agree to it.
Mr. TilleyI repeat that we welcome all the amendments, but we must break the convention of not being churlish. Apart from being descended from a long line of churls, I feel that I must make the point that the amendment goes nowhere near as far as we should like, although it moves in the right direction. With a few exceptions, that is true of every amendment here for consideration. The Government, having lost the argument, instead of reversing their position merely make tiny cosmetic changes that do not meet the objections, although they may appear to do so.
The amendment is a prime example of that. It is monstrous that children born here should be stateless for the first time in British history. It is also monstrous that they should have to wait 10 years before they can register as British citizens. Added to those two monstrosities is what I can only describe as the petty, bureaucratic and unworkable restriction that only 90 days of each of those 10 years can be spent outside the United Kingdom if someone is to qualify.
With a great flourish the Government announce a new flexibility in working the restrictions. It is a minor restriction compared with the monstrosities of statelessness created when children must wait so long before becoming registered citizens.
No action was taken by the Government here or elsewhere about the statelessness which has been created by the Bill. That is the central horror of the Bill. As the Minister of State made clear in Committee, the Government want to be able to deport the children as stateless. If, despite their parents' status, the children acquire Bitish citizenship through their birth, it might be difficult to deport them, because of current convention and possible future legal restrictions on the deportation of citizens.
There has been no action on the long delay—the 10-year wait—during which parents face uncertainty about their child's future. The child may be stigmatised at school. For example, if teachers intend taking a class abroad they may find that one of their pupils cannot obtain a passport because he or she is stateless. The leader of the
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ILEA, Bryn Davies, wrote to the Home Secretary on 31 July this year expressing disquiet about the terms of the Bill. He said:
"There has been growing concern from parents and teachers in our schools that this Bill could lead to hardship amongst children … who have no experience of any other country other than the United Kingdom and speak no language other than English but then discover that they are not British subjects. The suffering arising for these children is a matter of grave concern not only to their families and teachers but is a matter on which we, as an education authority, must express deep disquiet.
Not only will it affect the particular children involved but it will make it more difficult to develop, in our education service, the understanding necessary to provide an education which has the confidence of the people of inner London."
That states the educational problem very clearly. I hope that the Minister, as a former member of the ILEA, will pay particular regard to that.
The central reason why the amendment is merely cosmetic is that the vast majority of children involved will have been deported. That will occur long before they get the chance to qualify in terms of the 10 years or to accumulate the number of necessary days per year spent in this country.
4.15 pm
The small change proposed in the amendment recognises what we have said before—the impossibility of proving how many days, within a 10-year period, a child spends in the United Kingdom. That is particularly so with children below school age. In our opinion, the original concession allowing registration after 10 years, was only cosmetic. The latest daub does not create a more convincing make-up.
Last night the Minister took me to task, when discussing the timetable motion, for suggesting that hundreds of children would be stateless each year. I remind the Minister of what he said in Committee:
"if one supposed that 90 to 95 per cent. of the parents concerned were our citizens or were settled, that would still leave between 3,000 and 6,500 children born here each year to parents who are neither citizens nor settled."—[Official Report, Standing Committee F, 12 February 1981; c. 41.]
A large number of those children would have other nationalities because their parents would be jus sanguinis; although the parents were not in their country of origin, the children acquired the nationality of that country.
It is not unreasonable or wild to suggest that hundreds of those children, who may be as many as 6,500 a year according to the Minister's own estimates, would be born stateless in this country from the first year that the Bill commenced and in subsequent years.
I press the Minister to expand on his comment. Last night he had only a few minutes in which to conclude that I suspect that it would not have been in order for him to expand on the matter. The Government cannot have it both ways. They certainly cannot have it three ways. If only a small number of children are made stateless under the Bill, why on earth have the Government resisted, here and in the other place the amendment which would have provided that children born stateless would automatically become British? If it be such a tiny number, why are they bothering to dig in their heels?
The second possibility relates to a large number of children. If it be a large number, why do the Government not admit that they are creating a large number of stateless children in Britain for the first time?
The third possibility is equally untenable for the Government in the light of their actions. If the

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Government state that it is impossible to say how many—if they intend to guess—they should not ask the House to pass legislation whose effect is unknown.
I should be grateful for the Minister's answers on those matters. However, we are not pinning our arguments on numbers. If one child is born stateless—we know at least one child will be born stateless under the Bill—that would be reason to oppose this part of the Bill. We welcome the amendment as a slight modification of an unjust clause, but we wish that the clause and the Bill had not been introduced in the first place.
Sir Albert CostainThe Minister knows that I have had correspondence with him on this point. What sort of travel document will the children get if they wish to go abroad? There are obviously provisions for them to go abroad. What sort of travel document will they be given if they are not travelling with a parent? That is a real problem in a constituency like mine, where a number of students come over to learn English. They sometimes marry English girls. Their place of origin has a political upset, they cannot return home and they become stateless. What documents will be given to these children to allow them to travel?
Mr. J. Enoch PowellI agree that it is a narrow discretion given by the Lords amendment to the Secretary of State to widen the ambit of subsection (4). That is a useful provision and improves the clause.
I welcome the opportunity that has been given to the Minister of State to repudiate a lot of the nonsense that has been talked by others, including the hon. Member for Lambeth, Central (Mr. Tilley), about statelessness. Listening to the hon. Member one would suppose that those who were not British citizens were stateless. That is the sort of arrogance that has not been entirely absent from our debates on the Bill.
Mr. TilleySurely the right hon. Gentleman cannot have forgotten that only a few moments ago I said that a large proportion of the 3,000 to 6,500 children born of parents who were neither British citizens nor settled here would have another nationally because their parents would be able to bestow it upon them through the jus sanguinis. I did not say that all the children would be stateless, but my estimate of some hundreds is reasonable.
Mr. PowellAs I listened to the hon. Gentleman's remarks, I noticed that they narrowed prismatically as he went on. He started with the most sweeping statements and ended up with a few hundreds. Indeed, I was not even sure that there were a few hundreds left by the end. That is the sort of misconception that has attached to the clause for a long time.
It must be the rarest thing for those who are temporarily resident in this country, being nationals of another country, who have a child born here not to be able to transmit that nationality or not to be able to secure travel documents for the child. I am not dealing with the revolution case which the hon. Member for Folkestone and Hythe (Sir A. Costain) mentioned.
The idea that we should alter the principle of the Bill in order to deal with that minimal chance is absurd. As I read clause 3(1), it provides any Secretary of State with the necessary discretion—no conditions are applied to the
734
subsection—where actual statelessness occurs, and we are committed as a nation to do all that we can to avoid statelessness, and where the circumstances outlined by the hon. Member for Folkestone and Hythe arise to put the matter right for the child affected.
I hope that the House would not be disposed to think that we should alter the basis of clause 1 in order to deal with cases which, as I am sure the Minister of State can show, are a vanishingly small proportion of children born here who will not become British citizens under the provisions of the clause as it stands
Mr. RaisonI am glad that the House welcomes the amendments that we are meant to be debating. The debate has broadened a little into the realms of statelessness, and what the right hon. Member for Down, South (Mr. Powell) has just said is essentially true. I agree with him that the hon. Member for Lambeth, Central (Mr. Tilley) seemed to be rather like a concertina in his assessment of the problem of statelessness. It loomed larger at some points of his speech than at others.
The Bill is unlikely to cause statelessness except in the occasional case where another country's laws fail to give citizenship by descent, which may happen to a few children born here in the second generation outside their countries of origin.
I agree that discussion of clause 1 has been bedevilled by a widespread misunderstanding on the issue of statelessness. I have noticed that in another place and in public discussions outside the most extravagant claims have been made about the extent to which the Bill will create statelessness among people born here. That will occur in very few cases indeed.
My hon. Friend the Member for Folkestone and Hythe (Sir A. Costain) raised a significant practical problem. The answer is that the great majority of children born here who do not acquire British citizenship will have another citizenship and will be able to get a passport from the country of which they are citizens. If they are stateless, they will be able to turn to the Home Office for travel documents and that will solve the problem. I think that I have covered the main points raised in our short debate, and I hope that the House will approve the amendment.
Mr. TilleyBy leave of the House and having been described as a prismatic concertina—to put the two insults together—I should like to answer the points made in the debate.
The Minister has not been able to substantiate his point, and the point made by the right hon. Member for Down, South (Mr. Powell) was not substantiated other than in generalities. If the Government do not know the numbers involved, they are at fault.
My position can be attacked on the ground that I do not have the information to make a close and accurate estimate—any more than it appears that the Government have such information—but my position has at least been consistent. I referred to a few hundreds both in Committee and in last night's debate, and Hansard will prove that I referred to a few hundreds this afternoon.
Question put and agreed to.
Lords amendment: No. 4, in page 2, line 34, at end insert—
"O In this section and elsewhere in this Act "settled" has the meaning given by section 49."
Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.

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The amendment seeks to add to clause 1 a new subsection which draws to the attention of the reader that the term "settled", as used in clause 1 and elsewhere, is defined in clause 49, the interpretation clause. The amendment arises from a suggestion made in another place and is intended to be helpful to the reader by warning him that "settled", which is a word in common usage and with an ordinary meaning, has, for the purposes of the Bill, a technical meaning as set out in clause 49.
Mr. TilleyThis is the Humpty Dumpty amendment, which makes it clear that words mean what the Minister and the draftsman say they mean rather than what they mean in common language.
That is not a new element in the Bill or in immigration law. The definition of "settled" is peculiar, to say the least, in cases that have already occurred. We are glad that another place forced the Government to come clean and to make it clear that "settled" has not its everyday or common sense meaning, but a technical, legal meaning.
While making a clean breast of it, the Government should also admit that no one knows what the legal meaning is. In another place the Under-Secretary of State for the Home Department, Lord Belstead, came near to admitting that during a discussion of the meaning of "ordinarily resident", which is one of the component parts of the meaning of "settled". I understand that, even within the past couple of weeks, the Court of Appeal has spent four days trying to sort out the meaning of "ordinarily resident" in a case involving students—not an immigration case. The court has not yet given its decision.
In fact, the amendment is not telling people much. It is a pointer into the labyrinth of immigration law, but it does not point the way out. Perhaps it will simply mean that lay men and women who read the Bill will realise that they are confused when they get not to clause 49, as would have been the case with the Bill as it left this place, but to clause 1. To the degree that the amendment exposes the nature of the Bill we support it.
Mr. Ivor StanbrookIt would not be right to allow the speech by the hon. Member for Lambeth, Central (Mr. Tilley) to pass without criticism. It may be that courts debate the precise meaning of "ordinarily resident", but, if so, that is because some people claim that it does not apply to them. Like any other formula in the law, it is well recognised, but often debated and disputed. It is untrue to say that there is any real difficulty about the phrase. It has been accepted in the law for many years, and it would be wrong to give the impression that it is vague, uncertain or lacking in definition.
There is a definition which is known to the courts through established cases over many years. I suspect that it is the intention of some people—I do not accuse the hon. Member for Lambeth, Central of being one—further to discredit the Bill by suggesting that some concepts are not perfectly clear. This one is.
Question put and agreed to.

ACQUISITION BY DESCENT
Lords amendment: No. 5, in page 2, line 42, at end insert
"; or
(c) is a British citizen and is serving outside the United
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Kingdom in service under a Community institution, his or her recruitment for that service having taken place in a country which at the time of recruitment was a member of the Communities."
4.30 pm
Mr. RaisonI beg to move, That this House doth agree with the Lords on the said amendment.
Mr. Deputy SpeakerWith this, we may take Lords amendments Nos. 31 and 32.
Mr. RaisonLords amendment No. 5 reflects the strong feeling that was expressed, particularly in another place, that our links with the Community should be accorded more specific recognition. It equates British citizens working in Community institutions with British citizens in Crown service and service designated under clause 2(3) as closely associated with Crown service. That means that the children of such people will be British citizens automatically at birth. The children will be citizens otherwise than by descent.
The Government reached the conclusion that service in a Community institution could rightly be set apart for special treatment in the way proposed. Our links with our Community partners under Community treaties are special and different in character from the other international organisations of which we are members. We have only to consider the impact of Community legislation on our domestic legislation. It can have a direct effect. Moreover, service in a Community institution, provided recruitment for the service took place in Community territory, is a certain criterion to enable citizenship to be transmitted immediately at birth without a registration process.
Lords amendments Nos. 31 and 32 are minor amendments essentially consequential on amendment No. 5, which I have just explained. If the House wishes me to elaborate on them, I shall do so.
Mr. A. J. BeithI cannot allow this amendment to be passed without pausing to regret that, in deciding that it was necessary to apply these provisions to British citizens working for the European Community, the Government did not extend the same provisions to people working for the Council of Europe, the Western European Union and other international organisations. The terms of service, although not the pay, of staff working for the Council of Europe and the Western European Union are comparable with those of people working for the Community. There is much in common in the activities of the two bodies. It is fair to say that the European Community might not exist if it had not been for the pioneering work of the Council of Europe. There is also the vital continuing work of the Council of Europe in areas such as the European Commission on Human Rights and so on. British citizens give full and active service to bodies of which we are members.
It is regrettable that the Government did not respond to the equally strong pressure in another place by my noble Friend Lord Avebury and others to include the Council of Europe and the Western European Union. The Government are doing a disservice to British citizens working in such institutions. They should at least set on record that they do not regard such service any less favourably than service in institutions of the European Community.
Mr. Tony MarlowI sat on the Committee with my hon. Friend the Minister of State for

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many long hours, but this matter was never raised. It is said that their Lordships were anxious that the matter should be brought forward. Why were they so anxious? Was it, perhaps, on direct orders from Brussels and that our budget refunds would not be forthcoming if we did not introduce this provision? Was it some sort of diabolical harmonisation measure? Do other Community countries have this provision, or will it exist solely in United Kingdom legislation? Perhaps it has something to do with the amour propre of that fifth column for the greater glory of Europe and subjection of the United Kingdom—the Members of the European Assembly. It is puzzling to hon. Members who sat on the Committee. It did not seem necessary before, but it seems to be necessary now.
What problems will it build up for the future? I shall give the House an example. Let us take a transient member of the Community, such as Greece. Suppose my sister married a Greek gentleman and decided to make her life in Greece. Suppose she had given birth to his children, and they had been brought up in the Greek way of life, taught to speak the Greek language and had not spoken English at school or done very much about their English culture or nationality. They would, of course, have been entitled to British citizenship. Suppose one of those children, a daughter, then married a Greek, had a child and at some stage in her career worked in the library of the EEC in Athens. Under this provision, as I understand it, that child would be entitled to British citizenship. That may or may not be reasonable.
What about the many other people who in similar circumstances might wish to claim British citizenship? Might they not suggest that they had been through such processes? How shall we in the United Kingdom be able to validate or verify such claims? In other words, we are putting decisions on our citizenship in the hands of other institutions—some of which we have a degree of control over now, but over which in future we shall have no control which may not have an adequate system of recording to enable us to guarantee that claims for British citizenship by people who have little claim to it are valid.
Mr. J. Enoch PowellSome, if not all, of the anxieties of the hon. Member for Northampton, North (Mr. Marlow) are well founded. If one reads the amendment in the context of the clause, it is clear that it treats service to the Community as equivalent to service to Her Majesty. In so doing their Lordships have fallen into an absurdity. Of course, the expression
"recruitment for that service having taken place in the United Kingdom."
is logical in clause 2(1)(b) because we are seeking to ensure that service to the United Kingdom is directly related to the belonging of the person to the United Kingdom. The words have their logical position in the clause as unamended.
However, it is absurd to say that service to the Community by a British citizen shall be treated as equivalent to service to the Crown for the purposes of this clause, provided that that person was recruited in one of the Community countries. If he was recruited in Portugal, not Luxembourg, we say that Community service is not equivalent to service to the Crown, although the individual is a British citizen and all the arguments about our connection with the Community adduced by the Minister
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of State are equally valid. This is a thoughtless and ill-considered extension of the notion of national service abroad by British citizens.
I do not suppose there will be a sufficient head of steam today to reject this amendment on the grounds that I share with the hon. Member for Northampton, North. However, the hon. Member for Berwick-upon-Tweed (Mr. Beith) spoke about putting certain points on the record, and I should like to put one matter on record.
There is, I am sure, somewhere on the interstices and penetralia of the Government someone who is making a note of legislation that will have to be amended when this country ceases to be a member of the EEC, as assuredly it will in the foreseeable future. He might, unless the matter was noted now, fail to observe that clause 2 of the British Nationality Act 1981, as amended by this Lords amendment, is one of the consequentials that will have to be incorporated in the legislation that will repeal the European Communities Act 1972. I am sure that the individual—I have a picture of him in my mind—who accumulates this essential drafting information is such a diligent reader of Hansard that these remarks will not have fallen upon stony ground.
Mr. Teddy TaylorI was not a member of the Committee, but I appreciate that this is a complex Bill. This amendment appears to be ridiculous and I do not believe that anything that the Minister has said has removed that sentiment.
Why has this provision been inserted? The only reason the Minister gave was, not that anyone had asked for it, but simply that the Government wanted to give a special category status to anything associated with the EEC. The whole object of the Bill has been essentially to try to clarify the law and make it sensible. As an outsider, I understood that the Government were trying to ensure that people who were British would be British citizens and that people who were eminently not British in common sense parlance would not.
It would appear to me that there is a possibility that someone who is in a foreign country and who does not speak a word of English, and who might by a series of accidents have a British grandmother or grandfather, might be able to get British citizenship simply through having a temporary job in a Community institution.
It should be borne in mind that Community institutions are mushrooming all over the place. Having paid a brief visit to the EEC, I have been appalled at the way in which it spends money like water in setting up institutions. The Government are being very careful about expenditure, yet here is an organisation which appears to spend money as though it has gone out of fashion. We have no indication of how many institutions might be set up by the EEC in the future, or of how many countries might become members in the future.
I have several specific questions to put to the Minister. Does he accept that under the amendment there will be a number of people—perhaps a substantial number—given British citizenship who are eminently not British in any respect whatever, not speaking our language, not having lived in our country, and not being British in any realistic sense?
Does the Minister accept that there could well be foreign families living abroad in which one child has become a British citizen because the mother or father were at one time working for a Community institution, but

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where the other members of the family would not be British citizens? The Minister has said that the object is to clarify the law, to make it sensible and to remove anomalies. In those circumstances, surely it would be ridiculous to have a family living in Greece, in Spain—in the future—or in Luxembourg, in which one child or two children were British citizens, although they did not speak a word of our language, and in which other members of the same family were not British citizens. Surely that would not be sensible in any way.
What is the position in regard to associate members of the Community? Does the term "member of the Communities" exclude associate members altogether? What will be the position if we have a new relationship for the United Kingdom which is neither full membership nor associate membership?
My next question relates to elementary justice. I find it difficult to see why we should put a provision in the Bill only because the Minister and the Government regard the Common Market as something very special, so that thereby we make foreign children who have never been in our country and who do not speak our language full British citizens. There are many people who are serving Britain abroad in different ways, who are eminently British, who speak our language, who are descended from people born in this country, who have perhaps been working for the Salvation Army or as missionaries or for banks or insurance companies, or perhaps engaged in work for British companies in the Far East, who will not themselves have an automatic right to British citizenship. Their position has to be compared with that of those who will have British citizenship just because of a grandparent who came from this country and because of getting a job in a library, a canteen, or some other part of a Community institution.
What does the Minister mean by recruitment into the service? Is he referring to first secretaries earning £20,000 a year and with big pensions, or is he referring to anyone who works in any capacity for a Community institution? Are we talking about cleaners, people who serve in canteens, people who work in libraries, and people who are major Eurocrats? Does the Minister accept that the amendment covers anyone serving in any capacity in any Community institution?
What does the Minister define as a Community institution? Is he thinking simply of the Parliament and the Commission, or is he thinking of the whole range of so-called educational or propaganda institutions that are mushroooming all the time?
4.45 pm
My feeling is that any benefit of any sort that the Government think might come from the amendment will be lost by the undermining of the basic principle of the measure. I can see no benefit of any sort coming to anyone, and it would appear that the Government have introduced it only because they want to show that we are more European than others have thought us to be.
I hope that the Minister will be able to answer those specific questions. Perhaps I shall be permitted to summarise them briefly. Does "recruitment for service" mean for any service of any sort with any institutions set up now or to be set up? Does the Minister agree that it undermines the principle of the Bill that children who are not British and do not speak our language, have never been to our country and have no relationship directly with our
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country, should become British citizens? Does the Minister accept that there will be what one might call mixed families, and that if someone has a job in a Community institution—working in the canteen, for example—for two or three years, some of the children will be British and some will not? Does the Minister agree that it is eminently unjust to single out those who are working temporarily for a Community institution whereas many people who are doing valuable work for Britain abroad in banks, insurance companies and businesses will be automatically excluded? Are we thinking here only of the full members or are we considering also the associates?
It would seem to be ridiculous to have an amendment that will bring in confusion when the whole object is to remove confusion from our nationality laws. Unless the Minister can give good reasons for the amendment, I hope that he will think again and seek leave to withdraw it.
Mr. TilleyI am relieved to hear that the right hon. Member for Down, South (Mr. Powell) believes that the Labour Party will carry out its election promises about withdrawal from the Common Market. I say that particularly in the context of last night's debate, when the right hon. Member said that he did not believe that a future Labour Government would repeal this measure. However, I am glad that he appears to be coming round more to our point of view.
The points made by the hon. Member for Southend, East (Mr. Taylor), concerning various aspects of definition, were examined to some extent in Committee. Bearing in mind what was said earlier by the hon. Member for Orpington (Mr. Stanbrook), I am sure that none of us would want to snatch the bread from the mouths of hon. and learned Members who will no doubt be spending a good deal of time in the courts in deciding and defining what the measure really means. I hope that the Minister will not kill too many of the golden geese by giving too simple or too direct an answer to the various questions.
The Opposition are not particularly keen on the amendment, although we do not intend to oppose it. We are not in favour, on principle, of extending automatic succession rights beyond a second generation, which is what the amendment seeks to do. We feel that any sustained objection would be academic as the likely period ensuing between the commencement of the legislation and British withdrawal from the EEC will be so short that it is impossible to conceive that it might affect a second generation of Eurocrats or—if they will excuse the phrase—"Eurocrats". We do not think that the children of those people misguided enough to work in the Community should be penalised. After all, we do not want to have all coming back via a by-election in Warrington or in any other way.
Mr. RaisonThere appear to have been two slants to the debate. First, we had the views of the hon. Member for Berwick-upon-Tweed (Mr. Beith), who is an enthusiast for the EEC. Secondly, we had contributions from several hon. Members who seem to be rather less enthusiastic about the EEC. Indeed, some of them seem to be so convinced that we are about to depart from the Community within a very short space of time that it would seem to be hardly worth while for me to answer their questions.
I have to tell the right hon. Member for Down, South (Mr. Powell) that I am not aware that there is any unit

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tucked away in the recesses of Whitehall which is clocking up amendments which would have to be repealed if, by any mischance, we were to leave the Community. On the other hand, if that moment were ever to arrive, the apotheosis of the right hon. Gentleman would come about, because he would be able to spring up in his full glory and reel off every single amendment to an entranced House without once pausing for breath. No doubt we shall rely on him in this matter, if not in many other matters.
It is perhaps not too churlish to say to the hon. Member for Berwick-upon-Tweed that he tabled amendments which were not selected and which were designed to achieve the intention of his speech. As a good parliamentarian, he was not deterred by that from raising the matters that he would have raised had the amendments been selected. Ultimately, one has to make up one's mind whether our relationship with the European Community is of a special nature and whether it is not rather different in substance from other important relationships and participation in other important institutions.
The key must be, for better or worse—the right hon. Member for Down, South will say for the worse—that the European Community has a direct impact on the laws of our land in a way that those other admirable institutions do not. That gives them what I believe is a genuine difference of quality. There are many other admirable organisations. The hon. Gentleman mentioned the Council of Europe and the Western European Union, but one could easily put forward other organisations throughout the world with which we have a special relationship or in which we participate. In my view, the decision that was taken in the other place is the right one—that the Community is of a different, very special nature compared with all the others.
My hon. Friend the Member for Northampton, North (Mr. Marlow) complained that the matter was not raised in Standing Committee. Perhaps it would be more accurate to say that he complained that it was raised in another place. My hon. Friend felt that we behaved respectably by not discussing it. However, we cannot stop the noble Lords from raising fresh matters in another place. The justification for a second Chamber is that it brings forward fresh issues. I cannot say more than that.
My hon. Friend worked out, as he has done before, some rather ingenious relationships to test the proposition that is under discussion. This ingenious relationship of conferral of citizenship was correct. I cannot trip him up in his assumptions. It was a somewhat improbable relationship and not one that is likely to occur often, but I do not deny that it might occur. However, as always when dealing with difficult matters of nationality, if one tries to work out improbable relationships, even within the general philosophy of the Bill, it is not too difficult to find cases. It is amazingly difficult to have 100 per cent. cast-iron certainty. We have consistently tried to do our best in seeking what might be called meaningful relationships, close connections and so on, but from time to time there will be examples that point otherwise. If one admits to British citizenship anyone who is not actually born and resident in this country, such possibilities may arise. We should bear that in mind.
My hon. Friend the Member for Southend, East (Mr. Taylor) asked a number of questions, which I hope that I have understood. I accept that in some cases there is the
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possibility of split families. I do not dispute that, but it is important to point out, as I did on many occasions in Committee, that where there are grievous anomalies and real hardship within a family and real nonsenses and a feeling among some children that they have been grossly disadvantaged, there is always the discretionary power of the Secretary of State under the important clause 3(1) to remedy such nonsenses. So if there is a hard luck case, it is perfectly possible to tackle it.
My hon. Friend asked about associated members. It is not likely that a British citizen would be recruited for these purposes in the territory of an associated State. For the most part, recruitment will take place in the area where the activity takes place, be it Brussels or elsewhere. I am prepared to give the matter more consideration, although obviously at this stage it is not possible to remedy it in legislation. However, I will look into the matter again and write to my hon. Friend when we have considered it further.
Community service was mentioned. If need be, I could give the House a full list of the different organisations which qualify for this, but anyone who has considered the Community structure will have a rough idea of what Community service entails.
Mr. Teddy TaylorI was simply asking whether Community service included the whole range of employment. Could it, for example, include someone who worked temporarily in a canteen in Athens, as well as a leading civil servant in Brussels?
Mr. RaisonI think that the answer is "Yes", if they are full-time servants of the Community. Perhaps I can come back to the matter shortly.
Mr. MarlowMy hon. Friend the Member for Southend, East (Mr. Taylor) raised the issue of countries with associated status in the Community. At the moment certain countries have associated status, but who knows which countries will have associated status in the future? Under these provisions it is possible that masses of people could come in. This is a highly dangerous, significant, sensitive and damaging amendment. My hon. Friend is going through some of the potential difficulties and disadvantages, but he says nothing about the desirability, apart from the fact that the noble Lords have put forward this suggestion. Because the Government did not want to offend anyone in the Community or the amour propre of people with a vested interest in the Community, we seem to have become loaded with this issue. Surely my hon. Friend can see the dangers that are involved and do the responsible thing and withdraw the amendment.
Mr. RaisonThe general principle of the amendment was debated fully, and it was clear from the debates in another place who was pressing the argument most vigorously. The issue attracted a great deal of attention in the other place, but it also attracted much attention outside. I am sure that many of us have had in our postbags strong and heated representations from people who are thoroughly British and who are deeply concerned about the future of our country. They said that they felt that they were working for our country, had the essential characteristics of the British, and felt that it was wrong that the Community to which we are committed through Act of Parliament, subsequently endorsed by referendum, should be treated as having some special status.

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It could be argued, I suppose, that the European Community will spread and spread, although broadly speaking I think that it is limited to Europe. However, it is a little unrealistic of my hon. Friend to talk in terms of an ever-expanding universe which will eventually take in everyone. We should remember that we as a country have aligned ourselves with this organisation. We should think of it in terms of a young man considering his career. He might say "I wish to serve the country by entering the Crown service here", or he might say "I wish to serve the nation by entering the service of the Community institutions." We believe that there is enough in common between the two to justify their being treated in the same manner.
Mr. BeithAlthough I do not accept the rigid distinction between public service in Community institutions and service in other institutions of which we are a member, perhaps the Minister will place on record that the considerations which he has just described must have weighed heavily with Lord Elystan-Morgan in another place when he welcomed the original amendment on behalf of the Labour Benches.
Mr. RaisonIt is not for me to diagnose the views of Lord Elystan-Morgan. He is a very articulate Welshman, and I am sure that he made his views clear. To be honest, I cannot remember what they were, so I had better not embark on trying to describe them.
The essential point is that one has to make up one's mind. If one hates the Community and all its works, I can well understand that one could take any opportunity to have a go at it and would regard it as being something extraneous from the main direction in which we are moving. However, as a country we have committed ourselves to this course. The amendment is in line with that.
As to the specific point of whether particular sorts of employment count, the answer is that it depends whether it is employment with a Community institution. There is not a kind of cut-off. There is nothing that says that only top civil servants or splendid chaps of one kind or another are eligible for this. If one serves in a Community institution, one is eligible.
I have tried to meet the points that have been raised. It is our firm view that the decision taken in another place to introduce the amendment was the right decision. Therefore, I commend the amendment to the House.
Question put and agreed to.

ACQUISITION BY REGISTRATION: MINORS
Lords amendment: No. 6, in page 3, line 14, leave out subsections (2) to (5) and insert—

"A person born outside the United Kingdom shall be entitled, on an application for his registration as a British citizen made within the period of twelve months from the date of the birth, to be registered as such a citizen if the requirements specified in subsection (3) or, in the case of a person born stateless, the requirements specified in paragraphs (a) and (b) of that subsection, are fulfilled in the case of either that person's father or his mother ("the parent in question").

The requirements referred to in subsection (2) are—

that the parent in question was a British citizen by descent at the time of the birth; and

that the father or mother of the parent in question—

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was a British citizen otherwise than by descent at the time of the birth of the parent in question; or

became a British citizen otherwise than by descent at commencement, or would have become such a citizen otherwise than by descent at commencement but for his or her death; and

that, as regards some period of three years ending with a date not later than the date of the birth—

the parent in question was in the United Kingdom at the beginning of that period; and

the number of days on which the parent in question was absent from the United Kingdom in that period does not exceed 270.

If in the special circumstances of any particular case the Secretary of State thinks fit, he may treat subsection (2) as if the reference to twelve months were a reference to six years."

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Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy SpeakerWith this it will be convenient to discuss Lords amendments Nos. 9, 37 and 40.
Mr. RaisonLords amendments Nos. 6 and 9 replace the existing provisions in clause 3(2) and related subsections for the acquisition of British citizenship by those born abroad to British citizens by descent. As it left this House, clause 3(2) conferred an entitlement to British citizenship on those born abroad to British citizens by descent who had certain ties with this country. In particular, there were certain specified types of relevant employment overseas at the time of the child's birth.
As hon. Members may recall, the categories of employment relevant for this purpose were considerably widened when the Bill was considered by this House on an earlier occasion. Nevertheless, considerable criticism was made of the provisions of clause 3 in another place and by a range of outside organisations. It was argued that the employment criterion did not cover all British citizens overseas who had real ties with this country, such as the self-employed or partners, that people might have continued strong connections with this country even where they were working for a foreign firm or, indeed, not working at all, that the provisions were uncertain, relying as they did on factors such as "close connection" with the United Kingdom which were undefined, and that they were so complicated that those about to work overseas would not easily be able to ascertain in advance the likely effect on themselves and their children.
The attempt made in clause 3 as it left this House to define an employment connection with the United Kingdom was a determined attempt to provide for the very small number of cases where, given the extension of transmission rights to the female line, people with a genuine connection with this country would be unable to pass on citizenship to their children born overseas. Nevertheless, we have been persuaded by the criticisms made of these provisions that it would be best to change our approach to this very difficult question. We therefore brought forward in another place these amendments, which provide a clear entitlement to registration for the child born overseas in the second generation. Application for citizenship must be made within a period of 12 months from the date of the birth, although there is provision in a new subsection (4) for extension of that period to six years if, in the special circumstances of a particular case, the Secretary of State thinks fit.

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The requirements which must be met for registration to be affected are that one of the parents was a British citizen by descent at the time of the birth and born to a British citizen otherwise than by descent or—and this, of course, will be the position in the great majority of cases for many years—a person who became a British citizen otherwise than by descent at commencement or would have done so but for his death. That is in proposed new subsection (3)(b)(ii). Unless the child is born stateless, the parent who is a citizen by descent must also have resided in the United Kingdom at any time in the past for a period of three years, although it would be permissible for the parent to have been absent during that period for not more than 270 days.
I am grateful to my hon. Friends, particularly the Member for Petersfield (Mr. Mates), for their advice and interest in this matter and for the helpfulness of the way in which they have led us to reach what I believe is a good solution to what, by any standard, is a very tricky problem.
As I am sure hon. Members will have noted, this provision gives an absolute entitlement to a child born stateless in the second generation overseas. The Government accept that it could happen that the child of two British citizens by descent, both born overseas and in the first generation, could be stateless and that in some cases—in Belgium, for example—the child could be stateless even if its mother held the citizenship of its country of birth. There are, of course, respectable arguments for believing that this is not entirely a problem for which the United Kingdom should find the solution. Nevertheless, the Government are prepared, as the reference to statelessness in this amendment demonstrates, to ensure that no one in the second generation born overseas is stateless.
That completes the explanation of the effect of these two amendments, but it may be helpful if I refer briefly to the effect of later, related amendments. We are conscious that there may be cases which are not covered by clause 3 as we should like to see it amended, but where the connection with the United Kingdom may be so strong as to merit registration Clause 3(1) provides, of course, for the registration of any minor at the Secretary of State's discretion, and we would propose to use that subsection sympathetically, not only for children born in the second generation overseas who are not covered by clause 3 as amended, but also for children in the third and subsequent generations born overseas where there are clear and strong United Kingdom links, or compassionate circumstances. It is, however, the case that anyone registered under clause 3(1) as it stands would be a citizen otherwise than by descent, and this seems illogical when we are stretching a point for children who are descended more remotely than the second generation. We are therefore bringing forward amendments to clause 13 which will ensure that where a child born overseas is registered and is descended from a British citizen, he shall be a British citizen by descent. That seems only logical and sensible, because otherwise a child whose connections by descent are remote, to say the least, would be in a more favourable position than a child born abroad in the first generation overseas.
Perhaps I could take this opportunity to comment on how we see the exercise of the discretion under clause 3(1) in respect of children born overseas to British citizens by descent. Before children born overseas in the second and subsequent generations were registered, the strength of the
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child's connections with this country would be assessed. In considering whether to exercise the discretion in these circumstances the Secretary of State will take into account the special problems facing British business families in long-term service overseas. By "British business families" I mean people in British companies or firms or in employment with strong British connections. The special problems of such British business families will thus be an important matter for consideration in this discretion.
These amendments offer a clear and unambiguous entitlement to registration for children born in the second generation overseas, and it seems to us most unlikely that anyone with a genuine close connection with this country would be left out by them.
Amendments Nos. 37 and 40 replace the existing provisions in clause 16(2) and related subsections for the acquisition of citizenship of the British dependent territories by those born abroad to citizens of the British dependent territories by descent. They are the equivalent for citizenship of the British dependent territories of earlier Lords amendments to clause 3 with which the House has already seen fit to agree. I hope, therefore, that they will be acceptable.
I commend this group of amendments to the House.
Mr. TilleyWe welcome the amendments, which completely scrap the employment and close connection criteria that the Government originally attempted to impose as the basis for citizenship by descent. There is now a simple three-year residence rule for second generation transmission abroad. We must suspend our churlishness—if only for a moment—and extend our sympathy to the Minister. He has had to eat everything that he said in Committee. For about 100 columns of Hansard the Minister tried to justify the other system. However, I do not criticise him and I acknowledge that the Government have thought again. They have carried out a radical change largely as a result of pressure from Britons abroad, the points made in Committee and the way in which the anomalies and confusions were pointed out in the other place.
The Government have returned to square one and the system has been vastly improved in terms of clarity and workability. However, I wish to make several comments. As I have said, we are not keen on wider second-generation transmission. We feel that it should not be as easy as it might be in some cases, where we would consider the connection remote. I refer to the cases covered by the new set of amendments. The new qualifications are easier for some groups of British citizens abroad to acquire than for others. If a child born abroad to British citizens can transfer his or her British citizenship to his children—if the person has spent three years in Britain—the provision will benefit those families that can afford to send their children to the United Kingdom to attend schools, public schools, universities and even polytechnics. That will not be easy for many of the others involved.
The case of the Falkland Islanders may be raised later. The great majority of them are British citizens who will lose their right to transmit British citizenship because, as humble sheep farmers, they will not be able to send their sons and daughters to public or private schools in Britain.
Mr. Michael ShersbyWill the hon. Gentleman give way?
Mr. TilleyI thought that I might catch a fish.
Mr. ShersbyI have listened with interest to the hon. Gentleman. Is he not aware that a Government scheme exists whereby those children in the Falkland Islands who have taken their O-levels in schools in Port Stanley can come to Britain and take their A-levels at a school in Rye, where their fees are paid by the British Government? Therefore, there is no question of Falkland Islanders being unable to obtain for their children just as good an education at State-maintained schools as any citizen in this country.
Mr. TilleyI was not aware of that scheme. The result of it will probably be that those children who take three years to do their A-levels will qualify, while those who take two years will return to the Falkland Islands without an opportunity to transmit their citizenship. That is a matter for them to consider.
Many of those concerned about other aspects of the Bill are struck by the stark contrast between the effort that the Government have made to be fair to British business families—predominantly white, middle-class people living abroad—and the shabby treatment given to black British people both at home and abroad. As a result of the amendments, white expatriates and their grandchildren will have extra transmission rights if the second generation go to prep schools or public schools in the United Kingdom, or even to Rye grammar school. Before the introduction of this Bill the East African Asians had exactly the same passport as the whites. However, they will find that they cannot transmit their British citizenship to their children, let alone to their grandchildren.
The Minister raised a significant point about the Belgian nationality laws. He said that although the Belgians were responsible for the fact that their laws created statelessness, we should do something to ensure that they did not affect British citizens.
Sir Ronald BellThe hon. Gentleman is wrong to say that the East Africans have had the same passports as the British. The East African Asian's passport is stamped to the effect that it does not confer the right of abode in Britain.
Mr. TilleyI said that East African Asians had the same passports because in Home Office parlance East African Asians are known as United Kingdom passport holders. That is what they are, and they hold the same passport.
Because of the nationality laws, first generation children in Malawi born to United Kingdom passport holders will be stateless. The Government have set their face against making any provision for that. They say that that is Malawi's fault. However, when the same situation occurs in Belgium special provision is made for those children who might fall foul of its nationality laws. That is a stark contrast. In making the comparison we must question the fairness involved. The Government are adding to the substantial rights of British citizens, but neither here nor elsewhere have they given a single right to those British overseas citizens who are 100 per cent. black or brown skinned to transmit citizenship.
5.15 pm
Dr. Brian MawhinneyI welcome the amendment to clause 3, because it is right that the change should be made. In addition, Governments who have the vision to change their mind and to be persuaded should be
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congratulated. Furthermore, I have a vested interest in the clause and I drew it to the attention of my hon. Friend the Minister when we debated the Bill. If one were to ask the man on top of the celebrated Clapham omnibus which groups of people most exemplified British citizenship, he would probably say that Members of Parliament were British and that they need have no concern about their "Britishness" or that of their families. However, he would have made a gross mistake in my case. My second son was born in the United States of America. If he had followed the pattern of his father's life, his second son—my grandson—would not have been a British citizen according to the original clause 3. That is—both personally and in principle—nonsense.
Sir Ronald BellThere was an hon. Member called Brian Harrison. His parents had been abroad for two generations and he was not a British citizen with an entitlement to a right of abode. Every time that he returned to Britain he had to assert that he was a Member of Parliament and could not be kept out.
Dr. MawhinneyI am grateful to my hon. and learned Friend for having given a better example than mine. However, he will understand that it does not have the emotional appeal that my example had for the hon. Member for Peterborough.
It was fundamentally wrong for the Government to proceed with the original clause 3. Therefore, this provision is to be welcomed. However, my one regret is that the logic and moral rectitude of the new clause 3 did not convince my hon. Friend when we debated the original clause in the House.
I welcome the change, but I would have welcomed it more if it had been made in this House and not in the other place. Because the amendment was moved in the other place, a few people may assume that the Government were prompted to change their mind not by logic or moral rectitude, but by head counting. That would represent an unwarranted slur on my hon. Friend the Minister. Nevertheless, by the nature of the proceedings it may stick on the Home Office. I hope that that will not be the case but the possibility, remote though it may be, has not been lost on this side of the House.
Mr. J. Enoch PowellI agree with the hon. Member for Peterborough (Dr. Mawhinney) in regretting that this amendment is being made at so late a stage. The alteration in the Bill is far reaching and it is most unfortunate that it has not been debated and appraised by the House in a way that it would have been had it been proposed at an earlier stage. We are back with a vengeance to what in years gone by—10 years ago to be exact—was known as the grandmother clause. We have it back again now.
It was in the original form of the Immigration Bill in 1971. It stirred great indignation almost universally on the Opposition side and caused great unease on the Government Benches at that time. It was removed—not without vestige—during the Committee stage thanks to the assistance which I received from the hon. Member for Dorking (Mr. Wickenden), although some of its effects were maintained by the immigration rules which in their substance ran counter in this respect to the decision which the House had taken during Committee.
If we agree to this amendment we shall have the following situation. Let us consider the case of one individual. Neither of his parents was born in the United

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Kingdom. Of their four parents only one, a grandmother, was born in the United Kingdom. All the other grandparents could well be not just Australians but, indeed, aliens. Now we are saying that, provided one of his parents spends three years before the time of his birth on and off in the United Kingdom, that individual, in right of a grandmother born in the United Kingdom, is to be a British citizen. I believe that it is a serious departure from the general structure both of the Bill and of our nationality law hitherto that we should conceive that one grandmother is sufficient by descent to confer the privilege of being a British subject on the grandchild—and I know that there is a minimal residential qualification on the way.
This is a principle which should not be hurriedly imposed on the Bill at this stage. Of course, the pressure has arisen from persons whose parents and grandparents were not exactly as I have described in my example. In most cases there was probably one other ancestor who had a close connection with the United Kingdom, and in almost all cases the ancestors would have been white. But that is not the decision that we are taking here. The decision that we are taking today is that, subject to the residential qualification of three years in the case of one of the parents—the transmitting parent—one grandparent born in the United Kingdom is sufficient by descent to confer United Kingdom nationality.
I believe that that is a most unwise step to take. I believe that it will result in all kinds of people who have no natural allegiance or connection with this country claiming British nationality. It gives an extension to the jus sanguinis which is out of accord with the rest of our nationality law.
Mr. RaisonWe have had a debate about one of the most difficult and, in some ways, most important aspects of the Bill. If the hon. Member for Lambeth, Central (Mr. Tilley) had not said that he did not want to be churlish, I should have been tempted to be a little churlish with him. One can say fairly that on the whole question of citizenship by descent the Opposition have sat on their hands. They have said little about what they believe to be right. Occasionally they have made a few cracks about what they believe to be wrong about our proposals, but they have not faced up to the question.
For some reason which I do not understand, the Opposition have taken the view that the matter does not concern them and they have tried to duck the whole issue. Anybody who thinks about the principles of citizenship and nationality is bound to come to the view that one of the basic ingredients of citizenship and nationality will always be descent. There are certain fundamental aspects. The jus soli, jus sanguinis argument has highlighted two of the ways of acquiring citizenship. One is through birth and the other through descent. There are other ways of acquiring citizenship—by residence conveyed through naturalisation, by marriage, and so on. However, to duck the issue is regrettable.
It is a little naive to take the view that there should be no mechanism by which descent is conferred on the second generation born abroad. That view is out of line with nearly all the other citizenship schemes in the world. The jus sanguinis is qualified by certain countries in particular ways but it is still a system by which citizenship passes by descent.
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The Bill in some ways is a compromise in this matter. The outcome is, by any standards, much the most sensible of the various proposals for tackling the problem. I understand why the right hon. Member for Down, South (Mr. Powell) says that this is a bit late in the day. However, late though it might be, we have come up with the right answer.
My hon. Friend the Member for Peterborough (Dr. Mawhinney) said that it was a pity that the answer came in another place rather than here. So be it. If we support the existence of another place, as I and my party do, we must accept that it has a useful role to play. There is no reason why important and desirable amendments should not be made there.
The reason we did not discuss such an amendment here was that there was no such amendment to discuss. Some amendments were designed to prolong the system of consular registration, which has been a familiar part of our law. We did not feel happy about the proposals, although we compromised with a partial transitional extension of consular registration which, incidentally, remains in the Bill. It was not until a relatively late stage in proceedings that what I believe to be the right amendment was proposed. I apologise if anybody is unhappy about how we came to the present position, but I genuinely believe that we now have as realistic an answer as is possible.
I note what the right hon. Member for Down, South said about the history of the grandmother clause and the debate that we had in 1971 about grandpatrials and the immigration rules. The right hon. Gentleman can claim consistency. However, I cannot accept his notion that this is a serious departure from the Bill's structure. I am not sure that I can even accept that it is a serious departure from nationality law. The system of consular registration has been part of our citizenship law. That has been a mechanism for conferring citizenship by descent through the generations. I note that the right hon. Gentleman was careful to talk about grandmothers, because I know that he holds strongly the view that we are making a mistake by extending citizenship through the female line. We argued that at some length in Committee. I take a different view from the right hon. Gentleman. I think that we are right to extend citizenship through the female line.
To put that on one side, there was a system by which it was possible for the second generation born abroad to acquire citizenship. The Bill provides a system by which that is possible. That is desirable but it is not an open-ended acquisition of citizenship. The Bill does not provide that everyone in the second generation born abroad will be entitled automatically to citizenship. We have imported into the Bill a test of connection with this country which we believe to be a practical and working one. I refer to the three-year residential requirement.
5.30 pm
I understand the arguments that have been advanced in this interesting and short debate. However, I am convinced that the scheme that is before us is the right one. I hope that the House will support me in that view.
Mr. StanbrookI apologise to my hon. Friend the Minister of State and to the House for not rising in my place when the right hon. Member for Down, South (Mr. Powell) concluded his speech. My attention was temporarily diverted. I must apologise to my hon. Friend for not enabling him to take account of my remarks.

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I am one of those who have been strongly critical of the provisions which appeared to prejudice the position of Britons by descent, British communities abroad which were being deprived in the Bill, and still will be ultimately, of the right to consular registration. I acknowledge that by the amendment the Government seem to have gone a long way towards meeting the legitimate criticisms and anxieties of British communities abroad.
The original anxiety concerned those who would be Britons by descent on the enactment of the Bill. Under the Bill as drafted, their children would not automatically have been British. That caused a great deal of disquiet to those living abroad who formerly had assumed that they could continue citizenship throughout the generations by the process of registration. By the amendment, we must accept, the Government have acknowledged the problem. They have not removed it entirely but, as I understand the amendment, such a person being British by descent will be able to register the birth of his child, and the child will be British by descent provided that the parent has been three years in this country. That seems a reasonable way of preserving the connection.
However, I contend that we are going too far. We are diluting the concept of British citizenship in this way as in many others. When the Bill was first published, I approved of its contents, although I had some reservations about some of its provisions. However, there were some good parts and there was a great need to define British citizenship. As the Bill has passed through the parliamentary process it has constantly been modified and its terms have been loosened.
We have reached the stage at which no close qualifying connection is needed to pass on citizenship from one generation to another. I should prefer the qualifying period to be much longer than three years. Three years is insufficient. It means that some who have no real connection with Britain, but who are by the process of law Britons by descent, will be able to come to the country for three years and, being British people, will thereby be entitled without let or hindrance to pass on their British citizenship indefinitely.
British citizenship is of greater value than that. The purchase price is too low. Surely 10 years would be the appropriate qualifying connection. I am sorry that the Government did not see fit to require that period to establish the extraordinary privilege that will be passed on from one generation to another of children born abroad.
One of the results of the changes that we have made to the Bill's original character is that the status of the British citizen by descent is becoming isolated. He and he alone is the only one who cannot, as it were, upgrade his citizenship to the equivalent of British by birth. A Briton by descent is someone who was born abroad, perhaps in accidental and unintended circumstances. He will always be a Briton by descent, even if a few days after his birth he is brought to this country and lives here for the rest of his life. He will never be able to pass on automatically his citizenship to his children. He may be someone who in every other respect is totally connected with the country. The various provisions enable citizenship to be passed on by others, including so-called Britons otherwise than by descent, without let or hindrance.
What is the position of the children of Britons by descent? The Bill now includes a number of provisions that are in their favour. If such children having been born
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abroad are brought to this country and with their parents live here for three years, they acquire the right to be, in effect, British by birth, with all the rights, duties and transmissibility that arise from that. If those children are born abroad and are registered abroad, they are Britons by descent. Although they may subsequently be brought to this country, they cannot be the equivalent of British by birth. We are now saying that the children of Britons by descent born abroad can themselves be made into Britons by descent if their parents live in this country for three years.
I have no doubt that there are strong arguments for making it easy to transmit citizenship. Everybody benefits except the Briton by descent whose transmissibility is in question. He never has first-grade citizenship. There is no provision for his citizenship to be upgraded to that of British citizen by birth or its equivalent. That is one of the Bill's defects.
I accept that one cannot look a gift horse in the mouth. The amendment has met the substantial criticism of British indigenous stock born abroad and the objections which were expressed when the Bill appeared in its original form.
The criterion of employment for the qualifying connection proved to be extremely difficult. I do not accept the argument of my hon. Friend the Member for Peterborough (Dr. Mawhinney). The qualifying period of residence in this country is better than the employment connection, which was hedged with so many technical details and definitions. No doubt the hon. Member for Lambeth, Central (Mr. Tilley) would have said that it would give a great deal of employment to lawyers in applying it. It will be easier to apply the qualifying connection of residence
Mr. TilleyI would have said what the hon. Gentleman has suggested.
Mr. StanbrookIt is kind of the hon. Gentleman to confirm the accuracy of my statement.

On the whole, however, I believe that the changeover to a qualifying connection based on residence is one that should be welcomed on its merits. Although it is true that we should have given longer consideration to the matter in the House, and although I believe that three years is an inadequate period in which to establish that connection, I support the amendment.
Sir Ronald BellLike my hon. Friend the Member for Orpington (Mr. Stanbrook), I regret not having stood up when the right hon. Member for Down, South (Mr. Powell) sat down. I did not realise that he was sitting down because he had finished his speech, but the Minister did realise that, and the debate has therefore taken on an unusual form.
This is an important amendment which attracted a great deal of attention and which was subject to much debate in another place. It merits a little more attention than it has had in this short debate, which was occasioned by the disturbance that occurred.
I both agree and disagree with the right hon. Member for Down, South. I agree with him about the absurdity of the "one-grandmother" rule, because it was a fantastic mistake to extend nationality to the female line. That colours our approach to the change which was made in another place. It is absurd because one must have rules if one is to have a significant nationality. However, if either parent can transmit nationality, the scope of nationality is

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widened infinitely until it ceases to have any outline. It is similar to cheating at cards. However, if one gets rid of the absurdity of transmitting nationality both through the female line and the male line—which will lead to infinite dual nationality, and even quadruple and octuple nationality—one can look at the amendment from the practical point of view.
In practice I believe that the change will work in the right way. That point was made by the hon. Member for Lambeth, Central (Mr. Tilley). Although its theory may be alarmingly wide, it will mainly work to the advantage of people who are technically British. That is what we want to bring about. Surely, the extension of jus sanguinis is what we should be trying to achieve. For a long time past the whole movement of nationality law has been towards the place of birth. In the time in which we live, the place of birth is so unimportant as to be sometimes irrelevant. People move about the world quickly and British people who work abroad more often take their wives with them. The place where the baby happens to be born is a matter of almost the utmost triviality. To attach enormous significance to it is anachronistic. It is difficult to find a statutory definition of ethnic Britishness without causing apoplexy on Opposition Benches.
We should try to confine the right of abode in this country to those who are belongers. I take the word "belongers" from the speech of the right hon. Member for Cardiff, South-East (Mr. Callaghan) when he was Home Secretary. He was moving the Second Reading of the Commonwealth Immigrants Bill in 1968, which he said had the purpose of restoring the basic intention of the 1962 Act, which was to confine the right to live in this country to those who were belongers—those who had a long ancestral connection with this country. Those were splendid words. I have used them often and I use them again with happiness now—the British people are those with a long ancestral connection with this country.
Somehow or other we must make sure that those British people do not lose that citizenship—it is more than citizenship, it is the right to live here—simply because, for one or two generations, they have been working overseas. That is a nonsense now and has been so for a long time. One of my great grandparents was born in Australia—his parents happened to be there at the time—and another was born in Russia because, since I am Scottish, we built the railways of the whole world and the Russian railways were being built at that moment. Therefore, what matters is whether one is ethnically British. Somehow we must give a sensible definition of that.
As the right hon. Member for Down, South said, this Lords amendment goes a little wide in theory. In practical application, however, it will do nothing but good and will last us until we can have a new British Nationality Bill which will carry further the concepts of the jus sanguinis and exclude many more of those people whom the hon. Member for Lambeth, Central wants to come in. He knows well that he and I radically disagree on that subject.
Question put and agreed to.
Lords amendment No. 7 agreed to.
Lords amendment: No. 8, in page 5, line 23, after "application" insert—
"or his father and mother were legally separated on that date".
5.45 pm
Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy SpeakerWith this it will be convenient to take amendment No. 39.
Mr. RaisonThe amendment amends the conditions under which a child born overseas to a British citizen by descent, and not acquiring our citizenship at birth, would have an entitlement to registration if he came to this country with his family to live. Clause 3(6) requires that he must reside here with both parents for three years, but subsection (7) relaxes this requirement where one of the parents is dead or the couple are divorced. That is what "terminated" means in subsection (7). It does not cover legal separation.
It was suggested to us in another place that that was unduly restrictive since it would not cover, for example, those who were judicially separated but not divorced—divorce in some cases being impossible for reasons of conscience or religion. The amendment is designed to meet that criticism by extending subsection (7) to cover the situation where a child comes to this country with one parent who is legally separated from the other.
The wording of amendment No. 39 is similar, except that it refers to the dependent territories. I hope that the House will agree with the amendment.
Mr. TilleyWe welcome the amendment, but it does not go as far as we should like. The addition of judicial separation to the categories of parental separation, which means that the parent with custody has the decision, does not go as far as we should like. We believe that cases where one person has disappeared or cannot be traced should be catered for. As the Bill stands, even as amended, if a deserting parent cannot be traced, the child will stay unregistered. Even if that deserting parent were traced, he—or she—would still have a veto over the registration of the child, although he had avoided his other responsibilities to that child.
Our amendment to the amendment has not been called because the draftsman found that "separated" meant the same as "legally separated". Therefore, while in common sense terms what we were saying made sense, in parliamentary draftsmanship terms it did not. However, it conveyed the spirit of what we were trying to achieve. Will the Minister say whether there is any way in which our point can be met by wider use of discretion if it cannot be met by further amending the Bill?
Miss Jo RichardsonI am glad that as a result of the debate in another place the Government have thought again on this point and sought, through the amendment, to widen the subsection beyond the plain fact of death or divorce. That is to be welcomed. As my hon. Friend the Member for Lambeth, Central (Mr. Tilley) said, however, the clause is still restrictive in that it refers only to legal separation.
Many married people are living apart. They consider themselves, as it were, permanently separated, although, for a number of reasons, they are not divorced and have not sought a legal separation. They are certainly not living with their spouses. We sought to remove the word "legally" so that the circumstances of those people and their offspring could be taken into account. As the clause

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stands, even with the amendment, there would still be an obstacle in the way of such people, an obstacle which might disadvantage some children.
There was considerable debate in another place about this matter and about the definition of the word "terminated", which the amendment seeks to clarify and define. Much was said—the Government clearly accepted the spirit of it—about the circumstances which lead people to live apart without necessarily obtaining a divorce. The Minister has already referred to those who, for religious or other reasons, do not wish to divorce.
It is difficult to discover, although I have attempted to do so, the number of people in this country who are separated, but not legally separated in terms of an order by a magistrates' court. It is probably still guesswork, but I understand that in 1979 about 200,000 wives were separated without judicial separation. I have no means of knowing whether that was an intelligent guess, but, accepting that as the approximate figure, it suggests that the clause as amended, requiring people to produce evidence of separation, may disadvantage some people.
We can all cite people in our constituencies—let alone our personal acquaintances—who, in the course of explaining their problems, tell us that they are separated from their husbands or wives but that there is no legal separation. The matter arises frequently in connection with social security, which is why people's private lives are so often revealed. Those in the unfortunate position of having been deserted by their spouses may have children, born outside the United Kingdom, who wish to register but will be unable to do so.
What are they to do if the parents are not legally separated? The Government spokesman in another place gave his answer as follows:
"in the case of a separation which is not a judicial separation it is right that both the mother and the father should give consent to the application for registration. If they cannot do so under Clause 3(6), perhaps because one parent is living in the United Kingdom with the child, while the other parent is living abroad, then indeed they can apply for registration under Clause 3(1)."—[Official Report, House of Lords, 6 October 1981; Vol. 424, c. 70.]
Clause 3(1) embodies the Secretary of State's discretion.
That does not take account, however, of the case in which one parent has deserted and cannot be found, leaving the other parent, as it were, to pick up the pieces. That parent, and more particularly any children from the marriage, will be in a difficult position. Will the remaining parent, who is not legally separated, be able to ask for the Secretary of State's discretion? Will the Home Office advise people in that position, as one of our colleagues in another place asked at that time, by rather more than the standard letter that they will have the opportunity to ask for the Secretary of State's discretion instead of being left high and dry?
The number is probably small, but if we do not sort this out—if only by getting some words on the record from the Minister—some children will be deprived of the opportunity for registration, because their parents, for whatever reason, have not obtained a judicial separation. I hope that the Minister will clarify the position, as there seems to be a yawning hole in the provisions in this regard.
Mr. StanbrookClearly, the word "legally" qualifying the word "separation" is desirable. We need certainty and some degree of formality in these matters to know how to obtain the necessary evidence in seeking to effect registration under the Bill.
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There is, however, much to be said for the argument advanced by the Member for Barking (Miss Richardson) on the ground of the uncertain position of some parents in relation to their spouses. Does "legal separation" mean only judicial separation in the shape of an order by the divorce court? Does it include a separation order made by a magistrates' court, which is legally binding and has full effect for social security purposes and which may be obtained in the absence of the deserting spouse? Does it cover a separation under a formal, fully documented voluntary separation agreement which provides for maintenance?
A range of circumstances might be covered. One appreciates that there must be certainty and some means of producing evidence. Nevertheless, as the hon. Lady pointed out, there will clearly be cases and circumstances in which there will be doubt. I, too, therefore, would appreciate some guidance from the Minister as to the precise meaning of the term "legal separation".
Mr. RaisonI appreciate that the amendment does not go quite as far as the hon. Member for Lambeth, Central (Mr. Tilley) would wish, but I think that it has been generally welcomed by the House.
Clearly, the problem in having no legal definition of "separation" and no means of determining when there is legal separation is that there could be circumstances in which there is considerable confusion as to who is responsible for a child. Presumably, the point is that legal separation and divorce include some decision as to where custody of the child shall lie. To include no requirement for legal separation could clearly cause many problems.
A number of hon. Members, however, have asked whether there is any other way of dealing with the hard luck cases. As the hon. Member for Barking (Miss Richardson) will know from her long hours of service in the Standing Committee, there is always the invaluable provision of clause 3(1)—the Secretary of State's power to register minors. This is the type of circumstance in which it is reasonable to suppose that that power will be exercised.
I was asked whether we could put out some kind of information as to when this power would be used. Information which has the flavour of converting what is, after all, still a discretion into some kind of quasi-entitlement might produce problems. On the other hand, I accept the point that the hon. Lady was notable in pressing in Committee, that when the Bill becomes an Act as much information as possible should be made available to those whom it may concern. I accept that entirely. I hope that we shall be able to make people aware that the discretionary provision exists.
I hope that the House will agree to the amendment.
Question put and agreed to.
Lords amendments Nos. 9 to 11 agreed to.

RIGHT TO REGISTRATION BY VIRTUE OF RESIDENCE IN U.K. OR RELEVANT EMPLOYMENT
Lords amendment: No. 12, in page 7, line 27, after "made" insert
"(subject to subsections (5A) and (5B))".
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Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy SpeakerWith this we may discuss the following: Lords amendment No. 18.
The amendment to Lords amendment No. 18 standing in the name of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley).
The four Government amendments to Lords amendment No. 18.
Lords amendment No. 19.
The Government amendment to Lords amendment No. 19.
The Government consequential amendment to the Bill.
Lords amendment No. 43.
The amendment to Lords amendment No. 43 standing in the name of the right hon. Member for Sparkbrook.
The two Government amendments to Lords amendment No. 43.
Mr. RaisonWe now come to a debate of some complexity which I for one have never experienced before. I hope that other hon. Members know exactly how to handle this mixture of consequential amendments which agree, disagree and so on. It is remarkably complicated, but I shall do my best to keep on the right track.
The main concern of these amendments is with the provisions of clause 6(1)(a). The clause, as it left the House, conferred an entitlement to British citizenship for five years after commencement on citizens of independent Commonwealth countries or citizens of the Republic of Ireland settled in this country since before 1 January 1973.
The entitlement arose out of provisions in schedule 1 to the Immigration Act 1971, which applied to persons who had the right to register under section 6(1) of the British Nationality Act 1948. Under the Bill, those concerned had to be eligible for the entitlement both at commencement and at the time they applied for it and, therefore, had to be of full age at both those dates. Only those of full age eligible at commencement were able to benefit from the entitlement to citizenship in this provision as it left the House. Minors who were otherwise eligible were unable to benefit, even if they attained their majority during the five-year period for which the entitlement in clause 6(1)(a) is to remain available. Had such minors not been registered as citizens during their minority under the Secretary of State's discretionary powers, they would have had to apply for British citizenship by naturalisation.
We originally took the view that no great hardship would arise if those children were excluded from the entitlement to citizenship in clause 6(1)(a). They did not have an entitlement at commencement, and there seemed to us to be no reason why, if their parents so wished, they could not be registered as minors under the Home Secretary's discretionary powers.
A minor's prospects of acquiring citizenship are, after all, essentially bound up with those of his or her parents. If the parents applied for citizenship, it would be open to them to seek registration of their minor children as citizens. Had the parents not taken such steps, it could be assumed that they had decided that the matter should be left for the child to take further, if he wished, when he grew up.
However, both in another place and elsewhere it was put to us that there might be minors whose parents had not
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registered them perhaps through ignorance of the need to do so. Thus, through no fault of their own, they would find, when they were of age, that they could acquire British citizenship only by naturalisation. It was suggested to us that this might cause resentment among the young Commonwealth citizens concerned. We considered these arguments and concluded that, in all the circumstances, it would be right to accept amendments which opened the way to British citizenship as an entitlement for this group of minors. That is what these amendments are principally designed to do.
The first is a paving amendment which adds a forward reference to the new provisos to clause 6(1) added by Lords amendments Nos. 18 and 19. I do not think that I need detain the House over that.
The substantive amendments with which we are concerned are Lords amendments Nos. 14 and 19. Lords amendment No. 14 removes from clause 6(1)(a) the requirement that an applicant has to hold the entitlement both at commencement and at the time of application. Under this amendment, he would simply have to show that he was entitled at the time of application. Thus, children who were not qualified for this entitlement at commencement, because they were still minors, would be able to acquire an entitlement after commencement when they had reached their majority.
Lords amendment No. 19 is concerned with ensuring that those minors who acquire an entitlement to citizenship under clause 6(1)(a), when they become of full age after commencement, will have an adequate period of time in which to exercise that entitlement. As hon. Members will be aware, adults who have an entitlement at commencement under this provision are to have five years after commencement in which to exercise their entitlement. Lords amendment No. 19 makes similar provision for minors by providing that they shall have five years in which to apply after they attain their majority. We have brought forward a consequential amendment to carry through this arrangement to the scheme for British dependent territories citizenship.
The other main change in another place is contained in Lords amendment No. 18. That confers a discretion on the Secretary of State, in the special circumstances of any particular case, to accept late applications made under clause 6(1) for up to eight years after commencement. This discretionary power extends both to applications made under clause 6(1)(a) and (b). Clause 6(1)(b) confers an entitlement to British citizenship on Commonwealth citizens with the right of abode at commencement. This discretion is intended to meet the particular cases of hardship which might arise where a person was not able—perhaps because of severe illness or some other good reason—to submit an application under either clause 6(1)(a) or (b) within the normal five-year period.
It has been necessary to bring forward amendments to Lords amendment No. 18. The discretion in that provision does not adequately reflect the arrangements now proposed for minors who come of age after commencement. The Secretary of State has power to accept late applications from them only in circumstances which would exclude some of those concerned. It is clearly desirable that those in this group should enjoy the same facilities. Accordingly, we have brought forward amendments that give the Secretary of State discretion to accept late applications from those in this group for up to eight years after they come of age.

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Lords amendment No. 43 gives the Secretary of State discretion to accept late applications from applicants for British dependent territories citizenship under clause 18. In special circumstances, he will be able to accept applications made up to eight years after commencement. This will be a useful measure to relieve hardship in particular cases.
However, Lords amendment No. 43 does not reflect the changes to clause 6 which were agreed in another place and have been carried through to clause 18. These mean that people otherwise eligible for British dependent territories citizenship under clause 18, but who are minors at commencement, will be eligible to secure citizenship in this way once they are of full age. They will have five years after that time in which to exercise that entitlement. But as it stands Lords amendment No. 43 does not give the Secretary of State discretion to accept late applications, and this is now remedied.
I appreciate that this is an involved matter, but I hope that the House feels that the amendments are fair and just and can be supported.
Mr. TilleyLet me try to explain the procedural position as we see it. The Government amended the Bill in the other place. We tabled amendments to that Government amendment but then discovered that the Government were in this House seeking to amend their own amendment made in another place. Therefore, we are now seeking to amend the Government's amendment to the Government amendment in another place. Having worked all that out, we shall seek to divide the House on the amendment to Lords amendment No. 18 standing in the name of my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley).
The effect of the various amendments already carried in another place is to give the Secretary of State the discretion to extend from five years to eight years the grace period for Commonwealth citizens taking up their right to registration which will otherwise be extinguished by the Bill. It also covers those who are not 18 at the date of commencement but who will become 18 after that date. In enables them to take up their right, as adult Commonwealth citizens, to register as British citizens.

I pay tribute to my noble Friend Lord Pitt, who not only discovered the gap in the Bill—which we did not spot despite our 170 hours of close examination—but persuaded the Government to close it. Now that the problems of minors is settled, our concern is with the adults who came from the West Indies and the Indian subcontinent when they were colonies in response to Britain's labour requirements. They were people in their twenties and thirties who came here in the 1950s and 1960s on a United Kingdom and Colonies passport. They saw that as a British passport, as we all will until the Bill is enacted. They have worked here for half their lives, paid taxes and obeyed the laws. In many cases they had to suffer racial discrimination and disadvantage. They began their lives here and many are still in the worst housing and have the worst jobs in inner city areas such as the part of Lambeth that I represent.
As the Minister pointed out, those people have had the right to register as British citizens for many years. That process is easier, cheaper and quicker than naturalisation. That was part of the special treatment that, until this
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legislation, was accorded Commonwealth citizens who already had links with this country but wanted to take up full British citizenship.
The man on the Clapham omnibus has already been mentioned. He is likely, depending upon the stop he gets on at, to be a constituent of mine. He may be on his way to the Clapham citizens advice bureau, which has written to me about this problem. The letter says:
"In Clapham the majority of our West Indian and Asian clients, who have been resident and settled here for some time, would have had an automatic right to British Citizenship. When the Bill becomes law, unless they register within a specific time, they will lose this right. Instead they have to apply for the discretionary naturalisation, and be subject to investigation, with good character and language tests … The Nationality Bill is therefore already causing great anxiety and insecurity amongst our Commonwealth clients, and this can only increase when the Bill is implemented."
That letter was sent to me a few days ago by Mary Benton, the organiser of the Clapham citizens advice bureau. It reflects an anxiety that has been monitored and put forward to right hon. and hon. Members by the citizens advice bureau service nationally and by many other advice agencies to which Commonwealth citizens resident in this country turn for help.
We ask that the grace period be extended even further. The discretion that the Minister would have under the Government's amendment to extend the grace period from five to eight years should be increased infinitely so that it will extend to the lifetimes of the people who now have the right. We do not suggest that any new people should have the right. We suggest that those who have the right to register as British citizens should hold that right for their natural lifetimes and should be able to ask the Minister to exercise his discretion and allow them to take up citizenship within their lifetime.
The question we have to answer is why they have not already taken up their entitlement and/or why we may expect that a significant number will not take it up within the grace period of five years, which has already been extended from the two years that was on the face of the Bill when this House first considered it.
6.15 pm
There are several reasons why people have not taken up that entitlement but should be allowed to take it up later. First, many Commonwealth citizens feel resentment when they learn that they are not British citizens, as they thought, and that they have to go through the process of registration. That resentment has to be overcome and it takes time for them to realise their position. Secondly, registration costs £50 and that is a great deal of money for many of those people to find. Therefore, they wait until they can spare £50, which may take a matter of years.
The most important reason—and the one that is the responsibility of this Government and previous Governments—is that many of those people are not aware that they are not British citizens. They lost their United Kingdom and Colonies nationality on the day that the colony from which they came to work in Britain became independent. Jamaica became independent in 1963 and the other West Indian islands became independent on dates ranging from then until about two years ago, when St. Vincent and St. Lucia became independent.
They were not told that they were no longer United Kingdom and Colonies citizens. Because of the life they lead and their disposable income, very few of them travel great distances, so they do not need a passport for a long

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time. It is only long after they have lost their United Kingdom and Colonies citizenship, because of the independence of their home colony, that they realise that they have to apply for registration. It is reasonable to say that a substantial number of people may wish to exercise their right to register as British citizens after the maximum grace period allowed not only by the Bill after it left this House but also by this amendment.
We are talking about what is likely to happen in the 1990s, because commencement plus eight years takes us to the end of the decade. I should be grateful if the Minister would tell us when commencement will be. It seems hardly likely that it will be 1 January 1982, which was one of the dates first mooted. It will help us on this issue and many others if he can tell us when commencement for the Act will be. We are talking about the 1990s and about a handful of Indian, Bangladeshi and West Indian people who will be old-age pensioners—the first generation of black British pensioners.
If one of them realises that he is not a British citizen and decides that he wants to end his days as a citizen of the country of which he always thought he was a citizen—certainly the country he has always thought of as the mother country—and applies to be registered, he will be turned away unless the amendment is passed. He will be told to apply for naturalisation, which probably by that time will cost much more than the £150 it now costs. He will have to go through a series of tests that will present varying forms of difficulty to him.
The two Houses have gone a long way towards meeting that argument during their consideration of the Bill. I would ask the House to register by vote the need to grant justice to that group of old, black and, in the main, poor people who long ago threw in their lot with Britain.
Mr. J. Enoch PowellIs the hon. Member satisfied that his purpose is sufficiently achieved if he leaves in the words
"in the special circumstances of any particular case"?
I have listened carefully to the instances that the hon. Member appears to have in mind. It is difficult to see how they could be covered by the special circumstances of a particular case. Indeed, the strength of the hon. Gentleman's argument was that this was something that might frequently be expected in the case of that class of persons. Is he satisfied that his amendment, as it leaves those words unaffected, will have the result for which he hopes?
Mr. TilleyThe discretion could be exercised in many cases. I was talking in generalities. In about 10 years each individual case will be a special circumstance.
In the meantime, I look forward to two things happening. First, by the 1990s the legislation may have been repealed and replaced by something better. I say that in full so as not to add to the right hon. Gentleman's scepticism of last night. Secondly, we shall have a Labour Home Secretary who will regard the circumstances that I have instanced as special. We shall have to wait and see.
However, it is worth while having an investment for the reasonable treatment of people in the 1990s when the problems would arise.
Mr. Dan JonesThe Government are responsible for the ambiguities in my hon. Friend's mind.
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Could they not set up an agency in the meantime—not at great cost—to deal with the objections mentioned by the right hon. Member for Down, South (Mr. Powell)?
Mr. TilleyI find the question difficult to answer, as the ambiguities are in the Bill and not in my mind.
Mr. Edward LyonsUnder pressure the Government increased from two to five years the period in which people may apply for registration. They resisted my amendment in Committee proposing eight years. The Bill has come back from the House of Lords with an amendment for at least a discretion within eight years. The Government have lacked charity throughout the passage of the Bill. They have now almost arrived at a position that they fought vigorously against.
I do not know whether the official Opposition amendment has technical defects but I applaud its spirit. The number who will be affected is small. As the Government have moved from two to five and in certain instances eight years, they should complete the job. This is an example of how the Government have got a bad name for their action over the Bill. They have retreated in stages when they should have been generous to begin with.
Mr. RaisonThe interpretation by the hon. and learned Member for Bradford, West (Mr. Lyons) of our approach to the Bill is in itself uncharitable. On Second Reading, my right hon. Friend and I said that we were prepared to listen to the debate. If a good case was made out for change, we were prepared to make it. The hon. and learned Gentleman may be a little irked that we did not make the change in response to his pleading, but I am afraid that is how life works. Sometimes an argument has to be put two or three times before being accepted. The hon. and learned Gentleman should welcome the fact that we are prepared to move on such issues, whether the change is proposed in Committee or on the Floor in another place.
The amendments that I commend to the House meet the situation. It is not necessary or desirable to allow late applications to be submitted indefinitely, as the official Opposition amendment proposes. Such a provision would be out of line with the approach that we adopt elsewhere in the Bill—for instance in clause 6(6), which gives discretion to allow late applications under clause 6(2) up to eight years after commencement.
The provision would also be out of line with our general approach to entitlement, such as that in clause 6, which arises from previous nationality legislation. We are prepared to preserve these arrangements for a limited period, because we are anxious that the transition to a new scheme of citizenship should be made without dislocation or hardship, but we do not believe that it would be right to extend arrangements relating to these entitlements indefinitely, even on a discretionary basis. After all, one object of the exercise is to clarify—to standardize—to achieve a recognisable law. Constantly to extend the present situation is bound to blur the impact.
I appreciate that dilemma can arise where Commonwealth citizens are reluctant to exercise their entitlements because it would mean losing citizenship of their country of birth; but, frankly, that arises from the nationality laws of the countries concerned. It is not of our making and, anyway, it is not a matter that an indefinite extension of the discretion to accept late applications will do anything to solve.

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For those reasons I am afraid that I must ask the House to reject the official Opposition amendment.
Question put and agreed to.
Lords Amendment No. 13 agreed to.
Lords amendment: No. 14, in page 7, line 33, leave out "both at commencement and".
Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy SpeakerWith this we may take Lords amendment No. 42.
Mr. RaisonThe amendment means that it is no longer necessary for applicants for British citizenship under this provision to show that both at commencement and at the time of the application, they would, but for the Bill, have been entitled to citizenship under paragraphs 2 and 3 of schedule 1 to the Immigration Act 1971. They would simply have to show that at the time of their application they were so entitled. In other words, people who were not qualified for this entitlement at commencement, but become so afterwards, are able to obtain citizenship in this way. That is essentially the subject matter of our previous debate.
Amendment No. 42 is the equivalent for British dependent territories citizenship of the Lords amendment agreed earlier to clause 6. It is one of several amendments designed to amend clause 16 to benefit those citizens of Commonwealth countries and citizens of the Republic of Ireland settled in a dependent territory before 1 January 1973 who, but for their being minors, would at commencement have had an entitlement to citizenship under clause 18.
The amendment means that it is no longer necessary for applicants for British dependent territories citizenship under this provision to show that both at commencement and at the time of application they would, but for the Bill, have been entitled to citizenship under paragraphs 2 to 5 of schedule 1 to the Immigration Act 1971. They would simply have to show that at the time of their application they were so entitled. Thus, children who were not qualified for the entitlement at commencement, because they were still minors, will be able to acquire an entitlement after commencement when they reach their majority.
Essentially those are issues that we have already discussed, and I commend the amendment to the House.
Question put and agreed to.
Lords amendments Nos. 15, 16 and 17 agreed to.
Lords amendment: No. 18, in page 8, line 36, at end insert—
"(5A) If in the special circumstances of any particular case the Secretary of State thinks fit, he may treat subsection (1) as if the reference to five years after commencement were a reference to eight years after commencement, but shall not do so unless the person to whom the application relates would have been entitled to be registered under that subsection on an application made immediately before the end of the five years after commencement."
Read a Second time.
Amendment proposed to the Lords amendment, in line 3, leave out from 'may' to 'but' in line 5 and insert:
"disregard the references in subsections (1) and (5B) to five years after commencement and five years after the date on which he attains full age respectively'.—[Mr. Tilley.]
Question put, That the amendment to the Lords amendment be made:—
The House divided: Ayes 199, Noes 250.

AYES

Abse, Leo

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

Adams, Allen

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

Alton, David

Home Robertson, John

Anderson, Donald

Homewood, William

Archer, Rt Hon Peter

Hoyle, Douglas

Ashley, Rt Hon Jack

Huckfield, Les

Ashton, Joe

Hudson Davies, Gwilym E.

Atkinson, N.(H'gey,)

Hughes, Mark (Durham)

Barnett, Guy (Greenwich)

Hughes, Robert (Aberdeen N)

Beith, A. J.

Hughes, Roy (Newport)

Benn, Rt Hon Tony

Janner, Hon Greville

Bennett, Andrew(St'kp't N)

Jay, Rt Hon Douglas

Booth, Rt Hon Albert

John, Brynmor

Bray, Dr Jeremy

Johnson, Walter (Derby S)

Brown, Hugh D. (Provan)

Jones, Rt Hon Alec (Rh'dda)

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

Jones, Barry (East Flint)

Brown, Ronald W. (H'ckny S)

Jones, Dan (Burnley)

Buchan, Norman

Kerr, Russell

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

Kilroy-Silk, Robert

Campbell, lan

Kinnock, Neil

Campbell-Savours, Dale

Lambie, David

Canavan, Dennis

Lamborn, Harry

Cant, R. B.

Leadbitter, Ted

Carter-Jones, Lewis

Leighton, Ronald

Cartwright, John

Lestor, Miss Joan

Clark, Dr David (S Shields)

Lewis, Arthur (N'ham NW)

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

Lewis, Ron (Carlisle)

Cohen, Stanley

Litherland, Robert

Coleman, Donald

Lofthouse, Geoffrey

Concannon, Rt Hon J. D.

Lyons, Edward (Bradf'd W)

Cook, Robin F.

McCartney, Hugh

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

McDonald, Dr Oonagh

Crowther, Stan

McElhone, Frank

Cryer, Bob

McGuire, Michael (Ince)

Cunliffe, Lawrence

MacKenzie, Rt Hon Gregor

Cunningham, G. (Islington S)

McMahon, Andrew

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

McTaggart, Robert

Dalyell, Tam

McWilliam, John

Davies, Rt Hon Denzil (L'lli)

Magee, Bryan

Davies, lfor (Gower)

Marks, Kenneth

Davis, Clinton (Hackney C)

Marshall, D(G'gow S'ton)

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

Marshall, Jim (Leicester S)

Dean, Joseph (Leeds West)

Mason, Rt Hon Roy

Dewar, Donald

Maxton, John

Dixon, Donald

Maynard, Miss Joan

Dobson, Frank

Mellish, Rt Hon Robert

Dormand, Jack

Mikardo, lan

Douglas, Dick

Millan, Rt Hon Bruce

Douglas-Mann, Bruce

Mitchell, R. C. (Soton Itchen)

Dubs, Alfred

Morris, Rt Hon C. (O'shaw)

Duffy, A. E. P.

Morton, George

Dunwoody, Hon Mrs G.

Moyle, Rt Hon Roland

Eadie, Alex

Newens, Stanley

Eastham, Ken

Oakes, Rt Hon Gordon

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

O'Halloran, Michael

Ellis, Tom (Wrexham)

O'Neill, Martin

English, Michael

Orme, Rt Hon Stanley

Ennals, Rt Hon David

Owen, Rt Hon Dr David

Evans, loan (Aberdare)

Palmer, Arthur

Ewing, Harry

Park, George

Faulds, Andrew

Parker, John

Field, Frank

Parry, Robert

Flannery, Martin

Pavitt, Laurie

Fletcher, Ted (Darlington)

Pendry, Tom

Ford, Ben

Penhaligon, David

Forrester, John

Pitt, William Henry

Foster, Derek

Powell, Raymond (Ogmore)

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

Prescott, John

Freeson, Rt Hon Reginald

Price, C. (Lewisham W)

Garrett, John (Norwich S)

Radice, Giles

Garrett, W. E. (Wallsend)

Richardson, Jo

Graham, Ted

Roberts, Allan (Bootle)

Grant, George (Morpeth)

Roberts, Ernest (Hackney N)

Grimond, Rt Hon J.

Roberts, Gwilym (Cannock)

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

Robertson, George

Harrison, Rt Hon Walter

Ross, Ernest (Dundee West)

Hart, Rt Hon Dame Judith

Ryman, John

Hattersley, Rt Hon Roy

Sandelson, Neville

Haynes, Frank

Sever, John

NOES

Adley, Robert

Cranborne, Viscount

Alexander, Richard

Critchley, Julian

Alison, Rt Hon Michael

Crouch, David

Amery, Rt Hon Julian

Dean, Paul (North Somerset)

Ancram, Michael

Dorrell, Stephen

Aspinwall, Jack

Douglas-Hamilton, Lord J.

Atkins, Robert(Preston N)

du Cann, Rt Hon Edward

Baker, Kenneth(St.M'bone)

Dunn, Robert (Dartford)

Banks, Robert

Durant, Tony

Beaumont-Dark, Anthony

Dykes, Hugh

Bell, Sir Ronald

Eden, Rt Hon Sir John

Bendell, Vivian

Eggar, Tim

Benyon, Thomas (A'don)

Elliott, Sir William

Benyon, W. (Buckingham)

Emery, Peter

Berry, Hon Anthony

Eyre, Reginald

Bevan, David Gilroy

Fairgrieve, Sir Russell

Biffen, Rt Hon John

Faith, Mrs Sheila

Biggs-Davison, Sir John

Fell, Anthony

Blackburn, John

Fenner, Mrs Peggy

Blaker, Peter

Finsberg, Geoffrey

Body, Richard

Fisher, Sir Nigel

Bonsor, Sir Nicholas

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

Boscawen, Hon Robert

Fletcher-Cooke, Sir Charles

Bowden, Andrew

Forman, Nigel

Boyson, Dr Rhodes

Fowler, Rt Hon Norman

Braine, Sir Bernard

Fox, Marcus

Bright, Graham

Fraser, Rt Hon Sir Hugh

Brinton, Tim

Fraser, Peter (South Angus)

Brittan, Rt. Hon. Leon

Gardiner, George (Reigate)

Brotherton, Michael

Gardner, Edward (S Fylde)

Brown, Michael (Brigg & Sc'n)

Garel-Jones, Tristan

Browne, John (Winchester)

Gilmour, Rt Hon Sir lan

Bruce-Gardyne, John

Glyn, Dr Alan

Bryan, Sir Paul

Goodhew, Victor

Budgen, Nick

Goodlad, Alastair

Bulmer, Esmond

Gorst, John

Burden, Sir Frederick

Gow, Ian

Butcher, John

Gower, Sir Raymond

Cadbury, Jocelyn

Grant, Anthony (Harrow C)

Carlisle, John (Luton West)

Gray, Hamish

Carlisle, Kenneth (Lincoln)

Griffiths, Peter Portsm'th N)

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

Grist, Ian

Chalker, Mrs. Lynda

Grylls, Michael

Channon, Rt. Hon. Paul

Hamilton, Hon A.

Chapman, Sydney

Hamilton, Michael (Salisbury)

Churchill, W. S.

Hampson, Dr Keith

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

Hannam, John

Clark, Sir W. (Croydon S)

Haselhurst, Alan

Clarke, Kenneth (Rushcliffe)

Havers, Rt Hon Sir Michael

Clegg, Sir Walter

Hawkins, Paul

Cockeram, Eric

Hawksley, Warren

Colvin, Michael

Hayhoe, Barney

Cope, John

Heath, Rt Hon Edward

Corrie, John

Heddle, John

Costain, Sir Albert

Henderson, Barry

766

Hicks, Robert

Pink, R. Bonner

Hill, James

Pollock, Alexander

Hogg, Hon Douglas (Gr'th'm)

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

Holland, Philip (Carlton)

Prentice, Rt Hon Reg

Hooson, Tom

Price, Sir David (Eastleigh)

Hordern, Peter

Proctor, K. Harvey

Howe, Rt Hon Sir Geoffrey

Pym, Rt Hon Francis

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

Raison, Timothy

Hunt, David (Wirral)

Rathbone, Tim

Hunt, John (Ravensbourne)

Rees-Davies, W. R.

Jenkin, Rt Hon Patrick

Renton, Tim

Jessel, Toby

Rhodes James, Robert

Johnson Smith, Geoffrey

Ridley, Hon Nicholas

Jopling, Rt Hon Michael

Ridsdale, Sir Julian

Kaberry, Sir Donald

Rifkind, Malcolm

Kellett-Bowman, Mrs Elaine

Rossi, Hugh

Knox, David

Rost, Peter

Lamont, Norman

Royle, Sir Anthony

Lang, Ian

St. John-Stevas, Rt Hon N.

Latham, Michael

Scott, Nicholas

Lawrence, Ivan

Shaw, Giles (Pudsey)

Lee, John

Shaw, Michael (Scarborough)

Lennox-Boyd, Hon Mark

Shelton, William (Streatham)

Lloyd, Ian (Havant & W'loo)

Shepherd, Colin (Hereford)

Lloyd, Peter (Fareham)

Shepherd, Richard

Loveridge, John

Shersby, Michael

Luce, Richard

Silvester, Fred

McCrindle, Robert

Sims, Roger

Macfarlane, Neil

Skeet, T. H. H.

Macmillan, Rt Hon M.

Speed, Keith

McNair-Wilson, M. (N'bury)

Speller, Tony

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

Spence, John

McQuarrie, Albert

Spicer, Jim (West Dorset)

Madel, David

Spicer, Michael (S Worcs)

Major, John

Squire, Robin

Marland, Paul

Stainton, Keith

Marlow, Antony

Stanbrook, Ivor

Marshall, Michael (Arundel)

Stanley, John

Marten, Rt Hon Neil

Steen, Anthony

Mather, Carol

Stevens, Martin

Maude, Rt Hon Sir Angus

Stewart, Ian (Hitchin)

Mawby, Ray

Stewart, A.(E Renfrewshire)

Mawhinney, Dr Brian

Stokes, John

Maxwell-Hyslop, Robin

Tapsell, Peter

Mayhew, Patrick

Taylor, Teddy (S'end E)

Meyer, Sir Anthony

Thomas, Rt Hon Peter

Miller, Hal (B'grove)

Thompson, Donald

Mills, lain (Meriden)

Thornton, Malcolm

Miscampbell, Norman

Townend, John (Bridlington)

Moate, Roger

Townsend, Cyril D, (B'heath)

Molyneaux, James

Trippier, David

Monro, Sir Hector

van Straubenzee, Sir W.

Montgomery, Fergus

Viggers, Peter

Moore, John

Waddington, David

Morgan, Geraint

Wakeham, John

Morrison, Hon C. (Devizes)

Waldegrave, Hon William

Morrison, Hon P. (Chester)

Walker, B. (Perth)

Mudd, David

Walker-Smith, Rt Hon Sir D.

Murphy, Christopher

Walters, Dennis

Myles, David

Warren, Kenneth

Needham, Richard

Watson, John

Nelson, Anthony

Wells, John (Maidstone)

Neubert, Michael

Wheeler, John

Newton, Tony

Whitelaw, Rt Hon William

Page, John (Harrow, West)

Whitney, Raymond

Page, Richard (SW Herts)

Williams, D.(Montgomery)

Parkinson, Rt Hon Cecil

Winterton, Nicholas

Parris, Matthew

Wolfson, Mark

Patten, Christopher (Bath)

Patten, John (Oxford)

Tellers for the Noes:

Pattie, Geoffrey

Mr. Peter Brooke and

Percival, Sir Ian

Mr. Selwyn Gummer.

Sheerman, Barry

Wainwright, E.(Dearne V)

Sheldon, Rt Hon R.

Wainwright, R.(Colne V)

Shore, Rt Hon Peter

Walker, Rt Hon H.(D'caster)

Short, Mrs Renée

Watkins, David

Silkin, Rt Hon J. (Deptford)

Weetch, Ken

Silverman, Julius

Welsh, Michael

Skinner, Dennis

White, Frank R.

Soley, Clive

White, J. (G'gow Pollok)

Spriggs, Leslie

Whitehead, Phillip

Steel, Rt Hon David

Whitlock, William

Stewart, Rt Hon D. (W lsles)

Wigley, Dafydd

Stoddart, David

Willey, Rt Hon Frederick

Stott, Roger

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

Strang, Gavin

Wilson, Gordon (Dundee E)

Straw, Jack

Wilson, William (C'try SE)

Summerskill, Hon Dr Shirley

Woodall, Alec

Taylor, Mrs Ann (Bolton W)

Woolmer, Kenneth

Thomas, Dafydd (Merioneth)

Young, David (Bolton E)

Thomas, Jeffrey (Abertillery)

Thomas, Dr R.(Carmarthen)

Tellers for the Ayes:

Thorne, Stan (Preston South)

Mr. James Hamilton and

Tilley, John

Mr. Allen McKay.

Varley, Rt Hon Eric G.

Question accordingly negatived.
Government amendments to the Lords amendment agreed to.
Lords amendment, as amended, agreed to.
Government amendment to Lords amendment No. 19 agreed to.
Lords amendment, as amended, agreed to.
Consequential Government amendment agreed to.
Lords amendments Nos. 20 to 22 agreed to.

RIGHT TO REGISTRATION REPLACING RIGHT TO RESUME CITIZENSHIP OF UNITED KINGDOM AND COLONIES
Lords amendment: No. 23, in page 11, line 11, at end insert—
"(1A) On an application for his registration as a British citizen made by a person of full capacity who had before commencement ceased to be a citizen of the United Kingdom and Colonies as a result of a declaration of renunciation, the Secretary of State may, if he thinks fit, cause that person to be registered as a British citizen if that person—

has an appropriate qualifying connection with the United Kingdom; or

if a woman, has been married to a person who has, or would if living have, such a connection."

Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
Mr. Deputy SpeakerWith this we may take Lords amendments Nos. 24, 47 and 48.
Mr. RaisonAmendments Nos. 23 and 24 add to clause 9 a discretionary provision enabling a person who renounced citizenship of the United Kingdom and Colonies for whatever reason to resume British citizenship at discretion, provided that he has an appropriate qualifying connection with the United Kingdom.
As drafted, clause 9—like the current provision in section 1(1) of the British Nationality Act 1964 which it replaces—confers an entitlement to British citizenship only on those with the relevant qualifying connections with the United Kingdom who renounced citizenship of the United Kingdom and Colonies in order to acquire another Commonwealth citizenship. However, it was put to us both in this House and in another place that there could be people who renounced for other reasons than that they had to acquire another Commonwealth citizenship and who might wish to resume British citizenship. The Government accept that such cases deserve sympathetic consideration. We have therefore added to clause 9 the discretionary power to deal with cases of people who have an appropriate qualifying connection but do not meet the criteria for the entitlement.
I should point out that the permanent provisions for resumption by people who renounced British citizenship—to be found in clause 12—already contain, at subsection (3), a discretionary power of this kind. All we are really doing therefore is bringing the two provisions into line.
We are also asking the House to agree with the Lords amendments Nos. 47 and 48, which are the equivalent for the British dependent territories of those to which I have already spoken.
Question put and agreed to.
Lords amendment No. 24 agreed to.

RIGHT TO REGISTRATION BY VIRTUE OF UNITED KINGDOM NATIONALITY FOR EUROPEAN COMMUNITY PURPOSES
Lords amendment: No. 25, after clause 9, insert new clause A,
"A. A person who is a United Kingdom national for European Community purposes by virture of the operation of any of the pre-Accession Treaties listed in Part I of Schedule 1 to the European Communities Act 1972 shall be entitled, notwithstanding the provisions of Part II of this Act, on application, to be registerd as a British citizen."
Read a Second time.
The Secretary of State for the Home Department (Mr. William Whitelaw)I beg to move, That this House doth disagree with the Lords in the said amendment.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine)With this we may take the Government new clause in lieu—Acquisition by registration: nationals for purposes of the Community Treaties—Lords amendment No. 29 and Government motion to disagree, together with the Government amendment in lieu.
6.45 pm
Mr. WhitelawThe amendments are concerned with access to British citizenship by the people of Gibraltar. As the House knows, Gibraltar is the only British dependent territory whose people are treated as our nationals for the purpose of the Community treaties, and it was agreed in another place that, by virtue of this status, people from Gibraltar should be entitled to British citizenship on application.
An amendment on those lines was moved by my hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie) on Report on 2 June. I explained then that I could not advise the House to give Gibraltar a special position under the Bill, because of the impact on other dependent territories. Whilst we fully understood the views put forward on behalf of the people of Gibraltar, specific assurances had been given to them about arrangements for their entry to the United Kingdom. The House decided by a majority of 25 that special access to British citizenship should not be given to the people of Gibraltar.
It was, however, clear that there was a large body of opinion in this House and elsewhere that continued to hold the view that Gibraltar's position merited special treatment in the Bill. This was emphasised again when an amendment similar to that moved by my hon. Friend the Member for Aberdeenshire, East was moved in another place on 22 July. Again, very strong pleas were made that the situation of Gibraltar, the nature of its ties with the United Kingdom and its position within the European Community justified a different approach to British citizenship for its people from that available to other citizens of the British dependent territories. The opposing arguments were formidably displayed, but, by a majority of 38, the amendment was agreed. Subsequently on Third Reading the wording of the amendment was somewhat modified, but its intention remains the same—to confer on the people of Gibraltar, as nationals for the purposes of the Community treaties, an unqualified entitlement to British citizenship.
The Government carefully considered what response they should make when the amendment passed in another

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place came to be considered by this House. There are undoubtedly powerful arguments against the amendment. But we have to reckon with the fact that, though these arguments were fully set out in another place, they did not win the day there. Moreover, though this House voted against giving people from Gibraltar special access to British citizenship, it did so only by a relatively slender margin, though here too all the arguments against such a provision were fully exposed.
It is therefore clear that, after hearing all the arguments, a considerable body of opinion in this House and another place remains convinced that special access to British citizenship for the people of Gibraltar is amply justified. The Government have therefore concluded that they should not ask the House to disagree with the Lords over this principle of their amendment. Accordingly, we do not seek to oppose the principle that lies behind the amendment, but I am afraid that we must oppose the amendment as drafted since it fails in our view to achieve its objectives satisfactorily.
Let me outline briefly the deficiencies of the Lords amendment. It provides that an unqualified entitlement to British citizenship shall be held by a person who is a United Kingdom national for European Community purposes by virtue of the operation of any of the pre-accession treaties listed in part I of schedule 1 of the European Communities Act 1972.
In fact, no one is a United Kingdom national for European Community purposes by virtue of any of those treaties. It is, I believe, intended that the entitlement should be held by all those who are United Kingdom nationals for the purposes of those treaties. But it is not just people from Gibraltar who are United Kingdom nationals for that purpose. People connected in various ways with this country are nationals for that purpose. In most cases, such people will automatically become British citizens on commencement and consequently do not need the benefit of the entitlement in this amendment. The amendment thus goes far too wide.
We propose that the Lords amendment should be replaced by a simpler provision that will benefit solely those whom it is intended to help and whom the movers of the amendments both in this House and in the Lords clearly intended to help. The new provision confers an unqualified entitlement on those British dependent territories' citizens who are United Kingdom nationals for the purposes of the Community treaties. British dependent territories' citizens who derive that status from their links with Gibraltar are the only category of such citizens who fall to be United Kingdom nationals for the purposes of the Community treaties and, therefore, they alone will be able to benefit from this provision.
Lords amendment No. 29 would mean that those registered under the Gibraltar amendment, if this House sees fit to accept it, would be British citizens by descent. They would, therefore, be unable—unless they were in Crown service or other service relevant for the purposes of clause 2—to transmit their British citizenship automatically to a further generation born overseas.
The principle that lies behind this is surely right. After all, those who are registered under the Gibraltar amendment will in most, if not all, cases be born outside the United Kingdom. They will also normally be resident abroad, since the entitlement does not depend on a period
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of residence in this country, and need have no intention of coming to this country at any time during their lives. Their links with the United Kingdom are therefore comparable with those of other British citizens born abroad, and it seems only logical that they, like these other British citizens, should be British citizens by descent and should be able to transmit their citizenship—and the right of abode in the United Kingdom—to their children born abroad only in specified circumstances. To do otherwise would be incompatible with the Government's general approach to the transmission of citizenship and could only cause resentment amongst other British citizens born and resident abroad who have close links with this country.
However, Lords amendment No. 29 cannot stand as it is, since it is intended that the Gibraltar provision, as amended by this House, should appear after clause 4 instead of clause 9, as at present. This change will be made by the Public Bill Office. This has affected Lords amendment No. 29 in two ways. First, its place in clause 13 had to be changed, since the subsections of this clause follow the sequence of the clauses to which they relate. Secondly, the reference to the Gibraltar amendment in Lords amendment No. 29 has to be altered so that it refers to that provision if, as I ask, it is amended by this House.
We have decided to accept the principle of the amendment proposed and carried substantially in another place, and we have made the necessary technical adjustments to make sure that the amendment does exactly what the movers of it and others who voted for it in the House of Lords wished. That is the position, and I hope that the House will accept it.
Mr. David AltonI welcome the words of the Home Secretary and the fact that the new clause will be accepted in lieu of Lords amendments Nos. 25 and 29. However, it is arguable that in accepting these changes the Government further expose the Bill for the discriminatory legislation that it is.
I am all in favour of Gibraltarians being able to register as full British citizens, but the House should consider the illogicality of refusing such status to other dependent territories, too. With or without the Bill there are safeguards in the EEC treaties, but this new clause elevates those safeguards to a status that Liberals would argue should apply to all citizens of British dependent colonies.
For many Falkland Islanders and Hong Kong residents it is perceived as an attack on their status and an attempt to downgrade them to second-class citizens. But they are now third-class citizens or, more crudely, as suggested by commentators in Hong Kong and elsewhere, sheep, goats and more goats. In Hong Kong, this legislation is viewed as a covert measure to evade the responsibility that should accompany territorial and colonial acquisition. This new clause proves that their view is correct.
Some people may regard the new clause as a step in the right direction, but it is simply a device to placate a powerful white lobby with which the Government have sympathy. The fact that the new clause is to be included shows how ready yet again the Government are to concede ground to groups with emotional appeal and political clout. That should be contrasted with their willingness to listen to the fears and anguish of our black and ethnic minority groups and to citizens in colonies that have less patriotic appeal than the Rock of Gibraltar. It is proof again, if proof were needed, that the Bill is mean-minded, nasty, divisive and racist.
Sir Bernard BraineLike most hon. Members, I was shocked by the comments of the hon. Member for Liverpool, Edge Hill (Mr. Alton). Hong Kong is not in Europe, as is Gibraltar; nor is it part of the EEC. There is no possible argument that could be adduced along the lines the hon. Member advanced.
My comments will be brief because I know that some hon. Members who have played a notable role in bringing about this welcome change of heart by the Government wish to speak. I am glad that the Government are not seeking to reject the spirit of the Lords amendment and that the people of Gibraltar will now be able to enjoy the right to apply individually to be registered as British citizens. That is a wise decision and I warmly congratulate my right hon. Friend the Home Secretary on it. I am not surprised. I felt all along that he would see the justice of our argument. It is wise because Gibraltar was and is a unique case, especially since our entry into the EEC. How could one defend a situation where Gibraltarians were part of the EEC but were denied representation in the European Parliament?
It is wise, above all, because the decision takes into account the overwhelming wish of the people of Gibraltar to be regarded as British, if not in blood, certainly in spirit, culture and allegiance for a long time past. Certainly the overwhelming majority of people on the rock are not Spaniards. The origins of the people who settled there under the protection of the British Crown were anything but Spanish. They were Italian, Portuguese, Maltese, Moorish, Jewish and British. In short, the Government's decision is a recognition of the right of a people to proclaim their identity and, if they are denied sovereign independence, as the people of Gibraltar are under the treaty of Utrecht, to say where they want to belong.
However, I have one reservation: I am astonished that the Government have done nothing to meet the similar wishes of the Falkland Islanders, whose origins are wholly British and whose present insecurity is due entirely to the failures of successive Administrations to create the conditions that would ensure for them a viable economic future. It is, for example, a very sad commentary on the way in which British interests have been safeguarded in the Falklands that external communications, which are vital to the islanders, are now almost entirely dependent upon the Argentine.
7 pm
My correspondents in the Falkland Islands—I have letters from people there more or less weekly—tell me repeatedly that, despite all that has happened, they are determined to remain British. They reject the preposterous notion of lease-back, do not want to be part of the Argentine, and are now and wish to remain British.
I should like to quote from the last letter that I have received. It is from a lady in the Falkland Islands. She writes:
"We are told that if we refuse to co-operate with the Argentines we must take the consequences. Ridley said it on the stage at a public meeting, others in authority have said it since. No one says exactly what those consequences will be."
It is shameful that a people of wholly British stock—and I do not apologise for using that term—should have been put in this position of uncertainty. If the Argentine were a democracy, such as Australia or New Zealand, this situation would never have arisen, but it is not. It is a military dictatorship in which thousands of people in recent years have been arrested, have been
772
imprisoned without trial. Many have been tortured. Several thousand of them—as the Liberal Party should know, if it is at all interested in human rights—have disappeared altogether.
Mr. Deputy SpeakerOrder. The Falkland Islands are not directly included in the amendment. The hon. Gentleman is therefore out of order.
Sir Bernard BraineIndeed, Mr. Deputy Speaker, you are right, but I have travelled down this road very largely because of the remarks of the hon. Member for Edge Hill. You did not call him to order, and he was calling in aid not just a remote group of islands in the South Atlantic but a vast range of territories, stretching from east to west and from north to south. I shall not pursue the matter save to say that in the Bill the Government have lost a great opportunity in not listening to this cry from the heart from our own people in the South Atlantic and in not giving them the same rights as we are now giving to the Gibraltarians.

The Falkland Islanders and the Gibraltarians have one other thing in common. They have played a notable part, particularly in this century, in the maritime defence of the people of these islands. They have made sacrifices for us. Where is the objection to giving the Falkland Islanders the right to British citizenship? There is none, save from those who have forgotten our history and come perilously near to forgetting our national honour.
Sir Paul BryanI sincerely congratulate Gibraltar on securing the amendment, but I must point out the effects of the amendment on other dependent territories. The House will not be surprised to hear that I have in mind Hong Kong, although the words I use will be a good deal more temperate than those we have heard from the Liberal Benches.
During the passage of the Bill through both Houses there have been frequent assurances of non-discrimination between the different dependent territories. For instance, the Home Secretary stated:
"I recognise the deeply held feelings in some of the territories concerned that the Bill should have given them more. It would, however, have been difficult to devise a scheme for separate citizenships for all the dependencies"—
and here I emphasise the Home Secretary's words—
"and invidious to single some out from all the others. For that same reason, it would have been discriminatory to make some but not others British citizens."—[Official Report, 4 June 1981; Vol. 5, c. 1152.]
Similar sentiments have been expressed by other members of the Government when speaking on the Bill. Nevertheless, the Bill before us now includes a specific discrimination in favour of Gibraltar.
My right hon. Friend the Home Secretary also gave a special undertaking on 28 January in respect of the Falkland Islands, but I shall not go further in that direction for fear of being out of order. But here again we have an instance of specific assurances being given to one territory under one sort of pressure but not to others that may well feel that the pressure on them is just as great.
I assure the House that there is no ill will for Gibraltar in Hong Kong, or any wish to remove from Gibraltarians what they have been given in the amendment. But after repeated assurances that Her Majesty's Government would oppose the amendment, the fact that it is now accepted, together with the principle of discrimination that it embodies, has naturally caused profound disillusionment in Hong Kong.

773
I fully realise that this disillusionment is probably based on a misunderstanding of the very real sense of commitment to Hong Kong that the Government feel and have frequently expressed. Nevertheless, the acceptance of the Gibraltar amendment has created a new situation in which some further reassurance to other dependent territories is necesary. Their concern is with the extent of the Government's responsibility to them.
The extent of that responsibility was defined by my right hon. Friend the Minister of State, Home Office, in this way:
"I confirm that citizens of the British dependent territories will remain United Kingdom nationals in the sense that the United Kingdom can afford consular protection and represent their interests internationally—both of which, of course, we intend to continue to do."—[Official Report, 4 June 1981; Vol. 5, c. 1188-9.]

In the new situation it would be a great help if the Home Secretary would be explicit on a point which has hitherto been assumed but not stated. I ask him to confirm again that British dependent territory citizens hold and enjoy this status, together with the defined international responsibility of Her Majesty's Government for them, for life, regardless of whether their territory remains on the schedule and that the rights of this citizenship, as defined by the Minister of State, will be transmittable to their children, as provided for in clauses 16 and 17.
The situation for which I am attempting to provide is extremely hypothetical. Relations between the United Kingdom and China remain excellent in themselves and over Hong Kong. But the Bill, which was drafted so much with a view to the United Kingdom's own immigration problems—problems which are fully understood in Hong Kong—has, unfortunately, raised doubts, questions and uncertainties about the future of the colony and what Her Majesty's Government's attitude might be in certain circumstances.
I believe those circumstances to be a far-off matter. Nevertheless, the confirmation for which I have asked would be timely. It does not apply only to Hong Kong, it is very limited in extent, and it is without implications for United Kingdom immigration control. It would have a most reassuring effect after all the doubts that the Bill has raised.
Mr. Albert McQuarrieI am sure that if Gibraltar were a territory many thousands of miles away from Britain, there would not be one radio that was not tuned in to this debate. Had they been tuned in, it might have been the Gibraltarians' great misfortune to listen to the opening comments from the hon. Member for Liverpool, Edge Hill (Mr. Alton), who made some disgraceful remarks about a Bill which has had a satisfactory hearing in this House and in another place.
I should like, however, to make some comments on the new clause. Many of us in all parts of the House attempted to make the amendment before the Bill went to another place. In that respect we were unsuccessful. When the Bill reached the other place, an amendment was tabled by Lord Bethell. The Government, in their wisdom, thought it necessary to bring in the heavyweights. Indeed, they brought in Lord Soames, who was then the Lord President of the Council, and no less a person than the Lord Chancellor, who replied to the debate. But the Government failed. Indeed, they failed to such an extent
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that the amendment is now brought back into this House as a new clause. I therefore pay great tribute to the Home Secretary and to the Minister of State for the way in which they have handled the matter. I agree that when the matter was debated in another place certain drafting amendments were necessary. They were accepted by my noble Friend Lord Bethell.
My right hon. Friend's new clause seeks to make it perfectly clear that the people of Gibraltar will be given the right on application for registration as British citizens. That is what my right hon. Friend has chosen to do. In my view, it has been a wise decision and, despite what the hon. Member for Edge Hill said, and despite what my hon. Friend the Member for Howden (Sir P. Bryan), whose views I greatly respect, said about the people of Hong Kong, the most important aspect of the new clause is that the people of Gibraltar are United Kingdom citizens for Community purposes, and no other territories have that right as of now.
It was therefore right that my right hon. Friend should take cognisance of the decision that was taken in another place, because the people of Gibraltar have suffered badly for 18 years, although they have remained traditionally British and supported Britain in every respect. They did not expect the British Government to let them down in their appeal. All hon. Members—even my right hon. Friend the Prime Minister—were aware of the many thousands of petitions that were sent at great cost by the people of Gibraltar pleading for this new clause or a clause of some kind to be inserted in the Bill to permit the registration which my right hon. Friend has now conceded.
It has been a great moment for the people of Gibraltar and I assure my right hon. Friend that there will be great joy in Gibraltar this evening. It will be second only to that given to Their Royal Highnesses on the occasion of their recent visit to that territory. I thank my right hon. Friend on behalf of the people of Gibraltar. If he ever finds the time to visit Gibraltar, he will be more than welcome because its people have got what they wanted, to be British. In that respect, nothing better could have come out of the House this evening than this message to Gibraltar, despite the opposition of Liberal Members.
Mr. Christopher PriceIt would be wrong if all the congratulations to Gibraltar emanated from one side of the Chamber. To achieve a certain bipartisan approach to the matter, I add my congratulations to the Government on seeing sense at the end of a very long day. I congratulate them on the way in which they drafted this amendment to a Lords amendment.
However, Mr. Speaker, the point that I want to raise is close to your heart. I want to draw attention to what could become a grave anomaly with the amendment drafted as it is. I am happy that Gibraltar has been embraced within the bosom of the United Kingdom for the purposes of the Bill. That is absolutely proper. However, schedule 6 contains a list of territories which have not been embraced within the bosom of the United Kingdom. The list on page 61, headed by the word "Colonies", contains a territory which is not a colony at all. That is a grave defect in the Bill. It says:
"The Sovereign Base Areas of Akrotiri and Dhekelia (that is to say the areas mentioned in section 2(1) of the Cyprus Act 1960)".
In the negotiations to go into Europe one part of one dependent territory was treated for Commission

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purposes—I hope that I shall be forgiven if I use Commission language which I learnt in one year at the European Assembly—as a PDOM rather than a PTOM; that is, a d#x00E9;partement outremer rather than a territoire outremer. It so happens that Gibraltar was the only dependent territory of Britain which was treated in this PDOM category when we negotiated our agreement with Europe. That enabled the Government to draft the amendment as they did.
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However, other European territories could be analogous to Gibraltar in future in exactly that way. This is an important issue, because it will arise in future, and the interpretation of the amendment will become a matter of extreme importance.
The association agreement between Cyprus and the European Economic Community envisaged ultimately that Cyprus would become a full member of the EEC. Only four countries have association agreements with the EEC—Turkey, Cyprus, Greece and Malta. Greece has acceded to the EEC. Cyprus, Malta and Turkey have not yet acceded. Yet the treaty agreements between those countries and the EEC foresee a final accession to the EEC. No one knows whether that will happen, but, if it does, there will be an obligation on the Government to say how the sovereign bases in Cyprus will be affected by this resolution. The Government have tabled a new clause which does not mention Gibraltar. It just states:
"A British Dependent Territories' citizen … shall be entitled to register as a British citizen if an application is made for his registration as such a citizen"
if he is a British dependent territories' citizen for the purpose of Community treaties. Community treaties are a flowing river. They change from time to time. I do not want to delay the congratulations of the massed "ranks of Tuscany" opposite who wish to get their words in about Gibraltar, but there are two questions that I hope the Government will answer in replying to the debate. Do they seriously regard the two sovereign base areas of 99 square miles on the island of Cyprus—I shall not go into detail, because, Mr. Speaker, you would rule me out of order immediately if I were to go into the history—
Mr. SpeakerOrder. The hon. Gentleman has been trying my patience for the past three minutes. I am an incurable optimist. I was hoping all the time that he was about to conclude.
Mr. PriceAs always, Mr. Speaker, how right you are. I was about to conclude. I was concluding with two issues that I hope the Government will cover in their summing up. First, do they seriously regard the two sovereign base areas of Cyprus as colonies, as described in the schedule? That would seem to mark them out from this amendment. They are either Crown colonies or dependent territories. We want to know what status they will have if Cyprus accedes to the EEC. If the association agreement with Cyprus moves towards full membership of the EEC, what do the Government understand the position of the sovereign bases to be? Do they believe that they will come within the scope of this amendment? I might add that not many people live on the sovereign bases, because the boundaries were so drawn that very few could live there. Do the Government envisage that those few people who were born and live on those bases will be brought within
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or remain outwith the scope of the amendment? It may be stretching a debate on Gibraltar to ask such a question, but it is important to get these matters straight.
It was only to try to get an answer to those two questions—whether they are colonies and whether they will come within this provision—that I rose to my feet. To your great relief, Mr. Speaker I now conclude.
Mr. ShersbyAs my right hon. Friend the Home Secretary explained, this amendment means that, because Gibraltar is mentioned in the pre-accession treaties under the European Communities Act 1972, Gibraltarians alone of the citizens of the British dependent territories will be able to become British citizens with the right of abode in the United Kingdom. I should like to make it clear at the outset of my remarks that I have no overriding objections to my fellow citizens in Gibraltar being British citizens. I have an immense respect for them, for the fact that they are Europeans and for the fact that they already play an important part in our country's affairs.
However, I feel that it is wrong in principle for their Lordships to have amended the Bill in respect of the citizens of Gibraltar but not to have amended it in respect of that uniquely British colony, which is also a dependency, the Falkland Islands. I want to speak on that particular point.
Mr. SpeakerOrder. The hon. Gentleman knows that that amendment was not selected. The hon. Member for Lewisham, West (Mr. Price) was able, because Gibraltar had not been named, to ask whether other European territories were, as he counted it, included. But the Falkland Islands go far beyond the Lords amendment. Therefore, we must keep to the amendment.
Mr. ShersbyI am seeking to argue that the amendment made by their Lordships is unfairly discriminatory against another dependent territory. I am not seeking to debate the question of the Falkland Islands.
Mr. SpeakerIn that case, I apologise to the hon. Gentleman. However, had he so desired, he could have brought Hong Kong and everything else into his remarks.
Mr. ShersbyI completely and unreservedly accept your ruling, Mr. Speaker, with regard to the amendment which I tabled. I am sure that you know that that is so. However, I should like to know whether it is in order for me to argue against the amendment made by their Lordships in another place on the ground that it is unfairly discriminatory, and, in so doing, to advance the reasons why I believe it to be unfairly discriminatory. I cannot do that unless I can illustrate my remarks by drawing attention to some of the points that affect the Falkland Islands, without debating the Falkland Islands as such.
Mr. SpeakerI am afraid that the hon. Member will find himself, unfortunately, very restricted in what he can say. He knows that I did not select his amendment. Therefore, I ask him, as an old parliamentarian, to proceed in the knowledge that he cannot debate the Falkland Islands on this amendment.
Mr. ShersbyI am most grateful to you, Mr. Speaker. I shall confine my remarks entirely to the Lords amendment with regard to Gibraltar, and I shall seek to argue that it is unfairly discriminatory against other dependent territories, including the Falkland Islands. I

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hope that that will meet with your wishes, Mr. Speaker. I shall not refer to the Falkland Islands again during my remarks.
When their Lordships considered the amendment, they were faced with a text which referred entirely to the fact that the citizens of Gibraltar were to be treated in a special way because of their position as United Kingdom nationals for the purposes of the pre-accession treaties. No reference was made in the amendment to Gibraltar as such. It was only during the debate in another place that it became apparent that the consequences of accepting their Lordships' amendment would be to confer this special distinction on the citizens of one dependent territory as compared with citizens of another.
I read with great interest the remarks that were made in another place by the Lord Chancellor in seeking to persuade their Lordships not to accept this amendment. He made the point that if the amendment were accepted it would have an effect upon the homogeneity and solidarity of the Commonwealth. He said that there were British citizens living in other dependent territories who could, as a result of that amendment being passed, feel that they were in a second-class position.
I believe that the Lord Chancellor made an extremely valid point in reminding their Lordships that this was so. There is no doubt that the effect of this amendment will be to make British citizens in other dependent territories, including that to which I have already referred, feel that they are in some way different from the Gibraltarians, when many of them have a very much stronger claim to British citizenship than those who will get it under the Gibraltar amendment.
In other dependent territories there are British citizens who can trace their ancestry for four, five or six generations, but, because they are non-patrials, they do not have the right of abode in the United Kingdom. That is a very serious position for them. Consequently, they will look at the Gibraltar amendment and study the views expressed in another place by their Lordships, and they will be puzzled to know why it is that they are not to have the right of abode in this country whereas those who reside in Gibraltar are to have it.
I hope, therefore, that my right hon. Friend the Home Secretary will say something about the position of those British citizens in other dependent territories who are non-patrials and who do not have the right of abode in the United Kingdom, and that he will be able to give them some assurance that, although they are not to be treated in the same way as Gibraltarians, if their Lordships' amendment is accepted by this House, they may, nevertheless, receive very sympathetic consideration from the Home Office should they wish to enter this country at any time, particularly in times of difficulty which can be envisaged in certain territories around the world.
I hope, Mr. Speaker, that I have kept strictly within your ruling by not referring to another place in the South Atlantic but confining my remarks entirely to what I have described as the unfair discrimination caused by the amendment. I am most grateful to you, Mr. Speaker, for allowing me to make these remarks in this very important debate.
Mr. SpeakerI am obliged to the hon. Gentleman. I was tolerant.
Mr. J. Enoch PowellDespite the difficulties under which he was labouring, the hon. Member for Uxbridge (Mr. Shersby) has reminded all those of us who have been concerned in detail with the Bill of an unsatisfactory feature of the Bill with which I feel that none of us was pleased at the end. I do not think that the Government were satisfied. I do not think that the rest of us were satisfied.
In delimiting our own citizenship we were unable to solve the problem of what came to be known as the British dependent territories. Therefore, we solved it verbally rather than in reality. We created a citizenship, so we called it, which had none of the attributes of a citizenship. We created a common citizenship which had no common features. I think that we all know that this is a blemish upon what is bound to be a major settlement of our national law. In considering this Lords amendment we are bound to be reminded of it, as the hon. Member for Uxbridge reminded the House of the difficulty.
Nevertheless, I cannot say that I am sorry, as one who, at an earlier stage, argued the special claims of Gibraltar, that they have to some extent been met by the Lords amendment or the amendment which is, one gathers, to supersede it. However, they have not been fully met for the following reason. We argued the case that, if Gibraltarians were as such nationals, they should—straightforwardly—be defined by the Bill as British citizens. The orginal way in which we attempted to do that was by bringing Gibraltar within the definition—for the purposes of the Bill—of the United Kingdom.
According to this amendment they are not being recognised as British citizens. As individuals they are being given, individually, an entitlement to claim and to pay—presumably separately—for registration. That falls short of the logical consequence of the acceptance of Gibraltarians as such as British nationals. I can understand why the Government, in both Houses, limited and qualified the nature of their concession in that way. They could claim that they were not treating the territory differently but merely some of the people who happened to turn up. The Government have used a device that is not wholly satisfactory. The people of Gibraltar have been generous in welcoming this form of acceptance.
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Owing to the guillotine motion, it is possible that Lords amendment No. 33 will not be reached. I hope that I shall have your connivance, Mr. Speaker, and that of the House if I refer to something that occurs in the Home Secretary's amendment but that anticipates his amendment to Lords amendment No. 33. I refer to the expression "British Dependent Territories' Citizen". In anticipation, the right hon. Gentleman has written that into his amendment. I believe that I am right in saying that it is within the power of those who, between the completion of parliamentary proceedings on the Bill and Royal Assent, have a duty to prepare it for Royal Assent, to make certain changes, if necessary, to the punctuation. If the punctutation is manifestly inaccurate or fails to correspond with the clear intentions of both Houses of Parliament, I believe that that power exists.
I suggest that it might be possible to treat a comma and an apostrophe, for this purpose, as being of like effect. That would enable the right hon. Gentleman to avoid implanting a most horrible solecism on British nationality law. The apostrophe that follows "Territories"—instead of

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"British Dependent Territories"—is a monstrous piece of English. The word "Territories" is a noun epithet qualifying "citizen". It is, as it were, like "barnyard" in "barnyard fowl". To come nearer to the subject before us, it is like "Pakistan" in "Pakistan citizen", which is the correct description of that type of national. To come nearer to my home, it is like "Ulster" in the expression "Ulster Protestant".
In none of those cases would we dream of referring to a "Pakistan's citizen" or "the Pakistan's citizen". We would not dream of saying a "barnyard's fowl", because we do not apply the mark of the genitive—and should not apply it—to a noun that is being treated as an adjective. It is not a genitive but an adjective qualifying, in this case, the word "citizen". Therefore, the apostrophe is entirely solecistic; and, despite the reference to Cyprus—the home of "solecism"—that has been made in this short debate, the Home Secretary would not wish a solecism to find its way on to the statute book through his agency.
My remarks are serious in intent. If they were not, I would not have taken up the time of the House. We are creating a description for a class of people and we had better create one that is in decent, normal English. Therefore, I hope that the Home Secretary—who will not have to deal with this matter by way of amendment, or otherwise—will discover, with the help of others, that between the conclusion of tonight's procedure and the Bill's eventual presentation for Royal Assent he can bring "Territories" into the status of a noun epithet by omitting the apostrophe.
Sir Albert CostainOwing to the guillotine motion, we are coming to the end of our debate and I shall, therefore, make a one-minute speech. The amendment worries me, because it refers to Community treaties. If a Labour Government were ever foolish enough to take Britain out of the Common Market, what position would the Gibraltarians be in? Will they then have the right to British citizenship or will they go back to square one?
Mr. TilleyI shall speak briefly on behalf of the Opposition Front Bench. In such a short debate I felt it right—in view of the impending guillotine—to allow hon. Members with greater expertise on the various territories to have time to speak. However, some of them have managed to display their expertise without mentioning the territories concerned.
On behalf of the Labour Party, I very much support the Government's decision. It will give a sense of security to Gibraltarians. To some extent that sense of security has been undermined, even since our last debate on this issue. Since then, the naval dockyard has been threatened with closure and various proposals have been put forward regarding Spain's accession to NATO. Some people in Madrid think that if Spain joins NATO it will have some of the rights over Gibraltar that it has long claimed. Therefore, it is even more necessary now than it was when we last debated and supported this idea to give the people of Gibraltar extra security.
We welcome the Government's acceptance of the strong views expressed both in this Chamber and in the other place, as well as those expressed by the Gibraltarian and British publics. We certainly accept the extra gloss about citizenship by descent rather than by registration. I shall attempt to answer the question put by the hon. Member for Folkestone and Hythe (Sir A. Costain)
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Although the next Labour Government will, within a few years, withdraw Britain from the Common Market, the Gibraltarians will act quickly once the Bill has been enacted. Most of their registration forms will be in within weeks and months and not within the year or so that it will take to elect a Labour Government.
Will the Secretary of State confirm that Gibraltarians will be able to register in Gibraltar and to go through all the processes there? Will he confirm that they will not have to come here to do that? The right hon. Gentleman's confirmation would be helpful. I pay tribute to the courage of those Conservative Members who have challenged their Whips successfully during the past few months. I remind them, the people of Gibraltar and other hon. Members that their success was due not only to their courage but also to the solid support given by Labour Members since the idea was first mooted. We have always supported the right of Gibraltarians to acquire British citizenship.
I should like to take up the remarks the right hon. Member for Down, South (Mr. Powell). Every colony is different. Indeed, we made that point at the beginning. We do not like umbrella citizenship, because each colony is different. Therefore, we supported a separate form of citizenship for each colony. If that had been accepted, we should have moved to a system in which each colony—like Gibraltar—had a settlement suitable to its circumstances. Indeed, that will be done in the Bill that will replace this.
We support the Government's amendment and their gracious concession to Gibraltar. We hope similar settlements will be made for each colony, including the Falkland Islands, Hong Kong and the sovereign bases in Cyprus, as part of our legislative contribution in the first Session when the next Labour Government come to power.
Mr. Whitelaw:I shall seek to reply briefly to some of the important questions that have been raised. I found the remarks by the hon. Member for Liverpool, Edge Hill (Mr. Alton) surprising. We have bowed to the will of Parliament. We have bowed to the will of some of the hon. Gentleman's colleagues in another place. It is curious that he should castigate us for doing what his colleagues asked us to do. It is strange. I recognise that one of his colleagues did not ask us to do this but his behaviour is strange. We have done what Parliament thought that it wanted to be done. It is odd to be castigated for it.
Mr. AltonThe Home Secretary, more than most, is prepared to be conciliatory. I am grateful that he has accepted the amendment. He is mistaken if he feels that I was castigating him. I was saying that I wished that the same amendment applied to citizens in other colonies who feel just as strongly as Gibraltarians.
Mr. WhitelawThat is what the hon. Gentleman's colleagues in another place tried to do.
My hon. Friends the Members for Essex, South-East (Sir B. Braine) and Uxbridge (Mr. Shersby) mentioned the effect that the amendment will have on the Falkland Islands. Assurances have been given to that territory at various stages and they still stand. That is the best that I can say.
Sir Bernard BraineWill my right hon. Friend explain the assurances?
Mr. WhitelawI am sorry, I have done my best. I cannot do more.
Sir Bernard Brainerose—
Mr. SpeakerOrder. Before the hon. Gentleman leads the Home Secretary into temptation, we cannot discuss the Falkland Islands.
Sir Bernard BraineAll that I want is for the Home Secretary to spell out in two sentences exactly what the assurances are.
Mr. WhitelawI am saying that assurances that have been given before still stand. My hon. Friend the Member for Essex, South-East knows as well as I what those assurances are. If I say that they stand, they stand. That is reasonable.
My hon. Friend the Member for Howden (Sir P. Bryan) referred to the feeling of discrimination felt by Hong Kong citizens. Again I am in difficulty. I am sure, Mr. Speaker, that you would prefer it if I wrote in detail to my hon. Friend setting out the exact position as we now see it.
I am grateful to my hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie) for what he said. Parliament has decided. I argued the other way before, but I am glad that the House thinks that Parliament has decided correctly.
I am grateful to the hon. Member for Lewisham, West (Mr. Price) for what he said about Gibraltar. I understand that if Cyprus were ever to become a full member of the European Community we should then have to consider afresh the position of the sovereign base areas. For people in the sovereign base areas to benefit from the Gibraltar amendment they would first have to declare themselves as nationals for EEC purposes. To some extent, since this depends on whether Cyprus becomes a member of the Community, it is a hypothetical question. I hope that I have done my best to answer the point.
Mr. Christopher PriceThe right hon. Gentleman used carefully drafted words. It sounds as though the individuals who were born and now live in the two sovereign base areas could now register. Will the Home Secretary make it clear that he is talking wholly hypothetically in the event of Cyprus joining the Community?
Mr. WhitelawI was talking wholly hypothetically. I hope that I have made myself clear. When seen, I am sure that my words will bear that interpretation. I certainly meant them to.
I am advised that the right hon. Member for Down, South (Mr. Powell), as one would expect in connection with our procedures, is entirely correct. Punctuation is usually regarded as having no legal effect on a Bill. For that reason the Public Bill Office of the House of Lords usually is amenable to altering punctuation. I shall, therefore, ask the House of Lords whether the matter can be put right.
I turn to remarks made by my hon. Friend the Member for Folkestone and Hythe (Sir A. Costain) and the hon. Member for Lambeth, Central (Mr. Tilley). Since I regard the Cyprus position as hypothetical, I am entitled to regard the likelihood of Britain leaving the EEC as very hypothetical—and so I do, despite what the hon. Member for Lambeth, Central said.
I was asked whether citizens of Gibraltar would be able to register there. I understand that I have the power under the Bill's regulations to give them that right. I certainly agree that that is sensible.
Question put and agreed to.
New clause to the Bill in lieu thereof:

ACQUISITION BY REGISTRATION: NATIONALS FOR PURPOSES OF THE COMMUNITY TREATIES
B. A British Dependent Territories' citizen who falls to be treated as a national of the United Kingdom for the purposes of the Community Treaties shall be entitled to be registered as a British citizen if an application is made for his registration as such a citizen.'.—[Mr. Whitelaw.]

RESUMPTION
Lords amendment No. 26 agreed to.
7.45 pm

MEANING OF BRITISH CITIZEN BY DESCENT".
Lords amendment: No. 27, in page 14, line 9, at end insert—
"(bb) he is a British citizen by virtue of registration under section 3(1) and either—

his father or mother was a British citizen at the time of birth; or

his father or mother was a citizen of the United Kingdom and Colonies at that time and became a British citizen at commencement, or would have done so but for his or her death; or"

Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
Mr. SpeakerWith this we may discuss Lords amendment No. 49.
Mr. RaisonUnder the Government's further proposals on descent, there could be children in the second generation born overseas who are born to British citizens by descent, neither of whom has the statutory connections with this country to give the child an entitlement to registration as a British citizen. In some cases, however, there could be good reason why they should be registered under the Secretary of State's discretion to register any minor child. And this could also happen with the third or even subsequent generations born overseas. Before registering children born overseas in the second and subsequent generations, regard would naturally be had to the strength of the child's likely connections with this country. It is important in this connection that in exercising this discretion the Secretary of State will take into account the special problems facing British business families on long-term service overseas.
It is important that this discretion should be fairly widely available. But registration at discretion under the Bill as drafted would give citizenship otherwise than by descent. This is because the use of the discretion has been envisaged as applying in general only to children whose future lies in this country. That has, however, now changed and this amendment ensures that where children are registered because of their descent from parents who are British citizens, they are registered as citizens by descent themselves.
In the case of children born after commencement, their parents will, of course, themselves be British citizens by descent. It would be illogical in this context to give the

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children a right to transmit which their parents do not have. It is of course also possible that some children will be registered who have been born before commencement to people who are citizens otherwise than by descent. There would be the children of United Kingdom born mothers who do not now inherit their mother's citizenship at birth, but whom it has been the practice to register since February 1979 unless there is a well-founded objection from the father. These children also should be citizens by descent, since had they had a father born here they would have been citizens by descent at birth, and it seems illogical that discretion being exercised in their favour should result in a more favourable status as far as passing on citizenship to the next generation.
The amendment is therefore necessary to ensure a logical citizenship scheme, as well as to make it easier to take a generous attitude to registration of children born in the second and subsequent generations overseas.
Amendment No. 49 is equivalent, for citizenship of the British dependent territories, to an earlier amendment agreed by this House to the scheme of British citizenship. It would mean that a child registered under the Home Secretary's power to register minors in clause 16(1) would be a citizen of the British dependent territories by descent, if his parents were themselves such citizens, or would have been so but for their death.
Question put and agreed to.
Lords amendment: No. 28, in page 14, line 25, leave out "(i) or (ii)"
Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
The amendment is of a technical nature. It is intended to put right a minor omission in the construction of clause 13(1)(d).
Question put and agreed to.
Lords amendment disagreed to: No. 29, in page 14, line 25, at end insert—
"( ) he is a British citizen by virtue of registration under section A; or"—[Mr. Whitelaw.]
Amendment made to the Bill in lieu thereof: In page 14, line 9, at end insert—
"(bbb) he is a British citizen by virtue of registration under section B; or'.—[Mr. Whitelaw.]
Lords amendment: No. 30, in page 14, line 34, after "descent"" insert
"by virtue of subsection (1)(b) or (c)"
Mr. RaisonI beg to move, That this House doth agree with the Lords in the said amendment.
This is a technical drafting amendment which is designed to clarify the scope of the proviso to clause 13(1) in clause 13(2).
Question put and agreed to.
Lords amendments Nos. 31 and 32 agreed to.

ACQUISITION BY BIRTH OR ADOPTION
Lords amendment:No. 33, in page 15, line 5, leave out
"citizen of the British Dependent Territories"
and insert "British Dependent Territories' citizen".
(Mr. Richard Luce)I beg to move, That this House doth agree with the Lords in the said amendment.
Mr. SpeakerWith this it will be convenient to take Government consequential amendments and Government amendments to Lords amendments Nos. 35, 37, 47, 49, 53 and 89.
Mr. Luce:The amendment would change the first reference to a citizen of the British dependent territories in clause 14(1) to a British dependent territories' citizen. The only difference between the description now proposed and that currently in the Bill is in the order of the words. It would mean that "British" would appear first in the title.
We have stressed more than once, both in the House and in another place, that the Bill will not alter the present constitutional relationship between the United Kingdom and its dependent territories. Nevertheless, we accept that many people in the territories would prefer that their citizenship title began with the word "British" to make completely clear their links with this country.
The new description would not alter their status. If the status were to be described as is proposed, we do not believe that the relationship of the holders of it to the United Kingdom would be different from what is envisaged in the Bill as it stands. This change in title, however small it may seem to hon. Members, will be warmly welcomed by the dependent territories.
Once the amendment has been agreed, it will be necessary to make similar changes to other references to citizens and citizenship of the British dependent territories throughout the Bill and in relevant Lords amendments that are agreed by the House. That is what the consequential amendments are designed to achieve. My right hon. Friend the Secretary of State for the Home Department dealt with the important issue raised earlier on the power of punctuation, as argued by the right hon. Member for Down, South (Mr. Powell). I hope that the right hon. Gentleman feels that that issue has been dealt with adequately.
Mr. TilleyFirst, I congratulate the Minister of State, Foreign and Commonwealth Office, on his new status, on avoiding the guillotine by a few minutes and on managing to put in a brief appearance before we return to matters concerning these islands and the responsibilities of the Minister of State, Home Office.
It is clear that the apostrophe is already in the ashcan of history. I do not think that we need go into the grammatical aspects of the new phraseology. Its purpose, as was made clear in another place, is to enable those in the dependent territories to call themselves British people when they are asked to state their nationality either when completing forms or when asked directly by an official. It does not change the status of their passports. Any immigration officer in any part of the world who knows his job will be well aware that their status is different from that of British citizens in part I.
The representatives from Hong Kong—I am sorry that the hon. Member for Howden (Sir P. Bryan), who knows their feelings and fears especially well, is no longer in his place—wanted to be seen as British. They did not want the same treatment as Gibraltarians in the sense of acquiring British citizenship and the right of entry. They wanted to be seen as British nationals in terms of international law. They do not have that. However, I think that they will be happy, although they have little more than a shadow of it in the new terminology which puts "British" at the beginning of the category in which they now come.

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As I have said, every colony is a special case. We have argued that umbrella citizenship was wrong because each colony was a separate case and should have been dealt with as such. We said that there was no reason for the far-flung bits of empire that are left to us to have the same citizenship. We argued further that giving separate citizenship would not hinder the acquisition of independence, which we contend is the objective of all the colonies that still remain, where that is legally possible.
During the Bill's passage two of the territories in schedule 6 have acquired independence—namely, one colony, Belize, and one associated state, Antigua. We welcome that. If there were time, we would discuss the status of those ex-colonies on the various amendments that remove them from schedule 6 and place them in schedule 3 as full independent members of the Commonwealth.
In Committee the Minister of State said that the various immigration rules of the colonies would have to be brought into line with the citizenship provisions in part II. He added that he had every expectation that that would be done. What progress has been made? During the long interval in which we have been determining the final shape of the Bill, I think that the main outlines have been clear. I am sure that the Foreign and Commonwealth Office has been at work.
An area of particular concern was Bermuda. Has there been any effective progress? If not, how long will it be before the hon. Gentleman is in a position to report that progress has been made? We are anxious that immigration and citizenship should go hand in hand with British citizenship. We may argue about which hand should be in which when discussing citizenship and immigration, but we have never suggested that there should not be a close connection.
In another place Lord Tanlaw talked about Pitcairn. He said that short-wave radio hams were receiving pleas for information from those who claimed to be natives of Pitcairn. As one was Mr. Christian, I assume that the messages were genuine. If the Minister does not have time to reply before the guillotine falls, perhaps he will let us have a reply by letter or by some other suitable means—
Mr. Selwyn GummerOr by short wave radio.
Mr. TilleyI think that the Whip means "Don't ring us, we'll ring you."
It being Eight o'clock, MR. SPEAKER proceeded, pursuant to Order [26 October], to put the Question already proposed from the Chair.
Question, That this House doth agree with the Lords in the said amendment, put and agreed to.
Mr. Speaker then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at Eight o'clock.
Consequential amendments agreed to.
Mr. SpeakerI am required to put the Question on any Government amendment to a Lords amendment followed by the Question, That this House doth agree with the Lords in that amendment, as amended. The Lords amendments in question are Nos. 35, 37, 43, 47, 49 and 53. To save time, and if the House will give me permission, I shall put together the Government amendments to those Lords amendments.
Amendments to Lords amendments agreed to.
Lords amendments, as amended, agreed to.
Subsequent Lords amendments agreed to.

DECISIONS INVOLVING EXERCISE OF DISCRETION
Lords amendment: No. 61, in page 38, line 8, at beginning insert:
"Subject to subsection (1) herein,"
Mr. RaisonI beg to move, That this House doth disagree with the Lords in the said amendment.
The effect of the amendment is far from clear. Clause 43(2) provides that the Secretary of State shall not be required to give reasons for decisions on applications which are at discretion and that such decisions shall not be subject to appeal to or review in any court. The amendment would make the subsection subject to the provisions of the preceding subsection. That states that the discretionary powers in the Bill shall be exercised without regard to an applicant's race, colour or religion.
But there is an inherent difficulty in this amendment since clause 43(1) and (2) are concerned with two different situations. Clause 43(1) —what might be called the antidiscrimination provision—is concerned with the procedures leading up to the decision whether to grant citizenship. The first concerns the reaching of a decision which is a discretion without regard to the applicant's race, colour or religion. The second is concerned with access to the courts if a discretionary decision is challenged. To say that clause 43(2) is subject to clause 43(1), without explaining in what sense it is subject, can only make for obscurity and confusion. That seems to us to be a major objection to the amendment.
However, even if that problem of meaning were to be resolved, I am afraid that the amendment would still remain unacceptable to us. As I understand it, the intention, if not the effect, of the amendment is to ensure that an applicant who believes that he has been discriminated against on grounds of race, colour or religion should not be barred from taking the matter up with the courts by the general bar on access to the courts in discretionary cases set out in clause 43(2). But such a provision would, in our view, have serious drawbacks. It would mean that everyone whose application was refused would be able to challenge the Secretary of State's decision in the courts merely by alleging that he had been discriminated against on grounds of race, colour or religion.
As I am sure hon. Members will appreciate, such a provision would have undesirable consequences. After all, in deciding whether the applicant concerned had been subject to discrimination, a court seized of a case would clearly have to consider the Secretary of State's actual grounds for refusal, which would have to be disclosed. So this amendment might, in practice, lead to the Secretary of State having to give reasons for his decision, even in cases where that was clearly undesirable. As we see it, a system of review of discretionary decisions is fundamentally incompatible with the system of naturalisation as it appears in the Bill. That system was accepted both by this House and by another place.
Under that system, the final decision on naturalisation applications rests with the Secretary of State, and one of the criteria for citizenship is, as hon. Members will recall, the essentially subjective assessment of good character. As

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I have explained to the House on earlier occasions, if there were to be an appeal system involving examination of good character, it would considerably fetter the Secretary of State's discretion. It would mean that we should have to rely more and more on objective tests relating to an applicant's financial or criminal record. Applicants who fell short of generally accepted standards of behaviour, but whose activities had not been proved unlawful, could no longer fall to be refused, and the standards for naturalisation would thus inevitably be lowered. Particularly, difficulties would also arise with security cases. If a person refused on grounds of security were to allege that he had been discriminated against, would it be necessary for the whole matter to be raised in open court?
There is also the related problem of reasons. As my right hon. Friend the Home Secretary told the House on Report, it is our practice to give reasons for the refusal of naturalisation applications whenever possible and particularly when the reasons for refusal are matters which in time the applicant might overcome—such as the language requirement. But there are cases where the giving of reasons is not so easy and matters are not so clear cut: where refusal is on a combination of factors; where, for instance, an individual has criminal associations which have not as yet led to charges and convictions but may do so; where an individual's financial reputation and dealings have been dubious, but have not yet led him to bankruptcy. In such cases, giving reasons would be difficult. The work of the police and the authorities could be hampered, since the individual would become aware that his activities had come to official notice.

Those arguments apply all the more powerfully to security cases, where refusal on grounds of national security would alert an individual to the fact that his activities were under scrutiny. Nevertheless, the amendment, if it were to remain in the Bill, might be used successfully by applicants as an indirect means of discovering the reasons for refusal of their application where those had not already been given to them, even in cases in which it would not be appropriate or not in the public interest for the reasons for refusal to be divulged in public. With this amendment an aggrieved individual might, by alleging discrimination—and he might in practice need to offer only very minimal evidence—secure disclosure of the actual reasons for refusal and a review of that decision.
Finally, I should point out that removal of the amendment—which, in any case, as I have already explained, is of very uncertain effect—will not mean that those who believe that they have been discriminated against will be without means of redress. They will, as now, be able to take the matter up with their Member of Parliament. Where maladministration is alleged—which it presumably would be if a breach of clause 43(1) were in question—Parliament has its Commissioner for Administration—the Ombudsman—to investigate if the case is referred to him.
To sum up, the Government believe that the amendment is of uncertain effect; that, if it were interpreted as apparently intended, it could have harmful and far-reaching consequences; and that there are already remedies available to those who feel that their application for citizenship has been dealt with in a discriminatory manner. For all those reasons, I call upon the House to disagree to the amendment.
Mr. Roy HattersleyI hope that on this occasion the Commons will feel that wisdom resides with the Lords and will support the proposal from another place. It is embodied in what I regard as an admirably simple amendment. I say that so that there shall be no doubt as to why I support it and why I believe that my hon. Friends will wish to do so.
The amendment simply calls for clause 43(2) to be conditional upon the obligations placed upon any Government by subsection (1) of the same clause. Subsection (2) provides that in responding to an application for registration or nationalisation
"The Secretary of State … shall not be required to assign any reason for the grant or refusal of any application under this Act the decision of which is at his discretion; and the decision of the Secretary of State … on any such application shall not be subject to appeal to, or review in, any court."
That is a comprehensive allowance for the Secretary of State to use a discretion which is entirely unfettered. If the Lords amendment is incorporated, that at present unfettered discretion will be qualified in one particular way. The provision in subsection (1), which the amendment seeks to incorporate seeks to link to what follows:
"Any discretion vested by or under this Act in the Secretary of State … shall be exercised without regard to the race, colour or religion of any person who may be affected by its exercise."
It is important that the history of subsection (1) should be made absolutely clear. The subsection was incorporated by the Government in Committee, with the enthusiastic support of the Opposition, albeit against the wishes of one or two Tory Back Benchers. In proposing it, if I may say so without sounding patronising or condescending, the Minister of State spoke with great eloquence about the Government's determination to apply the Bill in a nondiscriminatory way. Indeed, my hon. Friend the Member for Lambeth, Central (Mr. Tilley) and I both congratulated him on establishing beyond doubt a point that we would quote—we hoped, to his and the Government's credit—namely, the Government's determination to apply the principles embodied in the clauses dealing with applications for citizenship in a way which could not and would not be in any way discriminatory with regard to race or religion.
We were told at that stage that this was a declaration, no more that that. Its effect was wholly declaratory. I welcomed that declaration, if it was no more that that. I think that a declaration of non-discriminatory intention in this part of the Bill did something to allay the fears of the ethnic minorities. If the Government have their way today, and if the Lords do not ask us to reconsider their proposals later in the week, I shall still regard the addition of subsection (1) to clause 43 as an advantage and an improvement.
The second historical point that the House must bear in mind concerns subsection (2), which it is proposed to modify. That subsection gives the Home Secretary a wholly unfettered discretion. My right hon. and hon. Friends and I believe in both an appeals system and what must go with an appeals system if it is to work, namely, the obligation on the Home Secretary of the day to publish the reasons for his refusal to grant naturalisation or registration.
I do not believe, however—and here I cross swords with the Minister of State and take issue with him—that by accepting the Lords amendment we are opening up the entire area of appeals and notification. Towards the end

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of his remarks the Minister either said or implied that to allow this single limitation on the Secretary of State's discretion was to open up the whole range of appeals and to require the Secretary of State to stipulate why he had refused an application. That is what I should like to see come about. The new nationality Act which must be introduced in the future must include an appeals system preceded by an explanation of why an application has been refused. But I do not believe that that is what we are debating today. We are debating a much narrower point concerning race and religion which need not, if it is sensibly applied, and in my view cannot, no matter how it is applied, open up the entire issue of appeals and explanations. I believe that unfettered discretion is wrong in general, but it would be disastrous if we provided today that a Home Secretary of any party had unfettered discretion to operate in a way which was discriminatory in terms of race or religion.
8.15 pm
The Minister of State may argue that no Home Secretary supported by the House would ever behave in such a fashion. I concede at once that it is inconceivable that the present incumbent would do so, at least by intention. These matters are always subject to occasional, inadvertent administrative slips, but clearly the present Home Secretary would never remotely behave in a way which needed to be described the amendment suggests. Equally important, however, is the obligation upon the House to state that, having declared our opposition to racial and religious discrimination, we shall do our best to incorporate it into the Bill in such a fashion that a person who feels that he has been subject to such an unacceptable act is able to seek some kind of redress and compensation in law.
When the matter was debated in the House of Lords on 28 July, noble Lords who could not be described, in the patois of some Tory Back Benchers, as "part of the race relations industry"—Lord Boyd-Carpenter, Viscount Colville of Culross and Lord Mackay of Clashfern—all advocated the course that I now advocate and were uncertain during that debate as to the exact reasons for the Government's opposition.
Mr. RaisonI do not think that the right hon. Gentleman can say that Lord Mackay advocated the course that he describes. Lord Mackay is the Lord Advocate. He may have been advocating, but he was certainly not advocating that course.
Mr. HattersleyI am sorry. Lord Boyd-Carpenter and Viscount Colville advocated that course. They went on to say that Lord Mackay had offered three objections to it which they found confusing and in conflict with one another. It is indeed with Lord Mackay's speech that I wish to deal in detail before turning to the Minister of State's remarks. I am sorry if I inadvertently included Lord Mackay among those who had taken a more rational view of the amendment.
Lord Boyd-Carpenter and Viscount Colville, who are not normally regarded as part of the race relations lobby, argued that Lord Mackay was making three criticisms of the proposal. First, he said that the amendment was unnecessary in that a general prohibition on racial discrimination already applied. If the Minister of State has
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the opportunity to speak again—I am sure that the House will be happy to give him leave to do so—I hope that he will expand a little on Lord Mackay's point that subsections (1) and (2) are not simply taken together but are both part of the whole Bill, that the Bill must be examined as a whole, and that, therefore, if subsection (1) remains in the Bill, it applies in every sense to all parts of the Bill. Lord Boyd-Carpenter and Viscount Colville both took that to mean that there might possibly be a recourse to law if there were a fear of the kind of discrimination that we seek to avoid.
Having argued that the amendment was unnecessary, however, the Lord Advocate then argued that it was undesirable because it would oblige the Government to give reasons for refusal—a point with which I shall deal in a moment. Thirdly, he argued that it was unworkable because it was less than precise in describing the redress that an applicant who suspected racial discrimination would be able to obtain.
When I mentioned this proposal yesterday, the hon. Member for Orpington (Mr. Stanbrook), I believe, described subsection (1) as meaningless. By that, I think he meant that it could not be tested in court. I repeat what I said a moment ago. If that were all that subsection (1) stood for, I would regard it as valuable as a sign and a promise. The ethnic minorities have had plenty of signs from Government supporters in the recent past which are likely to encourage their feelings of insecurity and to increase their apprehensions about their future status. I have no doubt at all that a sign—if that is all the subsection is—is valuable in itself. However, the Opposition argue that it would be much better if the aggrieved applicant, or the applicant who believes himself to be aggrieved, were able to appeal to the courts and say "I was excluded from British citizenship only because of my race or religion", and feel that he had some redress there.
What are the possible objections to this amendment, which received such wide support and enjoyed such a large majority in the other place? I suppose that there are two basic objections. The first was best described in Committee by the right hon. Member for Down, South (Mr. Powell) when he talked in general about the Home Secretary's discretion. As I remember it, the right hon. Gentleman was not offended—indeed, I think that he was positively flattered, as I half meant him to be—when I said that his objection to limiting in any way the Home Secretary's discretion in these matters was mystical. I argued that the right hon. Gentleman believed as a matter of principle that the Home Secretary, acting as the embodiment of the State, ought to have the right to accept or refuse applications for citizenship according to whatever seemed to him to be appropriate reasons because it was the State's right to deny additional citizenships.
Those hon. Members who want to cleave to this mystical concept of government will choose to do so. But that is not for me nor, I suspect, for the Government. My own suspicion is that the Government's objection is the sort put to them by civil servants who, while saying that the objects of the clause are undoubtedly worthy, add, "They are undoubtedly objects that you, Minister, subscribe to as you moved the new subsection (1). But if you try to give them any force and meaning, they will, in that time hallowed phrase, be administratively unworkable". What crimes have been committed in the name of those things that are administratively unworkable!

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For my part, I do not accept that to be the case. The Minister of State confirmed my suspicion that those were his objections by talking again in the language of the administrative classes of the Civil Service. He referred to "very serious drawbacks". But while some drawbacks certainly exist, they are nothing like sufficiently substantial to justify the withdrawal from applicants of what to some of us seems to be a basic right, namely, the right to ensure that if they are not allowed to become British citizens they shall be assured, and have it proved to them, that that is not because of their race or religion.
The Minister of State said that if we inserted this one proviso to limit the Home Secretary's discretion it would require him to give all the reasons that might have motivated him to refuse an application, including those reasons that were not concerned with the applicant's race or religion, I do not believe that for a moment. The several distinguished lawyers who spoke on this subject in the other place all believed that it was a workable proposition and that a man or woman who genuinely believed that the reason for the refusal concerned his or her race or religion should, and could, be able to take the case to court on that limited point, and that the Home Secretary should or would be able to demonstrate his good intentions and honourable behaviour in this particular alone.
As the Minister knows, I have always accepted that some refusals of British citizenship might be made for reasons that are good in themselves but that cannot be explained in open court. I have always accepted that security considerations might make it impossible for the Home Secretary to say, "I am denying this man British citizenship and this woman registration and these are the reasons". But I have always taken the view that in such cases the Home Secretary ought to announce simply and baldly that it has been refused for reasons concerning the security of the State, and that in itself would be a protection from any action in the courts which could and should be written into legislation.
On the other hand, I do not see why, as a matter of administrative opportunity and legal possibility, it is not possible for the courts to adjudicate on this simple principle that a man or woman claims to have been refused for this specific reason and that the Home Secretary refutes the specific nature of the claim and complaint, if refutation is possible.
The Minister suggested that there would be some frivolous or fractious applications and that men and women who had patently been refused British citizenship for some other reason might complain that the only thing held against them was their race and religion. In any case, I am deeply worried about denying rights to a few merely because others may unreasonably try to exploit that loophole.
Other hon. Members know more about this subject than I do. But I suspect that the costs in such cases would prohibit many specious applications, frivolous complaints or fractious actions. I suspect that the actions that do come about, but only in small numbers, will come from people who genuinely believe that British citizenship has been denied them because of their race and religion.
I do not believe that many cases of this sort will be brought to court if the two clauses are related in the way their Lordships propose. But to fail to give power to the Minister's admirable original proposition to demonstrate the Government's good intentions and their determination to avoid racial and religious bias would do enormous
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damage. To implement that would give the clause real power and move us forward a great deal along the road to a position where we could genuinely argue that at least parts of the Bill did not bear unequally on the different communities that make up Great Britain. It is enormously important to do that for the sake of good race relations in this country.
The Government may well persist in rejecting the Lords amendment. With the guillotine and Whips at their backs they may carry the day. If that is the case, I hope that their Lordships are as wise this week as they were on 28 July.
Mr. Raisonrose—
Mr. HattersleyI shall gladly give way, but I suspect that the Minister will want to speak at least once more.
Mr. RaisonThis is an important debate and it is right that the protagonists on both sides of the House should be clearly understood. I return to what the right hon. Gentleman said about whether the courts can look at the question solely in terms of an application dealing with colour, race or religion.
If somebody appealed to the courts on the ground that the Home Secretary's discretion had been exercised in a biased and prejudiced way, what would happen in the court? The appellant would put forward his argument. He would say, "The Home Secretary has behaved in a biased way about colour. The reasons have not been given so I do not know what they are." How would the court be able to judge the issue without probing into the reasons for refusal? The argument cannot be contained at the level that it is—simply race, religion or colour. In most cases the courts would have to penetrate the argument to find out what the reasons for refusal were before they could decide whether it was a matter of colour.
8.30 pm
Mr. HattersleyThe Minister of State and I obviously disagree about what is practical. I believe that it would be possible for the Home Secretary to demonstrate his good intentions without having to refer to all the reasons for refusal. Even if the Minister is right—and I do not believe that he is—I hope that, when he speaks again, he will tell us what Lord Mackay meant when he said:
"The court in reading subsection (2) of this clause would read it in the light of all the provisions of the Bill, including subsection (1)."— [Official Report, House of Lords, 28 July 1981; Vol. 423, c. 695.]
Lord Boyd-Carpenter, Lord Mishcon and Viscount Colville, who followed the Lord Advocate, took that at least half to mean that this subsection had force, since it was already part of the Bill and, as part of the Bill, must be related to the whole Bill. Although we can do no more than disagree about the practicalities of such an application, I hope that before the night is over we shall be told the relevance of that point, made with the authority of the Lord Advocate.
Mr. StanbrookI was one of those who originally opposed the provision—indeed, I still disapprove of it—requiring the Secretary of State or the lieutenant-governor to exercise his discretion without regard to race, colour or religion. It is contrary to the spirit of Conservatism, because there should not be empty gestures in legislation. Abstract human rights should not be conceded without the means of enforcing them. It means that, although we state that a certain thing shall be done,

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we are not providing, as we should, the means of ensuring that it can be done and that it can be enforced in a court of law.
To that extent, I have some sympathy with what the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) says. It was a mistake to have inserted the provision in this part of the Bill. In the Bill as originally printed it was the part that is now subsection (2), and it should have been left like that.
However, an amendment has been made linking the two subsections in a curious way. It is hard to believe that it was drafted by a former Lord Chancellor, because the effect of the amendment is to make nonsense of subsection (2). Subsection (1) is the commandment that the Secretary of State shall behave in a non-racial way in the exercise of his discretion. Subsection (2) says that he is not to give reasons for his decisions and that no court shall inquire into them. Linking the two subsections by saying that subsection (2) is subject to subsection (1) is unnecessary verbiage that does not convey the intention or the consequences that the right hon. Gentleman seeks. If the other place had wanted to reverse the principle of subsection (2), it could have done so simply by saying that the Secretary of State, in exercising his discretion under the Act, shall give reasons and his decisions shall be subject to review by the courts. That would have been straightforward and would have been far more acceptable than what has been done.
I am sorry to suggest that people with whose logic I agree have produced a way to achieve their object that is ham-fisted and leaves the whole thing impossible to carry out. Let us have it one way or the other. Either the Secretary of State's decisions may be challenged in the courts or they may not. If they may not, why tell him that he has a statutory duty to do anything? There is no point in legislating unless we ensure that the Secretary of State complies with the requirements by some process through the courts.
The introduction of subsection (1) makes the clause nonsense. The amendment from the other place would make it even more so. Subsection (1) is part of the Bill, as is subsection (2), and linkage of the two is not meaningful.
Mr. HattersleyWhat is the nature of the nonsense about which the hon. Gentleman complains? Is such a provision nonsense because it would give an applicant the right to appeal to the court or because, despite the linkage, it would still not give him the right?
Mr. StanbrookIt would not give him any such right. I do not disagree with the logic of the right hon. Gentleman's argument, but the object of the exercise was to have the Secretary of State's decision subject to review by the court, so the amendment should be that the Secretary of State must give his reasons and they may be challenged in court.
Mr. HattersleyThe hon. Gentleman is a lawyer and I do not have that disadvantage. All the objections concerning administrative convenience and fractious applications come to naught in the hon. Gentleman's view, because the right to appeal to the court would not exist.
Mr. StanbrookThat is the commonsense view. I agree with the spirit of the right hon. Gentleman's
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argument. It is about the first time that we have agreed on the Bill. However, we must do one thing or the other. We must either provide a proper channel to the court to challenge the Secretary of State's decisions or say that they shall not be challenged in any court. In that event we should not put a statutory duty on the Secretary of State to exercise his discretion.
Mr. Edward LyonsIn Committee and on Report the hon. Gentleman voted against amendments designed to provide a resort to the courts. He says that the provision is useless without resort to the courts but he made certain that there would be no such resort by voting against earlier amendments that I and others proposed.
Mr. StanbrookThat is true. I do not believe that decisions within the Secretary of State's discretion should be challenged in the courts. However, we are not discussing that. We are discussing the merits of the amendment and not what I would have in the Bill. If I were drafting it, it might be different.
We are discussing a manoeuvre by the Lords to provide for some form of judicial review. They have done it by linking subsection (1), which imposes a statutory duty on the Secretary of State, with subsection (2), which says that his decisions shall not be challenged in the court. That is nonsense. Let us not make foolish legislation. If there is to be a challenge in the courts, we should say that the decisions are subject to review by the court.
I believe that the original wording of the clause was acceptable. If we are talking about discretion, it is a subjective view of the merits of an application for naturalisation. It is not something for which reasons can be given that can be challenged in court. I therefore see no need for the injunction of subsection (1). I approve of the Government's general stance that there should not be a review in the court.
Mr. Peter ArcherThe issue is simple. The Government do not dispute that there should be a non-discrimination clause. Indeed, the Minister of State introduced it in Committee. As he said, he did so to allay the fears of minority communities.
There were such fears. There was a deep anxiety among minority communities. They felt that where a decision would profoundly affect the lives of people they ought to know the reasons to enable them to challenge mistakes which had crept into the file, to understand what they had to do to rectify matters and, at the very least, so that they might go away understanding why they had not received the answer for which they were hoping. Of course there were anxieties.
In Committee, the Minister of State fairly accepted that there were those anxieties. The purpose of introducing the non-discrimination clause was to allay those fears. So presumably the Government intend the clause to be effective. They intend it to have a purpose. Surely they cannot have intended to allay the fears of minority communities, without dealing with the grounds for those fears, by a declaration which was totally empty—which was sounding brass and tinkling cymbal. The hon. Member for Orpington (Mr. Stanbrook) and I are certainly at one on this. We may disagree about whether there ought to be a right at all, but we agree that it is illogical, misleading and unfair to introduce a right and then not to introduce a remedy. Before the debate began, I should

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have thought that that was almost dishonest. That is not an allegation that I would make against the Minister of State. I believe that he must just be very confused.
As my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said, the amendment may have some value as a declaration. But, as a method of setting people's fears at rest, it is a non-starter. None the less, it is introduced and included in the same clause as another subsection which states that all the rights in the Bill are to be unenforceable. Common sense and logic would suggest that the two cancel each other out. What is the Government's answer? What is their quarrel with common sense and logic and why are they so anxious to resist the amendment?
Before the debate began I thought that I knew the answer to the last question because in another place the Lord Advocate gave some reasons. One reason, as has already been said more than once in the debate, was that he thought that the amendment would not achieve its purpose. He stated that, since the two subsections dealt with two different stages of the process, it would not make sense to say that one was subject to the other.
I am not persuaded by that argument. The courts are perfectly capable of understanding what is meant. There is only one thing that the words could mean—the inhibitions on challenge in subsection (2) shall not apply to a challenge on the ground that subsection (1) has not been complied with. Any English speaker would understand that that is what was meant. But let us suppose that I am wrong and that the Minister is right about this. Then the argument would be that the drafting was defective.
With all the Government's resources, surely they can produce an amended draft. It would be monstrous, in a debate of this kind on a fundamental issue of principle—whether a non-discrimination clause introduced by the Government should be effective—for them to shelter behind a drafting point.
Mr. RaisonI was not sheltering behind a drafting deficiency. I pointed out that, in our view, there was a drafting deficiency. I attempted to explain that it concerned the linkage between subsections (1) and (2). However, I made it clear that the principal reason for my objection was the practical question of what would happen if one went to court and argued that the Home Secretary had refused somebody's application for naturalisation on grounds of colour, race or religion. How could that be argued without the true reasons for the refusal coming before the court?
It would be extremely interesting and helpful to the House if the right hon. and learned Gentleman, who is a former Law Officer, would give his views on how, as a matter of practice, that could happen. How could somebody say that the Home Secretary had discriminated against him on grounds of colour, race or religion without the court wanting to find out the reasons for the decision?
It might be possible on occasions to tackle such cases without penetrating into the real arguments, but surely that must be exceptional. The norm would be for the court to question the reason for the refusal.
Mr. ArcherI am grateful to the Minister of State for that intervention, but he must not make my speech for me. I am coming to the point that he made. We have now achieved one thing in this debate. The drafting argument has gone.
Mr. RaisonNo.
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Mr. ArcherThe Minister cannot have it both ways. He cannot say that he does not want the subsection to be subject to review and then object that the drafting is defective.
Mr. RaisonThe right hon. and learned Gentleman can do better than that. I said that there were two things wrong. The first, to which I attach less importance, concerns technicalities; and the second, to which I attach greater importance, concerns how the procedure would operate. I do not abandon the first point. It is significant, but the second issue is more significant and that is where I prefer to put the substance of my argument—perhaps because I can argue and grasp it more persuasively. There are two arguments, and the second is more important.
Mr. ArcherThe Minister of State has now made the same point four times. I am seized of it and I promise to come to it in due course, but perhaps I may be allowed to make my own speech in my own way. It still seems to me that if the Minister is saying that he does not want a review, it is irrelevant for him to say that the drafting does not achieve one.
I should like to make one other point before coming to the Minister of State's argument. I wish that the Government would be consistent. Before the debate began I thought that I knew what the Government's case was. I thought that the Lord Advocate had argued in another place that the words were not necessary—that, even without the words in the amendment, it would be possible for the courts to review the discretion on the ground that it did not comply with subsection (1).
However, it transpires that if that was what the Lord Advocate argued, it was not what the Government wanted to achieve. They do not want courts to be able to review the discretion. At various stages in our debates the Government have said not only things that are not necessarily the same, but things that are inconsistent. They now say that it can all be left to questions and debates in the House.
We discussed that matter at earlier stages of the Bill. It is difficult publicly to give parliamentary answers and to have debates about matters relating specifically to the position of individuals. They may be confidential or it may be unfair to say certain things about individuals. In addition, there is no prospect of cross-examination in the House. Law Officers in particular know that the House is not the best forum for such an exercise.
The Minister of State said that we could leave matters to the Parliamentary Commissioner. But he has to be satisfied that there is maladministration, which has a highly technical meaning, and that process would be no substitute for review in the courts.
We debated these matters at length on 2 June. We discussed in general whether it was right that the Secretary of State's discretion involving matters of great importance to individuals should be beyond challenge—whether the Secretary of State should virtually be beyond the challenge of any tribunal except those in the hereafter. I do not propose to repeat the arguments deployed on that occasion, but again I am inclined to agree with the hon. Member for Orpington that what is proposed is contrary

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to the spirit of Conservatism, as I tried to show on the previous occasion. The Minister of State may care to refer to that debate.
The Home Secretary rejected our arguments on that occasion and said that it was not possible to lay down criteria for the exercise of discretion which could be tested on appeal. Whatever the merits of that argument in that debate, it cannot be applied to the subject of this debate because, if subsection (1) has any purpose, it is precisely to lay down criteria for the guidance of the Secretary of State.
I come to the argument used time and time again by the Minister of State. He says that if we allow the courts to examine allegations that there has been an infringement of subsection (1) and that discretion has been used in a discriminatory way, we shall open up all the reasons that guided the Secretary of State to his decision. Like my right hon. Friend the Member for Sparkbrook, I am not sure why that would be so wicked or worrying.
There are many ways in which a court can investigate reasons without necessarily making them public to the whole world. They could be in the form of affidavits, which could be read quietly, not aloud, by the court. We have discussed that frequently in another context in recent months. If necessary, courts can conduct proceedings in camera. The only people whom one needs to trust are the judges, and I do not understand the difficulty about that.
The reasons that the Government give for a conscious decision to place subsection (1) beyond review are unconvincing. What is even more worrying is that it seems to be a habit of the Government to include in their Bills rights that appear impressive, but then to ensure that the rights cannot be enforced. In our debates on the Companies Bill in 1980 the Government introduced a new clause to the effect that company directors, in the performance of their functions, should have regard to the interests of their employees, but they then added a subsection which ensured that the employee should not have any right of action to enforce it.
I hope that the Minister of State will not repeat the same arguments in his reply. We are seized of them. But will he at least make clear what I think he was trying to make clear earlier—that the Government wish the discretion to be beyond challenge, even on the ground that it infringes the criteria which they have provided in subsection (1)? If so, will the Minister of State explain how it can serve to allay the fear of minority communities, how it can be other than a purely empty gesture, and how he can justify so empty a shell?
Mr. MarlowIf I understand the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) correctly—I apologise for not being present at the beginning of his speech—he was concerned about the potential denial of rights to people and that if those rights were denied, people would not have recourse to a court of law. As I also understand it, the clause concerns decisions involving the exercise of discretion. In this area we are not talking essentially about people's rights but, to an extent, about people's privileges. I believe that the grant of nationality, except in the majority of cut and dried cases that we have already discussed, is a great privilege and that the Government and the people of this country want the Government to hold that privilege very dear.
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As I understand it, the Government have been as fair as they can to everyone, particularly those with the right to British citizenship. Earlier today we discussed the giving of the right of British citizenship to those people who happened to have a British granny whose mother might have been a part-time charlady in an Athens canteen for the European Community. We cannot be any fairer than that. Not only are this Government fair and not only are any other Government likely to be fair, but we already have in this clause the statement that any discretion vested
"shall be exercised without regard to the race, colour or religion of any person who may be affected by its exercise."
I am sure that any civil servant assisting my hon. Friend the Minister of State or his successors in the Home Office will be sure that the subsection is fairly and correctly applied. But woe betide any Government at any stage who try not to apply the subsection fairly. I should think it will be possible, by various means that seem to have become more common in this day and age, that a wrongful application of the subsection will be brought to the public's notice. I cannot see that happening, but if it did the public would get to know about it. Further, hon. Members would be involved. If a person had been discriminated against on those grounds, I am sure that an hon. Member would be given the facts and, in the way of hon. Members of this House, would pursue it with the utmost vigour to see justice and fair play.
All hon. Members should be concerned that if in the exercise of discretion—which, as I have said, is a privilege—people were allowed to pursue the matter through the courts, there would be those with a chip on their shoulder. There would be those with vexatious causes. There would be those who had been put up by troublemakers. There would be those who, knowing full well that the discretion had been properly exercised and knowing full well that the reasons for the proper exercise of that discretion were perhaps a matter for national security, would wish to pursue it through the courts to embarrass the Government. They would wish to pursue it through a trumped-up case of alleged discrimination on the ground of race, colour or religion.
I believe that the Bill as it is, without the amendment, is a fundamentally fair Bill. I believe that my hon. Friend and his successors, of whatever party—long may he reign, and I believe that his successors will be from our party anyhow—and their civil servants will see that this measure is properly and fairly applied. I believe that there is no cause for concern on this issue.
Mr. Jim MarshallWill the hon. Gentleman give way?
Mr. MarlowI am just about to sit down—I have one further point to make—and I am sure that the hon. Gentleman will be able to make his own speech.
Apart from the fundamental issue of privilege in taking a matter to court, if the amendment, as so far put forward, is nonsense, and if it is ambiguous—and we have had two very distinguished hon. and learned Gentlemen putting forward different points of view—should we in this House put forward ambiguous legislation? Surely not. I believe that for those reasons the amendment should be rejected.
Mr. Edward LyonsThe Soviet constitution has the most magnificent clauses in it. Anyone reading it would imagine that the Soviet Union was governed on the most enlightened democratic principles

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But, of course, there is not much opportunity, when the principles in the constitution are not followed, for ordinary Soviet citizens to do anything about it.
As we look at the constitutions of other countries, we say to ourselves, "They do not have an independent judiciary, they do not have access to a free Parliament, and they have not independent media; therefore, what is written in their constitutions does not mean a thing." I am not suggesting by any stretch of the imagination that what we have in Britain is something similar to the Soviet constitution, but there is a lesson to be drawn. It is that high-sounding phrases—verbiage, which comes cheap—written into legislation, without the possibility of redress in the courts, will not be of very much use.
Although it is not the case at the moment, there could come a time when clause 43(1) could almost be an engine of oppression, in the sense that, in dealing with cases alleged discrimination, the authorities could say, "You are entirely wrong to accuse us of discrimination, because all our decisions are governed by clause 43(1), which says clearly that we never do that sort of thing. All our decisions are fair and just. You are entirely wrong, therefore, in making any contrary allegation."
The way to deal with that possibility—however far in the future it might be—is to provide teeth for the high-sounding phrases. What the Lords have sought to do—as was sought to be done in this House at an earlier stage—is to provide teeth for the high-sounding phrases. Those high-sounding phrases did not come from the Opposition; they came from the Government. The Government put subsection (1) into the Bill.
The argument throughout has been that since the protection of the citizen against an accumulation of power by the Executive must lie with the judiciary as well as with the legislature and the media, it is unfortunate that the judiciary—one of the three pillars on which our freedoms rest—is excluded from the ability to review decisions reached by the Executive under the measure.
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The Bill is now to contain a clause stating that rights which are affected by the operation of the Bill shall be subject to the jurisdiction of the courts—but discretion, no. The principal argument that is being used is that embarrassment could be caused if people took the Government to court on an allegation that there had been an improper exercise of discretion due to prejudice about race, colour or religion, and that that would force the Government into an embarrassing situation and improper disclosures.
Let us consider the realities. As a matter of habit, the Government reveal the ground of refusal when it amounts to a person not having lived here for five years. As a matter of practice, the Government reveal the ground for refusal when it is based on the failure of an applicant to pass the language test. All that remains is good character and security. The idea that a mole who applies for British citizenship and is refused is not alerted because he is not told the reason is fanciful. If a dangerous spy applied for British nationality and were refused without reason presumably he would know the reason, if he had been here five years and he had passed the language test. What would be left? If he had not been before the courts and was a person of good character, he would be left with only one inference, and that is that the Government were on to him and suspected him of being a spy. There would be no need
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for him to go to the courts. Why should he do that? That would certainly blow his cover, because he would be closely examined. The Government would then fear that the man suspected that they knew that he was a spy and their reasons for suspecting him.
It would have been open to the Government to exclude security from the provisions. The Government might have received sympathy if they said that if there were certificates for security there would be no need to go into the details behind the certificate. Of course the applicant would know that security was involved. A person who was a genuine danger to security would be caught by such a certificate, and probably he would not proceed with an application to the courts in any event. There would be no point in his doing so if he knew that he were a genuine security risk, because the certificate would stop him dead.
There is another protection, and that is if the Government made it clear—as might be the case with the present drafting—that the burden of proof lay on the applicant to prove that prejudice had been exercised and therefore an improper exercise of discretion. If the applicant could not make a prima facie case, in the first place, a judge might say at the end of the plaintiff's case "This case fails, and therefore I do not need to call the Government lawyers to give an answer."

Anyone who went to a lawyer who dealt with a large number of cases involving nationality would know that either good character or security were the reasons for refusal, because his lawyer would be able to say, "They have not said that it is a time factor or that there is a language problem." In cases where a case involved a person of bad character who had been before the courts, how would the Government be harmed, in an action brought by such a person, if they produced in private proceedings a list of his convictions? Moreover, the moment the Government did so, the man himself would know that it was pointless to proceed on a different ground, namely, that the refusal had been based on an improper exercise of discretion about race, colour or religion.
Altogether, therefore, I am not satisfied that the Government are acting reasonably having regard to their own introduction of the subsection. One can argue that there would be a recourse to the courts by persons who did not want to be removed from this country and wanted extra delay, but that does not apply to nationality. A person who applies for nationality has first to show ordinary residence. Therefore, no application to the courts here could be introduced as a means of delaying removal from this country, as a mere delaying tactic, because such a person would have a right to residence in the first place before he could go on to apply for citizenship.
Since the Government have addressed this matter, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has throughout given it a very warm welcome. I have taken the view that overall and in present circumstances it is better to have it in the Bill as a matter of reassurance than not to have it included, despite the fact that it is not backed by any sanction such as a right to approach the judiciary for review. None the less, one has seen an attempt made in the House of Lords to make sure that this preliminary subsection is not meaningless, since the declaration to be given is unenforceable anywhere. The Government immediately react strongly and say that they will vote against the amendment made by the House of Lords.

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I should have hoped that the Government would not do that but would accept the Lords amendment as they have accepted a number of other amendments by the Lords. The Government have thought again about a number of proposals which they vehemently opposed in Committee and on Report. The Minister has stated repeatedly that one needs time to think. The fact that one refuses vehemently and adamantly does not mean that one was right. No, it meant that the Government needed months and months to think. Eventually, the Government concluded, after all, that the language test for spouses was not necessary, and therefore they have agreed to the Lords amendment in that respect, which I find very satisfactory.
Therefore, when the Minister tells us that we on the Opposition Benches are wrong about our insistence, why should we accept his refusal and his reasons when, after a time, he has backtracked on so many arguments and conceded that he was wrong? All that one needs to do is to repeat the arguments for long enough and the Government, after many refusals, will accept that they were wrong and accept the Lords amendment. Only on this matter do the Government dig in their heels, saying, "No, we cannot have it." After what the Minister has been saying about other matters, he should follow his reasoning. At a very late stage it is possible to change one's mind and suddenly to see the merits of an argument, particularly if they have been advanced in the House of Lords.
It has been a most humiliating experience for Members of the House of Commons to see the alacrity with which the Government have accepted arguments in the House of Lords—glad though I am that they have accepted them—when similar arguments put forward repeatedly by assorted Opposition Members have been rejected out of hand throughout the proceedings in this House. It seems that the Government favour ermine and arguments advanced under robes of ermine and coronets. Apparently those views are taken into account to a far greater degree than are the views of the Members of the House of Commons.
At this late stage, I hope that the Government can be persuaded to think again. I share the view that there will be few applications to the courts under clause 43(1). It is not easy to foresee circumstances in which there could be a mass of applications. The Government should think again.
Mr. Greville JannerThe hon. and learned Member for Bradford, West (Mr. Lyons) is right. From the legal point of view, there is no reason why the Lords amendment should not remain. However, there is another reason that is, perhaps, more important that that. It is atmospheric.
Leicester has a large Asian community that is, on the whole, happily integrated. In cities such as Leicester it is correctly believed that the Bill is basically divisive, racist and contrary to the community's interest. They believe that it may well lead to the exercise of discretion with regard to race, colour and religion.
The hon. Member for Northampton, North (Mr. Marlow) said that the Bill was fundamentally fair. We on this side of the House regard it as an unfair Bill that will lead to ill feeling and that is fundamentally evil in its effect, not least on the atmosphere in which people live
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and work as citizens in the same country. Indeed, the children of immigrants cease to be immigrants and are citizens of this country, with the same rights as any others.
A clause has been inserted in the Bill and its intention is to give some reassurance. It states that the discretion that is vested not only in the Secretary of State but also in a governor, or lieutenant-governor
shall be exercised without regard to the race, colour or religion of any person who may be affected by its exercise.
The provision was inserted by a Secretary of State whom we all recognise to be someone who would not exercise his discretion willingly or knowingly in a way contrary to the decencies of normal parliamentary procedure and rights. However, one would not necessarily have such confidence in a governor or lieutenant-governor. Nor would one necessarily have such confidence in a future Home Secretary. We are determined to repeal the Bill at the first opportunity. Meanwhile, we could not be sure that a governor, lieutenant-governor or different Home Secretary would not take a different approach from that of the present Secretary of State. We were pleased when the Lords inserted an amendment to the effect that the absolute discretion vested in the Secretary of State could involve having regard to security and to a person's character, but not to a person's race, colour or religion.
If amended, the clause would state:
Subject to subsection (1) herein,
in other words, to the requirement to exercise the discretion without regard to the race, colour or religion of anyone affected by the provision's exercise—
the Secretary of State, a Governor or a Lieutenant-Governor, as the case may be, shall not be required to assign any reason
In other words, he is bound to have regard to subsection (1) and is accountable if he does not. I accepted the Minister's reasoning when he said that this might lead to a possible challenge in the courts. That is right.
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I have a healthy regard for the right of appeal. It is a basic right. I have a deep dislike of any unfettered discretion in anybody's hands which is not subject to the right of the courts to review it. Ministers are not elected as Ministers but appointed, and on occasion they are liable to be changed sometimes to the public benefit but sometimes for reasons which are not necessarily connected with that. If there must be a discretion, for security or personal reasons, and we are to have trust in the exercise of it by Ministers, that discretion must be subject to appeal in the courts in all cases. I know that such a right does not exist under the Bill. I know that it is too late, but I believe that it is a mistake that a person should not be entitled to go to a court, even if it has to sit in camera because of a security aspect. Courts frequently sit privately for that reason. The exercise of the court's discretion is itself subject to the right of appeal to other courts in most cases.
Since there is no right of appeal, there is still a possibility, in cases which affect race, colour or religion, of the Minister regarding himself as having not an absolute discretion but a discretion which is subject to limitation. I respect the Minister's view that if a discretion is subject to limitation the citizen is given the right to say to the court, "The Minister has acted beyond his powers. He has not acted in accordance with the discretion vested in him by Parliament. Indeed, he has acted contrary to that discretion, and therefore he should be taken to account." That is the essence of the individual's democratic freedom.

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The Minister says that that is not necessary because a person can already appeal to his Member of Parliament. I pay tribute to the Minister for the occasions when he has helped in individual cases which I have brought to his attention. In other cases I protested because he did not act. But, when the Minister has been convinced of the justice of a case, he has intervened and exercised his discretion.
I have always felt uncomfortable that there should be no right of appeal, other than in certain cases, to tribunals. I hope that, if there were a right of appeal against him, the Minister would feel no more fettered than does a High Court judge. High Court judges do not enjoy being appealed against, particularly if the appeal succeeds. I suggested to a High Court judge the other day that he had been appealed against successfully rather often lately. He said, "Yes. The Court of Appeal is frequently wrong." A judge might be wrong and a Minister might be wrong but the judge has no absolute right. His decisions are open to review. It is wrong that a Minister should have an unfettered liberty to decide on such a crucial issue as whether a person shall be allowed to live in a country, without at least some fetter on that power.
The total fetter for which some of us wish?the right of appeal to the courts—does not exist in the Bill. Instead the Lords have inserted a modified fetter which would lead in some cases, although not many, to people saying, "The Minister has not complied with his duties under clause 43(1)."
Mr. Douglas HoggPerhaps the hon. and learned Gentleman would clarify one matter. I have listened to him with great care. As I understand it, the amendment does not say that the Minister should state at any stage that he has had regard to the criteria in clause 43(1). If that is right and he is not obliged to state whether he has had regard to those criteria, I do not understand how the amendment gives rise to a greater ability to challenge decisions in the courts.
Mr. JannerI think that the hon. Gentleman had the misfortune of not being in the Chamber when the Minister opened the debate.
Mr. Douglas HoggThat is why I am asking for clarification.
Mr. JannerI am not happy about trying to translate the Minister's objections as he may disapprove of my interpretation. However, I understood the Minister to say that once there was a right to challenge his discretion, the right would be exercised in the courts. He added that the courts would have to ask the person concerned, "Why do you say this?". He would reply, "It is on the ground of race, colour or religion." The court would then ask the Minister, "Is that right or is it wrong?; If it is not right, what is your reason?" In other words, the procedure would lead, by an indirect route, to the Minister having to explain why he refused to exercise his discretion. If I am wrong in my interpretation of the Minister's argument, I shall gladly resume my place while he intervenes.
Mr. Douglas HoggI think that my hon. Friend is wrong.
Mr. JannerIf the Minister is wrong, it will not be for the first time. On this occasion I am trying merely to deal with the objections that the Minister has raised. It seems that there are only two possibilities. Either the Minister is wrong, as the hon. Gentleman suggests, in which case the
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worries that he raises are incorrect and without foundation, and the amendment should be allowed, or the Minister is right, in which case I rejoice, as those who believe that a discriminatory decision has been made will have a right to go to the courts. I am satisfied to rest my case on the basis that the amendment will do good and will emphasise that it is not the intention of the House that there should be any refusal of an application without regard to the just criteria which have been embedded in the clause.
I invite the House to consider the effect of not accepting the amendment. Would that have much the same impact on the atmosphere as the Bill itself? Would it be regarded by those who are, not surprisingly, sensitive to the effect of the Bill as reflecting an intention on the Government's part to reject any fetter and to reject even that which has been inserted by those in another place, which would in my view and the Minister's give those concerned a limited right to go to the courts? In my view and the Minister's it would allow people to challenge the Minister's reasons and at least the Minister would be required to give them. That would allow the courts to say, "We shall sit in camera" or allow the Minister to use his ordinary powers in law to say, "These are matters which in the public interest cannot be revealed".
If I am wrong, as the hon. Gentleman has been kind enough to suggest, there is no ground for the Government's opposition to the amendment. In the circumstances I hope that it will be allowed to remain in the Bill, where it belongs.
Mr. AltonI listened with interest to the hon. and learned Member for Leicester, West (Mr. Janner). I agree with much of his case. I agree also with the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and my hon. and learned Friend the Member for Bradford, West (Mr. Lyons).
It seems that two debates have been taking place simultaneously. One debate concerns the technical linkage of subsections (1) and (2) and the other appears to concern one's attitude and approach to race relations and whether one wants to make a reality of the statement contained in subsection (1).
The hon. Member for Orpington (Mr. Stanbrook) put it well when he said that we were discussing empty words. I suspect that without subsection (2) and the linkage to the right of appeal that is all that they will be. They will be merely a gesture and a cosmetic approach without giving any reality to the fears that many within minority groups, especially within the black community, have about the implementation of this proposed legislation.
In many ways, the decision by the Government to write into the Bill
Any discretion vested by or under this Act in the Secretary of State … shall be exercised without regard to the race, colour or religion of any person who may be affected by its exercise"
was an attempt to make a silk purse out of a sow's ear.
The legislation is regarded by many throughout the country as intrinsically wrong. The suspicion lingers that it is a racialist piece of legislation. In an attempt to respond to those fears, the Government decided to try to allay them by writing in those words at the beginning of the clause. It was suggested by Lord Elwyn-Jones in another place that, by linking that to the right of appeal, teeth would be provided for the statement that the legislation was not discriminatory and that it did not work against people on the basis of their race, colour or religion.

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The other debate that has been going on in the Chamber has been about Britain being a multi-racial society. Some hon. Members wish that in some ways this country were not a multi-racial society. I believe that it is and that we can be proud that, regardless of the colour of their skin or of their background, people have equality of opportunity. Many people in Britain are committed to the cause of integration. It is a tragedy that at this sensitive moment in race relations this legislation has sullied the approach to race relations in Britain.
The hon. Member for Northampton, North (Mr. Marlow) said that some people would try to bring the Government into disrepute by making out bogus cases, saying that they had been discriminated against. Such people might choose to go to courts of law if they felt that the new British Nationality Act had worked against their interests. They should have that right of appeal; they should have that chance to go to court. If those people genuinely believe that the legislation has worked against them, they should be able to appeal to someone other than their Member of Parliament.
The Minister said that people had the right to go to their Member of Parliament, but it should be enshrined in law and above the Member of Parliament. It is true that the Minister is helpful to hon. Members who approach him with cases concerning immigration?I have always found him to be helpful?even to the point of meeting hon. Members to discuss the details of cases. But it should not be a question of the Member of Parliament having to go to the Minister. Surely it should be the right of the appellant to take his case to a court of law and to say that he feels that he has been unfairly discriminated against.
That will not lead to people queuing at our courts, because, if the legislation works in the way in which the Minister has assured us it will, there should be no fears. Few people will harbour a grievance or be prejudiced. There will not be vexatious cases for the sake of having vexatious cases. If the legislation works as it should, we shall not have hundreds of people queuing up at the courts. However, many people who believe that there are racial undertones in the legislation will have their fears allayed if they believe that they have that right of appeal.
Mr. RaisonThe hon. Gentleman has been talking about appeals and also about appeals to Ministers. He must know that in immigration matters there are extensive appeal rights. He has also probably deduced that, despite those extensive appeal rights, there are still large numbers of appeals to Ministers by Members of Parliament. That shows that the belief that the introduction of an appeal right in this area would solve all our problems is a fallacy. Members of Parliament are able to appeal on naturalisation cases in exactly the same way as on immigration cases. There is an appeals system in the realm of immigration, but, judging by the reaction of hon. Members, it does not seem to be the panacea implied by the hon. Gentleman.
Mr. AltonI do not believe that it is any kind of panacea. I remember the words of the Minister of State, shortly into the life of this Parliament. Speaking at a meeting outside the House, he said that he felt that the whole procedure whereby Members of Parliament could go to Ministers should be abandoned.
Mr. RaisonRubbish.
Mr. AltonI give way to the Minister.
Mr. RaisonThat is a total and utter travesty of anything that I have ever said.
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Mr. AltonI am sorry if I have misrepresented the Minister, but I believe that is what he said. Indeed, it is implicit in what he argued earlier—that the whole appeals procedure is such that it does not satisfy Members of Parliament, who frequently have come to Ministers. He is presumably arguing that that procedure is cumbersome and ought to be changed.
I draw the Minister's attention to the words of his noble Friend the Lord Advocate, Lord Mackay of Clashfern, who was asked this very question in another place. In reply to a question about the right of appeal, his answer was that to some extent it must depend upon the circumstances. The appellant should have the right to know clearly what those circumstances are. That, again, is a reason for tying subsection (2) to subsection (1). People will then have an automatic right to appeal if they feel that the legislation is working against them. I also believe that the contradictions which will be implicit in the legislation, if it is passed in its present form, will lead to expensive and prolonged litigation and confusion in the courts.
As the Lord Advocate said, I do not believe that we can contemplate that a Secretary of State, governor or lieutenant-governor vested with discretion would act in breach of subsection (1). It seems to me that the present Home Secretary and, indeed, the Minister of State are unlikely to act in breach of the legislation. However, as others have pointed out today, legislation should not be based on the nature of individuals. Somebody might in future occupy a ministerial position and he might not exercise the kind of discretion that one would expect from the present Home Secretary or the Minister of State. I should therefore prefer the right of an individual to know precisely where he stands vis-a-vis the law to be clearly spelt out in the legislation.
The Minister of State talked about obscurity and uncertainty in the legislation. That is precisely what I believe he has achieved by refusing to tie subsection (2) to subsection (1). If the Minister and the Government mean what they say about there being no discrimination on the basis of race, colour or religion, it would have been more straightforward for that to be tied clearly to the right of appeal.
I hope, therefore, that, even at this late hour, the Minister will think again, listen to the objections that have been raised, not just here but in another place, and accept that, if the Bill is enacted as at present proposed, it will be one more piece of divisive legislation which will place fear in the hearts of many people in the minorities which form part of the complex chemistry that makes Britain the integrated community of which we are all proud.
Mr. Douglas HoggI have listened with great interest to the Opposition speeches. Although I am in agreement with the general propositions put forward, I did not find in any of them a reason to support Lords amendment No. 61. I agree with hon. Members about the undesirability of extending the discretionary powers of Ministers. As a general proposition, I believe that the discretionary powers of Ministers should as far as possible be subject to judicial

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review, and I am uneasy when I find that under clause 43 the power of review is expressly excluded. That is not a process that I like or approve of.
Having said that, however, I do not believe that the desirable objective of subjecting the Ministerial discretion to judicial review will be achieved by Lords amendment No. 61 or indeed by Lords amendment No. 62, which we shall shortly reach.
Lords amendment No. 61 provides only that the exercise of the power under subsection (2) should be subject to the overriding criteria set out in subsection (1). There is no coexisting power to require the Minister or official to state that he has had regard to the criteria contained in subsection (1), or to set out any of the considerations or criteria to which he has had regard. That being so, simply to accept Lords amendment No. 61 will not enlarge the grounds of appeal. It will not enable any dissatisfied applicant to appeal against a decision, because, unless the statute requires that the Minister state his reasons and goes on to say that those reasons will automatically be the subject of judicial review, there is nothing in the amendment that extends the grounds of appeal.
Let me make this point in answer to the hon. Member for Liverpool, Edge Hill (Mr. Alton). Although I am in favour of judicial review, it will not be achieved by anything hitherto contemplated either in this place or in another place. Simply to preserve the existing powers of judicial review, as is contemplated by Lords amendment No. 62, serves no purpose at all. The courts can review a judicial decision only if it can be shown that that decision is, for example, ultra vires or contrary to natural justice, or that the Minister has had regard to considerations to which he should not have had regard. Rarely will that be the case.
If we really want to subject decisions of this kind to judicial review, we must go beyond the scope of administrative law as we now understand it and say not that an applicant has a right to challenge the decision within the existing criteria but rather that the High Court should have the right to adjudicate on the merits de novo. I personally think that there is a lot to be said for that, because I do not like discretionary powers, nor do I like Ministers to be possessed of discretionary powers. Wherever possible, I should like some independent tribunal, such as the courts, to have the right to inquire into and adjudicate upon such matters. But that can be done only if this House is bold about it and says that discretionary decisions of this kind may be inquired into de novo and decided upon their merits. That will not be achieved either by Lords amendment No. 61 or by Lords amendment No. 62.
Mr. ArcherI do not wish to discourage the hon. Gentleman from urging a wider right of appeal. However, what is his comment on the Lord Advocate's argument that the exercise of a discretion which infringed subsection (l ) would not be a discretion within the powers granted by the Bill?
Mr. HoggI am sorry to disappoint the right hon. and learned Gentleman, but he has failed to grasp the point of the argument. As baldly stated, that proposition is correct. If the Minister failed altogether to have regard to the criteria set out in subsection (1), he might well be acting ultra vires and the order he issued could be quashed.
808
However, there is nothing in Lords amendments Nos. 61 and 62 that requires the Minister or the other official to state his reasons. In the absence of a requirement obliging the Minister or other official to state those reasons, which goes on to say, "and furthermore he shall set out the considerations upon which he comes to his conclusions", there is no way in which one can argue that the decision is ultra vires.
Simply to build in a requirement that the Minister shall have regard to subsection (1) carries the case no further at all. We must go on to say, "and furthermore he shall state his reasons and set out the considerations upon which those reasons are founded". If we say that, the decision could be challenged in the courts on the ground that it was ultra vires or a breach of natural justice. But unless we do so, we do not enlarge the grounds for appeal at all. That is the objection. The right hon. and learned Member for Warley, West (Mr. Archer) nods in agreement.
That is the objection to Lords amendment No. 61. It is mere verbiage. It does not carry the case any further forward, and for that reason the House should not be troubled with it. If we were bold and robust about it, that is another matter, and I would be sympathetic. But the truth is that we are wasting our time discussing Lords amendment No. 61.
Mr. SpeakerBefore I call the hon. Member for Leicester, South (Mr. Marshall), may I say that we hope to start the reply at 9.45 pm? I feel sorry for the hon. Gentleman, but those are the circumstances.
Mr. Jim MarshallYou may be sorry, Mr. Speaker, that I have only six minutes, but I am sure that your concern is not shared by the House generally.
I do not intend to follow the tortuous road outlined by the hon. Member for Grantham (Mr. Hogg). His speech was undoubtedly of great relevance to the legalistic interpretation of the amendment but it had little in common with the spirit that underlies clause 43(1). The best compliment that I can pay to the hon. Gentleman is that he shows all the best qualities of the son of a Lord Chancellor.
When the Minister opened the debate he introduced a red herring by bringing forward arguments that we had advanced in the House and in Committee concerning an objective appeal system against decisions made by the Secretary of State on the grant or refusal of naturalisation.
My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) was right. Although it is not pertinent to the discussion today, when we have the opportunity—as we shall after the next general—election?to introduce our own nationality legislation, not only shall we remove the blatant racial discrimination inherent in the legislation but we shall give everyone the right to appeal against any decision of the Home Secretary exercised in his discretion. It is important to make the Labour Party's position clear.
The second and main point is that it is ironic in the last 19 minutes of debate on British nationality legislation that we should be dealing with the racial discrimination, which underpins the basic assumptions of the legislation. It is all very well for the Minister and his colleagues to say, "We introduced that part of the Bill somewhat belatedly to show that we hold dear to our hearts a multi-racial society." That belies what has happened in Britain since the legislation was introduced. Every group concerned with good race

809
relations and the welfare of immigrants has attacked the legislation as racist. If we look at the way in which the legislation treats people who will become British overseas citizens, or at the mean-spirited way in which it will affect the few hundreds of children born in this country after its commencement—the children of students and people here on short-term work permits?we see that it is blatantly discriminatory.
To assuage his Tory conscience and to appease some of the immigrants' fears the Minister has introduced into clause 43(1) a declaratory provision that means nothing and does nothing to remove the basic discrimination. The words mean nothing and will not give immigrants who fall within the three headings in clause 43(1) the right of appeal to the courts.
The Minister's reasons are somewhat strange. The hon. and learned Member for Bradford, West (Mr. Lyons) highlighted the State security aspect. The mind boggles at the idea that a Russian or Chinese spy would apply for naturalisation, unless he were a double spy acting on behalf of the Home Office or Foreign Office and it wished to protect him.
Already under our immigration laws people can be prevented from entering the country if it is felt that their admission is not conducive to the public good. The Government already have those draconian powers. They could be maintained, but with an objective appeals system.
The clause will do nothing to remove the basic racial discrimination inherent in the legislation.
9.45 pm
Mr. HattersleyThe hon. Member for Grantham (Mr. Hogg) urged us, if we wished to fetter the Home Secretary's discretion—a view with which he several times said he had sympathy—to be bold and robust in the promotion of amendments that did exactly that. I only wish that he had been sufficiently bold and robust and followed us into the Lobby on Report for that purpose. However, I put that inconsistency aside; I wish to deal with a different one.
The hon. Members for Grantham and for Orpington (Mr. Stanbrook), who I regret is not now here, made lawyers' points. I do not say that critically. With their experience they believe that incorporating the amendment and linking the two subsections would have virtually no judicial effect?the appellant to whose aid we wish to come would have no greater right to appeal as a result of what their Lordships propose than is already inherent in the Bill.
The hon. Member for Grantham said that he had listened to our side of the debate carefully. Had he listened to his own side with equal care he would have heard the Minister argue against the proposal for quite different reasons. His objection was not that it would have no effect but that it would have one that was administratively unacceptable or inconvenient.
Mr. Douglas HoggThe Minister is right.
Mr. HattersleyI take it that that is an hereditary view. The hon. Gentleman may hear the Minister of State, when I sit down in three minutes, repeat what I told the House two hours ago. Fractious persons would appeal and apparently get into court with such devastating effect on the Government that they might be forced to give the
810
reasons for refusing naturalisation or citizenship, reasons altogether unrelated to the race or religion of the applicant and perhaps concerned with security. However, the Minister of State's view throughout his previous speech was that those unacceptable practices would flow from linking subsections (1) and (2).
My quarrel is essentially with the Minister and not with the hon. Gentleman. The Minister cannot argue or appear to argue simultaneously that linking the two subsections has no force in law and that it would have unacceptable consequences in requiring the Home Secretary to reveal his discretion. In the 10 minutes that remain, I hope that the Minister will tell us which is the principal objection.
Indeed, I hope that the Minister will do something more specific which will be enormously to the benefit of the House. As I understand our procedures, some of us are required to move to a different place if the Government will prevails and form ourselves into a Reasons Committee to stipulate why the House disagrees with the Lords. I am assured that the reason is always constructed in a single sentence or simple paragraph. Does the paragraph, which must now be at the Minister's disposal, state that the objection is that the provision has no force in law or that it has a force in law with which he disagrees? The Minister of State has given us both reasons tonight and the Lord Advocate gave both to the other place on 28 July.
In the dying minutes of the Bill perhaps we might have a firm answer to a firm question—a clear reply to a clear point. Some of us regard it not as wrong but as typical that, at the last moment of the Bill, the principles of which I will not dilate on any further, our final pathetic word is for the Minister to tell us what he means. Will he tell us the exact nature of his objections? Is it that it has no force in law, or is it that it has too much force in law? It cannot be both simultaneously.
Mr. RaisonSome hon. Members may recall that I promised the right hon. Member for Down, South (Mr. Powell) a reply to a point that he made about appeals in our first debate.
We cannot predict what view the courts will take should appeals come before them. One could argue that, if someone were registered when he had no entitlement, registration would be invalid. The arguments in favour of the satisfied formula were put to the Lords. The Lords were insistent that the applicant would be benefited rather than disadvantaged if the formula were removed. On balance, the Government would therefore recommend agreement with that view, although I agree that the matter is arguable.
I shall endeavour again, dealing with the subject of this debate, to put the reasons why we should reject the Lords amendment. First, in spite of what my hon. Friend the Member for Orpington (Mr. Stanbrook) said, I still believe strongly that we were right to include clause 43(1) in the Bill.
I am grateful to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) for stating that, whatever the outcome of this debate, he is grateful that we incorporated the subsection. I believe that we were right. It indicated our strong feeling that there must be no discrimination. As the right hon. Gentleman acknowledged, we stated at the time that it was fundamentally a declaratory provision.
I have attempted to stress that, quite apart from the question of appeal to the court, the Home Secretary could be taken before the Parliamentary Commissioner. Of

811
course, hon. Members can exercise some surveillance in the House and by approaching Ministers on questions of refusal.
I do not accept the argument of the right hon. and learned Member for Warley, West (Mr. Archer). He said that maladministration has a highly technical meaning which implied that it could not be spread to this area. My advice is that if an applicant who is refused has grounds for believing that his refusal was on the basis of race, colour, or religion, there is no reason why he should not be able to pursue the course of maladministration However, that is not the main part of this debate. I still believe that the amendment of Lord Elwyn-Jones is not workable. I have said consistently throughout the debate that there are two reasons for my argument. However, I attach much more importance to one than to the other.
I have attempted to argue that the "linkage" as it now seems to be termed is basically not a workable system. There is a technical deficiency in the amendment. I have attempted to explain why that is. In addition, I have made it clear that the real objection is something else.
There are two alternative ways in which one can approach the issue of naturalisation. One is our traditional method of granting it at the discretion of the Home Secretary. I remind the House that this is a well-tried method which worked for a very long time. Some hon. Members appear to have approached the debate as if we were cooking up something new. However, we are continuing a system that stretches back into the last century. I hope that that is clearly understood.
I accept that there is an alternative way of approaching this matter. It would be to adopt clearly objective criteria where the reasons for refusal would have to be made clear. They would be open to challenge, probably in the courts, but perhaps in some other form of appeal system. I recognise that there are arguments for both approaches, and we have heard them in our debates and outside. We believe that on balance the traditional method is preferable, and both Houses have supported us in that view.
The amendment attempts something that is half way between the two. It is calculated to produce muddle. One way is discretion and the other is objective tests and appeal rights. Something between the two would be unworkable and to fall between the two would be a considerable mistake. Equally, trying to bring into the discretionary system an appeal element in respect of one aspect would be impracticable.
As I have said time and again—and this is the nub of my argument—in endeavouring to show that he had not discriminated on grounds of race, colour or religion, the

812
Home Secretary would always be liable to be required to disclose the grounds on which he had refused an application, and they could include security grounds.
Mr. HattersleyAre we therefore to take it that, since the Minister of State is arguing that to pursue a case in this way might result in the Home Secretary's being forced to reveal that which it is best not to reveal, the linkage of the amendments would enable an appellant to get into court?
Mr. RaisonI have tried to say all along that there are technical deficiencies but that even if we put them to one side, which would be difficult at this stage of the Bill, there would still be what I see as the real objection of substance, namely, that if an appellant is able to take the Home Secretary to court to argue that he has been refused naturalisation on grounds of race, religion or colour, it is likely that, in order to establish whether that is so, all the circumstances would have to come out in open court. I do not say that that would always happen, but it is likely to happen rather often.
If both Houses had adopted the view that there should be objective criteria with appeals, that would be a tenable argument, but both Houses have rejected that view and have decided instead to uphold the traditional system by which the Home Secretary exercises his discretion. He cannot normally be challenged in the courts and does not have to give his reasons. The path followed by Lord Elwyn-Jones falls plumb between two stools and his approach is not workable.
The other idea floated by the right hon. and learned Member for Warley, West, that cases should be heard in camera, is also not satisfactory. In principle, it is not desirable to have to hear cases in camera unless there are strong and powerful reasons for doing so. I do not want to swap adages with lawyers, but the adage that justice must be seen to be done obviously applies. To say that we should trust judges to look at matters in private does not confer any improvement in the status of appellants compared with the position that we set forth in our approach.
We have a well-tried system for naturalisation which has been in existence for a long time. Many members of the ethnic minorities and others have been through the system and I have never found that we are being submerged by complaints about the manner in which the traditional system has worked.
I do not believe that the case has been made out that the system is bad and it is perfectly evident to anyone who thinks about it that the amendment is thoroughly impractical. I therefore urge the House to reject it.
Question put, That this House doth disagree with the Lords in a the said amendment:—
The House divided: Ayes 259, Noes 203.

Division No. 315]

[10.00 pm

AYES

Adley, Robert

Forman, Nigel

Aitken, Jonathan

Fowler, Rt Hon Norman

Alexander, Richard

Fox, Marcus

Alison, Rt Hon Michael

Fraser, Rt Hon Sir Hugh

Amery, Rt Hon Julian

Fraser, Peter (South Angus)

Ancram, Michael

Gardiner, George (Reigate)

Aspinwall, Jack

Gardner, Edward (S Fylde)

Atkins, Robert(Preston N)

Garel-Jones, Tristan

Baker, Kenneth(St.M'bone)

Gilmour, Rt Hon Sir Ian

Banks, Robert

Glyn, Dr Alan

Beaumont-Dark, Anthony

Goodhew, Victor

Bendall, Vivian

Gorst, John

Benyon, Thomas (A'don)

Gow, Ian

Benyon, W. (Buckingham)

Gower, Sir Raymond

Berry, Hon Anthony

Grant, Anthony (Harrow C)

Bevan, David Gilroy

Gray, Hamish

Blackburn, John

Griffiths, (Peter Portsm' N)

Blaker, Peter

Grist, Ian

Body, Richard

Grylls, Michael

Bonsor, Sir Nicholas

Gummer, John Selwyn

Boscawen, Hon Robert

Hamilton, Hon A.

Bowden, Andrew

Hamilton, Michael (Salisbury)

Boyson, Dr Rhodes

Hampson, Dr Keith

Braine, Sir Bernard

Hannam, John

Bright, Graham

Haselhurst, Alan

Brinton, Tim

Hastings, Stephen

Brittan, Rt. Hon. Leon

Havers, Rt Hon Sir Michael

Brotherton, Michael

Hawkins, Paul

Brown, Michael(Brigg & Sc'n)

Hawksley, Warren

Browne, John (Winchester)

Hayhoe, Barney

Bruce-Gardyne, John

Heath, Rt Hon Edward

Bryan, Sir Paul

Heddle, John

Buck, Antony

Henderson, Barry

Bulmer, Esmond

Hill, James

Burden, Sir Frederick

Hogg, Hon Douglas (Gr'th'm)

Butcher, John

Holland, Philip (Carlton)

Cadbury, Jocelyn

Hooson, Tom

Carlisle, John (Luton West)

Hordern, Peter

Carlisle, Kenneth (Lincoln)

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

Chalker, Mrs. Lynda

Hunt, David (Wirral)

Channon, Rt. Hon. Paul

Hunt, John (Ravensbourne)

Chapman, Sydney

Jenkin, Rt Hon Patrick

Churchill, W. S.

Jessel, Toby

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

Johnson Smith, Geoffrey

Clark, Sir W. (Croydon S)

Jopling, Rt Hon Michael

Clarke, Kenneth (Rushcliffe)

Joseph, Rt Hon Sir Keith

Clegg, Sir Walter

Kaberry, Sir Donald

Cockeram, Eric

Kellett-Bowman, Mrs Elaine

Colvin, Michael

King, Rt Hon Tom

Cope, John

Knox, David

Cormack, Patrick

Lamont, Norman

Corrie, John

Lang, Ian

Costain, Sir Albert

Latham, Michael

Cranborne, Viscount

Lawrence, Ivan

Critchley, Julian

Lawson, Rt Hon Nigel

Crouch, David

Lee, John

Dean, Paul (North Somerset)

Lennox-Boyd, Hon Mark

Dorrell, Stephen

Lewis, Kenneth (Rutland)

Douglas-Hamilton, Lord J.

Lloyd, Ian (Havant & W'loo)

du Cann, Rt Hon Edward

Lloyd, Peter (Fareham)

Dunn, Robert (Dartford)

Loveridge, John

Durant, Tony

Luce, Richard

Dykes, Hugh

Lyell, Nicholas

Eden, Rt Hon Sir John

McCrindle, Robert

Eggar, Tim

Macfarlane, Neil

Elliott, Sir William

Macmillan, Rt Hon M.

Emery, Peter

McNair-Wilson, M. (N'bury)

Eyre, Reginald

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

Fairgrieve, Sir Russell

McQuarrie, Albert

Faith, Mrs Sheila

Madel, David

Farr, John

Major, John

Fell, Anthony

Marland, Paul

Fenner, Mrs Peggy

Marlow, Antony

Finsberg, Geoffrey

Marshall, Michael (Arundel)

Fisher, Sir Nigel

Marten, Rt Hon Neil

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

Mather, Carol

Fletcher-Cooke, Sir Charles

Maude, Rt Hon Sir Angus

NOES

Abse, Leo

Cant, R. B.

Adams, Allen

Carter-Jones, Lewis

Alton, David

Cartwright, John

Anderson, Donald

Clark, Dr David (S Shields)

Archer, Rt Hon Peter

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

Ashley, Rt Hon Jack

Cohen, Stanley

Ashton, Joe

Coleman, Donald

Atkinson, N.(H'gey,)

Concannon, Rt Hon J. D.

Barnett, Guy (Greenwich)

Cook, Robin F.

Beith, A. J.

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

Berm, Rt Hon Tony

Crowther, Stan

Bennett, Andrew(St'kp't N)

Cryer, Bob

Booth, Rt Hon Albert

Cunliffe, Lawrence

Bray, Dr Jeremy

Cunningham, G. (Islington S)

Brown, Hugh D. (Proven)

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

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

Dalyell, Tam Brown, Ronald W. (H'ckn'y S) Davidson, Arthur

Buchan, Norman

Davies, Rt Hon Denzil (L'Ili)

Callaghan, Rt Hon J.

Davis, Clinton (Hackney C) Callaghan, Jim (Midd't'n & P) Davis, T. (B'ham, Stechf'd)

Campbell, Ian

Dean, Joseph (Leeds West)

Campbell-Savours, Dale

Dewar, Donald

Canavan, Dennis

Dixon, Donald

Mawby, Ray

Shaw, Giles (Pudsey)

Mawhinney, Dr Brian

Shaw, Michael (Scarborough)

Maxwell-Hyslop, Robin

Shelton, William (Streatham)

Mayhew, Patrick

Shepherd, Colin (Hereford)

Meyer, Sir Anthony

Shepherd, Richard

Miller, Hal (B'grove)

Shersby, Michael

Mills, lain (Meriden)

Silvester, Fred

Miscampbell, Norman

Sims, Roger

Moate, Roger

Skeet, T. H. H.

Molyneaux, James

Speed, Keith

Monro, Sir Hector

Speller, Tony

Montgomery, Fergus

Spence, John

Moore, John

Spicer, Jim (West Dorset)

Morgan, Geraint

Spicer, Michael (S Worcs)

Morrison, Hon C. (Devizes)

Sproat, lain

Morrison, Hon P. (Chester)

Squire, Robin

Mudd, David

Stainton, Keith

Murphy, Christopher

Stanbrook, Ivor

Myles, David

Stanley, John

Neale, Gerrard

Steen, Anthony

Needham, Richard

Stevens, Martin

Nelson, Anthony

Stewart, Ian (Hitchin)

Neubert, Michael

Stewart, A.(E Renfrewshire)

Newton, Tony

Stokes, John

Page, John (Harrow, West)

Tapsell, Peter

Page, Richard (SW Herts)

Taylor, Teddy (S'end E)

Parkinson, Rt Hon Cecil

Tebbit, Rt Hon Norman

Parris, Matthew

Thomas, Rt Hon Peter

Patten, Christopher (Bath)

Thompson, Donald

Patten, John (Oxford)

Thornton, Malcolm

Pattie, Geoffrey

Townend, John (Bridlington)

Pawsey, James

Townsend, Cyril D, (B'heath)

Percival, Sir Ian

Trippier, David

Pink, R. Bonner

van Straubenzee, Sir W.

Pollock, Alexander

Viggers, Peter Powell, Rt Hon J.E. (S Down) Waddington, David

F'rentice, Rt Hon Reg

Wakeham, John

Price, Sir David (Eastleigh)

Waldegrave, Hon William

Proctor, K. Harvey

Walker, B. (Perth )

Pym, Rt Hon Francis

Walker-Smith, Rt Hon Sir D.

Raison, Timothy

Warren, Kenneth

Rathbone, Tim

Watson, John

Fees-Davies, W. R.

Wells, John (Maidstone)

Renton, Tim

Wheeler, John

Rhodes James, Robert

Whitelaw, Rt Hon William

Rhys Williams, Sir Brandon

Whitney, Raymond

Ridley, Hon Nicholas

Williams, D.(Montgomery)

Pitkind, Malcolm

Winterton, Nicholas

Roberts, M. (Cardiff NW)

Wolfson, Mark

Ross, Wm. (Londonderry)

Young, Sir George (Acton) Rossi, Hugh

Rost, Peter

Tellers for the Ayes:

Royle, Sir Anthony

Mr. Alastair Goodlad and

Sainsbury, Hon Timothy

Mr. Nick Budgen Scott, Nicholas

Dobson, Frank

Leighton, Ronald

Dormand, Jack

Lestor, Miss Joan

Douglas, Dick

Lewis, Arthur (N'ham NW)

Douglas-Mann, Bruce

Lewis, Ron (Carlisle)

Dubs, Alfred

Litherland, Robert

Duffy, A. E. P.

Lofthouse, Geoffrey

Dunwoody, Hon Mrs G.

Lyon, Alexander (York)

Eadie, Alex

Lyons, Edward (Bradf'd W)

Eastham, Ken

McCartney, Hugh

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

McDonald, Dr Oonagh

Ellis, Tom (Wrexham)

McElhone, Frank

English, Michael

McGuire, Michael (Ince)

Ennals, Rt Hon David

McKay, Allen (Penistone)

Evans, loan (Aberdare)

McKelvey, William

Evans, John (Newton)

MacKenzie, Rt Hon Gregor

Ewing, Harry

McMahon, Andrew

Faulds, Andrew

McTaggart, Robert

Field, Frank

McWilliam, John

Flannery, Martin

Magee, Bryan

Fletcher, Ted (Darlington)

Marks, Kenneth

Forrester, John

Marshall, D(G'gow S'ton)

Foster, Derek

Marshall, Jim (Leicester S)

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

Mason, Rt Hon Roy

Freeson, Rt Hon Reginald

Maxton, John

Garrett, John (Norwich S)

Maynard, Miss Joan

Garrett, W. E. (Wallsend)

Mellish, Rt Hon Robert

Graham, Ted

Mikardo, Ian

Grant, George (Morpeth)

Milian, Rt Hon Bruce

Grimond, Rt Hon J.

Mitchell, R. C. (Soton ltchen)

Hamilton, James (Bothwell)

Morris, Rt Hon C. (O'shaw)

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

Moyle, Rt Hon Roland

Harrison, Rt Hon Walter

Newens, Stanley

Hart, Rt Hon Dame Judith

Oakes, Rt Hon Gordon

Hattersley, Rt Hon Roy

O'Halloran, Michael

Heffer, Eric S.

O'Neill, Martin

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

Owen, Rt Hon Dr David

Holland, S. (L'b'th, Vauxh'11)

Palmer, Arthur

Home Robertson, John

Park, George

Homewood, William

Parker, John

Hoyle, Douglas

Parry, Robert

Huckfield, Les

Pavitt, Laurie

Hudson Davies, Gwilym E.

Pendry, Tom

Hughes, Mark (Durham)

Penhaligon, David

Hughes, Robert (Aberdeen N) Powell, Raymond (Ogmore)

Hughes, Roy (Newport)

Prescott, John

Janner, Hon Greville

Price, C. (Lewisham W)

Jay, Rt Hon Douglas

Pitt, William

John, Brynmor

Race, Reg

Johnson, Walter (Derby S)

Radice, Giles Jones, Rt Hon Alec (Rh'dda) Richardson, Jo

Jones, Barry (East Flint)

Roberts, Albert (Normanton)

Jones, Dan (Burnley)

Roberts, Allan (Bootle)

Kerr, Russell

Roberts, Ernest (Hackney N)

Kilroy-Silk, Robert

Roberts, Gwilym (Cannock)

Lambie, David

Robertson, George

Lamborn, Harry

Ross, Ernest (Dundee West)

Leadbitter, Ted

Ross, Stephen (Isle of Wight)

Ryman, John

Tilley, John

Sandelson, Neville

Varley, Rt Hon Eric G.

Sever, John

Wainwright, E.(Dearne V)

Sheerman, Barry

Wainwright, R.(Colne V)

Sheldon, Rt Hon R.

Walker, Rt Hon H.(D'caster)

Shore, Rt Hon Peter

Watkins, David

Short, Mrs Renee

Weetch, Ken

Silkin, Rt Hon J. (Deptford)

Welsh, Michael

Silverman, Julius

White, Frank R.

Skinner, Dennis

White, J. (G'gow Pollok)

Smith, Cyril (Rochdale)

Whitehead, Phillip

Soley, Clive

Whitlock, William

Spriggs, Leslie

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

Steel, Rt Hon David

Wilson, Gordon (Dundee E)

Stewart, Rt Hon D. (W Isles)

Wilson, William (C'try SE)

Stoddart, David

Winnick, David

Stott, Roger

Woodall, Alec

Strang, Gavin

Woolmer, Kenneth

Straw, Jack

Young, David (Bolton E) Summerskill, Hon Dr Shirley

Taylor, Mrs Ann (Bolton W)

Tellers for the Noes:

Thomas, Dafydd (Merioneth)

Mr. George Morton and

Thomas, Jeffrey (Abertillery)

Mr. Frank Haynes. Thorne, Stan (Preston South)

Question accordingly agreed to.
Mr. SpeakerI am now required to put the Question on any Government amendment to a Lords amendment, followed by the Question, That this House doth agree with the Lords amendment, as amended. There are two such amendments, both to Lords amendment No. 89.
Lords amendments, as amended, agreed to.
Mr. SpeakerI now have to put the Question on all the remaining Lords amendments.
Subsequent Lords amendments agreed to.
Mr. SpeakerFinally, as the House has disagreed to one of the Lords amendments without offering an alternative, I have to put the Question on a motion made by the Minister to appoint a Committee to draw up the reasons for disagreeing to that amendment.
Committee appointed to draw up a Reason to be assigned to the Lords for disagreeing to one of their amendments to the Bill: Mr. Gummer, Mr. Hattersley, Mr. Morton, Mr. Raison and Mr. Whitelaw; Three to be the quorum.—?[Mr. Raison.]
To withdraw immediately.
Reason for disagreeing to one of the Lords amendments, reported, and agreed to, to be communicated to the Lords.

Imprisonment (Temporary Provisions) Act 1980
10.14 pm
(Mr. Patrick Mayhew)I beg to move,
That the Imprisonment (Temporary Provisions) Act 1980 (Postponement of Repeal) Order 1981 (S.L. 1981, No. 1358), a copy of which was laid before this House on 28th September, be approved.
The House will recall that the Imprisonment (Temporary Provisions) Act 1980 was passed last October in order to deal with the effects of industrial action which prison officers were taking at that time. The main feature of that action was a refusal to receive inmates at any establishment with a population exceeding certified normal accommodation. Given the chronic situation of overcrowding, this threatened a breakdown of the criminal justice system. It meant that large numbers of prisoners had to be lodged outside the prisons, either in police cells or in other temporary accommodation.
Part I of the Act contained a number of temporary provisions which came into force forthwith and which, by virtue of section 8(1) of the Act, remained in force for an initial period of one month. At the end of that period, the industrial action was still continuing, and an order was made under section 8(2) of the Act to provide that all the provisions of part I should continue in force for a further period of one month—that is, up to 28 December 1980. Subsequently, two more continuance orders were made under section 8(2), although the latter of these, which expired on 28 February 1981, provided that only sections 1 and 2 should continue in force. No further continuance order was made, and accordingly none of the provisions of part I has been in force since last February, following the suspension of the industrial action by prison officers.
That action remains suspended only for the time being, pending the final resolution of the dispute.
The order before the House tonight does not bring any of the provisions of part I once more into force. What it does, as its title indicates, is to postpone their repeal, which would otherwise occur automatically on 28 October of this year. It enables them, as it were, to remain dormant, capable of being activated in the future but only by a further order approved by Parliament under a procedure laid down in the Act. This postponement of repeal is necessary because section 8(6) of the Act provides that part I of the Act is to be repealed 12 months after the date on which the Act was passed.
However, my right hon. Friend may, by order, postpone for up to 12 months at a time, if Parliament approves, the date from which the repeal provided for in subsection (6) is to have effect. There is no provision for selective extension. The whole of part I must be either repealed or retained. Accordingly, the order postpones the repeal of part I from 28 October 1981 to 28 October 1982.
I now turn to the detail of the provisions whose repeal is postponed by the order, asking the House as I do so to bear in mind that none of these provisions is once again brought into force by the order that we are now considering.
Section 1 permits the establishment of temporary prison accommodation in any place in England and Wales approved for the purpose by the Secretary of State, and provides that anyone charged with the task of running such
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establishments shall have the powers and protection which prison officers have. The House will recall that it was under the provisions of this section that temporary accommodation was opened last winter at Frankland in County Durham and Rollestone Camp in Wiltshire. These were "approved places" under section 1.
Section 2 provides powers for a magistrates' court, having once remanded a defendant in custody, further to remand him without his being brought before the court. The House will recall that during the industrial action by prison officers last winter large numbers of persons remanded in custody were held in police cells up and down the country. Whilst normally remanded prisoners are accommodated quite near to the court which remands them, this was not always possible in the situation which obtained at that time and some had to be held at a considerable distance from the court. It would have been impossible for all prisoners held on remand in such circumstances to be produced in court every eight days. Section 2 therefore provides for a person who has once been remanded in custody in his presence to be further remanded in his absence unless the court has given a direction requiring him to be produced in court. However, the section also makes it clear that the magistrates' court retains its power to request a person remanded in custody to be brought before it at any time before the end of the period of remand. The section does not affect the requirement that there should be weekly remand hearings. No evidence came to our notice that the operation of section 2 worked to the disadvantage of defendants.
Mr. Bob CryerSo far, the Minister has rightly outlined the provisions. However, does he intend to move on to the reasons for the deferment of repeal£ Surely he does not visualise that there will be any further dispute with the prison officers. That was the initial cause of the legislation. If the dispute is over and done with, it would breed greater confidence?from the point of view of both the prison officers and the Home Secretary?if the dispute were done away with completely. I hope that the Minister will go into the reasons for this provision.
Mr. MayhewI had looked forward to giving the reasons. However, I thought that it might be more logical to complete the description of the provisions before doing that.
The remaining sections of part I contain a variety of provisions which, when they are in force, enable the Secretary of State to take exceptional action to prevent a breakdown of the penal system. My right hon. Friend the Secretary of State assured the House, when first seeking these powers, and I repeat the assurance now, that he would not use these powers unless it became absolutely necessary. Fortunately, it did not become necessary last winter to use any of the powers in sections 3, 4 or 5; and I certainly hope that it will not become necessary in the coming 12 months.
Section 3 contains power for the Secretary of State to release persons committed or remanded in custody, but only if he is satisfied that it is necessary to do so in order to make the best use of the places available for detention. Section 4 contains a power for the Secretary of State to remove a magistrates' court's power to commit persons to prison for failure to pay any sum of money or for want of sufficient distress to satisfy any sum of money. Section 5 contains a power for the Secretary of State to direct that

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prisoners of a specified class shall be released up to six months earlier than they would otherwise be released. Here again, he may do so only if he is satisfied that it is necessary to do so in order to make the best use of the places available for detention.
I emphasise again that the order does not bring any of the provisions of part I into force. That would require a separate and further order under section 8(2), which would have to be either approved in draft by both Houses or, in case of emergency, approved within seven days of being made. My right hon. Friend has no reason at present to make any such order and no intention of doing so. Since the end of January this year, when the Prison Officers' Association suspended the industrial action that occasioned the Act—I turn to the point raised by the hon. Member for Keighley (Mr. Cryer)—the Home Office and the POA have been negotiating the terms of a new agreement to cover working arrangements in all the various types of prison department establishment. We are certainly hopeful that those negotiations will have a satisfactory outcome. On the other hand, it is only prudent to recognise that the POA's industrial action last winter was merely suspended—and remains merely suspended—pending the outcome of the negotiations on the new duty arrangements to which I have just referred.
Mr. Christopher Pricerose—
Mr. Andrew F. Bennett Mr. Andrew F. Bennett (Stockport, North) rose—
Mr. MayhewThis situation obtains at a time when the prison service is still under very severe strain from the pressures of overcrowding and decaying buildings. While I do not think it likely that there will be any recurrence of industrial action on a large scale or that difficulties will arise from any other cause with which the prison system will be unable to cope, it plainly remains a possibility. Plainly it is right, accordingly, that part I of the Act should not be repealed at this stage and that the powers that it confers should remain available as an insurance against the risk of a breakdown in the criminal justice system capable of being brought into operation if circumstances demand and Parliament so resolves.
Mr. Christopher PriceIs the Minister really saying that his desire to keep this part of the legislation is simply part of the Government's package of anti-union legislation? Is he saying that they wish to keep the legislation to strengthen their part in negotiations with the Prison Officers' Association?
Mr. MayhewOn reflection, the hon. Gentleman will not think that that is a particularly sound intervention. The reasons were made clear when the Act was introduced and when the powers were last renewed in January this year. Then the hon. Member for Halifax (Dr. Summerskill) said that it was regrettable that it was still necessary for the powers to be renewed. It was made clear then that the legislation was necessary to guard against a possible breakdown in the criminal justice system occasioned by the prison officers' dispute. Almost everybody recognises that a duty of the Government is to ensure that the criminal justice system does not break down, for whatever reason. There is no question of a campaign against the unions, as the Prison Officers' Association would concede immediately. We are engaged in an exercise to ensure that in an emergency the prison service is able to cope with the
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consequences of further industrial action or of gross overcrowding in the prisons arising from that or some other reason.
Mr. Andrew F. BennettWhat is the Minister's intention, if and when the dispute is settled? Will he give the House a guarantee that as soon as the prison officers call off their action, rather than merely suspending it, he will come to the House and repeal all this legislation?
Mr. MayhewThe order is designed to postpone the repeal of the Act for the next 12 months.
Under the terms of section 8(7) of the Imprisonment (Temporary Provisions) Act 1980, my right hon. Friend has made the order which is before the House to postpone until October next year the repeal of part I and section 8(1) to 8(5) of the Act.
By virtue of section 8(8) of the Act, the order will cease to have effect 40 sitting days after the date on which it was made unless before the expiry of that period the order has been approved by resolution of this House and another place.
I hope that it will not be necessary within the next 12 months to ask the House to approve the activation of any of the provisions in part I, either on account of renewed industrial action or as a result of other intolerable pressures on the penal system. I believe that it would be imprudent to allow part Ito be repealed now. I ask the House to agree that the order to postpone repeal be approved.
10.28 pm
Dr. Shirley SummerskillThe Minister asks the House to agree that the Act should remain on the statute book for another year. I am wholly unconvinced by the Minister's justification for doing that. We believe that the Act should be repealed tonight. It now serves no useful purpose, as the Minister has admitted. It contains far-reaching provisions and powers which are objectionable and which represent a serious infringement of basic civil liberties—the rights of detained people.
Originally the Act was intended as an exceptional, emergency and temporary measure. If the circumstances arise again and similar provisions are required, the Government should come back with another Bill which can be passed if necessary in one day, as was this Act. That Bill can be considered by Parliament in the light of the special circumstances prevailing at that time if the need ever arises.
The Act was placed on the statute book to deal with an unprecedented crisis in the prison system caused by the prison officers' industrial action. The serious repercussions of the strike—the fact that it led to several thousand prisoners being held in police cells—meant that unprecedented measures had to be taken by the House. There was excessive pressure on the police and standards of security were falling.
The official Opposition did not oppose the Bill in Divisions in October 1980 because we appreciated the urgent need for its provisions to be available if required as long as the industrial dispute was in progress. When the Home Secretary spoke on Second Reading on 28 October 1980 he said that it was the industrial action that had been taken by the Prison Officers' Association that had made the Bill necessary. The same argument was advanced on successive occasions by Ministers when orders were renewed.

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Tonight we hear from the hon. and learned Gentleman that the Act is being retained on the statute book for other possible "disruptions" within the prison service and because the prison population is getting out of hand. An extended use of the provisions in the Act is now being admitted which has never before been revealed when the measure has been discussed in previous debates. The argument previously has always been confined to the prison officers' dispute.
It is unnecessary to have the Act on the statute book now that the dispute has been suspended. The Home Secretary said on Second Reading that he would not seek to rush the then Bill through the House unless the circumstances demanded it. Today there are no special circumstances that demand that the legislation that is before the House be retained. The dispute has been suspended. We understand that Frankland prison and Rollestone camp are empty and not in use and that police cells are not in use for prisoners. There is no need for the Act.
Our original objections to the Bill were, to some extent, placated because the provisions were only temporary. Those words were even incorporated in the Bill's title. However, a year later we are being asked to extend temporary provisions which it is admitted are not in use and which the Minister hopes will never be used.
If it were said that the Act would help to reduce the prison population, that might be of some encouragement. On 20 October that population was 43,837. The Act had no effect on the numbers in prison since the suspension of the prison officers' dispute. Indeed, the prison population has increased. At the end of the strike there were 40,000 in prison and now there are 43,837. The retention of the Act on the statute book has not led to a decrease in that population. We should find the real reasons for it decreasing during the prison officers' dispute and learn some lessons from them.
The purpose of section 1 was to establish temporary additional accommodation. We are told that Frankland prison and the camp are not in use. Section 2 was intended to minimise the workload of those responsible for detaining committal and remand prisoners. That was at a time when prisoners were distributed in police cells throughout the country, but that is no longer so. Great anxiety was felt and is still felt by the Opposition about the repercussions of section 2. It contains unprecedented powers. It is wrong that it should be retained on the statute book for the convenience of the prison administration or that of the Home Office.
Section 2 could lead to remand prisoners losing their long-standing and automatic right to appear in court every eight days. They could remain in cells, unknown to the probation service, and without legal advice. The Law Society, the probation officers and the Howard League for Penal Reform are all strongly opposed to such a system which could remove a valuable safeguard. That section is the most unacceptable part of the Act. The fact that it is not now being used is no justification for keeping it. On the contrary, it is a reason for repealing it tonight.
Sections 3, 4 and 5 have never been used by the Government at any stage, so there is even less justification for asking Parliament to renew them, and for them to remain on the statute book for yet another year. Section 3 is a reserve power. It authorises the release of
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unconvicted and unsentenced prisoners who courts have decided should be kept in custody, in order, as the Home Secretary said, to make the prison or police cell place available for a more dangerous prisoner. As that power has never been used during the last year, when does the Minister envisage its use in the future, and in what circumstances?
The Home Secretary justified section 3 on Second Reading on the grounds that he must have available to him the power, if necessary, to act in order to make the best use of places available for detention. With regard to section 3, he said:
I am putting forward proposals now—I have made clear that I do not like them—because I am forced to do so by the sort of industrial action taken by the prison officers…I am faced with a totally abnormal situation…I have to take whatever action is available to me to deal with an extreme position.—?[Official Report, 28 October 1980; Vol. 991, c. 220–21.]
How can it now be justified to keep section 3 on the statute book when the Home Secretary does not like it and is not forced to keep it by any industrial action of the prison officers, when he is not faced with a completely abnormal situation, and does not have to deal with an extreme position? All the reasons which he gave for including the section in the first place are non-existent now. There is no justification for keeping it in the Act.
Mr. Christopher PriceIs it not true that another reason why it is wrong to keep an administrative rather than a judicial review of the situation in prisons is that the Government lose time and again in the European Court of Human Rights in Strasbourg on this issue—that there should be proper judicial review, and not administrative review? Yet the Government keep section 3, which goes against everything that they have signed in the European Court in Strasbourg.
Dr. SummerskillI am sure that the Minister can answer that point, which is good. We eagerly await his reply.
Section 4 restricts the powers of the courts to imprison for non-payment of money. The Opposition support an increase in the types of non-custodial offences and an increase in non-custodial sentences. Section 5 authorises the early release of prisoners. We support shorter sentences wherever possible and appropriate. Ironically, those two sections have not been used by the Government, who are always saying that they are reluctant to legislate for either of those things. The Opposition are always urging more non-custodial offences and an increase in non-custodial sentences and, where possible, shorter sentences, and every time we mention that, the Home Secretary or the Minister says that he has exhorted the courts to do that and would rather not put it on the statute book. Yet here it is on the statute book, and here is a Minister asking the House to keep it on the statute book for another year as a temporary provision.
Sections 4 and 5 are measures that we have been asking to be incorporated in legislation rather than relying on exhortations to the courts. But the legislation that we wish to see should not be included in a temporary provisions Act which was originally passed, hurriedly and in crisis, in one day and which is now being renewed late at night in an hour and a half. We want those measures to be introduced as permanent legislation and placed on the statute book after very careful consideration.
Parliament originally passed this legislation to respond to the specific crisis of the prison officers' dispute in a

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specific way. There is no comparison between the situation now and that which existed a year ago. There is no need whatever for these unprecedented powers to remain on the statute book any longer.
If and when, regrettably, another crisis arises—I am referring to a prison officers' dispute and nothing else, because the Act was intended to deal with the repercussions of that and nothing else, although the Minister casually added a few other circumstances as he went along?the circumstances and needs at that time must be carefully considered. The circumstances may be utterly different from those a year ago. After careful consideration, a Bill appropriate to that situation can be introduced?if necessary, in one day and one night, as we did with the present Act.
There is, therefore, no justification for keeping these temporary provisions and my right hon. and hon. Friends and I will be voting tonight to repeal the Act.
10.42 pm
Mr. Douglas HoggIn opening, my hon. and learned Friend the Minister of State mentioned two emergency prison camps. There is a third, at Beckingham in my constituency. I shall say something about that camp in a moment. My constituency seems to be unfortunate, or perhaps fortunate, in these matters as we also have Morton Hall. As my hon. and learned Friend will know, the Home Office has already indicated that in respect of Morton Hall, which is a former borstal, there are plans for establishing an emergency prison. I shall therefore be asking my hon. and learned Friend to expand on the plans with regard to those two establishments.
In relation to Beckingham, I begin by congratulating the governor, and his staff, not merely on the kind of prison that he is operating but on the good relations that he has established with the local community. I had the opportunity to visit the prison and to attend a parish council meeting which the prison governor and his deputy also attended. [Interruption.] Does the hon. Member for Islington, South and Finsbury (Mr. Cunningham) wish to intervene? It seems that he wishes to go to sleep. I shall not stand in his way.
Mr. George CunninghamGet to the order.
Mr. HoggI shall come to the order in a moment. I am talking about an emergency prison set up under the order. To suppose that it is not in order to talk about such an emergency prison is to misunderstand the procedure of the House.
I began by congratulating the governor and deputy governor of Beckingham prison, first on the kind of prison being established, and secondly, on the very good relations that have been established with the local community. I had the opportunity to attend a parish council meeting which the governor and deputy governor attended and at which the governor extended a full invitation to all the local residents to visit the prison. In company with many others, I visited the prison and I must tell the House that the kind of prison that the governor is operating is one which in all the circumstances is entirely satisfactory.
Having said that, however, I must ask my hon. and learned Friend whether he can tell us a little more about his plans in respect of Beckingham. I understand that there
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are about 330 category C prisoners there, and that the future of the prison will be reconsidered in April 1982. Although I am in no way asking my hon. and learned Friend to disestablish the prison—far from it, as it has an important contribution to make in many ways—people in my constituency would like to know how long the prison is to remain at Beckingham. I should be grateful if my hon. and learned Friend could give some indication of the future of this camp.
That also goes for Morton Hall. That is a former borstal establishment, and the Home Office has already indicated an intention to use Morton Hall as an emergency prison. Indeed, it has invited certain people to serve on the board of visitors. From what my hon. and learned Friend said earlier, I visualise that, as prison over-crowding is decreasing, it may not be necessary to use the facilities at Morton Hall. However, my constituents would like some indication of the Home Office's plans for Morton Hall.
Mr. Dennis CanavanThey are going to send the hon. Gentleman there.
Mr. HoggNo, but they might send the hon. Gentleman there. He is just the sort of category C person—on the whole harmless, although perhaps given to a little over-indulgence—for whom these kinds of prison are suited.
My point was that Morton Hall could be used for this kind of emergency prison, and it is right that my constituents should know whether the facilities are likely to be used. I should like some clarification on that point.
I turn to a more general topic, which will no doubt encourage the hon. Member for Islington, South and Finsbury. Prisons such as Beckingham accommodate only category C prisoners. Apart from the fact that they are a bit cold and that there is not quite enough work for the prisoners to do, which is a definite drawback, they are an ideal way of accommodating category C prisoners. Although this Act will be repealed in time, I hope that the Home Office will give serious consideration to using facilities of this kind for the accommodation of category C prisoners.
They are more acceptable facilities than the secure prisons. Beckingham has only a perimeter fence. Much more freedom is involved in these prisons than in Pentonville or Wormwood Scrubs. It is a nicer place to be, and I have been in all of them—[Interruption.] I thought that the hon. Member for West Stirlingshire (Mr. Canavan) needed cheering up, so I placed an easy one which would get an easy and cheerful response. I always get easy and cheerful responses from the hon. Gentleman at this hour of the evening.
We must be serious about this. If, Mr. Deputy Speaker, you had to choose—I fancy that you will never have to make this choice?between Wormwood Scrubs and Beckingham, I recommend a small and comfortable berth in Beckingham rather than a small and uncomfortable berth in Wormwood Scrubs. The former may be cold, but altogether it is a great deal more decent.
I try to dress this up to amuse, but it is a serious point. We must provide custodial accommodation for category C prisoners. It is basically wrong to accommodate them in places such as Wormwood Scrubs, Pentonville or Lincoln for that matter. Whenever possible, it is much better to accommodate them in places such as Beckingham.

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I therefore hope that my hon. and learned Friend will think further about using existing army camps and the like for low-security prisoners. They do not really pose a threat to the local community and on the whole have a more tolerable existence. In addition, the whole system is much more acceptable and, incidentally, much less costly.
10.49 pm
Mr. Robert Kilroy-SilkA year ago, when this legislation was first before the House, the prison officers were entering the fourth week of their dispute for backdated continuous duty credits. A minority of us argued then that it would be far more appropriate if the Government were to refer the prison officers' claim to arbitration than to inflict wide-ranging powers and a major upheaval on the criminal justice and penal system. The Government and the majority of hon. Members did not take that advice. Looking back a year, when we see that the cost of the dispute to the Treasury was about £20 million and, had it been implemented in full, the cost of the arbitration award would have been only £10 million, it appears that we were not wrong and the Home Secretary was not right.
Again, in introducing the legislation Ministers made their distaste clear. They emphasised that it was justified only because of the dispute and the exceptional nature of the circumstances—because of a crisis, a word which was used frequently at the time. It was an unprecedented situation that called for unprecedented and crisis measures. It is, therefore, remarkable that a year later, when the dispute has ended, it is deemed necessary to prolong the distasteful powers and the Minister asks us to extend the legislation.
If there is a dispute or crisis, the Government should ask the House for emergency powers and the House should consider the request carefully. However, we are now asked to legislate temporary and emergency powers for a hypothetical situation. When the legislation came before the House it was necessary because of what was happening. That was the Government's only justification for it. Such justification no longer applies, so there is no defence that we have so far heard for the Government's position.
That fact becomes more apparent when we consider the legislation. For example, it overrides the normal rights of a defendant. Section 2 of the Act allows the courts to remand individuals in custody without a personal appearance in court. Many hon. Members criticised that position a year less a clay ago.
Many of us favour extending from eight to 21 days the period on remand in custody without an appearance in court. I make no excuse for that view. Indeed, the proposal is supported by the parliamentary all-party penal affairs group, of which I am chairman, and most recently by the report of the Select Committee on Home Affairs. However, we always make it clear that the extension of the remand period without a personal appearance from eight to 21 days must be conditional upon the consent of the offender and that he must be legally represented. Under the Act there is no requirement for consent and there does not have to be legal representation. Indeed, no time limit is imposed on the appearance in court of an offender.
In response to representations in the House during the passage of the Bill, the Home Secretary asked the courts
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to ensure that defendants would be legally represented. On the whole, that has happened. However, according to a Home Office sample survey in December, about 7 per cent. of defendants were not legally represented and did not personally appear in court. It is extremely important for those people personally to have the right to exercise an argument in favour of bail in court. It is important in principle and in practice that each offender should be able to come to court to argue why he should not be remanded in custody.
The principle is long-established and prevents potential abuse or injustice. The practical case is also well known and important. If a defendant is held in custody, he may lose his job or accommodation. Custody may have a severe psychological and practical impact on a defendant's family life and friendships. He certainly cannot persist in finding witnesses, collecting evidence and seeing his lawyer, as he could if he were out on bail.
It is objectionable to override that right unless there are good and clear reasons for doing so. There may have been such reasons in October, but they certainly do not exist today. Many hon. Members on both sides of the House described the section as objectionable in October—in the middle of the prison officers' dispute. If it was objectionable then, it is even more objectionable now when there is no dispute.
Sections 3 to 5 provide the Home Secretary with powers that many of us on both sides have suggested. He has power to release certain non-violent offenders from prison and to restrict the power of courts to impose prison sentences on other categories, notably fine and maintenance defaulters.
We have asked for those powers to be enshrined in permanent legislation. Unfortunately, they have not been used, but I also object to their renewal. I expect the House to object to giving a Home Secretary the amount of executive discretion that is contained in those sections. If we are to have those powers, as I wish, they should be included in permanent, well-considered, coherent legislation. I and other hon. Members on both sides have put that to the Home Secretary, but both he and previous Labour Governments, who have a lamentable record on penal policy, have not heeded that advice.
No one has yet seen fit to resolve the crisis of numbers, which is the real crisis of the prison service, by enacting permanent legislation to reduce the prison population both by reducing prison sentences and by reducing the categories of offenders who can be committed to prison.
The case for permanent legislation, with the objective of reducing the lengths of sentences that can be imposed and restricting the categories of offenders who can be imprisoned, was clearly emphasised by the prison officers' dispute. In September last year, the prison population was 44,000. By January—in the middle of the dispute—it had fallen to 39,500.
As the Home Secretary told the Leicestershire magistrates on 12 February, that dramatic reduction in the prison population was achieved without any threat to public safety—an opinion which he reiterated in oral evidence to the Home Affairs Select Committee. Yet by July at the end of the dispute the population was up to an unprecedented 45,500.
The Home Secretary pointed out to the Cumbria probation and after-care service only a few weeks ago that that level could not be sustained. Conditions for both staff and prisoners are intolerable. Those are the Home

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Secretary's words, not mine, and he has repeated them up and down the country. That opinion was reiterated by the Under-Secretary, Lord Belstead, only a few days ago in a speech to the annual meeting of the board of prison visitors on 12 October. He said that the present situation was not sustainable and was temporary.
The Home Secretary has responded by opening two new prison camps and by recruiting extra staff, but if we are to deal with the crisis in our prisons we must do so by enacting the sort of legislation that successive reports from the House and individual Members have enjoined on successive Home Secretaries. The Home Secretary should have done that two years ago. He did not and he therefore has no justification for asking for a renewal of the Act.
One day less than a year after the legislation was introduced, it is reasonable to ask the Minister of State what steps the Home Secretary has taken in that time to overcome the fundamental industrial relations problems that led to last year's dispute. The problems were clearly recognised by the May committee, which said in its report more than two years ago:
One of the features of the present system is that, except in regard to arrangements for taking arbitrable matters to the Civil Service Arbitration Tribunal, no guidelines exist for dealing with grievances and other matters which either staff or management would like to pursue.
The May committee went on to recommend that a procedural agreement should be negotiated for the prison service to include
a clear statement of what issues are being reserved for national resolution, the nature of negotiations at an establishment level, the time to be allowed at each stage,
and so on.
When I raised that matter on Second Reading last year, the then Minister of State replied:
"We have taken the view that the first priority should be the development of a new attendance system, but we are certainly anxious to make progress towards a new general procedural agreement along the lines recommended by the May committee … The Prison Officers' Association has indicated that it wishes to take the initiative by putting forward proposals on that point. We are awaiting these proposals and we are not saying that that is something which should not be done.—?[Official Report, 28 October 1980; Vol. 991, c. 320.]
What has been done since then to negotiate a procedural agreement for the prison service?
The problems of the prison service do not require a continuation of this legislation, which was unjustified a year ago, when the official Opposition should have voted against it, and when willingness by the Home Secretary to go to arbitration would have ended the dispute at considerably less cost than was involved and would not have required the enormous erosion, by precedent if nothing else, of the liberties that we have long enjoyed and respected.
We need permanent legislation substantially to reduce the prison population. That case has been made clearly anti loudly by hon. Members on both sides of the House, not least by the Home Secretary and the Lord Chancellor. The case is clear, overwhelming and convincing. When will the Government introduce that legislation and stop messing around with this unnecessary legislation?
11.3 pm
Mr. Edward GardnerI found it difficult to follow some of the arguments that were relied upon by the hon. Member for Ormskirk (Mr. Kilroy-Silk) because it appeared that he assumed that the provisions of the 1980 Act can be used today. They cannot. They lie
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dormant and will remain dormant until they are revived, if ever, unhappily, the need arises, by an order that will have to be put before the House.
The hon. Member for Halifax (Dr. Summerskill) said that in her view the 1980 Act now had no useful purpose and was, if I recollect her words correctly, "wholly unnecessary". To test the validity of her argument, one must look back briefly at the reasons why the 1980 Act came into being. We all remember vividly the coincidence of circumstances that brought a new threat of breakdown to our prison system. There was severe overcrowding in our prisons and an industrial dispute by the Prison Officers' Association over payment for certain meal breaks. The hon. Member for Ormskirk told the House that the dispute had ended. I pray that he is right, but the House will remember that, as my hon. and learned Friend the Minister of State said, the dispute was not brought to an end by any firm and final agreement but was suspended. We hope that agreement will be reached and that we shall soon be able to say that we have heard the last of that dispute.
Although for the moment there is, happily, no need for the application of the powers in the 1980 Act, who can say that similar circumstances may not arise in the future?
Dr. SummerskillWill the hon. and learned Gentleman join my hon. Friend the Member for Stockport, North (Mr. Bennett) in asking the Minister to seek to repeal the Act when the dispute is finally settled?
Mr. GardnerIf the circumstances of an industrial dispute were the only potential additional threat or ingredient that could be added, I would willingly support that request. One does not want to speculate, because there is no real profit in that, but, without using one's imagination very actively, one can envisage a number of other circumstances which could arise.
Mr. Kilroy-SilkWhat are they?
Mr. GardnerI shall not speculate. I am sure that there is no one in this House who would have the least difficulty in imagining a number of other circumstances.
Mr. Andrew F. BennettWill the hon. and learned Gentleman agree that if that is what the legislation was for it should have been permanent legislation and should have gone through the normal scrutiny in this House? The whole excuse for the legislation was that it was temporary, to deal with a temporary set of circumstances. Surely it is quite wrong to turn temporary measures into permanent measures.
Mr. GardnerFor the purposes of looking at the 1980 legislation, and the order which postpones its repeal, I should like to rely on the unhappy fact that the dispute with the Prison Officers' Association is not yet over. When it is concluded, that may be the wise and prudent moment at which to look again at the legislation. But we are concerned tonight with the present potential for trouble. It is still there. It broke out in 1980 and there is no one in this House—unless he has powers of forecasting which are beyond those held by most people—who can say with the least certainty that there will not be a similar coincidence of circumstances again.
Under section 2 of the Act, a new procedure was introduced to avoid the need for bringing to court every eight days, as the ordinary law rightly demanded, an accused person who had been remanded in custody. I agree

829
entirely that, when applied in normal circumstances, the powers of section 2 are wholly objectionable, but I think it has now become accepted that the application of section 2—despite all its objectionable features?in an emergency taught us that there was a better way of dealing with remands in custody, and that where there was a continuation of remand in custody it was not always necessary to bring the accused person to court.
For ordinary legislation, which protects the accused person who is in custody and who is remanded in custody, of course his consent is needed to a new procedure of this kind. Of course there must be legal aid, and the person must be represented when he is brought before the court. Nevertheless, when that objectionable procedure was used, I do not recollect or know any evidence to suggest that anyone was injured by it. That gives us hope that, with proper protection—that is, with the consent of the accused—and with the right to legal representation, this new procedure should be adopted as soon as possible. I for one would be happy to hear from my hon. and learned Friend tonight that the Government intend to go ahead with legislation to incorporate this innovation.
11.10 pm
Mr. Stephen RossI shall be brief, because the hon. Members for Ormskirk (Mr. Kilroy-Silk) and for Halifax (Dr. Summerskill) have already expressed my views adequately.
I bitterly oppose the renewal of this legislation. I opposed it when it was introduced. I always felt that section I was the only part that was necessary. Moreover, as someone who has three prisons in his constituency and who has good relations with the prison officers, I felt very strongly that the dispute should have gone to arbitration at the time and that this legislation was never necessary.
Those of us who know something about the prison service know that relations within it have improved remarkably during the past six to nine months. It is a great mistake on the part of the Government to renew the legislation at this time, because it will break the confidence that has been built up over the past few months, in which prison governors and others have played a leading role.
I have been in the House for nearly eight years, and I believe that I was the first hon. Member to have an Adjournment debate on the prison service—certainly the first for a long time. I warned then, as I have warned since, of the breakdown that would occur in prisons if the lot of prison officers was not improved and if we did not do something about the gross overcrowding. I had hoped—there was something in the press on the subject—that the Queen's Speech next week would contain a radical commitment and promise by the Government to introduce legislation on penal reform. Now I wonder whether our hopes will be dashed. I realise that one does not pre-empt what is in the Queen's Speech, but I sincerely hope that the Home Secretary will not back down from acting on the recommendations that have come from all quarters to deal with the gross overcrowding of our prisons. However, one has doubts when measures of this nature are introduced.
I am sorry that this legislation is to be renewed again. We are too much in the habit in the House of renewing temporary provisions legislation, and this Act is one that
830
could easily have been dispatched to the dustbin. If there is a recurrence of the sort of trouble that we had in our prisons a year or so ago, another emergency Bill could be brought in to deal with it immediately, as the hon. Member for Halifax rightly said. For goodness sake, let us have confidence in the prison officers. Let us show them that we mean to resolve the matter now, and that we do not need the sort of legislation that we are being asked to accept tonight.
11.14 pm
Mr. Andrew F. BennettThe Minister came to the House tonight with only one argument for renewing this measure. It was that the prison officers had only suspended their action rather than withdrawn it. If he had wanted to rest his case on that ground—possibly he could—he ought to have given a clear undertaking that as soon as the prison officers ended the action he would seek to repeal this legislation. If he had given such an undertaking clearly and emphatically, I would have been inclined not to vote against the order. I would have pressed him to be told how far the negotiations were proceeding and how soon they would be successful.
However, the Minister was not prepared to give such an undertaking. He seemed to suggest not only that he wanted to keep the measure for the original purpose but that he was envisaging its use for other purposes. That is completely unfair to the House. The Minister is denying the House the proper opportunities to scrutinise this type of legislation. For that reason, we ought to press him very hard to say that he will repeal this legislation as soon as the dispute is settled.
The Minister may say that within the order there is no opportunity to do that. It would be very simple to introduce a measure to repeal the legislation. It may have to be another Bill, but I could almost guarantee that the Minister would have no difficulty in getting it through Parliament, not in a matter of a day but within minutes.
Mr. Kilroy-SilkDoes my hon. Friend also agree with several hon. Members who have said that to renew this legislation now will inevitably be seen as a provocative measure on the part of the Government? The only justification that the Government gave on the last occasion was that a dispute was in progress. There is not now a dispute in progress. Therefore, it looks as though the Government are deliberately trying to intimidate the prison officers by renewing the measure.
Mr. BennettI take my hon. Friend's point. To renew the measure is not in the best interests of conducting negotiations. I press the Minister to give an undertaking that when there is a settlement he will seek powers to repeal the legislation straight away and that he will not, as he hinted, want to keep it for the rest of the 12 months just in case some other problem arises, which would be grossly unfair to the House.
If the Minister wants to activate the legislation, he ought to give an undertaking that he will not do so as a result of a one-and-a-half-hour debate. If the negotiations go wrong, the Minister has a duty to provide a full debate on why the negotiations have broken down and why it is necessary to bring the legislation back into force. A one-and-a-half-hour debate would be wholly unsatisfactory for that. It would need more like the amount of time that was necessary to pass the legislation originally.

831
The point that was made from the Opposition Front Bench was that if it was necessary to have this legislation in the future, we ought to have the process of proper debate and scrutiny in the House and not have such a measure rushed through as a result of a short debate late at night. It seems that it is only as a result of a serious crisis that the House has the right to debate matters and scrutinise legislation.
I come to how the House has been cheated of the opportunity to have a proper debate on all the issues concerned. If the Government had said "We want this legislation for two years, or possibly for longer", we would have gone through the full process of scrutiny, with the opportunity for those outside the House with strong points of view to make them known to Members. All hon. Members involved in this debate, and others, have pointed out that there is much merit in some of the procedures involved, and that if they are properly set up with safeguards, they might go a long way to reducing the prison population. However, as a result of the procedure that the Government have adopted, on every occasion, we have had little opportunity to debate the principles involved. Most of the time has been spent on debating the prison officers' dispute rather than the measures in the legislation.
The Government have a duty to ensure that in the next Session there is an opportunity to debate the possibilities for developing some of these measures, particularly early release and the extension of parole, so that we can have proper legislation on that and do something effective to reduce the prison population.
11.19 pm
Mr. John WheelerFor one straightforward reason, I find no difficulty in supporting my hon. and learned Friend the Minister in his proposal that the Act should continue. That reason is that the dispute within the prison service has not yet been resolved. That is the nub of the problem.
The Prison Officers' Association has yet to determine, with the prison department, decisions on the negotiations that have been going on for some time. Those of us who are familiar with the prison service know that prison officers, who are scattered among over 100 institutions, find difficulty in deciding exactly what they want. In the light of that, the Government have a clear duty to continue with this enactment, at least for the moment. There is a crisis in the prison service. Upwards of 44,000 prisoners are being held in the prisons of England and Wales. It is beyond dispute that any incident that involved the POA in several key prisons could prove extremely serious. In a matter of hours the Government might want to return to the House to activate parts of the Act.
Even if the House were to accept the order, the constituent parts could not be brought into effect without further debate. The safeguards that all hon. Members seek are amply met. I was glad to hear a fellow member of the all-party penal affairs group—the hon. Member for Ormskirk (Mr. Kilroy-Silk)—talk about the proposals that he and I, along with others, have debated concerning reform of the prison service, the courts and the criminal justice system. The proposal for a 21-day remand period is wholly sensible, provided that there are ample safeguards.
I understand that the special remand period that the enactment enabled the Government to operate recently
832
worked extremely well. I know of no complaints. I should be interested to learn from my hon. and learned Friend the Minister whether he has any evidence of complaints from the Home Office, lawyers, banisters or other interested parties. The procedure worked well. I see no reason why we should not continue to support the Government and, thereby, accept the order.
In the coming months, I hope that the House will have an opportunity to look at aspects of the criminal justice system to see what can be done to relieve overcrowding in our prisons and to resolve some of the problems that have existed for many years. The plain truth is that the Government inherited an abominable legacy in the prison system. Tonight we must recognise that legacy. I urge hon. Members to support the order.
11.23 pm
Mr. MayhewI should like to take up the point made by my hon. Friend the Member for Paddington (Mr. Wheeler). He was right to say that we took on an abominable inheritance. We took on a nil prison-building programme. Between 1918 and 1955 no new prison establishments were built in this country. The greater part of our prison estate was built in Victorian times—[Interruption]—when the political ideas espoused by the hon. Member for West Stirlingshire (Mr. Canavan) were in their finest flower. It is becoming impossible to use those prisons.
No Government, and certainly no Home Secretary, have done more in recent years to bring home to the public the need to reduce the prison population than the present Government and Home Secretary. Therefore, it is right to approach the difficult issues knowing that the Government took on an abominable inheritance in terms of the prison estate.
Dr. SummerskillThe Minister compares the last Labour Government's prison building plans with those of this Government. Has he opened a prison while in office? I did.
Mr. MayhewPerhaps the hon. Lady produced it out of a hat, because it takes between 10 and 12 years to bring a prison from start to completion. This Government are committed to a programme of two prison starts a year, beginning this year and stretching for several years ahead.
I am not surprised that the debate ranged wide. It covered the need to reduce the prison population. I make no complaint about that. It is common ground that, with a prison population so far in excess of certified normal accommodation, it is almost impossible for the prison service to do its full job. It is almost impossible for officers to pay attention to the rehabilitative part of their duties as they would like to do. The conditions for both inmates and those whose job it is to serve in the prisons are often abominable. That is part of the background to the issues that we have to decide tonight.
The hon. Member for Halifax (Dr. Summerskill) said that if the Act were used to reduce the prison population that might be some encouragement. This Government have drawn the attention of the House and the country to the need to reduce the prison population and, within the overriding need to protect the public, to see how prison sentences might be reduced.
The Prison Officers' Association dispute is not resolved. It was widely accepted in the House when the

833
Act was introduced that the consequences of the dispute necessitated the measures contained in it. The reason was that so great were the difficulties imposed on the criminal justice system by the action that the system was in danger of breaking down.
If that dispute had now been resolved and had been out of the way for some time, we should be in a different position. However, the action has been suspended. It was suspended when we last debated these matters. It had been suspended for about a fortnight when we debated them in February. The situation facing us today is, in essence, no different from the situation confronting us in February when the hon. Member for Halifax said that it was a matter of regret that it was necessary to renew the Act. She did not vote against the renewal of the Act. She said that she thought that it was necessary to renew it.
I say that in essence the situation is no different because the dispute was then suspended, and it remains today only suspended. My hon. and learned Friend the Member for South Fylde (Mr. Gardner), who has kindly explained to me that he cannot be here at the moment, and my hon. Friends the Members for Paddington and Grantham (Mr. Hogg) have all made that very point.
It would be irresponsible in the extreme were we in those circumstances to allow the Act that was so widely seen to be necessary to leave the statute book through automatic repeal. What the hon. Member for Halifax and other hon. Members on the Opposition Benches do not seem to have hoisted in is that, by preventing the repeal of the Act, we are not activating any of the powers contained in Part I. If my right hon. Friend the Home Secretary wished to use any of those powers he could not do so simply on his own initiative. He would have to tell the House the circumstances in which he wished the powers to be used. The House would be able to examine the circumstances and to see whether it was proper in those circumstances to give my right hon. Friend those powers, having regard to the history of the Act as a whole.
The hon. Member for Stockport, North (Mr. Bennett) has pressed me on this. He asked me for an undertaking that if the dispute were resolved I should immediately come to the House and seek the repeal of the Act. I will not give that undertaking because—and I see no justification for being other than entirely frank with the House—as many who have spoken in the debate have said, the prisons have been in a state of critical overcrowding this year. In July the prison population rose to 45,600, as the hon. Member for Ormskirk (Mr. Kilroy-Silk) said. That was an all-time record. The figure is a little lower at the moment.
Nobody yet knows what the prison population will be over the next few months. If we were confronted with an explosion to a higher figure than that which I have quoted, and if it became necessary urgently to relieve that pressure, this provision would be available. Whether it would be used, whether the House would consent to its use, is a quite different matter.
I thought that the hon. Member for Stockport, North had a fair point when he said that one and a half hours' debate in those circumstances would be insufficient. Therefore, I believe that it would be proper and highly desirable—of course, I do not control these matters—for a longer period of debate to be provided should the Government seek to implement those powers. The hon.
834
Lady said that the whole Act was passed in a day and asked why did not we come back with another emergency Bill. If a day's debate were to be granted on an order seeking to implement the powers the same effect would largely result.
Mr. Kilroy-SilkDoes the Minister realise that he has just made a very important confession? He said that the powers which were given in the Bill for a specific purpose concerning an industrial dispute may now potentially be used by the Government for a different reason, namely, to relieve the pressure of the prison population. That would be a misuse and an abuse of the powers given under the Act. Of course I want him to take measures to relieve the pressure of the prison population, but that should be done by permanent, considered, well-thought-out, coherent legislation, not by the activation of the powers contained in this Act.
Mr. MayhewI do not think that the hon. Gentleman listened with his usual care to what was said. I said that the Act would be available. It is a matter of the construction of the Act. Whether it would be used is one hypothetical question, Whether the House would agree to its being used is another. That is why I do not propose to say to the hon. Member for Stockport, North that it would be withdrawn if the prison dispute were settled straight away.
The key to this issue—
Mr. Andrew F. BennettWill the Minister give way?
Mr. MayhewNo. I have given way quite a lot. I am going to finish what I propose to say.
The key to this issue is whether it would be wise, at a time when the prison officers' dispute is not complete, to repeal the Act which provides for the implementation of powers that Parliament regards as being necessary. That would not be wise for the reasons so adequately and persuasively explained by my hon. Friends.
My hon. and learned Friend the Member for South Fylde asked about section 2.
Mr. Andrew F. Bennett rose—
Mr. MayhewI want to say.—[HON. MEMBERS: "Give way".]—My hon. Friend asked about the powers related to the remand of prisoners in section 2. I agree that to remove the right for a prisoner to come before a court without giving him the opportunity to say "I wish to come before the court" when a further remand is sought is unsatisfactory. That is conferred by this Act. The Home Office has exceptionally given guidelines to the courts on how this power should be implemented. No evidence has reached us that anyone's interests have been adversely affected. But earlier this year my right hon. Friend the Home Secretary, in answer to a question in the House, said that it was his intention to legislate, that in future the right to legal aid and to representation should exist and that no one should be deprived of the opportunity to come before a court every eight days on further remand unless he consented. In other words, he should be brought to court every eight days unless he consents to the contrary.
I think that meets the difficulties on this issue referred to by the hon. Member for Ormskirk.
Mr. Andrew F. BennettWill the Minister give way?
Mr. MayhewI have given way a great deal. I shall not give way any more.

835
It is essential to remember that if the order is approved—I believe the argument for it has been overwhelmingly made out?no powers in part I of the Act will be able to be implemented. The House will again have to determine whether that is right. In the circumstances, I believe that it is right that repeal of the Act should be postponed. I hope that the House will so decide.
Mr. Kilroy-Silk rose—
Mr. Deputy SpeakerOrder. The Minister has sat down. I am about to put the Question.
Mr. Kilroy-SilkOn a point of order, Mr. Deputy Speaker. I understood that the Minister had given way so that he could answer the questions that were put to him about the progress that has been made to establish a procedure agreement, as recommended by the May committee more than two years ago. Surely the Minister has the time, and wishes to take the opportunity, to answer that fundamental and important point.
Mr. Deputy SpeakerThe Minister kept saying that he was not giving way. I took it that he had finished his speech. Is that so?
Mr. MayhewYes, Mr. Deputy Speaker.
Question put:—
The House divided: Ayes 138, Noes 70.

Division No. 316]

[11.35 pm

AYES

Alexander, Richard

Garel-Jones, Tristan

Alison, Rt Hon Michael

Goodhew, Victor

Ancram, Michael

Goodlad, Alastair

Baker, Kenneth(St.M'bone)

Grant, Anthony (Harrow C)

Banks, Robert

Griffiths, Peter (Portsm'th N)

Beaumont-Dark, Anthony

Grist, Ian

Benyon, Thomas (A'don)

Grylls, Michael

Berry, Hon Anthony

Hannam, John

Bevan, David Gilroy

Hawkins, Paul

Biggs-Davison, Sir John

Hawksley, Warren

Blackburn, John

Heddle, John

Bonsor, Sir Nicholas

Hogg, Hon Douglas (Gr'th'm)

Braine, Sir Bernard

Hooson, Tom

Brinton, Tim

Hunt, David (Wirral)

Brotherton, Michael

Hunt, John (Ravensbourne)

Brown, Michael(Brigg & Sc'n)

Jenkin, Rt Hon Patrick

Bruce-Gardyne, John

Johnson Smith, Geoffrey

Bryan, Sir Paul

Jopling, Rt Hon Michael

Buck, Antony

Lang, Ian

Budgen, Nick

Lawrence, Ivan

Butcher, John

Lloyd, Ian (Havant & W'loo)

Cadbury, Jocelyn

Lloyd, Peter (Fareham)

Carlisle, Kenneth (Lincoln)

Loveridge, John

Channon, Rt. Hon. Paul

LyelI, Nicholas

Churchill, W. S.

Macfarlane, Neil

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

MacGregor, John

Clarke, Kenneth (Rushcliffe)

Macmillan, Rt Hon M.

Colvin, Michael

McNair-Wilson, M. (N'bury)

Cope, John

McQuarrie, Albert

Cranborne, Viscount

Major, John

Crouch, David

Marlow, Antony

Dorrell, Stephen

Marshall, Michael (Arundel)

Douglas-Hamilton, Lord J.

Marten, Rt Hon Neil

Dunn, Robert (Dartford)

Mather, Carol

Durant, Tony

Maxwell-Hyslop, Robin

Elliott, Sir William

Mayhew, Patrick

Eyre, Reginald

Mellor, David

Faith, Mrs Sheila

Meyer, Sir Anthony

Fenner, Mrs Peggy

Mills, lain (Meriden)

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

Moate, Roger

Fletcher-Cooke, Sir Charles

Monro, Sir Hector

NOES

Alton, David

Kilroy-Silk, Robert

Atkinson, N.(H'gey,)

Lamond, James

Beith, A. J.

Litherland, Robert

Bennett, Andrew(St'kp't N)

Lyons, Edward (Bradf'd W)

Booth, Rt Hon Albert

McCartney, Hugh

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

McGuire, Michael (Ince)

Campbell-Savours, Dale

McKelvey, William

Canavan, Dennis

McWilliam, John

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

Magee, Bryan

Cook, Robin F.

Marshall, Jim (Leicester S)

Cryer, Bob

Maynard, Miss Joan

Cunliffe, Lawrence

Owen, Rt Hon Dr David

Cunningham, G. (Islington S)

Parry, Robert

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

Penhaligon, David

Dalyell, Tam

Powell, Raymond (Ogmore)

Davidson, Arthur

Prescott, John

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

Price, C. (Lewisham W)

Dean, Joseph (Leeds West)

Ross, Ernest (Dundee West)

Dewar, Donald

Ross, Stephen (Isle of Wight)

Dixon, Donald

Sanclelson, Neville

Dobson, Frank

Skinner, Dennis

Dormand, Jack

Soley, Clive

Dubs, Alfred

Steel, Rt Hon David

Duffy, A. E. P.

Stott, Roger

Eastham, Ken

Strang, Gavin

Evans, John (Newton)

Summerskill, Hon Dr Shirley

Ewing, Harry

Tilley, John

Foster, Derek

Walker, Rt Hon H.(D'caster)

Garrett, W. E. (Wallsend)

Welsh, Michael

Harrison, Rt Hon Walter

White, Frank R.

Hattersley, Rt Hon Roy

Whitehead, Phillip

Haynes, Frank

Winnick, David

Holland, S. (L'b'th, Vauxh'11)

Woolmer, Kenneth

Home Robertson, John

Homewood, William

Tellers for the Noes:

Hoyle, DouglasMr. George Morton and

Hughes, Robert (Aberdeen N) Mr. Allen McKay.

Morgan, Geraint

Squire, Robin

Murphy, Christopher

Stainton, Keith

Neale, Gerrard

Stanbrook, Ivor

Needham, Richard

Stevens, Martin

Nelson, Anthony

Stewart, Ian (Hitchin)

Neubert, Michael

Stokes, John

Newton, Tony

Taylor, Teddy (S'end E)

Page, Richard (SW Herts)

Teblolt, Rt Hon Norman

Parkinson, Rt Hon Cecil

Thomas, Rt Hon Peter

Parris, Matthew

Thompson, Donald

Pattie, Geoffrey

Thornton, Malcolm

Percival, Sir Ian

Townend, John (Bridlington)

Proctor, K. Harvey

Townsend, Cyril D, (B'heath)

Renton, Tim

Trippier, David

Rhodes James, Robert

van Straubenzee, Sir W.

Rhys Williams, Sir Brandon

Wadclington, David

Roberts, M. (Cardiff NW)

Waldegrave, Hon William

Rossi, Hugh

Warren, Kenneth

Royle, Sir Anthony

Watson, John

Sainsbury, Hon Timothy

Wells, John (Maidstone)

Shaw, Giles (Pudsey)

Wheeler, John

Shaw, Michael (Scarborough) Whitelaw, Rt Hon William

Silvester, Fred

Whitney, Raymond

Sims, Roger

Williams, D.(Montgomery)

Skeet, T. H. H.

Wolfson, Mark

Speed, Keith

Young, Sir George (Acton) Speller, Tony

Spicer, Jim (West Dorset)

Tellers for the Ayes:

Spicer, Michael (S Worcs)

Mr. Robert Boscawen and

Sproat, lain

Mr. Selwyn Gummer.

Question accordingly agreed to.
Resolved,
That the Imprisonment (Temporary Provisions) Act 1980 (Postponement of Repeal) Order 1981 (S.I., 1981, No. 1358), a copy of which was laid before this House on 28th September, be approved.

National Dock Labour Board
11.50 pm
(Mr. David Waddington)I beg to move,
That the draft National Dock Labour Board (Increase of Loans Limit) Order 1981, which was laid before this House on 19th October, be approved.
As hon. Members will be aware, severance of registered dock workers takes place normally under the industry's national voluntary severance scheme, which is financed by a payroll levy on employers. Like their predecessors, however, the Government have made loans to the National Dock Labour Board, which administers the industry's severance arrangements, to enable the cost to be spread over a reasonable period.
Changes in cargo handling methods and in the pattern of port traffic in the last decade have contributed to a massive adjustment in the operations of our major ports and their manpower needs. The number of registered dock workers has fallen from 54,000 in 1965 to below 20,000 today, and this reduction has taken place without serious industrial trouble. I doubt whether this could have happened without the national voluntary severance scheme.
In spite of the scheme, however, surplus manpower, both registered and non-registered, has remained a recurrent problem. Changes in methods of cargo handling—in particular, containerisation—have reduced drastically manpower requirements. The year 1981 has proved to be particularly difficult for most United Kingdom ports and the NDLB has therefore had to revise its earlier estimates of the number of severances likely to be needed in the current financial year to some 4,750—an increase of 1,500 on the central estimate that it made in January. The outlook for next year and beyond remains uncertain, but it is reasonable to expect that there will be a need to make further reductions in the labour force.
The Ports (Financial Assistance) Act 1981 fixed the amount which the NDLB is permitted to borrow at £50 million, but provided for that amount to be increased by order to —90 million. An increase to £90 million is what is sought in the draft order now before the House. Its sole purpose is to enable the Government to help the industry, through the NDLB, to continue to finance the severances needed to bring its labour force more closely into line with its needs.
Hon. Members will want to know why it has proved necessary to come to the House and ask for an increase in the ceiling on borrowing so soon, and perhaps why the 1981 Act did not provide for a larger sum to be borrowed without the need for an order.
Part of the answer lies in the very success of the special scheme to help the ports of London and Liverpool. Government moneys were made available to allow larger severance payments to be made to dockers in London and Liverpool who accepted severance between 1 March and 30 April 1981. Although extra payments of up to £5,500 were funded by grant, however, the basic severance scales of up to ?10,500 were funded through the national voluntary severance scheme in the normal way. The special scheme for London and Liverpool achieved its targets and some 1,900 registered dock workers left the two ports under its terms. Obviously, however, this also meant a very large increase in the number of basic
838
severance payments under the voluntary scheme, increasing the deficit on the scheme by some £18 million to £30 million.
In addition, at the time of the passage of the Act it was not clear that an increase in the scales throughout the country would soon be thought necessary, but hon. Members will know that the National Association of Port Employers has now introduced a special scheme which offers on a national basis payments up to maximum of £16,000 under the NVSS to dock workers applying for severance between 1 September and 31 October.
The employers have estimated that they need if possible to achieve 2,750 severances under the special scheme, mainly in ports other than London and Liverpool. Meeting the cost of severances of this order is likely to push up the NVSS deficit by a further £35 million to £65 million. A third of this extra £35 million will be the result of the increase in the scales. The other two-thirds would have occurred if there had been an increase in the number of severances to the figures thought desirable under the old scales.
Clearly, loans of this size cannot be made without a substantial burden being placed on the industry. Interest has to be paid and arrangements have to be made for repayment. This inevitably means an increase in levies, and the employers have agreed to increase the national levy on 1 January next year by 2 per cent. , bringing it to 7½ per cent. of payroll. This is in addition to local severance levies which currently range from 0.5 per cent. to 4 per cent. Unwelcome as this must be to port employers, one must remember that in 1965 they made the decision to stay out of the statutory redundancy payments scheme and make their own arrangements, and this is a consequence of those arrangements. But the Government will continue to do what they can to help and to this end have agreed to extend the repayment period for current loans from five to 10 years.
The whole purpose of the current severance programme in the industry is to achieve a more efficient ports industry. There is no doubt that to achieve that greater efficiency changes in working practices are needed. Indeed, if the Government are expected to provide financial help, they are entitled to expect such changes in return. I was therefore pleased to learn some weeks ago that substantial changes in manning and other practices had been agreed between the management of the Mersey Docks and Harbour Company and the trade unions. Only through agreements of this kind can we hope to maintain a viable ports industry.
I ask the House to approve the draft order.
11.58 pm
Mr. Harold WalkerI shall try to earn the gratitude and appreciation of the House by not detaining hon. Members for too long. However, it is less than a year ago—3 November 1980—that we discussed a similar order to raise the borrowing powers of the National Dock Labour Board from £10 million to the then maximum permitted figure under the 1976 Act of £30 million. Within months, that £30 million which the then Minister described as a "prudent figure", was raised on a side-wind through the provisions of the Ports (Financial Assistance) Act to £50 million.
Tonight, just a few months on, we are asked to approve the rather impressive sum of £90 million. We have no intention of challenging the order. We entirely understand

839
and accept the reasons that make it necessary. However, the order illustrates the Government's lack of judgment and foresight. It shows their sheer inability to get even the shortest of short-term forecasts anywhere near a target, even for situations as predictable as this.
As recently as March£my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) will remember it well, as he was very much involved£in introducing the enabling legislation the Secretary of State for Transport said that the Secretary of State for Employment
does not envisage that the higher figure will be needed in the foreseeable future,"—?[Official Report, 25 March 1981; Vol. 1, c. 994.]

However, today, only a few months later, the threefold increase in the sum described as "prudent" only a year ago is upon us. It has risen from ?10 million to £90 million in less than 12 months. Apparently, the foreseeable future for the Government does not go much beyond six months.
I cannot help recalling that even the modest sum—as it seems now—of £10 million provided in the 1976 Act was furiously attacked and denounced by Conservative Members. What they said then is well illustrated by quoting the hon. Member for Cirencester and Tewkesbury, (Mr. Ridley), who is now a Minister. I was a Minister at the time and was present when he stated:
I ask the Government to justify the £10 million, let alone the £30 million … I propose that the power to go to £30 million be deleted from the Bill, because I cannot conceive of circumstances in which £30 million would be needed, or would be right or proper.—[Official Report, Standing Committee G,9 March 1976; c. 307.]
He went on to propose that the sum be reduced to ?2 million.
Mr. Anthony Beaumont-DarkHear, hear.
Mr. WalkerI hear hon. Members on the Tory Benches below the Gangway saying "Hear, hear". It appears that they share that outdated view, so they still misunderstand the situation facing dock workers.
The hon. Friends of the hon. Member for Cirencester and Tewkesbury went into the Lobby in support of his proposition. The Tory Party, whether in office or opposition, gets its sums wrong again and again. Can the Minister assure us that the Government have it right this time?
As I said, I do not wish to detain the House and nor do I wish to incite opposition to the order. However, can the Minister say a little more about present manpower levels compared with recent levels? Can he give a forecast of future employment in the ports industry? I understand that the present register for scheme ports stands at about 20,000, which appears to be about 3,500 or 4,000 down on about a year ago. At what number does the Minister expect the level to bottom out?
840
I do not ask for precise figures, as they may not be obtainable, but to what extent is the decline in the labour force in scheme ports due to a fall off in dock work generally and to what extent to work going from scheme ports to non-scheme ports or inland groupage depots and so on? Considering our experience since 1976—indeed, since 1969—it is important to assess the problems that the Government will face in demands for financial support, particularly for the unfortunate men who are to lose their employment.
I assume that the financial requirement is based on an arithmetical assessment. We hope that the decline in manpower will reach a plateau. How long will it be before the plateau is reached? What rate of take-up of severance is expected? Does the Minister expect the entire borrowing ceiling proposed in the order to be taken up?
Will the Minister also say something about the long- overdue implementation of the Dock Work Regulation Act 1976, which requires the Secretary of State to introduce a new dock work scheme? A mandatory obligation is placed on the Secretary of State, though it is qualified by words such as "as soon as may be". However, from 1976 to 1981 is stretching what was meant by those words more than a little.
May I finally echo some remarks that I made on a similar order last year? The House and people outside should be aware of some facts when Parliament is asked to vote large sums to the ports industry. I was glad that the Minister reminded us that dock workers are excluded from the statutory redundancy payments scheme. They will not get the amounts provided by the voluntary severance scheme in addition, or as an alternative, to the sums that might have been provided by the statutory scheme. They are not entitled to those sums. It would be inappropriate for me to go into the reasons for that, but it is a factor that we need to bear in mind.
For most, not all, dock workers, severance from dock work means severance from employment permanently. It is inevitable that men who are contemplating the prospect of joining the 3 million on the dole queue should put a high price on their jobs.
It would be helpful if the Minister had said something about the employment prospects of redundant dock workers and what steps the Government are taking to help them with retraining for other employment. But perhaps the Secretary of State wants them to join his cycling club.
I hope that the Minister will consider the questions that I have put and will respond positively. We support the order and we will not divide the House against it.
Question put and agreed to.
Resolved,
That the draft National Dock Labour Board (Increase of Loans Limit) Order 1981, which was laid before this House on 19 October, be approved.

Unemployment (Kilmarnock)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Budgen.]
12.8 am
Mr. William McKelveyI welcome the opportunity to draw attention to the growing unemployment problem in Kilmarnock. Just over a decade ago, Kilmarnock was considered a boom town and industry was diverse. We had heavy and light engineering, carpet weaving, lace making, spinning, knitwear production, pottery and whisky blending; and the shoe trade was prosperous.

Those industries carried names that were known the world over—Saxone, Glenfield and Kennedy, Massey Ferguson, Armitage Shanks and, of course, John Walker, the whisky company. Jobs were plentiful and a loss of production in one or two industries was usually more than compensated for by increases in others. Individuals who found themselves temporarily out of work were able simply to cross the road and to seek work in another industry.
However, in the past few years those giants of Scottish industry have been struggling against the effects of a Western economic slump which has been aided, abetted and accelerated by the Government's slavish addiction to monetarism. Since the Government came to office I have witnessed the loss of more than 4,000 jobs in my constituency and the disappearance of a whole industrial base.
Let me give an account of the decline so that hon. Members may be aware of it. Massey Ferguson, for instance, was perhaps the beginning of the big slide. This was a multinational company that produced combine harvesters—the only company in the United Kingdom that produced them in any quantity. The Government stood by and allowed that company to be uprooted, and the production line was transported to Marquette in France. The matter was raised in the House by my predecessor, and I also raised it, with the support of my hon. Friends the Members for Central Ayrshire (Mr. Lambie) and Dundee, West (Mr. Ross). In Kilmarnock 1,800 jobs were lost and the cost in misery and humiliation is incalculable. At Saxone, the shoe manufacturer, another famous name ruined by years of Italian imports, the cost in jobs to date is about 600 and the cost in terms of human misery again cannot be calculated.
The catalogue goes on. At Armitage Shanks, 100 years of pottery making in Kilmarnock was virtually wiped out when Blue Circle Cement took over the company. The bid was the subject of a Monopolies Commission inquiry, which concluded that it was in the public interest for Blue Circle to take over Armitage Shanks. The management told the workers that they should seize the opportunity because production would continue for some time and their jobs would be secure for years to come. Within six months of Blue Circle taking it over the firm closed and put on to the dole queue 600 men and women, some with 45 year's service, who had spent their working lives in the pottery industry. They were cast on to the dole queue by Blue Circle Cement, and now, as there is no chance of a pottery starting in Kilmarnock in the near future and as that is the only trade these people, most of whom are over 45
842
years of age, know, they will probably never work again. If one asks them about the ugly face of capitalism, they will be able to say how it has affected them directly.
Spinning and knitwear industries have been virtually forced out of existence by the never-ending flow of cheap imports. The Government are aware of the position, they have been told many times, but we still get the standard stock reply from the Minister that it is being noted and monitored. In the town of Stewarton there were once 40 small knitwear factories, but now there are fewer than 12. Hundreds of jobs have disappeared in the last two years, never to be replaced.
Now we have to add another name to this catalogue of disasters—the famous name of BMK. Two weeks ago it was taken over by the receiver because it was incurring large losses. That firm started in Kilmarnock. It was called Blackwood and Morton of Kilmarnock and became known as BMK—a name synonymous with high quality carpets the world over. It started in 1908 and prospered and grew to be worth millions of pounds in 1974. At that time it employed a maximum of 3,500 people.
In recent years the carpet industry has been in decline, mainly because of the massive influx of imports from North America and from the Continent. The North American carpets are most certainly subsidised and are being brought into this country and sold at a rate cheaper than that at which carpets can be manufactured here. They are being sold to the detriment of our carpet industry. Thousands of jobs have been lost.
I have written to the Minister on several occasions pointing out the difficulties of the carpet industry because of the influx of imports, but I have always had the same standard, stock reply: "We are aware of the points you make. The British Carpet Manufacturers Association has made these points on many occasions, and we are monitoring the situation".
In January and February this year, the figures showed an increase in imports of American carpets of 40 per cent. and an incredible jump in Belgian imports of 96 per cent. The cost, of course, has been borne by our industries here, and in particular BMK in Kilmarnock, which is now in the hands of the receiver, who is desperately trying to find a buyer for a firm which had shown a loss in the previous six months of over£1.3 million.
I have already been to the Minister and to the Secretary of State for Scotland to plead the case for BMK. I have to register some disappointment with the replies, because the industry needs help now and simply cannot wait. If we wait and yet another famous name, BMK, disappears from Kilmarnock and the Ayrshire scene, we shall have a leap in unemployment from the present wholly unacceptable figure of 18 per cent. to about 22 per cent. That will mean about 28 per cent. in male unemployment.
We are inclined to bandy unemployment figures about the House without ever really considering what they mean in terms of human misery and degradation. We have to consider what would happen to a family unit employed in BMK—perhaps the husband and the wife and in some cases also a son or a daughter. There is a possibility of their being thrown on to the dole queue, because 147 people were paid off last week. The receiver has intimated to the work force that the position will be monitored on a week-by-week basis in order to trim the work force. The 147 have been added to the growing dole queues in Kilmarnock, and among them there are family units. One

843
can imagine the domestic pressures, with the awful feeling that the breadwinner may be facing a life on the dole for many years to come.
If there is any upturn in the economy, it is certainly not happening in Scotland, and it is most certainly not happening in Kilmarnock and in Ayrshire. It is right, therefore, that the Minister should be questioned publicly and given the opportunity publicly to reply to some of the questions that I want to ask him.
The receiver would welcome and could certainly use £1 million of cash, to be injected into BMK right now. If he had that £1 million underpinning the present losses, he would have the confidence to go forward and to look for new orders. He was prepared only last week to accept two new orders, although he confessed to me that in the future he might not have that confidence. If he does not find a buyer by the middle of November, he fears that the operation of the factory as a viable unit might end some time in March. He would not then be in a position to offer potential buyers the goodwill that BMK has enjoyed for the last 70 years. But if the receiver had that £1 million he would be able to underpin the loss and have the confidence to go for orders and could keep BMK as a viable unit, with the chance of attracting a buyer from somewhere in the world.
Secondly, a task force needs to be installed now in BMK, through an office in Kilmarnock, to look after the interests of BMK and to try to assist the receiver to make the firm viable and thus attract a new buyer. That agency should be manned by the Scottish economic planning department or by the Scottish Development Agency and be on site to deal not only with the problems of BMK but to set the ground rules for bringing in a brand new industry. That is what Kilmarnock needs, because all the traditional industries are dying. The Government could invest money in a brand new expanding industry and direct a new employer into the area to provide thousands of new jobs quickly.
However, there was a ray of sunshine in this sad tale. It was contained in the Kilmarnock Standard and it relates to the Minister's visit last week to the Kilmarnock area to open an extension of Smith Brothers (Kilmarnock) Ltd., which is a printing firm. We welcomed the Minister's presence in Kilmarnock to open a factory. Indeed, the Minister would be welcome every week if he could produce an extension of any factory or enterprise, irrespective of the size. I shall quote the Minister's words, as reported by the Kilmarnock Standard:
We're all terribly concerned with unemployment, but there is no good 'greetin' about it; we've got to do something about it.
I am giving the Minister the opportunity to do something positive and say, "We are ready. If BMK comes up with a viability proposal, the coffers of the Treasury will be opened and there is an unlimited supply of cash to assist the new buyer in making a viable industry even more viable."
The awful truth is that Kilmarnock has 18 per cent. unemployment now, without taking BMK into account. What does that mean in human terms? It means 4,600 men, 1,763 women and?perhaps the saddest and most tragic of all—1,400 youngsters between the ages of 16 and 19, with little or no hope for the future. The people of Kilmarnock, who are a hard-working and thriving industrial community, are not prepared to stand by and be reduced to some kind of depressed, broken and
844
undignified flotsam on the industrial scene. They deserve a brighter future for themselves and for the future generations, their children and their grandchildren.
I have pledged to fight for their rights, and I shall continue to do so in any fashion and down any avenue that I think will assist them in their struggle to achieve a just solution for Kilmarnock and for the whole of Scotland, and in particular Ayrshire. I hope that the Minister has taken some cognisance of what I have said. He knows my opinion, because we have gone over the ground, particularly at our last few meetings, at some length.
If what I have said tonight falls upon deaf ears, I intend to go further. I have written to the Prime Minister, and she has agreed to meet me on Wednesday. I shall press her for the kind of changes that I hope that the Minister will agree to tonight.
12.24 am
(Mr. Alexander Fletcher):I am sure that all who hear the hon. Member for Kilmarnock (Mr. McKelvey) on this subject—I realise that not many hon. Members are present?agree that he has a deep concern for the problems of his constituency. I accept entirely his determination to fight for Kilmarnock and employment there. Although at times he may find this difficult to believe, I can assure him that my right hon. Friend and I are equally determined to fight to improve employment prospects in Kilmarnock and elsewhere in Scotland. Therefore, we welcome the opportunity that the hon. Gentleman has given the House tonight to consider employment in the Kilmarnock area. The area has had more than its share of closures and redundancies in recent years. Some were listed by the hon. Gentleman—Glenfield and Kennedy, Massey Ferguson and Monsanto. As he said, unemployment is currently running at just under 18 per cent. Understandably, therefore, there is grave apprehension about the future.
The hon. Gentleman referred in particular to BMK, which is now in receivership. Only this morning I met the hon. Gentleman and shop stewards from the company, and the provost and chief executive from the district, to discuss the problem. We had quite a helpful discussion.
The hon. Gentleman mentioned the Massey Ferguson company. He said that the Government had stood back and done nothing to try to help. He would want to be reminded that far from that being so, I went to Toronto to see the president of the company because we were dissatisfied with some of the explanations that were coming forward regarding the Kilmarnock closure. We had many meetings with the company in Scotland and in London. The hard truth of the matter as far as Massey Ferguson is concerned is simply that no amount of Government assistance would have persuaded the company to stay in Kilmarnock, for the very simple reason that it was closing factories all over the world, in North America and South America and in Canada, the headquarters.
Mr. David LambieAnd opening one in France.
Mr. FletcherIt did not open a factory in France. It transferred some production to that factory from Kilmarnock. It was doing the same in North and South America. It was closing factories there as well.
The particular matter of concern tonight is the carpet industry. In Scotland and elsewhere in the United

845

Kingdom it has suffered severely from the effects of the recession. Companies have undertaken substantial rationalisation in order to remain competitive in a very challenging market. We have seen a particular threat from cheap imports from the United States, but the recent movement in sterling in relation to the dollar, bringing the pound to what we consider is a more realistic level, has helped to remove at least part of that threat. But the industry is still experiencing very difficult conditions, and BMK in Kilmarnock is no exception.
On the question of imports, however, the figures that I have reveal that in 1980 22 per cent. of United Kingdom consumption was imported and of that figure just over 5½ per cent. was imported from Belgium. These are significant figures but, nevertheless, they must be seen in perspective with the total United Kingdom market and the amount that was imported as distinct from the amount that was supplied from British manufacturers.
Mr. McKelveyIt is a shrinking market.
Mr. FletcherI take that point.
I want to deal in particular with BMK and with the charge which the hon. Gentleman repeated tonight?that the Government are standing back and have taken no action nor got themselves involved in trying to help the company to try to resolve the threat of closure which hangs over the company and the thousand or so jobs in Kilmarnock alone.
That is not the case, as I shall illustrate. In June 1981 the company discussed its trading position with the Scottish Development Agency. As a consequence, BMK asked the agency to engage in a study. It employed the agency in a consultative capacity to look at its trading problems and to see what steps might be taken to get the company out of its difficulties. My officials in the Scottish economic planning department became involved with the company last month when the SDA reported the extent of the expected losses and recommended the closure of less profitable areas of the company's activities. This action?which was recommended by the SDA—coupled with other economies, including, I am afraid, a substantial number of redundancies, could conceivably have improved the position, but it depended on the company obtaining new borrowing facilities at a time when it was already heavily in debt to the bank. The company's bankers were not satisfied that the proposals made by the company would succeed. Therefore, the management tried to find alternative sources of funding to restructure the company and to resolve the problem. However, they were not forthcoming and, as a result—as the hon. Gentleman knows?BMK asked the bank to appoint a receiver.
The hon. Gentleman expressed a wish that the company had had £1 million. I do not doubt his sincerity. However, in recent years BMK has received a substantial amount of financial support from Government funds both to facilitate investment and to avert redundancies. As it happens, the most significant amount was made available to the company during the two years ending July 1981. The Government made a sum in excess of £1 million available to the company. It was not a loan but a grant to help to avert redundancies at Kilmarnock and at the Hillington factory. As the hon. Gentleman will know, that involved short-time working compensation.
846
That underlines the fact that the Government have made substantial amounts of taxpayers' money available to the company, but that has not helped. In the year to 30 June 1980, the company incurred a loss of £479,000. In the six months to 31 December 1980 the company made a further loss of £1.3 million. Therefore, the loss for the full year to June 1981 will obviously be substantial, given the £1.3 million loss in six months and the company's inability to find fresh funding to enable it to restructure and to find a new line of attack on its problems.
The current position is that on 15 October Deloitte, Haskin and Sells, chartered accountants, were appointed receivers to the company. They decided to continue trading while negotiations took place with potential buyers for all or part of the company's operations. No deadline has been set and no decisions have been taken on closure. These matters remain open while?as I have often told the hon. Gentleman?the receivers carry out their task not only of managing the company in the interim period, but of endeavouring to find a buyer for all or part of the business.
The Scottish economic planning department is in close touch with the receivers and stands ready to consider urgently the availability of selective financial assistance under the Industry Act 1972 for any viable investment proposal that may arise to safeguard employment in the company, particularly in Kilmarnock.
That is the extent of the assistance that has been made available to the company. I hope that the hon. Gentleman will agree that it is substantial. That is the action that has been taken since the company?during the summer?asked the Government and the Government's agency, the SDA, to assist in trying to find a plan to get it out of its difficulties. The receiver is busily trying to see what can be done to save the business, or part of it.
This morning the hon. Member for Kilmarnock asked me to arrange a meeting with the receiver because he thought there might be a misunderstanding in the meetings taking place between him and the receiver and between my officials and the receiver. I undertook to see the receiver as soon as possible. I have made an appointment to see him on Friday morning. I shall take the opportunity next week to bring the hon. Gentleman up to date with that meeting and whatever arises from it. He will then be in full possession of the facts.
There is no doubt that the hon. Gentleman is deeply concerned about BMK and unemployment in Kilmarnock. I say without hesitation that the Government are equally concerned.
Mr. LambieWhat are they doing about it?
Mr. FletcherPerhaps the hon. Gentleman did not listen to what I said. An appeal has been made to give the company £1 million. I have said that in the period ending July this year the Government made taxpayers' money in excess of £1 million available to the company. After that money ran out the company found that its trading position had worsened. Whether the money is found for short-time working compensation or anything else, it is still cash that assists the company's liquidity. The company also received a number of offers from the Scottish Office of funds to facilitate investment. It took up some of them in the last few years. It is for the company to decide whether to take up offers of selective financial assistance for investment.

847
When all these matters are taken into account we can say that we are not making polite noises about the Government's action and concern. We are deeply involved and committed. We shall continue to do everything that we can to help any viable proposition from the company and to assist the area to find new jobs and new industries,
848
so that, when the upturn in the economy comes to Scotland, the area will be as ready as possible to take advantage of it.

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at twenty-three minutes to One o'clock.

ENERGY

  Continental Shelf Gas Prices
  Mr. Skeet
  asked the Secretary of State for Energy whether he proposes to amend or repeal section 8 (3) of the Energy Act 1976 to allow the price of gas from the continental shelf to be determined by the market and not by the reasonable price formula as set out in the section.

  Mr. John Moore:
  Yes.

  Field

  Block

  Licence No

  BGC % Interest

  Status

  Beryl A

  9/13a

  P. 139

  10

  In production

  Beryl B

  9/13b

  P. 139

  10

  Under development

  Fulmar (extension)

  30/11b

  P. 185

  25.77

  Under development

  N. W. Hutton

  211/27

  p. 184

  25.77

  Under development

  Montrose

  22/17a

  P. 019

  30.77

  In production

  Montrose (extension)

  22/18a

  P. 020

  30.77

  In production

  Hutton

  211/27

  P. 184

  25.8

  Under development

  It also has interests in the following additional UKCS petroleum production licences—P. 016, P. 030, P. 064, P. 065, P. 066, P. 101, P. 105, P. 133, P. 143, P. 170, P. 184, P. 185, P. 235, P. 260, P. 281, P. 291, P. 292, P. 302, P. 303, P. 304, P. 318, P. 320, P. 323, P. 337, P. 360, P. 381, P. 395, P. 406.

  Natural Gas (Marketing)

  Mr. Skeet
  asked the Secretary of State for Energy whether it will be open to the producers of natural gas under his proposals to market their product in the United Kingdom and elsewhere in the European Community.

  Mr. Gray:
  My proposals are aimed at removing special privileges enjoyed by British Gas, so that it will be open to the producers themselves to supply their gas direct to the market. The proposals do not affect the requirement in production licences for the United Kingdom continental shelf that all petroleum won and saved must be delivered onshore in the United Kingdom unless I consent to delivery elsewhere.

  Gas Prices (Calculations)
  Mr. Skeet
  asked the Secretary of State for Energy what formula he proposes for the calculation of price payable by the corporation to producers for sale of natural gas to the domestic consumers who remain within the monopoly of the British Gas Corporation.

  Mr. John Moore:
  Prices payable by the British Gas Corporation for new supplies of gas will be a matter for commercial negotiation.
  300
  Mr. John Moore:
  Yes.

  British Gas Corporation (Assets)
  Mr. Skeet
  asked the Secretary of State for Energy what he assesses to be the total value of the assets of the British Gas Corporation scheduled for sale; what is the oil interest in the North Sea and of the British National Oil Corporation in its upstream business operations; and what is the expected contribution to the public sector borrowing requirement.

  Mr. Gray:
  I cannot comment on the value of BGC'S or BNOC's offshore oil operations, nor on the expected contribution to the public sector borrowing requirement. British Gas has the following interests in offshore oilfields.

  Natural Gas (Transportation)

  Mr. Skeet
  asked the Secretary of State for Energy if he will give the gas grid common carrier status for the purpose of transportation of natural gas from producers on the continental shelf to industrial consumers.

  Mr. John Moore:
  I intend to introduce measures to ensure that private suppliers of gas have effective access to British Gas pipelines.

SCOTLAND

  Farmland (Sale and Lease-back)
  Mr. Myles
  asked the Secretary of State for Scotland to what extent farmland in Scotland has changed hands on sale and lease-back agreements during the most recent 12-month period for which there are details.

  Mr. Younger:
  Detailed records of transactions involving farm land in Scotland are maintained only in respect of purchases by financial institutions. Of such purchases already recorded for 1980, 42 per cent.—covering approximately 3,000 hectares—were subject to sale and lease-back arrangements.

  Carpet Industry
  Mr. Bulmer
  asked the Secretary of State for Scotland how much money has been given in financial support to the carpet industry since 1 January 1975 by his Department; what form this assistance has taken; and under which schemes, including the various schemes to promote employment.

  Mr. Alexander Fletcher:
  Since 1 January 1975, 10 offers of selective financial assistance under section 7 of the 1972 Industry Act have been made to companies in the

  301
  carpet industry in Scotland by my Department. The total value of the assistance offered was £1.83 million, of which 93 per cent. was by grant and the rest by loan.

  I regret that information on assistance to the carpet industry under the special employment measures is not available.

  Council House Sales
  Mr. Home Robertson
  asked the Secretary of State for Scotland if he will provide the information on the number of public sector house sales, broken down by district, for the second quarter of 1981, in the same format as the first column of the table on page 22 of Scottish Housing statistics number 13.

  Mr. Rifkind:
  The information requested is as follows:

  Agency

  Total Number of Sales

  SCOTLAND

  *2386

  Local Authorities

  *1499

  BORDERS

  37

  Berwickshire

  9

  Ettrick and Lauderdale

  19

  Roxburgh

  —

  Tweeddale

  9

  CENTRAL

  Clackmannan

  23

  Falkirk

  —

  Stirling

  10

  DUMFRIES AND GALLOWAY

  Annandale and Eskdale

  Nithsdale

  70

  Stewartry

  16

  Wigtown

  51

  FIFE

  84

  Dunfermline

  42

  Kirkcaldy

  8

  North East Fife

  34

  GRAMPIAN

  Aberdeen City

  —

  Banff and Buchan

  —

  Gordon

  —

  Kincardine and Deeside

  29

  Moray

  77

  HIGHLAND

  Banenoch and Strathspey

  —

  Caithness

  37

  Inverness

  —

  Lochaber

  5

  Nairn

  33

  Ross and Cromarty

  62

  Skye and Lochalsh

  9

  Sutherland

  16

  LOTHIAN

  East Lothian

  —

  Edinburgh City

  214

  Midlothian

  1

  West Lothian

  40

  STRATHCLYDE

  Argyll and Bute

  —

  Bearsden and Milngavie

  18

  Clydebank

  —

  Clydesdale

  2

  Cumbemauld and Kilsyth

  1

  302

  Cumnock and Doon Valley

  67

  Cunninghame

  92

  Dumbarton

  —

  East Kilbride

  11

  Eastwood

  18

  Glasgow City

  178

  Hamilton

  14

  Inverclyde

  40

  Kilnarnock and Loudoun

  —

  Kyle and Carrick

  21

  Monklands

  24

  Motherwell

  —

  Renfrew

  8

  Strathkelvin

  61

  TAYSIDE

  Angus

  Dundee City

  2

  Perth and Kinross

  71

  ISLANDS COUNCILS

  Orkney Islands

  Shetland Islands

  —

  Western Isles

  57

  SSHA

  512

  New Town Development

  —

  Corporation

  375

  Cumbernauld

  156

  East Kilbride

  102

  Glenrothes

  80

  Irvine

  5

  Livingston

  32

  *Based on incomplete returns.

  Mr. Home Robertson
  asked the Secretary of State for Scotland if he will give the latest information on the number of applications to purchase public sector houses under part I of the Tenants' Rights Etc. (Scotland) Act 1980, received by each local authority, each new town development corporation and the Scottish Special Housing Association.

  Mr. Rifkind:
  The following table gives the latest available figures, as supplied by authorities at the end of September 1981, on applications to purchase public sector houses received under the Tenants' Rights Etc. (Scotland) Act 1980. These figures do not include the substantial numbers of applications received by the SSHA and the new towns for purchase under voluntary arrangements: nor do I have reliable information about applications to local authorities for voluntary sales.

  Authority

  Number of applications

  Borders Region

  Berwickshire

  66

  Ettrick and Lauderdale

  167

  Roxburgh

  240

  Tweeddale

  119

  Central Region

  Clackmannan

  133

  Falkirk

  1133

  Stirling

  238

  Dumfries and Galloway Region

  Annandale and Eskdale

  414

  Nithsdale

  522

  Stewartry

  210

  303

  Wigtown

  313

  Fife Region

  Dunfermline

  1441

  Kirkcaldy

  547

  North East Fife

  420

  Grampian Region

  Aberdeen City

  2047

  Banff and Buchan

  483

  Gordon

  477

  Kincardine and Deeside

  316

  Moray

  647

  Highland Region

  Badenoch and Strathspey

  107

  Caithness

  276

  Inverness

  390

  Lochaber

  193

  Nairn

  84

  Ross and Cromarty

  289

  Skye and Lochalsh

  95

  Sutherland

  59

  Lothian Region

  East Lothian

  573

  Edinburgh City

  1147

  Midlothian

  793

  West Lothian

  308

  Strathclyde Region

  Argyll and Bute

  442

  Bearsden and Milngavie

  270

  Clydebank

  195

  Clydesdale

  98

  304

  Cumbernauld and Kilsyth

  71

  Cumnock and Doon Valley

  171

  Cunninghame

  325

  Dumbarton

  275

  East Kilbride

  91

  Eastwood

  113

  Glasgow City

  3149

  Hamilton

  441

  Inverclyde

  220

  Kilmarnock and Loudoun

  219

  Kyle and Carrick

  184

  Monklands

  365

  Motherwell

  523

  Renfrew

  1547

  Strathkelvin

  509

  Tayside Region

  Angus

  659

  Dundee City

  253

  Perth and Kinross

  359

  Islands Areas

  Orkney

  182

  Shetland

  231

  Western Isles

  253

  New Towns

  East Kilbride

  925

  Glenrothes

  1108

  Cumbernauld

  2450

  Livingston

  256

  Irvine

  55

  SSHA

  218

  305
  Council House Sales

  Mr. Home Robertson
  asked the Secretary of State for Scotland if he will explain how the forecast figure of 14,000 sales during the financial year, used by the Under-Secretary of State in his statement to the press dated 1 October 1981, was calculated.

  Mr. Rifkind:
  The forecast of 14,000 sales to be completed by local authorities during the current financial year takes account of the number of voluntary sales known to be still awaiting completion at May 1981—approximately 1,000—and of the number of sales under the right to buy which are likely to be completed in the current year. I believe that 13,000 is a prudent estimate of the latter figure: in making the estimate I was bearing in mind that the number of applications known to have been received by local authorities by May 1981 was about 20,000—some of which will have led to sales completed before the start of the financial year—and that the number of further applications known to have been received by July 1981 was about 3,000.

  Housing Revenue Account (Rate Fund Contributions)
  Mr. Home Robertson
  asked the Secretary of State for Scotland if he will provide for each local authority in Scotland the level of rate fund contribution to the housing revenue account for 1981–82.

  Mr. Rifkind:
  The estimated information is as follows:

  Authority

  £

  Berwickshire

  —

  Ettrick and Lauderdale

  —

  Roxburgh

  187,617

  Tweeddale

  166,524

  Clackmannan

  1,373,230

  Falkirk

  3,950,910

  Stirling

  3,994,365

  Annandale and Eskdale

  422,000

  Nithsdale

  650,000

  Stewartry

  128,070

  Wigtown

  109,770

  Dunfermline

  1,595,265

  Kirkcaldy

  1,755,000

  North East Fife

  264,480

  Aberdeen

  7,833,000

  Banff and Buchan

  —

  Gordon

  739,400

  Kincardine and Deeside

  390,070

  Moray

  —

  Badenoch and Strathspey

  113,000

  Caithness

  323,000

  Inverness

  1,191,000

  Lochaber

  521,380

  Nairn

  170,315

  Ross and Cromarty

  387,289

  Skye and Lochalsh

  125,460

  Sutherland

  157,000

  East Lothian

  680,483

  Edinburgh

  4,199,925

  Midlothian

  1,556,154

  West Lothian

  1,622,000

  Argyll and Bute

  844,858

  Bearsden and Milngavie

  576,512

  Clydebank

  714,320

  Clydesdale

  618,370

  306

  Cumbernauld and Kilsyth

  793,430

  Cumnock and Doon Valley

  1,165,647

  Cunninghame

  2,253,994

  Dumbarton

  2,153,150

  East Kilbride

  456,340

  Eastwood

  438,432

  Glasgow

  36,150,800

  Hamilton

  5,253,050

  Inverclyde

  1,959,300

  Kilmarnock and Loudoun

  1,200,210

  Kyle and Carrick

  2,010,350

  Monklands

  5,269,460

  Motherwell

  4,620,380

  Renfrew

  4,887,700

  Strathkelvin

  1,422,062

  Angus

  —

  Dundee

  5,797,877

  Perth and Kinross

  —

  Orkney

  468,900

  Shetland

  575,000

  Western Isles

  919,550

  SCOTLAND

  115,156,399

  Source: Chartered Institute of Public Finance and Accountancy Rating Review

  Fish Marketing
  Mr. McQuarrie
  asked the Secretary of State for Scotland what proposals he has for the marketing of fish to the consumers in Scotland; and if he will make a statement.

  Mr. Younger:
  The Government do not have a direct role to play in the marketing of fish. The Sea Fish Industry Authority has a statutory duty to promote the efficiency of the sea fish industry as a whole and a power to promote the marketing and consumption of sea fish. I am confident that the new authority will be paying particular attention to marketing in the next few months.

  Nature Conservancy Council
  Mr. Morgan
  asked the Secretary of State for Scotland if he will take steps, including legislation if necessary, whereby the permission of, or at least reasonable notice to, private landowners would be obligatory before entry on to privately owned land by officials of the Nature Conservancy Council could be legally effected.

  Mr. Macfarlane:
  I have been asked to reply.

  Council officers cannot at present demand entry on to occupied land in the exercise of their powers unless 14 days' notice has been given to the occupier. Further powers of entry are included in the Wildlife and Countryside Bill; these will not be exercisable on occupied land unless 24 hours' notice has been given to the occupier, except where an offence is suspected or has been committed. I do not consider that further restrictions on the council's powers would be justified.

PRIME MINISTER

  Engagements
  Mr. Heddle
  asked the Prime Minister if she will list her official engagements for Tuesday 27 October.

  Mr. Robert Atkins
  asked the Prime Minister if she will list her official engagements for 27 October.
  307
  Mr Marlow
  asked the Prime Minister whether she will list her official engagements for 27 October.

  Mr. Moate
  asked the Prime Minister if she will list her official engagements for 27 October.

  Mr. Chapman
  asked the Prime Minister if she will list her official engagements for Tuesday 27 October.

  Mr. Michael Brown
  asked the Prime Minister if she will list her official engagements for 27 October.

  Mr Montgomery
  asked the Prime Minister if she will list her official engagements for 27 October.

  Mr. Skinner
  asked the Prime Minister if she will list her official engagements for 27 October.

  Mr. Stanbrook
  asked the Prime Minister if she will list her official engagements for Tuesday 27 October.

  Mr Adley
  asked the Prime Minister if she will list her official engagements for 27 October.

  Mr. Christopher Price
  asked the Prime Minister if she will list her official engagements for Tuesday 27 October 1981.

  Mr. Greville Janner
  asked the Prime Minister if she will list her official engagements for Tuesday 27 October.

  The Prime Minister:
  This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.

  Trades Union Congress
  Mr. Cryer
  asked the Prime Minister when next she expects to meet the Trades Union Congress.

  The Prime Minister:
  I have at present no plans to do so.

  Inner Cities (Riot Damage)
  Mr. Marks
  asked the Prime Minister if she is satisfied with co-ordination between the Treasury and the Home Department and the Department of the Environment on the subject of riot damage in the inner cities.

  The Prime Minister:
  Yes.

  Industrial Assistance
  Mr. Ernie Ross
  asked the Prime Minister what are the levels of industrial assistance for (a) factory rents, (b) training grants and (c) tax allowances in (i) Northern Ireland and (ii) special development areas in Great Britain.

  The Prime Minister:
  The information is as follows:
  Factory Rents
  In Great Britain the only assistance for factory rents is the provision of limited rent-free periods in Government factories to help let them. This is at the discretion of the various agencies concerned and information is not available on the total value of these concessions. In Northern Ireland there are a variety of concessions available, including rent-free periods of up to five years. The total value of actual and notional allowances is not available.
  Training Grants
  Expenditure by the Manpower Services Commission on training for the needs of industry—including expenditure on the administrative costs of industrial training boards—in Great Britain was £97 million in 1980–81. Expenditure in Northern Ireland was £18.5 million. Payments of training grants do not distinguish between special development areas and other areas of Great Britain.
  308
  Tax Allowances
  In general, the tax allowances for Northern Ireland and for special development areas are the same as for the rest of the United Kingdom.

  Mexico Summit Meeting
  Mr. Alton
  asked the Prime Minister if she will make a statement on her discussions in Mexico about North-South relations.

  The Prime Minister:
  I refer the hon. Member to the statement I made yesterday.

CIVIL SERVICE

  Pay (Committee of Inquiry)
  Mr. Peter Fraser
  asked the Minister for the Civil Service whether she will make available copies of the evidence which the Government have given to the Committee of Inquiry into Civil Service Pay, under the chairmanship of the right hon. Sir John Megaw.

  Mr. Hayhoe:
  The Government are making their formal written evidence to the inquiry publicly available. Copies of the memoranda which they have recently submitted have been placed in the Library.

  Redundancies
  Mr. Colvin
  asked the Minister for the Civil Service if she will publish a table giving a breakdown of the civil servants made redundant since May 1979 set out by the various administrative grades and showing the total financial saving in each grade.

  Mr. Hayhoe:
  I am having the information collated and will write to my hon. Friend as soon as possible.

HOME DEPARTMENT

  Pwllglas (Television Reception)
  Mr. Morgan
  asked the Secretary of State for the Home Department, in view of the poor state of television reception in the area of Pwllglas, Ruthin, Clwyd, if he will take steps to improve it.

  Mr. Mayhew:
  As my right hon. Friend explained in a reply of 20 July to my hon. Friend's question about television reception in Llangwm—[Vol. 9, c. 3]—the primary responsibility for extending the coverage of uhf television services rests with the broadcasting authorities. They are aware that the Pwllglas area is poorly served by the Moel-y-Parc transmitter on account of local topography. We understand that the population concerned is too small to benefit from phase II of the uhf engineering programme, but that the authorities will be considering the possiblity of a relay station for the area in the planning of phase III of the programme.

  Sheath Knives and Catapults
  Mr. David Atkinson
  asked the Secretary of State for the Home Department if he is satisfied with the present law permitting the sale of sheath knives and catapults to young people under the age of 18 years.
  309
  Mr. Mayhew:
  We have received no evidence to suggest that control of the sale of sheath knives and catapults would be justified. Existing legislation is available to deal with instances of their misuse.

  Parking Penalty
  Mr. Wheeler
  asked the Secretary of State for the Home Department what is the current estimated cost of collecting the £6 penalty for parking offences inclusive of all costs to the police and courts in the inner London area.

  Mr. Mayhew:
  The latest information available relates to 1978 and is contained in part IV—and annex K—of the report of the interdepartmental working party on road traffic law published in May. Figures for the inner London area are not separately available and could be provided only at disproportionate cost.

  Mr. Wheeler
  asked the Secretary of State for the Home Department when the —6 fixed penalty for parking offences was last reviewed; and what the current penalty would be if due allowance had been made for inflation.

  Mr. Mayhew:
  The interdepartmental working party on road traffic law, in its report published in May 1981, recommended that the fixed penalty of £6 should be increased to £10. The Government have accepted this recommendation and will be acting upon it in conjunction with other recommendations. Exact conformity with movements in the general index of retail prices since 1975, when the fixed penalty was increased from £2 to £6, would produce a figure of about £12.

  Metropolitan Police (Green Park)
  Mr. Skeet
  asked the Secretary of State for the Home Department on what date the Metropolitan Police took over a substantial section of Green Park; for what purpose; and for how long.

  Mr. Mayhew:
  By agreement with the Department of the Environment, the Metropolitan Police are using a small area of Green Park for the purpose of monitoring security arrangements at Lancaster House during the United Kingdom Presidency of the European Communities which runs from 1 July to 31 December 1981.

  European Community Citizens (Voting Rights)
  Mr. Warren
  asked the Secretary of State for the Home Department (1) if he will take an initiative during the United Kingdom Presidency of the EEC Council of Ministers to secure rights for EEC citizens living outside their own nation to have full voting rights in the EEC nation in which they are resident;

  (2) if he will take an initiative during the United Kingdom Presidency of the EEC Council of Ministers to secure voting rights for EEC employees in their home nation.

  Mr. Mayhew:
  My right hon. Friend has no plans to do so.

  Lookout Bunkers (Dundee)
  Mr. Ernie Ross
  asked the Secretary of State for the Home Department if he will name the location of lookout bunkers in the Dundee area.
  310
  Mr. Mayhew:
  United Kingdom warning and monitoring organisation fall-out monitoring posts are located in the Dundee warning group of the Royal Observer Corps as follows:

  Blair Atholl

  Dunkeld

  Aberfeldy

  Kinloch Rannoch

  Kirkmichael

  Alyth

  Clova

  Cortachy

  Letham

  Glamis

  Tarfside

  St. Cyrus

  Edzell

  Inverkeilor

  Arbroath

  Newbigging

  Killin

  Comrie

  Dunning

  Milnathort

  Abernyte

  Scone

  Methven

  Newburgh

  St. Andrews

  Cupar

  Strathyre Braco

  Kippen

  Callander

  Parole
  Mr. Marlow
  asked the Secretary of State for the Home Department how the parole system operates; what is the minimum length of sentence during which parole can be granted; at what stage parole is first considered; what proportion of those eligible are recommended by the parole boards; what proportion of those recommendations are accepted by him; what proportion of prisoners are accepted for parole whether or not they are recommended by parole boards; what is the average percentage of prison sentence actually served prior to parole; what percentage of (a) all prisoners and (b) prisoners convicted of violence re-offend during parole; and what proportion of prisoners who have at some stage been paroled are sentenced to further terms of imprisonment within (i) one year, (ii) two years, (iii) five years and (iv) 10 years.

  Mr. Mayhew:
  Details of the operation and scope of the parole scheme and of the numbers of prisoners considered for parole, released on licence and recalled to prison in successive years are given in the "Review of Parole in England and Wales" published by the Home Office in May this year, and in the annual reports of the Parole Board. Precise information about the average percentage of prison sentence served prior to parole and the numbers of parole licensees offending while on parole is either not available or could be obtained only at disproportionate cost. In 1980, 5,077 prisoners were granted parole, 183 licences were revoked following further convictions, and the average length of parole licence was eight months and 22 days. Information on reimprisonment following a period on parole is not available, but research on the subject of parole and reconviction generally is reported in "Parole in England and Wales (Home Office Research Study No.

  311
  38)" and in "Prison Statistics (England and Wales)" 1977 and 1978. All these publications are in the Library of the House.

  Police Forces (Arms Purchases)
  Mr. Meacher
  asked the Secretary of State for the Home Department which other police forces in the United Kingdom, in addition to Manchester, have purchased submachine guns; what exactly these firearms were in each case; what steps he has taken to ensure that he is always informed of any such intended purchase in advance; and if he will recommend to chief constables that the purchase is made known to the public as well as beforehand to the police authority concerned.

  Mr. Whitelaw:
  Police forces in the United Kingdom are not required to notify the Home Office of firearms purchases as this is a matter for individual chief officers of police. Guidance is given to the police by the Home Office and the Association of Chief Police Officers jointly as to the types of firearms recommended. The current guidance does not recommend fully automatic weapons. I am not at present persuaded that the guidance which has been given needs to be extended.

TRANSPORT

  Dropped Kerbs
  Mr. Pawsey
  asked the Secretary of State for Transport further to his reply to the hon. Member for Rugby dated 21 July, if he is now able to say what advice will be offered to local authorities about the provision and design of dropped kerbs taking account of BS 5810.

  Mr. Kenneth Clarke:
  I am sending my hon. Friend a copy of the draft advice, which is subject to further consultation with representatives of disabled and blind people and local authorities.

  Road Humps
  Mr. Stephen Ross
  asked the Secretary of State for Transport when he anticipates publishing the draft regulations under the Transport Act 1981 relating to the provision of road humps.

  Mr. Kenneth Clarke:
  We shall not publish these regulations in draft, but we shall, of course, consult interested representative organisations on them. I hope to have a draft ready to show them early next year.

  Strategic Road Network
  Mr. Rippon
  asked the Secretary of State for Transport what progress has been made in the last two years towards the completion of the strategic network of 4,500 miles of first class motorways and trunk roads; how many miles remain to be completed; and whether he will make a statement.

  Mr. Kenneth Clarke:
  The concept of a strategic network was abandoned in 1977. The present Government prefer the examination of individual road schemes on a case-by-case basis to ensure value for money and to take account of both environmental and economic factors rather than a return to a system of building whole routes to a predetermined standard regardless of conditions in each section.
  312
  In the last two years roughly 85 miles of motorway, 46 miles of new or improved all-purpose dual carriageway trunk road and 19 miles of new or improved single carriageway road have been completed in England. Our national trunk road programme still contains nearly 400 schemes totalling around 1,400 miles of new or improved motorway and trunk roads at various stages of construction or preparation and we propose to press on with them as quickly as sensible management and resources will allow.

  Roads (Winter Maintenance)
  Mr. Charles Morrison
  asked the Secretary of State for Transport whether the study by Sir Derek Rayner of the methods used to carry out winter maintenance on motorways and trunk roads has been completed; and, if so, in view of the co-operation and help afforded to the study team by the local authority association and their members, when copies of the study report will be made available to those associations as the representative bodies of the Secretary of State's agent authorities.

  Mr. Kenneth Clarke:
  The report of the scrutiny team made a large number of recommendations which are still being studied. The Government immediately accepted two suggestions—that the Department should publish a statement defining the winter maintenance service required on trunk roads and motorways together with a code of practice. These two documents, which have been drawn up with help from the local authority association, will be issued to agent authorities for action this winter. Inbucon, a firm of independent consultants is studying the whole question of recurrent maintenance of trunk roads by agent authorities at our request. I have now asked it to include winter maintenance and the Rayner recommendations as its study. My right hon. Friend's conclusions on the rest of the Rayner report and winter maintenance in general will be announced in due course, In the meantime, copies of the report have been sent to the local authority associations and been placed in the House Library.

  Liverpool to Belfast Ferry
  Mr. Parry
  pasked the Secretary of State for Transport what representations he has received concerning the proposed closure of the Liverpool to Belfast ferry; and if he will make a statement.

  Mr. David Howell:
  My right hon. Friend the Secretary of State for Northern Ireland has taken the lead on the discussions about the future of the service and my right hon. Friend the Secretary of State for Trade is responsible for shipping policy. I have received three letters from hon. Members and three from members of the public about the proposed closure.

WALES

  Nature Conservancy Council (Powers of Entry)
  Mr. Morgan
  asked the Secretary of State for Wales if he will take steps, including legislation if necessary, whereby the permission of, or at least reasonable notice to, private landowners would be obligatory before entry on to privately owned land by officials of the Nature Conservancy Council could be legally effected.
  313
  Mr. Michael Roberts:
  I refer my hon. and learned Friend to the answer given today by my hon. Friend the Under-Secretary of State for the Environment.

  Industry (Assistance)
  Mr. Ray Powell
  asked the Secretary of State for Wales if he has any plans to divert any assistance from the manufacturing to the service industries in Wales.

  Mr. Michael Roberts:
  No. However, the Government are aware of the need to increase the level and range of service industry activities in Wales. With this in mind, the assistance available to eligible service industry projects has recently been increased and additional publicity is being given to the assistance which can be made available under the office and service industry scheme.

  Mentally Handicapped Persons
  Mr. Wigley
  asked the Secretary of State for Wales if he will list the individuals and representatives of organisations with whom he has discussed during the past six months the improvement of services for the mentally handicapped in Wales.

  Mr. Michael Roberts:
  The Welsh Office has regular contact with a wide range of individuals and organisations concerned with the care of mentally handicapped people with the continuous aim of improving services. My right hon. Friend will be addressing a specially convened conference on this matter in Cardiff on Tuesday 3 November, to which my right hon. Friend has invited representatives of the county councils, the Council for the Principality, the area health authorities, the main voluntary bodies concerned, the principal professional advisory bodies, the Manpower Services Commission and the Housing Corporation.

  Hill Livestock Compensatory Allowance and Suckler Cow Subsidy
  Dr. Roger Thomas
  asked the Secretary of State for Wales if he will consider increasing the hill livestock compensatory allowances in line with inflation to meet the declining profitability and raise the suckler cow subsidy to the highest possible award under present European Economic Community regulations in order partly to check the decline in beef breeding in many parts of Wales.

  Mr. Michael Roberts:
  The Government are currently reviewing the rates of hill livestock compensatory allowances for 1982. All aspects of the hill and upland economy are being taken into account.

  The suckler cow premium is already being paid at the amount fixed and financed by the European Community. The Government have no proposal to increase the level of the premium from national funds.

  Sheep Rearing Hill Farmers
  Dr. Roger Thomas
  asked the Secretary of State for Wales if he is satisfied with the present financial returns of the predominantly sheep rearing hill farmer in view of their decreasing profitability at a time when there is nearly a 4 per cent. increase in animals.

  Mr. Michael Roberts:
  The implementation of the EC sheepmeat regime has led to an encouraging improvement in returns for sheep farmers.

INDUSTRY

  Liverpool to Belfast Ferry
  Mr. Parry
  asked the Secretary of State for Industry what representations he has received concerning the proposed closure of the Liverpool to Belfast ferry; and if he will make a statement.

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

ENVIRONMENT

  Sex Shops
  Mr. Skeet
  asked the Secretary of State for the Environment if he will introduce a change in the planning law to deal with the problem of sex shops taking over vacant shop premises and operating a business which the public generally find unacceptable, distasteful and detrimental to local morals.

  Mr. Giles Shaw:
  My right hon. Friend does not think that bringing sex shops under planning control would provide an effective solution to the problem, because planning permission cannot be refused on moral grounds. However, the Government have expressed support in principle for a proposal by the Greater London Council for legislation to introduce licensing control over sex shops in London. The question of more general legislation is being kept under review by my right hon. Friend the Secretary of State for the Home Department.

  Rate Support Grant
  Mr. Pavitt
  asked the Secretary of State for the Environment if, in his consideration of local rate support grants, he will take note of the report financed by his Department and prepared by Leicester university, which shows the disproportionate amount of total local authority expenditure caused by a decline of population in inner cities because of debt charges spread over 60 years incurred in previous decades.

  Mr. King:
  Once I have received the report of this research project I shall be able to assess its conclusions.

  Housing Investment (Brent)
  Mr. Pavitt
  asked the Secretary of State for the Environment if he will accede to the request of the London borough of Brent for adequate funds to meet the needs envisaged in the housing investment strategy programme.

  Sir George Young:
  My right hon. Friend will certainly make an allocation to Brent, as to other local authorities, for its housing investment programme which is related to its housing needs and which takes into account the council's proposed strategy for meeting those needs. Since local authorities are now able to augment their allocations with capital receipts, and given the continuing need to contain public expenditure, the council should not expect its allocation to be sufficient for the substantially expanded programme it has put forward.

  Nature Conservancy Council (Powers of Entry)
  Mr. Morgan
  asked the Secretary of State for the Environment if he will take steps, including legislation if necessary, whereby the permission of, or at least

  315
  reasonable notice to, private landowners would be obligatory before entry on to privately owned land by officials of the Nature Conservancy Council could be legally effected.

  Mr. Macfarlane:
  Council officers cannot at present demand entry on to occupied land in the exercise of their powers unless 14 days' notice has been given to the occupier. Further powers of entry are included in the Wildlife and Countryside Bill; these will not be exercisable on occupied land unless 24 hours' notice has been given to the occupier, except where an offence is suspected or has been committed. I do not consider that further restrictions on the council's powers would be justified.

  Local Authorities (Rate Income)
  Mr. Alexander
  asked the Secretary of State for the Environment what percentage of the total expenditure of local authorities in the United Kingdom is paid by domestic ratepayers.

  Mr. King:
  About 19 per cent. of the total net expenditure of local authorities is paid by domestic ratepayers—before allowance for rate rebates—in 1981–82, based on rate poundages set at April 1981.

  Liverpool (Ministerial Visit)
  Mr. Parry
  asked the Secretary of State for the Environment if he will make a statement on the recent official visit of the Minister for Local Government and Environmental Services to Liverpool.

  Mr. King:
  I addressed a seminar organised by my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen) and also spoke to a group of Merseyside industrialists and members of public authorities about inner city policy, and the recent initiatives that my right hon. Friend has taken in Merseyside.

  London Borough of Haringey
  Mr. Norman Atkinson
  asked the Secretary of State for the Environment if he will set down in the Official Report full details of all money at constant prices actually paid or earmarked to be paid under all headings by Her Majesty's Government to the London borough of Haringey for the years 1979–80, 1980–81 and 1981–82.

  Mr. King:
  The latest estimates, at constant 1981–82 outturn prices, are as follows—they do not include capital grants, for which comparable figures for the three years are not yet available:

  1979–80 £ million

  1980–81 £ million

  1981–82 £ million

  Rate Support Grants

  70·2

  66·7

  57·8

  Rate Rebates

  1·9

  1·9

  2·5

  Housing Subsidies and other support

  19·4

  19·7

  16·1

  Specific Grants *

  8·4

  8·3

  8·6

  * Based on returns made by the borough.

  Enterprise Zones
  Mr. Steen
  asked the Secretary of State for the Environment how much the three-year study to monitor the progress of enterprise zones will cost.
  316
  Mr. King:
  The three-year contract will cost a total of £273,130, excluding VAT.

  Mr. Steen
  asked the Secretary of State for the Environment how many statistical returns will be asked for from firms in enterprise zones; and how this figure compares with firms outside the zones.

  Mr. King:
  The only Government statistical inquiry that will go to firms in enterprise zones will be the census of employment. In addition, some firms will be surveyed each year as part of the study monitoring EZs. By comparison, in 1980 there were about 30 regular Government statistical service returns which firms nationally might have received depending on whether or not they fell within the samples.

TRADE

  Air Fares (European Community Directive)
  Mr. Warren
  asked the Secretary of State for Trade if he has received from the Council of the EEC Commission the draft directive on air fares; and if he will make a statement on the reasons for the delay in its production.

  Mr. Sproat:
  On 21 October the Commission presented to the Council a draft directive entitled "Proposal for a Council Directive (EEC) on Tariffs for Scheduled Air Transport between Member States". We had understood that at one time it was proposed to issue the draft directive in June of this year. We pressed the Commission strongly to issue the directive at the earliest possible date, as it was needed to form the basis of discussion on air fares during the United Kingdom Presidency. It is not, of course, possible for me to comment on the reasons for the delay. We are very glad that the draft directive has now been issued and have made arrangements for its early discussion in the council working group.

  Tariff Barriers and Import Controls
  Mr. John H. Osborn
  asked the Secretary of State for Trade whether he will list the countries outside the European Economic Community that maintain high tariff barriers or import controls against British products; and if he will list those product ranges where in his view there are grounds for seeking reduction of tariff barriers.

  Mr. Peter Rees:
  There are many developed and developing countries outside the European Community where imports of some British goods are impeded by high tariffs, non-tariff barriers and other import restrictions and it would not be practicable to list them. As far as those countries which are contracting parties to the GATT are concerned, the European Community sought reductions in tariff barriers on a wide range of products in the Tokyo roung of GATT multilateral trade negotiations. The resulting tariff reductions are generally being implemented in eight annual stages between 1980 and 1987. The White Paper, Cmnd. 7724, describing the outcome of these negotiations refers to some products and markets where tariffs are being so reduced, but further reductions would naturally be welcome to United Kingdom exporters. Such further reductions would, however, require reciprocal tariff reductions by the European Community, and a further round of tariff negotiations is not at present in prospect.

  Hoover (UK) Ltd
  Mr. Marlow
  asked the Secretary of State for Trade, in view of the recent job losses at Hoover, whether he is satisfied at the reaction speed of European trading policies in those areas of manufacturing that Hoover proposes to close; and whether he will take action to safeguard British industry from further job losses in these areas.

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

  Balance of Trade
  Mr. Marlow
  asked the Secretary of State for Trade (1) whether the balance of trade in manufactures with West Germany is in greater deficit than that with Japan;

  (2) whether he will consider similar action with regard to West Germany as he is considering with regard to Japan in order to achieve balanced trade.

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

AGRICULTURE, FISHERIES AND FOOD

  Home Food Production
  Mr. Knox
  asked the Minister of Agriculture, Fisheries and Food what was the total value of home food production in each of the past five years at constant prices.

  Mr. Buchanan-Smith:
  The information requested is as follows:
  Value of food produced by United Kingdom agriculture and fisheries at farmgate quayside prices, including production for export

  Year

  £ million*

  1976

  4,087

  1977

  4,283

  1978

  4,320

  1979

  4,416

  1980

  4,463

  * At constant (1975) prices.

  Meat Hygiene
  Mr. Anderson
  asked the Minister of Agriculture, Fisheries and Food what response he has made to the proposals of the Institution of Environmental Health Officers' meat legislation review group for changes in the Meat (Sterilisation) Regulations which were sent to his Department in February 1981.

  Mrs. Fenner:
  A reply was sent on 30 April 1981 commenting in detail on the proposals and seeking further comments and clarification on a number of points. The institution sent a substantive reply to this letter on 16 September. My officials have also carefully examined the institution's report "Illegal Trade in Unfit Meat for Human Consumption" which was forwarded to the Department in June.

  Mr. Anderson
  asked the Minister of Agriculture, Fisheries and Food whether he is satisfied with the existing means of protecting the public against the supply of unfit meat.

  Mrs. Fenner:
  We consider that improved protection can be achieved by a combination of vigilance by companies in the meat business, strict enforcement of the
  318
  law, and some strengthening of the present law. Ideas on how the law might be amended will be put shortly to the main organisations concerned.

FOREIGN AND COMMONWEALTH AFFAIRS

  Chile
  Mr. Frank Allaun
  asked the Lord Privy Seal why an official invitation to visit the United Kingdom has been issued by Her Majesty's Government to a Minister in the Government of Chile; when the visit will take place; what meetings and talks are planned; and who the Minister will be.

  Mr. Luce:
  The Chilean Minister of Mines, who had already been invited privately to a function in London, accepted an official invitation to extend his stay from 11 to 17 October. He called on my hon. and learned Friend the Minister for Trade. The Chilean Minister of Finance has accepted an invitation from the British Overseas Trade Board and Canning House to visit London to address a business seminar on Chile on 16 November. His programme has not yet been finally fixed, but is expected to include calls on Ministers.

  Sinai (Peacekeeping Force)
  Mr. Michael Brown
  asked the Lord Privy Seal if he will make a statement on the placing of British troops in Sinai as part of a peacekeeping force.

  Mr. Hurd:
  The United States Government have asked a number of countries, including the United Kingdom, France and Italy, to make a contribution to an international peacekeeping force in Sinai. We are considering this request together with our partners. No decisions have yet been taken.

EUROPEAN COMMUNITY

  United Kingdom Membership (Benefits)
  Mr. Marlow
  asked the Lord Privy Seal whether there are benefits which the United Kingdom derives from membership of the European Economic Community which are not derived by other member States.

  Mr. Hurd:
  All member States have the same status under the Treaties and the benefits of Community membership are available to all.

EMPLOYMENT

  Islington
  Mr. O'Halloran
  asked the Secretary of State for Employment how many people are currently unemployed in the London borough of Islington; how many are on Manpower Services Commission schemes; and what were the comparable figures a year ago.

  Mr. Alison:
  At October 1981 the provisional number of people registered as unemployed in the area covered by the Holloway and Kings Cross employment offices, which closely corresponds to the London borough of Islington, was 17,641. The corresponding figure at October 1980 was 10,478.
  319
  The number of people participating in the community enterprise programme in the borough of Islington at the end of August 1981 was 56. There is no comparable figure for the previous year.

  The community industry unit covering the boroughs of Camden and Islington employed 114 people on 13 August 1981 compared with 107 people on 14 August 1980.

  Information on the number of people participating in the youth opportunities programme is not available for individual boroughs within London.

  Willesden
  Mr. Pavitt
  asked the Secretary of State for Employment what was the total number of registered unemployed in September of each of the last three years in Willesden.

  Mr. Peter Morrison:
  The following is the information for the Willesden employment office area.

  September 1979

  2,017

  September 1980

  3,095

  September 1981

  6,738

  Unemployed Persons (Brent)
  Mr. Pavitt
  asked the Secretary of State for Employment if, in view of the record number of people unemployed in Brent, he will now urgently introduce measures to create jobs in the area.

  Mr. Peter Morrison:
  The Government's policies are aimed at bringing down the rate of inflation and producing conditions that will help our firms become competitive. When these aims are achieved we shall see new worthwhile jobs created both in Brent and throughout the country.

  Meanwhile we are continuing with our programme of special employment and training measures that are helping large numbers of people in Brent.
  Special Measures
  The number of people currently benefiting from the Governments special employment and training measures in Brent are as follows:
  Temporary Short Time Working Compensation Scheme: 331 Potentially redundant jobs supported.Job Release Scheme 118 people currently benefiting.Youth Opportunities Programme 250 young people have entered the scheme between 1 April 1981 and 31 August 1981.Community Enterprise Programme 420 people have entered the Scheme between 1 April 1981 and 31 August 1981.Community Industry (No units in Brent)Nil.
  We are also launching a new scheme—the young workers scheme—to encourage employers to take on young people under the age of 18.

  Unemployed for up to 4 weeks (October 1981)

  Unemployed aged 55 years and over (July 1981—latest available)

  Number

  As a percentage oftotal unemployed

  Number

  As a percentage of total unemployed

  South-East

  90,978

  13.3

  94,571

  14.9

  East Anglia

  10,573

  15.1

  11,557

  17.0

  South-West

  24,692

  13.7

  29,145

  17.3

  West Midlands

  29,355

  8.4

  48,964

  14.9

  Job Creation and work Experience (Leek)
  Mr. Knox
  asked the Secretary of State for Employment how many young people in the Leek parliamentary constituency have been helped by his Department's Job Creation and work experience programmers.

  Mr. Peter Morrison:
  Information on the Manpower Services Commission's programmers in Leek is not available in the form requested However, the number of entrants ti the vouth opportunities programme in the local authority district of Staffordshire Moorlands, which approximates most closely to the parliamentary constituency of Leek, is as Follows:

  Financial Year

  Number of entrants

  1979–80

  100

  1980–81

  170

  1981*

  300

  * April to end of September.

  This gives a total of 570 since April 1979.

  Unemployment Statistics

  Mr. Thomas Cox
  asked the Secretary of State for Employment (1) what is the present number of (a) men and (b) women now unemployed in the London borough of Wandsworth;

  (2) what is the number of (a) men, and (b) women under the age of 21 years now unemployed in the London borough of Wandsworth.

  Mr. Peter Morrison:
  At 8 October there were 9,929 males and 3,935 females registered as unemployed in the area covered by the Clapham Junction and Tooting employment offices, which closely corresponds to the London borough of Wandsworth. The numbers of young people under 20 years of age included in these figures were 1,882 males and 1,310 females. Information for the precise age range specified is not available.

  Mr. Adley
  asked the Secretary of State for Employment if he will list, for each travel-to-work area in Great Britain, the percentage and total numbers for each area, of those registered as unemployed who are (a) out of work for four weeks or less and (b) aged over 55 years and voluntarily retired.

  Mr. Peter Morrison:
  The unemployment statistics do not distinguish voluntarily retired people. The following table gives for each region the provisional numbers of people who, at 8 October, had been unemployed for up to four weeks and for 9 July, the latest date for which an age analysis is available, the numbers unemployed aged 55 years and over. In each case the numbers are expressed as percentages of the total unemployed. The information could be provided for each travel-to-work area only at disproportionate cost.
  321

  East Midlands

  17,435

  9.8

  29,123

  16.5

  Yorkshire and Humberside

  28,828

  10.4

  40,262

  15.0

  North-West

  39,726

  9.4

  52,226

  12.7

  North

  22,481

  10.4

  30,270

  14.3

  Wales

  19,966

  11.8

  23.077

  14.3

  Scotland

  34,765

  10.7

  35,062

  11.0

  Great Britain

  318,799

  11.1

  394,257

  14.4

  School Leavers
  Mr. Alexander
  asked the Secretary of State for Employment what is the estimated number of this summer's school leavers who will be employed on a Manpower Services Commission job opportunity scheme at the end of the year.

  Mr. Alison:
  Estimates are not available in the precise form required. However, between April 1981 and March 1982, the Manpower Services Commission expects around 360,000 unemployed 1981 school leavers to take part in youth opportunities programme schemes—about half of all the current year's school leavers estimated to have left school for work.

  Disabled Persons
  Mr. Geoffrey Robinson
  asked the Secretary of State for Employment what percentage of companies required by law to employ 3 per cent. disabled people do so.

  Mr. Alison:
  On 1 June 1981, the latest date for which information is available, 33.6 per cent. of all employers subject to the provisions of the Disabled Persons (Employment) Act 1944 employed 3 per cent. or more registered disabled people.

  European Social Fund
  Mr. Craigen
  asked the Secretary of State for Employment what he estimates will be the effects on employment projects in the United Kingdom of the current proposals regarding the European Social fund.

  Mr. Alison:
  As laid down in its rules, the operations of the European social fund are due to be reviewed before the end of 1982. The European Commission has not yet put forward its formal proposals for the review of the fund.

  The United Kingdom
  hopes that the review will lead the fund to place more emphasis on measures to support training for young people, to deal with the effects of declining employment in traditional manufacturing industries and to meet the training needs of new technology.

  Redundancy Payments
  Mr. Nicholas Baker
  asked the Secretary of State for Employment what would be the cost of removing the ceiling of £3,900 for redundancy payments in the last financial year.

  Mr. Peter Morrison:
  It is not possible to quantify the effect of such a change.

  Employed Persons (Statistics)
  Mr. Greenway
  asked the Secretary of State for Employment if he will list in numbers and as a percentage of the total population the number of the people in work in each year from 1945.

  Mr. Peter Morrison:
  The available information is attached and relates to the middle of each year. The employed labour force consists of employees in employment, the self-employed and Her Majesty's Forces. The figures from 1945 to 1950* are for Great Britain; those for 1950† onwards for the United Kingdom. The methods of making employment estimates have changed on a number of occasions since 1945. In 1948 and 1959, when the changes led to discontinuities, two sets of figures are given: those marked‡ are consistent with the preceding figures and those marked** with the subsequent figures.

  Employed labour force (thousands)

  As a percentage of the total population

  1945

  21,546

  45.1

  1946

  20,147

  42.1

  1947

  20,107

  41.7

  †1948

  20,002

  41.1

  **

  22,504

  46.2

  1949

  22,515

  46.0

  *1950

  22,710

  46.1

  †

  23,257

  45.9

  1951

  23,603

  46.7

  1952

  23,590

  46.5

  1953

  23,703

  46.6

  1954

  24,038

  47.1

  1955

  24,298

  47.4

  1956

  24,514

  47.7

  1957

  24,543

  47.5

  1958

  24,278

  46.8

  ‡1959

  24,348

  46.7

  **

  23,760

  45.6

  1960

  24,183

  46.0

  1961

  24,457

  46.2

  1962

  24,632

  46.1

  1963

  24,661

  45.9

  1964

  24,950

  46.3

  1965

  25,204

  46.3

  1966

  25,355

  46.4

  1967

  24,992

  45.5

  1968

  24,841

  45.0

  1969

  24,857

  44.9

  1970

  24,753

  44.6

  1971

  24,399

  43.8

  1972

  24,391

  43.7

  1973

  24,972

  44.6

  1974

  25,059

  44.7

  1975

  24,932

  44.5

  323

  1976

  24,765

  44.3

  1977

  24,832

  44.4

  1978

  24,961

  44.7

  1979

  25,120

  44.9

  1980

  24,720

  44.1

  1981

  23,425

  41.8

  Mr. Greenway
  asked the Secretary of State for Employment if he will list in numbers and as a percentage of the total population the number of people in each European Community country in employment in each year from and including 1972.

  Mr. Alison:
  I refer my hon. Friend to the publications: "OECD Labour Force Statistics 1968–1979" for information from 1972 to 1979.
  "Employment and Unemployment (31 July 1981)" issued by the Statistical Office of the European Communities for data on 1980.
  Copies are available in the Library.

  Youth Employment Statistics
  Dr. 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 [pursuant to his reply, 23 October 1981, c. 115]:
  The most recent survey, which covered a sample of young people who entered work experience schemes under the youth opportunities programme in Great Britain in the period April to June 1980 showed that 26 per cent. of males and 33 per cent. of females went into employment immediately after leaving their schemes. A further 12 per cent. of males, and 14 per cent. of females entered full-time education or another Manpower Services Commission scheme.

  Youth Opportunities Programme and Community Industry
  Mr. Waller
  asked the Secretary of State for Employment how many persons are currently participating in the youth opportunities programme in each region.

  Mr. Alison [pursuant to his reply, 26 October 1981, c. 161]:
  It is estimated that, at the end of September, there were 260,000 young people on the youth opportunities programme. The following table shows the estimated percentage share of this total for each region:

  percentage

  Scotland

  12.5

  Northern

  12.0

  Yorks and Humberside

  10.0

  North-West

  16.5

  Midlands

  19.0

  Wales

  8.0

  South-West

  8.5

  London

  2.5

  South-East

  11.0

  Great Britain

  100.0

  Percentage shares have been given as detailed information on the actual number of filled places in each region is not available.
  324
  Mr. Marlow
  asked the Secretary of State for Employment if he will extend the tabulations given in reply to the hon. Member for Colne Valley (Mr. Wainwright) on 10 July, Official Report, c. 234–40, by including the average number of weeks each trainee spends in each programme and the average cost both net and gross per week.

  Mr. Alison [pursuant to his reply, 26 October 1981]:
  I refer my hon. Friend to the reply given to the hon. Member for Bishop Auckland (Mr. Foster)—[30 June, Vol. 7, c. 347–48]—which gives the gross and net costs per young person per week on the youth opportunities programme in 1980–81.

  The average length of stay on each type of YOP scheme in 1980–81 is shown in the following table:

  Scheme Type

  Average Duration Weeks

  Work Experience on Employers' Premises

  22

  Community Projects

  33

  Training Workshops

  32

  Employment Induction Courses

  2

  Short Training Courses

  13

  Remedial and Preparatory Courses

  10

SOCIAL SERVICES

  State Pensions
  Mr. Charles Irving
  asked the Secretary of State for Social Services what is at present paid out annually in State pensions to women at 60 years and men at 65 years of age.

  Mrs. Chalker:
  £226 million and £340 million respectively.

  Health Care
  Mr. David Atkinson
  asked the Secretary of State for Social Services if he will introduce a scheme for compulsory periodic medical check-ups as a preventive care measure.

  Mr. Geoffrey Finsberg:
  No. Compulsory medical examination plays no part in the philosophy and practice of the provision of health care in the NHS, except in the control of some infectious diseases.

  Supplementary Benefit

  Mr. Richard Wainwright
  asked the Secretary of State for Social Services what is the total number of people currently having supplementary benefit in the area covered by Kirklees metropolitan district authority and Oldham metropolitan district authority; and what were the numbers for autumn 1978, 1979 and 1980.

  Mrs. Chalker:
  Information is not available in the form requested. However, 49,800 people were receiving supplementary benefit from the four DHSS local offices in the two districts at 5 August 1981—the latest available date. This includes some people who live outside Kirklees and Oldham metropolitan districts.

  Figures for previous years are as follows:

  Number

  November 1978

  38,300

  November 1979

  36,800

  December 1980

  42,000

  325 Source:
  100 per cent. count of cases
  Mr. Richard Wainwright
  asked the Secretary of State for Social Services how many staff were employed at each

  a. Kirklees Metropolitan District Area

  1975

  1976

  1977

  1978

  1979

  1980

  Huddersfield

  193

  202

  204

  208

  213

  210

  Dewsbury

  169

  173

  177

  176

  179

  183

  b. Oldham Metropolitan District Area

  1975

  1976

  1977

  1978

  1979

  1980

  Oldham

  213

  230

  235

  237

  225

  221

  Failsworth

  158

  170

  169

  166

  160

  157

  Unemployment benefit offices are the responsibility of my right hon. Friend the Secretary of State for Employment.

  Mr. Proctor
  asked the Secretary of State for Social Services what is the cost of administration of supplementary benefit, including costs of investigations of abuse and prosecutions for fraud; and what is the total value of supplementary benefits paid.

  Mrs. Chalker:
  The estimated cost in 1981–82 is £340 million and £4,353 million respectively.

  Action on Smoking and Health

  Mr. Michael Brown
  asked the Secretary of State for Social Services what public funds have been paid to Action on Smoking and Health in each year since its inception; what is the size of the grant in the current year; and what plans he has to make a further grant in 1982.

  Mr. Geoffrey Finsberg:
  Since its inception in 1971, Action on Smoking and Health and its Welsh and Scottish branches have been allocated the following sums by the Health Departments:

  Ash £

  Ash in Wales £

  Ash in Scotland £

  1971–72

  19,000

  —

  —

  1972–73

  6,000

  —

  —

  1973–74

  3,000

  —

  —

  1974–75

  6,400

  —

  —

  1975–76

  18,500

  —

  810

  1976–77

  31,000

  750

  1,740

  1977–78

  41,500

  750

  1,590

  1978–79

  59,500

  1,000

  1,440

  1979–80

  70,000

  1,200

  2,200

  1980–81

  80,000

  1,600

  * 11,000

  1981–82

  112,000

  1,600

  15,400

  *Introduction of revised funding arrangements and an end to the separate contribution from the former Scottish health education unit.

  No application has yet been received for a grant for 1982–83.

  Mr. Michael Brown asked the Secretary of State for Social Services what discussions he is having with Action on Smoking and Health concerning the possibility of a grant from public funds in 1982.
  326
  benefit office in (a) the Kirklees metropolitan district area and (b) the Oldham metropolitan district area in each year from 1975 to 1980; and if he will make a statement.

  Mrs. Chalker:
  The information requested on staff employed at DHSS local offices is as follows:

  Mr. Geoffrey Finsberg:
  I shall shortly be meeting representatives of Action on Smoking and Health at their request.

  Mr. Michael Brown
  asked the Secretary of State for Social Services on how many occasions Ministers of his Department have met officers of Action on Smoking and Health since May 1979.

  Mr. Geoffrey Finsberg:
  There have been three formal meetings at the request of Action on Smoking and Health.

  Mr. Michael Brown
  asked the Secretary of State for Social Services what checks he makes on how the grant from public funds to Action on Smoking and Health is spent.

  Mr. Geoffrey Finsberg:
  Officials attend annual general meetings and meetings of the executive and council of Action on Smoking and Health as observers, and maintain regular contact with officers of the organisation. Like other voluntary organisations seeking grants from the Department under the Health Service and Public Health Act 1968, ASH submits detailed financial estimates and audited accounts annually, which are scrutinised by the Department and discussed as necessary with ASH.

  Family Income Supplement
  Mr. Knox
  asked the Secretary of State for Social Services what is the total number of families now receiving family income supplement; and what is the average amount of benefit paid out to each family.

  Mrs. Chalker:
  There were about 110,000 families receiving family income supplement on 28 July 1981, the latest date for which figures are available. The average amount received was about £9.30 a week.

  Hearing Aids
  Mr. Haynes
  asked the Secretary of State for Social Services (1) what is the average waiting time for hearing aid services at the hearing aid center, Nottingham, and at Kings Mill hospital, Sutton in Ashfield, respectively;

  (2) whether he intends taking any action to reduce the waiting time for hearing aid services at Kings Mill hospital, Sutton in Ashfield.

  Mr. Rossi:
  Information about waiting times at hearing aid centers is not held centrally. I understand, however,

  327
  that the Nottinghamshire area health authority (teaching) is concerned about the length of waiting times for hearing aid services at the Nottingham and Sutton in Ashfield centers and is taking steps to reduce them. The hon. Member may wish to contact the AHA(T) direct for information about the waiting times at these centers and for details of the steps being taken by the AHA(T).

  Prescription Charges
  Mr. Mike Thomas
  asked the Secretary of State for Social Services (1) whether, and in what circumstances, prescription charges are collected by general practitioners personally administering drugs to patients;

  (2) whether he will list those drugs on which prescription charges are payable at the retail pharmacy but not when personally administered by the prescribing doctor;

  (3) whether he will estimate the annual loss in revenue to the National Health Service caused by the failure of general practitioners to collect prescription charges on personally administered drugs.

  Mr. Geoffrey Finsberg:
  Subject to exemptions, prescription charges are payable by patients when obtaining drugs and appliances on prescription from chemists whether for personal administration to them later by the doctor or, more usually, for self administration. Charges are also paid generally where items are supplied by a dispensing doctor. Where a non-dispensing doctor supplies drugs and appliances which he personally administers to patients, no prescription is given to the patient and no charge is payable. NHS payment arrangements provide for dispensing payments to be made to a non-dispensing doctor for the direct supply to patients of certain items personally administered by the doctor; these are vaccines, anaesthetics, injections and certain diagnostic reagents and appliances.

  Sheltered Workshops
  Mr. Mike Thomas
  asked the Secretary of State for Social Services whether joint financing money may be used in addition to Manpower Services Commission funds to provide sheltered workshops for the handicapped, disabled and mentally ill.

  Mr. Rossi:
  No. Joint finance money is available for the support of selected local authority personal social services schemes and related health services expenditure. The provision of sheltered workshops is a responsibility of my right hon. Friend the Secretary of State for Employment.

  Invalidity Benefit Recipients (Prescriptions)

  Mr. Wigley
  asked the Secretary of State for Social Services if he will now reconsider the decision not to allow those in receipt of invalidity benefit to have their medical prescriptions free of charge.

  Mr. Geoffrey Finsberg:
  I have no plans to extend automatic exemption from prescription charges to this group. Apart from the fact that not all invalidity benefit recipients need frequent prescriptions, many already qualify for exemption by being in receipt of supplementary benefit, family income supplement or because their income falls below a certain level. The pre-payment
  328
  certificate—"season ticket"—arrangements can, of course, help those people not entitled to exemption to limit their outlay on medicines.

  Retirement Pensions (Payment Abroad)
  Mr. George Cunningham
  asked the Secretary of State for Social Services approximately how many national insurance retirement pensions are currently being paid to persons living abroad; what proportion this represents of the total of national insurance retirement pensions in payment; and which are the main countries of residence.

  Mr. Rossi:
  At November 1980 there were 238,000 national insurance retirement pensions in payment to people living abroad, representing 2.7 per cent. of the total of 8,919,000. These figures exclude payments of non-contributory retirement pensions and graduated pension only. The main countries of residence were as follows:

  Australia

  29 per cent.

  Canada

  13 per cent.

  Republic of Eire

  12 per cent.

  United States of America

  9 per cent.

  New Zealand

  8 per cent.

  South Africa

  5 per cent.

  Peritoneal Dialysis
  Mr. Carter-Jones
  asked the Secretary of State for Social Services to what extent the evidence he has received shows that diabetic patients with kidney disease have achieved better control of diabetes when treated for both conditions on continuous ambulatory peritoneal dialysis; and if he will make a statement.

  Mr. Geoffrey Finsberg:
  I am not aware of any formal clinical trials on the effects of treating diabetic patients with chronic renal failure by continuous ambulatory peritoneal dialysis. It is thought possible that by putting insulin in the dialysis fluid a more even control of blood sugar may be achieved but it is as yet too early to evaluate the long term effects of this form of treatment for diabetic patients.

  Nurses (Pay)
  Mr. William Hamilton
  asked the Secretary of State for Social Services what were the minimum and maximum rates of pay for each grade in the nursing profession in April 1981, taking into account the most recent increases.

  Mr. Geoffrey Finsberg:
  The information requested is shown in the following table. It should be noted that the figures quoted relate to basic salary scales and do not include such allowances as payment for work done during unsocial hours.

  Annual Salary Scale

  Grade

  Minimum £

  Maximum £

  Regional Nursing Officer R1

  17,123

  21,924

  Regional Nursing Officer R2

  16,466

  21,389

  Area Nursing Officer AT1

  15,879

  20,793

  Area Nursing Officer AT2

  15,658

  20,380

  Area Nursing Officer A1

  15,378

  19,753

  Area Nursing Officer A2

  14,818

  18,611

  Area Nursing Officer A3

  14,258

  17,928

  Area Nursing Officer SDAT

  15,658

  20,380

  Area Nursing Officer SDA1

  15,098

  19,127

  Area Nursing Officer SDA2

  14,539

  18,202

  Area Nursing Officer SDA3

  13,978

  17,639

  329

  District Nursing Officer DT

  15,098

  19,127

  District Nursing Officer D1

  14,258

  17,928

  District Nursing Officer D2

  13,707

  17,062

  District Nursing Officer D3

  12,936

  15,730

  District Nursing Officer D4

  10,753

  12,944

  Regional Nurse R1

  11,986

  15,347

  Regional Nurse R2

  11,526

  14,973

  Area Nurse AN/T

  12,522

  14,139

  Area Nurse AN/A

  11,902

  13,438

  Area Nurse AN/B

  11,456

  12,997

  Divisional Nursing Officer I

  11,011

  12,654

  Divisional Nursing Officer II

  10,363

  11,834

  Divisional Nursing Officer III

  9,649

  11,005

  Divisional Nursing Officer IV

  9,033

  10,394

  Senior Nursing Officer I

  7,280

  8,462

  Senior Nursing Officer II

  6,954

  8,148

  Nursing Officer I

  6,523

  7,791

  Nursing Officer II

  6,248

  7,551

  Nursing Sister I

  6,248

  7,551

  Nursing Sister II (Ward Sister)

  5,628

  7,215

  Deputy Nursing Sister

  5,050

  6,234

  Staff Nurse SRN

  4,450

  5,426

  Enrolled Nurse

  4,008

  4,835

  Nursing Auxiliary

  3,143

  4,017

  Staff Nursery Nurse NNEB

  3,450

  4,246

  Hospital Nursing Staff NNEB

  3,583

  4,375

  Annual Salary

  1st Year £

  2nd Year £

  3rd Year £

  Student Nurse

  3,290

  3,428

  3,593

  Pupil Nurse

  3,290

  3,428

  Annual Salary Scale

  Minimum £

  Maximum £

  Director of Nurse Education I

  11,925

  13,425

  Director of Nurse Education II

  11,277

  12,777

  Director of Nurse Education III

  10,667

  12,161

  Director of Nurse Education IV

  9,747

  11,246

  Assistant Director of Nurse Education

  9,805

  11,133

  Senior Tutor

  7,392

  8,660

  Tutor

  6,805

  8,073

  Clinical Teacher

  6,248

  7,551

  Girocheques (Loss)
  Mr. Stan Thorne
  asked the Secretary of State for Social Services if he will revise the rule operated by his Department in respect of the re-issue of lost Giro payments only after seven weeks has expired in view of the considerable hardship this creates.

  Mrs. Chalker:
  The Department normally replaces a lost Girocheque only after a check that the original has not been cashed, a process which takes some weeks, but special procedures can apply in cases of financial hardship.

  Disabled Persons Act 1981
  Mr. Wigley
  asked the Secretary of State for Social Services when he anticipates a circular being issued to local authorities and other interested parties concerning the implementation of the Disabled Persons Act 1981, which comes into force on 27 October; and what discussions he has held with organisations representing disabled people in drawing up this circular.

  Mr. Rossi:
  Work is proceeding in the Departments concerned on the preparation of guidance. Consultations will be undertaken as necessary.

  Retirement Age (Pension Costs)
  Mr. Hicks
  asked the Secretary of State for Social Services what is the estimated increased cost for pensions if the retirement age for men were to be reduced to 60 years; and what would be the estimated net cost to public funds in the context of current unemployment levels.

  Mr. Rossi:
  I refer my hon. Friend to my reply to the hon. Member for Cannock (Mr. Roberts) on 20 October 1981—[Vol. 10, c. 102–3]—for the current net cost. On the same assumptions it is estimated that the increased cost of retirement pensions would be £3,050 million per annum.

  National Insurance Fund
  Mr. Marlow
  asked the Secretary of State for Social Services what is the annual income and expenditure of the national insurance fund.

  Mrs. Chalker:
  The most recent estimates are given in the report by the Government Actuary on the draft of the Social Security Benefits Uprating Order 1981, Cmnd. 8296.

  Glue Sniffing
  Mr. Teddy Taylor
  asked the Secretary of State for Social Services if he will initiate a comprehensive inquiry into the incidence of solvent sniffing; and if he will make a statement.

  Mr. Geoffrey Finsberg:
  Evidence suggests that solvent sniffing is sporadic and often clandestine and it is unlikely that a comprehensive inquiry into its incidence would be practicable or give reliable information.

  The Government's view is that the problem is best assessed locally by the health and local authorities, and best dealt with by education and persuasion through local initiatives involving parents, health, social and youth workers, police, teachers and others. I welcome the local initiatives already taken in several areas and we are exploring what more can be done to help.

EDUCATION AND SCIENCE

  Sixth Form Education
  Mr. Dykes
  asked the Secretary of State for Education and Science if he will estimate the number of children who are staying on for sixth form type education in secondary age schools because of the high rate of unemployment.

  Sir Keith Joseph:
  The number of children staying on for sixth form education in England this September is not yet known. But it seems that in many areas, particularly of high unemployment, there has been an increase in the proportion of the age group staying on.

  Universities (Expenditure Cuts)
  Mr. Marks
  asked the Secretary of State for Education and Science what representations he has received on the subject of expenditure cuts at universities of applied technology.
  331
  Mr. Campbell-Savours
  asked the Secretary of State for Education and Science what representations he has received on the cuts to be introduced in the financing of universities.

  Mr. Waldegrave:
  Ministers have received about 2,000 letters about the financing of the universities since the announcement of the allocation of recurrent grant on 2 July. Over half of these concerned universities that were formerly colleges of applied technology.

  Teachers
  Mr. Hooley
  asked the Secretary of State for Education and Science what is the current estimate of the shortage of teachers of mathematics and physics in State schools in England and Wales.

  Dr. Boyson:
  There is no single measure of teacher shortage in a particular subject because schools vary in the time allotted to different subjects in the curriculum, and many teachers teach more than one subject. But the number of unfilled vacancies reported by local education authorities indicates the immediate demand for additional secondary teachers by subject. In January 1981 local education authorities in England and Wales reported 383 unfilled vacancies in mathematics and 151 in physics.

  Mr. Andrew F. Bennett
  asked the Secretary of State for Education and Science how many qualified teachers are not now working as teachers.

  Dr. Boyson:
  About 300,000 qualified teachers in England and Wales under the age of 60 are estimated to be not currently working as teachers.

  Primary and Secondary Schools (Places)
  Mr. Spearing
  asked the Secretary of State for Education and Science what response he has had to his circular 2/81 concerning surplus places in primary and secondary schools.

  Mr. William Shelton:
  The circular invited LEAs to submit information by 31 December 1981 about the number of surplus school places in their areas up to 1986 and their plans for taking those places out of use. As yet no returns have been received.

  Academic Staff (Redundancies)
  Mr. Christopher Price
  asked the Secretary of State for Education and Science what further consultations he will be having with the University Grants Committee about redundancies of academic staff.

  Mr. Waldegrave:
  My right hon. Friend will continue to consult the University Grants Committee as necessary.

  Full-time Education (16-year-olds)
  Mrs. Renèe Short
  asked the Secretary of State for Education and Science if he is satisfied with the number of 16-year-olds who have decided to continue full-time education.

  Mr. William Shelton:
  My right hon. Friend is pleased by recent indications of an increase in the staying on rate among 16-year-olds, but he will not be wholly satisfied until we have achieved a much larger participation by our young people in education of suitable type and quality.

  Further Education
  Mr. Kenneth Lewis
  asked the Secretary of State for Education and Science whether he has made a decision on the future financing of further education.

  Sir Keith Joseph:
  Not about permanent arrangements. But I have put proposals to the local authorities for ad hoc machinery which should improve decisions about the pattern of provision and the financing of advanced further education. I am glad to say that they have welcomed this approach and are collaborating with me to get work started.

  University Grants Committee
  Mr. Torney
  asked the Secretary of State for Education and Science if he will ensure that future appointments to the University Grants Committee result in a wider representation of interests on the committee.

  Mr. Waldegrave:
  Members of the University Grants Committee and its sub-committees are not appointed to represent particular institutions. They are already drawn from a wide range of academic and industrial backgrounds.

  Education Programmes (North of England)
  Mr. Foster
  asked the Secretary of State for Education and Science what plans he has to encourage increased participation in education programmes amongst 16 to 19-year-olds in the North of England.

  Mr. William Shelton:
  My right hon. Friend is concerned to increase participation in all parts of the country. Additional expenditure of £60 million in 1982–83 has been announced to enable 50,000 more young people to stay on in full-time education.

  Aberdeen University
  Mr. Robert Hughes
  asked the Secretary of State for Education and Science what representations he has had from Aberdeen university on the level of University Grants Committee grant for forthcoming years.

  Mr. William Waldegrave:
  No representations have been received from the University of Aberdeen. Ministers have received 17 letters about the allocation of grant to the university, including some from members of staff.

  European Foundation
  Mr. Rippon
  asked the Secretary of State for Education and Science what progress is being made towards the enactment of the European Foundation on the basis agreed by the Heads of State and Government in Rome in March 1977 and in Copenhagen in April 1978; and whether he will make a statement.

  Mr. William Shelton:
  The Government look forward to further discussion at an early date of the issues that have so far prevented the establishment of the foundation and are certainly ready to consider constructively with our partners any proposals put forward by them for resolving the difficulties.

  Books and Equipment (ILEA)
  Mr. O'Halloran
  asked the Secretary of State for Education and Science how much is spent per head by the

  333
  Inner London Education Authority on books and equipment for primary and secondary pupils, respectively; how this compares with expenditure in 1974–75 and 1978–79 at comparable prices; and how it compares with other education authorities.

  Dr. Boyson:
  Expenditure per head on books and equipment for primary and secondary pupils by ILEA and by English local education authorities as a whole, in 1974–75, 1978–79 and 1979–80—the latest year for which figures are available—was as follows:

  £ (1980–81 outturn prices)

  1974ߝ75

  1978ߝ79

  1979ߝ80

  Primary—ILEA

  35.0

  32.5

  43.5

  —England

  18.0

  17.0

  16.5

  Secondary—ILEA

  63.0

  67.0

  78.0

  —England

  35.0

  32.0

  30.5

  Secondary Pupils (Qualifications)
  Mr. Knox
  asked the Secretary of State for Education and Science how many students left secondary schools in the maintained sector last year with (a) no academic qualifications, (b) one CSE, (c) one to five CSEs, (d) one O-level, (e) one to five O-levels and (f) five to 10 O-levels.

  Dr. Boyson:
  The information readily available on qualifications of leavers from English maintained schools in 1979–80 is as follows:

  Leavers with:

  Thousands

  Five or more higher* grades at O-level or CSE

  147.5

  1–4 higher* grades at O-level or CSE

  201.3

  No higher* grades but one or more other grades

  266.8

  No CSE or O-level qualifications

  90.5

  All leavers

  706.1

  *O-level grades A-C and CSE grade 1 are classified as higher grades. All other graded results are classified as other grades.

  Information for leavers in 1980–81 is not yet available.

  Mr. Colvin
  asked the Secretary of State for Education and Science what percentage of young people leave school without any approved educational qualification.

  Dr. Boyson:
  A total of 12.2 per cent. of all English school leavers in 1979–80 had no CSE or GCE graded examination result.

  Teachers (Efficiency Assessment)

  Mr. Dickens
  asked the Secretary of State for Education and Science if he will take steps to introduce a procedure to assess the efficiency of individual teachers at regular intervals following qualification.

  Dr. Boyson:
  My right hon. Friend recognises the importance to education of the quality of teachers performance; and it is a topic to which he intends to give further attention. He does not, however, have any plans at this stage to introduce new procedures.

  Ethnic Minorities
  Mr. Ernie Ross
  asked the Secretary of State for Education and Science when he expects to receive the report of the committee of inquiry into the education of children from ethnic minority groups chaired by Lord Swann.
  334
  Dr. Boyson:
  The committee has been asked to submit its final report by the middle of 1983.

  Secondary Schools (Buildings)
  Mr. Knox
  asked the Secretary of State for Education and Science how many secondary schools were built in the United Kingdom in 1980; and how many in each of the previous five years.

  Dr. Boyson:
  The number of secondary school projects completed in England in 1980 and in each of the previous five years is as follows:

  New Schools including first instalments

  Extensions and Adaptations

  1980

  8

  94

  1979

  17

  180

  1978

  20

  261

  1977

  64

  439

  1976

  58

  380

  1975

  70

  345

  Responsibility for secondary schools in other parts of the United Kingdom rests with my right hon. Friends the Secretaries of State for Scotland, Wales and Northern Ireland.

  Teachers (Salaries)
  Mr. Knox
  asked the Secretary of State for Education and Science if he is satisfied with the present system for negotiating teachers' salaries; and if he will make a statement.

  Dr. Boyson:
  My right hon. Friend is at present reviewing the negotiating arrangements for teachers' pay and intends to make a statement in due course.

  British Library Extension
  Mr. Grimond
  asked the Secretary of State for Education and Science what is the current estimate of the cost of the extension to the British Library.

  Mr. Channon:
  That part of the library's Euston Road building project on which a decision to proceed was announced on 28 November 1980 is estimated to cost £82 million at this year's prices.

  Expenditure
  Mr. Richard Page
  asked the Secretary of State for Education and Science (1) what is the estimated expenditure in England and Wales per pupil in (a)nursery and primary schools and (b) secondary schools in the maintained sector, excluding capital developments, for 1981–82;

  (2) what is the estimated expenditure in England and Wales per pupil in (a) nursery and primary schools and (b) secondary schools in the maintained sector, including capital developments for 1981–82.

  Dr Boyson:
  Planned institutional recurrent expenditure per pupil in England for 1981–82 is £614 in nursery and primary schools and £857 in secondary schools in cash terms. Capital expenditure on nursery, primary and secondary pupils cannot be separately identified within the planned provision for schools capital: planned capital expenditure per nursery, primary and secondary pupil in

  335
  England 1981–82 is £34 in cash terms. Expenditure in Wales is a matter for my right hon. Friend the Secretary of State for Wales.

DEFENCE

  Married Quarters (RAF Boulmer)
  Mr. Beith
  asked the Secretary of State for Defence how many married quarters at RAF Boulmer are at present empty.

  Mr. Wiggin:
  Eleven officers' married quarters and 52 airmen's married quarters were empty on 22 October 1981. These quarters are being held against future RAF requirements.

  Arms Sales
  Mr. Frank Allaun
  asked the Secretary of State for Defence what is the policy of Her Majesty's Government towards the sale of arms to countries where there is evidence of torture of political opponents.

  Mr. Pattie:
  Her Majesty's Government's general policy is to withhold approval for the export of arms to a country where there are serious abuses of human rights and where the equipment is, in our judgment, likely to be used for internal repression.

  Chile (Warship Sales)
  Mr. Frank Allaun
  asked the Secretary of State for Defence if he will reverse his decision to sell a naval missile vessel to Chile.

  Mr. Pattie:
  No.

  Mr. Ennals
  asked the Secretary of State for Defence what is the Government's policy concerning the sale of warships, including HMS "Norfolk" and HMS "Tidepool", to the Chilean Government.

  Mr. Pattie:
  All applications for the sale of arms to Chile, including warships, are considered on their merits taking all relevant factors into account.

  Pay Rates
  Mr. William Hamilton
  asked the Secretary of State for Defence if he will publish a table showing the minimum and maximum rates of pay for each rank in the Army, the Royal Navy, and the Royal Air Force in April 1981.

  Mr. Blaker:
  The military salaries for members of the Armed Forces effective from 1 April 1981 are set out in appendices 1 and 2 to the supplement to the Armed Forces Pay Review Body's Tenth Report 1981, Cmnd. 8241. My right hon. Friend the Prime Minister, in answer to a written question on 15 May—[Vol. 4, c. 343]—announced the Government's acceptance in full of the review body's recommendations and these are the rates that now apply.

  RAF Kemble
  Mr. Needham
  asked the Secretary of State for Defence

  what savings Her Majesty's Government expect as a result of the closure of No. 5 maintenance unit, RAF Kemble;

  what procedures the Royal Air Force is adopting for its study of the proposed closure of RAF Kemble; and whether the staff's opinions are being invited;

  336

  when the staff side will be invited to comment on the proposals to close RAF Kemble;

  whether he is satisfied that the entire If Kemble engineering task can be accommodated by surplus RAF Service personnel at the other two maintenance units;

  how many technical Service men, now surplus to RAF requirements, will take on the task currently performed by the No. 5 maintenance unit at Kemble;

  who in future will carry the surface finish tasks for the Queen's Flight;

  if he is satisfied that the quality of work carried out by the surface finishing section at RAF Kemble can be matched elsewhere within the Royal Air Force or by outside contractors;

  (8) what will be the capital costs if all work at RAF Kemble is transferred to other areas;

  (9) what are the alternative bases being considered to which work from RAF Kemble might be transferred, including contract work.

  Mr. Wiggin:
  I refer my hon. Friend to the answer given by my right hon. Friend the Secretary of State for Defence to my hon. and learned Friend the Member for Colchester (Mr. Buck), on 28 July.—[Vol. 9, c. 452.] Current studies are examining the issues referred to by my hon. Friend here and in other representations which he has made.

  Mr. Needham
  asked the Secretary of State for Defence (1) what are the numbers employed at RAF Kemble; what are their ages and grades; how many will have their jobs terminated if the closure of RAF Kemble takes place; and how many personnel will be offered alternative jobs at the other units to which work is transferred;

  (2) whether, if RAF Kemble is closed, redundancies will take place in the mobile grades.

  Mr. Wiggin:
  I shall write to my hon. Friend about the number of employees and their ages and grades. It is not possible to say how many would be made redundant or offered alternative jobs if RAF Kemble were to close. This would depend on a number of factors such as the level of natural wastage and to what extent suitable alternative jobs exist within the Ministry of Defence or other Government Departments.

  Jaguar and Tornado Aircraft
  Mr. Needham
  asked the Secretary of State for Defence whether he is satisfied that the surplus personnel generated by the current rundown of the Jaguar maintenance programme will not be required by the introduction of the Tornado.

  Mr. Wiggin:
  I am satisfied that adequate arrangements have been made to maintain the Tornado in service.

  Service Men (Rehabilitation)
  Mr. Carter-Jones
  asked the Secretary of State for Defence if he will take steps to permit a member of the British Limbless Ex-Servicemen's Association to visit at an early stage Service personnel who have lost a limb in order to assist with rehabilitation and give practical help and advice; and if he will make a statement.

  Mr. Wiggin:
  In so far as medical and security conditions and the personal wishes of Service men allow, there are no restrictions on visiting.
  337
  Royal Navy and Royal Fleet Auxiliary

  Mr. Speed
  asked the Secretary of State for Defence if he will list the names and type of each ship of the Royal Navy and Royal Fleet Auxiliary that have been, or are intended to be, withdrawn from the active fleet in 1980, 1981, 1982 and 1983, respectively.

  Mr. Blaker:
  The ships from the Royal Navy and Royal Fleet Auxiliary that have been, or on current plans will be, withdrawn from the active fleet in the period 1980–83, are listed below. Certain of these vessels will enter the standby squadron, where they will remain declared to NATO.

  1. Royal Navy

  1980

  "Blake"

  Helicopter Cruiser

  "Ashanti"

  Tribal Class Frigate

  "Eskimo"

  Tribal Class Frigate

  "Gurkha"

  Tribal Class Frigate

  "Mohawk"

  Tribal Class Frigate

  "Nubian"

  Tribal Class Frigate

  "Tartar"

  Tribal Class Frigate

  "Berwick"

  Rothesay Class Frigate

  "Tenacity"

  Fast Attack Craft

  "Dittisham"

  Inshore Minesweeper

  "Isis"

  Inshore Minesweeper

  1981

  "Bulwark"

  ASW/Commando Carrier

  "London"

  County Class Destroyer

  "Juno"

  Leander Class Frigate

  "Brighton"

  Rothesay Class Frigate

  "Falmouth"

  Rothesay Class Frigate

  "Glasserton"

  Coastal Minesweeper

  "Sabre"

  Fast Target Boat

  "Scimitar"

  Fast Target Boat

  "Cutlass"

  Fast Target Boat

  Year of Acceptance

  Name

  Type

  Order Date

  1980

  HMS "Invincible"

  Anti-Submarine Carrier

  17 April 1973

  HMS "Exeter"

  Type 42 Destroyer

  22 January 1976

  HMS "Speedy"

  Hydrofoil

  29 June 1978

  1981

  HMS "Southampton

  Type 42 Destroyer

  17 March 1976

  HMS "Splendid"

  Fleet Submarine

  26 May 1976

  HMS "Brilliant"

  Type 22 Frigate

  7 September 1976

  HMS "Ledbury"

  Mine Countermeasures Vessel

  31 March 1977

  HMS "Leeds Castle"

  Offshore Patrol Vessel

  8 August 1980

  On our latest assessment the following vessels are expected to enter service in 1982 and 1983:

  1982

  HMS "Illustrious"

  Anti-Submarine Carrier

  14 May 1976

  HMS "Nottingham"

  Type 42 Destroyer

  1 March 1977

  HMS "Liverpool"

  Type 42 Destroyer

  27 May 1977

  HMS "Brazen"

  Type 22 Frigate

  21 October 1977

  HMS "Cattistock"

  Mine Countermeasures Vessel

  29 January 1979

  HMS "Dumbarton Castle"

  Offshore Patrol Vessel

  3 June 1981

  1983

  HMS "Trafalgar"

  Fleet Submarine

  7 September 1977

  HMS "Manchester"

  Type 42 Destroyer

  10 November 1978

  HMS "Cottesmore"

  Mine Countermeasures Vessel

  29 Janauary 1979

  HMS "Challenger"

  Seabed Operations Vessel

  28 January 1979

  HMS "Brocklesby"

  Mine Countermeasures Vessel

  19 June 1980

  Unnamed

  Offshore Patrol Vessel*

  1 July 1981

  Note * First of five for use in Hong Kong (75 per cent funded by Hong Kong Government)

NATIONAL FINANCE

  Value Added Tax
  Mr. Proctor
  asked the Chancellor of the Exchequer by what amount value added tax would have to be increased to recover the costs incurred to the Treasury of abolishing corporation tax.
  338

  "Intrepid"

  Assault Ship

  "Norfolk"

  County Class Destroyer

  "Bacchante"

  Leander Class Frigate

  "Naiad"

  Leander Class Frigate

  "Rhyl"

  Rothesay Class Frigate

  "Crofton"

  Coastal Minesweeper

  "Lewiston"

  Coastal Minesweeper

  "Endurance"

  Ice Patrol Ship

  "Laleston"

  Coastal Patrol Craft

  "Porpoise"

  Porpoise Class Submarine

  1983

  "Hermes"

  ASW/Commando Carrier

  "Dido"

  Leander Class Frigate

  "Shavington"

  Coastal Minesweeper

  "Wasperton"

  Coastal Patrol Craft

  "Londonderry"

  Trials Ship

  2. Royal Fleet Auxiliary

  1980

  "Lyness"

  Stores Support Ship

  1981

  "Tarbatness"

  Stores Support Ship

  "Eddyfirth"

  Coastal Tanker

  "Tidepool"

  Fleet Tanker

  "Stromness"

  Stores Support Ship

  "Bacchus"

  Stores Carrier

  1982

  "Pearleaf"

  Support Tanker

  1983

  "Tide spring"

  Fleet Tanker

  Mr. Speed
  asked the Secretary of State for Defence if he will list the names and type and date of ordering of each ship of the Royal Navy and the Royal Fleet Auxiliary that has joined or is expected to join the active fleet in 1980, 1981, 1982 and 1983, respectively

  Mr. Blaker:
  The following ships, with their order date, have been accepted into service in 1980 and 1981:

  Mr. Bruce-Gardyne:
  It is estimated that the standard rate of VAT would have to be increased from 15 per cent. to about 20 per cent.

  Sir Brandon Rhys Williams
  asked the Chancellor of the Exchequer if he will publish a table showing what are now the rates at which value added tax is applied in member States of the European Community.

  Mr. Bruce-Gardyne:
  Following is the information:
  339

  VAT rates (percentage)

  Belgium

  6

  17

  25

  Denmark

  22

  France

  7

  17.6

  331/3

  Germany

  6½

  13

  Greece*

  Ireland

  0

  15

  25

  Italy

  8

  15

  18

  35

  Luxembourg

  5

  10

  Netherlands

  4

  18

  United Kingdom

  0

  15

  Notes:

  The Standard Rate in each case is in italic.

  Exports are zero-rated.

  In addition certain Member States have various temporary rates or additional rates with minimal coverage.

  * VAT not yet introduced.

  European Community (Rebates)
  Mr. Teddy Taylor
  asked the Chancellor of the Exchequer when the rebates which are being considered by the European Assembly fall to be paid under the agreement of 30 May.

  Mr. Ridley:
  I assume that my hon. Friend is referring to the United Kingdom's supplementary measures refunds in respect of 1981, which have recently been the subject of discussion in the Budgets Committee of the European Parliament. The 30 May 1980 agreement provides for these refunds in respect of 1981 to be paid out of the Community's 1982 budget, except to the extent that they have already been covered by advances from the 1981 budget.

  European Community (Membership Costs)
  Mr. Marlow
  asked the Chancellor of the Exchequer what is the cost of the United Kingdom's membership of the European Economic Community as computed by net budget deficit plus unemployment costs arising from increased net deficit in manufactured trade since 1973 plus the cost of net imports of European foodstuffs against probable prices available at world market prices.

  Mr. Ridley:
  I shall let my hon. Friend have a reply as soon as possible.

  Unemployment Benefits (Taxation)
  Mr. Rost
  asked the Chancellor of the Exchequer what is to be the starting date for the Government's proposals to bring into tax benefits paid to the unemployed.

  Mr. Ridley:
  Bringing these benefits into tax will involve withholding tax refunds while benefit is being paid to a claimant. We now propose to introduce these changes in two stages. The withholding of refunds will start from 6 April 1982, but benefit paid before 5 July 1982 will not be charged to tax. The necessary legislation will be introduced in the 1982 Finance Bill.

  Mortgage Interest
  Mr. Winnick
  asked the Chancellor of the Exchequer when it is proposed to adjust the income tax relief on increased mortgage interest rates; and if he will make a statement.

  Mr. Ridley [pursuant to his reply, 21 October 1981, c. 130]:
  Tax offices will shortly be amending the PAYE
  340
  codes of taxpayers with building society mortgages to reflect the increased tax relief due as a result of the recently announced rise in mortgage interest rates. We intend the revised codes to be available for employers to apply them, at the latest, on the first pay day after 30 November.

  Employee Share Schemes
  Mr. Waller
  asked the Chancellor of the Exchequer how many companies have received Treasury approval to introduce employee share schemes under the Finance Act 1978.

  Mr. Ridley [pursuant to his reply, 22 October 1981, c. 168]:
  By 30 September 1981, 247 profit-sharing schemes had been approved by the Inland Revenue under the provisions of the Finance Act 1978.

  Tax Threshold
  Mr. Field
  asked the Chancellor of the Exchequer if he will estimate the cost of raising the tax threshold to (a) the supplementary benefit level and (b) the family income supplement eligibility level.

  Mr. Ridley
  [pursuant to his reply, 23 October 1981]: It would cost about £2,500 million in a full year at 1981–82 income levels to raise tax thresholds for single people and married men to the current level of supplementary benefit plus average housing costs, assuming that the tax thresholds varied according to the numbers of dependants. In these calculations no adjustment has been made to the wife's earned income allowance.

  Only families with children have been considered in this case, as only these are eligible for family income supplement. The cost in a full year at 1981–82 income levels of raising tax thresholds to family income supplement eligibility levels assuming the tax thresholds varied according to the number of dependants would be about £3,100 million.

  European Community (United Kingdom Contribution)
  Mr. Teddy Taylor
  asked the Chancellor of the Exchequer if the £16 million aid offered by the EEC Commission for housing projects in Northern Ireland will have the effect of reducing further the net contribution to be made by the United Kingdom to the EEC under the agreement of 30 May, or whether it will be included as income from the EEC in assessing the size of rebates to be made under that agreement.

  Mr. Ridley
  [pursuant to his reply 26 October 1981]: The Government's discussions with Commission officials have proceeded on the basis that the proposed grants for housing in Northern Ireland should lead to an increase in total United Kingdom receipts compared with what would have happened otherwise. It follows from this that, if the proposed payments are made, the effect would be to reduce further the United Kingdom's net budgetary contribution in the event of the agreement of 30 May 1980 being extended to cover the 1982 budget.

NORTHERN IRELAND

  Unemployed Persons (Belfast)
  Mr. Concannon
  asked the Secretary of State for Northern Ireland if he will state in the Official Report the numbers unemployed in each of the Belfast travel-to-work areas.

  Mr. Adam Butler:
  The number of people registered as unemployed in each of the employment service office areas which constitute the Belfast travel-to-work area is as follows:

  Employment Service Office Area

  Total *

  Belfast

  35,803

  Bangor

  2,765

  Carrickfergus

  2,566

  Larne

  1,958

  Lisburn

  3,631

  Newtownards

  2,512

  Total

  49,235

  * as at 8 October 1981.

  Redundancies
  Mr. Concannon
  asked the Secretary of State for Northern Ireland how many redundancies from factories located in Northern Ireland have been notified to the Northern Ireland Departments since January of the current year.

  Mr. Adam Butler:
  The information is not available in the form requested as the statistics kept by the Northern Ireland Department of Manpower Services do not segregate proposed redundancies in factories from those in other places of work. However, a total of 20,092 proposed redundancies were notified to the Department of Manpower Services during the period from 1 January to 30 September 1981.
  342
  These figures are not a true measure of the number of actual redundancies since many redundancies do not in fact take place—for example, because of subsequent applications under the temporary short-time working compensation scheme—and there is no statutory requirement to notify the Department of Manpower Services when proposed redundancies do not take place.

  Maze Prison (Irish Language)
  Mr. Wigley
  asked the Secretary of State for Northern Ireland what rules govern the use of the Irish language during prison visits at HM prison Maze.

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

  European Community (Housing Aid)
  Mr. Teddy Taylor
  asked the Secretary of State for Northern Ireland if the £16 million aid offered by the EEC Commission for housing projects in Northern Ireland will be in addition to planned expenditure by Her Majesty's Government; and if the arrangements for the making of these grants have been finalised with the Commission.

  Mr. Prior
  [pursuant to his reply, 26 October 1981]: There is as yet no Community instrument to provide the legal authority for the Commission to make the proposed grant. Her Majesty's Government are co-operating fully with the Commission as it prepares the necessary regulation. Discussions with the Commission are proceeding on the basis set out in the answer given to my hon. Friend earlier today by my right hon. and learned Friend the Chancellor of the Exchequer. I can confirm that if the proposed grant is made available expenditure on housing in Northern Ireland will be higher than it could otherwise have been.

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

The Lord Llewelyn-Davies: Tribute
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): My Lords, before we begin our proceedings today, I wonder if I might be permitted to transgress the usual custom of the House, just to say that many noble Lords will have been deeply saddened to hear that the noble Lord, Lord Llewelyn-Davies, died earlier today. I should like to express what I am sure will be the feeling of the whole House: that our profound sympathy at this time should be conveyed to the noble Baroness, Lady Llewelyn-Davies, and her family.
Lord Peart: My Lords, the whole House will be grateful to the noble Earl, Lord Ferrers, for expressing the sympathy we all feel with Lady Llewelyn-Davies and her family.
Lord Byers: My Lords, we wish to be fully supportive of what has been said on this very sad occasion.

Nordic Nuclear Weapon-Free Zone
2.36 p.m.
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 what is their attitude towards the proposal to establish a nordic nuclear-free zone covering Finland, Sweden, Norway, Denmark and an adjacent area of the Soviet Union.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Trefgarne): My Lords, Her Majesty's Government have strong misgivings about proposals to establish a nordic nuclear weapon-free zone. We believe that these proposals do not take account either of the Soviet ability to make nuclear strikes on targets in Europe from deep within the Soviet Union or of the Soviet superiority in conventional weapons.
Lord Brockway: My Lords, while being very disappointed with his reply, in thanking the Minister may I ask this question: Does not this promise a major breakthrough in freeing Europe, East and West, from nuclear weapons? Has the noble Lord noted the statement of President Brezhnev that he will be prepared to discuss with the Governments concerned a large adjacent area in the Soviet Union. And supplementing the decisions of Bulgaria and Romania to join a nuclear-free zone in the Balkans, does not
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this indicate a hopeful development of communist attitude towards this issue?
Lord Trefgarne: Would that it did, my Lords, but unhappily this is not the case. In June President Brezhnev did make a vague reference to the possibility of considering measures concerning parts of Soviet territory that would border a nordic nuclear weapons-free zone, but subsequently the Soviet news agency explicitly rejected incorporation of either the Kola Peninsula or the Baltic in such a zone.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that there is widespread concern about the spread of nuclear weapons both in the East and the West? Is he not further aware that the idea of a nuclear-free zone in Europe has a respectable origin going as far back as Hugh Gaitskell and the Rapacki plan? Would he not look again at the Government's position in this matter?
Lord Trefgarne: My Lords, the Government consider their position in respect of these types of proposals—and there are a number of proposals which are discussed from time to time—from the point of view of our own security, among other things, and our security would most certainly not be served by creating a nuclear weapons-free zone in Europe, or confined to further North, while the Russians retain the ability to fire their missiles at us from their own territory.
Lord Boyd-Carpenter: My Lords, do not questions of this kind, whose only effect if implemented would be to weaken the military power of the western alliance, serve no purpose other than to strengthen the aggressive power of the Soviet Union? Would they not be more convincing if just occasionally an anti-nuclear demonstration were staged in the streets of Moscow?
Lord Trefgarne: My Lords, I think there is considerable force in what my noble friend says. But, having said that, we certainly would not dismiss all these proposals out of hand. We would examine each and every one on its merits.
Lord Davies of Leek: My Lords, is the noble Lord aware that the last sentence of that reply—that we would not dismiss out of hand what the Soviet Union says—brings us to the logical point that if we never believe anything that the USSR leaders say we can never get agreement, and that each step and moderate statement towards that is a worthwhile step on the path of a joint effort to build up peace?
Lord Trefgarne: My Lords, it is not a question of believing or disbelieving what they say, although I must say our credibility has been strained from time to time, but of examining these proposals on their merits. The particular proposal which is put to us now is one that we think would unduly expose us to the threat we hope to avoid. The fundamental difficulty is that none of the proposals include provision for moving the Soviet SS20 missiles out of range of Europe.
Lord Duncan-Sandys: My Lords, is not this an unrealistic proposal, and would it not be seen by the

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world as the first step towards the abandonment by Western Europe of the will to defend herself?
Lord Trefganre: My Lords, I believe there is considerable force in what my noble friend says.
Lord Molloy: My Lords, would not the noble Lord agree that if there should be some degree of agreement it might be the commencement of the abandonment of the suicidal policies now being followed by the powerful nations on earth? Therefore, would it not be a possibility for Her Majesty's Government to consider encouraging both the United States of America and the Soviet Union to have this item on their agenda in November, notwithstanding that the immediate proposals would be objectionable to the USA? But perhaps from these, with bargaining and discussion, progress might be made along the road to sanity.
Lord Trefgarne: My Lords, I certainly hope that the talks to which the noble Lord referred which are to begin at the end of November will make some progress on the matters which will be under discussion. But the proposal contained in the Question of the noble Lord, Lord Brockway, is so one-sided that it would have to be substantially modified before it could form any basis of discussion.
Lord Brockway: My Lords, has the Minister noted the statement by Mr. Michael Foot that he hoped that the coming Labour Government would join this North European nuclear-free zone? In view of that, will the Government reconsider spending their billions on the Trident which will be scrapped under those circumstances?
Lord Trefgarne: My Lords, if ever the right honourable gentleman succeeds to No. 10, which, I suggest, is not exactly a likely prospect, then I suspect that his policies will have to be modified in accordance with the reality of the situation that he will then find.
Lord Kennet: My Lords, is it not the case that the nuclear-free zone favoured by Mr. Rapacki when he was Foreign Minister of Poland, and by Hugh Gaitskell when leader of a different Labour Party, would have been in both Western and Eastern Europe roughly equally?
Lord Trefgarne: My Lords, I am not familiar with the elderly proposal to which the noble Lord referred —doubtless it had its merits in its day. However, the present problem is that the range of nuclear weapons available to the Soviets—and I mean range in terms of the distance that they will carry—is such that they would have to go a very long way East to cease to be a threat to Europe.

Youth Work Creation Schemes: Costs
2.45 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the difference in the net cost of creating a place under the Youth Opportunities Programme and under the Young Workers' Scheme.
Earl Ferrers: My Lords, the Youth Opportunities Programme and the Young Workers' Scheme are not comparable in terms of net costs per place. However, the present net cost of a YOP place is around £24 per week. It is not possible to state the net cost of the Young Workers' Scheme, first because it does not start until 4th January 1982, and secondly because there will be too many unknown factors to permit any reasonable degree of accuracy in such calculation.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for that reply and recognise that it is probably too early to make even a rough comparison now. However, how many additional jobs do the Government hope the Young Workers' Scheme will produce during 1982 after its start in January, applying as it does to under-18s in their first year of work and, therefore, being especially relevant to school-leavers?
Earl Ferrers: My Lords, it is very difficult to forecast with any accuracy what the position will be. However, the operating assumption is that the coverage is likely to build up within a few months to between 50,000 and 100,000 young people.
Lord Davies of Leek: My Lords, is the noble Earl aware that in the Guardian today there is an interesting suggestion that the cost to the Government of keeping some of these young workers in work is somewhere in the neighbourhood of £2,000? Would it not be worthwhile to give grants to some unemployed students who have their A-levels and who are qualified to go to university and worthy of a university place—for there are plenty of university places—thus enabling progress to be made in Britain and increasing our adaptability to the new world?
Earl Ferrers: My Lords, I had not seen the article to which the noble Lord referred and of course the difficulty is that it is very simple to make calculations of that nature without going into all the complexities of the position. I would only tell the noble Lord that the whole purpose of both the Youth Opportunities Programme and the Young Workers' Scheme is in order to try to alleviate the problem of unemployment which is affecting young people.
Lord Orr-Ewing: My Lords, did my noble friend note in The Times profile of the Manpower Services Commission that it was reported that the cost of training young people could be as much as £2,000—£40 a week—rather than the £25 cost mentioned by my noble friend in his first reply? Can he say exactly what is taken into account in the £25 per week costing as opposed to the £40 a week costing reported in The Times and repeated in a letter in that paper today as well?
Earl Ferrers: My Lords, when you take into account the gross cost it covers all the costs of the scheme,

899
including the administration and the purchases of materials and so forth. I would remind my noble friend that under the Youth Opportunities Programme there are some four schemes: the work experience scheme, the community projects, the training workshops and the work preparation courses in colleges of further education. The gross costs of these schemes vary from between about £30 to over £100. The average gross cost is £40. From that you then have to subtract the benefits which would otherwise have been paid, which are round about £16, which gives you the net cost of £24.
Lord Oram: My Lords, while recognising the difficulty of making comparisons between two distinctly different schemes, is the Minister aware that The Times recently forecast that places under the Young Workers' Scheme would be very costly and that it went on to explain that the cost would be high because the scheme, by its very nature, subsidises a high proportion or jobs which would have been created anyway? In other words, are not the Government proposing to pay employers to do something that they were in any case going to do? If that is so, is it not a somewhat ironical, but perhaps perfect, complement to the Government's decision recently in the Wildlife and Countryside Bill to pay farmers for not doing what they were not proposing to do anyway?
Earl Ferrers: My Lords, the noble Lord, Lord Oram, is ingenious. Of all the questions which one might have anticipated, I never thought that the Wildlife and Countryside Bill would come up under this Question. He is perfectly correct in that some of the money which will be paid under the Young Workers' Scheme will go to those who, anyhow, will have been employed. That is why it is difficult to answer my noble friend Lord Campbell of Croy. Of course, the advantage of this is that it is a payment to employers to make the work of young people more attractive, and the administration is very small. In other words, all the expense of the scheme goes to the purpose for which it is required, which is to encourage the employment of young people.
Lord Alexander of Potterhill: My Lords, will the Minister agree that because of the nature of the society in which these young people will live the fundamental need, rather than work experience, is to raise their educational standards so that they can be trained for the kind of technological society in which they will live? Are the Government not failing to recognise this problem and to make provision for it?
Earl Ferrers: My Lords, that is a very important point, but I do not think it is the whole point. Many people have perfectly good training but are unable to get jobs. The purpose of both these schemes is to encourage these people to get jobs, whether or not they have training.
Lord Wallace of Coslany: My Lords, is the noble Earl aware that both these schemes, however desirable, are in fact temporary expedients, and that the only worthwhile objective of the Government is to ensure a situation where a young man or girl leaving school
900
can get an adequate, progressive job and receive training which will benefit not only him or her but the country as a whole?
Earl Ferrers: My Lords, the noble Lord, Lord Wallace, is absolutely right; of course, these are temporary expedients. But we are going through a period of great recession and of great human discomfort. The Government are doing their best to try to ensure that the temporary position is alleviated while, at the same time, ensuring that the future of the country depends upon being competitive.

Disabled People: MSC Recommendation
2.52 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what consultations and other action they are carrying out upon the recent recommendation by the Manpower Services Commission that the quota scheme for employment of disabled people, established by legislation in 1944, be replaced by a new general obligation for employers, linked to a code of practice.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Elton): My Lords, as was announced on 23rd July, the Government are giving interested parties and individuals until the end of this year to comment on the commission's proposals, before coming to any decisions on the future of the quota scheme.
Lord Campbell of Croy: My Lords, I thank my noble friend for his reply. Is he aware that some organisations representing disabled people are very worried at the prospect of the abandonment of the quota, in spite of the fact that the quota of 3 per cent. has in practice become a target only rather than an obligation? Does my noble friend agree that one of the main problems has been that many disabled people seeking work have not wanted to be registered?
Lord Elton: My Lords, I can certainly reassure my noble friend, whose work for the IYDP in Scotland is widely regarded, that there is no question of abolishing the quota scheme without looking at it in the light of what is thrown up by discussion of this paper. I also take on board what he says about the effectiveness of the quota scheme. As, in fact, only 2 per cent. of the workforce is at present registered as disabled, it is physically and mathematically impossible for all employers to honour the 3 per cent. undertaking.
Baroness Lane-Fox: My Lords, is my noble friend aware that as there are those who stick to this misguided belief in the quota system, the facts, which show it to be ineffective and virtually unworkable, should be made better known so that the merits of the MSC's review of the system and the alternatives suggested therein are more widely recognised?
Lord Elton: My Lords, the Government issued a press statement on 23rd July to draw the general public's attention to this review and I trust that interested parties will indeed look closely at how the quota scheme is working.
Lord Molloy: My Lords, is the noble Lord aware that many of these well-meaning schemes to help, assist and encourage the disabled to earn a living and to make their contribution have never fully fructified because of some employers dodging the issue? One of the things that we ought to consider is a method of enforcement of the law of this land and punishment for those who so dishonourably and disgracefully evade their responsibilities to the disabled folk of our nation.
Lord Elton: My Lords, that is perhaps less easy to achieve than the noble Lord thinks. We have looked at the scheme used in, for instance, Germany where a levy is imposed on firms which do not honour their obligations. The danger is that some firms regard the levy as being an acceptable imposition in order not to honour the obligation; on the other hand, firms which cannot afford to pay the levy find themselves disadvantaged.
Lord Campbell of Croy: My Lords, will my noble friend ensure that the consultations being carried out are very wide and that enough time is given for bodies representing the disabled, employers and trade unions to put forward their views?—because one hopes that a better scheme than the quota scheme can be produced, but many people will need to be convinced that it is a better one.
Lord Elton: My Lords, both organisations and individuals have until the end of this year to make known their views. It is not surprising, therefore, that so far we have received only about three dozen submissions from organisations and individuals. I trust that the attention which the noble Lord has drawn to this issue by asking this Question will help to get others to interest themselves in this important matter.

Interest Rates
2.56 p.m.
Lord Beswick: 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 since 15th June 1981 they have taken any initiative with other countries of the EEC to secure agreement designed to prevent competitive interest rates.
The Minister of State, Treasury (Lord Cockfield): My Lords, my right honourable and learned friend the Chancellor of the Exchequer has discussed the level of interest rates with his counterparts from Governments of the European Community and other states on various occasions in recent months. At these meetings the Governments of several major European and other industrial countries have renewed
902
their commitment to the firm fiscal and monetary policies which hold out the best prospect of lower and more stable interest rates for the longer term. This message emerged strongly from the September meeting of the IMF Interim Committee, the advisory group representing the whole membership of the fund.
Lord Beswick: My Lords, as always, I am much obliged to the noble Lord for his Answer. However, does he not remember that when I put down this same Question on 15th June he then told me that the initiatives that I had in mind would not be useful but that the Government relied on:
"firm fiscal and monetary policy"? [Official Report; col. 431.]
Is it not a fact that since 15th June we have had a firm fiscal and monetary policy? Is it not also a fact that since then interest rates have increased by a further 2 per cent.? Is it not a further fact, despite what the noble Lord said about the IMF meeting, that we are out of step with our French and German friends in making representations to the United States about their high interest rate policy?
Lord Cockfield: My Lords, far from being out of step, the position is that the United Kingdom—in common with most other industrialised countries—believes that a firm monetary and fiscal policy is essential as a means of both dealing with inflation and, in the longer term, achieving lower rates of interest. We do, of course, all regard the present level of interest rates as a matter of grave concern, but we need to remember the reasons why those rates of interest exist. Most major countries, including this country, have very substantial budgetary deficits, and it is the existence of those budgetary deficits and the large amount of borrowing that they entail which forced up interest rates to the present level. If I may say so, it was a very considerable achievement on the part of my right honourable and learned friend to have reduced the rate of interest at the time of the Budget and to have kept it down over a period of a good many months.
Lord Beswick: My Lords, does not the noble Lord understand that many of us agree with the need for a firm monetary policy? But can he not also see that the high interest rates are, in fact, frustrating that policy? Is it not a fact that they are putting up costs at the same time as he is making his cuts? For example, has the noble Lord noticed that the 2 per cent. extra interest on the Treasury stock issued last month—the 2 per cent. extra, not the shameful total—precisely equals the £20 million cut they are making in the university grant this year? Are we really on the right lines if we cut down on education in order to increase the amount that goes to the moneylenders?
Lord Cockfield: My Lords, it is, I am afraid, a fallacy to believe that high interest rates add to inflation. They have precisely the reverse effect. They represent one of the major weapons in getting inflation under control. It is because of the burden of interest to which the noble Lord rightly draws attention—we are just as much concerned about it as he is—that we need to follow not only a strict monetary policy but a

903
strict fiscal and financial policy as well. This in fact is what underlay my right honourable friend's strategy at the time of the Budget.
Lord Morris: My Lords, would not my noble friend agree that so much misunderstanding on this particular point arises from the fact that interest rates are more a symptom than a cause?
Lord Cockfield: My Lords, I am obliged to my noble friend for his intervention. Interest rates of course are the result of the need to borrow large sums of money. The need to borrow large sums of money flows from the size of the Budget deficit, and that is why it is important to do everything possible to bring the size of the Budget deficit down.
Lord Shinwell: My Lords, may I ask the noble Lord, Lord Cockfield, a question? He informs your Lordships' House that high interest rates have a beneficial effect so far as inflation is concerned; they do not increase inflation. If they are not detrimental to inflation, then why not allow interest rates to increase, and have the uncertainty, so that inflation can be controlled?
Lord Cockfield: My Lords, I appreciate the dilemma that the noble Lord is trying to pose, but I think we must recognise what an important burden interest rates are on the individual business as well as on the individual, and our policies are directed to bring interest rates down when that is possible.
The Earl of Halsbury: My Lords, do we need to couple the interest rate we use to defend the purchasing power of our currency to the interest rate necessary to control inflation within the economy? At the moment it would appear that the tail is wagging the dog and we are controlled by American rises in interest rates to defend their foreign exchange position, rather than that necessary to defend our economic position.
Lord Cockfield: My Lords, the present level of interest rates depends upon domestic as well as on international factors, but it is quite impossible to separate the one from the other. We could not in practice, having regard to the very large proportion of our gross national product which comes from international trade, live in isolation inside a ring fence.
Lord Bruce of Donington: My Lords, will the noble Lord explain why it is that the adviser to the Prime Minister, Mr. Alan Walters, at the time of his appointment went on the record as saying that high interest rates were in fact a contribution towards inflation? Will he endeavour to see that those views are reconciled with his own on this matter?
Lord Cockfield: My Lords, I would be happy to read the speech of Professor Alan Walters, to which the noble Lord refers, and I have no doubt that Professor Walters would let the noble Lord know his views on that subject.
Lord Beswick: My Lords, may I just ask the noble Lord whether he does not think it is possible that the
904
high interest rate policy has something to do with the facts which were reported in the Monthly Economic Assessment two months ago, that in the case of non-oil companies in this country their undistributed income fell by one-third while that
"contrasts markedly with that of the financial companies and institutions whose undistributed income doubled in the same period"?
Is not this what is happening in our economy at the present time? We are frustrating the useful wealth producers in order to reward, or in fact are actually rewarding, the moneylenders?
Lord Davies of Leek: Usurers, not moneylenders.
Lord Cockfield: My Lords, it is of course the position that in a period of inflation there is a considerable redistribution of income between different sectors in the economy. These are sometimes redistributions which give rise to criticisms of the kind to which the noble Lord refers, but the answer to this is to eliminate inflation and the need for interest rates at this level. It is not simply to complain about the results.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that dinner will be available at the usual time this evening. The House will adjourn for a short period at approximately seven o'clock.
My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Belstead will, with the leave of the House, repeat a Statement that is to be made in another place on the bomb incidents in London.

Standing Orders (Private Business)
3.6 p.m.
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the first Motion standing in my name on the Order Paper. This makes various proposals for the amendment of Private Business Standing Orders, and the second Motion in my name makes amendments to Public Business Standing Orders. All these amendments arise from the Third Report of the Procedure Committee of the House, to which your Lordships have already agreed, and therefore they are to that extent procedural amendments. I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the Standing Orders relating to Private Business be amended as follows:
Standing Order 95
After paragraph (3) insert the following new paragraph:
"(4) In the absence of any chairman appointed in pursuance of paragraph (3) of this Standing Order a committee may appoint its own chairman."
Standing Order 216
Paragraph 3, line 3, after "above" insert "or

905
if every Petition, or the only Petition, so received is withdrawn,".
Paragraph 4, line 5, leave out "a Lord of Appeal as Chairman".
Paragraph 7(a), leave out from the beginning of line 3 to "or" in line 5.
Standing Order 216A
Paragraph 3, line 2, after "days" insert "or if every petition, or the only petition, so received is withdrawn,".
Paragraph 7(i), line 2, leave out from "Order" to "or" in line 5.—(Lord Aberdare.)
On Question, Motion agreed to.

Standing Orders (Public Business)
Lord Aberdare: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the Standing Orders relating to Public Business be amended as follows:
Standing Order 55
Line 3, leave out "appended to the Minutes of the Day and".
Standing Order 60
After paragraph (3) insert the following new paragraph:
"(3A) In the absence of any chairman appointed in pursuance of paragraph (3) of this Standing Order a committee may appoint its own chairman.".—(Lord Aberdare.)
On Question, Motion agreed to.

London Transport Bill
Lord Aberdare: My Lords, this is one of the usual Motions for carrying a Private Bill over and allowing it to proceed on its way through Parliament in the next Session. I beg to move.
Moved, That the Promoters of the Bills have leave to suspend any further proceedings thereon, in order to proceed with the Bills, if they shall think fit, in the next Session of Parliament, provided that notice of their intention to do so be lodged in the Office of the Clerk of the Parliaments not later than three o'clock on the day before the close of the present Session, and that all fees due thereon up to that period shall have been paid;
That such Bills shall be deposited in the Office of the Clerk of the Parliaments not later than three o'clock on the third day on which the House shall sit after the commencement of the next Session of Parliament, with a declaration annexed to each, signed by the Agent, stating that the Bill is the same in every respect as the Bill at the last stage of the proceedings thereon in this House in the present Session;
That the proceedings on such Bills shall in the next Session of Parliament be pro forma only in regard to every stage through which the same shall have passed in the present Session, and that no new fees be charged to such stages;
That the Standing Orders by which the proceedings on Bills are regulated shall not apply in the next Session of Parliament to such Bills in regard to any of
906
the stages through which the same shall have passed during the present Session.—(Lord Aberdare.)
On Question, Motion agreed to, and a Message ordered to be sent to the Commons to acquaint them therewith.

Companies (No. 2) Bill [H.L.]
3.8 p.m.
Lord Trefgarne: My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Lord Trefgarne.)
Lord Bruce of Donington Lord Bruce of Donington rose to move as an amendment to the Motion "that the Commons amendments be now considered" at end to insert—
"but this House deplores the fact that Members of this House have had only four days (including Saturday and Sunday) to examine the 242 Commons amendments; to relate them to the Bill [134] as first printed for the Commons; to formulate, if necessary, any amendments thereto; to consult with the professional, industrial and commercial interests affected by them; and places on record its displeasure at the treatment accorded to Members of this House by Her Majesty's Government.".
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I should like to assure your Lordships that this amendment has not been put down as a means of in any way trying to impede the progress of the Companies Bill through the House. It raises no constitutional issue at all. At the end of the day, whether it be today or whether it be tomorrow, it is quite inevitable that the Government will get the House's assent to the agreement to the various amendments that have come from another place.
We on this side of the House would not wish in any way to avoid the constitutional consequences. What we seek to do is to raise, if I may say so, an institutional question; a question affecting the relationship of this House with those in another place who control the business in another place and who therefore have a very considerable influence on, and indeed determine the timing of, legislation in this House. The charge I make is not against the noble Lord the Government Chief Whip and his department; they have been most co-operative in the entire matters that are the subject of this amendment. The gravaman of my complaint is that those in charge of business in another place have made it impossible for this House to discharge its obligations in regard to the Bill.
I will briefly reiterate the history of the Bill so far, because it is important that we should understand precisely what has happened. Your Lordships will recall that it was first published as a House of Lords Bill on 3rd February. We had a Second Reading in this House on 26th February and it went into Committee in your Lordships' House on 11th, 17th, 19th, and 23rd March, and when it finished here it had four parts, some schedules, 75 clauses and it was 125 pages long; it was slightly larger than when it first arrived because some extra clauses were introduced while it

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was going through this House. However, it did not leave here very much bigger in Committee than when it arrived. On 6th and 7th April we had the Report stage in this House and at the end of Report, because several more new clauses were added, it had 131 pages as against its original 109.
On 5th May it was brought before the Commons and on 2nd June it had its Second Reading. From 9th June to 9th July the Commons were in Committee on the Bill and when it emerged from Committee there it had increased in size to five parts plus the schedules, the number of clauses had increased to 106 and there were 165 pages. There was then a long pause, for over three months, and on the reassembly of the other place on 19th October, the Report stage took place and during that stage 14 new clauses were added, 13 by the Government and one accepted from the Opposition. That is roughly the history of the Bill.
As a consequence of all those events, noble Lords were last Friday presented by the Commons with 246 amendments to which our concurrence was invited, and the consideration of those is down for today. It cannot be said that those amendments are of a trivial, consequential or minor nature. Some of them of course are, but I have analysed the 246 amendments and have found that no fewer than 43 comprise new clauses and occupy 48 pages, and of those 43 amendments, no fewer than 14 were tabled on Report for consideration on 19th October last, including the one to which I referred that was put forward by the Opposition in another place and accepted by the Government. A further analysis reveals that the 246 amendments require 88 cross-references, needing checking with other Acts of Parliament, mainly those concerned with amendments to the Companies Acts 1948 to 1976 and the Companies Act 1980.
These are formidable considerations and we are complaining not because the time for discussion in this House of the amendments is likely to be curtailed—I repeat, the noble Lord opposite has offered extra time tomorrow should it be necessary to flow over and give more time—but because there has been no time for those Members of this House who are interested (and there are many, he they lawyers, accountants, businessmen, commercial people and so on) to consider in detail the impact of the amendments made in another place and which, as I say, were not in our hands until last Friday morning.
It has taken me from Friday morning until roughly 11.30 this morning, working on Saturday and Sunday, interpolating the various amendments where they should be in the Bill, to be able to understand exactly what has been done, let alone to formulate any view as to the correctness or otherwise of the amendments that have been made, whether they could conceivably be improved or whether further outside professional advice (from, say, the Law Society or the Consultative Committee of Accountancy Bodies) should be sought on specific items, particularly those which were introduced only on Report. And incidentally lest anyone has any illusion about it, those 43 amendments are not two or three line affairs; they occupy 48 pages, or half the original size of the Bill.
Those amendments cover a variety of subjects and are of a strictly non-party character in the sense that
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I do not think their contents are likely to arouse party passions on either side. But they comprise some important proposals for, for example, financial assistance for the acquisition of shares and special provisions in connection therewith as regards private companies. They also touch on the important matter of a company's purchase of its own shares and a company's purchase of its own shares out of capital. Those are not world-shattering matters for the general public, but they are of very considerable importance to industry and commerce and are of particular importance to those of us who have to advise, either as accountants or lawyers, on the form in which particular transactions should take place and, moreover, on the accounting consequences of the actions they propose to take if those actions are to comply strictly with the law. These are highly important questions. Some of the amendments deal with insider dealings, the prohibition on directors of insolvent companies, registers of part-directors, privileged information, and they cover some important aspects of voluntary liquidations and the like.
In other words, we are not dealing with trivia. Consider the important amendments, my Lords—and so far I have dealt only with the new clauses. In addition to new clauses, there are about 10 extremely important amendments (occupying 13 pages) of which five were made available only on 19th October last. They cover extremely important aspects of company law. So we are not dealing with trivial matters.
What is the result of this situation? I have already indicated the time that it has taken working full out —and I am no sluggard when it comes to working at this kind of thing—to go through the amendments in order to arrive at a position where one can understand, follow and trace exactly what the Government have done ever since the Bill went to the other place. I am sure that the noble Lord opposite would agree that when Bills of this kind come before your Lordships' House, it is the duty of an Opposition Front Bench spokesman, or one or two of them for that matter, to make themselves fully acquainted with the position to which the amendments relate, in order that they can both carefully follow the case for the amendments that is put up by the Government and draw the attention of the House to matters on which the House may wish to pronounce judgment.
Therefore, the position is this. Speaking personally, as someone who took an active part in the Second Reading and Committee stage of the Bill in this House, I have been unable to put down any amendments at all because there has simply been no time to carry out the complete appraisal of a Commons amendment that is necessary before one starts to try to amend it. All the amendments that are down in our names today have been prepared, with very great speed and under considerable stress, by my noble friend Lord Wedderburn of Charlton, who, as the House will know, is an expert in this particular field, and even he will say that much more time was required in order to put down proper amendments.
The other aspect of the position is that I have been able to contact outside professional opinion closely associated with the Consultative Committee of Accountancy Bodies. I received observations by telephone yesterday. In the middle of other work I was

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able to scribble them down on the backs of envelopes, and I shall try to appraise them while the debate proceeds. At this stage I can give the House the view of the profession, so far as I have been able to ascertain its position in regard to some of these long and complicated amendments, and the verdict is that they are diabolical and that they will in fact cause very considerable difficulty in the professions themselves.
It might be argued—the noble Lord might argue it in reply—that this is of course only tit for tat, that other Governments of my political persuasion have done precisely the same thing, in precisely the same circumstances, and that therefore that somehow justifies the present situation. It might be thought that I am saying that the Tory party has done it this time, and perhaps the noble Lord will rise and say that the Labour Party did it last time, and so it is six of one and half a dozen of the other. I very much doubt whether the noble Lord will be able to recall an occasion when the House has been invited to consider, within the time limitations that I have indicated, and which are quite factual, 43 new clauses, covering 48 pages. But even assuming that he can, and even assuming that a Government of my political persuasion has in fact done an identical thing in the past, I would not try to justify it. Had I been here at the time that such a thing occurred, I would have protested just as diligently as I am protesting today, and should such a thing ever happen again, most certainly I shall be one of the first to protest about it.
The other answer that could be given is that it is always open to us, to Members of this House, to follow closely the deliberations in another place. It could be argued that those of us on all sides of the House who are interested in the Bill could have searched through the colossal document covering the Committee proceedings in another place and so been forewarned and forearmed. Of course that completely begs the question in that the Commons operate on a different Bill, they operate under different pagination than do we, and it is not easy to relate the amendments that they make to the Bill that they consider with the Bill that we have to consider. It would be a very formidable job to trace the points through.
The other factor that operates against the situation even more than that is that most of your Lordships on this side of the House, and on the other side, save those who are fortunate enough to have an income on which to retire, have to earn their own livings during the day, and of course time is necessarily restricted. So I do not think that the horse about closely following what happens in another place will run.
The question is quite simply this: Do we believe in a bicameral legislature? Do we believe in the continued existence of this House as a revisory Chamber? That is the real question. Of course it can be argued that the Minister is so well advised in the drafting of particular clauses, which most of your Lordships have not had the opportunity to examine, that the House is quite safe in relying on his saying: "It is really not necessary for your Lordships to look at them at all, because the parliamentary draftsman is so expert, our intentions are known, and therefore no real harm is done by your Lordships not having the opportunity to study them and to put down your own amendments".
I invite your Lordships to consider the serious impli-
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cations of that argument, because if it is the argument that is advanced, then it is an argument for the abolition of this Chamber; that is precisely the argument. If it is unnecessary to perform our function, why should we go through the pretence of performing it? For the past 50 years there have been moves towards abolishing the House of Lords, and I believe that at the moment there is some dubiety as to the position of the House of Lords so far as the Labour Party is concerned. However, in view of the troubles that the Labour Party will inherit on regaining power, one never knows, when it comes to action, what priority will be given to that question. So far as I am concerned that is quite immaterial. So long as your Lordships' House continues, it should be enabled to perform, and should insist on performing, its proper function. I am surprised that the Conservative Government, who have arranged business in another place, and who are supposed to be all in favour of the retention of this House, in perhaps more legislative form, should put forward an argument such as is now before us.
I hope that the House will be persuaded that I have raised this matter quite temperately and on an absolutely non-partisan basis. This is a constitutional question which affects our own House. Obviously I cannot invite the Front Bench opposite, but I invite your Lordships, in whatever part of the House you sit, to support this amendment when it goes to a vote, because a vote against the amendment that I have ventured to put on your Lordships' Order Paper would in fact be a vote for the abolition of the House of Lords.
Moved, as an amendment to the Motion "that the Commons Amendments be now considered" at end to insert—
"but this House deplores the fact that Members of this House have had only four days (including Saturday and Sunday) to examine the 242 Commons Amendments; to relate them to the Bill [134] as first printed for the Commons; to formulate, if necessary, any amendments thereto; to consult with the professional, industrial and commercial interests affected by them; and places on record its displeasure at the treatment accorded to Members of this House by Her Majesty's Government.".
—(Lord Bruce of Donington.)
3.30 p.m.
Lord Lloyd of Kilgerran: My Lords, whatever may be the reasons why your Lordships find yourselves in the uenviable position of having to deal with these complex amendments at such short notice—amendments to a Bill of very considerable commercial importance—I am personally satisfied at least that the existing parliamentary procedures which have given rise to this situation are heartily to be deplored. First of all, from time to time these procedures have been shown in practice to be inconsistent with, and inappropriate to, a modern parliamentary democratic system for dealing with legislation of this nature, which is merely technical and largely non-controversial from a political point of view. Secondly, these procedures—and I urge the Government to endeavour to modify them in some way—have today resulted in there coming before your Lordships' House to be

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amended a Bill which, when it is passed (as of course it will be) will put a heavy burden on commercial and industrial interests already hard-pressed at the present time.
As the noble Lord, Lord Bruce of Donington, has indicated, it seems that many of the amendments are largely incomprehensible; their elucidation in the context of the business of individuals, firms and institutions will undoubtedly need the expenditure of vast sums of money; and, once again, professional advisers, whether they be lawyers or accountants, will no doubt benefit substantially. The haste with which this Bill has been put together is well illustrated by a new clause which purports to deal with the relaxation—and I emphasise the word "relaxation"—of certain restrictions for private companies. I think it is Amendment No. 62. This new clause, ironically intended to induce some sort of relaxation, is over two pages long and has nine subsections, and one of these subsections comprises a sentence of about 320 words.
I doubt whether a search through the whole of the statute law of this country would unearth a sentence of more fuliginous obscurity. That phrase is an oft-quoted phrase of the late Lord Justice McKinnon in a dissenting judgment in the Court of Appeal in a famous trade mark case called Bismag v. Ambling, when, late in the afternoon, he was called upon to construe a clause of a mere 253 words in the Trade Marks Act. I am sure that if this subsection of the new Amendment No. 62 comes before the Court of Appeal it will also induce some kind of relaxing observations, as did the other clause before Lord Justice McKinnon. I must say that I am very pleased to see that the noble Lord, Lord Wedderburn, will be asking your Lordships not to agree with Amendment No. 62 which has come to us from the other place.
I must agree, however, that this Government alone are not wholly responsible for the unsatisfactory position in which your Lordships find yourselves. If I am critical of the Government, I am not in any way criticising the Ministers who have been dealing with the Bill. The noble and learned Lord the Lord Advocate has always been courteous and cogent in dealing with these intricate matters. As for the noble Lord, Lord Trefgarne, I am increasingly in admiration of his versatility and of his ability to grasp the essentials of complicated matters. I should also like to recognise the vast amount of work which has been done behind the scene by civil servants and others, particularly during the last Summer Recess, in dealing with the many representations that have been made to the Government about this Bill.
My Lords, as I have indicated, this Bill is basically highly technical and contains matters on which there should be the minimum of political controversy. However, the Bill is a remarkable example of legislation having to be conducted by second or third thoughts, thus leading to these most unsatisfactory results. In my view, of course, it was premature for the Government to have ever introduced another Companies Bill in this year, but I am not going to trace the history of the Bill as it left this House a much better Bill, as it went to the other place and as it has now come back with these amendments.
During the Summer Recess discussion still ensued, as
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I have said, between Government departments and outside bodies, and new amendments arose even as late as this month. I suppose that in some ways the Government should be praised for being so flexible in these matters as to consider representations from outside bodies up to the last minute. But our parliamentary procedures, as I again emphasise, are ill-equipped to deal with a technical Bill of this kind, where the issues are non-controversial. I therefore again urge the Government to consider how these procedures may be modified to make them more flexible and helpful, particularly in regard to legislation of importance to British trading interests.
Therefore, my Lords, for a wide variety of reasons I am really appalled at the problems with which companies and their advisers will be faced in trying to understand whether much of this Bill has application to their business interests. Accordingly, I shall support the amendment moved by the noble Lord, Lord Bruce of Donington.
3.37 p.m.
Lord Denham: My Lords, I think it might possibly be for the convenience of your Lordships' House if we were to take the Statement next, which I understand has been cleared.

Bomb Incidents in London
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement.
"The House is aware that at about 4 p.m. yesterday afternoon a bomb exploded in a Wimpy Bar in Oxford Street, killing Mr. Kenneth Howorth, a Metropolitan Police Explosives Officer. Mr. Howorth had entered the building following an anonymous phone call received by Reuters news agency at 2.50 p.m., warning that three bombs had been placed in shops in Oxford Street, the other two places being the department stores Debenhams an Bourne's. Subseqently an explosive device was found in Debenhams and made safe. Despite an intensive search a third device has not been found. Subsequently the Provisional IRA have said they were responsible.
"The House will wish to express its revulsion at this vicious act. It will also, I am sure, wish to join in paying tribute to the courage and dedication to duty of Mr. Howorth. Our deepest sympathy goes to his widow and family. We all owe a tremendous debt of gratitude to those who, like Mr. Howorth, risk their lives to protect us.
"This is the third bombing incident this month in London for which the IRA have said they are responsible. In the first, at Chelsea barracks, two people were killed. The second was the attack on Lieutenant-General Sir Steuart Pringle. The House will wish me to place on record our deepest sympathy to the relatives of the victims of the first attack and our tribute to the courage of Sir Steuart.

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"The emergency services have responded swiftly and efficiently on each of these occasions. I can assure the House that the police are taking all possible steps—as they have done with success in the past—to bring the criminals to justice.
"I should like to underline what the police have already said. They need help from the public and, above all, vigilance. Any suspicious objects or actions should be reported to the police immediately."
That, my Lords, concludes the Statement.
3.40 p.m.
Lord Boston of Faversham: My Lords, the House will be grateful to the noble Lord, Lord Belstead, for repeating that Statement. We all share in the sense of outrage at this despicable, cowardly and criminal attack and join in condemning it totally. We have all too often had occasion in this House to praise the work of the bomb disposal experts, the police and the other emergency services. Those expressions of our gratitude and admiration have been just as heartfelt when there has been no injury or loss of life as when there has been. But yesterday's incident really does show all too clearly how completely justified are our praise and admiration. We hope that the deep sympathy we all feel can be passed on to the relatives of Mr. Kenneth Howorth, a most courageous man. We also join in expressing our deep sympathy to the others who suffered from this attack and from the other attacks that the Minister has mentioned. Once again, we join in praising the work of the services I have referred to. Perhaps I could join in commending the high example, in terms of both courage and devotion to duty, set by General Sir Steuart Pringle, which was not only an outstanding example to his men but, I believe, to us all.
I have only one question to put to the Minister. It is clear from this latest attack that it is not solely identifiable and prominent targets which are in danger but that those responsible are once again launching indiscriminate attacks. I do not wish in any way to be alarmist but I believe that the public wish the facts to be faced. Therefore it continues to be of great importance, as the Minister has said, that everyone remains vigilant. I would ask the Minister whether he is satisfied that everything possible is being done both to keep the public on the alert and to take all the precautions which can be taken—while it is recognised that there is a limit to what can be done there. My Lords, I would only make one further point in connection with this Statement and this attack. Your Lordships will have heard or read of the statement of those who say that they were responsible and of their expression of concern for the dangers faced by the children of Northern Ireland. I confess that I am tempted to say that, coming from that source, that statement amounts almost to an obscenity. If they are so genuinely concerned about the safety of men, women and children as we all are, then they have it in their power to end those dangers by stopping these criminal acts. It will not have escaped your Lordships' notice that this is half-term for very many schools and the likelihood is that there are more children about. While it is always difficult to draw any distinctions between one target and another, one is bound to feel that there is something particularly grotesque
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about choosing times and places where more children are likely to be about. We join the noble Lord in hoping that those responsible will be brought speedily to justice.
Lord Wigoder: My Lords, we, too, should like to add our tribute to the bravery shown on this occasion by Mr. Howorth and on so many other occasions in the past by him and his colleagues. One has only to imagine the work involved to realise the courage that is required and the quiet and unostentatious way in which their tasks have been carried out. The only other observation I would make is to query the way in which, after each of these outrages, it is reported in the media that a particular organisation "claims responsibility "—an expression which seems to me to lend an aura of respectability to these outrages. Is not the straightforward fact that what such an organisation is doing is either admitting its guilt or confessing to a serious criminal offence? Would it not help in a very small way if we were to use the appropriate terminology?
Lord Belstead: My Lords, I know that the expressions of sympathy and admiration from the noble Lords, Lord Boston and Lord Wigoder, will be much appreciated by all those who are concerned. The noble Lord, Lord Boston, asked me a specific question: whether everything possible was being done to keep the public informed and to take all the possible precautions? My answer is, yes, I believe that everything possible is being done; but let us remain vigilant and take nothing for granted. So far as the closing words of both noble Lords are concerned, the Government agree that the people who perpetrated this and the two previous acts are criminals and everything possible will be done to bring them to justice.
Lord Shinwell: My Lords, is the Minister aware that the expressions of sympathy for the several persons involved in this deplorable affair would be applauded by every Member of your Lordships' House and by a very large body of people outside? But expressions of sympathy, while desirable in the circumstances, to me do not seem to be enough. I should like to ask the Minister a question that may not have been put in the course of debates dealing with Northern Ireland, and it is this. How long is this affair going on? How many years will elapse while scores of innocent people are slaughtered, and how many years will elapse while the British taxpayer is being asked to accept a burden that it is doubtful he can afford? Also, how many years will elapse while a very substantial and important element of the British forces are deployed in a task that they abhor, as do we all?
Is it not possible, in some form that hitherto has not been deployed—and I hope that this proposal will not be laughed at, because I do not laugh at this problem and neither do I think anybody here does—for the Government to appoint a commission of responsible people (and, if possible, people who are impartial, those who have studied Irish history, the depression, persecution and political implications associated with it) to create some medium, whether personal, or public, collective or individual, which will enable us to bring this deplorable and horrific business to an end? I

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know that the idea of a Royal Commission will seem futile and absurd to many Members of your Lordships' House, but not long ago a suggestion was made from the Government side of your Lordships' House that something of the nature of an advisory body might be appointed to inquire into various aspects of the problem. That proposal failed to stay the course and, so far as I know, has been rejected.
The members of the IRA—the Provisionals—have an objective. As I understand it, it is a united Ireland. That is politically unacceptable. It has been talked about for several hundred years and certainly during this century. I have heard of many of the discussions earlier than this century. But what about the other side of the coin? I make no personal or offensive criticism, but is it not possible for Mr. Ian Paisley, who is a leader of an important section in Ulster, to offer some proposal, some suggestion, which might have the effect, if not of providing a solution, of bringing the parties together for further discussion? Could we not revive the question of the sharing of power, although rejected by Mr. Paisley and his friends? All sorts of ideas might occur to members of a commission and to Members of your Lordships' House. But merely to express sympathy—however essential it is in the circumstances—is not enough.
My noble friend Lord Bruce of Donington raised an issue this afternoon that may occupy the attention of your Lordships' House for some time in the future. The Companies (No. 2) Bill has a vast array of amendments. I would rather see this House and the other place in the next few months, if necessary, devoting their attention to finding some solution to the Irish problem. Something has to be done and I think it can be done. After all, what do we ask them to do? We are asking Mr. Paisley to agree with the opponents of the other side. Mr. Paisley might consider that suggestion—however objectionable it might be to him—in the hope of providing an approach to a solution. I ask the House to forgive me for speaking in this fashion but I am sure I represent the views, hopes and the expectations and still, I hope, the optimism—of a majority in your Lordships' House.
3.53 p.m.
Lord Belstead: My Lords, the noble Lord expresses understandable concern about the scourge of terrorism and its underlying causes so far as it concerns the United Kingdom. I do not think, with respect to the noble Lord, that this is the occasion to take up the broad and important questions which the noble Lord, Lord Shinwell, has asked. I will certainly draw to the attention of my right honourable friends who are concerned the remarks which the noble Lord has made.
Lord Harris of Greenwich: My Lords, is the noble Lord aware that many of us are extremely anxious to ensure a satisfactory settlement to the Northern Ireland problem, but at the moment our principal concern is the catching and conviction of those who have committed these disgraceful offences in the city of London? Secondly, may I ask the noble Lord whether he will bear in mind that, with the death of Mr. Howorth, this is the second Metropolitan Police
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explosives officer who has died in circumstances of this kind? Thirdly, may I express our own view that the tribute which he paid to the police and which Sir Steuart Pringle paid to the other emergency services was particularly well made, if I may say so? I think it right for us to remember the debt we owe to the police, particularly at times when they are victims of so much snarling invective at other periods of the year.
Lastly, is the noble Lord aware that, although we applaud the steps which have been taken in London to increase the number of Metropolitan Police officers in central London, it is highly desirable to warn the inhabitants of other cities in this country of the risks that they run at the moment of a switch in IRA tactics to Birmingham, Manchester and other major provincial cities which have been at the receiving end of the terrorist outrages of this kind in the past?
Lord Belstead: My Lords, the Government agree with the noble Lord, Lord Harris, in his words of sympathy and admiration, and also for the word of warning with which he ended his question. The noble Lord referred particularly to the fact that this was the second tragedy of this kind concerned with Metropolitan Police officers working in this way. I think that it is right to remember—as I think the noble Lord was remembering as he spoke—that Mr. Howorth had in fact been with the Metropolitan Police since 1974; but before then he had been an army bomb disposal man. Among other places, he had served in Northern Ireland. All who do this work are owed a debt of gratitude by us.
Lord Blease: My Lords, I wish to add my voice to the words of sympathy expressed by noble Lords in this House and so widely expressed throughout these islands concerning the tragic death of Mr. Kenneth Howorth in the course of his services in protecting the lives and property of peace-loving citizens. As the recent bombing instances have been associated in the public mind with Ireland and with the Irish people, may I as an Irishman say that I utterly deplore and condemn the methods and acts of terrorism and murder being perpetrated in Britain, in Northern Ireland and in the Republic in the name of Irish patriotism and the Irish people? I feel sure that noble Lords will be fully aware that the vast majority, the millions, of Irish people in Ulster, in the Republic and those who have made their homes here in Britain are ashamed and saddened by such vile acts, acts which seriously impair the solutions to the problems confronting the people of Ireland and add great difficulties to the hardships of the Irish people.
Lord Belstead: My Lords, the Government are grateful to the noble Lord, Lord Blease, for the lead which the noble Lord gives in the words which he speaks. It is that kind of constructive response which could help lead us out of these difficult days.
Lord Hankey: My Lords, before we leave this question, are the Government aware that an enormous number of people in this country are getting extremely concerned at the way in which these constant acts continue in Northern Ireland? It is obviously only a matter of time before it begins to spread to the main-

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land of the United Kingdom. This is going to have a very serious effect on our foreign relations. It is really bringing this country into disrepute. Will the Government consider whether it is time to proscribe the IRA, in the same way as they are proscribed in the Republic of Ireland? Is it not time that we began to take the offensive against these people? It seems to me that we are being very soft in dealing with them and there might be a good deal of support in this country for more radical measures.
Lord Belstead: My Lords, the prevention of terrorism legislation, which of course is on the statute book, is the answer to the noble Lord's question. Incidentally, it may be a sad reflection that there are today some 69 IRA prisoners in English gaols.
Baroness Hornsby-Smith: My Lords, can my noble friend give us any information on the widespread reports in the press that these terrorists are being trained in the Lebanon by the PLO? In view of the fact that we have seen similar incidents in Brussels, Holland and Belgium, where similar claims have been made, can he tell us whether we have any confirmation of this and what steps Her Majesty's Government propose to take?
Lord Belstead: My Lords, as I said to the noble Lord, Lord Hankey, the prevention of terrorism legislation is on the statute book. This is a piece of legislation which allows us to keep close watch on people who come and go, and that we will continue to do.
The Earl of Onslow: My Lords, the Prevention of Terrorism Act is on the statute book, as also is the Treason Act. Are not people who are born subjects of the Crown and who then try to disturb other people's loyalty to the Crown by blowing things up guilty of treason?
Lord Belstead: My Lords, I think we are now really getting so wide that we are starting a debate. If your Lordships will excuse me, I think I will simply come back to the point at which we started. The point is to capture the criminals who have perpetrated this act; then the courts will deal with them.
Earl Ferrers: My Lords, with that thought, I suggest that we return to the original subject we were discussing.

Companies (No. 2) Bill [H.L.]
4.1 p.m.
Debate continued on amendment to the Motion that the Commons amendments be now considered.
Lord Morris: My Lords, those noble Lords who listened with care to the remarks of the noble Lords, Lord Bruce of Donington and Lord Lloyd of Kilgerran, I humbly suggest must come to the conclusion that there is very great merit in the substance of their case. However, in my view, that substance is solely one of procedure in your Lordships' House or, rather, of the interrelated procedures of the two Houses of Parlia-
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ment. I believe that in arguing as they did they placed themselves on two prongs of Morton's fork—for they raised this question, which I would ask my noble friend to answer if possible. The question is: Does he believe that the tabling of this amendment has in any way helped your Lordships' House in the consideration of the Commons amendments by delaying further such consideration? It is for this reason I believe that the tabling of this amendment in this form at this particular time smacks of a certain technical trickery that has not helped their cause, which is of course a change in the interrelated procedures of the two Houses of Parliament. I believe that there are other ways and means in which that cause could be furthered if they feel as passionately as they apparently do.
Lord Harris of Greenwich: My Lords, I am not sure that the noble Lord, Lord Bruce of Donington, will necessarily welcome the fact that I am springing to his defence. Nevertheless, it is only right to say that I do not think that in this matter the noble Lord is guilty of trickery, even of technical trickery. It seems to me he has done no more than put down a Motion which is rather reminiscent, in the form of words used, of the very weighty complaints made by the noble Lord, Lord Carrington, when speaking as Leader of the Opposition when he delivered, in my view, a wholly well-merited rebuke to the then Labour Government for producing shoals of amendments at the last stage of the parliamentary year, and not giving this House the opportunity of debating them. I am bound to say that I sat then on the Government Front Bench and thought that the views expressed by the noble Lord, Lord Carrington, were wholly justifiable.
I say that because, that being so, I would have assumed the present Government would have gone to considerable lengths to avoid doing exactly what they complained the Labour Government had been doing. Unhappily, they are doing precisely the same thing, which is to give us no adequate time to discuss major amendments to the laws of England—to produce 240 amendments, accepting at once that some are of a technical character and no doubt will be agreed very largely on the nod, and giving this House only four days to consider them. Certainly my noble friends and I will vote with the noble Lord, Lord Bruce of Donington, as an indication of our view that this is an unreasonable way to treat this House.
All I would say to the noble Lord, Lord Bruce, is that I listened with fascination, as I think we all did, to his views on the attitude of the Labour Party to the House of Lords. If I may say so to him, I think that their view is a little more robust than would appear from the way he expressed their view. As I understand it, the one thing on which the Labour Party agree is the immediate abolition of the House of Lords, and I think it is an indication of the new unity of the Labour Party that everyone apparently agrees with the proposition. Speaking for myself and, I think, for the overwhelming majority of other people in this country, who take the view that it is highly necessary in order to safeguard the basic liberties of the people of this country that there should be a second chamber, in view of that, I think it is even more essential to ensure that the second chamber, in whatever form it exists, is treated with a great deal more respect than has been the position today.
4.6 p.m.
Lord Wedderburn of Charlton: My Lords, this amendment tabled by my noble friend to the original Motion is of very great importance. Indeed, for a Government which is devoted to free enterprise and privatisation and market forces, I would have thought company law is a matter of some seriousness. I was interested that the speech of my noble friend Lord Bruce of Donington appeared to be treated with some amusement by the Government Front Bench. I would have thought that is unfortunate, but it does perhaps characterise the situation with which we are faced. Every big Companies Bill is a re-examination of the mechanism by which business is carried on and a re-examination of the relationships of society with the enormous privileges of limited liability and incorporation which companies enjoy—far bigger privileges than any other organisations in the land. That is a matter which has to be considered by everybody. It is not just a technical matter and workers are beginning, as dole queues increase, to take a greater interest in this matter. I will come to that a little later.
The method of company law reform has changed since 1908. We used to have a committee or a commission, then a revising Bill and then consolidation legislation. In 1918, 1929, 1948, 1967 and 1976, it began to run into the ground. Now we have a new method. It is a method prompted by the EEC directives which, for good or ill, the Government are obliged to carry out. There are many European Economic Community directives on the harmonisation of company law; so most Sessions we shall have a Companies Bill.
You can do two things with a directive; you can just take it and put it on the statute book as best you can—because often it is very difficult to do it—or you can take it as an opportunity, a launching pad, for company law reform of a wider kind. In 1978 the previous Administration chose the wider course on a systematic basis. In 1979 the present Administration chose the narrower course, and then they changed their mind. There is nothing wrong with that, so long as you know what you are doing. But when they changed their mind they just put bits and pieces here and there, now and then, into the Companies Bill in 1979, and that Bill became the Act of 1980. Of course, in this Bill we are considering there are dozens of amendments to the 1980 Act, and there are now dozens of amendments to the amendments to the 1980 Act—new amendments put in on Report in another place. There are most important amendments to the 1980 Act which have never been discussed properly at all. That is the point which the noble Lord, Lord Morris, perhaps ignored, because the notice has not been adequate for the business community, the trade unions or the Houses of Parliament, where it is relevant. The notice has not been adequate of the steps which the Government wish to take.
There is an amendment to the clause dealing with what the side note calls "international bonds". Every time this Government introduce a clause with a short side note you can guarantee that it is very difficult to understand. Nobody really understands the section in the 1980 Act on international bonds—and who will understand the amendment to it which was introduced on Report on 19th October in another place, eight days ago, with precious little notice at all,
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I do not know! Indeed, the right honourable gentleman the Minister of State showed a fine sense of irony in introducing it—he hardly did more—when he said this on 19th October:
"I hope the House will accept the clause, particularly since no substantial criticism has been levelled at its substance".
Of course no substantial criticism has been levelled at it. Everyone has been doing what my noble friend and I have both been doing for the last few nights—sitting up trying to put together a paste-and-scissors version to try to understand what on earth is being done.
When one comes to look at the substance, as we can now begin to do, I immediately say with regard to my own amendments that I shall not withdraw them all, perhaps because they will cause the Government to put on the record an explanation—and this is another cause of complaint, because some of these amendments were simply put in and never explained at all at various stages of this Bill. My amendments, I now think, having had the chance to glance at them this afternoon, are not very adequate. I should like another chance to have another go, but of course that will not be possible.
If noble Lords will look at Amendment No. 169 on the Commons amendments sheet, they will find that the 1980 Act is being amended so that arrangements with directors in regard to assets which the directors may take from the company, and substantial arrangements of that kind, are being altered in a most fundamental way. That was introduced on Report on 20th October, at column 243 of the Official Report, and there was no explanation, no debate—nothing. By Amendment No. 170, the policy of the 1980 Act is reversed. At least, this was introduced on 7th July in Committee, but there has been no clear explanation. Amendment No. 194 was introduced on Report on 20th October, one week ago, and it amends the first schedule to allow companies to keep secret matters which, up to now, one would have thought it was pretty obvious they should disclose, such as the previous year's result on certain matters.
There are dozens of these clauses which have never been properly debated. This Bill left this House with 79 clauses on 131 pages and comes back with 106 clauses on 165 pages, and some noble Lords—perhaps the noble Lord, Lord Morris—may feel that that is what happens in the run of the mill knock-about of parliamentary life. But it is not at all like that. The existing clauses have been changed in a fundamental way and dozens of amendments have been made at a very late stage. One might have thought that the Government would have learned something from what they had to do to the 1980 Act in this Bill, but they have not. We all know that this Government are not for learning!
There are dozens of ways in which company law cries out for rationalisation, which could have been done and which—I say this in all frankness to the Ministers who are to speak—could still be done. There is no reason why this Government could not take back a shambles of a Bill and introduce it in the next Session, after two months' consultation, find the parliamentary time which the noble Lord, Lord Lyell, seems to think he could not possibly find and put it through quite

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quickly before Christmas, if they did it systematically.
Noble Lords who were present during the debates on the Bill on company law will know that I have had a special interest in the section which prohibits a company from giving financial assistance for the purchase of its own shares. The noble Earl, Lord Selkirk, with whom I was in communication and who regrets that he cannot attend your Lordships' House because he is unwell, also joined with me on 30th April to show to the Government that—which they then accepted—their proposed replacement for the section prohibiting such assistance, which since the Green Committee of 1929 has been accepted as being an improper use of company funds, was quite inadequate.
The Government took their version away and came back to another place on 30th June with a totally new version—not just a new set of words, but a new philosophy. They then took that away from Committee in another place and came back on Report on 20th October on one of the most fundamental issues of company law of our time, in terms of financial fiddlers as well as in terms of the innocent who suffer. The noble Earl, Lord Selkirk, and I joined forces about that, because the section was unkind to the innocent and too kind to the guilty. The noble Earl was more interested in the first and I was more interested in the second. He has won, because this clause is so kind that both the innocent and the guilty need have no fear whatsoever, however much fiddling of this kind goes on.
If noble Lords are going to jump through the hoop in the kind of way which is suggested by three different clauses, with three different philosophies, the last on 20th October, and are not going to issue a bleat, what do they think they are doing here? My noble friend Lord Bruce is quite right. If this House lets this go through with a few discussions on amendments dreamed up by my noble friend and myself at 2.30 in the morning which, no doubt, will be criticised for their drafting, if the Government have such effrontery, then perhaps we shall go through the charade of a pantomime, of which my right honourable friend Mr. Stanley Clinton-Davis complained in another place, and he was right. It is a pantomime.
May I give one other instance to the House, because it is important to give concrete instances? We are not just talking about matters of terminology, amendment or interpretation. The Government appear to be prepared to put on to the statute book a clause which they themselves have said is a matter of doubt and uncertainty. Let me explain in a few sentences what I mean. The Government are enacting legislation on concert parties. They produced draft clauses on concert parties on 28th May and they asked for comments on 15th June. Everyone with any knowledge of the subject agreed with the new journal The Company Lawyer, which is rapidly acquiring some authority, when it wrote on that suggestion:
"The Government has tabled 21 new clauses to the Companies Bill at committee stage in the House of Commons after the Department of Trade, in a hastily assembled consultative document, allowed a mere 18 days for comment by any interested parties".
That is a comment that one can find in many other
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pages of the journal during this year, where the period for consultaton is said to be absurd.
I wish to make it clear, because this may be misrepresented, that I do not wish to attack those who carry out the difficult work of the Department of Trade. I say that this comes from the Government, because the Government do not know what they want to do and, when the Government decide what they want to do, they are so devious in these matters that it is very difficult for their advisers to know how to do it.
This clause was Clause J in the consultative document, and what did the consultative document say about Clause J? It said that there was uncertainty whether the clause,
"would include all beneficial interests, such as an interest under a trust of income from shares".
That is quite an important point. It went on:
"If there is such a doubt, the Department is uncertain whether such arrangements are likely to be a source of difficulty in practice".
That is an important matter for consultaton.
But between 28th May and today, we have had no change in the clause. Your Lordships are asked to approve it as it stands, and we have not had any explanation from Government spokesmen about whether the difficulty has disappeared, whether there is still uncertainty or what it all means. So that on their own documents they are asking this House to enact what today they may care to explain. But if they do not, this House should take another look.
I am told that it was asked through the usual channels whether this House would sit until after 8.30 p.m. on this Bill. But it would take until half past 8th November to discuss properly the kind of amendments which are put in the 246 which are listed. I ask the Government whether or not they intend to consider accepting any amendment in these proceedings. Unless they say "yes", your Lordships may as well pack up and go home after voting for this amendment, and having the courage to show the Government what should be shown to them.
4.18 p.m.
Lord Boyd-Carpenter: My Lords, although I shall not support the amendment moved by the noble Lord, Lord Bruce of Donington, which seems to me to be a pointless exercise, and although I shall not follow the example of the noble Lord who has just sat down and make several speeches which were, perhaps, more relevant to the amendments when we come to them, I think it is right that there should be, at any rate, one voice from this side of the House on the procedure which Her Majesty's Government have seen fit to adopt in respect of these amendments.
The substance of what is happening this afternoon is that your Lordships are being asked to rubber-stamp 246 amendments which were made in another place. That makes something of a mockery, does it not, of the revising function of this House? I must express my regret that it is a Conservative Government which seeks to do this to this House and, I am afraid, to set yet another precedent which another Government of another colour may well exploit in

923
the future. It is a very great pity that we should be conducting this important discussion in this way.
As I said, I see no point in tagging on to the Motion some words which may ease the feelings of some noble Lords who feel as they do, and as I do, about this, but which do not at all affect the procedure. But I think one can ask of my noble friends on the Front Bench two things which, with very great respect, I put to them. First, I think that they owe this House an apology for the procedure and I hope that they will be prepared to express it. Secondly, I hope that they will be prepared to express in even stronger terms the views which many of us feel, and which I suspect my noble friends on the Front Bench also feel, about the conduct of business by the business managers in another place which has produced this situation. If there is anything said this afternoon which can strengthen their hands, I hope it will have that effect.
We have had occasion more than once during this Session to find this House badly treated—not by our own Leaders and Chief Whip, who, if I may say so without impertinence, have always tried to serve this House to the full, but by the business managers in another place. This is certainly the worst example. Although I appreciate that decorum and tact will prevent my noble friend from indicating in a few moments from now what it is he proposes to say to his right honourable friends in another place, I hope he will let just a bit of his feelings and the expressions he has in mind to peep through.
Lord Campbell of Alloway: My Lords, I wonder whether your Lordships will allow me a very brief intervention. My noble friend Lord Boyd-Carpenter has in fact said everything that I would have wished to say to your Lordships, save this: that this is a serious procedural defect. It is a serious and substantial defect in the machinery of law-making in a bicameral system of government. Whether it happens, as it does here, by accident of our friends or, as it might in other circumstances, by design of our enemies, it denigrates the system of bicameral government. Finally, may I say that I would have supported this amendment wholeheartedly but for the inclusion of the last few words which for me to adopt would imply a degree of hubris which I am not prepared to indulge in.
Lord Elwyn-Jones: My Lords, I venture to support what has been said from this side of the House and, indeed, the other side in condemnation of the shoddy way in which this House has been treated by the business managers in another place, upon whom I quite agree the responsibility must certainly rest. It is no fault of the Chief Whip, who has the unpleasant task once more of having to hold the baby, or the buck, or whatever the appropriate object might be. Here is a situation where we are asked to consider a series of amendments —246 of them—which saw the light of day last Friday, containing 43 new clauses. This is an astonishing reversal of the revisionary role of the House of Lords. Apparently that role has gone over to another place. The Government had the responsibility of bringing forward the Bill. We had been promised this Bill. Sometime early last year I think we were promised that we should have something of this kind. We had a
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short interim Companies Bill because effect had to be given to the conventions of the Communities. But here we are faced with this grotesque situation in which the revising function has been taken over by another place and has been done extremely badly. If I may say so, they have not got the facilities. Least of all have they the know-how that this House has in matters of this kind.
My noble friends have identified in detail some of the matters of complaint. So has the noble Lord, Lord Lloyd of Kilgerran. The latter and my noble friend, who is a great expert in this field of company law, identified not only the incomprehensibility of many of the amendments but their sheer unsuitability. I think the word "diabolical" was an adjective which was used by the noble Lord, Lord Lloyd of Kilgerran, who, admittedly, occasionally is given to exaggeration but apparently not on this occasion.
We can blame the Devil for an awful lot of things but the responsibility here is more clearly establishable without calling in the assistance of theology for the purpose. The responsibility is plain. I think that to have put down and, I hope, to carry this resolution will be of value, if only to teach another place that they just cannot treat us like this. The warning words of my noble friend Lord Bruce of Donington were that they are conjuring up and supporting those who have said all along, "Well, we can do without the House of Lords". If they treat the House of Lords in this contemptible way, they are breeding dangerous things for the future of this House.
Lord Lloyd of Kilgerran: My Lords, before the noble and learned Lord sits down, may I say that on this occasion it was not I who conjured up the Devil but his noble friend sitting alongside him.
Lord Elwyn-Jones: My Lords, I apologise for having visited the Devil upon the noble Lord below the gangway. I do not think my noble friend would wish to disclaim responsibility in another place for what he has temporarily inadvertently passed to the Devil himself.
Lord Denham: My Lords, until this debate started your Lordships might have been surprised that it should be I who am intervening on behalf of Her Majesty's Government during consideration of what is by common consent a complicated and highly technical Bill. My noble friend Lord Trefgarne, my noble and learned friend Lord Mackay of Clashfern and my noble friend Lord Lyell will of course be dealing with the amendments themselves when we eventually get to them.
This amendment to the Motion, That the Commons amendments be now considered, is concerned, as your Lordships will have seen by now, not so much with the details of the legislation as with parliamentary handling and management of business. For that I myself must take full responsibility. We in this House must, I think, be very careful. Some noble Lords have probably sailed a little close to the wind regarding the rules of comity between the two Houses, in that it is agreed that we do not criticise the timetables and procedures of another place. I say this in parenthesis. Speaking for Her Majesty's Govern-

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ment, it is my responsibility, together with my noble friend the Leader of the House, to decide how business is managed in this House, and mine alone.
Let me say at the outset that I have considerable sympathy with those who would have liked more time between the final stages of this Bill when it was in another place and further consideration in your Lordships' House: more particularly between the arrival and circulation of the amendments and their discussion this afternoon. It cannot be denied that a number of provisions, some of them technical but others of no little significance, were added to this Bill in another place only last week. I say this openly and categorically. I can assure the House that I and my colleagues would not wish to belittle the practical difficulties under which your Lordships have to work on this occasion.
However, as I shall seek to show, the picture is not perhaps quite so cut and dried or indeed so bleak as the noble Lord, Lord Bruce of Donington, and other noble Lords have suggested. I am not going to disappoint the noble Lord, Lord Bruce of Donington, when I use one of the arguments that I think he suggested that I might: that the bulk of the significant changes in another place, including the new clauses on disclosure of interest in shares, have been in the public domain since early July. The Bill was reprinted in another place as amended by Standing Committee on 9th July, and some 150 of the 246 amendments made by another place were already reflected in this print of the Bill. In addition, the great bulk of the amendments made on Report in another place were available in print well in advance of last week. Most of them were tabled by 8th October. I think we have already heard from what the noble Lord, Lord Wedderburn, said, that he, for one, seems to have done quite a large amount of research on what was happening while it was happening in another place. Of course I accept that nothing can fully compensate for the properly printed and marshalled list of amendments, but there was certainly nothing to stop Members of this House from reflecting upon and seeking advice on a good number of the issues in the period since July.
Of the 256 amendments, 153 are consequential. Of the remaining 103 amendments, I am advised that 50 are technical, drafting or minor and, of the remaining 53 amendments which are substantive, about 20 are in response to pressure either from this House or from outside bodies. I say this just to put the matter a little more in perspective, in that there are not, as your Lordships will appreciate, 246 substantive points.
Many of the changes are technical, and technical amendments, particularly in the second House—which on the present occasion happened to be another place—are inevitable in a complex Bill such as this. While on this point I really must say to the noble and learned Lord, Lord Elwyn-Jones, that he surely realises that some Bills start in your Lordships' House, some Bills start in another place and, on the occasions when Bills start in this House, another place is to a certain extent, as with regard to this particular Bill, the revising Chamber. So I do not think that there is anything new or anything incongruous in what he suggested on this.
My Lords, I am bound to say that both these and many of the more significant changes reflect concern
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expressed in this House earlier this year. I would remind your Lordships of the remark made by the noble Lord, Lord Ponsonby of Shulbrede, at the Second Reading of the Bill in your Lordships' House. He said:
"The Bill is notable for the absence of clauses on matters on which legislation is needed".
It was in response to your Lordships that we agreed to deal with disclosure. I recall the noble Lord, Lord Mishcon, on Second Reading urging us not to "duck" this issue but to have the courage to come forward with proposals. Well, we have had that courage and our proposals represent one-third of the volume of the amendments before us today. The noble Lord, Lord Bruce, pressed us to take account of proposals made by a working group of the CBI, the Law Society and the accountancy bodies on Section 56 of the1948 Act. We did, and hence another batch of the amendments. We were pressed hard to strengthen Part II of the Bill. My Lords, we have. Of course it is always possible to blame any Government for lack of time, but I had hoped to hear at least a word of congratulation for our prodigious efforts to meet points raised here, in another place, and by the main professional bodies.
Lord Harris of Greenwich: My Lords, may I ask the noble Lord one question? Let me say at the outset that I am quite sure the Government, in meeting some of these points, have done extremely well and I am sure we shall all be delighted about that. But that is not the point. The point is, why have over 200 amendments, albeit some of them are of a technical character, been produced 48 hours before the end of this parliamentary Session? That is the issue.
Lord Denham: My Lords, I shall be coming to that point later and I am afraid in spite of what the noble Lord, Lord Bruce of Donington, said, I shall be quoting precedents for this.
Lord Harris of Greenwich: But the noble Lord complained of the time. That is the point.
Lord Denham: My Lords, I shall come to that point later. The noble Lord, Lord Bruce, mentioned at one point in his speech—and the noble and learned Lord, Lord Elwyn-Jones, has commented on this—that some of the amendments were "diabolical". I know that the noble Lord, Lord Lloyd of Kilgerran, seems to disassociate himself from that remark; or whether he is merely modestly disallowing the originality of it, I am not quite sure.
Lord Elwyn-Jones: My Lords, I think the noble Lord, Lord Lloyd of Kilgerran, was disassociating himself from being given the paternity of the adjective which in fact belonged to my noble friend Lord Bruce of Donington, otherwise I think he agreed with it.
Lord Denham: My Lords, I am not surprised that the noble Lord would wish to disassociate himself from paternity because in this case it seems to me to be rather a doubtful child. I am advised that the Consultative Committee of Accountancy Bodies has been consulted all the way along by Her Majesty's Govern-

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ment I am advised that the Law Society have been consulted all along by Her Majesty's Government, and I am advised that both these bodies indicated that there were no matters on which they would make representations at this stage.
Lord Bruce of Donington: My Lords, I am greatly obliged to the noble Lord for giving way. Would he inform the House of the date of the last occasion on which the representatives of the CCAB met his officers from his department?
Lord Denham: No, my Lords, I am afraid I will not because I do not happen to have the information to hand; but I will certainly find out that information and let the noble Lord know.
The business managers of successive Administrations in this House have suffered from congestion of business and, quite rightly in my opinion, they have not got a guillotine procedure, they have not got a Committee off the Floor of the House, they have not got the selection of amendments by the Speaker or some other body equivalent in this House, and they have not got the closure in order to control this business. This means that on occasion log-jams do occur. The quite exceptional log-jam of the two Sessions 1974–1975 and 1975–1976, for instance, led to the House laying down recommended minimum intervals between stages —minimum intervals, incidentally, which in this Session we have had no small success in endeavouring to maintain.
Lord Oram: My Lords, in those instances was it not the case that the Bills then being dealt with were controversial as between the parties, whereas in this case everyone seems to agree that this is a technical Bill?
Lord Denham: My Lords, I do not see that that necessarily makes the thing better or worse. We now have minimum intervals between the stages. We do not in fact have any laid-down procedure as to a minimum interval between receiving amendments back from another place and discussing them.
But, my Lords, noble Lords opposite, when they are accusing us of behaving badly over this, really cannot say that we must totally forget everything that they did in the past. With particular regard to Commons amendments, in 1975 the House began consideration of 300 amendments to the Children Bill only three days after their arrival from the Commons. In 1977 no fewer than 252 Commons amendments to the Patents Bill were agreed to by this House less than two days after their arrival. My Lords, I will repeat those last figures: 250 amendments to the Patents Bill—and as the noble Lord, Lord Lloyd of Kilgerran, will agree, patent law is not noted for being the simplest branch of English law—received from the Commons and agreed to by your Lordships' House during the last Government of the party of which the noble Lord, Lord Bruce, is a Member, within two days. I have no record as to whether the noble Lord, Lord Bruce, was present on that occasion.
Lord Bruce of Donington: My Lords, for the sake of
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accuracy, will the noble Lord say whether those two days were inclusive of Saturday and Sunday, or were they just two working days?
Lord Denham: My Lords, I understand they were just two straight calendar days, if you can have calendar days. The noble Lord, Lord Bruce, says that had he been present he would have objected to such treatment. I must tell the noble Lord this, that speaking as he has been doing this afternoon—and I feel your Lordships will be very glad of this point—from the Opposition Dispatch Box, he has committed the party of which he is a member never again, when they are in power again, to inflict anything like such a task as on that occasion, indeed as on this occasion, on this House. Perhaps the House will appreciate this commitment. I hope the House will never have cause to remember it.
My Lords, these examples cannot undo what has been done in the present case; nor do they make the programme any more acceptable to the House. But they do point out that this is a perennial problem and one on which the present Government's record, thanks partly, it is true, to the minimum intervals I have referred to, is no worse, and I would say a good deal better, than that of the previous Administration. As the House will know, I readily agreed to look at the week's business after the noble Lord, Lord Bruce, first raised his complaint last Thursday. As a result this House may wish to continue consideration of the amendments tomorrow. I can give the House an assurance that I have taken note of what has been said from all parts of the House and I will specifically raise the points with my colleagues in another place. I will do all that I can to ensure that the House is not faced with a repetition of this difficulty at the end of next Session, or indeed at any time in the parliamentary year. But having said that, I really do question whether taking into consideration all the circumstances, both past and present, an amendment in the terms such as those proposed by the noble Lord, Lord Bruce of Donington, is justified in the best traditions of the House or indeed in the best interests of the House, and I would ask your Lordships to reject it.
4.42 p.m.
Lord Bruce of Donington: My Lords, I am most grateful for the intervention of noble Lords who have spoken in this debate and I am particularly grateful for the support that appears to have come from all sides. I was particularly grateful for the brief summary of the noble Lord, Lord Boyd-Carpenter, who said quite correctly—he encapsulated the whole procedure—that it was being demanded of the House that it rubber-stamped the position as it came to your Lordships' House from the Commons. This is a perfectly accurate summary of the situation in which the House finds itself.
I am sorry that the noble Lord, Lord Morris, seemed to think that there was some deep party motive or plot behind my putting down this amendment. It was indeed the result of a good deal of personal exasperation that a situation could have arisen where it was quite impossible within the time limits defined to do justice to the Bill, for ourselves as an Opposition

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or for the House as a whole to be able to perform its functions properly. This is the sole reason for putting down this amendment.
The noble Lord, Lord Denham, agreed eventually that it was all a question of time. That did not, of course, prevent him from enlarging on a whole series of other matters not in any way connected with the amendment itself. He expressed some regret that the Government are not being congratulated on responding to so many suggestions that came from your Lordships' House and from the Opposition. I would have thought that was more appropriate to the later stages, when one is considering the amendments in detail. But I will give the noble Lord the congratulations in advance. We congratulate the Government and we appreciate the fact that the Government have responded to the views expressed in your Lordships' House and to some of the views expressed by the Opposition in another place.
But still that is quite immaterial to the amendment on the Order Paper, which deals purely with the question of time. I take into account the observations which the noble Lord has made concerning the undesirability of casting any adverse reflection on the other place as another place. I entirely share that view and I trust that nothing I have said today will be interpreted in that sense. But it would have been quite easy for the Government so to have arranged the affairs of another place as to tack another couple of days onto its Session, which terminated at the end of July, in order to take the Report stage of this particular Bill. There would still have been 10 days before the arrival of the Glorious Twelfth; two days would not have been an undue affliction upon Members of another place. Your Lordships will recall that we ourselves in this House came back a fortnight before our colleagues in another place. That period was really all that was necessary.
My Lords, I have only one thing more to say, apart from thanking noble Lords who have taken part, and that is with regard to the position of the Consultative Committee of Accountancy Bodies. I trust the noble Lord was not seeking to infer that the CCAB were in agreement with the content and the form of the 43 new clauses that have been brought before your Lordships, because I think that would be unfair. It would be just as unfair as it would be if I were to say to your Lordships that they are in dissent with the 43 clauses. I think they ought to be absolved from that responsibility.
Lord Denham: My Lords, if I may intervene, I was making this point in regard to the fact that the noble Lord, Lord Bruce, was saying that some professional body outside had said that all these amendments were diabolical. He has not named the professional body, but I do not think the particular professional body we are discussing can have said that.
Lord Bruce of Donington: My Lords, I am grateful to be allowed to clear up the position about the word "diabolical". I did not say—and the record will show this—that a professional body said that. What I did say was that I had been in conversation with a member of one of the bodies to whom these matters had been referred, that I had received a telephone call
930
late yesterday in response to my urgent request, saying that he had been through them as carefully as he could over the weekend and that in his view some of them were diabolical. I should like to clear up that point.
My Lords, the amendment, as I have indicated, does not prevent discussion of the Bill, and therefore does not prevent this House from going through the remaining constitutional processes which have been described so succinctly by the noble Lord, Lord Boyd-Carpenter, as a rubber stamp. But it does seek to express a view, it does seek to deplore a position, it does seek to express regret. I do not see that any Member of this House who believes in the correct performance of the functions of this House can resist it. I commend the amendment to your Lordships' support.
The Deputy Speaker (Baroness Wootton of Abinger): My Lords, the original Question was, That the Commons amendments be now considered, since when an amendment has been moved in the terms set out on the Order Paper. The Question, therefore, I have to put to the House is, That this amendment be agreed to?
4.50 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 80; Not-Contents, 119.

DIVISION NO. 1

CONTENTS

Ailesbury, M.

Kilmarnock, L.

Airedale, L.

Kirkhill, L.

Ampthill, L.

Leatherland, L.

Ardwick, L.

Lloyd of Kilgerran, L.

Aylestone, L.

Lovell-Davis, L.

Bacon, B.

Mais, L.

Banks, L.

Masham of Ilton, B.

Beswick, L.

Molloy, L.

Bishopston, L. [Teller.]

Northfield, L.

Blease, L.

Ogmore, L.

Blyton, L.

Oram, L.

Boston of Faversham, L.

Paget of Northampton, L.

Brooks of Tremorfa, L.

Pargiter, L.

Bruce of Donington, L.

Peart, L.

Byers, L.

Pitt of Hampstead, L.

Collison, L.

Ponsonby of Shulbrede, L. [Teller.]

Cooper of Stockton Heath, L.

Crowther-Hunt, L.

Roberthall, L.

Davies of Leek, L.

Rochester, L.

Davies of Penrhys, L.

Ross of Marnock, L.

Denington, B.

Scanlon, L.

Elwyn-Jones, L.

Segal, L.

Ewart-Biggs, B.

Shinwell, L.

Foot, L.

Simon, V.

Gaitskell, B.

Somers, L.

Gladwyn, L.

Stewart of Alvechurch, B.

Glenamara, L.

Stewart of Fulham, L.

Granville of Eye, L.

Stone, L.

Gregson, L.

Strabolgi, L.

Hale, L.

Taylor of Mansfield, L.

Hankey, L.

Underhill, L.

Hanworth, V.

Wallace of Coslany, L.

Harris of Greenwich, L.

Wedderburn of Charlton, L.

Houghton of Sowerby, L.

Wells-Pestell, L.

Hunter of Newington, L.

White, B.

Irving of Dartford, L.

Wigoder, L.

Jacques, L.

Willis, L.

Jeger, B.

Wilson of Langside, L.

Jenkins of Putney, L.

Wilson of Radcliffe, L.

John-Mackie, L.

Wynne-Jones, L.

Kennet, L.

931

NOT-CONTENTS

Airey of Abingdon, B.

Hornsby-Smith, B.

Aldington, L.

Hylton-Foster, B.

Auckland, L.

Ilchester, E

Avon, E.

Inglewood, L.

Balerno, L.

Kilmany, L.

Balfour of Inchrye, L.

Kitchener, E.

Belhaven and Stenton, L.

Lane Fox, B.

Bellwin, L.

Long, V.

Beloff, L.

Lyell, L.

Belstead, L.

McAlpine of Moffat, L.

Bessborough, E.

Mackay of Clashfern, L.

Boyd-Carpenter, L.

Macleod of Borve, B.

Caccia, L.

Malmesbury, E.

Campbell of Alloway, L.

Mancroft, L.

Campbell of Croy, L.

Margadale, L.

Charteris of Amisfield, L.

Marley, L.

Cockfield, L.

Marshall of Leeds, L.

Coleraine, L.

Melville, V.

Constantine of Stanmore, L.

Mersey, V.

Milverton, L.

Cottesloe, L.

Monk Bretton, L.

Craigavon, V.

Morris, L.

Craigmyle, L.

Mowbray and Stourton, L.

Craigton, L.

Murton of Lindisfarne, L.

Cranbrook, E.

Northchurch, B.

Crathorne, L.

Nunburnholme L.

Cullen of Ashbourne, L.

Orkney, E.

Daventry, V.

Orr Ewing, L.

Davidson, V.

Oxfuird, V.

de Clifford, L.

Pender L.

De Freyne, L.

Portland, D.

Denham, L. [Teller.]

Rankeillour, L.

Derwent, L.

Reigate, L.

Digby, L.

Rochdale, V.

Drumalbyn, L.

Romney, E.

Dundonald, E.

St. Aldwyn, E.

Ebbisham, L.

Saint Brides, L.

Eccles, V.

St. Davids, V.

Ellenborough, L.

Saint Oswald, L.

Elton, L.

Sandford, L.

Faithfull, B.

Sandys, L. [Teller.]

Ferrers, E.

Seebohm, L.

Fortescue, E.

Sempill, Ly.

Fraser of Kilmorack, L

Sharples, B.

Gainford, L.

Skelmersdale, L.

Gardner of Parkes, B.

Spens, L.

Garner, L.

Stamp, L.

Gisborough, L.

Stodart of Leaston, L.

Glenkinglas, L.

Strathspey, L.

Grantchester, L.

Swansea, L.

Greenway, L.

Swinfen, L.

Gridley, L.

Terrington, L.

Grimston of Westbury, L.

Thomas of Swynnerton, L.

Hailsham of St. Marylebone, L.

Trefgarne, L.

Vaux of Harrowden, L.

Hawke, L

Vivian, L.

Hayter, L

Wakefield of Kendal, L.

Henley, L.

Westbury, L.

Hill-Norton, L.

Windlesham, L.

Hives, L.

Yarborough, E.

Home of the Hirsel, L.

Resolved in the negative, and amendment disagreed to accordingly.
On Question, Motion agreed to.
4.58 p.m.

COMMONS AMENDMENT
1 Clause 1, page 3, line 20, leave out ("(within the meaning of the Companies Act 1980)").
The Lord Advocate (Lord Mackay of Clashfern): My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 1. It may be for your Lordships' convenience if we take, so far as possible, groups of amendments together which have the same subject matter and I would propose, along
932
with Amendment No. 1, to speak to Amendments Nos. 160, 161, 173, 210 and 239.
As a result of discussions in another place the Government have examined very carefully both the effectiveness of the powers to disqualify persons from the management of companies and the availability of information about a director's business career. Your Lordships will recall that Clause 63 already contains measures which will strengthen the existing provisions on disqualification. For example, the clause will enable an application for a disqualification order on grounds of a conviction for an indictable offence committed in connection with the management of a company or because of a history of default in making returns to the Registrar of Companies, to be made to a court of summary jurisdiction. This new procedure should avoid the present time-consuming and costly processes. While we are preparing to make a number of improvements to Clause 63 which we shall consider in due course, we also propose to make parallel improvements to Section 9 of the Insolvency Act 1976 as well as to require details of a director's past directorships to be available for public inspection.
Amendment No. 1 is a paving amendment for Amendments Nos. 161 and 210, the former of which will require companies to keep details of past directorships held by their directors in addition to the details of other current directorships which they are at present required to keep by virtue of Section 200 of the Companies Act 1948. The purpose of the clause is to enable interested parties—whether conducting business with a company or considering investment in it—to be able to ascertain details of the past record of any of its directors. Such details may be inspected either in the register of directors which the company is required to keep at its registered office or on the company's file which is help in Companies House. It will thus be possible in future to obtain a list of all companies of which a person had been a director in the past five years (other than its holding company or any wholly-owned subsidiary in the same group, and dormant companies) and then to inquire as to the success—or otherwise—of those companies.
We believe that this new facility to help creditors and potential creditors will assist them better to assess the trustworthiness of directors, but without involving the obvious disadvantage of calling for extra returns to the registrar as opposed to some expansion of existing returns. The beauty of the scheme is that the new requirement has been tailored to fit into the existing returns of directors which companies are already required to make to the registrar. Amendments Nos. 173, 210 and 239 are consequential upon this amendment.
I turn to Amendment No. 160, which was in fact brought forward by the Opposition in the other place and which the Government were happy to accept. This amendment will most usefully strengthen the provisions of Section 9 of the Insolvency Act 1976. That section enables a disqualification order to be made where, in circumstances where a director has been involved in at least two insolvencies within five years, the court considers that his conduct makes him unfit to be concerned in the management of a company. The improvements which will be made consist principally of an extension of the maximum period of dis-

933
qualification for such conduct to 15 years, and of a widening of the coverage of a disqualification order to include all the stages in the life of a company; namely, its promotion, formation, receivership and liquidation, as well as its management. These improvements, therefore, will bring the section into line with the improvements already being made, by means of Clause 63 of the Bill, to Section 188 of the Companies Act 1948. Therefore, I recommend them to the House. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
Lord Bruce of Donington: My Lords, I follow what the noble and learned Lord has said in this matter. I have not had time to consider the implications of these amendments in detail. On the face of it—and I commit myself no further—it appears that Amendments Nos.160, 161 and the associated amendments are acceptable. Owing to lack of time, I am not prepared to make any further definitive observations upon them.
On Question, Motion agreed to.

COMMONS AMENDMENT
2 Clause 13, page 23, line 14, leave out ("that year") and insert ("the financial year ending with the balance sheet date").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their amendment. This is a minor, clarifying amendment. It seeks to clarify various issues that are concerned with Section 157 of the 1948 Act, as amended by Clause 13 of the Bill before us today. I see that the noble Lord, Lord Bruce, is indicating assent. The one section and the clause refer to the directors' report. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
3 Clause 16, page 25, line 37, leave out from beginning to ("paragraphs") in line 38.
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their amendment. I hope that it will be for the convenience of the House if I speak also to Amendment No. 233. The first amendment on the Marshalled List to Clause 16 is designed to reinstate a minor deletion which was made in your Lordships' House by Clause 16 to Section 16(1) of the Companies Act 1967. The second amendment, Amendment No. 233, in Schedule 4 to the Bill is merely a consequential amendment. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
4 Clause 21, page 28, line 35, leave out from ("Expressions' ) to ("shall") in line 36 and insert ("which, when used in Schedule 8 to the 1948 Act, fall to be construed in accordance with any provision of Part VI of that Schedule").
Lord Lyell: My Lords, I beg to move that this
934
House doth agree with the Commons in their amendment. This is a minor, clarifying amendment. It deals with the interpretation clause—paragraph 90 of Schedule 1. It refers to references to Clause 21. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
5 Clause 22, page 29, leave out from first ("Act") to ("by").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their amendment. I hope that it will be for the convenience of your Lordships' House if, with this amendment, I speak also to Amendments Nos. 6, 11 and 13. The term, "re-registration", has been used in this Bill, but it is now considered that this particular term is not correct, certainly in the context of the first amendment. It had been considered that a change of name by a company would constitute what we call a "re-registration", but opinion has now been expressed that the term should be limited in use to those companies re-registering under Part I of the Companies Act 1980.
A change of name by a company is provided for under Clause 24 of the Bill, and has no other effect, unlike a re-registration under the 1980 Act, which involves consequences such as restrictions on membership and also disclosure as to accounts, as well as various other matters. In order to avoid any ambiguity concerning these terms, we have amended the phraseology. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
Lord Bruce of Donington: My Lords, we are glad that the noble Lord has cleared up this point. He will recall that the matter was raised here during the Committee stage and that some of us ventured to express some doubts as to the eternal non-fallibility of the parliamentary draftsmen, saying that perhaps some further thought could be given to this matter. We are very glad that the Government have done so, and entirely support the amendment and the consequential ones.
On Question, Motion agreed to.

COMMONS AMENDMENT
5A Clause 22, Page 29, line 30, leave out ("on") and insert ("in").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their amendment. The House will see that this is a fairly simple amendment. It is entirely for the sake of consistency that the clause has been amended to read:
"a name appearing in the index".
With the plethora of lawyers that surround both the noble Lord, Lord Bruce, and myself, we hope that this is clearer, and for that reason I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
6 Clause 22, page 29, line 39, leave out from ("be") to ("by") and insert ("registered under the 1948 Act").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their amendment. I spoke to this amendment when I dealt with Amendment No. 5. It is consequential. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
7 Clause 22, page 30, line 16, at end insert ("where they appear at the end of the name").
8 Clause 22, page 30, line 18, after second ("letters") insert ("accents").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 7 and 8. These two amendments are minor drafting amendments. Clause 22(3) specifies items to be disregarded for the purpose of determining whether or not a new company name is the same as a name which is already on the index. Amendment No. 7 requires the Secretary of State to disregard not only the words and expressions specified in Clause 22(3)(b), but also the abbreviations of the expressions which appear in paragraph (b). Amendment No. 8 requires accents also to be disregarded, together with punctuation marks and other such distinguishing marks which are already specified in Clause 22(3)(d). This takes account particularly of the number of companies which are now being registered in Great Britain with what we call foreign names.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
9 Clause 23, page 30, line 34, at end insert ("or the Industrial and Provident Societies Act (Northern Ireland) 1969.").
10 Clause 23, page 30, line 42, after ("body"), insert ("except any within subsection (1)(a) or (b) above").
Lord Lyell: My Lords, I hope it might be for the convenience of the House if I speak to Amendments Nos. 9 and 10, and I understand I might be able to move them en bloc. Both of these amendments relate to the classes of the bodies whose names are to form the statutory index to be kept by the Registrar of Companies. The first amendment, No. 9, by requiring the inclusion of societies registered under the Industrial and Provident Societies Act (Northern Ireland) 1969, will allow such bodies to be shown in the same way as those registered in Great Britain under the Industrial and Provident Societies Act 1965. This particular inclusion was agreed in another place in Committee and it is included in Clause 23(1)(b).
This particular amendment will enable account to be taken of the names of such bodies as well as companies within the meaning of the Companies Act (Northern Ireland) 1960 when considering the registration of companies in Great Britain. Amendment No. 10 honours an undertaking given in Committee in another place to amend the power given to the Secretary of State by Clause 23(3) to vary by order the
936
classes of body whose names will form the index to be kept by the registrar under that clause. What we would call 1948 Act companies and overseas companies—in other words, companies which have complied with Section 407 of the 1948 Act—will form the major part of the index, and it is considered inappropriate that the Secretary of State should have power to delete from the index such classes of bodies. I beg to move that this House doth agree with the Commons in their Amendments Nos. 9 and 10.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
11 Clause 24, page 31, line 5, leave out from ("has") to ("by") in line 7 and insert ("been registered on or after the appointed clay").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 11, which is consequential. I have spoken to it.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.
5.13 p.m.

COMMONS AMENDMENT
12 Clause 24, page 31, line 8, after ("as") (insert ("or, in the opinion of the Secretary of State, too like").
Lord Trefgarne: My Lords, I fear it will be necessary for me to speak at a little greater length on this amendment, as it is an important one. This amendment, and the ones associated with it, have been introduced to allow the Secretary of State to direct a company to change its name if that name is, in his opinion, too like that of a body already appearing on the index. I would remind your Lordships of our previous discussions on this question, both at the Committee and Report stages of this Bill, and at Third Reading. The noble Lord, Lord Mishcon, and others, including the noble Lord, Lord Lloyd of Kilgerran had pressed that powers should be retained to protect existing companies against the commercial consequence of the subsequent registration of other companies by names which were too like their own, and had proposed a number of amendments designed to achieve such protection.
Although the Government maintained their view that they could no longer exercise the subjective executive judgment which had previously been applied to all applicators in order to eliminate those which might conflict with existing companies, they accepted that a case had been made out for residual powers to deal with the problem. To this end a consultative document was prepared suggesting alternative methods of dealing with this problem. These alternatives were: (a) a requirement for the advertisement of any proposed company name in the London or Edinburgh Gazettes 21 days before application was made for its registration so that the Secretary of State might take account of any objection received before a certificate was issued; (b) a provision for a change of name to be directed within 12 months following registration, if a name was considered to be "too like". The document was

937
subsequently distributed to some 24 organisations including the Law Society, the Institute of Chartered Secretaries and Administrators, the Confederation of British Industry, the Consultative Committee of Accountancy Bodies, and the Association of Company Registration Agents. Given the two alternatives, the overwhelming majority of the response preferred the second.
The pre-registration proposals attracted little support, on the grounds that they would cause delays and more expense in the registration of companies, and create an unwarranted burden on the smaller companies in finding resources for a regular perusal of advertisements in the London and Edinburgh Gazettes. Difficulties were also envisaged in searching for names during holiday periods or due to administrative failures such as late or mis-delivery of the Gazettes. The time limit of 21 days for objection was also considered to be short and the point was stressed that failure to take action at this stage would be irreparable. On the other hand, it was recognised that the post-registration proposals would allow a considerably longer period of 12 months for objections to be lodged.
A number of organisations urged that the time limit for the exercise of the power of direction should be extended or abolished. The reasons advanced were that a company might be formed with a "too like" name but, by chance or deliberate intent, might not start trading for some time after incorporation and that, by the time the existing company became aware of the danger, it would be too late to take action. However, although the sense of this argument was recognised, it was also felt that a newly-formed company should not be left in lengthy or indefinite doubt as to its right to its name. Moreover, the general availability of the index, and the commercial "name watching" services based upon it which have been developed in recent months, provide means for existing companies to protect their interests. On balance, therefore, it was felt that the 12-month limit should be maintained. The key factor in this amendment is, of course, the definition of names which may be considered "too like". Interpretation of "too likeness" necessarily entails subjective judgment and, in consequence, cannot be enshrined in legislation. However, taking into account the arguments advanced in debate and in correspondence, not least with Lord Lloyd of Kilgerran, guidelines are being formulated against which requests for directions can be considered.
First suggestions are that a company name, including that of an overseas company registered under Part X of the Companies Act 1948, may be considered "too like" an existing name if, first, it is phonetically identical to the existing name; secondly, there is a difference of only one letter except where, in the Secretary of State's opinion, the letter makes a significant difference in the names; thirdly, in the case of oversea companies registered under Part X the only difference is by the substitution of qualifications equivalent to "Limited", et cetera, for example, "Inc", which is the American suffix, "SA" or "GmbH"; fourthly, the proposed name and an existing name have a distinctive element in common, for example, Widget Holdings Limited versus Widget Limited (in this context distinctive elements will not normally
938
include place names, personal names or everyday descriptive words in general use) and, fifthly, if the names are otherwise similar and the circumstances of the companies' operations, including location, nature of business and any other relevant factors are such as to be likely to create risk of confusion.
These guidelines, after further discussion with relevant professional organisations, will be published in the notes for guidance issued by the Registrar of Companies. They will supplement the statutory provisions and thus enable persons forming companies and their advisers to decide with reasonable certainty not only whether their proposed name will be acceptable under law, but also whether it is likely to avoid an objection from an existing body.
I hope your Lordships may accept that, while the amendments now in the Bill approach the problem in a different way from that proposed by the noble Lord, Lord Mishcon, and others, they do embody the same principle of the exercise by the Secretary of State of subjective judgment on a selective basis in respect of names which may be "too like" those of existing companies. I believe—and my view is supported by the great majority of the professional organisations we have consulted—that they will provide the safeguards which we all agree to be necessary in this area. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
Lord Ponsonby of Shulbrede: My Lords, I thank the Minister for explaining the amendment in detail and for bringing it forward. We regard this as an improvement to the Bill, as it meets some of the fears expressed in Committee and on Report, particularly by my noble friend Lord Mishcon; post-registration change of name instead of pre-registration change of name provides an element of protection. While having welcomed this proposal, we would on the whole have felt it better had the Government stuck to the present system, which allows subjective assessment of an individual name to be made on registration. Nevertheless, we regard the amendment as an improvement to the Bill.
Lord Lloyd of Kilgerran: My Lords, I support the noble Lord, Lord Ponsonby, in those remarks. I welcome this and the other amendments which contain the words "too like" because they recognise the practical fears expressed by myself and others, those who have experience of dealing with trade name matters. As for the indications we have had of what the guidelines will be, I was not too happy with what the Minister said about those; I assume they will not have statutory significance and that the Secretary of State will have a further discretion to those set out in the guidelines.
Lord Trefgarne: Yes, my Lords; the guidelines will not have statutory force, and furthermore they are still subject to some consultation. Thus, if the noble Lord still has doubts, he will be able to participate in that further consideration.
On Question, Motion agreed to.

COMMONS AMENDMENTS
13 Clause 24, page 31, line 9, leave out ("re-registration").
14 Clause 24, page 31, line 12, after ("as") insert ("or, in the opinion of the Secretary of State, too like").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment Nos. 13 and 14.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.
5.22 p.m.

COMMONS AMENDMENT
15 Clause 24, page 31, line 15, leave out from ("within") to ("period") in line 16 and insert ("such").
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 15. Amendments Nos. 15 and 17 taken together strengthen the provisions of Clause 24 under which companies may be directed to change their names. As a result of discussion in Committee in another place 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. 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 the Government considered there was no need to specify a minimum period for a change of name. Amendment No. 15 therefore 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.
Amendment No. 17 falls into two parts. One of the difficulties experienced in the administration of the 1948 Act has been that the registrar, when considering applications for named containing prestigious words, such as "British" or "trust", has had to rely primarily on the information or assurances provided and subscribed within a certain period from the date of registration, or as to the eventual membership of the board of directors. At present, once the name in question is registered, there is no means of undoing any harm which might be caused by applicants providing false or, misleading information, because the Acts do not give power to the department to enforce a change of name in such circumstances. The first part of the amendment is intended to cover this kind of situation and to prevent the continuance on the index of prestigious company names which have been gained by deception, allowing a direction to be issued in such cases within five years of registration.
Secondly, although Amendment No. 15 will require the time within which a company must comply with a direction to change its name to be varied, it does not provide for any extension of whatever time limit may have been determined in respect of a particular com-
940
pany. In practice, the company could submit a new name which is not acceptable and may thus have to hold further meetings to pass special resolutions confirming new names. The second part of Amendment No. 17 therefore allows discretion to extend the period specified in the direction in the light of circumstances arising after issue of the direction to change name. As the amendments are not consecutive, I cannot move them en bloc, so I beg to move Amendment No. 15.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
16 Clause 24, page 31, line 18, leave out from ("apply") to ("as") in line 19 and insert ("in determining for the purposes of this subsection whether a name is the same as or too like another").
17 Clause 24, page 31, line 20, at end insert—
("(2A) Where it appears to the Secretary of State that a company has provided misleading information for the purposes of its registration by a particular name or has given undertakings or assurances for that purpose which have not been fulfilled, the Secretary of State may within five years of the date of its registration by that name in writing direct the company to change its name within such period as he may specify.
(2B) Where a direction has been given under subsection (2) or (2A) above, the Secretary of State may by a further dirction in writing extend the period within which the company is to change its name, at any time before that period expires."):
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 16 and 17 en bloc. These are both consequential.
Moved, That the House doth agree with the Commons in the said amendments.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
18 Clause 25, page 32, line 15, after ("members") insert ("generally").
19 Clause 25, page 32, line 19, at end insert ("(whether or not the body is a member of the company)").
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 18 and 19 en bloc. Clause 25(2)(b)(iii) requires all the assets on the winding-up of a company exempt from using the word "limited" to be transferred either to another body with objects similar to its own or to one whose objects are the promotion of charity and anything related thereto. It has been suggested that this present wording would preclude the transfer of assets on winding-up to any member or members who are themselves bodies with objects similar to those of the company being wound up. It appears to be not uncommon for charitable and other companies falling within the scope of Clause 25 to have among their members other charities or non-profit making bodies with similar objects. The object of these amendments is to make clear that bodies to which available assets could otherwise be transferred need not be excluded from consideration by reason only of the fact that they are members of the company being wound up.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
20 Clause 27, page 34, line 15, leave out ("subsection") and insert ("subsections").
21 Clause 27, page 34, line 27, at end insert—
("(1A) Subject to subsection (2) below, if the corporate name of any oversea company is in the opinion of the Secretary of State too like a name appearing on the relevant date in the index of names kept by the registrar in pursuance of section 23 of the Companies Act 1981 or which should have appeared in that index on that date or is the same as a name which should have so appeared, the Secretary of State may serve a notice on the company specifying the name in the index which the company's name is too like or which is the same as the company's name.
(2A) In subsections (2), (3) and (5) for the words "subsection (1)" in each place where they occur there shall be substituted the words "subsection (1) or (1A)".").
22 page 35, line 4, after ("(1)") insert ("or (1A)").
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 21, 21 and 22 en bloc. Overseas companies which establish a place of business in Great Britain are required to register under Part X of the 1948 Act. Section 31 of the 1976 Act enables the Secretary of State to issue a notice to the company to require it to carry on business in Great Britain under a name other than its corporate name. This keeps the position of overseas companies on all fours with the position presently prevailing for 1948 Act companies. These amendments ensure that the position of overseas companies remains the same as that of domestic companies under the provisions of this Bill, and enable the Secretary of State to direct that an oversea company carry on business under a name other than its corporate name if he considers that its corporate name is the same as or too like one which appeared or should have appeared in the index maintained by the registrar at the time the company registered under Part X of the 1948 Act. It thus brings oversea companies into line with amendments governing the names of British companies. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Trefgarne.)
Lord Lloyd of Kilgerran: My Lords, in this area of international trade, I welcome this series of amendments as an improvement in relation to the status of overseas companies in bringing them into line with domestic companies.
On Question, Motion agreed to.
5.30 p.m.

COMMONS AMENDMENT
23 Clause 29, page 36, line 43, after ("letters") insert ("written orders for goods or services to be supplied to the business").
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 23. The Government considered carefully the arguments advanced both in your
942
Lordships' House and in another place, that the present definition of the business documents on which particulars of ownership should be displayed was unduly restrictive. Although there are obvious practical difficulties in requiring such particulars to be shown on all documents which might be considered to be issued by a business—for example, on "cut out" coupons in newspaper advertisements—the Government were satisfied that it would be right to extend the requirement to all written orders for goods or services to be supplied to the business. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
Lord Ponsonby of Shulbrede: My Lords, we welcome this particular amendment. As the noble Lord said, it meets a number of the criticisms that were made in your Lordships' House, in particular by my noble friend Lord Mishcon, and it will indeed help the consumer in being able to trace any defaulting business.
On Question, Motion agreed to.

COMMONS AMENDMENT
24 Clause 29, page 37, line 9, after ("address") insert ("within Great Britain").
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 24. Clause 29(1) requires any person carrying on business in a name other than his own to state in legible characters on all business documents details of the proprietors of the business, and to give an address at which service of any document will be effective. It is considered that as the paragraph stood, it might enable persons to give an address outside Great Britain for service, particularly a trader who has a place of business in Great Britain, but resides elsewhere. This clause seeks to ensure that the address given is within the jurisdiction of British courts. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
25 Clause 29, page 37, line 19, after ("above"), insert ("or which would have been so required but for subsection (3) below").
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 25. This 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 the business and who asks for such names and addresses. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
26 Clause 29, page 37, line 24, leave out ("sent out") and insert ("issued").
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 26. I understand that it was suggested by the Law Society that it would be preferable to avoid the use of different wording when describing identical actions. Clause 29(1)(a), to which Clause 29(3) refers, speaks of certain documents,
"issued in the course of the business".
Although the action to which Clause 29(3) refers is the same in effect, it might be construed to have a slight difference in meaning if it continues to refer to "documents sent out". This amendment seeks to correct that difficulty. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
27 Clause 29, page 37, line 27, after ("none") insert ("of").
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 27. This amendment corrects a typographical error. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
28 After Clause 29, insert the following new clause:
("Civil remedies for breach of section 29.
. Any legal proceedings brought by any person to whom section 28 of this Act applies to enforce any right arising out of a contract made in the course of a business in respect of which he was at the time the contract was made in breach of subsection (1) or (2) of section 29 of this Act shall be dismissed if the defendant to the proceedings shows—

(a) that he has a claim against the plaintiff arising out of that contract which he has been unable to pursue by reason of the plaintiff's breach of section 29(1) or (2); or

(b) that he has suffered some financial loss in connection with the contract by reason of the plaintiff's breach of section 29(1) or (2);

unless the court before which the proceedings are brought is satisfied that it is just and equitable to permit the proceedings to continue.
This section is without prejudice to the right of any person to enforce such rights as he may have against another person in any proceedings brought by that person.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 28. This amendment reflects the Government's acceptance of representations made in another place that the introduction of a civil sanction for breach of the provisions relating to the disclosure of information regarding the ownership of businesses carried on under business names would provide a desirable reinforcement of the criminal sanction for breach of those provisions. We had originally consulted on the case for including a provision on the lines of Section 8 of the 1916 Act, but the consultations suggested that such a sweeping power would not be appropriate.
On further consideration the Government have
944
accepted that there was a need for a narrower power, as set out in this clause, to prevent the possibility that the owners of a business who had failed to comply with their disclosure obligations under Part II of the Bill should be able to enforce a contract against a person who had been unable to pursue a remedy or had suffered some financial loss in connection with the contract because of the failure to comply. The clause enables the court to grant relief only if it thinks it just and equitable to do so. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
Lord Ponsonby of Shulbrede: My Lords, the enforcement of the control of the use of business names is the subject of this amendment, and in a sense it is self-evident that there needed to be an enforcement procedure. However, following the doing away with the Registry of Business Names, and the consequential saving of 65 staff, in the light of the introduction of this new clause, involving the necessary enforcement of the two previous clauses, one must ask how many people will be involved in the enforcement procedure? It could well be that the enforcement procedure will reflect on the strength not of the Civil Service but perhaps the local authorities. I wonder whether the noble and learned Lord can give your Lordships any idea of the number of additional staff which the enforcement procedure will involve and say whether there is any net saving at all in staff.
Lord Mackay of Clashfern: My Lords, the enforcement procedure which is incorporated in this amendment is by way of preventing a person who is in breach of his obligations from enforcing his contract in the defined circumstances, and therefore I cannot see that any kind of manpower requirement is at all involved here. It is between the parties to the contract that this point would arise, as an incident of litigation between them, if it came to that.
On Question, Motion agreed to.

COMMONS AMENDMENT
29 Clause 30, page 38, line 10, leave out Clause 30.
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 29. The previous inclusion of this clause was intended to allow the Secretary of State to dispose of the records currently held by the Registrars of Business Names, following the abolition of the registers in London and Edinbrugh. However, although a number of organisations did respond to the Secretary of State's invitation to submit proposals, none was prepared to accept the conditions which he had thought proper to attach to any disposal. In particular, they considered that the value of the records would diminish rapidly in the absence of any statutory registration requirement. The Government's view, reflected in this Bill, was that this was not an area in which they considered statutory registrations to be justified, and that in any event it would not have been appropriate to devolve statutory powers to a private organisation. Accordingly, as the offer had failed to elicit any effective response over an extended period, it was withdrawn

945
by the removal of the clause which would have permitted such disposal. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
Lord Ponsonby of Shulbrede: My Lords, can the noble Lord tell your Lordships what in fact will now happen to the records?
Lord Trefgarne: My Lords, I understand that most of the records will be destroyed, but that will not preclude the Public Records Office from taking any that it might think are necessary to hold for historical purposes.
On Question, Motion agreed to.

COMMONS AMENDMENT
30 After Clause 32, insert the following new clause:
("Temporary extension of power to require company to change its name
. (1) In relation to any company which was first registered, or registered by a new name, at any time during the period beginning with 18th March 1981 and ending with 23rd August 1981 section 18(2) of the 1948 Act (power of Secretary of State to direct company registered by name too like an existing company's name to change its name) shall have effect as if for the words "within six months of its being registered by that name" there were substituted the words" before 24th February 1982".
(2) Where in the case of any oversea company the relevant date within the meaning of section 31(2) of the 1976 Act (date of delivery of certain documents on the company's first establishing a place of business in Great Britain or date of return as to change in the company's corporate name) falls within the period mentioned in subsection (1) above, section 31(2) (which restricts the power of the Secretary of State to serve a notice under subsection (1) of that section in effect requiring an oversea company to use a name other than its corporate name for carrying on business in Great Britain) shall have effect in relation to that company as if for the words from "six months" (in the first place where they occur) to "this section" (in the second place where they occur) there were substituted the words" 23rd February 1982".
(3) This section applies in relation to any such company as is mentioned in subsection (1) or (2) above notwithstanding the fact that the period of six months mentioned in section 18(2) or (as the case may be) in section 31(2) has expired in the case of that company before this section comes into operation.
(4) In this section "oversea company" has the meaning given by section 406 of the 1948 Act.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 30. One of the results of the recent industrial action within the Civil Service was that the index of company names was not updated by the Registrar of Companies between 18th March and 23rd August 1981 inclusive, and was therefore not available for inspection by members of the public. This index is the present non-statutory version of the index which will be required to be kept under Clause 23. As your Lordships know, this is the record that companies may use to check on other companies' registrations. In respect of names registered during the absence of the index, objecting companies may subsequently have, or have had, only a restricted time in which to examine the index and lodge their objections before the expiry of the six-month period within which objections may be tabled. We have received representations about this
946
and consider that the absence of the index, caused by industrial action, may have resulted in companies being registered by names which are "too like" those of existing companies and that, in the circumstances, we are justified in extending the period in which a direction under Section 18(2) may be given in respect of names registered in that period. It is that which this amendment achieves. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
Lord Lloyd of Kilgerran: My Lords, I am much obliged to the noble and learned Lord for explaining that. This is one of the clauses that I found incomprehensible. I was quite wrong. Now that the noble and learned Lord has explained it, it is quite clear: it is due to the industrial action that occurred. I am much obliged to the noble and learned Lord.
On Question, Motion agreed to.
5.40 p.m.

COMMONS AMENDMENTS
31 Clause 35, page 40, line 33, leave out ("36 to") and insert ("(merger relief), 38 and").
32 Clause 35, page 40, line 35, leave out from ("account)") to end of line 39 and insert ("in the circumstances mentioned below in this section").
33 Clause 35, page 40, line 40, leave out ("sections 36 to") and insert ("section (merger relief)or").
34 Clause 35, page 40, line 41, leave out from ("company") to ("only") in line 43 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").
35 Clause 35, page 41, line 4, at end insert—
("(4) References in sections (merger relief), 38 and 39 of this Act to the issuing company are references to the company issuing the shares as mentioned in subsection (2) or (3) above.")'
36 After Clause 35, insert the following new clause:
("Merger relief
.—(1) Subject to section 38(5) of this Act, this section applies where the issuing company has secured at leaset a ninety per cent. equity holding in another company in pursuance of any arrangement providing for the allotment of equity shares in the issuing company on terms that the consideration for the shares allotted is to be provided by the issue or transfer to the issuing company of equity shares in that other company or by the cancellation of any such shares not held by the issuing company.
(2) Where the equity shares in the issuing company allotted in pursuance of the arrangement in consideration for the acquisition or cancellation of equity shares in the other company are issued at a premium, section 56 of the 1948 Act shall not apply to the premiums on those shares.
(3) Where the arrangement also provides for the allotment of any shares in the issuing company on terms that the consideration for those shares is to be provided by the issue or transfer to the issuing company of non-equity shares in the other company or by the canellation of any such shares in that company not held by the issuing company, the relief from section 56 provided by subsection (2) above shall extend to any shares in the issuing company allotted on those terms in pursuance of the arrangement.
(4) Subject to subsection (5) below, the issuing company shall be regarded for the purposes of this section as having secured at least a ninety per cent. equity holding in another company in pursuance of any such arrangement as is mentioned in subsection (1) above if in consequence of any acquisition or cancellation of equity shares in that

947
company in pursuance of that arrangement it holds equity shares in that company (whether all or any of those shares were acquired in pursuance of that arrangement or not) of an aggregate nominal value equal to ninety per cent. or more of the nominal value of that company's equity share capital.
(5) Where the equity share capital of the other company in question is divided into different classes of shares this section shall not apply unless the requirements of subsection (1) above are satisffied in relation to each of those classes taken separately.
(6) Shares held by a company which is the issuing company's holding company or subsidiary or a subsidiary of the issuing company's holding company, or by its or their nominees, shall be regarded for the purposes of this section as held by the issuing company.
(7) In this section "equity share capital" has the meaning give by section 154(5) of the 1948 Act; and, in relation to any company, "equity shares" means shares comprised in that company's equity share capital and "non-equity shares" means shares in that company of any class not so comprised.").
37 Clause 36, page 41, line 5, leave out Clause 36.
38 Clause 37, page 42, line 18, leave out Clause 37.
39 Clause 38, page 43, line 25, at end insert:
"(5) Section (Merger relief) of this Act shall not apply in any case to which this section applies.").
40 Clause 39, page 43, line 26, after ("Act") insert ("and subsection (1A) below").
41 Clause 39, page 43, line 27, leave out from ("issued") to end of line 37 and insert:
("at a premium shares which were allotted in pursuance of any arrangement providing for the allotment of shares in the issuing company on terms that the consideration for the shares allotted was to be provided by the issue or transfer to the issuing company of shares in another company or by the cancellation of any shares in that other company not held by the issuing company.
(1A) The other company in question must either have been at the time of the arrangement a subsidiary of the issuing company or of any company which was then the issuing company's holding company or have become such a subsidiary on the acquisition or cancellation of its shares in pursuance of the arrangement.").
42 Clause 39, page 43, leave out lines 41 to 44.
43 Clause 39, page 44, line 5, leave out subsection (3).
44 Clause 40, page 44, line 13, leave out ("37 to") and insert ("(Merger relief), 38 and").
45 Clause 40, page 44, line 15, leave out second ("the") and insert ("any").
46 Clause 40, page 44, line 16, leave out from first ("shares") to ("to") and insert ("or other consideration provided for the shares issued is").
47 Clause 40, page 44, line 26, leave out ("36 to") and insert ("Merger relief), 38 and ").
48 Clause 40, page 44, line 36, leave out subsections (4) to (6).
49 Clause 40, page 45, line 18, leave out ("36 to") and insert ("Merger relief), 38 and").
50 Clause 40, page 45, line 30, after ("sections") insert ("(Merger relief)").
51 Clause 40, page 45, line 33, at end insert—
("(8A) in sections (Merger relief) and 39 of this Act "arrangement" means any agreement, scheme or arrangement (including an arrangement sanctioned in accordance with section 206 or 287 of the 1948 Act).").
52 Clause 40, page 45, line 34, leave out ("36 to") and insert ("(Merger relief), 38 and").
53 Clause 40, page 45, line 36, leave out from ("corporate") to end of line 38.
54 Clause 41, page 46, line 3, after ("appropriate") insert ("(a)").
55 Clause 41, page 46, line 5, at end insert ("or
(b) for restricting or otherwise modifying any relief from those requirements provided by sections 35 to 40 and (Merger relief) of this Act.").
Lord Mackay of Clashfern: My Lords, with your Lordships' permission I should like to deal with Amendments Nos. 31 to 55 together. Your Lordships
948
may recall that at Report stage on 7th April I explained at some length the rationale behind the Government's intention, on the basis we were then able to establish in this complicated area, to give somewhat restricted relief, certainly as to future transactions, from Section 56 of the 1948 Act. I also gave an assurance in response to a question from the noble Lord, Lord Bruce of Donington, that the Government would give very careful consideration to any generally agreed proposals which might emerge from a joint working party, formed at the initiative of the CBI and comprising, besides, representatives of the Law Society and the CCAB, whose objective was to ascertain whether a consensus in favour of a somewhat broader measure of relief from Section 56 than that put forward by the Government at that time could be established.
In June the joint working party established such a consensus and submitted recommendations to the Government. Briefly, it recommended that Section 56 should not apply:
"in the case of any share-for-share transaction 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".
This recommendation was intended to replace Clauses 36 and 37 (prospective relief) with a much broader exemption from the requirements of Section 56, and was supported by a number of detailed recommendations. Your Lordships will remember that Clauses 36 and 37 concerned reliefs for the future, and it is with these that I am dealing at the moment.
The joint working party further recommended that within the legal framework which it proposed accounting standards should define the appropriate accounting treatment for particular types of acquisitions and mergers. Finally, the working party recommended that where a merger or acquisition qualified for relief from Section 56 the issuing company should be required to disclose in its accounts, after the transaction, certain information about the names of the combining companies, the form of the transaction, the accounting treatment adopted for the combination and certain other, financial information concerning the previous and subsequent performance and actions of the companies. The working party suggested that this information might be required by the law or by an accounting standard.
These recommendations were fully supported by the CBI and the Law Society. The CCAB as a body also supported the recommendations while indicating that it had certain reservations concerning the accounting treatment of different types of business combination. It accepted that the applicability of so-called merger accounting, as distinct from relief from Section 56, would be a matter for an accounting standard rather than the law. The chairman of the accounting standards committee expressed his support for the recommendations as the basis for a legislative framework within which an appropriate accounting standard could be developed, and work on such a standard has already begun.
I should like to pause at this point to repeat the Government's tribute, already paid in another place, to the skill and rapidity with which the joint working party conducted its deliberations and reported its

949
conclusions to the Government. I think everyone concerned was very anxious that a consensus should be reached on this extremely difficult and technical problem. The joint working party hastened to that, and I believe it is outstanding work that it was able to reach such a fairly simple consensus.
I should like to say just a little more about this. The Government were satisfied that the joint working party had made significant progress in this difficult area by identifying this much broader consensus, and in recognition of this the Government felt able to bring forward amendments based on the joint working party's recommendations. In broad terms, the Government propose to implement the spirit of the working party's main recommendation so as to broaden significantly the scope of the relief from Section 56. The substance of the new proposals, which replace the prospective relief provided at present in Clauses 36 and 37, is contained in the new clause, Amendment No. 36.
I should perhaps draw your Lordships' attention to two particular aspects of the new clause. First, the relief is to be available in the future in respect of any transaction which secures the necessary 90 per cent. holding in an acquired company. In other words, in contrast to the Government's original proposals, there is no longer any requirement that the issuing company should have been formed for the express purpose of acquiring, or have been dormant until acquiring, the acquired company.
Second, again in contrast to the earlier clauses, there is no requirement for a "general offer for equity shares on a share-for-share basis". This concept was regarded as too restrictive and has been replaced by that of a broadly defined "arrangement" which, in response to representations made to the Government, includes an arrangement sanctioned in accordance with Section 206 or 287 of the 1948 Act. Clause 38, which deals with intra-group reconstructions, is to be retained as providing necessary additional scope for relief in respect of certain transactions outside the terms of the new clause. The clause provides slightly more restricted relief than the new clause in order to take account of the special characteristics of intra-group reconstructions. Amendments in another place therefore made clear that all such reconstructions, even those which would also fall within the terms of the new clause, are to be subject to Clause 38.
Clause 39, which deals with retrospective relief from Section 56, has been amended slightly to take account of the principles underlying the new clause, as has Clause 40, which makes necessary supplementary provisions. Clause 41 has been slightly amended with an eye on negotiations in Brussels on the draft seventh directive on group accounts. The directive will contain provisions which bear on the treatment of business combinations in group accounts, and we cannot be sure that the terms of the directive, as it finally emerges, will be exactly congruent with the proposals in these clauses. We think it wise to amend just to cover the possibility that further action will be required, which possibility would not be covered without such an amendment.
Last, but by no means least—and I am grateful for your Lordships' patience—I should refer again to the recommendations of the joint working party in respect
950
of disclosure of information. The Government accept that the new broad prospective relief from Section 56 should be complemented by disclosure provisions. However, in order to allow further consultation on the detail of these provisions, and to provide flexibility for the future, it is proposed to legislate on this matter by means of regulations under Section 454 of the 1948 Act, as amended by the Bill.
I trust that your Lordships will now feel that I have reasonably explained the Government's revised proposals on relief from Section 56. This was a problem which I think was one felt on all sides of the House to be an important problem which the Government should, if possible, try to solve in the course of this Bill, and I believe that we have satisfactorily solved it. I beg to move that this House doth agree with the Commons in their Amendments Nos. 31 to 55 inclusive.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Mackay of Clashfern.)
Lord Wedderburn of Charlton: My Lords, I had hoped to put something to the noble and learned Lord before he sat down, and it may be that perhaps I am out of order, but it might make for speed if I ask him to clarify a simple point. Is it the case that the relevant clauses or sections will not be brought into effect until the regulations on the disclosure of information are in effect as well?
Lord Mackay of Clashfern: My Lords, I think that, so far as prospective relief is concerned, the situation is that we have provided a date for that, which I think is 4th February 1981, which is the date on which the proposals were first made. 1 would hope that the regulations will come along sufficiently quickly to give an effective follow-up to that, because the regulations are to affect work which proceeds from the merger rather than making it permissible.
Lord Bruce of Donington: My Lords, the noble and learned Lord has been kind enough to refer to the assistance he has received from the consultative committee and accountancy bodies. I should like to reiterate their general support for the proposals which he has sought to incorporate in his amendments, but on their behalf I should like to reserve their position until they have had an opportunity to examine them in detail.
On Question, Motion agreed to.
5.50 p.m.

COMMONS AMENDMENT
56 Clause 42, page 46, leave out lines 15 to 30 and insert:
("(1) Subject to the following provisions of this section and sections (Relaxation of section 42 restrictions for private companies) and (Provisions supplementary to section (Relaxation of section 42 restrictions for private companies)) of this Act, where a person is acquiring or is proposing to acquire any shares in a company it shall not by 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 (Relaxation of section 42 restrictions for private companies) and (Provisions supplementary to section (Relaxation of section 42 restrictions for private

951
companies)) 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—

(a) 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

(b) 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—

(a) 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 is but an incidental part of some larger purpose of the company; and

(b) the assistance is given in good faith in the interests of the company.

(2B) Subsections (1) and (1A) above shall not prohibit—

(a) any distribution of a company's assets by way of dividend lawfully made or any distribution made in the course of the winding up of the company;

(b) the allotment of any bonus shares;

(c) anything done in pursuance of an order of the court made under section 206 of the 1948 Act (compromises any arrangements with creditors and members);

(d) anything done under an arrangement made between a company and its creditors which is binding on the creditors by virtue of section 306 of the 1948 Act;

(e) anything done under an arrangement made in pursuance of section 287 of the 1948 Act (power of liquidator to accept shares, etc. as consideration for sale of property of company;

(f) any reduction of capital confirmed by order of the court under section 68 of the 1948 Act;

(g) a redemption or purchase of any shares made in accordance with sections 43 to 45, (contingent purchase contracts) 46 (Assignment or release of company's right to purchase own shares), (Payments apart from purchase price to be made out of distributable profits), 47 to 54, (Supplementary provisions relating to Part III of 1980 Act), (Power to alter certain provisions with respect to redemption or purchase by a company of its own shares) and 56 of this Act.").

57 Clause 42, page 46, line 31, leave out ("Subsection (1)") and insert ("Subsections (1) and (1A)").
58 Clause 42, page 46, line 36, after 'scheme' insert ("within the meaning of section 87(1) of the 1980 Act)").
59 Clause 42, page 46, line 38, leave out ("by the trustees of the scheme").
60 Clause 42, page 47, line 2, leave out ("company's net assets") and insert ("company has net assets which").
61 Clause 42, page 47, line 2, leave out lines 6 to 24 and insert—
("(5) In this section "financial assistance" means—

(a) financial assistance given by way of gift;

(b) 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;

(c) 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

(d) any other financial assistance given by a company the net assets of which are thereby reduced to a
952
material extent or which has not net assets.

In this subsection "net assets" has the same meaning as it has for the purpose of the 1980 Act.
(5A) 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.
(5B) 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.
(5C) For the purposes of subsection (4) above—

(a) "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

(b) "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.").

Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 56, and I should like to speak also to Amendments Nos. 57 to 61. We are now in the area to which the noble Lord, Lord Wedderburn, referred in the course of his remarks in the earlier debate. These amendments make important changes to Clause 42 of the Bill. Clause 42 was introduced to 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 a holding company. Some of your Lordships will remember that we had a good deal of debate on this at earlier stages of the Bill in this House.
I should like to express on behalf of the Government gratitude for the very considerable help that the Government derived from these discussions. I think that, even during the time the matter was being discussed in this House at the various stages, the tide flowed backwards and forwards a bit, and the climax of the flowing came when the noble Lord, Lord Wedderburn, and my noble friend Lord Selkirk and others joined together in promoting an amendment.
During the initial stages of this Bill, the department was consulting with bodies such as the Law Society and the Committee of London Clearing Banks on the implications of certain recent decisions which were considered to require an undesirably restrictive application of Section 54 to commercial transactions which had not previously been considered to fall within the scope of the prohibition. My noble friend Lord Selkirk—I am sorry he is unable through illness to be here today—informed the House that the section had become known as the "bankers' bogey"—that is, the trap-for-the-innocent side of the matter, to use Lord Wedderburn's phrase.
Clause 42 was tabled by the Government at Report stage, and it is fair to say that neither then nor at Third Reading did it meet with the unanimous approval

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of this House. At the end of Third Reading, with some gentle encouragement from my noble friend Lord Selkirk, I undertook that the Government would propose an amendment to this clause in another place. I think I can safely say that that undertaking has been thoroughly fulfilled. The amendments before the House are of considerable significance. They derive from a very intensive process of consultation that has taken place throughout the period since the Bill left this House. I understand that, in the view of those most closely concerned with these matters in the commercial world, the amendments represent a considerable improvement in the provisions, and indeed have their full support. Amendments Nos. 56 to 61 must be read in conjunction with Amendments Nos. 62 and 63, which provide special provisions for private companies, but first I propose to deal with the amendments to Clause 42.
The most important Commons amendment is clearly the first, Amendment No. 56. This has two distinct elements. First, subsections (1), (1A), (2) and (2A) reformulate the basic provision and the general defence that are in subsections (1) and (2) of Clause 42 in the Bill. Secondly, a new subsection (3) contains a list of transactions which are to be exempt from the prohibition in all circumstances. Your Lordships may remember that at an earlier stage, the noble Lord, Lord Wedderburn, was rather in favour of the list and then later was rather against it, while we have fluctuated in our view about this and have eventually decided that it is wise to propose the list.
The essential change in subsection (1), the restatement of the prohibition, 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 also given rise to great uncertainty of interpretation and has been a major element in the extension of the field of the prohibition because of the very wide range of transactions which can be said to be "connected" with a particular acquisition of shares. It is argued, for example, that where, by virtue solely of the terms of the holding company's standing financial arrangements with its bankers, a new subsidiary charges its assets as security for group borrowings, then that subsidiary is, in fact, providing prohibited assistance, because although there may be no causal link between the assistance and the acquisition, there is a connection since, without the acquisition, the assistance would not have been given.
The new provisions accordingly now distinguish explicitly between financial assistance given before or at the same time as an acquisition, and financial assistance given after the event. This is the primary reason why we want to make this division: to try to get over the difficulty which, in practice, has been found to arise from this reason. Financial assistance given directly or indirectly for the purpose of an acquisition before or at the same time as the acquisition is prohibited in the 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 (1A). The effect of a return to "in connection with" would be a reintroduction of uncertainty on an unacceptable scale. Accordingly I
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could not commend to the House proposals to that end about which you will no doubt hear in a moment.
The phrase "for the purpose of reducing or discharging the liability so incurred" is designed to isolate the mischief as actions which have a direct link with the financial commitments undertaken to achieve the acquisition, and I am pleased to note from Amendment No. 56A that noble Lords opposite see virtue in it. So far as Amendments 56B and D are concerned, the wording in the Commons amendments seem to us to be clearer and more direct, and these are particularly important attributes on a clause such as this normal wording as experience has suggested.
As the offence has now been divided into two, so the defence has been divided in subsections (2) and (2A) to apply respectviely to financial assistance before or at the same time as acquisition, and such assistance after acquisition. The condition in Clause 42(2)(c) that the assistance is given in good faith in the interests of the company is retained in both subsections. But, not least in the light of the critical comments made in this House at Third Reading, references to a power conferred by an instrument or resolution which were clearly regarded as obscure have been deleted. The subsections continue to found the defence on the company's purpose in giving assistance. However, I hope that noble Lords will feel that the concentration on "principal purpose" rather than "purpose or principal purpose" and the latter part of subsection (2)(a) and (2A)(a) make it considerably clearer what test a company must pass if it is not to provide prohibited assistance. We believe that these provisions in particular will help to remove recent uncertainties.
Before turning to subsection (3), I should like to refer briefly to Amendments 56G to L, which contain three different elements. Amendments Nos. 56G and 56I would delete what we see as essentially clarificatory phrases which those whom we have consulted have found particularly helpful in defining the scope of the defences. Amendments Nos. 56H and 56L seek to deal with the civil consequences where a third party (I assume a third party, although the drafting would appear to encompass the company itself also) seeks to take advantage of the defences in subsections (2) and (2A). I am not wholly clear what is seen to be the difference in practice between the clause as amended by Amendment No. 56 and with the addition of provisions along the lines of Nos. 56H and 56L. The fact is that anyone seeking to rely on the defences would, if tested, have to demonstrate that he reasonably believed that they were substantiated.
Regarding Amendments Nos. 56J and 56K, I am afraid that we found these difficult, and it may be that the noble Lord will explain them more fully later. In so far as they extend the onus of proof on a third party, we believe that they may go unreasonably far, because it seems unreasonable to expect a third party to inquire beyond the company's purpose in providing assistance to establish the purpose of the assistance itself.
Amendments Nos. 56A and 56F effectively seek to return to a more conventional formulation of the offence and to restrict the defences. There appears to be a basic difference of view on this, and we do not consider that those amendments strike the right balance between appropriate restriction of a mischief

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and reasonable commercial flexibility. It is clear from our consultations on this matter that they unacceptably inhibit entirely worthy group financial arrangements. I appreciate what has been said already. It is very difficult to get the line right in this case and to have reasonable freedom for perfectly legitimate financial transactions and those which are not reasonable.
Lord Bruce of Donington: My Lords, before the noble and learned Lord the Lord Advocate finishes making his points, I wonder whether he will inform the House if the proposals set out in Amendment No. 56 and also in Amendment No. 61 to which he has been speaking, were discussed in draft amendment terms with the Consultative Committee of Accountancy Bodies, or was there agreement with them as to the more general principles which will be followed? This is very important because I do not wish the CCAB to be saddled with the complete responsibility of approving every jot and tittle incorporated in both amendments.
Lord Mackay of Clashfern: My Lords, I believe it would be right for me to say in general terms that the Government have tried to consult on these technical matters as widely and as fully as possible. Nevertheless, having so consulted the responsibility for the amendments is that of the Government. Even if we had consulted on the absolute final detail of the amendment, I would still say that the Government had that responsibility. I am seeking to inquire in what detail this was put to the CCAB, but it would be quite unfair for me to do more than to say that we benefited very much from their help and we understood that, at least in general terms, the CCAB were in agreement with it. So far as the other bodies which we consulted are concerned, I would feel very much the same thing.
The recent uncertainty about the scope of Section 54 has extended to the application of the prohibition to forms of payment, which have been widely considered not to be covered. The new subsection (2B) is intended to put beyond doubt that certain transactions which are expressly provided for in company law and which may result in payments which are used to purchase the shares of the company can never fall within the scope of the prohibition. The approach embodied in this subsection was, as I said, debated on Third Reading when I expressed considerable reservations about exempting completely transactions such as dividends. On reflection, however, we now recognise that our earlier resistance to what might loosely be called the "list approach" did not pay sufficient regard to the possible overlap of different protective provisions in company law.
Even in the case of dividends, which are dealt with in (3)(a), which Amendment No. 56M seeks to delete, Parliament has legislated since the introduction of the original prohibition in Section 54 to regulate the distribution of a company's assets in Part III of the Companies Act 1980, with the interests of creditors particularly in mind. The reference to "dividend lawfully paid" in the proposed amendment ensures not only the protection of creditors by applying the provisions of Part III of the 1980 Act, but also ensures
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that any funds distributed are paid as a dividend in compliance with the provisions of a company's articles, which will normally safeguard the interests of any minority shareholders by ensuring equality of treatment between holders of the same class of shares.
It is worth noting that the Jenkins Committee stated that it should be made clear that Section 54 did not prohibit dividends, and it is fair to say that it has been widely considered that Section 54 did not in fact prohibit dividends. Similarly, the other specific exemptions provided in subsection (2B) cover transactions which company law regulates in order to protect those legitimately interested in the disposal or deployment of a company's assets.
So far as the Opposition amendments are concerned, we disagree with the policy behind Amendments Nos. 56N and 56P as detracting from the clean exclusion of the transactions set out in subsection (2B). We believe that this is a very important part of the clarity of the proposal. Moreover, Amendment No. 56P appears to embody a somewhat strange concept of a lawful transaction, perhaps a dividend, that is not in good faith and in the interests of the company. So far as Amendment No. 56Q is concerned, we do not see that it adds anything.
Dealing briefly with the remaining Commons amendments to Clause 42, Amendment No. 57 is consequential on Amendment No. 56. Amendment No. 58 inserts a definition of "employee share scheme" which was previously in subsection (7) which a later amendment deletes. Amendment No. 59 deletes the requirement that funds made available by a company in accordance with an employee's share scheme for the acquisition of shares must be provided to trustees. Such a change has been urged on the Government by a number of commentators, particularly in the context of our provisions to enable companies to purchase their own shares. The requirement that employee share schemes must have trustees—which has been the effect of the existing provision so far as company law is concerned—seems to have been as much for administrative convenience as to safeguard the beneficiaries. Amendment No. 60 is a drafting amendment.
Amendment No. 61, finally, contains a number of important definitional provisions to support the earlier subsections. The definition of "financial assistance" previously in subsection (5)(i) has been refined and revised in the new subsections 5(a), (b) and (c) in the light of extensive consultations. The reference to "net assets" previously in (5)(a)(ii) and now in 5(d) has been amended to cover the case of a company without net assets but unlike other references to net assets in the clauses which I shall deal with later, is a test by reference to actual asset values.
Subsections (5A) and (5B) clarify the scope of references respectively to incurring a liability for the purpose of an acquisition—which arises on subsection (1A)— and reducing or discharging such a liability, which arises on subsections (1A) and (2A). The amendments make clear that in deciding the question of whether 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.

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Finally, subsection (5C) provides that, for the purposes of subsection (4) only—that is subsection (4) as in the Bill—the question of whether net assets are reduced is to be determined by reference to book values, rather than, under Clause 42 as it stands, actual values. Subsection (4), which has not been significantly amended, restricts any assistance given by a public company under the exemptions in subsection (3) for general lending which is part of the ordinary course of business, for provision of funds in accordance with an employee share scheme and for lending to employees, to such assistance as does not reduce net assets or which is provided from distributable profits. In applying the standard of book values the amendment reflects the policy of the EC Second Directive on Company Law and responds to comment to the department that in that context a reference to actual values was unduly harsh. It is considered that this is justified in the case of the limited types of payment permitted under subsection (4).
My Lords, I hope that my explanation of the reasoning behind the Government amendments and of our reservations about the amendments to the amendments which are being proposed, may enable your Lordships to understand our approach to this matter and will commend the amendments to your Lordships. I beg to move.
Moved, That this House cloth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern,)
6.9 p.m.
As an amendment to Amendment No. 56:
56A Leave out subsections (1) and (1A) and insert—
("Subject to the following provisions of this section and of any other provision of this Act, it shall not be lawful for a company or any of its subsidiaries to give financial assistance directly or indirectly for the purpose of or in connection with the acquisition or proposed acquisition of its shares, whether that assistance is given before or at the time of the acquisition or after the acquisition either by reducing or discharging any liability or otherwise".).
Lord Wedderburn of Charlton: I am sure your Lordships are grateful to the noble and learned Lord the Lord Advocate for his explanation and for giving us a greater understanding of Amendment No. 56—although I myself could not follow the speed with which he went through our amendments to the amendment because he chose not to do so either in alphabetical order or indeed in the clusters which were my clusters. I shall do my best to move Amendment No. 56A and, conveniently, in view of what the noble and learned Lord Advocate has said, I will take with it, if your Lordships agree, Amendments Nos. 56C and 56E.
It is necessary to match the noble and learned Lord Advocate's introduction with a few words on what these amendments are all about, and then it will not be necessary to make points on individual amendments.
The noble and learned Lord in our previous debates—as today—has adverted briefly to the fact that ever since 1929 Parliament has regarded it as grossly improper for a company to provide financial assistance for the purchase of its own shares. The question has been: Where should the limit be laid? It has been
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accepted as an abuse both in our statutes of 1929 and 1948, and by the second European Economic Community directive in Article 23. It is widespread knowledge that it is improper. Indeed, in report after report of the Department of Trade inspectors, although it has been made a crime in the past, it very frequently appears at the centre of the spider's web of this or that malpractice.
Therefore, those who counsel that the barrier of Section 54 should be removed must be listened to very carefully and with caution because financial assistance for the purchase of the company's shares is at the centre of a very large number of malpractices. It is also true—and this is where I join the noble Earl, Lord Selkirk—that the section as it has stood since 1948 was a quite unnecessary harassment for what we chose to call the innocent. They were usually bankers—but not always—or people who advanced money in some form to the company not knowing that it would be in any way used for this purpose.
Therefore, we jointly criticised the Government on 30th April because the clause did not protect the innocent sufficiently and did not deter the guilty sufficiently. The Government went away and, as the noble and learned Lord has told us, had consultations. May I say a word about consultations? I am not being critical of the Government, their advisers or anyone else in the way that they go about things. In this particular matter, as perhaps on so many company law matters, unless one is careful one is always consulting with the innocent. No man in the City is going to say: "I break Section 54 every day". He is going to be a person who wants to avoid breaking the law. So he will want the widest gateways for the innocent.
With whom did the Government consult? Did they consult with the guilty or those with who were interested mainly in the apprehension of the guilty? Did they consult with the TUC? There is great interest there in this matter. Did they consult with those who prosecute? If so, what did those who prosecute say? It may be they did not and it is not usually done perhaps. But it should be done. I read the clause put to the other place in Committee on 30th June. I thought it was too relaxed, even more for the innocent. There was nothing to catch the guilty. In the other place on Report, just one week ago, the Government not only opened all the gateways to the innocent and guilty together, they totally changed their philosophy. As this involves the noble and learned Lord speaking today and speaking on 30th April I must make my point stick. I will, if I may, quote in a moment what he said then and what he says now. The philosophy of the Government has totally changed not between those two dates but between 30th June and 20th October. The 20th October clause which we have before us now is a totally new concept to open the gates. I believe that it could be said that this clause, by laying down an ineffective prohibition and widening the gates to such enormous exemptions does not effectively comply with the directive. I do not believe that it complies with Article 23 because it is completely ineffective.
It is the purpose of these amendments, of which this is the first, to test out the different points. In that respect a central point on which this first amendment

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challenges the clause is its omission of the words "in connection with" and its insistence that there shall be no offence unless the assistance is given for the purpose of the acquisition of shares. The two phrases are of course different. May I dub them in this way: the purpose phrase denotes a subjective test.
The connection phrase dubs an objective test; that is, as the noble and learned Lord has said, anything which is connected may include anything which has a casual link. Financial assistance given out of the company's assets which has a causal link with the purchase of shares. I do not apologise for spending a little time on this first amendment because it goes to the root of the clause, and taking it with the other two amendments, Amendments Nos. 56C and 56E, I hope your Lordships will agree that we can make progress on all three amendments together.
The noble and learned Lord said that "assistance in connection with the acquisition of shares" includes everything where there is a causal link. He said that they want to keep it to a causal link. My first comment is that leaving in the phrase, "assistance for the purpose of acquisition of shares", does not include every kind of causal link. The word, "purpose", does not include every result. You can do something which has a result; you may even know it. But it is not for the purpose of doing it unless there is some intention. Therefore, we find that of the three areas which can be covered—namely, anything in connection with or anything which has the result or anything which is intended—the Government only intend to include the third.
Whose intention is it? Whose purpose is it? We are looking at the purpose of the company to begin with. The purpose of the company will rest on the evidence that has to be obtained primarily from the boardroom. We canvassed these areas on 30th April. With great respect, I am rather disappointed that the noble and learned Lord did not deal with the very obvious arguments against Amendment No. 56 which were put on Third Reading in this House in respect of another clause but which equally apply here in what he said. He said nothing about them at all. Is it not the case that evidence of purpose in the company's case will rest very largely on what comes out of the boardroom? Is it not the case that two rogue elephant directors among five could ensure that it was very hard for the prosecution to prove that the company's purpose was that which it has to prove if it has to prove an offence is committed?
I am aware that the purpose of directors individually apprehended as in default of this clause would rest upon the ordinary rules of evidence. Even there I say that it is not enough for the protection of the money of the shareholders and creditors. Also I wish to add employees. To be frank, I am a little fed up of hearing company law discussed entirely in terms of shareholders and creditors. Also the workers are involved and the community. Everybody has an interest in not seeing the company's assets squandered on purchase of its own shares as part of a malpractice. I stress this because of the Government's own exemptions in the subsections we are coming to such as in (2)(a) and (2)(b). Assume them to be in the Bill, and the Government have their way, which I suppose
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a rational human being this evening would predict they may—why not have a wide offence? Why narrow the area of liability if there are plenty of gateways for the guilty?
The Government will be suspected of a peculiarly devious intention if, having enacted very wide gateways for the innocent bankers (which may well be necessary) they go on to enact a very wide exemption for the guilty whom we would all say in debate we wanted to catch. They will not be caught by subsection (1)—certainly not in 10 per cent. of the cases where even now they might be caught. It is difficult enough under Clause 54 even now no matter what is said about its all-embracing character. How many prosecutions actually take place? That is another question about the enforcement of company law.
I said I would make stick the proposition that the noble and learned Lord had changed his mind. I will only say this: Today he was all in favour of the Jenkins Committee approach to this matter, and when we come to dividends we shall see this again. But on 30th April he said about payments such as dividends—and I quote from col. 1298—
"Such payments were thought by the Jenkins Committee normally to be innocent—and I emphasise 'normally'—based on their view that the dangers arising from a company giving financial assistance were for minority shareholders and creditors only. However, the Government believe that this view is mistaken, and that to allow such a payment would undermine very much of the function of the Section 54 prohibition and the matter at which the new clause is aimed".
In that and the rest of his speech, I am sure he would accept that he did not adopt the Jenkins approach. Indeed, the Government explicitly on that occasion did not adopt it, I think correctly. We all change our minds. The noble and learned Lord referred to my change of mind. I do not think it was during, the passage of this Bill. Unless I am wrong on the record, I think it was that I once favoured a list and said on Third Reading that I had changed my mind.
To change one's mind, especially on a minor matter, is one thing; but it is another thing to change one's mind on the whole philosophy of the approach to financial assistance for the purchase of a company's shares—a matter which has been there since 1929 as a central problem of company law—and to do that in two amendments and not to explain why, or to give the general conceptual framework, but just to treat the matter as a matter of consultation with the people who want to get through the net, and who I do agree should get through the net, and not to tell us who should be caught—that is what I want to know from the Government. Who do they expect to be caught? Which of the inspectors' reports would reveal a case where this clause would create a crime, as Section 54 does now? I want to know, and I think the country has a right to know; and that is why I have spoken at some length on this and why I spoke as I did on the amendment. I think some noble Lords thought it was wrong to mention particular clauses, but the case on the amendment rested on facts of this sort that we have never had explained to us—absolutely central matters of this kind on the amendment.
The final point comes back to the words "in connection with". If you say that you must not give financial assistance, directly or indirectly, for the purpose of or in connection with the acquisition or proposed

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acquisition of shares, first, you may be talking about assistance afterwards. I agree that has been dealt with by the Government. It is a minor point and they are dealing with it in the way they suggested, in broad terms.
Secondly, it is said that it is too uncertain, but I say that the test of purpose is uncertain. Elsewhere in this clause the Government talk about the "principal purpose". Is that what they mean in subsection (1), or do they mean a minor purpose or an incidental purpose? They must know perfectly well that they are legislating litigation. The noble and learned Lord has held more briefs in his hand than I have eaten hot dinners, and he knows very well that this subsection will give rise either to nothing or to excessive litigation, and the prosecution are likely to lose. What does the word "purpose" mean, when later on they say "principal purpose"? What is a court going to make of that?
I could go on to criticise other minor points, but I do not claim to have had either the time, the energy or indeed the native ability, as I have had to go slowly through these matters, as a simple soul might try to go through a difficult, hard forest. But I would say that some parts of Amendment No. 56A are more likely to deter and catch the guilty than anything in the Commons Amendment No. 56, in subsection (1). I put to the Government: Do they not accept that to be so? I beg to move.
Moved, That the amendment to the amendment be agreed to.—(Lord Wedderburn of Charlton.)
6.25 p.m.
Lord Bruce of Donington: My Lords, if I may, I should like just to supplement the observations made by my noble friend Lord Wedderburn of Charlton. I refer in particular to subsection (1A) of Amendment No. 56 and also to subsections (2) and (2A) of Amendment No. 56. There, as my noble friend has pointed out, the words "principal purpose" have been stated. "The company's principal purpose" is referred to. Who is to determine what the company's principal purpose is? A company is a corporate entity. It has no mind; its actions take place either through the issue of documents bearing the signatures of authorised people, such as cheques, or in the case of a company's corporate action there is a resolution of its directors or of its annual general meeting. How is anybody going to determine what a company's principal purpose was? If, for example, a company at a meeting of its directors were to put into its minute book, and subsequently pass, a minute saying that, "the principal purpose of the transaction is as follows", that at the moment would appear, in the absence of evidence in rebuttal, to be conclusive evidence of what the company's principal purpose was. How else is a company's principal purpose going to be assessed?—except, as my noble friend has already pointed out, in the undoubted litigation that will arise from clauses containing ambiguities of this kind.
I invite the noble and learned Lord to contemplate actions in interpretation of these clauses that may and are more likely to arise. How does one assess what is the company's principal purpose? Can it be assessed on the basis of a collection of a whole series of facts
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from which irresistible implications or irresistible conclusions can be reached? How near is the balance to be struck—or is a board or a company resolution going to be conclusive evidence of purpose?
I hope the noble and learned Lord will be in a position to answer that; and since, at the same time as he discussed Amendment No. 56 he also discussed No. 61, may I ask him whether the Government can do a little better than describing financial assistance as "financial assistance"? This is hardly a cogent way of framing a definition clause. What about financial assistance given by way of credit, for example? Is that "financial assistance" or is it not? These two amendments, which have been spoken on very cogently by my noble friend Lord Wedderburn, are only two of the ambiguities that arise. Can the noble and learned Lord be of any further assistance on these matters when he replies to the points raised by my noble friend on the amendment he has submitted?
6.30 p.m.
Lord Lloyd of Kilgerran: My Lords, may I first thank the noble and learned Lord for the explanation he has given about the amendments to Clause 42. I must say I have considerable sympathy for the theme that has been developed so ably by the noble Lord, Lord Wedderburn. The question is whether the amendment now under these amendments to Clause 42 is too wide. My professional experience, if I may refer to a personal matter, is entirely in the field of intellectual property, involving patents, trademarks, know-how and copyright.
I have had some anxiety about Amendment No. 61, where there is a definition of "financial assistance". The noble Lord, Lord Bruce of Donington, asked whether this covers assistance by means of credit. It is quite possible in this age, which is so often called the age of science and technology, for there to be a large number of patents and trademarks available to a company. Is it possible, therefore, for a person to obtain assistance for the purpose of purchasing a share by some transaction involving the intellectual property which the company may own?
It seems to me prima facie—and I have not had the opportunity of studying this matter very carefully—that there may be a loophole there, in relation to the definition of "financial assistance" in the new amendments which the Government have now put forward. I apologise for at this late hour raising questions involving esoteric matters of patents and trademarks. But, if it were possible, I should be grateful for an answer, and no doubt there is a simple answer, because the noble and learned Lord has had more time to study these proposals than I have.
Lord Seebohm: My Lords, speaking as a banker, I naturally welcome Clause 42, as amended, very much indeed, and the death of Section 54 of the 1948 Companies Act is something for which we have all looked for very many years. What worries me about Amendment No. 56A is in connection with the financing of management buy-outs, which is now becoming extremely important.
I think that people will have seen in the press the announcement that arrangements are being made by

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the National Freight Corporation, which is a £50 million transaction and is very important indeed. I am speaking rather hypothetically, because I do not know the details at all, but it seems to me that in a case like that, where the management are having a buy-out, they also want to get as large a proportion as they can of workers in the business buying shares. It seems to me very important that they should do so. A lot of those workers will not have the cash on the nail to put down and will have to borrow money, and the obvious party to lend them that money will be the company. If Amendment No. 56A is adopted, will it make this more difficult or impossible or what would be the result? If it makes it more difficult or impossible, then I think that No. 56A is a very undesirable amendment.
6.32 p.m.
Lord Mackay of Clashfern: My Lords, the noble Lord, Lord Wedderburn, asked whom we had consulted. Our main external consultations were with the Law Society, the representatives of the banks and Finance for Industry, who have considerable experience of management buy-outs of the type to which the noble Lord, Lord Seebohm, referred. I am sure that the noble Lord, Lord Wedderburn, will have in mind that the Department of Trade has its own prosecution branch, and, of course, the Companies Inspectorate were also closely involved in these matters.
The noble Lord said that I had changed my mind, and I quite accept that I have changed my mind. Indeed, I anticipated that he would say that, which is why I said what I did earlier on. But this is a very difficult and important field, and I think that it is very justifiable to change one's mind in looking for a solution to a problem which, as the noble Lord, Lord Seebohm, has said, has been with us for a long time. The primary answer which I give to the noble Lord, Lord Wedderburn, in connection with his Amendment No. 56A is that the difference between us is that he wants, in effect, to put in "in connection with", whereas I want to keep in "the purpose".
As I see it, what our Amendment No. 56 does is to focus on what is regarded as the mischief. The mischief is that a company should give financial assistance directly or indirectly for the purpose of the acquisition of its own shares. It is that that requires to be restricted, and it is for that reason that we have used these words. We certainly consider that our clause as it stands, as amended by the Commons, carries out the requirements of the directive.
Of course, I accept that in any particular case one has to establish the purpose, and that is the present position, because Section 54 has never been an absolute offence. It is an offence which requires the establishment of what some people call mens rea—the kind of mind which intends to commit an offence. Therefore, there is nothing new in its being an offence which relates to the purpose of the transaction—
Lord Bruce of Donington: My Lords, I am grateful to the noble and learned Lord for giving way. Would he also bear in mind that Section 54 of the original Act uses not only the word "purpose" but also "or in connection with", which is the very phrase that has been used by my noble friend?
Lord Mackay of Clashfern: Yes, my Lords. I am, of course, well aware of that and that is the principal improvement on this aspect that we want to make; that instead of, as it were, drawing a bow at a venture, the old Section 54 identified in part what the mischief was, and that was when it was talking about purpose. When it came to "in connection with", it was really hitting at something which might or might not be bad, according to what its purpose was. That is the real difficulty. While "in connection with" is a phrase that does not perhaps depend so much on the individual's mind, it is capable of very wide application, and that has been one of the difficulties of Section 54 in recent cases.
A point has been made by both the noble Lord, Lord Wedderburn, and the noble Lord, Lord Bruce, about the company's principal purpose. The obvious intention of that part of subsection (2) is to give the company the opportunity of a way out of the primary liability, if it can show that its principal purpose is not. to give assistance for the purpose of any acquisition. That is the point. The question of what is the company's principal purpose is a matter of fact to be decided upon the evidence. I cannot see any other way in which anything of that kind could be done. It is a question of assessing, in all the circumstances, what is the principal purpose that the company has in mind. The noble Lord is, I am sure, familiar with the Belmont case, where the judge had to do just that. So, in order to apply any kind of law in this area, one has to apply one's mind to the facts and see whether they show to a reasonable tribunal that the principal purpose was as the company claimed it to be.
The noble Lord, Lord Wedderburn, asked me whether, if our clause applied, any cases in the inspectors' reports would have escaped. I must say that I cannot be certain that there is any case reported in the reports which would not have been caught if this clause had been in operation but which would have been caught under the old Section 54.
I come to the last point, I think, which is on the question of financial assistance. The noble Lord, Lord Bruce, said that it is not much help to say that "financial assistance" means financial assistance. If that were all that was said, I might have to agree with him, but it does not say that. Amendment No. 61 says:
"In this section "financial assistance" means (a) financial assistance given by way of gift; (b) financial assistance given by way of guarantee"
et cetera. In other words, it indicates the various methods by which financial assistance may be given, in order to indicate the scope of the phrase. It is not just a question of handing over cash. It is a question of financial assistance which may be given in the variety of ways which are reasonably exhaustively described in paragraphs (a) to (d).
I should like to end with the question put to me by the noble Lord, Lord Lloyd of Kilgerran, regarding intellectual property. Certainly financial assistance could be given by way of intellectual property. For example, supposing that, in order to assist me to buy shares, a company which held rights in an important patent gave the right in the patent to me as a gift in order that I might then derive money from it for the purpose of buying shares in the company, that would

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clearly be caught by subsection (5)(a). The particular nature of the property which is used to give the financial assistance does not determine the matter for the purpose of the clause.
In these circumstances, I would suggest to your Lordships that the clause as it is is preferable to the amendment proposed by the noble Lord and I would ask your Lordships not to accept it.
6.41 p.m.
Lord Wedderburn of Charlton: My Lords, I am grateful for the suggestions which have been made concerning this amendment. I can think of ways in which to improve it but I have not heard anything which suggests to me that the Government's subsection (1) of Clause 56 is better than I thought it was. It seems to me to be rather worse.
The debate has reaffirmed yet again how so many misconceptions cover this area. The latest fashion is to say, "We must get rid of Section 54 in order to assist management buy-outs". I agree that management buy-outs may be a very important phenomenon that one wants to assist. One does not want the statute to stand in the way. But it is dealt with perfectly simply and clearly in the exemptions of the Government's own clause. It does not need the omission of the words "in connection with"; that is, to assist management buy-outs you do not effectively have to abolish the offence of using the company's assets to acquire its shares, which is what, in practice, this clause does. You have to have exemptions which clearly allow for ordinary banking activity to be carried on. So no doubt today we must look at exemptions from the offence to see whether they include room for management buy-outs.
I suggest that these exemptions quite clearly do. In other words, the debate about the exemptions is once again being muddled up with the debate about the basic prohibition. I did not complain that the noble and learned Lord had changed his mind. I explained that I have changed my mind. I complained that whereas I was right to change mine he was wrong to change his because he has not explained up to now why he has changed his mind. I knew that the noble and learned Lord would do for us what no other Government spokesman has done. Throughout the debates I have read on this matter no other Government spokesman has said what a lawyer should say to start with: What is the mischief to be prohibited? Although I do not have his precise words, I understood the noble and learned Lord to say that the mischief to be avoided is that the company's assets must not be used for the intentional purpose of acquiring its shares. With respect, that shows why the Government have got it wrong, because that is not the only mischief to be avoided.
Although in certain respects I regard the Jenkins Report of 1962 on Company Law Amendment as rather diabolical, nevertheless I shall sup with the devil on this one. I have been looking at the Jenkins Report. I cannot make the point stick without reading paragraphs 172 to 186 of the Jenkins Report but I am sure that noble Lords would not wish me to do so. If, however, one reads paragraphs 172 to 186 one finds
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that even Jenkins—perhaps the most relaxed document on this matter in the last few decades—does not confine the mischief to be avoided only to cases of intentional application of assets for the purchase of shares. It is a little difficult, I agree, to define the area which Jenkins wanted to have covered because the report went on to procedural matters requiring a special resolution—into the area which the Government wish to apply to private companies.
I do not know of anybody who has defined the mischief so narrowly as it has been defined in this Chamber tonight. Surely in 1981 somebody is interested, apart from my noble friend Lord Bruce of Donington and I, in stopping malpractice. The Government give the impression that they do not care a fig. Surely they care whether or not there are practices where the application of the assets of the company would result in the acquisition of shares being assisted and should have been foreseen but was not. This was not the purpose of the relevant people but they really should have foreseen it because, as directors, they owe a duty to all the people who depend upon that enterprise, be they creditors, shareholders or workers, that the assets of that enterprise should be looked after with due care. Should not they be caught by this clause? Should they just be able to say, "It was not the company's purpose, nor ours: therefore that is an end of the matter?" Should they not be forced to prove that they come within an exception?
The debate tonight has shown that this is a most deplorable clause. The noble and learned Lord and I could swap many evenings discussing the finer points which I know he has not revealed and which I shall not reveal in the discussion tonight. But surely this cannot be the correct form for a Companies Act of 1981. I am utterly astonished that the noble and learned Lord has not even hinted that he has any reservations. I know that he may not be able to do that here, but one day, when he has changed his mind again, perhaps we shall see whether he really has.
All I can do is to say that I shall not withdraw this amendment. No doubt we shall not go through all the palaver of dealing with it by the ultimate deterrent. However, the amendment will not be withdrawn and I hope that it will stay on the record as an indictment of this particular part of this Companies Bill.
On Question, Amendment No. 56A, as an amendment to Commons Amendment No. 56, negatived.
As an amendment to Commons Amendment No. 56:
56B Subsection (1), line 8, leave out ("for the purpose of") and insert ("with a view to")
Lord Wedderburn of Charlton: My Lords, I can move this amendment much more quickly. It relates to exactly the same matter. I merely want to ask the Government a question. Accepting now that their subsection (1) of Clause 56 is based upon the notion of purpose, this amendment would replace "purpose" with "view to". This amendment would insert the words,
"that no financial assistance should be given with a view to the acquisition of the company's shares".
The reason that the amendment is moved is to test this one point. In Article 23 of the second directive, in the English version at least, the words

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used are that the "funds"—I do not suggest we should adopt the word "funds"—of the company should not be donated, which sounds like a bad translation, with a view to the acquisition of shares. Is it the Government's understanding that in either the English or any other version the purpose, which in English is "donation of assets with a view to the acquisition of shares", is the same as the English purpose? If the translation is correct in the sense that it is official—and I understand that the English text is an official version of the directive—then one looks at the Oxford English Dictionary and finds that the two are not quite the same. They relate to the fine tuning point that came up in the debate between the noble and learned Lord and myself on the previous amendment. If one looks at the Oxford English Dictionary, to do something "for the purpose of" (in any meaning you care to look at under the various headings) is always with the intentional object of attaining something. If, however, one looks at the word "view" and the words "with a view to" in the Oxford English Dictionary, one finds that they include both the object of attaining something and doing something with regard to something else, which sounds more like a causality without the full intent, which is always included in "purpose". Therefore the question is: Do the Government regard the two phrases as the same, and do they feel that this is justified?
In any case, why not use the words in the directive?— because of course the matter of the directive is very important so far as cost is concerned for those who depend on this. First, the courts will want to look at the directive to interpret the Act—and the Government have no doubt thought about that; so will the courts put any peculiar meaning on "purpose" in view of the different wording in the directive, such that the layman or even the legal adviser might not think of and, secondly, will the courts have the Act challenged as not according with the directive? I cannot believe that the Government have not thought of that. But the question needs to be put, and I move this amendment to the amendment with the purpose and with a view to ascertaining the Government's views. I beg to move.
Moved, That Amendment No. 56B, as an amendment to Amendment No 56, be agreed to.—(Lord Wedderburn of Charlton.)
Lord Mackay of Clashfern: My Lords, so far as we are concerned, the view—and I am sorry to use that word—that we have taken is that "for the purpose of" and "with a view to" in this context have very little difference between them. The noble Lord, referring to the dictionary, gave more than one meaning for the phrase "with a view to", but I think that the second one which he gave, "with regard to", would hardly fit the context of this phrase, and the first one is indistinguishable from the meaning "for the purpose of", which he also gave, so I think perhaps his researches confirm the result from which I said we started. As has been said, "for the purpose of" is the phrase in the existing Section 54, and up to date that does not appear to have given rise to any particular difficulty. Accordingly, for those reasons, we would wish to adhere to the phrase "for the purpose of".
Lord Wedderburn of Charlton: My Lords, I am a little disappointed in the noble and learned Lord because he has not stated on behalf of the Government that the Government feel confident that the clause accords with the directive. What he said was that there was a difference but very little difference, and if there is very little difference then what the Government are enacting is not in accordance with the directive. The Government are obliged to enact the directive. I am not making some silly point because the noble and learned Lord knows as well as I do that cases go up to the Judicial Committee of this House on points of this sort and there might be a reference to the European Court which would all be a quite unnecessary cost to people involved in commercial affairs.
This is a commercial point. It is not in any way like the previous points that I was putting to him of a fundamental kind: it is a straightforward point of approaching the directive and avoiding the pitfalls which all the wretched references to the European Court entail. I was disappointed that the noble and learned Lord did not make it clear that the Government were confident on this. If the Government are confident, I am happy, but in any case I beg leave to withdraw the amendment.
Amendment to the amendment, by leave, withdrawn.
[Amendments Nos. 56C, 56D and 56E to the amendment not moved.]
6.52 p.m.
As an amendment to Commons Amendment No. 56:
56F Leave out subsections (2) and (2A)
Lord Wedderburn of Charlton: My Lords, this amendment is to delete all the exemptions in subsections (2) and (2A). That was the first reaction of myself and, I believe, of some of my noble friends to our sight of this clause when it appeared just a week ago. Since then, one has had further thoughts, and, with your Lordships' permission, I should like with this amendment to speak also to Amendment No. 56G, which effectively gets rid of the second half of subsection (2)(a) and the equivalent, which I believe to be Amendment No. 561, which is on Clause 56(2A).
The first point on these amendments relates to the point that my noble friend Lord Bruce raised earlier, but which really must be probed yet again. The exemptions require—if we now assume that there is such a thing as an offence—that the assistance which the company has given (if I may take them in reverse order to that in which they appear in the clause) must be given in good faith in the interests of the company.
There is a subjective test of bona fides to consider the right interests—it is sometimes called a subjective test with an objective flaw. The directors, who are usually the people at issue, must consider the interests of the shareholders and now, because of the 1980 Act, they must also consider the interests of the employees and according to the latest case, more probably the interests of the creditors (which seems rather sensible). They must act in good faith in those interests on a long-term view.
Secondly—and this goes back to paragraph (a)—the purpose in giving the assistance must not be for the purpose of such acquisition of shares. That is easy, so long as one can prove the purpose. Here

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of course the difficulty of catching the crook transmutes itself into the ease with which the innocent survive, because of course as my noble friend and I suggested before, the company's purpose will be broadly stated in the evidence as that which the directors want it to be stated as; it will be difficult to go behind the evidence that comes out, both of the boardroom and of what the directors have done elsewhere, because of course, as the noble and learned Lord, Lord Denning, when he was Master of the Rolls in 1957 pointed out in the well-known case of Bolton Engineering Company v. Graham, the directors' mind and will is the mind and will of the company, as opposed to the servants and agents, who are merely hands to hold the tools, and, as in that case, the mind and will may be exercised on an informal occasion and not only in the boardroom. Nevertheless, it is what the directors are doing that will be the first evidence of the company's purpose. To go behind it and find out what was really the purpose of some of them, which may well be a hidden purpose, or what was the purpose of some other managers with whom one or two of them were in league, is very difficult indeed if one wants to catch them. But it is very easy if you want the purpose to be what you want it to be. So, heads they do not lose and tails they do not lose. They are either not guilty of the offence or they can prove the exemption, and that was the reason for striking at the whole subsection in fear that the noble and learned Lord would allow himself to be attached to the horrendous proposition that the Government's subsection (1) in Amendment No. 56 should be retained.
But in case we have to live with that and if, therefore, as a sort of consequence, we have to live with the first half, as it were, of the exemption, I have taken the other amendments with it in the hope that I am being helpful, because the other amendments relate to what I might call the second half of the first paragraph, and here we read that so long as the assistance is given in good faith in the interests of the company it is not within the prohibited area if:
"the giving of the assistance for that purpose is but an incidental part of some larger purpose of the company".
I have discussed this matter, as indeed many other matters in these amendments, in the last four days, often late at night—and I even thought one professor of accounting was going to assault me as a member of the legislature for having such a Bill. I have not found anyone who is confident about what is meant by something which is an incidental part of a larger purpose. It does not take a lawyer to know that it is common sense for the court to use a very simple rule. If they find words in a section which say one thing, they expect those words to mean that thing, and then if later on they find slightly different words they expect the legislature to have meant something different. The judges will say, "Parliament intended…"—and that is the noble and learned Lord and me—whereas they may not have intended anything of the sort. However, they ought to look at it, and just such a case arises here.
The paragraph begins by mentioning the principal purpose and then it mentions a larger purpose. So what is envisaged is not something which is an incidental part of a principal purpose; it is something which is an incidental part of a purpose which is larger but
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not necessarily principal. How large does a purpose have to be to be larger? How do you measure the purpose of assisting the acquisition of shares against the purpose of doing something else to which it is incidental? I suppose it is arguable that the incidental part could be principal. Indeed, I know one of my colleagues who argues—he is a very good lawyer and he thinks I am quite wrong on this; I am not going to tell the noble and learned Lord what I think it means in case I have a case on it—but he thinks it means the incidental part could be principal. So I am obliged to put that to the noble and learned Lord. I think it is wrong, but he thinks it is right. He says larger need not be principal; therefore, incidental can be principal so long as the other purpose is larger in some way, larger, for example, by way of financial considerations. Is that what the Government have in mind? If not, what on earth does "larger" mean?
It really will not do to say, "Oh, well, everybody knows it is incidental to a larger purpose", for this reason; that is, that we do not normally cure crimes simply because they are incidental to some unspecified larger purpose. Indeed, it is not even said that it has got to be a lawful purpose, and in subsection (2B) we talk about "dividends lawfully paid" or words to that effect, "distributions lawfully made ". But supposing it is lawful, are the Government saying to burglars, "We have got good news and bad news: the bad news is that burglary is still a crime, but the good news is that it will cease to be a crime if it is an incidental part of a larger purpose". It would be a very silly thing to put on the statute book. With respect, I think this subsection makes a mockery of the whole business. It is one of the foundations of my proposition to the Government that they are abolishing this offence. It is not just that they are giving wide exemptions; if they enact this they are abolishing the offence.
I want to know, and many people want to know, what is meant first by the whole purpose test. Is it as easy to get through the exemption as we think? I do not object to that for banks and people like that, but I do for others. If you do not get through that way, just how easy is it to establish a larger purpose, in a courtroom where a judge has to make up his mind on a conflict of views what is meant by "larger" purpose, and where a man's legality and perhaps his freedom—because he might be put in prison for this—will depend on these words. It seems to me astonishing that a responsible legislature could enact a crime of this kind where imprisonment is a possibility at the end of the road. I think the Government must give better explanations than they have of this subsection. I beg to move.
Moved, That Amendment No. 56F, as an amendment to Commons Amendment No. 56, be agreed to. —(Lord Wedderburn of Charlton.)
Lord Mackay of Clashfern: My Lords, we are certainly not contemplating legislating on burglary in the sense that the noble Lord has suggested. What we have endeavoured to do is to legislate against what we believe to be the mischief, that is to say the giving of financial assistance for the purpose of the acquisition of a company's own shares. The defences in subsection (2) are intended to be cumulative; that is to

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say both (2)(a) and (2)(b) have both to be satisfied. It has to be given in good faith in the interests of the company, and I should have thought it reasonably clear that (a) requires that the company establish some purpose other than the giving of assistance as the main purpose or larger purpose of the transaction. If the purpose of giving assistance proves only to be incidental, then it is not caught, because it is not part of the mischief to catch purposes of that kind which are merely incidental; it must be more than a mere incidental purpose to constitute the mischief we complain of. I suggest that it would by no means preclude investigation that, for example, the directors sought to minute that (a) was their purpose if the circumstances clearly showed that (b) was their purpose. That is a difficulty which prosecutions have daily to surmount and I believe they manage to surmount it without undue difficulty. I would suggest to your Lordships that the words in the defences should remain.
Lord Wedderburn of Charlton: My Lords, if I may put two small points, I am not convinced by the noble and learned Lord. On his first point, of course it has to be established that the defendants have acted in good faith in the interests of the company, but as my noble friend Lord Bruce and I have tried to point out, these matters are easily established by defendants when they depend on the subjectivity of the matter, but are very difficult for the prosecution. It is no good the noble and learned Lord saying that, of course, we face the problem of the burden of evidence and the prosecution having to prove something every day, the question is what are the hurdles which the legislature puts up against the prosecution succeeding, and this hurdle is too low. The noble and learned Lord did not address himself to that at all.
Secondly, of course, it is correct that they must act in good faith in the interests of the company. But that is not enough. We are at one on that, but I still do not know after having heard the noble and learned Lord what the Government have in mind, except the obvious case where just by some accident it occurs that some assistance is given and it is a very small matter. But in a serious situation where it is doubtful, where is the line? I do not think anyone would be able to advise a client clearly on this matter. It is a great pity the Government chose not to spend a longer time on this. This is a perfect example of something the Government could take away and bring back and put through both Houses by Christmas, but they are not interested in doing so. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Denham: My Lords, I think this would probably be a suitable moment to adjourn for dinner. If your Lordships agree, I beg to move that further consideration of Commons amendments be now adjourned till eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.7 p.m. until 8 p.m.]
[Amendment No. 56G not moved.]
As an amendment to Amendment No. 56:
56H Subsection (2), at end insert ("but no person shall be entitled to rely upon this subsection by way of defence to civil liability under this section unless he proves that he neither had nor should have had reasonable cause to believe that the financial assistance fell outside the provisions of paragraphs (a) and (b) of this subsection")
Lord Wedderburn of Charlton: My Lords, I move Amendment No. 56H for a very simple purpose: First, to see whether we are right in assuming that the Government also assume that civil liability will arise if there is a breach of this section, just as it arises at present as an action in tort for a breach of a statute. The recent decision of the House of Lords Judicial Committee in the case of Lonrho Ltd. v. Shell suggests that. on the construction of any section, a civil action will lie in tort. That has been confirmed by the Belmont cases on Section 54. We hope that it is still true. If it is true we think that a defence to a civil action should only arise in the circumstances proposed in Amendment No. 56H. I beg to move.
Moved, That Amendment No. 56H, as an amendment to Commons Amendment No. 56, be agreed to.—(Lord Wedderburn of Charlton.)
Lord Mackay of Clashfern: My Lords, I am not at all clear what is the purpose of this amendment. So far as I can understand the situation, if the provisions of paragraphs (a) and (b) are established, then there would be no offence. Therefore. I must say that I am not quite clear what this does in the way of addition to that situation.
Lord Wedderburn of Charlton: My Lords, I am very disappointed by the noble and learned Lord's response. It should surely be clear from our amendment that it is a proviso to the subsection which says that the subsection would not apply by way of defence to civil liability unless the defendant had—and let us take the simple case—"reasonable cause to believe" that it fell outside the paragraphs, which is not within the terms of the clause as it stands. He must have "reasonable cause to believe" it. That puts an objective element into it. I am disappointed that the noble and learned Lord has not taken the occasion to confirm that civil liability will still remain after this Bill, as it has remained for many, many years in English law in relation to this offence. I shall not withdraw the amendment.
On Question, amendment to the amendment negatived.
[Amendments Nos. 561, 56J and 56K to Commons Amendment No. 56 not moved.]
As an amendment to Amendment No. 56:
56L Subsection (2A) at end insert—
("Provided that no person shall be entitled to rely upon this subsection by way of defence to civil liability under this section unless he proves that he neither had nor should have had reasonable cause to believe that the financial assistance fell outside the provisions of paragraphs (a) and (b) of this subsection.").
Lord Wedderburn of Charlton: My Lords, I beg to move Amendment No. 56L. I shall again put on record the fact that this amendment would add to the gateway out of liability the need for the malefactor to

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prove not only what is there at the moment under subsection (2A), but also the requirements of this amendment to the amendment as printed. It would add a further factor whereby the defendant would not escape quite so easily, that is, almost always, as the Government would have it. I beg to move.
Moved, That Amendment No. 56L, as an amendment to Commons Amendment No. 56, be agreed to. —(Lord Wedderburn of Charlton.)
Lord Mackay of Clashfern: My Lords, my position as regards this amendment is somewhat the same as on Amendment No. 56H. If the facts are established as bringing the case within the defence, then there is no crime and no civil liability, as I see it, and therefore I do not see the purpose of this amendment either. Therefore, I would not be able to advise your Lordships to support it.
Lord Lloyd of Kilgerran: My Lords, before the noble and learned Lord sits down, may I ask him whether there is not one difficulty about dealing with Clause 42, dealing with the malefactor; namely, that you are dealing with a criminal prosecution and therefore the necessity for proof is so much higher than in a civil matter? Would not a proviso like that put forward in Amendment No. 56L help in relation to dealing with the malefactor by explaining the position a little further? I fully realise that I am not a criminal lawyer and have not had much experience in criminal matters. However, it seems to me that there is a pretty wide exemption given by the Government amendments to this clause and, therefore, if you are dealing with criminal proceedings you want, in the course of the text of the Act or the Bill, to be more explicit in providing provisos which make it more difficult for the malefactor to get away with it.
Lord Mackay of Clashfern: My Lords, the noble Lord addresses his question to me. As I understand it, Amendment No. 56L is dealing not so much with the criminal prosecution as with the consequences for civil liability of a breach of this section. As I understand it, the noble Lord, Lord Wedderburn, wishes to add to what a person has to prove in negativing the civil liability, not only what we have in our subsection (2), but also what he has in the amendment. That is my understanding. What I do not understand is why he needs this. If in fact subsection (2) is made out, then the basic offence would not arise on the facts. Therefore, I do not see the point of this, but there may be more to it than that.
Lord Wedderburn of Charlton: Not very much, my Lords. I am gratified that the noble and learned Lord has confirmed in what he said that civil liability will remain. He had not done that previously. Secondly—and it really is very simple—if someone applies the company's assets for the purpose set out in subsection (1), he is a criminal; but he is not a criminal if he shows that he has done it in good faith as an incidental part of a larger purpose. I say, albeit that in those circumstances he is not a criminal, he ought still to be liable to a civil action unless he shows that he had no reasonable ground for thinking that
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anything else was the case. That is quite different. It is not simply the same formula all over again, but as the noble and learned Lord is still unpersuaded even as to the meaning of the amendment, I think that the best thing I can do is to beg leave to withdraw it.
Amendment to the amendment, by leave, withdrawn.
As an amendment to Amendment No. 56:
56M Subsection (2B), leave out paragraph (a).
8.8 p.m.
Lord Wedderburn of Charlton: My Lords, I beg to move Amendment No. 56M as an amendment to Amendment No. 56. This is a substantial matter. We have now come to the point regarding the offence of using the company's assets to finance a purchase of its shares, diminuative though that area of liability is; in view of the exemptions in subsection (2) and (2A), such little tiny area of offence as is remaining is given further protections. Those are set out in subsection (2B). The first of those is the exception which has been proposed by many people over the years as a total and blanket exception to the offence of assisting the purchase of shares.
Looking at paragraph (a) it says:
"any distribution of a company's assets by way of dividend lawfully made or any distribution made in the course of the winding-up"—
I am not concerned with the winding-up; this amendment is concerned with the dividend lawfully made. We say that this is too wide. It is true that I once thought that this might be possible. It is true that the Jenkins Report proposed that dividends be exempt from the offence. I think it is the case that the discussion after the Jenkins Report in 1962 has not shown in this respect that the Jenkins argument was the stronger. Indeed, the noble and learned Lord the Lord Advocate on 30th April, at col. 1298 of the Official Report, said:
"Permitting otherwise lawful dividends"
and that is what this paragraph does—
"would, for example, allow a 'predator' to borrow sufficient funds to acquire control of a cash-rich company, in the knowledge that he could then declare a lawful, substantial dividend from the assets of the company and repay funds borrowed from this dividend. This might well be an extremely undesirable commercial activity and we think that the prohibition should be able to catch it in such circumstances. The Jenkins Committee concluded that if the acquirer had to rely on the assets of the company to achieve acquisition, it was likely that the interests of minority shareholders and creditors would, at least, have been put to unacceptable risk, or that the company would have been made to part with assets for illusory consideration.
"But the objections to such activities go wider than this. Breaches of Section 54 have been significant features of many cases of asset stripping or share puffing, revealed in a series of companies inspectors' reports which have been produced over the years".
That is not just an opinion of the noble and learned Lord; those are facts, and he is right. It is astonishing that his right honourable friend, on 30th June in Committee in another place, put forward at column 300, in a passage which I shall not read but will summarise, a totally opposite point of view, except that he does not deal with the facts. He simply put forward the view that dividends should always be

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allowed to be paid so long as they fit the concept of lawful dividend. He does not deal with the point that the noble and learned Lord so rightly stressed: that this is the basis of many sorts of abuse and in report after report you find that this sort of thing is at the centre of the spider's web.
We have gone through changes of mind tonight, but this is not a change of mind. It is simply ignoring the facts. The noble and learned Lord faced them, but his right honourable friend and the Government would not, and the Government are putting forward a clause that will not face the facts. That is the first point.
If paragraph (a) of subsection (2B) is passed, that is the end of the offence because, with all the other things that have gone before—with the diminution of the offence and the widening of the gateways—if you cannot get through any of those, you pay it out of the dividend. Of course, the noble and learned Lord will say, "but only out of lawful dividend; that is, only out of profits, and in accordance with the articles of the company, of course," and so on. If he is suggesting that this does not add a further area of possible malpractice, I can only say that the Government are living in a wonderland that even Alice did not inhabit. Obviously, this would supplement the procedures whereby a company's assets could be used by those who are among the guilty and not the innocent. It is a particularly bad example of the Government moving to a defective philosophy on the matter.
Without elaborating the point, surely there is an ambiguity about the word "lawfully". It is normally suggested by Government spokesmen—as it was by the noble and learned Lord this afternoon in our earlier debate—that it just means in accordance with Part III of the 1980 Act and in accordance with the company's constitution. Does it not also mean bona fide, in the interests of the company? Is there no purpose test? Let us suppose that a dividend is lawfully paid in accordance with Part III of the Companies Act 1980 and in accordance with the articles, but that the ulterior motive is something else. Is that included or is it not? Normally one would have thought that the fiduciary obligation of the directors would apply. It has never been mentioned by Government spokesmen in debates so far. Let the noble and learned Lord mention it if that is part of the problem. In that case perhaps it would have been better to elaborate it a little more in the text. This is a paragraph that had better go. I am aware that the Government will not make it go, but we want to put on record the fact that we should not legislate like this.
Moved, That this House doth agree with the amendment to the amendment.—(Lord Wedderburn of Charlton.)
Lord Mackay of Clashfern: My Lords, I sought to cover this in explanation of our amendment and in anticipation of the noble Lord's Amendment No. 56M. As a result of our discussion and consultation. the situation is that it seems to us that the protections which are implied in the word "lawfully" are sufficient to make it proper that the proceeds of such a dividend should be applied in accordance with the wishes of the person whose dividend it is. Once the company is
976
entitled to hand it out to an individual to use as he wishes, it seems perhaps to go a little far—as one views the matter now—not to allow that to be an exemption from any influence that might otherwise arise that it was under Clause 42. It is better to go for clarity in this area than to leave the matter vague, and those are some of the reasons why we now think that subsection (2B) (a) should be allowed to stand.
Lord Wedderburn of Charlton: My Lords, I beg to move.
On Question, amendment to the amendment negatived.
As an amendment to Commons Amendment No. 56:
56N Subsection (2B), line 3, leave out ("lawfully made") and insert ("made lawfully and otherwise than for the principal purpose of financial assistance rendered unlawful by those subsections").
Lord Wedderburn of Charlton: My Lords, I beg formally to move Amendment No. 56N.
Moved, That this House doth agree with the amendment to the amendment.—(Lord Wedderburn of Charlton.)
On Question, amendment to the amendment negatived.
[Amendment No. 56P, as an amendment to Commons Amendment No. 56, not moved.]
As an amendment to Amendment No. 56:
56Q Subsection (2B) at end insert—
("Provided that in each case the transaction effected or the thing done was effected or done in good faith in the interests of the company.").
8.15 p.m.
Lord Wedderburn of Charlton: My Lords, it seems reasonable to suggest that this might have been put in, or at least to ask why it was omitted. Subsection (2B) lists a large number of transactions or things done which are total exceptions from the offence of a company financing the assistance of the acquisition of its own shares, if there is still such an offence. There are paragraphs (a) to (g). It is quite true that all of them, except paragraphs (a) and (b), have some relationship to what the court will allow the company to do.
However, this amendment to the amendment would attach to the end of the list of paragraphs the general proviso that:
"the transaction effected or the thing done was effected or done in good faith in the interests of the company".
There is a doubt about whether that is so. Indeed, if I may point out to the noble and learned Lord (because we seem to have difficulty in communicating about the meaning of these amendments, so I must dwell upon this sufficiently to show him that there is meaning in the amendment), paragraph (a) speaks about "dividends lawfully made". Paragraph (b) talks about "the allotment of any bonus shares". It is perfectly possible to allot bonus shares and by a technicality to infringe some very minor proviso either of the Act or of the articles. Because the word "lawfully" is not there but is in paragraph (a) it is obviously possible to argue that some minor technicality or, indeed, perhaps something slightly more is allowed by paragraph (b).

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That may sound an unreasonable interpretation to the noble and learned Lord, but both he and I very well know that unless unreasonable interpretations are stamped on at the root of this House they can grow into great tryffids by the time they get to the appelate courts. The fact that "lawfully" is in paragraph (a) and not in paragraph (b) leads me to think that a proviso of this kind could do nothing but good.
There are two points to be made. First, the priviso is surely reasonable and, secondly, is not the wording of paragraphs (a) and (b) rather odd? Why is not "lawfully" in paragraph (b)? If it is not in paragraph (b), would not the proviso help to cure the lapse? Given longer time I think that we could have invented better amendments to the amendment, but we did not have much time. I beg to move.
Moved, That this House doth agree with the amendment to the amendment.—(Lord Wedderburn of Charlton.)
Lord Mackay of Clashfern: My Lords, we see this as a superfluous amendment. We should have thought that this condition was implied. As regards the distinction between paragraphs (a) and (b), and the word "lawfully" in paragraph (a), I think it falls to be emphasised that the distribution must be by way of dividend lawfully made. Distribution might, in fact, happen where it was not lawful. As regards the allotment of any bonus shares, that is an act which requires lawfulness for it to exist at all, so in that respect the two are different. I certainly think that this amendment should not be made, and I would so invite your Lordships to agree.
Lord Bruce of Donington: My Lords, I am very disappointed in the reaction of the noble and learned Lord to the amendment moved by my noble friend. It seems to me that the insertion of almost the identical words in subsection (2A)(b):
"the assistance is given in good faith in the interests of the company",
could equally be put in—as, indeed, the amendment proposes—at the end of subsection (2B):
"Provided that in each case the transaction effected or the thing done was effected or done in good faith in the interests of the company".
The noble and learned Lord says that that is superfluous. I wonder what grounds he has for assuming that that is superfluous. It can only be superfluous where the contents—the precise phrasing of subsection (2B)(a), (b), (c), (d), (e), (f) and (g)—are framed in such precise terms as admit of no possible doubt. I think that the noble and learned Lord would be the first to agree that at any rate some of those particular paragraphs (a), (b), (c), (d), (e), ( f ) and (g) are not phrased in completely precise terms. What therefore is the objection to the sweeping-up subsection that has been proposed by my noble friend, which is on all fours with that in (2A)(b)? There can be no objections.
I am beginning to come to the conclusion that our further discussion of these various amendments is starting to serve little purpose. The noble and learned Lord has already made up his mind in point of fact
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that all the amendments brought from another place are going to go through. He has already made up his mind that there will be no amendments accepted from this side of the House, no matter how reasonable or how necessary they may be. Add to that particular consideration the fact that we ourselves, in the circumstances I described in the Motion earlier this afternoon, have but little time to study these matters in great detail with a view to forming precise amendments of our own after due consideration of, after pondering over at some length and, if necessary, by reference to other works, the various purports of the amendments that have been laid before us, and it seems to me that further participation by the Opposition in the remaining process of this Bill is beginning to become superfluous, because not the remotest attention is going to be paid to it anyway. In the event, the ultimate result is assured by the simple machinery of the Whip.
I regret to say this because, to use the words "good faith", I am quite persuaded that noble Lords opposite are themselves acting in good faith in defending the position that their departmental brief has laid before them. I am quite sure that they are the other victims, not necessarily the conspirators or the participants, of the kind of circumstances to which I referred in the Motion that I moved in your Lordships' House earlier this afternoon. We have therefore the choice of pretending to go through each particular amendment when it is proposed by the noble and learned Lord that we should accept the Commons amendment, going through the dismal ritual, the mere charade, of pretending to discuss it on an informed basis without even the remote possibility of producing an intellectual shift or a reasoned response to argument as distinct from producing a mere repetition of what is already on the brief.
We on this side of the House do not propose further to participate in this charade. We shall therefore on this side of the House allow, as indeed the Rules of the House allow, the Government to propose their amendments and to explain them. To that, we shall give no response except formally to agree. If the noble and learned Lord and the Government consider that to be a victory for democratic legislation properly discussed, with this House performing its functions as a revising Chamber, they are welcome to that view. For our part, we do not propose to participate in this charade any longer.
We shall remain in our Benches at our seats in conformity with the tradition in order that we can obey the formal requirements that are made of us, and in order that we may see the matter through to the bitter end, but we claim no responsibility for this. In fact, we disclaim all responsibility for it. We consider that it has been forced on this House at an unreasonable time with an unreasonable time lag, and we ourselves will have nothing of it. We also express at this time the fact that none of the professional organisations which have been taken into consultation as regards these various clauses can have attributed to themselves any responsibility for the proposals, because they have not had the opportunity of examining the clauses in their final form. They have not had an opportunity of commenting on the ambiguities, the tortuousness, contained within them; the double-think that is comprised in so many of them; the leaks with

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which they are riddled. In those circumstances, the Government are welcome to their amendments.
8.26 p.m.
Lord Lloyd of Kilgerran: My Lords, I have listened carefully to what the noble Lord, Lord Bruce of Donington, has said and I wonder whether he is going to propose therefore, or whether he is suggesting, that all the rest of the amendments should be moved en bloc in order to save time, to let us all out of here much earlier than we expected? I should have liked in some cases to ask certain questions of the noble and learned Lord, because he is always helpful, as he was in his reply to me on instructions, in relation to intellectual property. It was very helpful to me in view of the example he gave on the question that I asked, which was only one aspect of a very intricate position that arises in intellectual property.
I should have liked to ask the noble and learned Lord why, on Amendment No. 56Q, he says it is superfluous. I cannot understand why he should say that, for the following reasons. I am sorry if I am taking up the time of your Lordships on this matter, but if he looks at subsection (2A)(b), there is a paragraph saying that if,
"the assistance is given in good faith in the interests of the company",
that gives an exemption. Then when you look at (2B) you have in (a) the word "lawfully", and the word "lawfully" does not appear anywhere else in the rest of the subsections. Therefore, I should have thought that, in order to clarify the situation, particularly when there are criminal proceedings involved, there should be an amendment something like No. 56Q—not perhaps the exact words—saying that, where a chap acts in good faith in the interests of the company, then it is all right. But why it should be superfluous in the circumstances of Amendment No. 56, I do not follow.
Nevertheless, if the intention of the noble Lord, Lord Bruce of Donington and the Opposition Labour Party is that the rest of the amendments can be taken en bloc, I should be very satisfied with that, because I fully realise the position of the noble and learned Lord the Lord Advocate, and there is nothing we can do to make any change in the law at the present time. I am pretty certain of that. In those circumstances I feel I should not like to waste the time of all my colleagues who are supporting me on this occasion.
Lord Bruce of Donington: My Lords, I have hesitated to make the point more forcefully because I should not wish, by suggesting that the remainder of the proceedings could be accomplished en bloc, to deprive any Member of this House in any party either on the Benches opposite or on the Liberal Benches of an opportunity to debate individual points. But it seems to me, from the considerations I have already given, which I do not propose to amplify but which the noble and learned Lord knows very well, that the purposes of the Government (which were so adequately described by the noble Lord, Lord Boyd-Carpenter, with whom I agree) are putting the House in a position where it is acting as a rubber stamp, and it might be accomplished more conveniently, more expeditiously, more efficiently, more painlessly, by moving the remainder of the
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amendments en bloc.
Lord Lloyd of Kilgerran: My Lords, may I say with leave that I do not want to be misunderstood? I do not want to say anything in the course of any of the other amendments, and I shall certainly accept the suggestion of the noble Lord, Lord Bruce of Donington, that in the circumstances we can deal with all of the rest of the amendments en bloc.
Lord Mackay of Clashfern: My Lords, first of all with leave may I seek to answer the question which has been put to me on this amendment? I sought to answer it earlier, but I shall try to answer it again. The difference from subsection (2A), in which, under (b), the phrase appears in regard to assistance having been given in good faith in the interests of the company, is that the first branch of that subsection is a general one about the company's principal purpose and so on, which we have already discussed to some extent.
So far as subsection (2B) is concerned, it is a list of specific actions on the part of the company, and in the case of distribution, emphasis is put on the need for the distribution to be lawful, because you could have an unlawful distribution. As for the allotment of bonus shares, I certainly think that an allotment, in order to be a valid allotment, would require to satisfy that criterion. And when one goes from (c) onwards, most of the matters in question are in respect of orders of the court or of action taken under statutory authority, and in all of those I should have thought this was plainly implied, and for that reason I say that Amendment No. 56Q is superfluous. Indeed, if it were made it would suggest, for example, that it would be open to the court to make an order under Section 206 of the 1948 Act otherwise than in accordance with the best interests of the company, and I am sure the noble Lord, Lord Wedderburn, would be the last to suggest that the court could competently make an order under Section 206 in those circumstances.
As for the more general matters raised by the noble Lord, Lord Bruce, I understand the issue has already been discussed. I would propose to follow the course I indicated at the outset, in moving Amendment No. 1, that I would give an explanation of the principal substantive amendments, and any noble Lord who felt inclined to ask questions would be welcome to do so and I would do my best to answer them. Accordingly, I do not propose, at least at the present juncture, to move all the rest of the amendments en bloc.
Lord Wedderburn of Charlton: My Lords, as I am still speaking to Amendment No. 56Q after that diversion, I would say two things to the noble and learned Lord, one nice and one nasty. To be nice first, it is always nice to tempt the noble and learned Lord out into real discussion, and he has just entered into some of that. It is difficult today to do that. The problem with the noble and learned Lord—this is still part of the nice remarks I am making—is that he is not here for the purpose of running the amendments through with a steamroller; he is here in connection with the operation of running the amendments through with a steamroller, and he had better realise that the one is as guilty as the other.
On the nasty side, I agree with my noble friend that it is a charade, and that is absolutely clear. I do not

981
complain about the Government not accepting anything; nor do I complain that there are Whips able to defeat us every time. After all, that is everyday life in this House, until its legislative functions go, and everything that has been done tonight will, as my noble friend suggested, push that argument further. It is not that to which one objects; it is the failure to engage in real discussion. I had noted the point, "They will say it is superfluous"; but I crossed that out because if one looks at the provision which we are discussing, there is clearly an argument that is not superfluous. The noble and learned Lord knows that as well as I do—both sides can be briefed—but when he replies he does not say, "You could say it is superfluous, but on the other side you could say it is not", as he would normally say if briefed; no, he simply says, "It is superfluous", and then he must be tempted by the noble Lord, Lord Lloyd, into having a discussion.
In view of the way things have gone, I think one is right to say that the measure might as well be pushed through as quickly as possible. The only small amendment I would make, if my noble friends would bear with me, is that, if the procedures of the House allow, I would ask leave in some manner to move all my amendments formally en bloc so they may be printed in Hansard. There will be no real discussion of them, but at least that would show that Parliament had tabled before it some amendments on the matter. If that involves one of us being here to call out a set of numbers until whatever hour, I suppose that is the only way it can be done. On the other hand, if there is any other procedure, it might be more sensible to do it that way because it is clear that these amendments will not be debated. We are not withdrawing Amendment No. 56Q.
On Question, amendment to the amendment negatived.
On Question, Motion agreed to.

COMMONS AMENDMENTS
57 Clause 42, page 46, line 31, leave out ("Subsection (1)") and insert ("Subsections (1) and (1A)").
58 Clause 42, page 46, line 36, after 'scheme' insert ("within the meaning of section 87(1) of the 1980 Act)").
59 Clause 42, page 46, line 38, leave out ("by the trustees of the scheme").
60 Clause 42, page 47, line 2, leave out ("company's net assets") and insert ("company has net assets which").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 57, 58, 59 and 60 en bloc. The House will recall that I explained the purpose of these amendments.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
61 Clause 42, page 47, leave out lines 6 to 24 and insert—
("(5) In this section "financial assistance" means—

(a) financial assistance given by way of gift;

(b) financial assistance given by way of guarantee, security or indemnity, other than an indemnity in respect of

Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 61.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
As an amendment to Amendment No. 61:
61A Line 2, after ("assistance") insert ("or his position in respect of any interest in property of any kind").
Lord Wedderburn of Charlton: My Lords, I beg to move formally that this House doth agree with the amendment to the amendment.
Moved, That this House doth agree with the amendment to the amendment.—(Lord Wedderburn of Charlton.)
On Question, amendment to the amendment negatived.
As an amendment to Amendment No. 61:
61B Line 2, at end insert ("or given in respect of any transfer of property not accompanied by adequate consideration;").
Lord Wedderburn of Charlton: My Lords, I beg to move formally that this House doth agree with the amendment to the amendment.
Moved, That this House doth agree with the amendment to the amendment.—(Lord Wedderburn of Charlton.)
On Question, amendment to the amendment negatived.
[Amendment No. 61C not moved.]
On Question, Motion agreed to.

COMMONS AMENDMENT
62 After Clause 42, insert the following new clause:
("Relaxation of section 42 restrictions for private companies.
.—(1) Section 42(1) and (1A) of this Act shall not prohibit a private company from giving financial assistance in any case where the acquisition of shares in question is or was an acquisition of shares in the company or, if it is a subsidiary of another private company, in that other company if the following provisions of this section and section (Provisions supplementary to section (Relaxation of section 42 restrictions for private companies)) of this Act are complied with as respects the giving of that assistance.
(2) Subsection (1) above shall authorise a company to give financial assistance to any person only if the company has net assets which are not thereby reduced, or to the extent that those assets are thereby reduced, if the financial assistance is provided out of distributable profits.
(3) Subsection (1) above shall not permit financial assistance to be given by a subsidiary in any case where the acquisition of shares in question is or was an acquisition of shares in its holding company if it is also a subsidiary of a public company which is itself a subsidiary of that holding company.
(4) Unless the company proposing to give the financial assistance is a wholly owned subsidiary, the giving of the financial assistance must be approved by special resolution of the company in general meeting.
(5) Where the financial assistance is to be given by the company in any case where the acquisiton of shares in question is or was an acquisition of shares in its holding company, that holding company and any other company which is both the company's holding company and a subsidiary of that other holding company, except, in any case, any company which is a wholly owned subsidiary, shall also approve by special resolution in general meeting the giving of the financial assistance.
(6) The directors of the company proposing to give the financial assistance and, where the shares to be acquired

983
are shares in its holding company, the directors of that company and of any other company which is both the company's holding company and a subsidiary of that other holding company shall before the financial assistance is given make a statutory declaration in the prescribed form complying with subsection (7) below.
(7) A statutory declaration made by the directors of any company in pursuance of subsection (6) above shall—

(a) contain such particulars of the assistance to be given and of the business of the company of which they are directors as may be prescribed and shall identify the person to whom the assistance is to be given;

(b) state that the directors have formed the opinion as regards its initial situation immediately following the date on which the assistance is proposed to be given, that there will be no ground on which their company could then be found to be unable to pay its debts; and either—

(i) 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

(ii) 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.

In forming their opinion for the purposes of this subsection, the directors shall take into account any liabilities of the company which the court would be required by section 223(d) of the 1948 Act to take into account in determining for the purposes of section 222(e) of that Act (circumstances in which a company may be wound up by the court) whether the company was unable to pay its debts.
(8) Any statutory declaration made in pursuance of subsection (6) above shall have annexed to it a report addressed to the directors who made the declaration by the auditors of their company stating that they have enquired into the state of affairs of that company and are not aware of anything to indicate that the opinion expressed by the directors in the declaration as to any of the matters mentioned in subsection (7)(b) above is unreasonable in all the circumstances.
(9) Financial assistance shall not be given in pursuance of this section—

(a) where a special resolution is required by this section to be passed approving the giving of that assistance, before the expiry of the period of four weeks beginning with the date on which that special resolution is passed or where more than one such resolution is passed, the date on which the last of them is passed unless, as respects that resolution (or, if more than one, each of them) every member of the company which passed the resolution who is entitled to vote at general meetings of the company voted in favour of the resolution;

(b) where an application for the cancellation of any such resolution is made under section (Provisions supplementary to section (Relaxation of section 42 restrictions for private companies)) of this Act, before the final determination of the application, unless the court otherwise orders;

(c) after the expiry of the period of eight weeks beginning with the date on which the directors of the company proposing to give the financial assistance made the statutory declaration in pursuance of subsection (6) above, or, where that company is a subsidiary and both its directors and the directors of any of its holding companies made such a declaration, the date on which the earliest of the declarations is made, unless the court, on any such application as is mentioned in paragraph (b) above, otherwise orders.

Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 62.
Lord Wedderburn of Charlton: My Lords, I beg not to
984
move the Motion that this House doth not agree with the amendment.
Lord Mackay of Clashfern: My Lords, I gather that the noble Lord, Lord Wedderburn, does not intend to move that this House doth not agree with the Commons in their Amendment No. 62, but I am not certain whether he wishes to move, as amendments to No. 62, Nos. 62A, 62B and 62C. I am moving that this House doth agree with the Commons in their Amendment No. 62 and I shall speak at the same time, with permission, to No. 63.
These amendments contain important new provisions which will complement Clause 42 as amended by enabling a private company to give financial assistance for the acquisition of its shares or those of any holding company which is also a private company, subject to appropriate safeguards for members and creditors. At first sight the provisions in these amendments may appear very far-reaching, but the general scheme of the safeguards is very much in the spirit of the approach of the Jenkins Committee and are on similar lines to those proposed in the case of a purchase by a company of its own shares. These provisions reflect the Government's recognition, in the light of representations by people who are closely and directly concerned with the development of industry and commerce in this country, that quite apart from the changes to Clause 42, it would be desirable to provide a gateway through the general prohibition, provided that adequate safeguards were incorporated, and we consider that adequate safeguards have been incorporated by the provisions in these amendments. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
As amendments to Amendment No. 62
62A Subsection (1) at end insert—
("(1A) No person shall be entitled to rely upon subsection (1) above by way of defence to civil liability under this section unless he proves that he believed and had reasonable cause to believe:

(a) that the financial assistance was given in good faith in the interests of the company; and

(b) that the assistance was given as an incidental part of a larger transaction unconnected with the acquisition of the shares in the company.").

62B Subsection (2), at the end insert ("and the assistance is given in good faith in the interests of the company and by way of a transaction effected or thing done which falls within the terms of any one of paragraphs (a) to (g) of subsection (2B) of section 42 above.").
62C Subsection (4) at end insert ("but, notwithstanding any provision in the memorandum or articles of association of the company or in any other document or agreement, no person to whom any such assistance is provided or it so be provided shall be entitled to vote upon that resolution either on a poll or otherwise, in his own right or as a proxy".).
8.40 p.m.
Lord Wedderburn of Charlton: My Lords, I beg to move formally Amendments Nos. 62A, 62B and 62C as amendments to Amendment No. 62.
Moved, That this House doth agree with the amendments to the amendment.—(Lord Charlton of Wedderburn.)
On Question, amendments to the amendment negatived.
Lord Lloyd of Kilgerran: My Lords, I draw attention to the fact that I have already spoken about Amendment No. 62, when I earlier supported the amendment of the noble Lord, Lord Bruce of Donington, and I referred to that wonderful subsection (9) with its 320 odd words. I was very disappointed when the noble Lord, Lord Renton, left the House, because I am sure that he would have supported me in making an appeal for simplification and clarification in Acts of Parliament of this kind. Here we have a clause dealing with restrictions for private companies; indeed, not only restrictions, but relaxation of restrictions. But to have a sentence, with indeed two or three semi-colons, of 320 words is really not the way in which modern law should be written these days.
On Question, Motion agreed to.

COMMONS AMENDMENT
63 Insert the following new clause:
Provisions supplementary to section (Relaxation of section 42 restrictions for private companies.
.—((1) A special resolution required by section (Relexation of section 42 restrictions for private companies) of this Act to be passed by any company approving the giving of any financial assistance must be passed on the date on which the directors of that company made the statutory declaration required by that section in connection with the giving of that assistance or within the week immediately following that date.
(2) Where any such special resolution is passed by a company, an application may be made to the court for the cancellation of that resolution—

(a) by the holders of not less in the aggregate than 10 per cent. in nominal value of the company's issued share capital or any class thereof; or

(b) if the company is not limited by shares, by not less than 10 per cent. of the company's members;

but any such application shall not be made by any person who has consented to or voted in favour of the resolution.
(3) Subsections (4) to (10) of section 11 of the 1980 Act (provisions as to applications for cancellation of resolutions to which that section applies) shall apply in relation to applications made under this section as they apply in relation to applications made under that.
(4) A special resolution passed by a company shall not be effective for the purposes of section (Relaxation of section 42 restrictions for private companies) of this Act—

(a) unless the declaration made in compliance with subsection (7) of that section by the directors of the company, together with the auditors' report annexed thereto, is available for inspection by members of the company at the meeting at which the resolution is passed;

(b) if it is cancelled by the court on an application under this section.

(5) Any statutory declaration made by the directors of any company in compliance with section (Relaxation of section 42 restrictions for private companies) (7) of this Act, together with any auditors' report annexed thereto, shall be delivered to the registrar of companies—

(a) together with a copy of any special resolution passed by the company in pursuance of section (Relaxation of section 42 restrictions for private companies) (4) or (5) of this Act and delivered to the registrar in compliance with section 143 of the 1948 Act; or

(b) where no such special resolution is required to be passed, within fifteen days after the making of the declaration.

(6) If a company fails to comply with subsection (5) above, the company and every officer of the company who is in default shall be liable on summary conviction to a fine not exceeding the statutory maximum or on conviction after continued contravention to a default fine not exceeding one-fiftieth of the statutory maximum.
(7) A director of a company who makes a statutory declaration in pursuance of section (Relaxation of
986
section 42 restrictions for private companies) of this Act without having reasonable grounds for the opinion expressed in that declaration shall be liable—

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

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

(8) In section (Relaxation of section 42 restrictions for private companies) of this Act, "financial assistance" and "net assets" have the meaning given by subsections (5) and (5C) of section 42 of this Act respectively.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 63.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
As an amendment to Amendment No. 63:
63A Subsection (6) at end insert ("and every such officer and every director who authorised the giving of the financial assistance shall be jointly and severally liable to indemnify any person who has suffered loss by reason of the contravention of subsection (5) above".).
Lord Wedderburn of Charlton: My Lords, I formally beg to move Amendment No. 63A.
Moved, That this House doth agree with the Commons in the amendment to the amendment.—(Lord Charlton of Wedderburn.)
On Question, amendment to the amendment negatived.
On Question, Motion agreed to.

COMMONS AMENDMENT
64 Clause 43, page 47, line 38, leave out from ("are") to end of line 39 and insert ("to be redemmed or are liable to be redeemed at the option of the company or the shareholder.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 64. This amendment makes express provision enabling a company to issue shares which are redeemable at the option of either the shareholder or the company. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.]
On Question, Motion agreed to.

COMMONS AMENDMENT
65 Clause 43, page 48, line 5, after ("to") insert ("subsection (5A) below and").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 65, and at the same time I wish to speak to Commons Amendment No. 67. The purpose of these amendments is to provide that premiums on redemption may be paid out of the proceeds of a fresh issue, where the shares to be redeemed were issued at a premium, but only to the extent of the amount of the premium on issue of the shares to be redeemed, or the amount of the share premium account, whichever is the less. The amendments make a modest relaxation in the provisions of Clause 43(5)(b). I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.]
On Question, Motion agreed to.

COMMONS AMENDMENT
66 Clause 43, page 48, line 5, leave out ("section 49") and insert ("sections 49 and 54(4)").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 66, and with this amendment I wish to take Commons Amendments Nos. 107, 108 and 109. These amendments will change the remedies which are to be available against the company where the company has failed to purchase or redeem shares. At present Clause 54 provides that any general remedy which 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 54, as amended, will provide: (a) 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; (b) 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; (c) 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, unless it is shown that the company could not at any time between the due date for redemption or purchase and the commencement of the winding up, have paid for the shares out of distributable profits. In a winding up all other debts and liabilities of the company are to be paid in priority to the purchase price and any shareholder having, under the terms of issue of his shares, rights in priority to the right to a return of capital of the shareholder seeking to enforce a contract of purchase on terms of redemption, is also to receive amounts due to him in satisfaction of his rights in priority to the payment of the purchase of redemption price. Subject to that, the purchase or redemption price is to be paid in priority to amounts due to other members in the winding up. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
67 Clause 43, page 48, line 11, at end insert:
("(5A) Where the redeemable shares were issued at a premium, any premium payable on their redemption may be paid out of the proceeds of a fresh issue of shares made for the purposes of the redemption, up to an amount equal to—

(a) the aggregate of the premiums received by the company on the issue of the shares redeemed; or

988

(b) the current amount of the company's share premium account (including any sum transferred to that account in respect of premiums on the new shares);

whichever is the less; and in any such case the amount of the company's share premium account shall be reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made by virtue of this subsection out of the proceeds of the issue of the new shares.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 67.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
68 Clause 45, page 50, line 1, leave out subsection (4) and insert:
("(4) A company may only make an off-market purchase of its own shares in pursuance of a contract approved in advance in accordance with the following provisions of this section or under section (Contingent purchase contracts) of this Act.
(4A) The terms of the proposed contract of purchase must be authorised by a special resolution of the company before the company enters into the contract.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 68, and at the same time I wish to speak to Commons Amendments Nos. 69 to 79.
Amendment No. 79 makes a provision enabling companies to enter into contracts for an option to purchase their own shares and other contingent contracts of purchase, subject to appropriate safeguards. The other amendments are technical, consequential, or of a drafting character. The main points of substance that underlie them are the objectives of ensuring that the terms of a contract to purchase own shares are authorised prior to the conclusion of the contract and that names of members holding shares to be purchased are available to all members when the terms are to be authorised. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
As an amendment to Amendment No. 68:
68A Line 1, at beginning insert ("Subject to subsection (4) of section (Contingent purchase contracts).
Lord Bruce of Donington: My Lords, I beg to move Amendment No. 68A as an amendment to Amendment No. 68.
Moved, That this House doth agree with the amendment to the amendment.—(Lord Bruce of Donington.)
On Question, amendment to the amendment negatived.
On Question, Motion agreed to.

COMMONS AMENDMENTS
69 Page 50, line 5, leave out subsection (5) and insert:
("(5) Subject to subsection (6) below, the authority

989
conferred by any such resolution may be varied, revoked or from time to time renewed by special resolution of the company.").
70 Page 50, line 7, leave out from ("company") to ("must") in line 8 and insert ("the authority for a proposed contract of purchase conferred by any such resolution").
71 Page 50, line 9, leave out from ("expire") to end of line 11.
72 Page 50, line 14, leave out ("an off-market") and insert ("a proposed contract of").
73 Page 50, line 17, leave out ("an off-market") and insert ("a proposed contract for the").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 69 to 73 en bloc.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
74 Page 50, line 20, leave out from ("relates") to ("and") in line 25 and insert:
("exercises the voting rights carried by any of those shares in voting on the resolution and the resolution would not have been passed if he had not done so.
For the purposes of this subsection a member who holds shares to which the resolution relates shall be regarded as exercising the voting rights carried by those shares in voting on the resolution not only if he votes in respect of those shares on a poll on the question whether that resolution shall be passed but also if he votes on that resolution otherwise than on a poll.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 74.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
As an amendment to Amendment No. 74:
74A At beginning insert ("either (a)").
Lord Bruce of Donington: My Lords, I beg to move Amendment No. 74A as an amendment to Amendment No. 74.
Moved, That this House doth agree with the amendment to the amendment.—(Lord Bruce of Donington.)
On Question, amendment to the amendment negatived.
As an amendment to Amendment No. 74:
74B Line 3, at end insert—
("; or
(b) in the case of a public company exercises such voting rights in voting on the resolution being a member who has an interest in the shares which are the subject of the purchase.
In this paragraph "interest" in shares has the same meaning as in section (obligation to notify known interests in voting shares in a public company").
Lord Bruce of Donington: My Lords, I beg to move.
Moved, That this House doth agree with the said amendment to the Commons Amendment No. 74.—(Lord Bruce of Donington.)
On Question, amendment to the amendment negatived.
On Question, Motion agreed to.

COMMONS AMENDMENTS
75 Page 50, line 36, at end insert:
("Any memorandum of the terms of the contract of purchase made available for the purposes of this section must include the names of any members holdings shares to which the contract relates, and any copy of the contract made available for those purposes must have annexed to it a written memorandum specifying any such names which do not appear in the contract itself.").
77 Page 50, line 37, leave out subsection (10).
78 Page 50, line 44, leave out subsection (11) and insert:
("(11) A company may agree to a variation of an existing contract of purchase approved under this section, but only if the variation is authorised by a special resolution of the company before the company agrees to it; and subsections (5) to (9) above shall apply in relation to the authority for a proposed variation as they apply in relation to the authority for a proposed contract of purchase, save that a copy or memorandum (as the case may require) of the original contract (together with any variations previously made) must also be available for inspection in accordance with subsection (9).").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 75 to 78.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.
8.51 p.m.

COMMONS AMENDMENT
79 After Clause 45, insert the following new Clause:
("Contingent purchase contracts.
.—(1) This section applies to the purchase by a company of its own shares in pursuance of a contract relating to any of its shares—

(a) which does not amount to a contract to purchase those shares; but

(b) under which the company may (subject to any conditions) become entitled or obliged to purchase those shares;

and any such contract is referred to below in this section as a contingent purchase contract.
(2) A company may only make a purchase of its own shares in pursuance of a contingent purchase contract if the contract is approved in advance in accordance with subsection (3) below.
(3) The terms of the proposed contract must be authorised by a special resolution of the company before the company enters into the contract, and subsections (5) to (12) of section 45 of this Act shall apply in relation to the authority for a proposed contingent purchase contract and the variation of an existing contingent purchase contract respectively as they apply in relation to the authority for a proposed contract of purchase and the variation of an existing contract of purchase.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 79.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
As an amendment to Amendment No. 79:
79A Subsection (2), at end insert ("and if the directors make in advance a statutory declaration:

(a) containing particulars of the name of the member from whom the shares are to be purchased, the price to be paid, the other terms of the contract and such other particulars as may be prescribed; and

(b) stating that they have formed the opinion that the contingent purchase contract is required for the purpose of pursuing the interests of the company, giving the reasons for that opinion.

A statutory declaration required by this subsection shall be delivered to the Registrar of Companies; and subsections (6) and (7) of section (Provisions supplementary to section [Relaxation of section 42 restrictions for private companies]) shall apply to this subsection as they apply to subsection (5) of that section.").
Lord Bruce of Donington: My Lords, I beg to move.
Moved, That this House doth agree with the said amendment to the Commons Amendment No. 79.—(Lord Bruce of Donington.)
On Question, amendment to the amendment negatived.
Lord Bruce of Donington: My Lords, before we proceed to the next amendment I wonder whether we could know what has happened to Amendment No. 76, which appears to be missing. The numbering runs directly from No. 75 to No.77.
The Deputy Speaker (Baroness White): My Lords, we moved Nos. 75 to 78 en bloc. We are now dealing with Amendments Nos. 79B and 79C.
Lord Denham: My Lords, I think there is a slight quandary here because No. 76 seems to be missing from the list of amendments. I do not think it exists.
The Deputy Speaker: We are now considering Amendments Nos. 79B and 79C. Is it proposed to move those two amendments?
As amendments to Amendment No. 79:
79B Subsection (3), at end insert—
("(4) Subsection (10) of section 45 of this Act shall for the purposes of this section apply in relation to that authority with the addition after paragraph (b) of the words: "and for inspection by employees of the company both at the registered office of the company for not less than the said period and at each place from which the work of its employees is administered.".").
79C Subsection (3), at end insert—
("(4) Notwithstanding subsections (1), (2) and (3) above it shall not be lawful for a company to buy:

(a) a right to call for delivery at a specified price and within a specified time of a specified number of its relevant shares; or

(b) a right (as it may elect) to call for delivery at a specified price and within a specified time, or to make delivery at a specified price and within a specified time of a specified number of its relevant shares;

and any director of the company who authorises any such transaction shall, subject to subsection (5) below, be guilty of an offence and be liable to the same penalties as would arise if he had committed an offence under section 25 of the 1967 Act.
(5) In determining whether an offence has been committed under subsection (4) above, subsections (3) and (4) of that section shall apply to that subsection as they do to that section.
(6) In this section, "relevant shares" has the same meaning as in subsection (2)(a) of that section".).
Lord Bruce of Donington: My Lords, I beg to move.
Moved, That this House doth agree with the said amendments to the Commons Amendment No. 79.—(Lord Bruce of Donington.)
On Question, amendments to the amendment negatived.
On Question, Motion agreed to.

COMMONS AMENDMENT
80 After Clause 46, insert the following new Clause:
("Assignment or release of company's right to purchase own shares.
.—(1) The rights of a company under any contract approved under section 45 or (Contingent purchase contracts) of this Act or any contract for a purchase authorised under section 46 of this Act shall not be capable of assignment.
(2) Any agreement by a company to release its rights under any contract approved under section 45 or (Contingent purchase contracts) of this Act shall be void unless the release is approved in advance in accordance with subsection (3) below.
(3) The terms of the proposed release agreement must be authorised by a special resolution of the company before the company enters into the agreement; and subsections (5) to (12) of section 45 of this Act shall apply in relation to the authority for a proposed release agreement as they apply in relation to the authority for a proposed variation of an existing contract of purchase.").
Lord Mackay of Clashfern: My Lords, the new clause to be added by this amendment prohibits a company from assigning any of its rights under a contract of purchase authorised under Clauses 45 or 46 of this Bill or under a contingent purchase contract authorised under Amendment 79, and requires that an agreement by a company to release its rights under contracts approved under Clause 45 or Amendment No. 79 be authorised by special resolution, just as the terms of such contracts and any variation to them must be. I beg to move that this House doth agree with the Commons in their Amendment No. 80.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
Lord Bruce of Donington: My Lords, could the noble and learned Lord inform us whether this applies to companies of all kinds and not merely to PLCs?
Lord Mackay of Clashfern: This is a general clause, my Lords.
On Question, Motion agreed to.

COMMONS AMENDMENT
81 After Clause 46, insert the following new clause—
("Payments apart from purchase price to be made out of distributable profits.
.—(1) Any payment made by a company in consideration of—

(a) acquiring any right with respect to the purchase of any of its own shares in pursuance of a contract approved under section (Contingent purchase contracts) of this Act;

(b) the variation of any contract approved under section 45 or (Contingent purchase contracts) of this Act; or

(c) the release of any of the company's obligations with respect to the purchase of any of its own shares under any contract approved under section 45 or (Contingent purchase contracts) or under any contract

993
for a purchase authorised under section 46 of this Act;

must be made out of distributable profits of the company.
(2) If the requirements of subsection (1) above are not satisfied in relation to any contract—

(a) in a case within subsection (l)(a), no purchase by the company of any of its own shares in pursuance of that contract shall be lawful by virtue of this Part of this Act;

(b) in a case within subsection (1)(b), no such purchase following the variation shall be lawful by virtue of this Part of this Act; and

(c) in a case within subsection (1)(c), the purported release shall be void.").

Lord Mackay of Clashfern: My Lords, I should like to speak to Amendment No. 92 at the same time as I move Amendment No. 81. The new clause embodied in Amendment No. 81 requires that any payment made by a company in consideration of acquiring a right to purchase its own shares under a contingent purchase contract, or varying a contract of purchase, or obtaining a release from any of its obligations with respect to a purchase, must be found from distributable profits. If this requirement is not satisfied the clause makes the related purchase of shares unlawful in the case of a payment for a right to purchase or a variation, and the release of an obligation void. Amendment No. 92 is a consequential drafting amendment. I beg to move that this House doth agree with the Commons in their Amendment No. 81.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
82 Clause 47, page 52, line 14, leave out ("transferred ") and insert ("delivered").
83 Clause 47, page 52, line 18, leave out ("transferred") and insert ("delivered").
84 Clause 47, page 52, line 26, leave out ("transferred") and insert ("delivered to the company").
Lord Lyell: My Lords, I beg to move Amendments Nos. 82, 83 and 84 together. These three amendments replace references to shares being "transferred" to the company with references to their being "delivered" to the company. The use of the word "transfer" was held by some commentators to carry the implication that it would be necessary to use what we call, in our felicitous translation, an instrument of transfer to effect a purchase of own shares. The Government see no reason for company law to require an instrument of transfer in a purchase or redemption of one's own shares, and thus it will be possible under company law to effect a purchase or redemption by simply delivering share certificates against payment. I beg to move that this House doth agree with the Commons in their Amendments Nos. 82 to 84.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
85 Clause 47, page 52, line 27, leave out ("of purchase").
86 Clause 47, page 52, line 32, leave out from beginning to ("the") in line 33 and insert—
("(4) Where a company enters into any contract
994
approved under section 45 or (Contingent purchase contracts) of this Act or any contract for a purchase authorised under section 46 of this Act").
87 Clause 47, page 52, line 38, leave out from second ("the") to end of line 39 and insert ("purchase of all the shares in pursuance of the contract is completed or (as the case may be) the date on which the contract otherwise determines.").
88 Clause 47, page 53, line 26, leave out subsection (9) and insert—
("(9) The obligation of a company under subsection (4) above to keep a copy of any contract or (as the case may be) a memorandum of its terms shall apply to any variation of that contract so long as it applies to that contract.").
Lord Lyell: My Lords, on behalf of my noble and learned friend I beg to move Amendments Nos. 85 to 88. These amendments are consequential to earlier amendments to which he spoke. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
89 Clause 47, page 53, leave out lines 3 to 6 and insert "without charge—

(a) of any member of the company; and

(b) if the company is a public company, of any other person.").

Lord Lyell: My Lords, during the passage of the Bill through your Lordships' House the Government have reviewed the provisions in the Bill dealing with the inspection and provision of copies of documents. This amendment reflects our conclusion that, in the light of advice from those directly concerned with company administration, it is unnecessary to make provision for payment of any fee for the inspection of company documents. It seems that few companies bother to charge fees, where they are already empowered to do so, simply for the inspection of documents which they are obliged to keep by law for other purposes. This amendment accordingly changes subsection (5)(b) of Clause 47 so that a public company may not charge for inspection by persons other than members of the company of contracts to purchase own shares or contingent purchase contracts. Under Amendment 133 a similar situation will obtain in respect of the inspection of reports by companies of investigations into their membership and, indeed, of registers of interests in shares. I beg to move that this House doth agree with the Commons in their Amendment No. 89.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
90 Clause 49, page 54, line 15, leave out ("out of capital").
91 Clause 47, page 54, line 17, at end insert "otherwise than out of distributable profits of the company or the proceeds of a fresh issue of shares; and references below in this Part of this Act to payment out of capital are (subject to subsection (6) below) references to any payment so made (whether or not it would be regarded apart from this section as a payment out of capital)").
Lord Lyell: My Lords, with Amendments Nos. 90 and 91 I should like to speak also to Amendments Nos. 93, 94 and 95, 105, 114 and 115, and, finally,

995
Amendment No. 222. All these amendments attempt to refine the clauses which deal with purchases or redemptions out of capital without substantially changing their essential provisions. All these amendments are proposed in the light of representations to the Government that greater clarity of expression was desirable in certain key respects. The purpose of Amendments Nos. 90, 91, 105 and 114 is to revise the drafting of Clause 49 to give a clear and easily understood definition of what constitutes a payment out of capital for the purposes of the clauses relating to purchase or redemption of shares.
Amendment No. 95 is a crucial amendment. It replaces subsections (7) and (8) of Clause 49. They deal with Part III of the 1980 Act, some aspects of which were found to be difficult. We consider that a reference to the proper aspects of Part III would impose too onerous a requirement, bearing in mind that the amount of available profit spelled out there must be confirmed by the auditor under Clause 51 of the Bill. Also, Amendment No. 95 provides that the accounts by which available profits can be determined must be drawn up within the three months preceding the date of the making of the statutory declaration by the directors rather than the date of the resolution to make the payment out of capital. We hope that this is more logical, as the amount of the company's available profits must be determined before the directors can make their statutory declaration. The rest of the amendments are technical and I hope they are not complicated. I hope that the House will bear with me, and that I have given a reasonable explanation of Amendments Nos. 90 and 91.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
92 Clause 49, page 54, line 26, leave out from ("the") to end of line 27 and insert ("price of redemption or purchase").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 92. This is consequential on Amendment No. 81.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
93 Clause 49, page 54, line 38, after first ("amount") insert ("(a)").
94 Clause 49, page 54, line 40, after ("company") insert
"; and
(b) any amount representing unrealised profits of the company for the time being standing to the credit of any reserve maintained by the company in accordance with paragraph 34 of Schedule 8 to the 1948 Act (the revaluation reserve);").
95 Clause 49, page 55, leave out lines 9 to 24 and insert:
("(7) 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
996
following provisions of this section instead of in accordance with section 43 of the 1980 Act.
(8) 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 jurgment to be made as to the amounts of any of those items.
(9) 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.
(10) 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 50(3) of this Act.").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 93 to 95.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
96 Clause 50, page 55, line 39, leave out from beginning to end of line 7 on page 56 and insert:
("(a) as regards its initial situation immediately following the date on which the payment out of capital is proposed to be made, that there will be no ground on which the company could then be found to be unable to pay its debts; and
(b) as regards its prospects for the year immediately following that date, that, having regard to their intentions with respect to the management of the company's business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to continue to carry on business as a going concern (and will accordingly be able to pay its debts as they fall due) throughout that year.").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 96. I should like to speak to Amendments Nos. 97 and 98 at the same time. The statutory declaration of solvency of the company by the directors outlined in subsection (3) is one of the cornerstones of the protection built into the provisions enabling shares to be purchased or redeemed out of capital. It is important to do everything possible to ensure that creditors' and members' interests are not prejudiced in those situations. The significance of the statutory declaration is indicated by the fact that any false declaration renders the directors liable to a criminal offence. With these considerations in mind, it is clearly im-

997
portant that there should be no doubt as to what is required in the declaration. One or two representative bodies had difficulty with the wording in the Bill as it left this House. The purpose of Amendment No. 96 is accordingly to clarify Section 50(3). I believe that it will be more easily understood than the original version, and I commend it to this House.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
Lord Bruce of Donington: My Lords, I have a question to ask on this. It occurs to me not as a result of any profound study but because I have to read through these things while the noble Lord speaks on them. At line 5 of Amendment No. 96 one sees the phrase, "there will be no ground". How can anybody say that there will be no ground? Anything might happen. A bomb might drop on them. Surely the noble Lord would be advised even at this late stage without prompting by me to insert the word "reasonable" before the word "ground", which puts it on a firm legal footing. As to the ridiculous "no ground," nobody can guarantee that there will be no ground.
Lord Lyell: My Lords, if the noble Lord looks at the bottom of page 55 of the Bill, starting on line 34, he will find the words,
"The directors of the company … have formed the opinion … that there will be no ground …"
I think the amendment is supposed to be tacked on. We are taking out line 39 onwards. I think it reasonable to suppose that we are discussing the directors' opinion that there is no ground. I think that that opinion could not foresee everything foreseen (or perhaps not foreseen) by the noble Lord, Lord Bruce. That would not cover bombs, et cetera!
Lord Bruce of Donington: My Lords, I am obliged and indebted for the noble Lord having drawn my attention to the earlier part of the clause. Would the noble Lord oblige me by defining somewhere in the Bill what he means by "going concern" in subsection (b) of the same amendment? I do not find "going concern" defined anywhere.
Lord Lyell: My Lords, I suspect that, as always, the noble Lord doth tempt me. May I, on this occasion, see whether there is a clearer definition and perhaps write to him on this particular point?
Lord Davies of Leek: My Lords, it is obscure. I used to hear at an auction "Going, going, gone!" Does it mean that?
As an amendment to Commons Amendment No.96:
96 A Paragraph (b), line 4, after ("business") insert ("(which must be described in the declaration)").
Lord Bruce of Donington: My Lords, I beg formally to move Amendment No. 96A as an amendment to Commons Amendment No. 96.
Moved, That this House doth agree with the amendment to the amendment.
On Question, amendment to the amendment negatived.
On Question, Motion agreed to.

COMMONS AMENDMENTS
97 Clause 50, page 56, line 15, after ("must") insert ("be in the prescribed form and contain such information with respect to the nature of the company's business as may be prescribed, and must in addition").
98 Clause 50, page 56, line 26, leave out ("(a) to (c)").
Lord Lyell: My Lords, I spoke to these amendments when I was moving Amendment No. 96 and I beg to move them en bloc.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
99 Clause 50, page 56, line 28, at end insert ("on or").
Lord Lyell: My Lords, I beg to move Amendment No. 99, and at the same time I wish to speak to Amendment No. 101. Amendment No. 99 seeks to remove any uncertainty as to whether the special resolution of the company which authorises payment out of capital for a purchase or for a redemption of the company's own shares may be passed on the same day as the associated statutory declaration which has to be made by the directors. At the moment the clause requires the resolution to be passed within one week of the date of the declaration. The amendment makes it clear that the two may happen on the same day, because this may be more convenient for companies; for example, by avoiding the need for directors to meet on two different days within the one week.
The purpose of Amendment No. 101 is to ensure that members of the company are able to see and indeed to inspect the directors' statutory declaration and also the auditors' report before they vote on the special resolution. This would enable members to check that the statutory requirements of Clause 50 have been complied with. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
100 Clause 50, page 56, line 38, leave out from ("relates") to ("and") in line 43 and insert ("exercises the voting rights carried by any of those shares in voting on the resolution and the resolution would not have been passed if he had not done so.
For the purposes of this subsection a member who holds shares to which the resolution relates shall be regarded as exercising the voting rights carried by those shares in voting on the resolution not only if he votes in respect of those shares on a poll on the question whether that resolution shall be passed but also if he votes on that resolution otherwise than on a poll;").
Lord Mackay of Clashfern: My Lords, I have already spoken to this amendment and I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
101 Clause 50, page 57, line 2, at end insert:
("17A) Any such resolution shall not be effective for the purposes of this section unless the statutory declaration

999
and auditors' report required by this section are available for inspection by members of the company at the meeting at which the resolution is passed.").
Lord Lyell: My Lords, I have just spoken to this amendment and I beg to move.
Moved, That this House cloth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
102 Clause 50, page 57, line 4, leave out from ("section") to ("shall") in line 5 and insert ("without having reasonable grounds for the opinion expressed in that declaration").
Lord Lyell: My Lords, this amendment revives the drafting of the first part of paragraph (8) of Clause 50. As drafted at the moment it is an offence for a director to make a declaration knowing it to be false or misleading, or without reasonable cause to believe in its truth. Since the main provision of the statutory declaration concerns expressions of opinion by the directors, to refer to the declaration as being "false" and to the "truth" of the declaration is singularly inappropriate. The amendment will provide that there is a criminal sanction for making a statutory declaration without having reasonable grounds for expressing that particular opinion. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.
9.12 p.m.

COMMONS AMENDMENTS
103 Clause 51, page 58, line 9, leave out from ("shall") to first ("the") in line 10 and insert ("be kept at the company's registered office throughout").
104 Clause 51, page 58, line 12, leave out from ("capital") to ("creditor") in line 13 and insert ("and shall during business hours on any day during that period be open to the inspection of any member or").
Lord Lyell: My Lords, I beg to move Amendments Nos. 103 and 104 together. These two amendments relate to the requirement in Clause 51 for the inspection of the statutory declaration by the directors and also the auditors' report. Amendment No. 103 provides that they should be kept for inspection at the registered office of that company, which of course is the normal and proper place for such documents to be kept. Amendment No. 104 provides that the declaration and report should be open to the inspection of members as well as of creditors. I beg to move.
Moved. That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
105 Clause 53, page 59, line 31, leave out from ("shares") to ("referred") in line 32.
Lord Lyell: My Lords, this was one of the many amendments to which I spoke when moving Amendment No. 90. It is consequential and I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
106 Clause 53 Page 59, line 36, leave out ("and by its debtors").
Lord Lyell: My Lords, this amendment seeks to remove the phrase,
"and by its debtors".
from paragraph 2 of Clause 53, since the term,
"the aggregate of the amount of its assets",
will already include the amounts paid by its debtors. For this reason the phrase is superfluous. It is a drafting amendment but it is one that I hope will make the Bill much clearer. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
107 Clause 54, page 60, leave out from beginning of line 39 to end of line 30 on page 61 and insert:
("(1) Where on or after the appointed day a company—

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

(b) agrees to purchase any of its own shares;

the following provisions of this section shall apply in relation thereto.
(2) A company shall not be liable in damages in respect of any failure on its part to redeem or purchase any of the shares.
(3) 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.
(4) 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.
(5) Subsection (4) above shall not apply if—

(a) 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

(b) 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.

(6) 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—

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

(b) 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.").
108 page 61, line 37, leave out ("(5)") and insert ("(6)").
109 page 61, line 37, leave out lines 38 and 39.
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their said Amendments Nos. 107, 108 and 109. These amendments are consequential on an amendment I moved earlier.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Mackay of Clashfern.)
Lord Bruce of Donington: My Lords, before we part with Amendment No. 107, I should be grateful if the noble and learned Lord could elucidate one small problem for me that occurs as a result of my recent reading of Amendment No. 107. Had I had an opportunity of studying it earlier I might have added more observations. If the noble Lord will refer to subsections (2) and (3) he will see:
"(2) A company shall not be liable in damages in respect of any failure on its part to redeem or purchase any of the shares.
(3) 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;".
which is a right already denied it under subsection (2). Would he kindly explain that?
Lord Mackay of Clashfern: Yes, my Lords. The purpose of subsection (2) is to prevent the remedy of damages for reasons which I explained earlier, because it would mean that this shareholder would have a priority over others in a liquidation. What subsection (3) is saying is that subsection (2), cutting off the right of damages is without prejudice to the other rights to enforce the contract that the shareholder has.
Lord Wedderburn of Charlton: My Lords, perhaps the noble and learned Lord could add a little more. Are we to understand that the word "damages", which is excluded, does or does not include compensation for breach of equitable obligations, other types of compensation in restitution or remedies of that kind?
Lord Mackay of Clashfern: My Lords, the intention is to exclude rights of action for damages for breach of the contract, the contract being the contract for the redemption or purchase of the shares. It is that right of action which is excluded.
On Question, Motion agreed to.
9.11 p.m.

COMMONS AMENDMENT
110 After Clause 54, insert the following new clause:
("Supplementary provisions relating to Part III of the 1980 Act.
—. (1) For the purposes of determining by reference to any particular accounts whether any proposed distribution may be made in accordance with section 43 of the 1980 Act (determination of amount of distributable profits) subsection (7) of that section (reduction of distributable profits by amount of earlier distributions) shall apply if it would not otherwise to—

(a) any financial assistance lawfully given by a public company out of its distributable profits in any case where the assistance is required to be so given by section 42(4) of this Act;

(b) any financial assistance lawfully given by a private company out of its distributable profits in any case where the assistance is required to be so given by section (Relaxation of section 42 restrictions for private companies) (2) of this Act;

1002

(c) any financial assistance given by any company in contravention of section 42 of this Act in any case where the giving of that assistance reduces the company's net assets or increases its net liabilities;

(d) any payment made by any company in respect of the purchase by the company of any shares in the company except any payment lawfully made otherwise than out of distributable profits; and

(e) any payment of a description specified in section (Payments apart from purchase price to be made out of distributable profits) of this Act;

being financial assistance given or payment made since those accounts were prepared, as if any such financial assistance or payment were a distribution already made in pursuance of a determination made by reference to those accounts.
(2) Section 44 of the 1980 Act (consequences of unlawful distributions) shall not apply in relation to—

(a) any financial assistance given by any company in contravention of section 42 of this Act; or

(b) any payment made by a company in respect of the redemption or purchase by the company of any shares in the company.

(3) In this section—
"financial assistance" has the meaning given by section 42(5) of this Act;
"net assets" has the meaning given by section 42(5C) of this Act; and
"net liabilities" in relation to the giving of financial assistance by any company means the amount by which the aggregate amount of the company's liabilities (within the meaning of section 42(5C)(b) of this Act) exceeds the aggregate amount of its assets taking the amount of the assets and liabilities to be as stated in the company's accounting records immediately before the financial assistance is given.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 110. The new clause proposed n his amendment clarifies how Part III of the 1980 Act, which regulates distributions by companies, is to apply in relation to financial assistance given by a company for the acquisition of its shares or payments made by a company in respect of a purchase or redemption of its own shares. Section 43(7) of the 1980 Act requires a company to take into account any previous distributions made since accounts were prepared in determining, by reference to those accounts, whether any subsequent distribution would be lawful. The new clause provides, in subsection (1), that financial assistance given by a company for the purpose of the acquisition of its shares, whether lawfully under those subsections of Clause 42 and Amendment No. 62 which require the assistance to be provided out of distributable profits, or unlawfully in contravention of Clause 42 if the assistance reduces net assets or increases net liabilities; any payment made by a company for the purchase of its own shares, except a payment lawfully made from capital reserves or unrealised profits; and any payment made by a company for an option to purchase its own shares, or for a variation of or release from a contract of purchase, is to be treated as a previous distribution for the purposes of Section 43(7) of the 1980 Act.
Secondly, the new clause disapplies Section 44 of the 1980 Act, which makes provision for civil consequences of an unlawful distribution, for both financial assistance given in contravention of Clause 42 and any payment made by a company in respect of redemption or purchase of its own shares.
Moved, That this House doth agree with the Com-

1003
mons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
111 After Clause 54, insert the following new Clause:—
("Power to alter certain provisions with respect to redemption or purchase by a company of its own shares
.—(1) The Secretary of State may by regulations made by statutory instrument modify the provisions of this Part of this Act with respect to any of the following matters—

(a) the authority required for a purchase by a company of any of its own shares;

(b) the authority required for the release by a company of its rights under any contract for the purchase of its own shares or any contract under which the company may (subject to any conditions) become entitled or obliged to purchase any of its own shares;

(c) the information to be included in any return delivered by a company to the registrar of companies in accordance with section 47(1) of this Act;

(d) the matters to be dealt with in the statutory declaration of the directors required by section 50 of this Act with a view to indicating their opinion of their company's ability to make a proposed payment out of capital with due regard to its financial situation and prospects; and

(e) the contents of the auditor's report required by that section to be annexed to that declaration.

(2) The Secretary of State may also by regulations so made make such provision including provision by way of modifying the provisions of this Part of this Act as appears to him to be appropriate—

(a) for wholly or partly relieving companies from the requirement under section 49(2)(a) of this Act that any available profits must be taken into account in determining the amount of the permissible capital payment for any shares under that section; or

(b) for permitting a company's share premium account to be applied, to any extent appearing to the Secretary of State to be appropriate, in providing for the premiums payable on the redemption or purchase by the company of any of its own shares.

(3) Regulations under this section—

(a) may make such further modifications of any provisions of this Part of this Act as appear to the Secretary of State to be reasonably necessary in consequence of any provision made by any such regulations by virtue of subsection (1) or (2) above;

(b) may make different provision for different cases or classes of case; and

(c) may contain such further consequential provisions, and such incidental and supplementary provisions, as the Secretary of State thinks fit.

(4) No regulations shall be made under this section unless a draft of the instrument containing the regulations has been laid before Parliament and has been approved by resolution of each House of Parliament.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 111. The new clause in this amendment provides a power for the Secretary of State to modify by statutory instrument certain provisions of the Bill relating to various aspects of redemption or purchase by a company of its own shares. These concern the authority required for a purchase or for a release by a company of its rights under a contract of purchase; the information relating to purchases to be disclosed to the registrar of companies; the content of the statutory declaration to be made by the directors when a private company wishes to reduce capital in a purchase and of the associated auditors' report; and possible relief from the require-
1004
ment to deplete available profits before having recourse to capital and from restrictions imposed upon the use of share premium account in paying for premium on redemption or purchase. Provision is also made for consequential modifications and for different provisions for different cases. Any regulation is to be subject to Affirmative Resolution in each House. This clause was brought forward by the Government in response to a request to that effect from the Opposition in another place.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
Lord Bruce of Donington: My Lords, this will be the last intervention I shall be making on this part of the Bill. Therefore, may I say that I am not wholly satisfied with the advice that was offered to the Government in another place by the Opposition in another place. We have the right, like the Conservative Party opposite, as we recently experienced. We are a broad church in which there can be a variety of opinion and, just as there are divisions in the noble Lord's party which have been so obvious in recent days, so we have slight differences of technical opinion in my own.
I regard it as highly dangerous that the Secretary of State should be empowered in this Bill to make recommendations of such a broad character. One of the curses of professional life over the last 15 or 20 years in particular has been the proliferation not only of legislation but of regulations which impose on practising accountants, solicitors and professional men of all kinds, including industrialists, a considerable burden. Far better have it in the Act; but what the noble and learned Lord is really saying is that there are certain sections of this Bill which when it becomes an Act he has a suspicion that he may have to be extremely flexible about. Therefore he seeks to take powers to make regulations.
Regulations have one disadvantage of which we are all well aware. If in the form of a statutory instrument, they cannot be amended. They can only be objected to as a whole or accepted as a whole. Therefore, that procedure in itself lacks flexibility. On the whole, in the light of the desire of Her Majesty's Government to rush into permanent print so many statutes affecting companies, I am of the view that it would be wise for them to stick to that procedure so that what they in fact enact can be subject to detailed examination not only by another place but by this House. I regard with some misgiving this general power.
There are other reasons too. I have a suspicion that the noble and learned Lord knows quite well that all these particular parts of the Bill relating to the reduction of capital and the purchase of shares have very wide taxation implications. In fact, as he will be well aware, the Commissioners of Inland Revenue issued a consultation document in September—that was before this amendment was put down, because it was put down only on Report stage long after the end of September—in which they asked for the views of the professions generally on the particular reduction of capital proposals that were incorporated in the Bill as it then stood. The noble and learned Lord will be

1005
well aware that there are implications for capital gains tax, for capital transfer tax and for other taxation as the result of a distribution or a disposal occurring within the meaning of the Income Tax Act 1970 and the Capital Gains Tax Act of 1979. Therefore there is bound to be some relationship between taxation law and company law. Incidentally, it is one of the reasons why, in our view, this Bill should have been postponed, or at any rate these particular parts of it, until such time as the consultation called for by the Commissioners of Inland Revenue had in fact occurred.
The Inland Revenue put a deadline of, I think, 10th November, and the consultations have not yet occurred. Therefore, the noble and learned Lord must know that these are matters of some ambiguity, and I wonder whether it is for that reason that this Amendment No. 111 has been proposed, whereby there is some flexibility now so that various exigencies may have to be incorporated in the 1982 Finance Act or in such earlier Budget as his right honourable friend the Chancellor of the Exchequer may feel constrained to bring forward this November in order that they can deal with the economic crisis of their own creation. This is what will happen. This is why they want a certain amount of flexibility. We on this side of the House—and we pay due deference to the observations that were made by our colleagues in another place, who were also operating under conditions of great stress—much prefer that the right to amend over this wide field by regulation by statutory instrument is not put into the Bill, and we shall therefore be very much against it.
Lord Mackay of Clashfern: My Lords, I explained that this clause was put forward in response to suggestions made by Opposition spokesmen in another place. I must say I think it unlikely that the principal purpose that those Opposition spokesmen had in putting forward these suggestions was what the noble Lord, Lord Bruce, has specified. We accepted these suggestions with the view that it would make for a better company code as a whole if there was a limited flexibility of this kind in it. Accordingly, I commend this amendment to your Lordships.
On Question, Motion agreed to.

COMMONS AMENDMENT
112 Page 61, line 40, leave out Clause 55.
9.26 p.m.
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 112.
This amendment proposes the deletion of Clause 55 from the Bill. 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.
1006
The clause has been the subject of continuing consultations with outside bodies during the passage of the Bill, like so many of the other clauses both on the need for it in principle and on the difficulties of drafting satisfactorily an exception for powers of pre-emption, while preserving the basic safeguard for shareholders against compulsory purchase of shares which the clause is intended to provide. In the light of the further comments received since Committee stage in the other place, the Government have concluded on balance, that the clause should best be deleted. My Lords, I beg to move.
Moved, That the House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
113 Clause 56, page 62, line 19, leave out from "( to") to end of line 22 and insert:
("the making of any payment or the giving of any financial assistance (within the meaning of section 42(5) of this Act) by any company, means those profits out 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").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 113. This amendment amends the definition of "distributable profits" provided in Clause 57 for the purposes of Part III of the Bill and provides an additional definition of "distribution". The amendment has the effect of ensuring that all of the provisions of Part III of the 1980 Act, which determine the legality of a distribution, apply to any payment in connection with a purchase or redemption of own shares or any financial assistance which is required by the Bill to be paid out of distributable profits. My Lords, I beg to move.
Moved, That the House doth agree with the Commons in the said amendment. (Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
114 Clause 56, page 62, line 24, at end insert ("and references to payment out of capital shall be construed in accordance with section the 1980 Act; and").
115 Clause 56, page 62, line 40, leave out from ("profits") to end of line 44.
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 114 and 115. These amendments are consequential on Amendment No. 90. My Lords, I beg to move.
Moved, That the House doth agree with the Commons in the said amendments.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
116 Clause 56, page 62, line 45, leave out subsection (4).
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 116. I should also like to speak to Amendment No. 172. Amendment No. 172 ensures that, where appropriate, the provisions of the Bill which are applicable to public companies and companies other than private companies apply also to old public companies within the meaning of Section 8 of the Companies Act 1980. Amendment No. 116 is consequential on that. My Lords, I beg to move.
Moved, That the House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
117 After Clause 56, insert the following new clause:
("Obligation to notify known interests in voting shares in a public company.

COMMONS AMENDMENTS

  DISCLOSURE OF INTERESTS IN SHARES
  Disclosure of interests in voting shares in public companies
  .—(1) Where a person either—

  (a) to his knowledge acquires any interest in shares comprised in relevant share capital of a public company or ceases to be interested in any shares so comprised (whether or not he retains any interest in other shares so comprised); or

  (b) becomes aware that he has acquired any interest in shares so comprised or that he has ceased to be interested in any shares so comprised in which he was previously interested;

  he shall be under an obligation to make to the company the notication with respect to his interest in shares so comprised required by subsection (5) below in any case within subsection (2) below.
  (2) That obligation arises where either—

  (a) he has an interest subject to the notification requirement under this section in shares comprised in the share capital in question immediately after the relevant time but did not have such an interest immediately before that time; or

  (b) he had an interest subject to the notification requirement under this section in shares comprised in that share capital immediately before the relevant time but does not have such an interest immediately after that time; or

  (c) he has an interest subject to the notification requirement under this section in shares comprised in that share capital both immediately before and immediately after the relevant time but the percentage levels of his interest immediately before and immediately after that time are not the same.

  (3) A person has an interest subject to the notification requirement under this section in relevant share capital of a public company at any time when he is interested in shares comprised in relevant share capital of any such company of an aggregate nominal value equal to or more than the percentage of the nominal value of that share capital which is for the time being the notifiable percentage under this section; but all facts relevant to determining for the purposes of this section whether a person has such an interest at any time (or the percentage level of his interest) shall be taken to be what he knows them to be at that time.
  (4) Where otherwise than in circumstances within subsection (1) above a person—

  (a) is aware at the time when it occurs of any change of circumstances affecting any fact relevant to the application of the notification requirement under this section in relation to any existing interest of his in shares comprised in a company's share capital of any description; or

  1008

  (b) otherwise becomes aware of any such fact (whether or not arising from any such change in circumstances);

  he shall be under an obligation to make to the company the notification with respect of his interest required by subsection (5) below in any case within subsection (2)(a) above.
  (5) A notification required by this subsection with respect to a person's interest (if any) in shares comprised in relevant share capital of a public company must be in writing and must specify the share capital to which it relates; and any such notification must also either—

  (a) state the number of shares comprised in that share capital in which the person making the notification knows he was interested immediately after the time when the obligation to make the notification arose; or

  (b) in any case where the person making the notification no longer has an interest subject to the notification requirement under this section in shares comprised in that share capital, state that he no longer has such an interest.

  (6) A person's obligation to make any such notification must be performed within the period of five days next following the day on which that obligation arises.
  (7) Subject to the qualification mentioned below, in subsection (2)(c) above "percentage level" means the percentage figure found by expressing the aggregate nominal value of all the shares comprised in the share capital there mentioned in which the person in question is interested immediately before or (as the case may be) immediately after the relevant time as a percentage of the nominal value of that share capital and rounding that figure down, if it is not a whole number, to the next whole number.
  Where the nominal value of that share capital is greater immediately after the relevant time than it was immediately before that time the percentage level of his interest immediately before (as well as immediately after) that time shall be determined by reference to the larger amount.
  (8) The reference in subsection (3) above to the percentage which is for the time being the notifiable percentage under this section is a reference to five per cent. or such other percentage as may from time to time be prescribed for the purposes of this section by regulations under section (The prescribed percentage) of this Act.
  (9) References in subsections (2) and (7) above, as they apply in relation to any person's interest, to the relevant time are references to the time of the event or change of circumstances relevant for the purposes of subsection (1)(a) or (4)(a) above or the time when he acquired the knowledge relevant for the purposes of subsection (1)(b) or (4)(b) above (as the case may require).
  (10) For the purposes of this Part of this Act "relevant share capital", in relation to any public company, means issued share capital of that company of a class carrying rights to vote in all circumstances at general meetings of the company; and it is hereby declared for the avoidance of doubt that the temporary suspension of voting rights in respect of shares 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.".
  118 After Clause 56, insert the following new clause:
  ("The prescribed percentage.
  .—(1) The Secretary of State may by regulations made by statutory instrument from time to time prescribe the percentage to apply in determining whether a person's interest in any shares in a company is subject to the notification requirement under section (Obligation to notify known interests in voting shares in a public company) of this Act, and different percentages may be so prescribed in relation to companies of different classes or descriptions.
  (2) Where in consequence of any reduction in the percentage applicable for the purposes of that section made by regulations under this section a person's interest in relevant share capital of any public company becomes an interest subject to the notification requirement under

  1009
  that section, he shall be under an obligation to make to the company the notification with respect to his interest required by subsection (5) of that section.
  (3) Subsection (6) of that section shall not apply in any such case, but a person's obligation to make any notification under that section by virtue of this section must be performed within the period of ten days next following the day on which that obligation arises.
  (4) No regulations shall be made under this section unless a draft of the instrument containing the regulations has been laid before Parliament and has been approved by resolution of each House of Parliament.").
  119 After Clause 56, insert the following new clause:
  ("Obligation to notify particulars of registered ownership of voting shares in a public company.)
  .—(1) A notification under section (Obligation to notify known interests in voting shares in a public company) of this Act with respect to a person's interest in relevant share capital of a public company (other than one stating that he no longer has an interest subject to the notification requirement under that section in shares comprised in that share capital) shall include particulars of—

  (a) the identity of each registered holder of any shares to which the notification relates; and

  (b) the number of those shares held by each such registered holder;

  so far as known to the person making the notification at the date of the notification.
  (2) A person who has an interest in shares comprised in relevant share capital of a public company which is subject to the notification requirement under section (Obligation to notify known interests in voting shares in a public comapny) of this Act shall be under an obligation to notify the company in writing—

  (a) of any such particulars in relation to those shares as are mentioned in subscription (1) above; and

  (b) of any change in any such particulars;

  of which in either case he becomes aware at any time after any interest notification date and before the first occasion following that date on which he becomes subject to any further obligation to make any notification under that section with respect to his interest in shares comprised in that share capital.
  (3) The reference in subsection (2) above to an interest notification date, in relation to any person's interest in shares comprised in relevant share capital of a public company, is a reference to either of the following, that is to say—

  (a) the date of any notification made by him with respect to his interest under section (Obligation to notify known interests in voting shares in a public company) of this Act; and

  (b) where he has failed to make any such notificatino, the date on which the period allowed under this Part of this Act for making that notification came to an end.

  (4) A person who at any time has an interest in shares comprised in relevant share capital of a public company which is subject to the notification requirement under section (Obligation to notify known interests in voting shares in a public company) of this Act shall be regarded for the purposes of subsection (2) above as continuing to have an interest in those shares subject to that requirement unless and until he becomes subject to an obligation to make a notification under that section stating that he no longer has such an interest in those shares.
  (5) A person's obligation to make a notification required by this section must be performed within the period of five days next following the day on which that obligation arises.
  Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 117 to 119 en bloc.
  These amendments insert the clause which replaces the main provisions of Section 33 of the 1967 Act, as amended by Section 26 of the 1976 Act and defines the basic obligation of any person with an interest in 5 per cent. or more of any class of voting shares in a
  1010
  public company to notify the company of that fact and of significant changes of his interest above that level.
  Earl St. Aldwyn: My Lords, before the Question is put, may I raise a point of order?
  The Deputy Speaker (Lord Drumalbyn): May I first put the Question in the normal way? The Question is that Commons Amendments Nos. 117 to 119 be agreed to en bloc.
  Earl St. Aldwyn: My Lords, it is, I always understood, customary in this House that when amendments are moved, en bloc, even Commons Amendments, the leave of the House is asked for. I have noticed a total absence of that custom during the passage of the Bill this evening. I do hope that we can revert to our normal custom.
  The Deputy Speaker: My Lords, I am most grateful to the noble Earl. I shall try to adhere to that custom.
  Lord Trefgarne: My Lords, I stand quite properly corrected by my noble friend. With the leave of the House, I beg to move Commons Amendments Nos. 117 to 119 en bloc.
  Moved, That this House doth agree with the Commons in the said amendments. (Lord Trefgarne.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  120 After Clause 56, insert the following new clause:—
  ("Notification of certain family and corporate interests.
  .—(1) For the purposes of sections (Obligation to notify known interests in voting shares in a public company) to (Obligation to notify particulars of registered ownership of voting shares in a public company) of this Act a person shall be taken to be interested in any shares in which his spouse or any infant child or step-child of his is interested.
  (2) For the purposes of those sections, a person shall be taken to be interested in shares if a body corporate is interested in them and—

  (a) that body corporate or its directors are accustomed to act in accordance with his directions or instructions; or

  (b) he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of that body corporate.

  (3) Where a person is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of a body corporate and that body corporate is entitled to exercise or control the exercise of any of the voting power at general meetings of another body corporate (the "relevant voting power"), then, for the purposes of subsection (2)(b) above, the relevant voting power shall be taken to be exercisable by that person.
  (4) For the purposes of subsections (2)(b) and (3) above, a person shall be taken to be entitled to exercise or control the exercise of any voting power if he has a right (whether subject to conditions or not) the exercise of which would make him so entitled or is under an obligation (whether so subject or not) the fulfi.ment of which would make him so entitled.
  (5) In this section "infant", in relation to Scotland, means pupil or minor."
  Lord Trefgarne: My Lords, this clause provides that specified family and corporate interests must be taken into account under the main notification requirement. I do not think that I need to go further. I beg

  1011
  to move that this House doth agree with the Commons in their Amendment No. 120.
  Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  121 After Clause 56, insert the following new clause:
  "Notification of group interests of persons acting together.
  .—'(1) Subject to the following provisions of this section, an agreement between two or more persons which includes provision for the acquisition by any one or more of the parties to the agreement of interests in shares in a particular company ("the target company") is an agreement to which this section applies if—

  (a) it also includes provisions imposing obligations or restrictions on any one or more of the parties to the agreement with respect to their use, retention or disposal of interests in that company's shares acquired in pursuance of the agreement (whether or not together with any other interests of theirs in that company's shares to which the agreement relates); and

  (b) any interest in that company's shares is in fact acquired by any of the parties in pursuance of the agreement;

  and in relation to any such agreement references below in this section and in section (Obligation of persons acting together to keep each other informed of relevant facts) of this Act to the target company shall be read as referring to the company which is the target company for that agreement in accordance with this subsection.
  (2) The reference in subsection (1)(a) above to the use by parties to the agreement of interests in shares in the target company is a reference to the exercise of any rights or of any control or influence arising from those interests (including the right to enter into any agreement for the exercise, or for control of the exercise, of any of those rights by any other person).
  (3) Once any interest in shares in the target company has been acquired in pursuance of any such agreement as is mentioned in subsection (1) above, this section shall continue to apply to the agreement irrespective of—

  (a) whether or not any further acquistiions of interests in that company's shares take place in pursuance of the agreement; and

  (b) any change in the persons who are for the time being parties to the agreement; and

  (c) any variation of the agreement;

  so long as the agreement continues to include provisions of any description mentioned in paragraph (a) of that subsection.
  References in this subsection to the agreement include references to any agreement having effect (whether directly or indirectly) in substitution for the original agreement.
  (4) In this section (and in references elsewhere in this Part of this Act to an agreement to which this section applies) "agreement" includes any agreement or arrangement; and references in this section to provisions of an agreement—

  (a) accordingly include undertakings, expectations or understandings operative under any arrangement; and

  (b) (without prejudice to paragraph (a) above) also include any provisions, whether express or implied and whether absolute or not.

  (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.
  (6) For the purposes of sections (Obligation to notify known interests in voting shares in a public company) to (Obligation to notify particulars of registered ownership of voting shares in a public company) of this Act each party to an agreement to which this section applies shall be taken to be interested in all shares in the target company in
  1012
  which any other party to the agreement is interested apart from the agreement (whether or not the interest of the other party in question was acquired, or includes any interest which was acquired, in pursuance of the agreement).
  (7) For the purposes of subsection (6) above and section (Obligation of persons acting together to keep each other informed of relevant facts) of this Act an interest of any party to an agreement to which this section applies in shares in the target company is an interest apart from that agreement if he is interested in those shares otherwise than by virtue of the application of this section in relation to that agreement (and accordingly any such interest of his apart from that agreement includes for those purposes any interest treated as his by virtue of section (Notification of certain family and corporate interests) of this Act or by virtue of the application of this section in relation to any other agreement with respect to shares in the target company to which he is a party).
  (8) Any notification with respect to his interest in shares in the target company made to that company under section (Obligation to notify known interests in voting shares of a public company) of this Act by a person who is for the time being a party to an agreement to which this section applies—

  (a) shall state that the person making the notification is a party to an agreement to which this section applies;

  (b) shall include the names and (so far as known to him) the addresses of the other parties to the agreement, identifying them as such; and

  (c) shall state whether or not any of the shares to which the notification relates are shares in which he is interested by virtue of this section and, if so, the number of those shares.

  (9) Where a person makes a notification to any company under section (Obligation to notify known interests in voting shares in a public company) of this Act in consequence or ceasing to be interested in any shares in that company by virtue of the fact that he or any other person has ceased to be a party to an agreement to which this section applies, the notification shall include a statement that he or that other person has ceased to be a party to the agreement (as the case may require) and also (in the latter case) the name and (if known to him) the address of that other person.
  (10) This section shall not apply to any agreement to underwrite or sub-underwrite any offer of shares in a company, provided the agreement is confined to that purpose and any matters incidental to it.
  Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 121. This amendment defines certain agreements to acquire interests in shares, the so-called "concert parties", and provides that parties to them are to be regarded as having all the interests in shares held by the other parties as well as their own. It also makes special provision as to the notification to companies of interests attributed by operation of the clause. I beg to move.
  Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
  On Question, Motion agreed to.

COMMONS AMENDMENT
122 After Clause 56, insert the following new clause:
("Obligation of persons acting together to keep each other informed of relevant facts.
.—(1) A person who is a party to an agreement to which section (Notification of group interests of persons acting together) of this Act applies shall be subject to the requirements of this section at any time when—

(a) the target company is a public company; and

(b) the shares in that company to which the agreement

1013
relates consist of or include shares comprised in relevant share capital of that company; and

(c) he knows the facts which make the agreement one to which section (Notification of group interests of persons acting together) applies and the facts with respect to the company and the shares mentioned in paragraphs (a) and (b) above respectively

(2) Any such person shall be under an obligation to notify each other party to the agreement, in writing, of the relevant particulars of his interest (if any) apart from the agreement in shares comprised in relevant share capital of the target company—

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

(b) on each occurrence after that time while he is still subject to those requirements of any event or circumstances within subsection (1) of section (Obligation to notify known interests in voting shares in a public company) of this Act as it applies to his case otherwise than by reference to interests treated as his under section (Notification of group interests of persons acting together) of this Act as it applies to that agreement

(3) For the purposes of subsection (2) above, the relevant particulars of a person's interest apart from the agreement in question in shares comprised in relevant share capital of the target company are, in relation to any notice required under that subsection—

(a) the number of shares (if any) comprised in that share capital in which he would be required to state his interest if he were required to make a notification under section (Obligation to notify known interests in voting shares in a public company) of this Act with respect to his interest in those shares apart from the agreement immediately after the time when his obligation to give that notice under subsection (2) above arose; and

(b) the relevant particulars with respect to the registered ownership of those shares, so far as known to him at the date of the notice

(4) A person who is for the time being subject to the requirements of this section shall also be under an obligation to notify each other party to the agreement, in writing—

(a) of any relevant particulars with respect to the registered ownership of any shares comprised in relevant share capital of the target company in which he is interested apart from the agreement; and

(b) of any change in those particulars;

of which in either case he becomes aware at any time after any interest notification date and before the first occasion following that date on which he becomes subject to any further obligation to give any notice under subsection (2) above with respect to his interest in shares comprised in that share capital.
(5) The reference in subsection (4) above to an interest notification date, in relation to any person's interest in shares comprised in relevant share capital of the target company, is a reference to either of the following, that is to say—

(a) the date of any notice given by him with respect to his interest under subsection (2) above; and.

(b) where he has failed to give any such notice, the date on which the period allowed by this section for giving that notice came to an end.

(6) A person who is a party to an agreement to which section (Notification of group interests of persons acting together) of this Act applies shall be under an obligation to notify each other party to the agreement, in writing, of his current address—

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

(b) on any change in his address occurring after that time and while he is still subject to those requirements.

(7) References in this section to the relevant particulars with respect to the registered ownership of any shares are references to such particulars in relation to those shares as are mentioned in section (Obligation to notify
1014
particulars of registered ownership of voting shares in a public company) (1)(a) or (b) of this Act.
(8) A person's obligation to give any notice required by this section to any other person must be performed within the period of five days next following the day on which that obligation arises.").
Lord Trefgarne: My Lords, this amendment imposes a criminal obligation on persons acting together as defined in the previous new clause to keep one another informed of all the relevant facts. Because the notification obligation depends upon each of the parties knowing of the interests of the others this is an essential supplementary provision. I beg to move that this House doth agree with the Commons in their Amendment No. 122.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
123 After Clause 56, insert the following new clause:
("Application of section (Obligation to notify known interests in voting shares of a public company) in cases within section (Notification of certain family and corporate interests) or (Notification of group interests of persons acting together).
.—(1) References in section (Obligation to notify known interests in voting shares in a public company) of this Act to a person's acquiring any interest in shares or ceasing to be interested in any shares shall be read as including references to his becoming or ceasing to be interested in those shares by virtue of another person's interest.
(2) For the purposes of this section, a person becomes or ceases to be interested in any shares by virtue of another person's interest where he becomes or ceases to be interested in any shares by virtue of section (Notification of certain family and corporate interests) or (as the case may be) by virtue of section (Notification of group interests of persons acting together) of this Act, whether—

(a) by virtue of the fact that the person who is interested in those shares becomes or ceases to be a person whose interests (if any) fall by virtue of either of those sections to be treated as his; or

(b) in consequence of the fact that any such person has become or ceased to be interested in those shares; or

(c) in consequence of the fact that he himself becomes or ceases to be a party to an agreement to which section (Notification of group interests of persons acting together) applies to which the person interested in those shares is for the time being a party or an agreement to which both he and that person are parties becomes or ceases to be one to which that section applies.

(3) Where a person becomes or ceases to be interested in any shares by virtue of another person's interest he shall be regarded for the purposes of section (Obligation to notify known interests in voting shares in a public company) of this Act as knowing he has acquired an interest in those shares or (as the case may be) that he has ceased to be interested in those shares if and when he knows both—

(a) the relevant facts with respect to that other person's interest in those shares; and

(b) the relevant facts by virtue of which he himself has become or ceased to be interested in those shares in accordance with section (Notification of certain family and corporate interests) or (Notification of group interests of persons acting together) of this Act.

(4) For the purposes of subsection (3)(a) above a person shall be regarded as knowing the relevant facts with respect to another person's interest in any shares if he knows (whether contemporaneously or otherwise

1015
either of the subsistence of that other person's interest in those shares at any relevant time or of the fact that that other person has become or ceased to be interested in those shares at any such time; and in this subsection "relevant time" means any time when that other person's interests (if any) fall or fell to be treated as his by virtue of section (Notification of certain family and corporate interests) or (Notification of group interests of persons acting together) of this Act.
(5) For the purposes of subsection (4) above (but without prejudice to its application apart from this subsection), a person shall be regarded as knowing of the subsistence of another person's interest in any shares or (as the case may be) that another person has become or ceased to be interested in any shares if he has been notified under section (Obligation of persons acing together to keep each other informed of relevant facts) of this Act of facts with respect to that other person's interest which indicate that he is or has become or ceased to be interested in those shares (whether on his own account or by virtue of a third person's interest in those shares).").
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 123. This clause makes provision for the application of the general notification obligation for a person's actual interests to cases where interests are attributed to him under the new clauses covering family and corporate interests and group interests of persons acting together.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
124 After Clause 56, insert the following new clause:
("Interests to be notified.
.—(1) The provisions of this section shall apply, subject to section (Interests to be disregarded) of this Act, in determining for the purposes of sections (Obligation to notify known interests in voting shares in a public company) to (Obligation to notify particulars of registered ownership of voting shares in a public company) of this Act, whether a person has a notifiable interest in any shares.
(2) Any reference to an interest in shares shall be read as including a reference to any interest of any kind whatsoever in the shares; and accordingly there shall be disregraded any restraints or restrictions to which the exercise of any right attached to the interest is or may be subject.
(3) Where any property is held on trust and any interest in shares is comprised in that property, any beneficiary of that trust who apart from this subsection does not have an interest in the shares shall be taken to have such an interest.
(4) A person shall be taken to have an interest in shares if—

(a) he enters into a contract for their purchase by him (whether for cash or other consideration); or

(b) not being the registered holder, he is entitled to exercise any right conferred by the holding of those shares or is entitled to control the exercise of any such right.

(5) A person shall be taken to have an interest in shares if, otherwise than by virtue of having an interest under a trust—

(a) he has a right to call for delivery of the shares to himself or to his order; or

(b) he has a right to acquire an interest in shares or is under an obligation to take an interest in shares;

whether in any case the right or obligation is conditional or absolute.
(6) For the purposes of subsection (4)(b) above, a person shall be taken to be entitled to exercise or control the exercise of any right conferred by the holding of shares if he has a right (whether subject to conditions or not) the exercise of which would make him so entitled or is under an obligation (whether so subject or not) the fulfilment of which would make him so entitled.
(7) Persons having a joint interest shall be taken each of them to have that interest.
(8) It is immaterial that shares in which a person has an interest are unidentifiable."").
Lord Trefgarne: My Lords, may I with the leave of your Lordships speak to Amendments Nos. 124 and 125 together? Amendment No. 124 provides a new clause to replace those parts of Section 28 of the 1967 Act which define when a person is interested in shares for the purposes of the obligation to disclose a substantial interest in shares.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
As an amendment to Amendment 124:
124A Subsection (1), line 4, leave out ("(obligation to notify particulars of registered ownership of voting shares in a public company)") and insert ("(notification of group interests of persons acting together)").
Lord Ponsonby of Shulbrede: My Lords, I beg to move Amendment No. 124A as an amendment to Commons Amendment No. 124.
Moved, That the amendment to the amendment be agreed to.—(Lord Ponsonby of Shulbrede.)
On Question, amendment to the amendment negatived.
9.35 p.m.
As an amendment to Amendment No. 124:
124B Subsection (4)(b) at end insert ("whether such entitlement arises by reason of a legally binding right or obligation or not")
Lord Ponsonby of Shulbrede: My Lords, I beg to move.
On Question, amendment to the amendment negatived.
On Question, Motion agreed to.

COMMONS AMENDMENT
125 After Clause 56, insert the following new clause:
("Interests to be disregarded.
.—(1) The following interests in shares shall for the purposes of sections (Obligation to notify known interests in voting shares in a public company) to (Obligation to notify particulars of registered ownership of voting shares in a public company) of this Act be disregarded, that is to say—

(a) where any property is held on trust according to the law of England and Wales and any interest in shares is comprised in that property, an interest in reversion or remainder or of a bare trustee or a custodian trustee and any discretionary interest;

(b) where any property is held on trust according to the law of Scotland and any interest in shares is comprised in that property, an interest in fee or of a simple trustee and any discretionary interest;

(c) an interest which subsists by virtue of an authorised unit trust scheme within the meaning of Prevention of Fraud (Investments) Act 1958, a scheme made under section 22 of the Charities Act 1960, section 11 of the Trustee Investments Act 1961 or section 1 of the Administration of Justice Act 1965 or the scheme set out in the Schedule to the Church Funds Investment Measure 1958;

(d) an interest of the Church of Scotland General Trustees or of the Church of Scotland Trust in shares held by them or of any other person in shares held by the said Trustees or Trust otherwise than as simple trustees;

(e) an interest, for the life of himself or another, of a person under a settlement in the case of which the property comprised in the settlement consists of, or includes, shares, and the conditions mentioned in subsection (3) below are satisfied;

(f) an exempt interest held by a recognised jobber;

(g) an exempt security interest;

(h) an interest of the President of the Family Division of the High Court subsisting by virtue of section 9 of the Administration of Estates Act 1925;

(i) an interest of the Accountant General of the Supreme Court in shares held by him;

(j) any such interests, or interests of such class, as may be prescribed for the purposes of this paragraph by regulations made by the Secretary of State by statutory instrument.

(2) A person shall not by virtue of section (Interests to be notified) (4)(b) of this Act be taken to be interested in any shares by reason only that he has been appointed a proxy to vote at a specified meeting of a company or of any class of its members and at any adjournment of that meeting or has been appointed by a corporation to act as its representative at any meeting of a company or of any class of its members.
(3) The conditions referred to in subsection (1)(e) above are, in relation to any settlement—

(a) that it is irrevocable; and

(b) that the settlor (within the meaning of section 444 of the Income and Corporation Taxes Act 1970) has no interest in any income arising under, or property comprised in, the settlement.

(4) A person is a recognised jobber for the purposes of subsection (1)(f) above if he is a member of The Stock Exchange recognised by the Council of The Stock Exchange as carrying on the business of a jobber; and an interest of any such person in shares is an exempt interest for those purposes if—

(a) he carries on that business in the United Kingdom; and

(b) he holds the interest for the purposes of that business.

(5) An interest in shares is an exempt security interest for the purposes of subsection (1)(g) above if—

(a) it is held by a person who is—

(i) a recognised bank or licensed institution within the meaning of the Banking Act 1979 or an insurance company within the meaning of the Insurance Companies Act 1974 to which Part II of that Act applies; or

(ii) a trustee savings bank (within the meaning of the Trustee Savings Banks Act 1976); or

(iii) a member of The Stock Exchange carrying on business in the United Kingdom as a stock broker; and

(b) it is held by way of security only for the purposes of a transaction entered into in the ordinary course of his business as such a person;

or if it is held by 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 which consists of the provision of banking services.
Lord Trefgarne: My Lords, I beg to move Amendment No. 125, which is consequential. I beg to move that this House doth agree with the Commons in their amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
126 After Clause 56, insert the following new clause:
("Supplementary provisions.
.—(1) Where a person authorises any other person ("the agent") to acquire or dispose of, on his behalf, interests in shares comprised in relevant share capital of a public company, he shall secure that the agent notifies him immediately of acquisitions or disposals of interests in shares so comprised effected by the agent which will or may give rise to any obligation on his part to make a notification under section (Obligation to notify known interests in voting shares in a public company) of this Act with respect to his interest in that share capital.
(2) An obligation to make any notification imposed on any person by any provision of sections (Obligation to notify known interests in voting shares in a public company) to (Obligation to notify particulars of registered ownership of voting shares in a public company) of this Act shall be treated as not being fulfilled unless the notice by means of which it purports to be fulfilled identifies him and gives his address, and in a case where he is a director of the company, is expressed to be given in fulfilment of that obligation.
(3) A person who—

(a) fails to fulfil, within the proper period, an obligation to make any notification required by any provision of section (Obligation to notify known interests in voting shares in a public company) of this Act; or

(b) in purported fulfilment of any such obligation makes to a company a statement which he knows to be false or recklessly makes to a company a statement which is false; or

(c) fails to fulfil, within the proper period, an obligation to give any other person any notice required by section (Obligation of persons acting together to keep each other informed of relevant facts) of this Act; or

(d) fails without reasonable excuse to comply with subsection (1) above;

shall be guilty of an offence under this section.
(4) A person who is guilty of an offence under this section shall be liable—

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

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

(5) It shall be a defence for a person charged with an offence under subsection (3)(c) above to prove that it was not possible for him to give the notice to that other person required by section (Obligation of persons acting together to keep each other informed of relevant facts) within the proper period, and either—

(a) that it has not since become possible for him to give the notice so required; or

(b) that he gave that notice as soon after the end of that period as it became possible for him to do so.

(6) Where a person is convicted of an offence under this section, other than an offence relating to his ceasing to be interested in shares in any company, the Secretary of State may direct that the shares in relation to which the offence was committed shall, until further order, be subject to the restrictions imposed by section 174 of the 1948 Act.
(7) Subsection (6) above shall apply in relation to shares in any company notwithstanding any power contained in the memorandum or articles of the company enabling it to impose similar restrictions on the shares in question itself.
(8) Subsections (3) to (7) of section 174 of the 1948 Act shall apply in relation to any shares subject to the restrictions imposed by that section by virtue of an order under this section as those subsections apply where the restrictions are imposed by virtue of an order under that section.
(9) Proceedings in respect of an offence under this section shall not, in England and Wales, be instituted except by or with the consent of, the Secretary of State or the Director of Public Prosecutions.").
Lord Trefgarne: My Lords, Amendment No. 126 provides a new clause which contains provisions supplemental to the new Clauses 117 to 125. It obliges a person who uses an agent to acquire or dispose of interests in shares to ensure that the agent notifies him immediately of certain acquisitions or disposals and it provides that a notification made under Amendments Nos. 117 and 119 must contain certain particulars as to the person giving the notification.
I beg to move that this House doth agree with the Commons in their amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
Register of interests in shares
127 After Clause 56, insert the following new clause:
("Register of interests in shares.
.—(1) Every public company shall keep a register for the purposes of sections (Obligation to notify known interests in voting shares in a public company) to (Obligation to notify particulars of registered ownership of voting shares in a public company) of this Act, and whenever the company receives information from a person in consequence of the fulfilment of an obligation imposed on him by any of those sections, it shall be under an obligation to inscribe in the register, against the name of that person, that information and the date of the inscription.
(2) Without prejudice to subsection (1) above, where a company receives a notification under section (Obligation to notify known interests in voting shares in a public company) of this Act which includes a statement that the person making the notification or any other person has ceased to be a party to an agreement to which section (Notification of group interests of persons acting together) of this Act applies, it shall be under an obligation to record that information against the name of that person in every place where his name appears in the register as a party to that agreement (including any entry relating to him made against another person's name).
(3) An obligation imposed by subsection (1) or (2) above must be fulfilled within the period of three days next following the day on which that obligation arises.
(4) The company shall not, by virtue of anything done for the purposes of this section, be affected with notice of, or put upon inquiry as to, the rights of any person in relation to any shares.
(5) The register must be so made up that the entries against the several names inscribed in the register appear in chronological order.
(6) Unless the register is in such form as to constitute in itself an index, the company shall keep an index of the names inscribed in the register which shall in respect of each name contain a sufficient indication to enable the information inscribed against it to be readily found; and the company shall, within ten days after the date on which a name is inscribed in the register, make any necessary alteration in the index.
(7) Where the company ceases to be a public company it shall continue to keep the register and any associated index until the end of the period of six years beginning with the day next following that on which it ceases to be such a company.
(8) The register and any associated index—

(a) shall be kept at the place at which the register required to be kept by the company by section 29 of the 1967 Act (register of directors' interests) is kept; and

(b) subject to subsection (9) below, shall be available for inspection in accordance with section (Inspection of register and reports) of this Act.

(9) Neither the register nor any associated index shall be available for inspection in accordance with that section in so far as it contains information with respect to a company for the time being entitled to avail itself of the benefit conferred by section 3(3) or 4(3) of the 1967 Act (exemption of a company from requirement to disclose in its accounts particulars of shareholdings in subsidiaries or other bodies corporate incorporated or carrying on business outside the United Kingdom in circumstances where disclosure would be harmful to business).
(10) If default is made in complying with subsection (1) or (2) or with any of subsections (5) to (7) above, the company and every officer of the company who is in default shall be liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum or, on conviction after continued contravention, a default fine not exceeding one-fiftieth of the statutory maximum").
Lord Trefgarne: My Lords, with the leave of your Lordships I will speak also to Amendment No. 132.

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This amendment (No. 127) provides a new clause which provides for the registration of substantial interests notified to a company. It follows the provisions of Section 34 of the Companies Act 1967 which currently regulates the registration of details of substantial interests but makes allowance for the new provision of the group interests of persons acting together. In such a case the person who is party to an agreement must be shown on the register as such. I beg to move that this House doth agree with the Commons in their amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
Investigation by a company of interests in shares
128 After Clause 56, insert the following new clause:
("Power of company to require information with respect to interests in its voting shares.
.—(1) Any public company may by notice in writing require any person whom the company knows or has reasonable cause to believe to be or, at any time during the three years immediately preceding the date on which the notice is issued, to have been interested in shares comprised in relevant share capital of that company to confirm that fact or (as the case may be) to indicate whether or not it is the case and, where he holds or has during that time held any interest in shares so comprised, to give such further information as may be required in accordance with subsection (2) below.
(2) A notice under subsection (1) above may require the person to whom it is addressed—

(a) to give particulars of his own past or present interest in shares comprised in relevant share capital of the company (held by him at any time during the three year period mentioned in subsection (1) above);

(b) where the interest is a present interest and any other interest in the shares subsists or, in any case, where another interest in the shares subsisted during that three year period at any time when his own interest subsisted, to give so far as lies within his knowledge such particulars with respect to that other interest as may be required by the notice;

(c) where his interest is a past interest, to give so far as lies within his knowledge particulars of the identity of the person who held that interest immediately upon his ceasing to hold it.

(3) The particulars referred to in subsection (2)(a) and (b) above include particulars of the identity of persons interested in the shares in question and of whether persons interested in the same shares are or were parties to any agreement to which section (Notification of group interests of persons acting together) of this Act applies or to any agreement or arrangement relating to the exercise of any of the rights conferred by the holding of the shares.
(4) A notice under this section shall require any information given in response to the notice to be given in writing within such reasonable time as may be specified in the notice.
(5) Sections (Notification of certain family and corporate interests), (Notification of group interests of persons acting together) and (Interests to be notified) of this Act shall apply for the purpose of construing references in this section to persons interested in shares and to interests in shares respectively as they apply in relation to section (Obligation to notify known interests in voting shares in a public company) of this Act (but with the omission of any reference to section (Interests to be disregarded).
(6) This section shall apply in relation to a person who has or previously had or is or was entitled to acquire a right to subscribe for shares in a public company which would on issue be comprised in relevant share capital of that company as it applies in relation to a
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person who is or was interested in shares so comprised; and references in the preceding provisions of this section to an interest in shares so comprised and to shares so comprised shall be read accordingly in any such case as including references respectively to any such right and to shares which would on issue be so comprised.").
Lord Trefgarne: My Lords, Amendment No. 128 is consequential on an earlier amendment. I beg to move that this House doth agree with the Commons in their amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
129 After Clause 56, insert the following new clause:
("Registration of interests disclosed under section (Power of company to require information with respect to interests in its voting shares).
.—(1) Whenever in pursuance of a requirement imposed on any person under section (Power of company to require information with respect to interests in its voting shares) of this Act a company receives any information to which this section applies relating to shares comprised in relevant share capital of the company it shall be under an obligation to inscribe against the name of the registered holder of those shares in a separate part of its register of interests in shares—

(a) the fact that the requirement was imposed and the date on which it was imposed; and

(b) any information to which this section applies received in pursuance of the requirement.

(2) This section applies to any information received in pursuance of a requirement imposed under section (Power of company to require information with respect to interests in its voting shares) which relates to the present interests held by any persons in shares comprised in relevant share capital of the company in question.
(3) Subsections (3) to (10) of section (Register of interests in shares) of this Act shall apply in relation to the part of the register maintained in accordance with subsection (1) above as they apply in relation to the remainder of the register, reading references to subsection (1) of that section as including references to subsection (1) above.").
Lord Trefgarne: My Lords, as with the previous amendment, this also is consequential. I beg to move that this House doth agree with the Commons in their amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
130 After Clause 56, insert the following new clause:
("Investigation and report on requisition of members.
.—(1) A company may be required to exercise its powers under section (Power of company to require information with respect to interests in its voting shares) of this Act on the requisition of members of the company holding at the date of the deposit of the requisition not less than one-tenth of such of the paid up capital of the company as carries at that date the right of voting at general meetings of the company.
(2) The requisition must—

(a) state that the requisitionists are requiring the company to exercise its powers under section (Power of company to require information with respect to interests in its voting shares) of this Act;

(b) specify the manner in which they require those powers to be exercised; and

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(c) give reasonable grounds for requiring the company to exercise those powers in the manner specified;

and must be signed by the requisitionists and deposited at the registered office of the company.
(3) The requisition may consist of several documents in like form each signed by one or more requisitionists.
(4) On the deposit of a requisition which complies with this section it shall be the duty of the company to exercise its powers under section (Power of company to require information with respect to interests in its voting shares) of this Act in the manner specified in the requisition.
(5) On the conclusion of any investigation carried out by a company in pursuance of a requisition under this section it shall be the duty of the company to cause a report of the information received in pursuance of that investigation to be prepared, and that report shall be made available at the registered office of the company within a reasonable period after the conclusion of that investigation.
(6) Where—

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

(b) 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.
(7) The period for making any report prepared under this section available as required by subsection (5) or (6) above shall not exceed fifteen days.
(8) A report prepared under this section shall not include any information with respect to a company entitled to avail itself of the benefit conferred by section 3(3) or 4(3) of the 1967 Act (where disclosure of substantial holdings in bodies incorporated or carrying on business outside the United Kingdom would be harmful) but where any such information is omitted that fact shall be stated in the report.
(9) The company shall within three days of making any report prepared under this section available at its registered office notify the requisitionists that the report is so available.
(10) An investigation carried out by a company in pursuance of a requisition under this section shall be regarded for the purposes of this section as concluded when the company has made all such enquiries as are necessary or expedient for the purposes of the requisition and, in the case of each such enquiry, either a response has been received by the company or the time allowed for a response has elapsed.
(11) Any report prepared under this section—

(a) shall be kept at the company's registered office from the day on which it is first made available there in accordance with subsection (5) or (6) above until the expiration of the period of six years beginning with the day next following that day; and

(b) shall be available for inspection in accordance with section (Inspection of register and reports) of this Act so long as it is so kept.

(12) If default is made in complying with subsection (4), (5). (6), (9) or (11)(a) above the company and every officer of the company who is in default shall be liable—

(a) on conviction on indictment, to a fine; and

(b) on summary conviction, to a fine not exceeding the statutory maximum").

Lord Trefgarne: My Lords, this is a consequential amendment. I beg to move that this House doth agree with the Commons in their amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
131 After Clause 56, insert the following new clause:
("Penalties for failure to provide information under section (Power of company to require information with respect to interests in its voting shares).
.—(1) Where a notice is served by any company under subsections (1) and (2) of section (Power of company to require information with respect to interests in its voting shares) of this Act on any person who is or was interested in any shares in the company and that person fails to give the company any information required by the notice within the time specified in the notice, the company may apply to the court for an order directing that the shares in question shall be subject to the restrictions imposed by section 174 of the 1948 Act.
(2) An order may be made by the court on an application under subsection (1) above notwithstanding any power contained in the memorandum or articles of the applicant company enabling it to impose similar restrictions on the shares in question itself.
(3) Where an order is made under subsection (1) above directing that shares shall be subject to the restrictions imposed by section 174 of the 1948 Act, the company or any person aggrieved by the order may apply to the court for an order directing that the shares shall cease to be subject thereto.
(4) Subsections (3A) to (7) of section 174 shall apply in relation to any shares subject to the restrictions imposed by section 174 by virtue of an order under this section but with the omission in subsections (3A) to (6) of any reference to the Secretary of State or the Board of Trade.
(5) Subject to subsections (6) and (7) below, any person who fails to comply with a notice under section (Power of company to require information with respect to interests in its voting shares) of this Act, or who, in purported compliance with such a notice, makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in a material particular shall be guilty of an offence and liable—

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

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

(6) A person shall not be guilty of an offence by virtue of failing to comply with a notice under section (Power of company to require information with respect to interests in its voting shares) of this Act if he proves that the requirement to give the information was frivolous or vexatious.
(7) A person shall not be obliged to comply with a notice under section (Power of company to require information with respect to interests in its voting shares) of this Act if he is for the time being exempted by the Secretary of State from the operation of that section; but the Secretary of State shall not grant any such exemption except after consultation with the Governor of the Bank of England and unless satisfied that, having regard to any undertaking given by the person in question with respect to the shares held or to be held by him, there are special reasons why that person should not be subject to the obligations imposed by that section").
Lord Trefgarne: My Lords, Amendment No. 131 is consequential on Amendment No. 128. I beg to

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move that this House doth agree with the Commons in their amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to,

COMMONS AMENDMENTS
Removal of entries from register
132 After Clause 56, insert the following new clause:
("Provision for removal of certain entries in register
.—(1) A company may remove an entry against any person's name from its register of interests in shares where more than six years have elapsed since the date of its inscription, and either—

(a) that entry recorded the fact that the person in question had ceased to have an interest subject to the notification requirement under section (Obligation to notify known interests in voting shares in a public company) of this Act in relevant share capital of the company; or

(b) it has been superseded by a later entry inscribed under section (Register if interests in shares) of this Act against the same person's name;

and in a case within paragraph (a) above the company may also remove that person's name from the register.
(2) Where any person in pursuance of an obligation imposed on him by any provision of this Part of this Act gives to a company the name and address of any other person as being interested in shares in the company, the company shall within fifteen days of the date on which it was given that information, notify that other person that he has been so named and shall include in that notification—

(a) particulars of any entry relating to him made, in consequence of its being given that information, by the company in its register of interests in shares; and

(b) a statement informing him of his right to apply to have that entry removed in accordance with the following provisions of this section.

(3) Any person who has been notified by a company in pursuance of subsection (2) above that an entry relating to him has been made in the company's register of interests in shares may apply to the company for the removal of that entry from the register; and the company shall remove the entry if satisfied that the information in pursuance of which the entry was made was incorrect.
(4) Where a person who is identified in a company's register of interests in shares as being a party to an agreement to which section (Notification of group interests of persons acting together) of this Act applies (whether by an entry against his own name or by an entry relating to him made against another person's name as mentioned in subsection (2)(a) above) ceases to be a party to that agreement, he may apply in writing to the company for the inclusion of that information in the register; and if the company is satisfied that he has ceased to be a party to that agreement it shall record that information (if not already recorded) in every place where his name appears as a party to that agreement in the register.
(5) Where an application under subsection (3) or (4) above is refused (in a case within subsection (4), otherwise than on the ground that the information has already been recorded) the applicant may apply to the court for an order directing the company to remove the entry in question from the register or (as the case may be) to include the information in question in the register, and the court may if it thinks fit make such an order.
(6) Where any name is removed from a company's register of interests in shares in pursuance of subsection (1) or (3) above or an order under subsection (5), the company shall within fourteen days of the date of that removal make any necessary alteration in any associated index.
(7) If default is made in complying with subsection (2) or (6) above. the company and every officer who is in default shall be liable on summary conviction to a fine
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not exceeding one-fifth of the statutory maximum or, on conviction after continued contravention, a default fine not exceeding one-fiftieth of the statutory maximum.
132A Insert the following clause:
("Prohibition of removal of entries in register
.—(1) Entries in a company's register of interests in shares shall not be deleted except in accordance with section (Provision for removal of certain entries in register) of this Act.
(2) 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.
(3) If default is made in complying with subsection (1) or (2) above the company and every officer who is in default shall be liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum or, on conviction after continued contravention of subsection (2), a default fine not exceeding one-fiftieth of the statutory maximum.").
Lord Trefgarne: My Lords, with the leave of your Lordships I will move Amendments Nos. 132 and 132A en bloc. I beg to move that this House doth agree with the Commons in their amendments.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
Inspection of register and reports
133 After Clause 56, insert the following new clause:
("Inspection of register and reports
.—(1) Any register of interests in shares and any report which is required by section (Investigation and report on requisition of members) of this Act to be available for inspection in accordance with this section shall, during business hours (subject to such reasonable restrictions as the company may in general meeting impose, provided that not less than two hours in each day are allowed for inspection) be open to the inspection of any member of the company or of any other person without charge.
(2) Any such member or other person may require a copy of any such register or report, or any part of it, on payment of ten pence or such less sum as the company may prescribe, for every hundred words or fractional part thereof required to be copied; and the company shall cause any copy so required by a person to be sent to him before the expiration of the period of ten days beginning with the day next following that on which the requirement is received by the company.
(3) If an inspection required under this section is refused or a copy required under this section is not sent within the proper period, the company and every officer of the company who is in default shall be liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum, or on conviction after continued contravention, a default fine not exceeding one-fiftieth of the statutory maximum.
(4) In the case of a refusal of an inspection required under this section of any register or report, the court may by order compel an immediate inspection of it; and in the case of a failure to send a copy required under this section, the court may by order direct that the copy required shall be sent to the person requiring it.
(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.").
Lord Trefgarne: My Lords, this amendment provides for the inspection of a company's register of substantial interests and of any report or interim

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report produced in an investigation by a company of interests in its shares. Inspection by any person may be made without charge but a maximum fee is provided for provision of a copy. The Secretary of State is empowered to change this maximum by statutory instrument. I beg to move that this House doth agree with the Commons in their amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
Supplemental
134 After Clause 56, insert the following new clause:
("Offences by bodies corporate.
.—(1) Where a body corporate is guilty of an offence under section (Supplementary provisions) or (Penalties for failure to provide information under section (Power of company to require information with respect to interests in its voting shares)) (5) of this Act and it is proved that the offence occurred with the consent or connivance of, or was attributable to any neglect on the part of any director, manager, secretary or other officer of the body, or any person who was purporting to act in any such capacity he, as well as the body corporate, shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(2) Where the affairs of a body corporate are managed by its members, subsection (1) above shall apply in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.").
135 Insert the following new clause:
"Interpretation.—
(1) In this Part of this Act—
"associated index", in relation to any register, means the index kept in relation to that register in pursuance of section (Register of interests in shares) (6) of this Act;
"register of interests in shares" means the register kept in pursuance of section (Register of interests in shares) of this Act including, except where the context otherwise requires, that part of the register kept in pursuance of section (Registration of interests disclosed under section (Power of company to require information with respect to interests in its voting shares)) of this Act; and
"relevant share capital" has the meaning given by section (Obligation to notify known interests in voting shares in a public company) (10) of this Act.
(2) It is hereby declared for the avoidance of doubt that where the relevant share capital of a public company is divided into different classes of shares, references in this Part of this Act to a percentage of the nominal value of its relevant share capital are references to a percentage of the nominal value of the issued shares comprised in each of those classes taken separately.
(3) Where the period allowed by any provision of this Part of this Act for fulfilling any obligation is expressed as a number 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.").
136 Insert the following new clause:
("Repeals, transitional provisions and saving
.—(1) Sections 33 and 34 of the 1967 Act and sections 26 and 27 of the 1976 Act, which are superseded by the preceding provisions of this Part of this Act, shall cease to have effect.
(2) Subject to subsection (3) below, where on the appointed day a person has an interest subject to the
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notification requirement under section (Obligation to notify known interests in voting shares in a public company) of this Act in relevant share capital of a public company he shall be under an obligation to make to the company the notification with respect to his interest required by subsection (5) of that section.
(3) A person shall not be required to make any such notification by virtue of subsection (2) above in any case where—

(a) he has made a notification to the company under section 33 of the 1967 Act with respect to any interest of his in shares comprised in the share capital in question; and

(b) the percentage level of the interest notified (or last notified) by him under that section is the same as the percentage level of his interest on the appointed day determined in accordance with section (Obligation to notify known interests in voting shares in a public company) of this Act.

(4) In subsection (3)(b) above "percentage level" means in relation to any interest in share capital notified by a person under section 33 of the 1967 Act, the percentage figure found by expressing the aggregate nominal value of all the shares so notified as a percentage of the nominal value of that share capital as known to the person in question on the appointed day and rounding that figure down, if it is not a whole number, to the next whole number.
(5) Section (Obligation to notify known interests in voting shares in a public company) (6) shall not apply in any case where a person is required to make a notification under that section by virtue of subsection (2) above, but a person's obligation to make any such notification must he performed within the period of ten days next following the appointed day.
(6) Section (Notification of group interests of persons acting together) of this Act shall apply in relation to an agreement notwithstanding that it was made before the appointed day or that any such acquisition of shares as is mentioned in subsection (1)(b) of that section took place before the appointed day.
(7) Section (Application of section (Obligation to notify known interests in voting shares in a public company) in cases within section (Notification of certain family and corporate interests) or (Notification of group interests of persons acting together)) of this Act applies where a person becomes or ceases to be interested in any shares by virtue of section (Notification of certain family and corporate interests) or (Notification of group interests of persons acting together) of this Act on the coming into operation of either of the two last-mentioned sections as it applies in the other cases mentioned in subsection (2) of that section; and references in that section to a person's becoming interested in any shares by virtue of section (Notification of certain family and corporate interests) shall be read as including any case within this subsection notwithstanding that the person in question was interested in the shares immediately before the appointed day by virtue of section 28(3) of the 1967 Act.
(8) Any register kept by a company immediately before the appointed day under section 34 of the 1967 Act, and any part of any such register so kept for the purposes of section 27 of the 1976 Act, shall continue to be kept by the company under and for the purposes of sections (Register of interests in shares) and (Registration of interests disclosed under section (Power of company to require information with respect to interests in its voting shares)) of this Act respectively.
(9) Notwithstanding the repeal by this Act of section 27 of the 1976 Act, subsections (1) to (4) and (7) to (10) of that section shall continue to apply in relation to any notice given to any person under that section before the appointed day (and further notices may accordingly be given under that section on or after that day by virtue of information received in pursuance of any notice given before that day or any further notice given by virtue of this subsection); and references in section (Registration of interests disclosed under section (Power of company to require information with respect to intererests in its voting shares)) of this Act to a requirement imposed

1029
under section (Power of company to require information with respect to interests in its voting shares) of this Act shall be read as including references to a requirement imposed under section 27.").
9.40 p.m.
Lord Trefgarne: My Lords, with the leave of the House, I beg to move that this House doth agree with the Commons in their Amendments Nos. 134 to 136, and I would speak also to Amendments Nos. 233A and 242. These provides that where a body corporate commits an offence under the new clauses on disclosure of interest any officer of the company or person acting as an officer who consented or connived in the offence or whose negligence was attributed also commits an offence.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
137 After Clause 57, insert the following new clause:
("Distributions in kind
The following section shall be inserted after section 43 of the 1980 Act—
"Distributions in kind.
43A. Where a company makes a distribution of or including any non-cash asset and any part of the amount at which that asset is stated in the accounts relevant for the purposes of that distribution in accordance with section 43 of this Act represents an unrealised profit, that profit shall be treated as a realised profit—

(a) for the purpose of determining the lawfulness of that distribution in accordance with this Part of this Act (whether before or after it takes place); and

(b) for the purpose of the application of paragraphs 12(a) and 34(4)(b) of Schedule 8 to the 1948 Act (only realised profits to be included in or transferred to the profit and loss account) in relation to anything done with a view to or in connection with making that distribution.".").

Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 137. This clause was inserted at Report stage in another place. It provides that, where a company distributes an asset in kind which contains an element of unrealised profit, the amount of that unrealised profit should be treated as a realised profit on distribution. In other words—I think that this is common sense—the act of distribution is effectively an act of realisation.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
138 Clause 58, page 64, line 2, after ("164") insert ("(1)").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 138, and, with your Lordships' permission, I shall speak also to Amendment No. 203. These are drafting amendments to rectify the omission of the figure "(1)" after "section 164" in line 2 of Clause 58(1) and before (a) and (b) in the
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third line of paragraph 7 of Schedule 3. They make it clear that Clause 80(1) is amending Section 164 of the 1948 Act and that the reference in Section 172(3) of that Act to the appointment of inspectors is to the appointment of inspectors on the application of members under Section 164(1) (a) and (b) and not the company itself under (1)(c) introduced by Clause 58(1).
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
139 Clause 60, page 66, line 24, at end add—
("(2) In section 171 of the 1948 Act (inspectors' report to be evidence) for the words from "authenticated" to "investigated" there shall be substituted the words "certified by the Secretary of State to be a true copy of such a report"; and at the end there shall be added the following paragraph—
"Any document purporting to be such a certificate as is referred to above shall be received in evidence and shall, unless the contrary is proved, be deemed to be such a certificate.".").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 139. This amendment provides that an inspector's report need no longer be authenticated by the seal of the company before it can be admitted in legal proceedings as evidence of the opinion of the inspectors, but instead must be certified by the Secretary of State.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
140 Clause 61, page 66, line 43, at end insert ("or, in the case of any other such report, a copy of the whole report").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 140. Clause 61 proposes three amendments to Section 172(5) of the 1948 Act, one of which permits the Secretary of State to cause the Registrar of Companies to keep a copy of the report of inspectors under Section 172 in certain circumstances instead of obliging him to do so as at present. We do not think that Clause 61(c) as brought from the Lords to the other place achieves this objective, and this amendment is intended to ensure that the discretion given to the Secretary of State as to whether to send a copy of the report of inspectors appointed to investigate the ownership of a company extends to the report of all such investigations whether edited or not.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
141 After Clause 61, insert the following new clause:
("Extension of power to require information to be provided under section 173 of the 1948 Act
"In section 173(1) of the 1948 Act (certain persons required to give information about intenvts in shares to

1031
the Secretary of State) for the words from "(a) to be" "expected to obtain" there shall be substituted the words "to have or to be able to obtain any information" and at the end of that subsection there shall be inserted the following words, "to give any such information to the Secretary of State".
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 141. This amendment proposes a new clause to widen the powers of the Secretary of State to investigate the ownership of shares or debentures under Section 173 of the 1948 Act. It will enable the department to make enquiries of any person whom it has reasonable cause to believe to have, or to be able to obtain, information about interests in shares or debentures and will require such a person to provide that information.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
142 Insert the following new clause:
("Amendment of section 174 of the 1948 Act
.—(1) Subject to subsection (8) below, section 174 of the 1948 Act (power to impose restrictions on shares or debentures) shall have effect subject to the following modifications.
(2) In subsection (1) (power of Secretary of State to impose restrictions) the words from "and that" to "Act" shall cease to have effect.
(3) The following subsections shall be inserted after subsection (2)—
"(2A) 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.
(2B) 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."
(4) In subsection (3) (power of court to lift restrictions) for the words from "and the court may" to the end there shall be substituted the words "for an order directing that the shares shall cease to be subject thereto."; and the following subsections shall be inserted after subsection (3)—
"(3A) Subject to subsections (3B) and (4A) of this section, an order of the court or of the Secretary of State directing that shares shall cease to be subject to the restrictions imposed by this section may be made only if—

(a) the court or, as the case may be, the Secretary of State is satisfied that the relevant facts about the shares have been disclosed to the company and no unfair advantage had accrued to any person as a result of the earlier failure to make that disclosure; or

(b) the shares are to be sold and the court or the Secretary of State approves the sale.

(3B) Where any shares in a company are subject to restrictions imposed by this section, the court may on the application of the Secretary of State or the company order the shares to be sold, subject to the approval of the court as to the sale, and may also direct that the
1032
shares shall cease to be subject to those restrictions.
(3C) Where an order has been made under subsection (3B) of this section then, on the application of the Secretary of State, the company, the person appointed by or in pursuance of the order to effect the sale or any person interested in the shares, the court may make such further order relating to the sale or to the transfer of the shares as it thinks fit.
(3D) Where any shares are sold in pursuance of an order made under subsection (3B) of this section, the proceeds of sale, less the costs of the sale, shall be paid into court for the benefit of the persons who are beneficially interested in the shares; and any such person may apply to the court for the whole or part of those proceeds to be paid to him.
(3E) On an application under subsection (3D) of this section the court shall, subject to subsection (3F) of this section, order the payment to the applicant of the whole of the proceeds of sale together with any interest thereon, or if any other person had a beneficial interest in the shares at the time of their sale, such proportion of those proceeds and interest as is equal to the proportion which the value of the applicant's interest in the shares bears to the total value of the shares.
(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.".
(5) 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".
(6) 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.".
(7) 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,".
(8) The preceding provisions of this section and the repeal of part of section 174(1) contained in Schedule 4 to this Act shall not have effect in relation to any shares which on the appointed day are subject to the restrictions imposed by section 174 and subsection (3) above shall not apply in relation to any agreement made before the appointed day.").
9.45 p.m.
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 142. With your Lordships' permission, I shall speak also to Amendments Nos. 230 and 240. Amendment No. 142 concerns the power of the Secretary of State to impose restrictions upon shares when difficulty is encountered in discovering information about the ownership of shares in an investigation undertaken on his initiative. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
143 Clause 62, page 67, line 14, 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.".").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 143. I should like to explain also Amendment No. 212. These amendments provide that an answer given by a person to a question put to him in the course of investigations under Sections 164 to 166, 172 and 334 of the Companies Act 1948, as amended by Clause 62 of the Bill, or Section 32 of the 1967 Act, may be used in evidence against him. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
144 Clause 63, page 67, line 38, after ("company") insert ("or with the receivership or management of the property of a company").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 144, and I should like to speak also to Amendments Nos. 145 to 159 en bloc as well as Amendments Nos. 205, 214 and 235. These amendments are principally to Clause 63. Clause 63 is designed to strengthen the existing powers in the Companies Acts 1948 and 1976 which enable a court to disqualify a person from taking part in the management of a company. These amendments make further small improvements to it. Perhaps I can deal with them fairly briefly.
Amendments Nos. 144 and 145 bring certain misconduct in the course of acting as receiver within the grounds for a disqualification order. Amendment No. 146 extends the grounds on which disqualification orders can be made to include not only breach of duty to the company, but any breach of duty as officer, liquidator, receiver or manager of the company. Amendment No. 147 is a drafting amendment. Amendments Nos. 148 and 149 widen the scope of the disqualification order to debar a person from acting as a receiver and from involvement in the promotion or formation of a company. Amendment No. 154 is consequential.
Amendments Nos. 150 and 151 prevent the courts from using retrospectively their new power to disqualify a person in respect of conduct as a liquidator or receiver. Amendment No. 152 will prevent the longer period of disqualification—up to 15 years—being applied in respect of certain acts committed before the appointed day. Amendment No. 153 specifies that a person may seek leave to form or promote a company from any court with jurisdiction to wind up companies. Amendments Nos. 155 and 157 restrict the definition of "default order" to defaults involving the submission of returns to the Registrar of Companies. Amendment No. 156 is very technical. Amendment No. 158
1034
will enable a disqualification order for persistent default to be applied for by the liquidator or a past or present member of any of the companies against which the offences or defaults have been, or are alleged to have been, committed.
Amendment No. 159 provides that orders and applications for orders made before the appointed day under Section 28 of the Companies Act 1976, which is to be repealed, shall be treated as orders and applications under Section 188 of the Companies Act 1948. Amendment No. 205 will bring the coverage of the disqualification from managing companies, which is provided by Section 187 of the 1948 Act to undischarged bankrupts, into line with the amended Section 188 by including promotion, formation and liquidation as activities from which such persons are debarred. Amendment No. 214 is consequential to Section 29 of the 1976 Act which requires the courts to notify the Secretary of State of the details of disqualification orders. Amendment No. 235 is consequential. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
As an amendment to Commons Amendment No. 144:
144A At end insert ("or any indictable offence which in the opinion of the court renders him unfit to manage or otherwise control the affairs of a company").
Lord Ponsonby of Shulbrede: My Lords, I beg to move Amendment No. 144A as an amendment to Amendment No. 144.
Moved, That Amendment No. 144A, as an amendment to Commons Amendment No. 144, be agreed to.—(Lord Ponsonby of Shulbrede.)
Lord Davies of Leek: My Lords, can we have a rational statement as to why the Government refuse what appears to me to be a reasonable insertion in a Companies Act? There are so many people who play about forming companies and who go bankrupt. We hear of cases week in and week out. Although we are going through this so quickly, as with the slaughter of the innocents, I would like a rational answer. I do not intend to delay the House.
Lord Mackay of Clashfern: My Lords, I hope that my answer can be rational and brief and, incidentally to that, I do not wish to slaughter any innocents. The situation is that the Companies Act provisions generally deal with offences which are committed in connection with the affairs of the company. This amendment proposes an enlargement of that to indictable offences which, in the opinion of the court, render them unfit to manage or otherwise control the affairs of a company, whether or not that offence is itself committed in connection with the affairs of a company. One can see that that is a reasonable proposal. We think that that is part of a larger exercise and we feel that it would be right to await the general review of the law on insolvency which is being undertaken by the committee under Sir Kenneth Cork. That is why we do not think it right at this stage to

1035
amend this Bill by adding still further to its manifold provisions.
Lord Ponsonby of Shulbrede: My Lords, I thank the noble and learned Lord for that explanation and beg leave to withdraw the amendment.
Amendment to the amendment, by leave, withdrawn.
On Question, Motion agreed to.

COMMONS AMENDMENTS
145 Clause 63, page 68, line 5, after ("company") insert ("or receiver or manager of the property of the company").
146 Clause 63, page 68, line 7, leave out ("to the company") and insert ("as such officer, liquidator, receiver or manager").
147 Clause 63, page 68, line 15, leave out ("for") and insert ("of").
148 Clause 63, page 68, line 23, after ("director") insert ("or a receiver or manager of the property of a company").
149 Clause 63, page 68, line 24, after ("the") insert ("promotion, formation or").
150 Clause 63, page 68, line 26, at end add—
("(1C) Subsection (1)(a) and (c)(ii) of this section shall not apply in relation to anything done before the date on which section 63 of the Companies Act 1981 came into force by a person in his capacity as liquidator of a company or as receiver or manager of the property of a company.").
151 Clause 63, page 68, line 27, at beginning insert ("Subject to subsection (1C) of this section").
152 Clause 63, page 68, line 41, 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 63 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.").
153 Clause 63, page 69, line 36, 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").
154 Clause 63, page 69, line 39, after ("company") insert ("or to be a receiver or manager of the property of a company").
155 Clause 63, page 69, line 42, after ("made") insert ("against any person").
156 Clause 63, page 70, line 1, leave out ("lay") and insert ("deliver").
157 Clause 63, page 70, line 2, at end add ("by virtue of any contravention of or failure to comply with any relevant requirement (whether on his own part or on the part of any company);").
158 Clause 63,page 70, leave out lines 37 to 42 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."").
159 Clause 63, page 71, line 12, leave out from ("made") to end of line 14 and insert ("under section 28 shall have dffect 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.").
160 After Clause 63, insert the following new clause:
"Prohibition on directors of insolvent companies from acting as liquidators etc.
.—(1) In subsection (1) of section 9 of the Insolvency Act 1976 (power of court to disqualify persons from acting as directors, etc.) for the words from "the court may" to the end there shall be substituted the words—
"the court may make an order that that person shall not, without the leave of the court—

(a) be a director of or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company; or

(b) be a liquidator of a company; or

(c) be a receiver or manager of the property of a company;

for such period as may, subject to subsection (1A) below, be specified in the order.
(1A) The period which may be specified in any order under subsection (1) above shall begin with the date of the order and may not exceed five years if none of the conduct to which the court has regard under subsection (1)(b) occurred after the day appointed for the coming into force of section (Prohibition on directors of insolvent companies from acting as liquidators, etc.) of the Companies Act 1981, or fifteen years in any other case.".
(2) In subsection (7) of that section, for the definition of "company" there shall be substituted the following definition—
" 'company' includes any company which may be wound up under Part IX of the Companies Act 1948;".
(3) The following subsection shall be inserted in that section after subsection (7)—
"(7A) An order under subsection (1) may be made on grounds which are or include matters other than criminal convictions notwithstanding that the person in respect of whom the order is to be made may be criminally liable in respect of those matters."
161 After Clause 63, insert the following new clause:
Register of past directorships
.—(1) Section 200 of the 1948 Act (register of directors and secretaries) shall have effect subject to the following modifications.
(2) In subsection (2)—

(a) in paragraph (a) (particulars of directorships to be kept on the register) after the words "particulars of any other directorships held by him" there shall be inserted the words "or which have been held by him";

(b) in the proviso (particulars not required to be kept on register) for all the words preceding the words "and for the purposes of" there shall be substituted the words—

"Provided that it shall not be necessary for the register to contain on any day particulars of any directorship—

(a) which has not been held by a director at any time during the five years preceding that day;

(b) which is held by a director in any company which—

(i) is dormant or, in relation to the company keeping the register, is a relevant company; and

(ii) if he also held that directorhsip for any period during the five years immediately preceding that day, was for the whole of that period either dormant or such a relevant company;

1037

(c) which was held by a director for any period during the five years preceding that day in a company which for the whole of that period was either dormant or, in relation to the company keeping the register, a relevant company;";

and at the end of that subsection there shall be added the words"and

(iii) a company shall be treated as being or as having been dormant during any period during which no transaction occurs which is or was a significant accounting transaction (within the meaning of section 12(6) of the Companies Act 1981) for that company; and

(iv) a company shall be treated as being or as having been at any time a relevant company in relation to any other company if at that time it is or was a company of which that other company is or was a wholly owned subsidiary or if it is or was a wholly owned subsidiary of that other company or of another company of which that other company is or was a wholly owned subsidiary.".

(3) The following subsection shall be substituted for subsection (7)—
"(7) If any inspection required under this section is refused or if default is made in complying with subsection (1), (2), (3) or (4) of this section, the company and every officer of the company who is in default shall be liable on summary conviction to a fine not exceeding the statutory maximum or on conviction after continued contravention to a default fine not exceeding one-tenth of the statutory maximum.".
This subsection shall not have effect in relation to any offence committed before the appointed day.
(4) Subsection (4) of section 200 (notification to registrar of changes in register) shall not apply in relation to any change in the particulars contained in a company's register of directors and secretaries made solely by reason of the coming into force of subsection (2) above but if, after any such change has occurred and before the company makes its next annual return, any other change in those particulars occurs, the company shall send to the registrar a notification in the prescribed form of any such earlier changes and the date on which they occurred at the same time as it notifies the registrar of the later changes in accordance with section 200(4).").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their amendments. With the leave of the House, I beg to move these consequential amendments en bloc.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
162 Clause 69, page 72, line 23, leave out ("issued more than one class of") and insert ("more than one class of issued").
163 Clause 70, page 73, line 23, leave out ("more than one class of members") and insert ("any class of members with such rights as are mentioned in subsection (1) above,").
164 Clause 70, page 73, line 26, leave out ("each") and insert ("any such").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their amendments. Clauses 69 and 70 require the disclosure by registration of additional information concerning classes of shares and members. Clause 69 requires the identification on share registers of the class of shares or membership. Clause 70 requires companies without a
1038
share capital to disclose information about rights attaching to different classes of membership. Amendment No. 162 to Clause 69 makes it clear that the new requirement to show a members' class does not apply if there is only one class in issue, which seems a highly sensible proposal. Amendments Nos. 163 and 164 ensure that the new requirements on companies without a share capital do not apply where the information is already stated in the memorandum and articles in order to avoid duplication. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
165 After Clause 70, insert the following new clause:
("Privileged information
.—(1) The following paragraph shall be substituted for paragraph (a) of section 175 of the 1948 Act (saving for disclosure of information by solicitors)—
"(a) by any person of any information which he would in an action in the High Court, or in Scotland, the Court of Session be entitled to refuse to disclose on grounds of legal professional privilege except, if he is a lawyer, the name and address of his client;".
(2) In section 446 of the 1948 Act (saving for disclosure of privileged information in criminal proceedings) for the words from "nothing in this Act" to the end there shall be substituted the words "or the Secretary of State, nothing in this Act shall be taken to require any person to disclose any information which he is entitled to refuse to disclose on grounds of legal professional privilege".
(3) In section 116(1) of the 1967 Act (saving for disclosure of information by solicitors) for the words "the production by a solicitor of a document containing a privileged communication made by or to him in that capacity" there shall be substituted the words "the production by any person of a document which he would in an action in the High Court or, in Scotland, the Court of Session be entitled to refuse to produce on grounds of legal professional privilege.").
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in the said amendment. With this amendment I should like to speak to Amendments Nos. 204 and 213. The net effect of these amendments is the introduction of a new clause which will supersede paragraphs 8 and 30 of Schedule 3 to the Bill, which extend to counsel legal professional privilege presently available to solicitors under Section 175 of the 1948 Act and Section 116 of the 1967 Act, and will also amend Sections 175 and 446 of the 1948 Act and Section 116 of the 1967 Act in so far as they relate to legal professional privilege.
Under the new clause a person shall not be required to disclose any information to the Secretary of State or an inspector appointed by him, or in proceedings instituted under the Companies Act 1948 by the Director of Public Prosecutions, by or on behalf of the Lord Advocate, or by the Secretary of State, or be required to produce a document under Part III of the 1967 Act, which he would in an action in the High Court or, in Scotland, the Court of Session, be entitled to refuse to produce on grounds of legal professional privilege. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
166 After Clause 71, insert the following new clause:
Voluntary liquidations
("Amendment of section 283 of the 1948 Act
.—(1) In section 283 of the 1948 Act (statutory declaration of solvency in a winding up)—

(a) in subsection (2)(a) for the words from "and is delivered" to "date" there shall be substituted the words "or on that date but before the passing of that resolution";

(b) the following subsection shall be inserted after subsection (2)—

"(2A) A declaration made by any directors of a company in compliance with subsection (2)(a) of this section shall be delivered to the registrar of companies before the expiry of the period of fifteen days immediately following the date on which the resolution for winding up the company is passed.";

(c) in subsection (4) the words "and delivered", in each place where they occur, shall cease to have effect; and

(d) the following subsection shall be inserted after subsection (4)—

"(4A) Where any declaration required to be delivered to the registrar by subsection (2A) of this section is not so delivered within the time prescribed by that subsection, the company and every officer in default shall be guilty of an offence and liable on summary conviction to a fine not exceeding one-fifth of the statutory maximum or on conviction after continued contravention to a default fine not exceeding one-fiftieth of the statutory maximum.".
(2) Subsection (1) above shall not apply in relation to any winding up commenced before the appointed day.
Lord Mackay of Clashfern: My Lords, I beg to move that this House doth agree with the Commons in their amendment. With this amendment, if I may, should like to take Amendment No. 231. The purpose of this new clause is to relax the provisions of Section 283 of the 1948 Act which relates to members' voluntary liquidation. At present for a liquidation to be a members' voluntary winding-up a statutory declaration of solvency must be made by the directors and delivered to the Registrar of Companies before the date of the resolution to wind up the company. The amendments will provide that for it to be a members' rather than a creditors' voluntary winding-up the declaration must be made before the resolution to wind up the company, but the period for delivery of the declaration to the registrar is extended, and the sanction for failure to deliver will be a criminal penalty rather than making what is really a members' voluntary winding-up into a creditors' winding-up.
Moved, That this House doth agree with the Commons in the said amendment—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
167 Insert the following new clause:
("Minimum notice of meeting for voluntary winding up
.—(1) For section 293(1) of the 1948 Act (obligation of company to call meeting of creditors for the day, or the day next following the day, of the company's meeting for voluntary winding up), there shall be substituted the following subsection—
"(1) Notwithstanding any power of the members, or of any particular majority of the members, to exclude or waive any other requirement of this Act or the
1040
company's articles with respect to the period of notice to be given of any meeting of the company, the company shall give at least seven days' notice of the meeting of the company at which the resolution for voluntary winding up is to be proposed; and the company shall in addition—

(a) cause a meeting of the creditors of the company to be summoned for the day, or the day next following the day, on which the said meeting of the company is to be held; and

(b) cause the notices of the said meeting of the creditors to be sent by post to the creditors simultaneously with the sending of the notices of the said meeting of the company."

(2) The following subsection shall be added at the end of that section—
"(7) Failure to give notice of the meeting of the company mentioned in subsection (1) above as required by that subsection shall not affect the validity of any resolution passed or other thing done at that meeting which would be valid apart from that subsection").
9.56 p.m.
Lord Mackay of Clashfern: My Lords, this new clause will require a company to give at least seven days' notice to its members of a meeting of the company in which it is proposed to go into voluntary liquidation. It will prevent the company going into liquidation and appointing a liquidator with insufficient notice to allow the creditors the opportunity to appoint their own nominee to realise the company's assets. If there is insufficient time for the creditors to realise what is happening, the members' nominee sometimes gets an undue preference. In that situation it is desirable to lengthen the time. That is the purpose of this new clause. I beg to move that this House doth agree with the Commons in their Amendment No. 167.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
168 Insert the following new clause:
"Conversion of creditors' voluntary winding up to members' voluntary winding up in certain circumstances.
(1) Subject to the following provisions of this section, where a company is being or has been wound up voluntarily and—

(a) the winding up is or was a creditors' winding up; and

(b) a statutory declaration which satisfies the requirements of subsection (2) below is delivered to the registrar of companies;

from the date on which that declaration is so delivered (referred to below in this section as the conversion date) the winding up shall be treated for all purposes of the 1948 Act as if it were or (in the case of one already concluded before that date) as if it had been a members' voluntary winding up and (in the case of any such winding up, whether concluded before or still in progress at that date) as if it had been a members' voluntary winding up at all times since its commencement.
(2) A statutory declaration made for the purposes of this section must be made by the directors of the company or, in the case of a company having more than two directors, by the majority of the directors, and must state—

(a) that a statutory declaration complying with the requirements of subsections (1) and (2)(b) of section 283 of the 1948 Act (statutory declaration of solvency

1041
in case of proposal to wind up voluntarily) was made by the directors (or by the majority of the directors) of the company in accordance with subsection (1) of that section within the five weeks immediately preceding the date of the passing of the resolution for winding up the company (as required by subsection (2)(a) of that section);

(b) that it was properly addressed to the registrar of companies, pre-paid and posted on a date within the period beginning with 7th April 1981 and ending with 1st August 1981; and

(c) that a letter so addressed and posted would in the ordinary course of post have been delivered to the registrar of companies before the date of the passing of the resolution for winding up the company.

(3) For the purposes of sections 283(3) and 288 of the 1948 Act (consequences of actual or prospective failure to pay debts in full within the period stated by the directors in the declaration of solvency) the period specified in the declaration under section 283 of that Act in the case of a winding up to which subsection (1) above applies shall be taken to have been twelve months from the commencement of the winding up unless the contrary is shown.
(4) Nothing in this section shall affect the validity of anything validly done in a winding up to which subsection (1) above applies before the conversion date.").
Lord Mackay of Clashfern: My Lords, the object of this clause is to allow certain voluntary windings-up to proceed as members' voluntary windings-up where, because of recent industrial action within the Civil Service, the statutory declaration of insolvency has not been delivered to the Registrar of Companies within the prescribed period; or circumstances which otherwise would require them to be changed at some expense and inconvenience into creditors' voluntary windings-up. This is just an unfortunate consequence of the recent trouble, and this clause is designed to remove that particular consequence. I beg to move that this House doth agree with the Commons in their Amendment No. 168.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
169 After Clause 73, insert the following new clause:
Amendment of Parts IV and V of the 1980 Act
("Exclusion from section 48 of the 1980 Act of arrangements made between certain group companies or by companies in liquidation.
.—(1) Section 48 of the 1980 Act (substantial property transactions involving directors, etc.) shall have effect subject to the following modifications.
(2) In subsection (1) at the beginning there shall be inserted the words "Subject to subsections (6), (7) and (8) below".
(3) The following subsections shall be inserted after subsection (6)—
"(7) Subsection (1) above shall not apply in relation to any arrangement for the acquisition of a non-cash asset—

(a) if the non-cash asset in question is to be acquired by a holding company from any of its wholly owned subsidiaries or from a holding company by any of its wholly owned subsidiaries or by one wholly owned subsidiary of a holding company from another wholly owned subsidiary of that same holding company; or

(b) if the arrangement is entered into by a company which is being wound up unless the winding up is a members' voluntary winding up.

(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.".").
170 Insert the following new clause—
Additional exception from section 49 of the 1980 Act.
.—(1) In section 50 of the 1980 Act (certain transactions exempted from section 49 of that Act) the following subsection shall be inserted after subsection (2)—
"(2A) Without prejudice to any other provision of this section, section 49(1)(a) above shall not prohibit any company from making a loan to a director of the company or of its holding company if the aggregate of the relevant amounts does not exceed £2,500."
(2) In section 51 of that Act (definition of "relevant amounts") in subsection (1) for the words "by subsection (3) (a)" there shall be substituted the words "by subsection (2A) or (3)(a)"; and at the end of that subsection there shall be inserted the words—
"Where the relevant exception is the exception provided by subsection (2A) references in this section to a person connected with a director shall be disregarded."
Lord Trefgarne: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 169 and 170. I should furthermore like to speak to Amendments Nos. 223, 224, 225, 226 and 227. This group of amendments introduces certain relaxations of the provisions of Part IV of the Companies Act 1980 dealing with the duties of directors and conflicts of interest. I am very willing to go into further details, but, if your Lordships would prefer to leave it at that, I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Trefgarne.)
On Question, Motion agreed to.

COMMONS AMENDMENT
171 After Clause 73, insert the following new clause—
"International bonds
.—(1) Section 71 of the 1980 Act (exclusion of things done in connection with international bonds from prohibition on insider dealing) shall have effect subject to the following modifications.
(2) In subsection (1)—

(a) after the word "debenture", in the first place where it occurs, there shall be inserted the words "or any right to subscribe for, call for or make delivery of any debenture";

(b) in paragraph (a)(ii) for the words "before the date on which it is decided" there shall be substituted the words "before the decision is taken"; and

(c) in paragraph (b) after the word "debenture", in both places where it occurs, there shall be inserted the words "or right".

(3) The following subsection shall be inserted after subsection (1)—
"(1A) Where an individual holds unpublished price sensitive information in relation to any securities but by virtue of subsection (1) above he is not prohibited by section 68 above from doing anything in relation to those securities, he shall not be prohibited by virtue of his holding that information by section 70(2) above (prohibition on counselling persons to deal on stock exchanges outside Great Britain, etc.) from doing any other thing in relation to those securities.".
(4) In subsection (2)—

(a) in paragraph (b) of the definition of "international bond issue" for the words "are so offered"

1043
there shall be substituted the words "are or are to be so offered"; and

(b) the following words shall be inserted after the definition of 'issue manager", that is to say, "and 'off-market dealer' has the meaning given by section 70(3) above.".

(5) The following subsections shall be inserted after subsection (2)—
"(3) The Secretary of State may by regulations made by statutory instrument make provision—

(a) permitting persons of any specified class to be treated as issue managers for the purposes of subsection (1) or (1A) (or both) of this section;

(b) permitting persons of any specified class to be treated as off-market dealers for those purposes;

(c) permitting an issue of international securities of any specified class to be treated as an international bond issue for those purposes;

(d) extending the exemptions conferred by subsection (1) or (1A) above (or both) for things done in relation to other advertised securities or other advertised securities of any specified class;

(e) amending or disapplying paragraph (i) or (ii) (or both) of subsection (1)(a) above in relation to any international bond issue or any international bond issue of a specified class.

(4) In subsection (3) above "international securities" means any securities (whether listed or advertised or other) which are in any way connected with a country outside Great Britain, for example, securities issued by a body which is incorporated or resident outside Great Britain or which are denominated in a currency other than sterling or which are dealt in by bodies incorporated or resident outside Great Britain or by individuals so resident.
(5) Regulations under subsection (3) above—

(a) may make different provision for different cases or classes of case and may contain such incidental and supplementary provisions as the Secretary of State thinks fit;

(b) shall not be made unless a draft of the instrument containing them has been laid before Parliament and approved by resolution of each House of Parliament.".

Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 171. Your Lordships will see that this amends Section 71 of the 1980 Act. This excludes certain dealings in the international bond market from the prohibition which we discussed at great length at earlier stages in this particular Bill, and I remember, in 1980, and at earlier stages on the vexed question of insider dealing. The new clause amends Section 71 in two major ways. First of all it puts right certain technical defects in the old section. The result of these defects is that the section as it stands fails to achieve completely the intended objective of providing a defence for certain specified activities in the international bond market.
Secondly, we are amending Section 71 because the clause gives to the Secretary of State power to make certain further amendments to Section 71 by order subject to the affirmative resolution of both Houses of Parliament. I recognise that it is unusual to take powers to make secondary legislation to amend criminal provisions, but the circumstances are very unusual and I hope that your Lordships will permit me to explain briefly why this is so.
Even in the 18 months or so since Section 71 was enacted in the 1980 Act, there have been considerable changes in the way that the international issue market
1044
has been operating. This particular market is confined to professionals who are, in almost all cases, large financial institutions who are well aware of the risks that they are taking. There is no danger in this aspect to the unsophisticated saver or small investor.
The market has developed very much in the last 18 months, and seems certain to continue to do so in the future, in new and unpredictable directions. It would be wrong for restrictions which are designed to protect the small investor and saver to prevent large institutions in the City of London from playing a part in a market which began here in London and in which the City is pre-eminent. Equally, it is clear that opportunities for primary legislation will be too infrequent to allow the law to catch up with any rapid commercial developments, especially in this specialised market. Thus, subsection (5) of the new clause enables the Secretary of State to amend the section by regulations in various specified ways. None of the regulations can come into force until it has been approved by affirmative resolution of both Houses.
I wish to stress the limited scope of these powers. We are not seeking to widen our original concept of the international bond market to give complete freedom, complete licence and complete carte blanche to the institutions in the City to deal whenever they hold inside information. Far from it. We are seeking a flexible way of keeping the law in step with detailed developments in the way that the international issues and bond markets operate. I apologise for going at such length into the matter, but this is a very specialised market and I thought the House merited an explanation of why we have taken this step.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
Lord Davies of Leek: My Lords, this demonstrates again what we said earlier today about the importance of this measure. As I see it, the lifting of exchange control has created a completely different situation in the international bond system. It would be remiss of me to delay the House at this late hour, but I should have liked rather more discussion of this whole issue. I do not seek more explanation from the Minister, but we should have had more time to discuss the point. Perhaps at a later time we shall be able to deal with this.
Lord Lyell: I appreciate that this is a very complicated subject, my Lords. I have several pages more of supplementary briefing, but if the noble Lord has further questions to raise, then, apart from the myriad of opportunities he has to question me and my noble friends, if he wishes any aspect of the bond market explained, either formally or informally, I shall be more than happy to write to him.
Lord Davies of Leek: My Lords, I am obliged to the noble Lord for that kind reply.
On Question, Motion agreed to.

COMMONS AMENDMENTS
172 After Clause 73 insert the following new clause:
("Old public companies.
Supplemental
. Subject to section 34(l) of this Act, any reference in this Act to a public company or to a company other

1045
than a private company shall unless the context otherwise requires be construed as including a reference to an old public company (within the meaning of section 8 of the 1980 Act) and any reference to a private company shall be construed accordingly.").
173 Clause 78, page 77, line 40, leave out (","public company" and "the statutory maximum"") and insert ("and "public company"").
Lord Lyell: My Lords, on behalf of my noble and learned friend Lord Mackay, and with the leave of the House, I beg to move that this House doth agree with the Commons in their Amendments Nos. 172 and 173. These are consequential on amendments which he moved earlier.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
174 Clause 79, page 78, line 12, leave out ("35 to 41") and insert ("(Temporary extension of power to require company to change its name), 35 to 41, (Merger relief)and (Conversion of creditors' voluntary winding up to members' voluntary winding up in certain circumstances)").
175 Clause 79, page 78, line 14, after ("instrument") insert ("and different days may be appointed for different purposes").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 174 and 175. Amendment No. 174 provides that the new clauses introduced by Amendments Nos. 30 and 68, which we discussed earlier, shall come into effect on the date of Royal Assent. It is essential that the clauses which make special provision for the extension of time within which certain companies' names may be changed—that was Amendment No. 30—and for the conversion of creditors' voluntary liquidations into members' voluntary liquidations, which was explained lucidly by my noble and learned friend Lord Mackay, to mitigate certain effects of the industrial action of the Companies Registration Office, should come into operation without delay. These provide that they shall come into force on the day of Royal Assent rather than on a day to be appinted. Amendment No. 175 provides in Clause 106(3) for the commencement of the provisions of the Bill on days to be appointed by statutory instrument, except in the case of those provisions which come into force on Royal Assent. These were the two earlier amendments that I mentioned.
Amendment No. 175 allows different days to be appointed for different purposes in respect of any particular provision contained in the Bill. That appears to provide licence, but in fact it will be carefully regulated and it will provide flexibility to permit, for example, the provisions of Part I to be commenced for overseas companies at a time different from their commencement for British companies. Amendment No. 175 will facilitate the process of commencement. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
176 Schedule 1, page 83, line 5, at end insert ("(82)").
177 Schedule 1, page 83, line 17, at end insert ("(8A)").
178 Schedule 1, page 85, line 24, at end insert ("(8A)").
179 Schedule 1, Page 86, 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.").
Lord Lyell: My Lords, with the leave of your Lord-ships' House, I beg to move that this House doth agree with the Commons in their Amendments Nos. 176 to 179. These amendments require the amount for creditors in respect of taxation and social security to be shown separately from the amount for "other creditors", as the English text of the directive was found to be defective in its reference to:
"other creditors including tax and social security".
These are minor drafting amendments in an accountancy sense. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
180 Page 96, line 38, at beginning insert ("Subject to the qualification mentioned below").
181 Page 96, line 45, at end insert—
("The method chosen must be one which appears to the directors to be appropriate in the circumstances of the company").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 180 and 181. These two amendments were made in Committee in another place and they meet an undertaking that was given in your Lordships' House on Report. I hope that the noble Lord, Lord Bruce of Donington, would agree that the accountancy bodies could be encapsulated into what he called the CCAB; I cannot exactly recall the name, but I refer to the Central Council of Accountancy Bodies. The undertaking was to discuss with the accountancy bodies their concern over the fact that the accounting standard dealing with stock valuation, while not ruling out the use of what is attractively known as the LIFO (last in, first out) method of valuing stock, which is expressly permitted by paragraph 27 of Schedule 1, would not normally be appropriate. The accountancy bodies were concerned that paragraph 27(1) might be read as giving directors absolute freedom to use the last in, first out method in any circumstances that they chose. These two amendments seek to dispel the fears which were expressed very strongly by the noble Lord, Lord Bruce, and by other members of the accountancy body. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
182 Page 97, line 17, at beginning insert ("Subject to sub-paragraph (4A) below").
183 Page 97, line 23, leave out from ("date") to end of line 28.
184 Page 97, 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.").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 182 to 184. These three amendments result from further consideration of paragraphs 27(3) and (4) of Schedule 1, and they implement the fourth directive more accurately in respect of calculating the difference between the value of stocks and what are attractively called fungible assets arrived at on the basis of the methods mentioned in paragraph 27(2) and the last known market value prior to the balance sheet date. I hope that your Lordships do not think that that is entire gobbledygook. I am sure that my noble and learned friend could give a much more precise explanation than I could of the fascinating term "fungible assets". I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
185 Page 98, line 20, leave out ("either item B.III or item C.III') and insert ("item B.III").
186 Page 98, line 29, at end insert—
("(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.").
10.10 p.m.
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 185 and 186. These two amendments, I am given to understand, are minor amendments; although no amendments of this technical nature can be classified as minor. They provide that current asset investments, if the accounts are drawn up in accordance with the alternative accounting rules, may be included as current costs only and not as now allowed by paragraph 31(3) at a market value or at a valuation considered appropriate by the directors.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
187 Page 102, line 29, leave out from ("item'') to end of line and insert ("either—").
188 Page 102, line 32, leave out ("and") and insert ("or").
189 Page 102, line 33, at end insert—
("(leaving out of account in either case any provisions for depreciation or diminution in value)").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 187, 188 and 189. These minor amend-
1048
ments are designed to resolve any doubt that the information required to be disclosed under paragraph 41(1) and (2) in respect of fixed asset movements relates not to net book values but to gross book amounts.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
190 Page 104, 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.").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 190. This is a minor addition to paragraph 46 of Schedule 1, which implements a fourth directive requirement.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
191 Page 104, 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 item which").
192 Page 104, line 22, leave out from ("year") to ("are") in line 23, and insert—
("and
(b) the aggregate amount of any debts so included which").
193 Page 104, line 25, leave out ("shall be stated").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 191, 192 and 193. These are technical amendments which enable us to comply fully with the provisions of the Fourth Directive. They make it clear that the aggregate amounts of the debts payable both by instalments and other than by instalments are to be disclosed separately in the Notes to the Accounts.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
193A Page 106, line 14, after ("(c)") insert ("or (Relaxation of section 42 restrictions for private companies)").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 193A. This is an amendment to the disclosure provisions in Schedules 1 and 2 to reflect the new provisions whereby a company may give financial assistance for the purchase of its own shares.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
194 Page 109, line 38, leave out from first ("of") to end of line 39 and insert ("any of the following provisions, that is to say—

(a) 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.);

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

(c) paragraphs 42 and 46 above.").

Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 194. This amendment adds to the items in paragraph 58(3) of Schedule 1 which provides that certain amounts required to be disclosed are not subject to the requirement in paragraph 58(2) that corresponding figures for the preceding financial year are to be stated.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
195 Page 111, line 3, at end insert—
("64A.—(l) Notwithstanding paragraph 62 above, the consolidated accounts prepared by a holding company may deal with an investment of any member of the group in the shares of any other body corporate by way of the equity method of accounting in any case where it appears to the directors of the holding company that that body corporate is so closely associated with any member of the group as to justify the use of that method in dealing with investments by that or any other member of the group in the shares of that body corporate.
(2) In this paragraph, references to the group, in relation to consolidated accounts prepared by a holding company, are references to the holding company and the subsidiaries dealt with by the accounts.").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 195. The amendment allows the established practice of equity accounting to continue in the United Kingdom as it was put to us that the interactive effect of paragraphs 12(a), 34, and 62 of Schedule 1 would prevent the use of the present practice of equity accounting in drawing up statutory accounts. This has never been the intention of the Government and to avoid this we seek to move this amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
196 Schedule 1, page 115, line 27, at end insert—
("Purchase price
87A. References in this Schedule (however expressed) to the purchase price of any asset of a company or of any raw materials or consumables used in the production of any such asset shall be read as including references to any consideration (whether in cash or otherwise) given by the company in respect of that asset or in respect of those materials or consumables (as the case may require).
Realised profits
87B. Without prejudice to—

(a) the construction of any other expression (where appropriate) by reference to accepted accounting principles or practice; or

(b) any specific provision for the treatment of profits of any description as realised;

it is hereby declared for the avoidance of doubt that references in this Schedule to realised profits, in relation to a company's accounts, are references to such profits of the company as fall to be treated as realised profits for the purposes of those accounts in accordance with principles generally accepted with respect to the determination for accounting purposes of realised profits at the time when those accounts are prepared.").
Lord Lyell: My Lords, the first paragraph in this amendment results from an undertaking given by the Government in this House to, so far as I recall, the noble Lord, Lord Bruce of Donington, that they would deal with the problem that the words "purchase price or production cost", as used in Schedule 1, are not wholly appropriate for the amount to be included in the accounts in respect of certain assets such as debts by referring to any consideration given in respect of the asset. We reflected further on this and had further discussions with the accountancy bodies and the Law Society. We hope the amendment makes it quite clear that the term "realized" is to be construed in an accounting rather than a tax context. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
197 Schedule 1, page 116, line 44, at end insert—
("Wholly owned subsidiaries
91A. In this Schedule, "wholly owned subsidiary" has the same meaning as it has for the purposes of section 150 of this Act.").
Lord Lyell: My Lords, this amendment seeks to clarify the position. It provides that the definition of "wholly-owned subsidiary" has the same meaning as it has for the purposes of Section 150 of the master Act, the Companies Act. I beg to move that this House doth agree with the Commons in their Amendment No. 197.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
198 Schedule 2, page 118, line 3, 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 42(3)(b) or (c) or (Relaxation of section 42 restrictions for private companies) of the Companies Act 1981;";
Lord Lyell: My Lords, I spoke to this amendment earlier. I beg to move that this House doth agree with the Commons in their Amendment No. 198.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
199 Schedule 2, page 118, line 13, at end insert—
("( ) in paragraph 12(1)(d), for the word "provided", there shall be substituted the words "set aside";
Lord Lyell: My Lords, this is a technical amendment to Schedule 2 of the Bill, which provides that in paragraph 12(1)(d) of the old Schedule 8, which is to be renumbered Schedule 8A, the words "set aside" shall be substituted for the word "provided". This is an accountancy concept, and we believe it clarifies the Bill. I beg to move that this House doth agree with the Commons in their Amendment No. 199.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
200 Schedule 2, page 119, line 16, after ("Act") insert ("and the repeal of subsections (1)(b) and (2) of that section by section 16(2)(b) of this Act.").
Lord Lyell: My Lords, in moving Amendment No. 200, with the leave of your Lordships' House, I would wish to speak also to Amendment No. 241. Amendment No. 200 is a technical amendment rectifying an omission in paragraph 5(4) of Schedule 2, and Amendment No. 241 is a consequential amendment upon that. I beg to move that this House doth agree with the Commons in their Amendment No. 200.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
201 Schedule 2, page 120, line 1, leave out ("41, 42, 43") and insert ("41(1)(a), 42, 43(a)(i), (aa) and (b)").
Lord Lyell: My Lords, with the leave of your Lordships' House, I should like to move Amendment No. 201 and to speak also to Amendments Nos. 217, 218, 219, 221, 236, 237 and 238. My noble friend the Minister advises me that I should be speaking to Amendment No. 220 as well. My Lords, all these technical amendments relate to Section 39(4) of the Companies Act 1980, which provides that all provisions are to be treated as realised losses other than provisions in respect of diminutions in value of a fixed asset arising on a revaluation of all the fixed assets. They are technical amendments, and they all fall into line after Amendment No. 201. I beg to move that this House doth agree with the Commons in their Amendment No. 201.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
202 Schedule 3, page 121, leave out lines 1 to 4 and insert—
("3A. In section 106 (registration of charges on property in England of companies incorporated outside England) for the word "England", in the third place where it occurs, there shall he substituted the words "Great Britain".
3B. 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
1052
in default shall be liable on summary conviction to a fine 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.").
Lord Mackay of Clashfern: My Lords, it gives me particular pleasure to bring forward the first paragraph of Amendment No. 202, since it removes an inconsistency between the laws of England and Scotland in relation to the registration of charges, and is the implementation of an undertaking which was given to my noble friend Lord Selkirk at the Committee stage in your Lordships' House. Paragraph 3B of the amendment provides for an increase in the maximum fine for failure to render an annual return to the registrar to the statutory maximum. I beg to move that this House doth agree with the Commons in their Amendment No. 202.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
203 Schedule 3, page 121, line 22, after ("words") insert ("(1)").
204 Schedule 3, page 121, leave out lines 23 and 24.
205 Schedule 3, page 121, line 24, at end insert—
("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"").
Lord Mackay of Clashfern: My Lords, if I may, I should like to take Amendments Nos. 203, 204 and 205 together. They are consequential upon amendments to which I have already spoken. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Mackay of Clashfern.)
On Question, Motion agreed to.

COMMONS AMENDMENT
206 Schedule 3, page 21, line 25, leave out ("of the 1948 Act").
Lord Lyell: My Lords, this is a technical amendment. It deletes a superfluous reference to the 1948 Act. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
207 Schedule 3, page 122, 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)").
208 Schedule 3, page 122, line 24, leave out from ("if") to ("cwmni") in line 27 and insert ("the company has

1053
delivered a statement under section 382(3)(c) of this Act to the registrar").
209 Schedule 3, page 122, 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"").
Lord Lyell: My Lords, with the leave of your Lordships I should like to move Amendments Nos. 207, 208 and 209 together. These three amendments permit a joint stock company registering under Part 8 of the 1948 Act to use the Welsh equivalent of what we call a public limited company or "limited" as the last words or word of its name if the registered office of that company is to be situated in Wales. We consider that as drafted paragraph 13 of Schedule 3 makes the use of the Welsh equivalent compulsory in such cases. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
210 Schedule 3, page 123, 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;"").
211 Schedule 3, page 124, line 13, at end insert—
("25A. In sections 25, 27 and 29 of the 1967 Act (restrictions on directors' dealing in options in securities of own companies and registration of their interests in such securities) any reference (however expressed) to any price paid, given or received in respect of any interest in shares or debentures shall be construed as including a reference to any consideration other than money given or received in respect of any such interest.
25B.—(1) In section 28 of the 1967 Act (meaning of "interests in shares and debentures" for purposes of section 27 of that Act) the following subsections shall be substituted for subsections (1) to (4)—
"(1) The provisions of this section shall apply in determining for the purposes of section 27 of this Act whether a person has an interest in shares or debentures.
(2) Any reference to an interest in shares or debentures shall be read as including a reference to any interest of any kind whatsoever in shares or debentures; and accordingly there shall be disregarded any restraints or restrictions to which the exercise of any right attached to the interest is or may be subject.
(3) Where any property is held on trust and any interest in shares or debentures is comprised in that property, any beneficiary of that trust who, apart from this subsection, does not have an interest in the shares or debentures shall be taken to have such an interest (but this subsection is without prejudice to the following provisions of this section).
(4) A person shall be taken to have an interest in shares or debentures if—

(a) he enters into a contract for their purchase by him (whether for cash or other consideration); or

(b) not being the registered holder, he is entitled to exercise any right conferred by the holding of those shares or debentures or is entitled to control the exercise of any such right.

(4A) A person shall be taken to be interested in shares or debentures if a body corporate is interested in them and—

(a) that body corporate or its directors are accustomed to act in accordance with his directions or instructions; or

(b) he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of that body corporate.

(4B) Where a person is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of a body corporate and that body corporate is entitled to exercise or control the exercise of any of the voting power at general meetings of another body corporate (the "relevant voting power"), then, for the purposes of subsection (4A)(b) above, the relevant voting power shall be taken to be exercisable by that person.
(4C) A person shall be taken to have an interest in shares or debentures if, otherwise than by virtue of having an interest under a trust—

(a) he has a right to call for delivery of the shares or debentures to himself or to his order; or

(b) he has a right to acquire an interest in shares or debentures or is under an obligation to take an interest in shares or debentures;

whether in any case the right or obligation is conditional or absolute.
(4D) For the purposes of subsection (4)(b) above, a person shall be taken to be entitled to exercise or control the exercise of any right conferred by the holding of shares or debentures if he has a right (whether subject to conditions or not) the exercise of which would make him so entitled or is under an obligation (whether so subject or not) the fulfilment of which would make him so entitled.
(4E) A person shall not by virtue of subsection (4)(b) above be taken to be interested in any shares or debentures by reason only that he has been appointed a proxy to vote at a specified meeting of a company or of any class of its members and at any adjournment of that meeting or has been appointed by a corporation to act as its representative at any meeting of a company or of any class of its members.
(4F) Without prejudice to subsection (2) above, rights or obligations to subscribe for any shares or debentures shall not be taken for the purposes of subsection (4C) above to be rights to acquire, or obligations to take, any interest in shares or debentures."
(2) Subsection (3) of section 27 of the 1967 Act (periods during which any obligation imposed by that section must be fulfilled) shall not apply in relation to any obligation imposed on a director of a company by subsection (1)(a) of that section to notify the company of any interest of his in shares or debentures if that obligation arose on the appointed day by virtue only of the coming into force of sub-paragraph (1) above; but the director must fulfil any such obligation—

(a) if he knows of the existence of that interest on the appointed day, within the period of ten days next following that day;

(b) in any other case, within the period of five days next following the day on which the existence of that interest conies to his knowledge;

(disregarding in reckoning that period any day that is a Saturday or Sunday or a bank holiday in any part of Great Britain).").
212 Schedule 3, page 123, line 26, at end insert ("(whether as it has effect in relation to an investigation under any of sections 164 to 166 of the principal Act").
213 Schedule 3, page 123, leave out lines 33 to 35.
214 Schedule 3, page 125, line 1, at end insert—
("32A. In section 29(1) of the 1976 Act (register of disqualification orders)—

(a) 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

(b) the words from "This subsection" to the end shall cease to have effect.").

Lord Lyell: My Lords, with your Lordships' leave, I wish to move Amendments Nos. 210 to 214 inclusive. These are all consequential amendments and have been spoken to at an earlier stage. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
215 Schedule 3, page 125, line 23, 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."").
216 Schedule 3, page 125, line 30, leave out paragraph 38 and insert—
("38.—(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."
(3) In subsection (3) of that section—

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

(b) 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 after subsection (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 1048 Act)."".
Lord Lyell: My Lords, these amendments provide a relaxation from the requirements in Section 24 of the 1980 Act for an independent valuation of a consideration which is not in cash which is to be used in a takeover or merger for schemes of arrangement which are defined in the Bill for the purposes of merger of companies, as well as for mergers in which securities other than shares are involved. The amendments also make clear that the valuation requirement does not apply when a company use capital reserves to pay up what they call bonus shares. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
217 Schedule 3, page 126, line 12, at beginning insert ("(1)").
218 Schedule 3, page 126, line 13, after ("distribution") insert ("(a)").
Lord Lyell: My Lords, with the leave of the House I beg to move Amendments Nos. 217 and 218.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
219 Schedule 3, page 126, line 16, at end insert—
("and
(b) after the words "fixed assets" there shall be inserted the words "or of all the fixed assets other than goodwill.
(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.").
Lord Trefgarne: My Lords, this is a consequential amendment and I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Trefgarne.)
As an amendment to the amendment:
219B Line 17, leave out ("are satisfied") and insert ("determine by way of resolution").
Lord Ponsonby of Shulbrede: I beg to move.
On Question, amendment to the amendment negatived.
On Question, Motion agreed to

COMMONS AMENDMENTS
220 Schedule 3, rage 126 leave out lines 23 and 24 and insert—
("(a) in subsection (2)—

(i) the words "or filed", wherever occurring, shall cease to have effect; and

1057

(ii) in paragraph (b) for the word "proper" there shall be substituted the word "reasonable";

(aa) in subsection (3)(d) the words from "or delivered' to the end shall cease to have effect;

(aaa) the following subsection shall be inserted after subsection (7)—

"(7A) Where subsection (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 any of the relevant items as stated in those accounts has taken place, unless it is stated in a note to those accounts—

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

(b) 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

(c) that the relevant items affected are accordingly stated in the relevant accounts on the basis that a 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").

221 Schedule 3, rage 126 line 29, after ("words") insert ("",or filed" and the words").
222 Schedule 3, rage 126 line 35, leave out from beginning to end of line 37 and insert—
("(b) the redemption or purchase of any of the company's own shares out of capital (including the proceeds of any fresh issue of shares) or out of unrealised profits in accordance with Part III of the Companies Act Act 1981;"").
223 Schedule 3, page 127, line 46, leave out ("and").
224 Schedule 3, page 128, line 6, at end insert ("and
(d) in subsection (6)(c) for the word "or", in the second place where it occurs, there shall be substituted the word "and".").
225 Schedule 3, page 128 line 8, 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)").
226 Schedule 3, page 128 line 12, at end insert—
("48A. In section 58 (transactions, etc. excluded from sections 54 and 57) the following subsection 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—

(a) the value of each transaction or arrangement within subsection (1)(c) or (2)(c), as the case 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

(b) the value of each such transaction or arrangement which was made before 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;
1058
did not 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.".".

227 Schedule 3, page 128 line 20, at end insert—
("49A. 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)".".
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 220 to 227 en bloc.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
228 Page 128, line 34, at end insert:
("52A. 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".").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 228. This amendment rectifies a small omission in Section 72 of the 1980 Companies Act. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
229 Page 129, line 14, at end insert:
"Transport Act 1981 (c. 56)
55A. In paragraph 10 of Schedule 6 to the Transport Act 1981 (amendments of the Harbours Act 1964) for each reference to the Companies Acts 1948 to 1980 there shall be substituted a reference to the Companies Acts 1948 to 1981.").
Lord Lyell: My Lords, this amendment updates references in Schedule 6(10) of the Transport Act 1981. These refer at present to the Companies Acts 1948 to 1980. We hope that this reference will be able to include a reference to this particular Bill when it is enacted.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
230 Schedule 4, page 130, line 23, column 3, at end insert:
("In section 174(1) the words from "and that" to "Act".").
231 Schedule 4, page 130, line 30, column 3, at end insert:
("In section 283(4), the words "and delivered" in each place where they occur.").
Lord Lyell: I beg to move that this House doth agree with the Commons in their Amendments Nos. 230 and 231. These are consequential and have been spoken to earlier.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
232 Page 130, line 35, column 3, at end insert:
("In Schedule 1,—Regulation 10 of Table A; in Regulation 88 of Table A and Article 38 of Table C, the words "or under section 28 of the Companies Act 1976".".
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 232. This amendment provides for the deletion of certain provisions of both Table A and Table C of the 1948 Companies Act which are consequent upon repeals made in the Bill before your Lordships.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
233 Page 130, line 40, column 3, leave out from beginning to ("paragraphs") in line 42.
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 233. This is a consequential amendment.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
233A Page 130, line 45, column 3, at end insert:
("Sections 33 and 34").
Lord Lyell: I beg to move that this House doth agree with the Commons in their Amendment No. 233A. This is consequential to an amendment moved by my noble friend the Minister when he was speaking to Amendment No. 134. I think that must have been considerably before dinner.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENT
234 Page 131 line 5, column 3, leave out line 5 and insert:
("Sections 26, 27 and 28. In section 29(1), the words from "This subsection applies" to the end.").
Lord Lyell: I beg to move that this House doth agree with the Commons in their Amendment No. 234. This carries on where Amendment No. 232 left off. It lists certain repeals to the Companies Act 1976 which have been made in the Bill before your Lordships.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
235 Schedule 4, page 131, 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.'").
236 Schedule 4, page 131, line 20, column 3, after ("43") insert ("in subsection (2)").
237 Schedule 4, page 131, line 21, column 3, at end insert ("in subsection (3)(d) the words from "or delivered" to the end.").
238 Schedule 4, page 131, line 23, column 3, after ("words") insert (" "or filed" and").
239 Schedule 4, page 131, line 29, column 3, leave out ("18 and 19") and insert ("18, 19, 124, 125 and 200").
240 Schedule 4, page 131, line 39, at end insert—
("( ) The repeal by this Act of part of section 174(1) of the 1948 Act shall have effect subject to the saving in section (Amendment of section 174 of the 1948 Act) (8) of this Act.").
241 Schedule 4, page 131, line 40, leave out ("in part") and insert ("(b)").
242 Schedule 4, page 131, line 44, at end insert—
("( ) The repeal by this Act of section 27 of the 1976 Act shall have effect subject to the saving in section (Repeals, transitional provisions and saving) of this Act.").
Lord Lyell: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 235 to 242 en bloc. All these are consequential on amendments which have been spoken to by my noble and learned friend, by my noble friend the Minister or, in the case of four of the amendments, by myself. I beg to move.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
On Question, Motion agreed to.

London Transport (No. 2) Bill
Returned from the Commons with the amendments agreed to.
Cumbria Bill [H.L.]
Message from the Commons that they concur with the Resolutions of this House communicated to the Commons in the Messages of 27th July and 22nd October.
Trustee Savings Banks Bill [H.L.]
Returned from the Commons agreed to.
Education Bill
Returned from the Commons with the amendments agreed to.
  CIVIL SERVICE PAY INQUIRY: GOVERNMENT EVIDENCE
  CIVIL SERVICE PAY INQUIRY: GOVERNMENT EVIDENCE
  CIVIL SERVICE PAY DISPUTE: "NO-VICTIMISATION" CLAUSE
  CIVIL SERVICE PAY DISPUTE: "NO-VICTIMISATION" CLAUSE
  HOME OFFICE CIRCULAR NO. ES 3/1976
  HOME OFFICE CIRCULAR NO. ES 3/1976
  BRITISH/SOVIET CULTURAL AGREEMENT
  BRITISH/SOVIET CULTURAL AGREEMENT
  EDUCATION OF CHILDREN: INQUIRY INTERIM REPORT
  EDUCATION OF CHILDREN: INQUIRY INTERIM REPORT
  ST. BARTHOLOMEW'S HOSPITAL FIRE
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  DISTRICT HANDICAP TEAMS
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  "ADDITIONALITY": INTERPRETATION
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  MALAYSIA: UK PASSPORT HOLDERS
  MALAYSIA: UK PASSPORT HOLDERS