Sitting of 8 February 1982

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

    Vale of Belvoir
    Mr. Welshasked the Secretary of State for Energy when the National Coal Board would be able to start development of the Vale of Belvoir's three collieries in the event of the granting of planning permission.
    The Secretary of State for Energy (Mr. Nigel Lawson): Planning permission is a matter for my right hon. Friend the Secretary of State for the Environment. I cannot speculate on subsequent events in advance of his decision.
    Mr. Welsh: To maximise returns from the Vale of Belvoir the NCB should work only three pits, so will the right hon. Gentleman ask the Secretary of State for the Environment to take that factor into account? Does he agree that to work more than three pits would reduce the NCB's returns and increase unit costs, so the undertaking would not be efficient and effective? As the inquiry report has been with the Department of the Environment for over a year, does that not show that that Department is the most inefficient of the lot?
    Mr. Lawson: My right hon. Friend the Secretary of State for the Environment will take into account the economic and environment dimensions. The hon. Gentleman asked whether the delay proved that the Department of the Environment was inefficient. It proves nothing of the sort. It is a highly complex issue, as the hon. Gentleman will be the first to agree. I am sure that my right hon. Friend will make his decision as soon as he possibly can.
    Mr. Latham: Have not the many thousands who objected to the Vale of Belvoir project as much right to have their views heard and respected as would, say, the citizens of Don Valley if it were proposed to site a PWR there?
    Mr. Lawson: Yes, Sir.
    Mr. Haynes: Is the Secretary of State aware of the pressures on hon. Members for the development of the Vale of Belvoir coalfield? It would create jobs and finance for the NCB and the nation, and coal is the nation's cheapest energy source. When will the Government stop dilly-dallying and get stuck into the job that they were appointed to do?
    Mr. Lawson: I have already answered the question, but I shall gladly do so again. The matter is for my right hon. Friend the Secretary of State for the Environment, and he will take a decision as soon as he possibly can.
    Mr. Haynes: They are dilly-dallying.
    Mr. Skeet: As the Secretary of State has had about 18 months to work out production costs for the Vale of Belvoir on the assessment of two pits, may we now know what they would be? Would they be similar to those at Selby?
    Mr. Lawson: I am sure that the NCB would be happy to enlighten my hon. Friend. All these matters were discussed at considerable length in the public inquiry, which is what it was for.
    Mr. Merlyn Rees: When eventually the Department of the Environment makes a statement on environmental matters, which is what it is paid to do, will the right hon. Gentleman make a statement at the same time on the energy implications, as I fail to see why the Department of the Environment should lay down the law on energy matters?
    Mr. Lawson: Although they are planning inquiries, they also have to take account of the economic dimension. There was no separate environmental inquiry. Precisely the same applies to Sizewell, which we discussed last week. There again the inspector will be concerned with both environmental and economic matters.

    North Sea Oil
    Mr. Eggarasked the Secretary of State for Energy what representations he has received about the relationship between the level of North Sea taxation and the level of oil field developments.
    The Minister of State, Department of Energy (Mr. Hamish Gray): A considerable number.
    Mr. Eggar: I am not surprised at that information. Is my hon. Friend aware that decisions on a considerable number of field developments depend crucially upon the Chancellor's review of the tax regime? Can my hon. Friend assure us that the Department of Energy is putting all possible pressure on the Treasury to ensure that those developments go ahead?
    Mr. Gray: My hon. Friend will be aware that the proposals put forward by the United Kingdom Offshore Operators Association have been discussed by Ministers in both the Department of Energy and the Treasury. I am sure that my right hon. and learned Friend the Chancellor is giving careful attention to the suggestions of UKOOA. We shall know the result of his deliberations in due course.
    Mr. Grimond: Will the Minister tell us what proportion of North Sea takings currently goes in tax? Secondly, does he consider that development has been retarded by the extremely heavy rate and multiplication of different rates of tax now in force?
    Mr. Gray: I cannot give an exact answer on the first part of the right hon. Gentleman's question, but the proportion is substantially more than 80 per cent. In answer to the second part, this matter is currently receiving careful consideration.
    Mr. Douglas: Does the Minister agree that his right hon. and learned Friend's deliberations, the results of

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    which are due in March, will have a significant influence on the valuation to be put on BNOC? That being so, how is it possible for the Standing Committee now examining the Oil and Gas (Enterprise) Bill, the House, or anyone else to put a valuation on those assets in the absence of the details of taxation?
    Mr. Gray: The hon. Gentleman will not be asked to put a valuation on them in the immediate future, and he has a relatively short time to wait for the results of my right hon. and learned Friend's deliberations.
    Sir Anthony Fell: Is the Minister aware that any speeding up of gas exploration in the North Sea would provide at least some assistance for the town of Yarmouth, which is currently very hard pressed by unemployment?
    Mr. Gray: I know of my hon. Friend's concern, which he has expressed in the past. We are very hopeful that the measures currently being taken by the Government will speed up North Sea gas development.
    Mr. Rowlands: Besides the fact that the Government seem to be using taxation as a form of depletion policy, will the Minister comment on authoritative press reports at the weekend that BNOC intends to take the lead in cutting oil prices by a further $1.50? What will be the effect of that on revenues and development in the North Sea? Will the Minister ensure that a full statement is made to the House if such a significant and major step is envisaged by BNOC? Have the Government been consulted about this?
    Mr. Gray: The hon. Gentleman will realise that that is a matter entirely for BNOC, which in recent months and years has responded to the market in terms of oil prices and no doubt will continue to do so.
    Mr. Nelson: Does my hon. Friend accept that there is now a real danger that by the end of the decade the level of North Sea oil production will have declined very substantially and that many of the attendant benefits will have been lost? Does he favour a single progressive form of taxation which would be more closely related to investment, such as the form proposed by the Institute of Fiscal Studies, and would result in a far higher level of investment now when it is most needed?
    Mr. Gray: It is the objective of the Department of Energy to encourage maximum exploration in the North Sea. So far that policy has been well rewarded, but I take note of my hon. Friend's comments. I have no doubt that my right hon. and learned Friend the Chancellor will also take these matters into consideration before he makes his statement.

    Alternative Energy Sources
    Mr. Knoxasked the Secretary of State for Energy whether he proposes to have discussions within the European Economic Community Council of Ministers about alternative sources of energy?
    The Under-Secretary of State for Energy (Mr. Mellor): The Council is already discussing what further Community support might be offered for demonstration projects in new sources of energy. I hope that agreement will shortly be achieved.
    Mr. Knox: Does my hon. Friend feel that enough research into alternative sources of energy is being carried
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    out on a Community basis? Is this not a sphere in which it would far better to concentrate research entirely on a Community basis than to have the present mixture of national and Community efforts?
    Mr. Mellor: A considerable sum—almost £120 million—it being invested in the present programme of research and development and demonstration project schemes within the Community. We believe that there is a considerable role to be played by domestic programmes, as the interests of member States with regard to alternative energy sources are not all the same.
    Mr. Hooley: Will the Minister have serious discussions with the CEGB to discover why it is buying American-designed wind generators for electricity generation instead of using the well-advanced technology designed and produced in the United Kingdom? Is this to be a habit of the CEGB in relation to alternative sources?
    Mr. Mellor: Procurement policy is, of course, a matter for the CEGB, but I assure the hon. Gentleman that the Department is playing a very active part in developing British aero-generator capability, and we are sure that that is right.

    Energy Requirements (Environmental Protection)
    Mr. Adleyasked the Secretary of State for Energy what is his policy towards the resolution of conflicts arising out of competing claims between energy resource requirements and environmental protection.
    Mr. Gray: Environmental aspects are taken into account in decisions on new energy developments in the United Kingdom and the issues can be thoroughly examined by public inquiries.
    Mr. Adley: Is my hon. Friend aware that that is not good enough? Will he call for an immediate investigation into the furtive decision by Mobil Oil, aided and abetted by the British Transport Docks Board, to locate in the Solent a 900 ft liquefied petroleum gas vessel? Is he aware that the Solent is to yachting what Lords is to cricket, and that hundreds of thousands of people like to think—[Interruption]—it is no use my hon. Friends laughing—that they can enjoy their peaceable sport unmolested in this way? Will he do something about this so that people do not feel, once again, that the oil companies are trampling on the rights of ordinary individuals who see the sport that they have enjoyed quietly and peacefully for years about to be destroyed without their having a chance to do anything about it?
    Mr. Gray: I well understand my hon. Friend's concern, but the regulatory aspects of these proposals do not fall within the jurisdiction of the Department of Energy. With regard to the energy aspects, however, the proposal is concerned not only with United Kingdom energy production, but with the supply of liquefied petroleum gas to the Continent.
    Mr. Adley: That is even worse.
    Mr. Stoddart: Does the Minister agree that one of the greatest areas of conflict is likely to arise over the siting of nuclear power stations, particularly PWRs? Bearing that in mind, has he studied the report prepared under the chairmanship of Sir Kelvin Spencer, which seems to show

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    that coal-generated electricity is far cheaper than that produced by nuclear power? May we have his comments on that report?
    Mr. Gray: I do not think that it would be appropriate to comment on that at this stage. It will undoubtedly arise at the public inquiry in due course.
    Mr. Patrick McNair-Wilson: Will my hon. Friend ensure that in future when production licences are awarded for areas in the New Forest proper consideration will be given to the constraints placed upon the use of the land by the New Forest Act 1877? Is he aware that the public planning inquiry into the Shell UK Ltd. application to drill a bore hole in the Denny Inclosure cannot go ahead because under section 7 of the 1877 Act inclosures can be used only for the production of timber, free from all rights and privileges.
    Mr. Gray: The precise effects of the 1877 Act are complicated and must inevitably be a matter for legal interpretation. I cannot emphasise too strongly, however, that a large framework of protection must be satisfied before drilling. The licences awarded by the Department of Energy in no way exempt the licensee from compliance with all relevant legislation, the constraints of local planning permission and adherence to technical standards.
    Mr. Palmer: In the event of any clash between environmental considerations and energy needs, what help is the Department of Energy giving to the CEGB with regard to a badly needed new large power station in the far West of England? Does he agree that if such a station had already been constructed the electricity supply difficulties that occurred in the recent bad weather would not have arisen?
    Mr. Gray: The hon. Gentleman will appreciate that that is a matter for the CEGB. The board announced on 2 February that it was clear from work carried out so far that, due to unsatisfactory geological conditions, the two Cornish sites near Portreath could not be considered for future stations. The board therefore has no further interest in those sites. Assessment of the other three sites is continuing, and I understand that no decision as to their suitability for development has yet been reached.
    Mr. Adley: On a point of order, Mr. Speaker. In view of the unsatisfactory position outlined by the answer, I give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

    Electricity Supplies
    Sir William van Straubenzeeasked the Secretary of State for Energy whether he has yet received a report from the area electricity boards concerning the breakdown in electricity distribution which occurred during the recent inclement weather.
    Mr. Lawson: I have now received the report from the chairman of the Electricity Council which I called for on 21 December. I am placing a copy in the Library of the House. The report makes a number of positive suggestions for further study and improvements in procedures for dealing with future emergencies. I shall be encouraging the industry to press ahead with these studies and improvements. Meanwhile, I am sure that I have the support of the whole House in thanking those who worked so hard in appalling weather conditions to restore supplies.
    Sir William van Straubenzee: I thank my right hon. Friend for that very helpful reply. We shall obviously need to study the report, but can he say, in the interim, whether the effects of the first spell of bad weather, before Christmas, and the disastrous effects on electricity supplies suggest a lack of preparedness, even though. of course, the severe weather came very much earlier this year than would normally be expected?
    Mr. Lawson: I am aware of the considerable hardship caused in many areas, but I am sure that when my hon. Friend reads the report he will see that there is no evidence of lack of preparedness. However, some areas where improvements could be made have been identified and the exercise has, therefore, been worth-while.
    Mr. Rowlands: We, the Opposition, fully associate ourselves with the Secretary of State's congratulations to those who worked so hard in appalling difficulties,, not only before Christmas, but, as those of us in South Wales saw, after Christmas. Does the report show any need for co-ordination of response between various areas? There are occasions when some areas get overwhelmed by the problem. Is the necessary co-ordination fully safeguarded in the present arrangements?
    Mr. Lawson: There is co-ordination already, but the hon. Gentleman has made a good point. One of the report's recommendations is that there should be closer cooperation between the various boards, co-ordinated by the Electricity Council.
    Mr. Speller: I join in the congratulations due to the various boards and, in my area, to the South-West electricity board which did much good work. While my right hon. Friend the Secretary of State for Wales was flying over the Principality, the weather was so unkind that it was not possible to fly a helicopter over North Devon. I fully support what my right hon. Friend has said so far, but cannot the Services be involved more quickly? Were communications good enough between the boards and their consumers?
    Mr. Lawson: Those matters are dealt with in the report, which deals with the subject in considerable detail. I hope that when my hon. Friend has read the report he will be satisfied that the matters that should have been considered have been considered. If there are still matters on which he would like to write to me he is more than welcome to do so.

    Coal Mines (Leasing)
    Mr. Marlowasked the Secretary of State for Energy whether he will bring forward proposals to lease individual coal mines to their work forces.
    The Under-Secretary of State for Energy (Mr. John Moore): Should proposals be received from the work forces to lease individual coal mines to them the Government will of course, consider them.
    Mr. Marlow: If at some future date we were able to establish co-operatives run by the miners, would not one of the many benefits be their ability to raise additional capital on the private market rather than relying entirely on the taxpayer, thereby allowing an expansion in activity, investment and jobs?
    Mr. Moore: My hon. Friend has made an excellent point. Those of us who are concerned with the coal industry would welcome any idea that would attract capital for it, from whatever source.
    Mr. Edwin Wainwright: Does the Under-Secretary realise that the NUM would greatly object to mines of whatever size coming under private enterprise?
    Mr. Marlow: Why?
    Mr. Wainwright: Is the Under-Secretary aware that, as one who worked in the coal industry under private enterprise, I will fight like the devil to make sure that the mines are never returned to the private sector? Safety was not the priority that it should have been and there were more accidents and fatalities and very bad working conditions when the mines were privately owned.
    Mr. Moore: I respect the hon. Gentleman's long experience in the industry and his obvious emotional intensity, but I hope that he will respect the flexible nature of our response. If we can find mechanisms that attract the support of the work force and the public—
    Mr. William Hamilton: Freddie Laker.
    Mr. Moore: Those who deny the opportunities given by the private sector should address their remarks to consumers who do not take the same view as Labour Members of the demise of Sir Freddie Laker.

    Domestic Energy Supplies
    Mr. Canavanasked the Secretary of State for Energy whether he will meet the chairmen of the fuel boards to discuss disconnection policy and related matters, in view of the recent severe weather.
    Mr. Meacherasked the Secretary of State for Energy how many disconnections have been made by fuel boards in the last three months.
    Mr. Mellor: I meet the chairmen from time to time and I recently discussed these issues with the chairman of the Electricity Council. I will ask the chairmen of the Electricity Council and British Gas Corporation to write to the hon. Member for Oldham, West (Mr. Meacher) about the figures requested.
    Mr. Canavan: Since the House last debated the matter two weeks ago there have been, even according to the Government's conservative estimates, probably at least 3,000 more families who have had gas or electricity supplies disconnected. Is it not about time that legislation was introduced to stop or limit the statutory powers of boards to disconnect? The code of practice is hopelessly inadequate to deal with the present emergency, in which thousands of low income families are living in fear of the gas or electricity bill arriving and, after it has arrived, living in fear of the man coming to disconnect the supply.
    Mr. Mellor: I very much doubt whether the 3,000 figure is correct for the limited period to which the hon. Gentleman referred. I made it clear in the recent debate—I do not think that we had the pleasure of the hon. Gentleman's company—that disconnections will take place only after fair and reasonable procedures have been followed. It would not be in the interests of any consumer if the power to disconnect were removed altogether.
    Mr. Meacher: Is the hon. Gentleman aware that the independent review sponsored by the fuel industries of the
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    code of practice designed to limit disconnections in cases of hardship found that most of those disconnected could not afford to pay their fuel bills, that three out of five were living on State benefits and that nine out of 10 were estimated to be in hardship? Since it is known that the death rate from cold and hypothermia rises markedly when the temperature falls below a certain level, will the right hon. Gentleman give instructions that disconnections should be suspended during the winter for all those living on State benefits or in equal poverty?
    Mr. Mellor: The question of changes in the code is being considered by the industry and the consumer councils. I expect a report shortly. The hon. Gentleman knows that the question of defining hardship is a difficult one, but he also knows that the Government are making available more funds than ever before—certainly more than when he was a Minister at the DHSS, when disconnections were at the highest level during the decade and much higher than they are today.

    Electricity and Gas Prices
    Mr. Winnick askedthe Secretary of State for Energy what have been the increases in gas and electricity prices since May 1979; and what increases he expects during 1982 and 1983.
    Mr. Lawson: Approximately 70 per cent. and 60 per cent. respectively. I would expect price rises over the next two years to be considerably less.
    Several Hon. Members rose—
    Mr. Speaker: Order. I am sorry that I did not call the hon. Member for Midlothian (Mr. Eadie) on the previous question. It is too late now, because we have had the answer to question No. 9. I shall try to remember next time.
    Mr. Winnick: Is the Secretary of State aware of the considerable hardship caused to many families on average and less than average incomes, who receive no assistance with the payment of their fuel bills, by the substantial increases in gas and electricity prices? In the light of all the increases that have occurred recently, is there not a case for a 12-months freeze on gas and electricity prices?
    Mr. Lawson: As my hon. Friend the Under-Secretary said in answer to the previous question, the Government are providing substantial help this winter for those in greatest need. The sum involved is £250 million, which is more in real terms, let alone money terms, than ever before, including the Labour Government's period of office. That help benefits about 2¼million people.
    Mr. Rost: What has happened to the Government's promised legislation to allow fair competition for the private generation of electricity? Would this not be the most effective way to hold down electricity prices?
    Mr. Lawson: I would not like to promise that private generation of electricity is the best way of holding down prices. Nevertheless, there are strong arguments for allowing private generation of electricity. As my hon. Friend, who is an expert in these matters, knows, the major element in the cost of electricity is the fuel burden, which at present means almost exclusively coal. The price of coal is the key to the price of electricity.
    Mr. Rowlands: Will the right hon. Gentleman confirm that the formula for gas price increases of 10 per cent. over

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    the real rate of inflation is the Government's formula and not that of British Gas? Does he appreciate that it is to the Government that complaints should be sent? Will he confirm that this formula is likely to mean gas price increases of 20 per cent. plus in 1982?
    Mr. Lawson: When the previous Government, of which the hon. Gentleman was a member, were in office, gas prices were held down artificially to a point where, when the Conservative Government came to office, the British Gas Corporation was making a loss on business to the domestic consumer. That is not something that the Gas Corporation—any more than the Government—wishes to see. There has been a partial and gradual deregulation over a three-year period. Gas prices are still much lower in real terms than they were some time ago.
    Dr. J. Dickson Mabon: Is the right hon. Gentleman aware that of the 60 per cent. mentioned, 10 per cent. is due to taxation? Is he suggesting that the British Gas Corporation wanted that increase?
    Mr. Lawson: The price has nothing to do with taxation.
    Mr. Archie Hamilton: Will my right hon. Friend give figures of the increase in gas prices among our Continental competitors?
    Mr. Lawson: My hon. Friend raises a good point. Gas prices on the Continent are rising fast. Prices for domestic consumers of gas in West Germany and France are between 60 and 90 per cent. higher than in this country.
    Mr. Hal Millerasked the Secretary of State for Energy what progress is being made towards the introduction of a discount tariff for bulk industrial users of electricity.
    Mr. Hannamasked the Secretary of State for Energy whether he plans to take steps to reduce the cost of electricity to British industry.
    Mr. Lawson: I have recently received from the Electricity Council the review of the bulk supply tariff. The review contains proposals for minor changes in the structure of tariffs that would benefit heavy industrial users. It also proposes new load management arrangements that could provide further benefits. I am now examining this with the industry as a matter of urgency.
    Mr. Miller: In the light of the delay in dealing with the bulk supply tariff, a review of which was first demanded in June 1980, the lack of determined action on the two NEDC reports on energy prices for industry and the anxiety and scepticism among industrial bulk users, will my right hon. Friend confirm that the Government intend to deal with the cosy working practices and the contemptuous attitude towards their customers of these nationalised monopolies? Will the Government, at the end of the day, enable our industries to compete on an equitable basis with their foreign competitors?
    Mr. Lawson: The Government are fully aware of the difficulties faced by certain industries. I had hoped that my hon. Friend would perhaps give a slightly warmer welcome to the statement that I have made. On the matter of cosiness, I have asked the Electricity Council to make copies of the review available on request, and my Department is ready to consider comments on it from industrial consumers and others.
    Mr. Merlyn Rees: Is the Minister aware that there is concern throughout industry—I attended a meeting with trade unions only this morning—about the disparities in some respects between France, Germany and ourselves, to which reference is, I believe, made in the report? Does he agree that given the effect on industry and unemployment, it is important to act quickly? There have been plenty of reports. We need action.
    Mr. Lawson: I appreciate the urgency. I am now discussing the proposals and suggestions in the bulk supply tariff review with the electricity supply industry as a matter of urgency.
    Mr. Hannam: I welcome my right hon. Friend's announcement. Is he aware that it is vital to carry out a review of the tariff structure at the earliest opportunity if companies are not to switch factories across to the Continent where electricity costs are sometimes 20 or 30 percent. below ours? Is it not possible to give category "C" users some further assistance by widening the load management terms to make it easier for companies to comply with them?
    Mr. Lawson: My hon. Friend has raised a good point. If the electricity supply industry is seeking some means to alleviate the burden on this category of consumers, the load management arrangements, introduced for the first time last year, represent a basis upon which it might be possible to build.
    Mr. Hardy: The Secretary of State has suggested that the changes may be only minor. Is he aware that far more than minor changes will be required if the special steels industry is to retain competitiveness with France, Germany, Italy and other countries where electricity is much cheaper and, in certain circumstances, substantially subsidised, to the great disadvantage of British industry?
    Mr. Lawson: My reference to minor changes was directed towards the bulk supply tariff as such. The proposals on the load management arrangements are more than minor. I cannot accept that whenever any other country—Italy or anywhere else—introduces a subsidy, this country must follow that example. We are seeking through the Community, at meetings of the Energy Council and elsewhere, to prevent these subsidies, which distort user resources and are particularly ill-advised when we are trying to conserve energy. We should try to get these subsidies removed.
    Mr. Michael Brown: With reference to the question asked by the hon. Member for Rother Valley (Mr. Hardy), does my right hon. Friend accept that there is a feeling in the bulk steel making industry especially that the steel industry is being asked to accept burdens created by inefficiencies in the electricity generating industry and that much of the unemployment within the BSC has been caused by high bulk electricity costs? Does he agree that there is no incentive to the electricity industry to take action to rationalise the industry, such as that adopted by the British Steel Corporation?
    Mr. Lawson: The British Steel Corporation, so far as I am aware, is not primarily dependent on electricity for its operations.
    Mr. Spriggs: Is the right hon. Gentleman aware that on the last occasion he replied to a question on the bulk price of gas to industry he said that the glass industry had

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    not made out a case about the cost at a conference held 12 months ago? Is he further aware that that point was not on the agenda of the conference to which he referred? Will he examine the matter again?
    Mr. Lawson: I shall certainly look at any such answer that I may have made. I do not recall it. The most recent NEDC task force report indicated that the price of interruptible gas, representing two-thirds of supplies of gas to industry, is on average below that of most of our Continental competitors.

    "Plan for Coal"
    Mr. Skeetasked the Secretary of State for Energy whether, in reviewing the capital investment programme of the National Coal Board, he will reassess the production targets set in the "Plan for Coal" to accord with the conditions of the market.
    Mr. John Moore: The National Coal Board should aim to provide what the market wants efficiently and at fully competitive prices. It would not be sensible to base investment simply on a production target, whatever its level.
    Mr. Skeet: Does my hon. Friend agree that the production targets set for 1985 and 1990 are not related to the market? Is he aware that the taxpayer is being forced to carry the entire industry? When will the National Coal Board reach a break-even point?
    Mr. Moore: The question specifically addressed to me related to when we shall break even. For the future of the coal industry it is in everybody's interest that we reach a break-even point as soon possible. I should have thought that the House had sufficient time last Tuesday, in a long and excellent debate on the coal industry, to understand the Government's policy on this matter.
    Mr. Eadie: Based on that answer, does the Minister agree that any contracting of "Plan for Coal" would be disastrous for our long-term energy needs? Does he further agree that, if it were even contemplated, the miners would regard it as a gross betrayal by the Government?
    Mr. Moore: I think that the miners, as well as this House, would like to see an industry that is efficient, competitive and able to provide a bigger market for all its users. That is the aim of all in the industry. The sooner we break away from a policy of subsidy, the better the miners and the whole country will be pleased.
    Mr. Forman: If the Government are keen to boost new markets for the coal industry, may I ask what progress has been made with the imaginative scheme, introduced by the Chancellor of the Exchequer some time ago, to boost coal use by British industry?
    Mr. Moore: As I said last Tuesday in the debate on the coal industry, the application level so far has been modest. As I recall, £17 million worth of applications had been introduced up to last Tuesday. I listened to the views of the House on that matter and had already drawn them to the attention of my right hon. Friend the Secretary of State for Industry, who is responsible for this scheme.
    Dr. Edmund Marshall: Should not the National Coal Board concentrate more of its available capital investment on new developments, such as the one at Thorne in my
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    constituency where the abundance of coal reserves would maximise the return in terms of coal production and job provision?
    Mr. Moore: I am conscious of the hon. Gentleman's interest. He has recently visited me to press the points that he mentioned. I remind the House that individual investment analysis and development are for the coal industry to decide. However, the reality is that, although the industry has a very large investment—in excess of £800 million this year—it is limited somewhat by its inability to close uneconomic capacity at the rate planned in "Plan for Coal" at the beginning of 1974.

    West Sussex (Oil and Gas)
    Mr. Nelsonasked the Secretary of State for Energy what assessment he has made of the possibility of oil and gas exploitation in West Sussex, in the light of geological and seismic surveys and exploratory drilling by licensed operators.
    Mr. Gray: Licensees have shown a great deal of interest in the West Sussex area, but until drilling has taken place it is impossible to predict whether oil and gas are present and in commercial quantities.
    Mr. Nelson: Will my hon. Friend confirm that not only in my constituency but throughout the whole of the county of West Sussex extensive seismic and drilling explorations are taking place? Can he reassure my constituents that the conditions attaching to onshore licences and to any planning applications under appeal will contain sufficient clauses against despoliation of the environment—in particular, excessive smells, noise, spillage and flaring?
    Mr. Gray: I appreciate the concern of my hon. Friend and of other hon. Members who have the possibility of drilling taking place within their constituencies. I have made it clear on several occasions that the award of a licence does not preclude the licensee from being subject to the constraints of other statutory obligations. Indeed, planning authorities have the right to attach specific requirements to whatever permission they grant to developers.
    Mr. Renton: Could my hon. Friend assure people in Sussex, such as myself, who are not on gas supplies, that if gas is found in Sussex there might be some hope of having quicker access to gas?
    Mr. Gray: I share my hon. Friend's concern about this matter. I represent a constituency the shores of which are bounded by gas discoveries, but only a small part of the constituency is served by gas. Like my hon. Friend, I hope that the matter will be put right one day.

    Buildings (Insulation)
    Mr. Michaelal Morrisasked the Secretary of State for Energy if he has any plans to revise the incentives available to the industrial and domestic sector for the insulation of buildings.
    Mr. Mellor: The homes insulation scheme is kept under review and changes are announced from time to time by my right hon. Friend the Secretary of State for the Environment. Any revision of the tax allowances presently available for investment in industrial insulation projects would be a matter for my right hon. and learned Friend the Chancellor of the Exchequer.
    Mr. Morris: Does my hon. Friend accept that the gains from a further drive on industrial insulation would far outweigh those on the domestic front? Should not he and his Department be pressing the Chancellor of the Exchequer for some additional incentives in that area?
    Mr. Mellor: I think that it sells short the case for insulation to suggest that only by Government incentives will it come about. Insulation in industry, as domestically, is a highly cost-effective way of making business competitive. As I go round the country I see ample evidence that people are getting the message.
    Mr. John Evans: Is the Minister aware that many people, particularly old-age pensioners, are shocked to find that, because they installed 1 in of insulation in their lofts 20 years ago, they are disqualified from receiving local authority grants? Does the hon. Gentleman recognise that it causes considerable hardship and will he relax the regulations so that such people may receive the benefit?
    Mr. Mellor: The first task facing the Government is to ensure that the several million homes that are not yet insulated get some measure of insulation. That is why the scheme that my right hon. Friend the Secretary of State for the Environment is implementing is cast in the way that it is. The hon. Gentleman has raised a point that many others have raised. I shall be more than happy to look at it and to make representations if that seems the right thing to do.

    Domestic Energy Supplies
    Mr. Chapmanasked the Secretary of State for Energy what is the amount and proportion of gas and electricity bills represented by standing charges.
    Mr. Gray: The standing charge on the normal tariff for quarterly-billed consumers is £7 to £8 per quarter for gas and £5.10 to £7 per quarter for electricity. On average, the standing charges account for 12 per cent. of electricity bills and 17 per cent. of gas bills.
    As my hon. Friend the Under-Secretary of State for Health and Social Security said in the debate two weeks ago, we are taking another look at the effect of standing charges on low-income consumers.
    Mr. Chapman: I thank my hon. Friend for that reply. I appreciate that the standing charge is fixed to cover the average cost per household of providing energy, including the repair of lines, and so on, but does my hon. Friend agree that it is unfair when people pay more for the standing charge than they pay for the energy consumed? That hits low-income consumers particularly hard. Will he look sympathetically at the matter?
    Mr. Gray: The boards look sympathetically at cases involving poor families, but I remind my hon. Friend that poor families are not necessarily those who consume least. In that regard, the amount of the standing charge varies substantially according to the families.
    Several Hon. Members rose—
    Mr. Speaker: Order. I shall call one more question and allow one minute extra at 3.30 pm.
    Mr. Rowlands: Will the Minister of State answer the question that the Secretary of State ducked, when I put it to him that this year domestic gas consumers will face increasing gas prices of at least 20 per cent.?
    Mr. Gray: I cannot accept that figure.

  HOUSE OF COMMONS

    Scottish Grand Committee
    Mr. Canavanasked the Lord President of the Council whether definite arrangements have now been made for the Scottish Grand Committee to meet in Scotland.
    The Lord President of the Council and Leader of the House of Commons (Mr. Francis Pym): Yes Sir. The House approved motions on 28 January providing that the Scottish Grand Committee should meet in Edinburgh on 15 February.
    Mr. Canavan: How many seats have been allocated to members of the public so that they may witness this historic occasion? Will they be allocated on a first come, first served, basis?
    Is it absolutely necessary to spend hundreds of pounds transporting House of Commons staff all the way from London to Edinburgh in this way, including a House of Commons Doorkeeper in full dress regalia, when there are 350,000 unemployed people in Scotland, any one of whom would grab at the chance to act as the chucker-out of some of the Tory Members who are so recalcitrant that they might misbehave in Edinburgh?
    Mr. Pym: I have left the detailed arrangements in the capable hands of my right hon. Friend the Secretary of State for Scotland, who has had discussions and made the arrangements with the right hon. Member for Glasgow, Craigton (Mr. Millan). I understand that they are both satisfied that, for the first experiment of this kind, the arrangements that have been made are appropriate arid adequate.

  LORD PRESIDENT OF THE COUNCIL

    Government Policies
    Mr. Rentonasked the Lord President of the Council if he will take steps to ensure that better publicity is given to the progress of the Government's policies.
    Mr. William Hamiltonasked the Lord President of the Council what recent steps have been taken to improve the public presentation of Her Majesty's Government's policies.
    Mr. Murphyasked the Lord President of the Council if he will take steps to ensure that more effective publicity is given to the progress of the Government's policies.
    Mr. Pym: There is, I hope, a continuous process of improvement, in which all Government Ministers are engaged.
    Mr. Renton: Is not one of my right hon. Friend's problems that the media are constantly examining the entrails in search of a misplaced organ? Does he agree that there is a clear case for a stronger, central effort to put over the successes of the Government's policy—for example, the gains in productivity, the increase in export orders and the new training initiatives?
    Mr. Pym: All these facts are presented to the public. They are at times criticised and certainly commented upon. I do not think that I can remember a time when the

    733
    policy and programme of any Government received so much discussion and comment. That is a healthy state of affairs. In view of the depth of the recession and the problems facing this and every other country, I think that it is entirely appropriate that all the facts and the difficulties are referred to and discussed by Ministers. It is necessary to have discussion of both. There is at present a healthy discussion about how we can best handle the difficulties that we are facing.
    Mr. Hamilton: Is the right hon. Gentleman satisfied with the co-ordination between himself and the Prime Minister in these matters? Will he give an assurance that, despite her attempts to gag him, he will tell the truth about the terrible mess that we are in and damn the consequences?
    Mr. Pym: I do not know whether the hon. Gentleman was in his place last Tuesday when my right hon. Friend made a comment or two about my speech. I am indeed satisfied with the co-ordination.
    Mr. Murphy: Does my right hon. Friend agree that it is important to ensure that all major ministerial speeches are co-ordinated for their content?
    Mr. Pym: But would it not be boring if they were all the same?
    Mr. Jay: Does the Minister believe that the publicity or the policies are most to blame?
    Mr. Pym: In my view, the blame rests with the problems that face this country and all countries in the world's worst recession for 50 years. Clearly, there is much interest in how we are tackling the problems and because there are a variety of views, as it is right there should be, the presentation can be difficult. Nevertheless, we do the best that we can, and the country is well aware of how we are tackling the problems. It cannot be said that there is any doubt about our presentation.
    Mr. Grimond: Is the right hon. Gentleman aware that the famous speech that he made a week ago has been widely acclaimed as a statement of Government policy and of what the future is likely to hold for us? Can he assure us that his colleagues will take up his theme and explain what it will mean during the next two years?
    Mr. Pym: Yes, but I was not adumbrating a new theme. On a number of occasions I have made speeches giving what I considered was the correct assessment. Certainly that speech received more comment than it perhaps deserved, but there is no reason for me to worry about that.
    Mr. Durant: When my right hon. Friend talks to his ministerial colleagues, will he seek to persuade them to start discussing the long-term unemployment that I believe the country will face for a considerable number of years?
    Mr. Pym: That, too, is an important matter, which I mentioned in that speech and in previous speeches. Much thought is being given to the matter.
    Mr. John Silkin: Will the Lord President give as much publicity as possible to the fact that, contrary to the statement that the recession ended 12 months ago, the purchasing power of the average citizen during the past 12 months dropped by 3.6 per cent. and is still declining?
    Mr. Pym: It is important that there should be an accurate and realistic assessment of the situation, which
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    should take into account everything that is going right, all the improvements that are taking place—of which there are many—a comprehension of the problems that we are facing and how we are tackling them. There should be a balanced assessment. That is what I and all my colleagues seek to make.

  PALACE OF WESTMINSTER
  Mr. Greville Jannerasked the Lord President of the Council when the Select Committee on the House of Commons (Services) last made recommendations to Mr. Speaker concerning the cleaning of the stonework of the Palace of Westminster.
  Mr. Pym: On 13 May 1981. The recommendation—which Mr. Speaker approved—was that, in order to avoid unnecessary delays to the programme of restoration, work should be allowed to proceed while Parliament was sitting, and in more than one area at a time.
  Mr. Janner: Can the Lord President now estimate when the work of restoration of the Palace of Westminster is likely to be completed, how much it is expected to cost, and whether it can now be completed without any further danger from falling masonry?
  Mr. Pym: Every possible precaution is taken to protect the public, as well as Members of the House, from any danger of that kind. I cannot say when the work will be completed, but the next stage of the programme—the 1982–83 programme—will relate to the western elevation of the Palace. Good progress has been made with the first stage. I am sure that hon. Members, as well as the public, appreciate what is being done. It will, of course, be a long programme. I should not like to say when it will end.
  Mr. Chapman: Is my right hon. Friend aware that, arguably, this building is the most beautifully designed building in the world—if my few designs are excluded? Does he accept that it is three times more beautiful when it is clean, as witnessed by the facades that have now been cleaned, as seen from New Palace Yard? Will he press ahead with the programme, bearing in mind that it is not just a matter of cost, but that it will be a tremendous national asset at which people will marvel?
  Mr. Pym: I agree with my hon. Friend, who is professional in these matters, while I am a mere layman. He is absolutely right. We are undertaking a tremendous task in cleaning the Palace, but it will be an even greater asset when it is completed. My hon. Friend's remark about it being the most beautiful building in the world is a controversial opinion.
  Mr. William Hamilton: Is the right hon. Gentleman aware that, however asthetically valuable the building may be, it is probably one of the worst workshops in the world?
  Mr. Pym: That depends more on the workmen in it than on the building itself.

  PAYMASTER GENERAL

    Trade Unions (Meetings)
    Mr. Christopher Priceasked the Paymaster General how often he has met representatives of the recognised trade unions relevant to his responsibilities since assuming office.
    The Paymaster General (Mr. Cecil Parkinson): Since assuming office I have had one meeting, at Crawley, with representatives of all the trade unions relevant to my responsibilities as Paymaster General.
    Mr. Price: Reverting to the question and the discharge of all the multifarious responsibilities, both towards his office and towards his party, that the right hon. Gentleman has when sitting as a member of the Cabinet, will he congratulate Mr. Clive Jenkins on using Tory legislation to try to get some information about takeovers in some of the firms in which his members are affected? Will he repudiate all the scare stories in the press that the Government are amazed at the legislation that they have passed—allowing trade unions access to this information—and that they will ensure that the trade unions get no further information of any kind about this matter? Will he ensure that all trade unions get further information of this kind?
    Mr. Parkinson: I am responsible for the activities of 982 people at Crawley. As far as I know, few of them, if any, are members of Mr. Clive Jenkins' union. One of the bonuses of my job is that I have never had to meet him or take much notice of what he says.

    Privatisation
    Mr. Murphyasked the Paymaster General whether he has any plans for privatisation in his Department.
    Mr. Parkinson: The cost and effectiveness of my Department are subject to regular review and where it is found that a satisfactory service could be provided at lower cost by the private sector, this course is examined. For example, a recent review of my Department's night custody arrangements resulted in the transfer of these functions to a specialist security firm.
    Mr. Murphy: I thank my right hon. Friend for that most encouraging reply. Will he undertake to commend to his ministerial colleagues the considerable advantages of privatisation?
    Mr. Parkinson: It is not necessary to recommend to my colleagues the advantages of using the private sector. Whenever the opportunities arise, I know that that is what many of my colleagues do.
    Mr. Ogden: Did the right hon. Gentleman say that during his period in office he has met one group of representatives of trade unions on one occasion? Will he place in the Library the record of what he has been doing with the rest of his time?
    Mr. Parkinson: I should be happy to do that, but the question asked how often I had met representatives of the trade unions whose members work in the offices at Crawley. I have met them on one occasion. Of course the management of the Paymaster General's office has regular meetings under the umbrella of the Whitley Council with the unions that work in the Paymaster General's office.

    Ministerial Consultations
    Mr. Adleyasked the Paymaster General with which bodies and individuals outside Government it is his practice to consult in the discharge of his ministerial duties.
    Mr. Parkinson: It has not so far been necessary to consult any outside bodies in the discharge of my ministerial duties. I would, of course, be happy to meet any interested bodies if they wish to raise with me specific issues relevant to my duties.
    Mr. Adley: Am I right in thinking that my right hon. Friend acts in the role of banker to the Government? Will he consider taking a lesson from the average bank manager, who has a duty to tell his client—as my right hon. Friend might find it his duty to tell the Government and the people—that if one earns £1 and spends 95p one will be happier than if one earns 95p and spends £1?
    Mr. Parkinson: My hon. Friend underlines a point that is brought home forcefully to me, because the public expenditure on which the House votes translates itself in my Department to 35 million banking transactions and cheques. That shows that the public expenditure about which we speak in abstract terms involves a huge volume of transaction and that there is a limit to what the country can afford.

Orders of the Day

  Employment Bill
  Order for Second Reading read
  Mr. Speaker: Before I call the Minister I wish to make a brief ruling. The three Instructions on the Order Paper are out of order, but their general substance can be raised during the debate.
  3.31 pm
  The Secretary of State for Employment (Mr. Norman Tebbit): I beg to move, That the Bill be now read a Second time.
  "Some people say that you cannot solve the problems of industrial relations simply and solely by the operation of the law. Every single member of the Government agrees with that …there is not a single law on the statute book that would work if there was not a general will to work it …
  The trade union movement must now decide consciously whether it is right that the institutions which govern industrial relations are to remain the one absolutely sacrosanct set of institutions …No Government could possibly accept that limitation, least of all in a period of history when industrial production and industrial relations lie at the heart of the whole process of change.
  I do not believe for one moment that the trade union movement as a whole and its membership takes that view. Trade unionists are people as well as organised factory or office workers. Their wives are consumers and citizens…To legislate on this is really not very different from asking a Government to legislate about working conditions, equal pay, a minimum wage, industrial training, or any of the many issues on which the trade union movement have been urging the Government to legislate in the industrial field …
  It is the reality of Britain's position in the world which confronts the Government. It is a much harsher reality. It is about the real world in which we have to earn a living. It is about the way in which we can use new technology to lift our living standards.
  It is about the protection of the human being in an age of undreamed of power which can so easily hurt people and in certain circumstances crush and destroy them."
  I hope that the House will forgive me for sticking so closely to my text at this stage of a speech, but I wanted to be careful about what I said. Everything that I have said since I moved the Second Reading is a direct quotation from a speech made by the right hon. Member for Bristol, South-East (Mr. Benn) at Red Lion Square Holborn, on 19 April 1969. I hope that we will hear no more of the line that there is no role for the law in industrial relations.
  Having established the common ground, on which I still stand, but from which the right hon. Gentleman and his friends have fled, I wish to come to the detail of the Bill—[Interruption]. The hon. Member for Feltham and Heston (Mr. Kerr) may not think that the right hon. Member for Bristol, South-East treated these matters seriously. I am doing the House the compliment of doing so.
  Under the Labour Administration an unprecedented volume of employment legislation reached the statute book. They also re-enacted most of the earlier statute law, going back to 1871 and 1906. I hope that without being too controversial I can show some of the lessons that we should have learnt from that experience. In the first place, it followed the logic of the right hon. Gentleman and showed the impossibility of excluding the operation of the law from industrial relations—despite what the Labour Party and its owners say now, as they parrot their cry that
  "the law has no place in industrial relations".
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  Of course, the plain fact is that the laws which give trades unions rights are laws which take away the historic common law rights of the people. There is a case for so doing—within limits. But we have seen the folly of divorcing rights from obligations and power from responsibility. Unlimited immunity for industrial action leads not to peace and stability, but to conflict and stalemate, as we saw in the winter of 1978–79.
  That experience demonstrated the injustice that is bound to result if the rights of the individual are totally subordinated to those of the group. The closed shop legislation of 1974 and 1976 led directly to the arraignment of the United Kingdom before the European Court of Human Rights. The consequences of the court's judgment in that case are matters to which I shall return later.
  Mr. A. J. Beith: Why did the Minister and his colleagues send the Solicitor-General to Strasbourg to defend the action of British Railways?
  Mr. Tebbit: The Solicitor-General was sent to defend the Government's view that the 1980 Act had put matters right—[Interruption] There is still a case for improving compensation for those affected. The Solicitor-General was not discussing the level of compensation under the 1980 Act. He was defending the Act itself. He was not defending the Labour. Government's Acts of 1974 and 1976. That experience demonstrated that injustice is bound to result.
  The Bill before us today, like the 1980 Act introduced by my right hon. Friend the Secretary of State for Northern Ireland, is a modest measure, in both size and purpose. We have not sought to transform the whole framework of industrial relations law. Nor have we fallen into the error of assuming that good industrial relations can simply be legislated into existence. We have not attempted root and branch reform on the lines of "In Place of Strife", nor the 1971, 1974 and 1976 Acts.
  We have tried to provide specific remedies for real abuses, to provide effective protection where it has been shown to be necessary, and to redress the imbalance of bargaining power to which the legislation of the last Government had contributed so significantly.
  Mr. Clinton Davis: How does the Minister equate what he is saying now with the words of Lord Denning in the Nawala case? He said:
  "The only weapon … at the disppsal of the International Transport Workers Federation which they can use so as to ensure fair play for seamen and the like is the weapon of 'blacking'. If it were taken away in this case it would mean that it would be taken away virtually in all the cases in which they operate for the benefit of seafaring men."
  Mr. Tebbit: The law of Great Britain is concerned with British citizens and actions on British property. It does not purport or set out to govern the conditions of work of people who express themselves perfectly happy with their conditions in countries abroad where those contracts are made. If they are not happy, it is for them to take strike action against their employers. That is not in question in the Bill. The point—the hon. Gentleman will forgive me if I return to it later—is the sort of dispute where outsiders come in when there is no dispute between the employer and his employees.
  We have not acted hastily. The Bill is the product of 12 months' consultation, first on the Green Paper of

  739
  January last year and then on the proposals that I made on 23 November. Those consultations show that the proposals in the Bill command wide support in industry. Opinion polls have repeatedly shown that they have the approval of the majority of the electorate and the majority of trade union members.
  For many of us the cause of liberty requires more commitment than to hold hands and sing the "Red Flag" once a year. For those concerned with freedom, the closed shop—trade union conscription—is a matter of deep concern. Therefore, more than half of the clauses in the Bill are concerned directly or indirectly with that subject. Indeed, that is why I toyed with the idea of calling it the "workers' rights Bill", but of course it goes beyond the rights of workers to the rights of the whole community.
  Mr. Frank Dobson: That bit is from General Jaruzelski's speech.
  Mr. Tebbit: I believe that the hon. Gentleman's party has more connections with East Europe than mine has. We have received the judgment of the European Court of Human Rights in the British Rail case.
  Mr. Dobson: Does the right hon. Gentleman and his right hon. Friend the Prime Minister support the call of the Solidarity movement in Poland for workers' control of industry and no limitations on the right to strike?
  Mr. Tebbit: We support the right of people throughout the world to free elections. That is denied in Poland. The arrangements made after free elections are matters for the peoples of the countries concerned. I hope that the hon. Gentleman will accept that the arrangements that we make in Britain after a free election are for Parliament and for Parliament only—not for outsiders to try to use muscle to break what Parliament has willed.
  Mr. Greville Jannner rose—
  Mr. Tebbit: Since we debated the 1980 Act proposed by my right hon. Friend we have received the judgment of the European Court in the British Rail case. The court found the closed shop legislation, which was supported by the Labour Party and by Social Democratic Party Members who were then in the Labour Party, to be in clear breach of the European Convention on Human Rights.
  The House would like to know this afternoon, as we have not yet heard, whether the right hon. Member for Chesterfield (Mr. Varley) supports that judgment or still thinks that it is wrong. Indeed, we should not mind hearing from the right hon. Member for Crosby (Mrs. Williams) on that, and we should be interested to read a letter in The Times, perhaps from Mr. Jenkins, who is such a distinguished supporter of the European ideal and the court.
  Mr. Cyril Smith: If the Secretary of State considers my record on the closed shop, he will see that it leaves nothing to be desired. It leaves nothing to be desired from the Government's point of view on the closed shop. Will the Secretary of State say, since the closed shop is a contravention of human rights, why the Bill continues to leave the closed shop as a legal institution?
  Mr. Tebbit: The hon. Gentleman makes a fair point and is perfectly correct when referring to his own record and that of most of his Liberal colleagues on this matter. I do not know how they get on with their new colleagues, who were so firm in their support of the 1974 and 1976 Acts. Perhaps the clue is that they do not.
  740
  I regard the closed shop as a very unhappy arrangement. I am a practical man, who believes in reform step by step, as public opinion supports it. Since we have the closed shop institution, the best thing that we can do at present is to provide protection and redress for those who are damaged by it. I hope that I have the hon. Gentleman's support in going that far—in fact I know that I do—and that he would like me to go further.
  Mr. John Prescott rose—
  Mr. Tebbit: I shall not give way. The point is that those who supported the 1974 and 1976 laws—the Labour Party and its members who now belong to the Social Democratic Party—violated the convention to which successive Governments had subscribed since 1950. I should like to hear from the right hon. Member for Chesterfield whether he still wants to return to those laws and days and again break that convention.
  Mr. Harold Walker: I remind the right hon. Gentleman that the first statutory provision for closed shops was introduced in the 1971 Act, on the initiative of his Government, to provide specific approval for closed shops in particular cases, such as the seamen and actors.
  Mr. Tebbit: If I remember correctly, it was an agency shop and there was clear protection for many of those involved.
  Mr. Prescott: Not in this Bill.
  Mr. Tebbit: The official view of both the Labour Party and the trade union hierarchy is that to allow four part-time dinner ladies to give schoolchildren their lunches in Walsall would undermine the whole structure of the trade unions in Britain. That is the extremity of their position on the closed shop. The bigots of the big battalions refer to the dinner ladies as "bounty hunters" or "free loaders". Their suffering is brushed aside, in the words of a trade union official, Mr. Eric Faux of NALGO, who said
  "It may appear to be unfair, undemocratic and un-British, but it is not illegal".
  What an attitude! At least we will give them some decent compensation for the damage done to them by creatures of that sort.
  The cases of those dinner ladies and the British Rail employees who went to the European Court seeking justice: that would be fair, democratic and British—however much that sticks in the gullet of some people—have struck the conscience of the nation. However, many others have been denied justice altogether. Therefore, clause 1 is a direct response to the suffering caused by the last Government's closed shop legislation.
  It is not retrospective legislation. For example, it is not like the attempt by Mr. Roy Jenkins to claim a retrospective increase in television licence fees. That was struck down by the court of Appeal. It is not the same as the retrospective tax amnesty for Fleet Street trade unionists who had fiddled their income tax for years by using fictitious names. The clause creates no new rights or duties. It does not retrospectively declare unfair what the law then said was fair. It simply provides a power to be exercised at the Secretary of State's discretion, to compensate from public funds people sacked without the possibility of redress between 1974 and 1980, who would have been entitled to compensation if the main provisions of the 1980 Act had been in force.

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  It is no more retrospective legislation than, for example, the last Government's Pneumoconiosis Etc. (Workers Compensation) Act 1979, on which it is closely modelled. Nor is it any more of a constitutional novelty than the last Government's retrospective restoration of tax exemption to trade unions in respect of their provident funds, at a cost of about £10 million to the Exchequer. We cannot undo the wrongs of the past, but we can offer some restitution to those who suffered because the law gave them no protection at the time.
  Mr. George Cunningham: Will the right hon. Gentleman give way?
  Mr. Tebbit: Perhaps the hon. Gentleman will forgive me if I do not.
  On 29 January the Financial Times reported that union leaders had drawn a comparison with legislation which
  "prevented convicted murderers from going to the gallows".
  The bigotry of the defenders of the closed shop is well illustrated by that kind of language. Of what crime are these people accused? It is that of defying the press gang that operated under the 1974 and 1976 Acts.
  When I presented my proposals to the House on 23 November, I said that our aim was twofold: first, to safeguard the liberty of the individual from the abuse of industrial power—an aim referred to by the right hon. Member for Bristol, South-East in the quotation that I made—secondly, to improve the operation of the labour market by providing a more balanced framework of industrial relations law.
  The proposals in clauses 2 to 11, all but one of which relate to the future operation of the closed shop and allied practices, illustrate that very clearly. The essence of the closed shop is that it gives a trade union control over who works for an employer and who does not work for him. At the worst, it means that an employer is forced to abdicate the right to decide whom he employs and even how many people he employs. The closed shop need not, but too often does, reinforce restrictive practices and inefficient working methods. It damages competitiveness, and therefore in the long run it destroys jobs.—[HON. MEMBERS: "Claptrap".] Then hon. Members must ask themselves why this is one of the few countries in the world whose legislation legalises the closed shop. It may have something to do with the fact that we have also been one of the poorest industrial performers in recent years.
  That is not the only or the most serious criticism that we level against the closed shop. I have already mentioned the victims of Labour-controlled local authorities—
  Mr. Stanley Orme: Lazy workers.
  Mr. Tebbit: No, in many cases it is workers who want to get on and work more effectively but who are prevented from doing so. The right hon. Gentleman knows that perfectly well.
  Mr. Allen McKay: Will the right hon. Gentleman look at the history of the mineworkers who operate a closed shop in Northampton? What about the way in which they have increased production and slimmed down their industry to suit the prevailing circumstances? What about the way in which they have taken mechanisation to its full fruition? That is the result of a closed shop system.
  Mr. Tebbit: I do not want to get into a tangle with the hon. Gentleman about the productivity of the miners. I said that the closed shop need not, but too often does, reinforce restrictive practices. I do not say that it does so in every case; merely that it too often does.
  Mr. Prescott: Which cases?
  Mr. Tebbit: For a start, the hon. Gentleman might look at parts of the engineering industry, where he might just possibly find the odd case or two.
  I have mentioned—[Interruption]
  Mr. Speaker: Order. I remind the House that I have today had indicated to me one of the longest lists that I have seen since becoming Speaker of hon. Members on both sides of the House who hope to take part in the debate. I already know that many of them will be unable to do so, but we might as well listen to those who are fortunate enough to be called.
  Mr. Tebbit: I shall, Mr. Speaker, try not to yield to the temptation of allowing interventions. That lengthens Front-Bench speeches, and I am one of the worst offenders in that respect.
  I have mentioned already the victims of Labour-controlled local authorities that were ready to trample on the new rights that the Employment Act had provided for non-union employees. Walsall council was prepared to hound people out of their jobs, even though they worked for only an hour-and-a-half a day. We cannot guarantee complete protection against such bigotry and bullying, but we can ensure that those who indulge in it have to pay a heavy price—and those who suffer are properly compensated.
  Clause 2 provides wide-ranging rights against unfair dismissal for the non-union employee in a closed shop. It reinforces the balloting requirement for new closed shops provided by the 1980 Act, with a balloting requirement for all existing closed shops. It considerably extends the right not to be unfairly dismissed for non-union membership.
  I have no hesitation in saying that when the Bill reaches the statute book it will provide the most comprehensive and the most effective statutory protection for non-union employees that we have ever had in this country.
  The present rates of compensation are too low. That is why the Bill contains an entirely new framework of compensation for closed shop dismissals at considerably enhanced levels. This framework is in substance no different from the proposals that I announced on 23 November, and is set out in clauses 3 and 4.
  Briefly, it consists of a minimum basic award of £2,000, plus a compensatory award related to past and future loss of earnings, subject to the maximum now in force for the generality of unfair dismissals. The new elements are a special award of twice the annual salary, subject to a minimum of £10,000 if the applicant asks for reinstatement but the tribunal does not order it, or an additional award of three times annual salary, subject to a minimum of £15,000 if the employer refuses to comply with an order to reinstate.
  Perhaps I can best illustrate the effect of these changes by a simple comparison. Under the present rules, the median award for unfair dismissal in 1980 was just under £600. Under the proposals in the Bill, someone unfairly dismissed in a closed shop would normally get a minimum

  743
  of £12,000 even if the tribunal did not order reinstatement and a minimum of £17,000 if the employer refused to comply with an order of reinstatement.
  In response to points put to me by the CBI and others during consultations, I have reduced the minimum special award from £12,000 to £10,000 so as to widen the gap between the special and additional award and thus increase the incentive for an employer to agree to reinstatement. I have also introduced a number of safeguards against abuse by people who might otherwise try to exploit the enhanced levels of compensation.
  Clause 5 enables someone who is claiming unfair dismissal as a result of trade union pressure also to claim compensation directly from the union as well as his employer. At the moment "joinder"—as it is known—is available only to the employer.
  I should make it clear that the enhanced rates of compensation apply both to dismissal for trade union membership and to dismissal for non-membership. There is no comfort in the Bill for the employer who tries to sack someone solely because he is a trade union member. We have been evenhanded in our approach. Under clause 6, I also propose to extend interim relief to those dismissed for non-membership, as well as membership of a trades union. The right hon. Member for Salford, West (Mr. Orme) may scoff, but I take it that he does not like those wo are sacked for non-membership or membership to be treated equally.
  Clause 7 is designed to restore to employers the ability to make a credible and legitimate response when they are faced with a strike. Section 62 of the 1978 Act removed from industrial tribunals jurisdiction to hear complaints of unfair dismissal by employees involved in a strike. Tribunals retain jurisdiction to hear such complaints, however, unless all employees involved are dismissed—that is, even those who may subsequently have returned to work.
  Clause 7 provides that if an employer has given the requisite warning notice to his employees and then dismisses all those still on strike at the end of the notice period, no employee can complain of unfair dismissal to a tribunal. The new provision does not affect the existing right of an employer to dismiss all employees on strike without notice.
  Clauses 8 and 9 mirror the earlier closed shop provisions in term of action short of dismissal.
  Clauses 10 and 11 deal with union labour only requirements in contracts. These are being widely used to extend the closed shop into firms where neither employer nor employees want it. The consultations on the Green Paper showed very widespread concern about these practices. Again, it is some Labour-controlled local authorities that have been most blatant in their refusal to award contracts to firms unless their work force is 100 per cent. unionised. In some cases they have refused to allow non-union firms even to tender for contracts. There is no doubt also a cost to the ratepayer of deliberately stifling competition in this way and, like all uncompetitive practices, the end result can be only a loss of jobs.
  Mr. John Evans: The right hon. Gentleman is bringing back lump labour.
  Mr. Tebbit: The hon. Gentleman may not like the lump, but, properly managed, it is a very effective institution. [Interruption] If Opposition Members worry about tax avoidance, they should go down to Fleet Street.
  744
  The Bill therefore declares void any term in a commercial contract which requires only the use of union labour or only that of non-union labour. It makes it unlawful to exclude non-union or union firms from tendering lists. And it makes it unlawful to award or to terminate a contract on the ground that union or non-union labour will be used in performing that contract.
  It may be that trade unions will try to frustrate these provisions by industrial action or the threat of it. Clause 11, therefore, would remove immunity from those who put pressure on an employer to contravene clause 10 And it would remove immunity from those who organised industrial action which interfered with the supply of goods or services on the ground that work done in connection with the supply of those goods or services is performed by non-union or union members.
  This brings me directly to the issue of trade union immunities, which is dealt with in the four remaining substantial clauses of the Bill—clauses 12 to 15. I am conscious that this is an area of great complexity and I recognise that over the years some aspects of trade union immunity have acquired great symbolic and emotional significance both for employers and unions. That is why it is important that we should all be clear what the Bill will do and what it will not do.
  When the general secretary of the TUC gave evidence to the Select Committee on employment he said:
  "We only claim three rights: the right to combine in order to pursue the collective interest of our members, the right to be recognised by employers for collective bargaining purposes and the right to withdraw labour, that is to say the right not to work except on terms and conditions which have been agreed with an employer. These are the characteristic rights of free trade unions in all democratic countries".
  I have no quarrel with that statement. If those are the rights that trade unions need to function effectively, they have nothing to fear from the Bill. There is nothing in the Bill that prevents trade unions from organising, gaining recognition, bargaining collectively or from organising industrial action by their members in pursuit of improvements in their pay and conditions or in defence of their jobs. Nor is there anything in the Bill that interferes with the internal organisation of trade unions, with their rules or the way they conduct their domestic affairs. It is important that that should be understood. Rightly or wrongly, I have not sought to use the law—this time at any rate—to reform the structures or internal affairs of trade unions, though there may come a time when there is great public pressure to do that. Indeed it is manifest already. Liberal and SDP Members will refer to the great pressure on me to do so. However, I have resisted that pressure, because to carry out such reform would raise many issues that would be best dealt with—if at all—in a separate Bill.
  The Bill is not concerned with settling quarrels between members of unions and the unions over the way in which the latter are run. Nor is there anything in the Bill that would take trade unions back—as I have heard some of their leaders say—to the Taff Vale situation before the 1906 Act, when trade unions and their officials had no immunity at all and their funds were at risk for any and every strike or other form of industrial action. There is no comparison between that situation and the very wide immunity for organising industrial action which trade unions and their officials will still enjoy when the Bill reaches the statute book.
  The Bill does two things. First, it provides for trade unions to have the same immunity as individual trade

  745
  union officials and other organisers of industrial action have today: no more and no less. Since 1906 trade unions in this country have enjoyed virtual total immunity from civil actions even if they have acted unlawfully, quite outside a trade dispute. No other trade union movement in the world is outside the law in that way and, as the Donovan Comrnission pointed out in 1968, no other person or organization—not even the Crown—has comparable immunity in this country.
  We believe that there is no reason in logic or equity why trade union funds should be protected if officials of the trade union, acting with the authority of the union, act unlawfully. If the individual official is liable in those circumstances, why should the union be immune? What incentive is there for the union to restrain unlawful action by its officials if the union's funds are never to be at risk?
  If the House feels that I am taking a hard or extremist line, it should consider what the 1906 Royal Commission—of which Sidney Webb was a member—said in the light of the Taff Vale case. I take it that his views hold some weight with Opposition Members. It stated:
  "That vast and powerful institutions should be permanently licensed to apply the funds they possess to do wrong to others and by that wrong inflict upon them damage … and yet not be liable to make redress out of those funds would be a state of things opposed to the very idea of law and order and justice".
  That was Sidney Webb, a member of the Royal Commission which produced that report. He did not dissent from it. [Interruption] I have made my point plain. The House should consider what the Royal Commission—with Sidney Webb as a member—said in the light of that case. If Opposition Members were not listening, I shall repeat the point. Obviously Opposition Members think that they can sign a report and subsequently deny responsibility for it.
  Let me repeat: we are not talking about the ability of a union to organise a strike of its members in pursuit of an increase in their pay or in defence of their own jobs. That is and will remain lawful. We are talking about action that is unlawful and may—even under the legislation of 1974 and 1976—make the individual official liable for damages but which, as the law stands, involves the union, on whose behalf the official was acting, in no liability at all. The disparity between the immunity of trade unions themselves and of their officials is and always has been an anomaly, and in our view a dangerous anomaly, because it has allowed trade unions to abdicate control over their officials when it has suited them to do so, safe in the knowledge that whatever happens their funds will be immune.
  Mr. John Evans rose—
  Mr. Tebbit: If the hon. Gentleman is fortunate, Mr. Speaker will no doubt call him to speak later.
  Clause 12 corrects that anomaly. It brings the immunity for trade unions into line with the immunity for individuals and defines the circumstances under which trade unions are to be liable for the unlawful acts of their officials. Broadly speaking, unions will be liable for unlawful acts that are authorised in accordance with their rules or by the national executive or national officials. If the rules do not specify where the authoritiy to call industrial action lies, a union will be liable for unlawful acts authorised by any
  746
  full-time official or the committee to which he reports, but in such cases the union can always escape if it genuinely repudiates the action. We thought it right to define the liability of trade unions not only to help the courts but also so that trade union and employers know where they stand.
  We also thought it right to put limits on the damages payable by a trade union in any one case. The limits in the Bill are those I announced on 23 November, except that in response to representations from the Conservative Trade Unionists I have reduced the limit for unions with 5,000 members or fewer to £10,000 and for those with up to 25,000 members to £50,000. These limits are set out in clause 13.
  Clause 14 makes it clear that union provident funds and also political funds which are not used to finance industrial action are not at risk. Let me point out that if a trade union wants to be sure that its funds remain untouched all it has to do is keep within the law—[Interruption]—as laid down by Parliament. The union is at risk only if it procures or supports action which is of itself unlawful for individuals today.
  The second main change in this part of the Bill is the tightening up of the definition of trade dispute in clause 15. Again some wild and misleading criticisms have been made of our proposals. Let me say straightaway that we are not proposing to outlaw political strikes for the simple reason that they have always been outside the "trade dispute" immunity in tort. The House will recall that the courts held that the TUC's so-called day of action in 1980 fell outside the definition of a trades dispute as defined in the legislation of the Labour Government. We are simply proposing that where a dispute is mainly political or mainly concerned with a personal grudge or some other non-industrial matter, and falls only marginally within the definition of a trades dispute, it should be treated as the law has always treated disputes that are wholly political.
  Again, we do not propose that all sympathetic action should be made unlawful. Clause 15 applies to the position where an employer and his employees have no dispute between them and everyone is working normally. It provides that, in that position, a trade union outside the company cannot declare that it is in dispute with that company because it does not like the way that the company runs its business or because none of the employees is in a trade union. The effect will be that they cannot organise blacking or other secondary action against him. In other words, this change in the definition will affect only one sort of secondary action, although a particularly abnoxious sort of action.
  It is clear that the Bill is widely welcomed throughout the country. I do not wish the Bill to be misunderstood. I do not wish the case for it to be overstated. It does not put the clock back to Taff Vale, whatever that means. I do not claim that it is the complete answer to poor industrial relations, low productivity and poor pay, which have characterised our economy for far too long. It is one step along the path to improving our performance in all those areas.
  The House knows that I am far from reluctant to enjoy a little mild partisan controversy now and again, but it is not in that spirit that I turn to the Liberal-SDP alliance. Its decision on the Bill will be a litmus test of its resolve to break the mould of British politics. It has set out to be the Left of Centre alternative in British politics. Now its Members must decide whether to continue as Social Democrats the marsupial relationship with the trade union

  747
  establishment that they enjoyed as Socialists. They must decide whether to disentagle themselves from their history of subservience to vested interest. They must decide whether they wish to return to being financed or controlled by the trade union movement. [Interruption] Opposition Members cart look for a block vote being traded in back rooms at the Conservative Party conference, but they will not find it. They had better get themselves video recordings of the debates about the deputy leadership of the Labour Party—
  Mr. Leslie Spriggs rose—
  Mr. Tebbit: —and consider whether to re-run them.
  Mr. Spriggs: On a point of order, Mr. Speaker. This has been a most unusual Second Reading debate. In the time that I have been a Member of the House, Ministers have generally given way for questions on Second Reading. On this occasion the Secretary of State has shown that he does not have the guts to give way.
  Mr. Speaker: Order. The right hon. Gentleman has given way so often that he has cut out one person who would have been called to speak.
  Mr. Tebbit: The right hon. Member for Crosby must decide whether she wishes to set the clock back and go out on the picket line again. She knows that what she did at Grunwick would be unlawful now. She must make upther mind whether she wishes to change the law so that she can go back on the picket line or whether she is content with the law as it has been enacted in this Parliament. She and her former Labour Party colleagues voted for "In Place of Strife". Their new ally, the Liberal Party, voted against it. The right hon. Lady and her Labour Party friends voted for the 1974 and 1976 Acts. Their partner, the Liberal Party, voted against them. They must get their act together. If we are to avoid ping-pong politics in this area they must come forward in full support of the central provisions of the Bill. Of course, they may wish to go further in some matters, but let us proceed one step at a time. I say at once that I have no doubts about the hon. Member for Rochdale (Mr. Smith).
  Perhaps an even heavier responsibility lies upon the Labour Party. I accept that it opposes the Bill. Its relationship with the trade union bureaucracy and its money will ensure that. For Labour Party Members the question is where do they oppose it—here and at the next election as democrats—or will they join those who threaten to use industrial power to overrule Parliament?
  Parliament willing, the Bill will receive Royal Assent no more than 18 months before the next general election. Some trade union leaders have said that they will not be content to leave its future to be judged by the electors through the ballot boxes. I repeat, because the hon. Member for St. Helens (Mr. Spriggs) was talking instead of listening, that some trade union leaders have said that they will not be content to leave the future of the Act to be judged by the electors through the ballot boxes. Above all, it is the responsibility of the right hon. Member for Chesterfield to repudiate such talk and to pledge himself to oppose any talk of political strikes against the Bill, or the Act as it becomes law. He deserves to be regarded in a dismal light if he does not have the courage to do that.
  The Bill may be my Bill, but if it is enacted it will be Parliament's law. It will be the people's law to be changed only by Parliament. I expect the right hon. Gentleman to make his position plain about that.
  4.19 pm
  Mr. Eric G. Varley: When the 1979 Employment Bill was placed before the House in December of that year I said that the then Secretary of State for Employment was the sacrificial victim who was required to lead the ritual Tory war dance against the trade unions. That Secretary of State knew that the use of the law in the sense that it is to be used in this Bill was likely to bring about an increase in industrial conflict and that it was not a means of resolving such conflict.
  That Secretary of State was defeated by his colleagues because the Bill was not to their liking, and it was amended in Committee. The then Secretary of State had to produce a Green Paper out of which came the main proposals in this Bill. The Prime Minister knew that if she was to have her way and carry through her hostility and prejudice against the trade union movement she had to remove the right hon. Member for Lowestoft (Mr. Prior) and to replace him with someone who was a far nastier piece of work, both personally and politically. The present Secretary of State falls naturally into that category.
  The Prime Minister has a willing servant, as the Secretary of State has shown today in his own inimitable style. He has introduced a Bill which is designed only to weaken trade unions and which will be damaging to industrial relations.
  The trouble is that the Tories have not learnt a thing. I remember the right hon. Member for Sidcup (Mr. Heath) speaking in the debate on Second Reading of the Industrial Relations Bill. He was then Prime Minister and he said:
  "there is nothing so strong as an idea whose time has come. The ideas in the Bill have been widely discussed and carefully prepared. The time has now come to carry through this reform which the people overwhelmingly demand."—[Official Report]15 December 1970; Vol. 808, c. 1143.]
  That Bill reached the statute book. The Secretary of State is probably right, this Bill might reach the statute book, although we shall do our best to prevent it. Four years after the Industrial Relations Bill was passed there had taken place a national postal strike, a gas workers' strike, an electricity workers' strike, a railway strike and two national coal miners' strikes. It was even worse—five dockers had been imprisoned and a national dock strike had been averted by the frantic activity of that obscure functionary, the Official Solicitor, who got the men out of gaol.
  The Amalgamated Union of Engineering Workers was sued by Con Mech and consequently called a national engineering strike. The industrial relations court ordered the sequestration of all the union's assets. To the Government's huge relief an anonymous group of rich business men paid the large compensation and fines for contempt involving a total of £122,000. After that the engineering strike was called off.
  The whole sorry episode ended in 1974 with the Director General of the CBI telling the nation that the Industrial Relations Act had soured and sullied industrial relations in Britain. The Act was repealed and sensible Conservative Members pledged that they would never go down that road again.
  Our attitude is that trade unionism is a right to be enjoyed and exercised responsibly. To impose vexatious legislation on the trade unions while totally ignoring their representations is to remove from the trade unions their obligation to contribute voluntarily to improve industrial relations and trade union practice. When government, out

  749
  of dogma, says "We will legislate", the natural reaction of the unions, especially if their representations are ignored, is to reply "Get on with it. Do your worst, but do not expect anything from us."
  What are the facts about industrial relations in Britain today? Last month the Department of Employment trumpeted the news that working days lost through industrial disputes were at the lowest level since 1941. There is one reason above all others for that reduction in industrial disputes. It is that this Government's unique and perhaps only achievement is to turn the whole country into a depressed area through mass unemployment.
  It is instructive to study the working days lost in 1981 from a variety of different causes. Working days lost through strikes in 1981 totalled 4,196,000. Working days lost through sickness totalled 371,450,000 and through unemployment 780,300,000. Strikes accounted for about 4 million lost working days but unemployment accounted for 780 million. Those two statistics alone highlight the irrelevance of the Bill in tackling the real economic and industrial problems that face Britain today.
  It is tragic that Parliament should be asked to devote so much time to a Bill which, if enacted, can make our problems only devastatingly worse. We might take the Government seriously if they were really concerned about workers' rights and freedoms.
  Mr. Tony Marlow: Will the right hon. Gentleman give way?
  Mr. Varley: No, not at this stage.
  If the Government had a strategy to reduce the dole queues they might carry more credibility. We shall not take lectures from them about individual rights. Within three months of taking office they had laid before the House a statutory instrument which denied the right of over one million workers even to go to a tribunal to claim unfair dismissal. In addition they removed the right of hundreds of thousands of employees to advanced notice of redundancies. In thousands of cases they have made it impossible for workers to bring and win unfair dismissal cases. That is a massive denial of workers' rights. It must be seen alongside the proposals in the Bill to help people who have lost their jobs through union membership agreements.
  It is fraudulent to claim that the main purpose of the Bill is to improve and protect individual employees. The position of workers is very weak in relation to that of the employer. Large companies have developed. The financial strength and the colossal power of trans-national companies are enormous compared with the power of the individual worker. Workers can improve and protect their living standards only through trade union organisation. The basis of trade union organisation is to strive for 100 per cent. membership.
  The Government's motive as set out in the Bill springs not from a desire to enhance job protection, but from a desire to weaken trade union membership agreements and weaken the trade unions. If the Bill becomes law, denying thousands of individuals the right to go to industrial tribunals, we shall see whether the Government will give the opportunity for a few to go to tribunals on the basis of enhanced compensation, paid in some cases out of trade union funds. There is no doubt that that concept in the Bill
  750
  will increase the financial incentive to drop out of trade union membership. That is probably what the Secretary of State wants.
  It is no wonder that the Institute of Personnel Management, the principal professional organisation engaged in personnel management, said:
  "High levels of compensation … offer too much scope for exploitation by the unscrupulous individual who exists in almost every large organisation and who would be attracted by the money."
  In other words there will, according to the institute, be bounty hunters.
  Even Sir Terence Beckett of the CBI expressed doubts about higher compensation saying that it
  "could cause real damage to industry. It is conceivable that small firms could be bankrupted in the event of a high award. If the compensation is pitched at too high a level it could lead to abuse by individuals without a genuine grievance."
  Mr. Tebbit: Will the right hon. Gentleman also quote what Sir Terence and the CBI have said since they have seen the Bill and given it their full support?
  Mr. Varley: Sir Terence does not give full support to that part of the Bill. I do not know whether I should be diverted into a discourse on the pros and cons of the CBI. I know that it has changed considerably over the past two years, when it was prepared, apparently, to take on the Prime Minister in bare knuckle fights.
  There are sincere people who have deeply held and genuine conscientious objection, or religious objection, to belonging to a trade union, and they have rights too. However, the Department of Employment discovered about a year ago, by means of a specially commissioned piece of research, that overwhelmingly in union membership agreements provision has been made for individuals to keep their jobs. Anyone who has worked on the shop floor knows of the deep resentment of trade unionists to the free riders, the men or women who take all the benefits of trade unionism but do not contribute a penny to the organisation.
  Mr. Peter Viggers: When the European Court of Human Rights condemned the previous Government's legislation was it right or wrong?
  Mr. Varley: The Solicitor-General went to the European Court of Human Rights and put the Government's case. He said that what had been done was right. I repeat that everybody resents the free rider. He is resented even by the Government. It is a general resentment that is well known.
  Mrs. Elaine Kellett-Bowman: The right hon. Gentleman has not answered the question of my hon. Friend the Member for Gosport (Mr. Viggers).
  Mr. Sydney Bidwell: Does my right hon. Friend realise that the Secretary of State, when he was an official of the British Air Line Pilots Association, deplored the free rider?
  Mr. Varley: I do not know whether he did. However, I have read the history of BALPA over the past few days, and it is clear that it would not have been possible for that organisation to have been set up if the legislation that the right hon. Gentleman is now trying to put on the statute book had existed at that time. The Secretary of State shakes his head. I shall send him the research work that

  751
  has been undertaken and he will have the evidence chapter and verse. I repeat again that there is resentment in any organisation when there are free riders.
  The case was put for the Government in November 1981 by the Under-Secretary of State for Scotland. In a Statutory Instruments Standing Committee he proposed that there should be a compulsory levy on seed potato producers to set up a development council. He anticipated that he might be asked why the council could not be established by a voluntary levy. He replied:
  "The answer is simply that producers who pay the levy for the benefit of all are unwilling to allow those who do not pay the levy to benefit at their expense, from the general effort."—[Official Report Third Standing Committee on Statutory Instruments, &c., 18 November 1981; c. 4.]
  When it comes to farming interests in Scotland, the Cabinet has no qualms about establishing a closed shop.
  There will be a detailed examination of clauses 10 and 11 on union membership requirements in Committee. I merely observe now that many legal advisers have great doubts about whether the proposals can be enforced. I bet that that is the advice that has been given to the right hon. Gentleman. The lawyers will have a field day on clauses 10 and 11. Whoever loses aut when the Tories introduce anti-trade union legislation, the lawyers always win.
  It is not clear whether workers would be in breach of the legislation if they refused to handle work from nonunion companies as well as refusing to work alongside non-unionists. There are many employers who admit, especially in the civil engineering and construction industries, that union-only contracts have ensured that time-served, properly trained and competent skills are employed and that safety standards are reached.
  The most dangerous legislative concept in the Bill is contained in the clauses that deal with trade union disputes and the repeal section 14 of the Trade Union and Labour Relations Act 1974. The concept of making it possible to sue trade unions for injunctions and damages—putting trade unions funds at risk, threatening unions with bankruptcy and making them liable to fines of up to £250,000 in any one case if they have a membership of over 100,000—takes the clock back to the Industrial Relations Act 1971 and the Con Mech case, and even further back to 1901 and the Taff Vale case. It is a squalid and discredited approach that has been tried before and has failed. It ignores entirely the purpose, function and democratic structure of the free trade union movement in Britain. It is a misplaced idea and the damage that it will do to the sound development of industrial relations is underestimated.
  The threat of fines will not deter men and women in highly charged working environments when they feel that they have a genuine grievance. There is a misconception about the financial resources of trade unions. Total funds per member in all trade unions are on average only £22. There is no pot of gold there. It is thought that it is possible to hold trade union leaders totally responsible for every member of the unions. That is staggeringly naive. The prize for stupidity must go to the man who put this gem on the Government's Green Paper, which stated:
  "Such a change in the law, would, it is suggested, induce unions to reform their structures and rule books and to turn themselves into more authoritatian organisations".
  Is that what we are trying to do? Do we want more authoritarian organisation?
  Mr. Tim Reton (Mid-Sussex)rose—
  Mr. Varley: No, I shall not give way. You have said, Mr. Speaker, that many right hon. and hon. Members wish to take part in the debate. I do not think that I should give way any more. I have given way already to two bon. Members and I think that I had better make progress.
  Mrs. Kellett-Bowman: The right hon. Gentleman has not answered any questions yet.
  Mr. Varley: The Government fail to understand the trade union movement. Trade union leaders are not generals leading armies. Mr. Bill Keys, the chairman of the TUC employment and organisation committee, told the Select Committee on Employment two weeks ago:
  "We are not in a position to point gatling guns at people, whether they be shop stewards or ordinary lads and lasses or the shop floor."
  The Prime Minister should understand this difficulty more than most. She cannot get 22 members of her Cabinet to speak and act in unison. The Lord President of the Council is always ready to break ranks and blurt out the truth. The right hon. Lady is aware of the difficulty. She sacks one or two members of her Cabinet from time to time and then finds that the difficulty manifests itself in another direction.
  If the trade unions could become "authoritarian", to use the language of the Green Paper, the result might be counter-productive. Splinter groups would form, rival organisations would come into existence and key sectors of workers would take independent action and strike terror into the office of the industrial relations director. That has already happened. The Institute of Personnel Management has already said:
  "much of the support for the legislative action is based on misconceptions about the structure of trade unions and the fallacious belief that legal pressures will force union officials to assume and use powers over their members which they do not in reality possess."
  The repeal of section 14 of the Trade Union and Labour Relations Act will create catastrophic problems for unions, employers and the Government. It will mean a re-run of the Industrial Relations Act 1971. It will revive the bitter conflicts of the period before 1906. That conflict will be heightened by the narrowing of the definition of a trade dispute.
  In the Government's eyes, disputes between workers and workers are to be unlawful. Very few, if any, disputes between workers and workers do not involve management. Demarcation disputes may be about which skill should be used in the application of new technology or about differentials and grading, but managements are not innocent bystanders in such disputes. I fail to see how the blunt instrument of injunctions and damages will improve worker-worker disputes. Indeed, resort to the law might exacerbate the problems. In fact, demarcation disputes are hardly a problem at all. They account for less than 1 per cent. of all disputes.
  But there is real anxiety in other cases, as my hon. Friend the Member for Hackney, Central (Mr Davis) said. He told us about the concern of the International Transport Workers Federation. If he catches your eye, Mr. Speaker, he will point out how unscrupulous shipowners will be able to sail their ships under flags of convenience. They will be able to exploit the changes proposed to the detriment not only of seamen but of the British shipping industry.
  The most vindictive aspect of the Bill is that it will prevent British workers from taking action to support

  753
  workers in other countries. It will try to prevent trade unionists taking action to support workers in sister companies overseas, even though such action may ultimately reflect their own terms and conditions. They must be the only Government in the world to try to disinvent the multinational company.
  That aspect of the Bill has other implications, too. The Prime Minister took part the other day in President Reagan's inspired television spectacle about the oppression of trade unions in Poland. If the Bill becomes law, British workers will be prevented from taking industrial action to support their Polish brothers and sisters. It is all right for the Prime Minister to take action, but dockers would be prevented from doing so. That is a fine example of double standards.
  But we should not be surprised about the Government's double standards and their hostility to the trade unionists. Before the last election the Prime Minister boasted that she was ready to confront anybody. Conservative industrial relations policy!is based on confrontation.
  Mr. Cyril Smith: How will striking against British employers assist Polish workers?
  Mr. Varley: It may be planned to export a piece of equipment from Britain to assist the Polish military regime, and British dockers may not wish to handle it. Under this legislation they would be prevented from taking any action.
  Mr. Raymond Whitney: Will the right hon. Gentleman give way?
  Mr Varley: No. I shall not give way again.
  Mr. Whitney: Favouritism.
  Mr. Varley: Favouritism for the Liberals, yes.
  The right hon. Lady has said on more than one occasion that she is prepared to confront anybody.
  We are not surprised by the Government's attitude, but most of us are surprised at the speed with which the new Social Democratic Party has come round to supporting the Government in bringing forward anti-trade union laws. Only two years ago hon. Members who now form that party, marched into the Lobby against the then Secretary of State for Employment's Bill, which was bad enough but was milk and water compared with this Bill.
  Not all the SDP Members will be voting with the Tories. I understand that the hon. Member for Islington, Central (Mr. Grant) will not stand on his head. I would be utterly amazed if he did. He sat with us for 100 hours in Committee fighting the 1980 Bill.
  I understand that even the right hon. Member for Crosby (Mrs. Williams) has doubts about the action which her party has taken, but, nevertheless, she will vote for the Tories. Is that the same right hon. Lady who was the heroine of the Grunwick picket line? Is that the same right hon. Lady who sat in the Cabinet Room at No. 10 with my right hon. Friends and me when the Labour Government approved the Trade Union and Labour Relations Act, which the Bill will get rid of?
  Mr. John Grant: The right hon. Gentleman is normally more fair-minded and certainly rather more so than the Prime Minister's pet piranha. In addition to the time that I spent in Committee on that Act, I spent a great deal of time, particularly during the
  754
  previous Labour Government, defending the right hon. Gentleman, his right hon. Friend the Deputy Leader and other leading members of the then Government from the very same charges of union bashing. He should be a little careful when making charges.
  Mr. Varley: The hon. Gentleman is maintaining his long-standing and consistent objection to such legislation. He is taking an honourable course and will not go along with his new party. I admire him for that, but The Guardian on Saturday reports him as saying that there might be "poitical mileage" in supporting the Government. Is that what it is all about?
  Mrs. Shirley Williams: There were certain abuses of corporate power which justified some of the actions which the Labour Government took in introducing the Trade Union and Labour Relations Act. Does the right hon. Gentleman deny that certain abuses of trade union power led a previous Labour Government to introduce "In Place of Strife"?
  Mr. Varley: The right hon. Lady sat in the Cabinet Room when we approved the Act which gave trade unions certain rights provided that they exercised them responsibly. She is now voting to get rid of the legislation. [HON. MEMBERS: "Shame."]
  The Social Democratic Party is engaged in nothing more than opportunism. I expect that the writ will be moved any day by the Patronage Secretary or his deputy for the by-election in Glasgow, Hillhead. This high-powered, holier than thou, whiter than white, mould-breaking party, is not above putting a bit of vote-grubbing before principles. Mr. Roy Jenkins believes that the best way of getting a seat in the House is as the Secretary of State's poodle. I hope that Mr. Jenkins will be proud of himself in the coming weeks when he tells the 97,000 Glasgow unemployed how his colleagues in the House scurried into the same Lobby as the Tories to support the "bovver boy" from Chingford. SDP Members will doubtless be in Hillhead in the coming weeks campaigning on their bicycles.
  The SDP attitude is contemptible. The Bill is a disgrace. It is fraudulent to call it an Employment Bill. It has nothing to do with creating employment. For how many of the 3 million registered unemployed will it find jobs? Not one. Even this Government will rue the day that they introduced the Bill. Through it they will blunder into one of the most bitter and divisive periods of industrial relations that many of us have experienced.
  Free trade unionism is an essential ingredient of our free society. It is a safeguard of our liberties. We shall fight the Bill at every stage and do the very best that we can to prevent it reaching the statute book. If it reaches the statute book, we, shall remove it at the first opportunity.
  4.49 pm
  Mr. William Rodgers: Were I and my colleagues to be judged by the company that we keep, we would much prefer to be in the Lobby tonight with the right hon. Member for Chesterfield (Mr. Varley), despite the rather rough remarks that he made towards the end of his speech. [Interruption] However, I see that we have already flowed over into the old-style cat and dog fight. [HON. MEMBERS: "The right hon. Gentleman should know".] I am happy to encourage right hon. and hon. Members on both sides to behave in the traditional way,

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  looking neither at the merits of the Bill nor at the broader issues. I shall address myself to the Bill and the major issue of trade union reform.
  I say to both sides of the traditional House that if Conservative Members could think less of the party political advantage, as they see it, of attacks on the trade unions, and if Opposition Members could consider carefully the merits of the issue and the power and abuse involved in trade unionism today, we would not have this sort of argument across the Chamber and would probably agree on legislation that would ensure a stable period ahead.
  We have an intolerable Government, objectionable in principle arid disastrous in their record. They are incompetent at managing the economy and their attitude to unemployment is shameful. Having said that, however, we should not fail to judge the issues put before us on their merits.
  Mr. Tristan Garel-Jones rose—
  Mr. Rodgers: No, I shall not give way yet.
  The idea that the Bill will destroy the trade unions is farcical. I and my right hon. and hon. Friends would never support it if that were the case. There is a conspiracy to deceive on both sides of the House. It is in the interests of the Government, despite what the Secretary of State said about it being a modest Bill, to pretend that this is a major measure which will change the face of industrial relations. It is in the interests of the right hon. Member for Chesterfield to argue that the Bill will do great damage to the industrial fabric of the country. Neither argument is true. We should look at the individual proposals within the Bill as well as the major issues behind it.
  Mr. Tebbit: I think that the right hon. Gentleman may have written his speech before he heard mine. I made it plain that I was not overselling the Bill as an enormous reform. I said that it was a modest reform, and that is what all my right hon. and hon. Friends have been saying. Why cannot the right hon. Gentleman listen to what we say? Perhaps he has been listening to the argument in his own party—the cat and dog fight.
  Mr. Rodgers: I listened to every word that the right hon. Gentleman said. He used the phrase "a modest Bill", but in his nauseating manner he made it clear that he thought that the Bill was a very important part of his attack on the trade unions. No one who heard the right hon. Gentleman—I agree that he made an ugly speech, because he is an ugly man—could come to any other conclusion. As a Bill concerned with industrial relations, this is a flimsy measure. That is why my right hon. and hon. Friends and I have placed on the Order Paper, by way of Instructions, proposals on how the Bill might cover a larger area. [Interruption]
  Mr. Speaker: Order. In the House, we believe in fair play. The right hon. Gentleman is entitled to put his point of view, and he must be allowed to do so.
  Mr. Rodgers: As I understand it, the effect of your ruling, Mr. Speaker, is that we shall be free to seek to amend the Bill in the direction indicated by the Instructions that we have placed on the Order Paper.
  I shall describe what we have in mind, as these matters are very important and I believe that they should win the support of at least some hon. Members on both sides of the House.
  Mr. Garel Jones rose—
  Mr. Rodgers: No, I shall not give way. I wish to make some progress.
  First, we make it clear that we regard it as wrong that there is nothing in the Bill that would make for the fuller participation of workers in workplace decisions. Industrial democracy is a large subject and I should like to think that there are right hon. and hon. Members on both sides of the House who would support an amending proposal of that nature. Certainly we look to them for their blessing.
  Secondly, in our Instructions and therefore in any amendment that we propose we make it clear that there is a need to provide for internal trade union ballots. I remember a motion many years ago in which a considerable number of Members made it clear that in their view ballots were a highly desirable development. That must surely be the common view among Members on both sides of the House who believe in the importance of trade union democracy.
  Mr. Frank Haynes: Did the right hon. Gentleman say that in the past when he was looking for sponsorship?
  Mr. Rodgers: I hope that many hon. Members will believe it right to amend the 13ill to provide for trade union balloting.
  Thirdly, referring to matters on which we might seek to amend the Bill, there is a proposal which I should have thought would commend itself to at least some Conservative Members. I referred earlier to a conspiracy. One aspect on which there is a conspiracy is the political levy and the nature of contracting out and contracting in. As has been made plain on previous occasions, there is now an overwhelming case for changing to a system in which individual trade unionists would choose to contract into rather than out of the political levy.
  Mr. John Evans rose—
  Mr. Rodgers: I shall give way in a moment.
  Mr. John Evans rose—
  Mr. Speaker: Order. The right hon. Gentleman has made it clear that he is not giving way. He wishes to make his speech.
  Mr. Rodgers: I said that I would give way in due course, Mr. Speaker.
  Mr. Speaker: Order. I do not know what "due course" is.
  Mr. Rodgers: If there are Conservative Members who believe that a change in the political levy system is desirable, I hope that we shall have their support when the moment comes.
  Mr. Haynes: The right hon. Gentleman did not say that when he was a sponsored Labour Member.
  Mr. John Evans rose—
  Mr. Rodgers: I give way to the hon. Member for Newton (Mr. Evans).
  Mr. John Evans: If the right hon. Gentleman wishes to avoid the charge of hypocrisy, will he tell the House how many times, when he was a Member of Parliament sponsored by the General and Municipal Workers Union, he argued for a change in the status of the political levy?
  Mr. Rodgers: I have long taken the view, which I have expressed before now—[HON. MEMBERS: "When?"]—that the system of contracting out is wrong. I should also make it clear that nothing in such a proposal for the political levy would affect the right of trade unions to sponsor Members of Parliament if they wish, so sponsored Opposition Members who are getting worried need not be anxious on that account.
  I wish to comment, as did the Secretary of State and the right hon. Member for Chesterfield, on some specific provisions in the Bill. I greatly welcome clause 1, because it remedies an injustice. I also generally welcome clause 2, although I believe that the percentages—80 per cent. and 85 per cent.—are far too high. I should much prefer a trigger mechanism, which I hope will be discussed in Committee, based on, say, the wish of 20 per cent. of the workers, for a subsequent ballot.
  I generally welcome clause 3 and those following it, although the level of compensation seems lavish compared with the sums paid to those unfairly dismissed as a result of sex or racial discrimination, and there is apparent scope for abuse.
  I should like to hear more from the Secretary of State about clause 7. Although he referred to it, some very difficult questions of interpretation arise.
  There are also serious worries—here I think that I join the right hon. Member for Chesterfield—about the extent to which clause 10 may be a charter for cowboys on construction sites. There may be a way of restricting the clause to the public services where political reasons rather than industrial relations can be the motive for labour-only contracts.
  Clause 12 and the subsequent clauses should also be examined in Committee. Among other questions is whether there could be a series of separate legal actions arising from a single dispute which would result in the bankruptcy of a trade union. If that is the intention of the Secretary of State, it is indefensible.
  There are no grounds for objecting to the provisions in clause 15 concerning political strikes and, contrary to what the right hon. Member for Chesterfield said, overseas disputes, but in other respects the clause needs careful examination for its effect on industrial relations. I wish to be absolutely honest with the House—
  Mr. Haynes: The right hon. Gentleman should be ashamed of himself.
  Mr. Rodgers: If the hon. Member for Ashfield (Mr. Haynes) would stop shouting, he might learn something from what I have to say.
  Mr. Haynes: I am learning all the time.
  Mr. Speaker: Order. The hon. Member for Ashfield (Mr. Haynes) must give the rest of us a chance to learn. Perhaps he will control himself for a while.
  Mr. Rodgers: I am a recent convert to legislation of this type.—[Interruption]
  Mr. Speaker: Order. The House must allow the right hon. Member for Stockton (Mr. Rodgers) to proceed.
  Mr. Rodgers: I am not ashamed of saying that there are many matters on which all of us, in the light of the evidence, should examine our views. In my mind the events of the winter of 1978ߝ79 were decisive. I never believed that trade unionists would refuse to grit and sand roads when life and limb were at risk. I never believed that
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  trade unionists would prevent people from entering a hospital when they were in need. I never believed that trade unionists Would refuse to bury the dead. But all those things happened in the winter of discontent. When trade union abuse has reached that level, it is necessary to look at the scope for legislation in order to ensure reform.
  Mr. Garel-Jones: The right hon. Member for Stockton (Mr. Rodgers) opened his remarks by showing a high-minded contempt for the seeking of party political advantage. Does he agree that perhaps the greatest potential party political advantage would be for a party, at the end of the debate, to have hon. Members in the "Aye" Lobby and, the "No" Lobby, and to have abstentions? That is precisely what his party will do.
  Mr. Rodgers: I would not judge that to be the case. I should prefer all my right hon. and hon. Friends to be in the same Lobby this evening.
  Mr. T. W. Urwin: The right hon. Member appears to be trying, not very successfully, to hedge himself around with reasons why he and some of his colleagues should vote with the Government. Having regard to the fact that everything that the right hon. Gentleman is and has, in a political sense, he owes to the Labour Party and the trade union movement, why did he not reject the money supplied to his constituency party so that he could fight successfully elections in Stockton on behalf of the Labour Party? How can he salve his conscience in the light of that experience over many years?
  Mr. Rodgers: I do not doubt, I have never doubted, and I am trying to say, that the trade unions have made, and will continue to make, a massive contribution to the life of this country. Nevertheless, although I am in favour of strong trade unions—in no way do I renege on that view—I have, in the light of events, changed my mind about the desirability at least of minimum legislation.
  Trade unions should be strong and I welcome the extension of their membership in recent years, but I do not believe that they should use industrial muscle for political ends or that the rights of individuals can be subordinated to the power of a trade union, irrespective of the consequences.
  Over the years I have desperately hoped that the trade unions would reform themselves. I was closely involved, during that winter three years ago, with the problems that trade unions brought to this country. I hoped then that trade union leaders would learn the lessons—that they would have secret ballots, recognise the nature of the national interest and speak out in favour of individual and human rights. I thought that there would be a change, but there has been no change. Far from there having been a change for the better, I have seen correspondence between trade union leaders and the TUC recommending a course of action on the Bill which, again, would be profoundly damaging to the country and would also—
  Mr. Arthur Lewis: On a point of order, Mr. Speaker. Although it may be true, I do not think that it is in order for one of my hon. Friends to call the right hon. Member for Stockton (Mr. Rodgers) a twister. I distinctly heard—
  Mr. Speaker: Order. It was fortunate that I did not hear that expression. I have sufficient faith in the hon. Member for Mansfield to think that he would not have used such an expression.
  Mr. Haynes: All that I say, Mr. Speaker, is that I am the hon. Member for Ashfield and not Mansfield.
  Mr. Speaker: And I hope that that is all that the hon. Member will say until the right hon. Member for Stockton has finished. It is in the interests of us all and of the good name of the House that the right hon. Gentleman be allowed to state his case and submit his argument.
  Mr. Rodgers: I am grateful for support even when it comes from the most unexpected place.
  Mr. Arthur Lewis: I wanted it on the record, that is all.
  Mr. Rodgers: I do not believe that the Bill should be opposed except through the proper political processes in the House and elsewhere. If trade union leaders and the TUC seek to organise and lead their membership in strenuous opposition to what the Secretary of State chooses to call this modest Bill, they will be disappointed.
  The plain fact is that on all the available evidence, including, for example, the MORI poll and the "Panorama" programme, a significant majority of individual trade unionists believe in the Bill's provisions. A significant majority of individual trade unionists believe that there is an overwhelming case for trade union reform. They want ballots, but their leaders do not. They believe that there should be greater freedom within and without the closed shop, but their leaders do not. Trade union leaders should look to their own members and judge what they want. Only when they do that will they embark upon the steps that make legislation of this kind and any further such legislation unnecessary.
  I regret the necessity for the Bill, although I am prepared myself, and would so advise my hon. Friends, to vote in favour of it. I hope that, apart from the matters to which the Instructions we have placed on the Order Paper relate, there will be no need for further trade union legislation and that we shall be able to return to the voluntary principle, secure in the knowledge that the trade unions will reform themselves.
  Unlike the Government, my colleagues and I want an open and constructive dialogue with the TUC. We would be happy to receive representations and if necessary to meet a deputation from the TUC general council to discuss the detailed provisions of the Bill. If the Bill is to be amended in Committee or on Report, it is reasonable that all hon. Members should have the best advice that may be available, whatever conclusions we may reach.
  I have welcomed the extension of trade unionism to many new groups in recent years. Representative trade unions have an immensely important part of play in our national life. I say to the Secretary of State that there is much that we should admire in British trade unions and in the fair mindedness, the ability, the talent and the dedication of many of their officials. It must be said again, however, that the trade unions have made themselves immensely unpopular. They cannot be above criticism. They cannot be above the law. There is nothing anti-trade union in saying that.
  Mr. Speaker: Order. Before calling the next hon. Gentleman, 1 wish, like the hon. Member for Newham, North-West (Mr. Lewis), to ensure that something is placed on the record. It is out of order to call any hon. Member a twister. One cannot be a twister and an hon. Gentleman.
  Mr. Ian Mikardo: On a point of order, Mr. Speaker. May I point out, with the deepest respect, that "twister" is an honoured and ancient Order occupational term in the textile industry?
  Mr. Speaker: Everyone must speak for his own industry.
  5.12 pm
  Mr. Tim Renton (Mid-Sussex): I am glad, Mr. Deputy Speaker, not to have your job or Mr. Speaker's. Chests bared in shame and in agony over past misdeeds are always a pretty miserable sight. The sight of the bared chest of the right hon. Member for Stockton (Mr. Rodgers) is no exception. If the right hon. Gentleman was so distressed at the sight of trade unionists closing hospitals, and if he was so disturbed at the misuse of trade union power in 1978–79, why did he not then resign from the Cabinet? Why did he not show his independence at that time rather than support the cause of trade union reform now because he realises, as he stated, that it is popular? It is supported in the public opinion polls.
  I agree, however, with the right hon. Gentleman that there is widespread disquiet over the abuse of trade union power. In this regard, I found the speech of the right hon. Member for Chesterfield (Mr. Varley) most distressing. The right hon. Gentleman spoke in terms that indicated no worry anywhere in the country about trade unions and how they exercise their power. One would have thought that the rail strike was not happening and that ASLEF, a closed-shop craft union, was not using its power in an inter-union dispute to bring the whole rail system to a halt and severely to damage the economy. The right hon. Gentleman has forgotten nothing and he has learnt nothing. That was painfully plain.
  All Conservative Governments tread carefully in the sphere of trade union refomi. My right hon. Friend the Member for Chingford (Mr. Tebbit) behaves no differently from my right hon. Friend the Member for Lowestoft (Mr. Prior). My right hon. Friend has followed the step by step approach. He puts one more step carefully in front of the step taken by my right hon. Friend the Member for Lowestoft in 1980. There is little that individuals such as the right hon. Member for Chesterfield and the general secretary of the TUC can find wrong with the detail of the Bill. They indulge in rhetoric against the principle of so-called union bashing and in vilification of my right hon. Friend—who is fortunately well able to stand up to such attacks.
  I have no doubt that the Bill accords with the general mood of the British people. It is what the vast majority of trade unionists want. They have no quarrel with the principle of the Bill. I am all for the principle, although I find certain details worrying. I also find certain things omitted that I would have liked to see included. Like the right hon. Member for Stockton, I should have liked to see the Government do much more to promote industrial democracy, profit sharing, worker participation in factory decisions and employee share ownership. I accept from my right hon. Friend that this may not be the right Bill for these measures. I hope, however, that in the 1982–83 Session, it will be possible to bring forward such a Bill. It would receive widespread support on the Conservative Benches.
  I note with interest the Instructions—a novel way of trying to get a Bill amended at this stage—that the Social

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  Democratic Party has tabled. The right hon. Member for Stockton must have been reading literature issued by Conservative trade unionists. I have the honour to be their president. The same three points were discussed in great detail at our recent conference. I welcome the right hon. Gentleman as a convert to our literature. If he wishes to receive regular copies of our news letter, I shall be pleased to ensure that.
  The Government have a great responsibility to help trade unions to become more responsible, more democratic and more accountable to their members. Certainly in the election of the deputy leader of the Labour Party, no one can say that the Transport and General Workers Union Executive acted either responsibly or democratically or accountably. The wishes of the membership of the TGWU, when polled, were clearly expressed in favour of the right hon. Member for Leeds, East (Mr. Healey) as first choice and then, at some stage, for the right hon. Member for Deptford (Mr. Silkin). None the less the TGWU executive cast its vote—by far the largest vote at the Labour Party conference—for the right hon. Member for Bristol, South-East (Mr. Benn). No one can call that a democratic process.
  But Conservative Governments have always shied away from legislating to cause internal reform within the workings of trade unions. They have preferred to see that happen voluntarily within the trade union movement itself. The Employment Act 1980 of my right hon. Friend the Member for Lowestoft was an example of that approach. My right hon. Friend made public funds available for secret ballots within the union movement, either for the election of national officials or before the calling of official strikes. Since the Act, the sad fact is that no single union has made use of these funds, although public funds are being used for the training of trade union officials.
  I must conclude that our attempt to step back and wait for voluntary reform within the trade union movement is not succeeding. I believe therefore that trade union leaders, out of pride or prejudice, will not reform themselves.
  Mr. John Evans rose—
  Mr. Renton: With respect to the hon. Gentleman, I would prefer to continue with my speech. Many hon. Members wish to speak. I hope that the hon. Gentleman will be successful in catching your eye, Mr. Deputy Speaker.
  Mr. Evans: I was about to put the hon. Gentleman right on the point he has made.
  Mr. Renton: I believe that the Government should seriously consider legislating to make secret ballots mandatory in the election of all national union officials. That should come within, say, three or four years, and thereafter such elections should take place every five years. The ballots would be paid for out of Government funds and they would be supervised by an independent body.
  Clive Jenkins, one of the most vociferous of trade union leaders, has never been elected as general secretary of the Association of Scientific, Technical and Managerial Staffs. He is there simply as a result of a merger between two unions, and he never will be elected to the job.
  Mr. Mikardo rose—
  Mr. Renton: I shall not give way. I, too, was a member of ASTMS for several months until Clive Jenkins managed to throw me out. I know a certain amount about that union. Equally, Arthur Scargill has recently been elected president of the National Union of Mineworkers by a large majority, but he will be there for 22 years without another vote. Is that right? I very much doubt it. I think that he and any union official should be willing to stand for election every five years on a secret ballot, just as Members of Parliament do. I hope that my right hon. Friends will seriously consider taking that further step.
  Throughout the Bill, we must take great care not to give the Left wing ammunition to stir up the massive majority of moderates in the trade union movement against us. It is against that background that I tell my right hon. Friends that I have considerable doubt about the way in which regular ballots on existing closed shops—for which clause 2 provides—will work. I am all for the principle but I have difficulty in seeing how it will work in practice.
  We can explore clause 2 further in Committee, but I shall put some questions for my right hon. Friends to think about in coming weeks. For example, what will happen if there is only a 75 per cent. vote in favour of the continuance of an existing closed shop so the closed shop ceases to be official? What will then be the position of the one union that has the wage bargaining rights with the employer? What will happen to an employee who is dismissed because of his trade union activities when his trade union is still the wage negotiator but no longer has an official closed shop? Will that be fair or unfair dismissal? More particularly, what will happen to the trade unionist who actively tries to get more people to vote at the next ballot in favour of the closed shop and who is dismissed because of his trade union activities?
  Those are some of the questions that will inevitably arise. All of us want clause 2 to work. I suggest that my right hon. Friends should think carefully about what will be fair and unfair dismissal in the sort of case that I have predicted.
  Mr. Tebbit: No doubt there will be a good deal of time to discuss some of these matters, but I should say straight away that the issue of the closed shop, and the ballots on it, does not affect the bargaining rights of the union with the employer.
  Mr. Renton: I take that point. Equally, one can imagine circumstances in which 25 or 30 per cent. voted against the closed shop who at that stage would want their own union to take part in the bargaining process, which it had not done before. How would that then relate to the question of what is fair and unfair dismissal?
  Clause 13 relates to the damages that can be levied in a civil action against individual unions. As my right hon. Friend said in his opening speech, the Conservative Trade Unionists asked him to reduce the amount of damages on the smaller unions. We are very grateful that he has done that, but I do not think he has gone far enough. The clause weighs still more heavily on the small union than on the large union. To give one example, if the Transport and General Workers' Union, with 1,886,000 members and an annual income of £28.5 million—this sad little union that the right hon. Member for Chesterfield (Mr. Varley) was so worried about—were to suffer the maximum fine, that would still represent under 1 per cent. of its annual income in one action. [Interruption] I stand corrected. The

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  damages would be 0.88 per cent. of its annual income. But the National Association of Colliery Overmen, Deputies and Shotfirers—a small union known familiarly as NACODS—with 18,000 members, has only £122,000 of annual income, and in its case the maximum damages would take 40 per cent. of its annual income, as opposed to under 1 per cent. for the Transport and General Workers' Union.
  We should accept that very often it is the smaller unions which have harder fights and which will need careful consideration in regard to the question of maximum damages.
  Clause 12 and the subsequent clauses deal with the very important question of removing immunities for trade union funds in civil actions in civil courts.
  I was struck that on Wednesday evening the hon. Member for Keighley (Mr. Cryer)—who, unfortunately, is not in his place—said in an intervention that trade unions require their immunities to make them work. That is a remarkable statement, and to be convinced of its truth we need very much firmer evidence than anyone has yet given—firmer evidence than the right hon. Member for Chesterfield gave us in his opening remarks today.
  It is extremely hard to see why a large organisation such as the Transport and General Workers Union, with an annual income of £28½ million, needs immunities for unlawful action which neither its members nor its union officials have.
  These are not like the days of 1908, when the immunities were first given, largely for the purposes of protecting very small unions with very small assets. That position does not apply today. If the comment that striking at immunities really strikes at the heart of the trade unions is to be taken seriously, we shall need very much more serious evidence than has yet been presented. It is no good either Opposition Members or trade union leaders just going about the country saying "We wuz robbed" and "They are taking our money away from us". Any of us would obviously like to have immunities from action for debt, and immunities in civil courts concerning moneys that we have in the bank. I have heard no valid reason advanced for any longer continuing the trade union immunities nowadays.
  I should like to remind hon. Members on each side of the House of the old saying that it is excellent to have a giant's strength but it is tyrannous to use it as a giant. Individuals throughout the country—trade unionists and non-trade unionists—have, unfortunately, come to regard unions as tyrannous giants, out of touch with many of their members. The purpose of the Bill is in part to rectify that position. It is to enable unions—which are, of course, a vital part of our society—to take their place not in the last century but in this century's industrialised society in Britain.
  5.29 pm
  Mr. Charles R. Morris: As the debate has proceeded we have heard the charges that trade unions press-gang individuals into union membership, that they exercise industrial muscle unduly, and that what we witness on so many occasions is the use of unbridled trade union industrial power.
  The Secretary of State said that the Bill is merely one small further step to rectify what he termed the imbalance of power between worker and employer. Such phrases may well be the exchanges of parliamentary debate, but they
  764
  bear little relation to the exercise of power which exists in so many industries and so many companies in terms of industrial relations in 1 Britain.
  I want to mention a dispute in my constituency. which has been going on for more than 10 months. I want to highlight the relevance that the Bill will have to that industrial dispute at Lawrence Scott Electromotors in Openshaw, Manchester. One would imagine that the major issue now facing the nation was the closed shop and union membership agreements. I do not know how many right hon. and hon. Members have looked at the Employment Gazette for 1982 to see the disputes that arise from what are termed union matters. The January issue of that publication contains statistics which show that 8 per cent. of disputes arise from union matters—demarcation issues, and the like—but there is nothing in it to show that any disputes have arisen as a result of union membership agreements or closed shops as such.
  In his speech today the Secretary of State did not say how widespread was the problem of union membership agreements and the exclusion of individuals. He quoted three cases. I saw a report in The Times of 30 January that 400 disputes had arisen from the application of the closed shop and membership agreements. That seems a large number, bearing in mind the reality of the situation, but let us assume that it is right. One should bear in mind that union agreements now cover 5.2 million workers. If there have been 400 cases in which individuals felt that they were dealt with harshly as a result of those agreements, that number of cases represents only .008 per cent. of those covered by the agreements. But I am not seeking to justify cases where people have been dealt with unfairly—
  Mr. Marlow: Perhaps it would help the right hon. Member to look at the matter the other way round. How many nuclear wars have arisen from the possession of nuclear weapons? Union membership agreement affects the balance of power, just as nuclear weapons do. It does not mean that many disputes have to arise out of it.
  Mr. Morris: I shall come back to the balance of power when I take up the point made by the Secretary of State that the Bill is designed to rectify the imbalance of power.
  First, however, I come to what I was saying about the dispute in my constituency, which has been going on for over 10 months. The power in that dispute has reposed virtually in the hands of one man. Lawrence Scott was taken over in October 1980. The assets of the company were valued at the time at £18.4 million. Mr. Arthur Snipe, the managing director of Mining Supplies, acquired Lawrence Scott for £5.8 million and gave the workers the usual undertaking that their future employment prospects were assured and that they would continue to be employed on terms and conditions that were no less favourable than at that time. That was the undertaking that was given.
  Three months later, on 10 February, the same managing director decided to close the plant. The plant was profitable. Its orders were mainly from the Ministry of Defence and the National Coal Board. He closed the plant in order to transfer the work elsewhere, without any consultation or discussion with the 650 individuals who had invested their lives and skills in that enterprise, which was regarded in the greater Manchester area as a centre of industrial excellence. Today we have heard about the exercise of industrial power. Trade unionism was absolutely powerless to deal with that situtation.

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  Since then the bailiffs have come in with sledgehammers and repossessed the factory. Then we had what I can only describe as helicopter hooliganism, when helicopters were used in a heavily urbanised area to negotiate the picket lines. People talk about the use and abuse of industrial power. There is nothing in the Bill that will rectify that imbalance in terms of the exercise of power between an employer who refused to consult and negotiate with his workers, and workers who have now been in industrial dispute for 10 months.
  I see no justification for the proposals in clause 7 regarding the closed shop and membership agreements. Nor do I believe that there is any justification for clause 15, which narrows the definition of trade disputes. It has been said that the long-running dispute at Lawrence Scott has been engineered by political extremists from outside. It is possible that some political extremists from outside support the 650 workers, but those workers are not mindless militants. I have visited the factory over many years, and in the past I have had the greatest difficulty in persuading the workers there to take any interest in politics. They are not mindless militants. Rather, they are victims of what I can only describe as an asset-stripping exercise by a commercial entrepreneur.
  That type of problem will not be helped or solved by this legislation. In my view, legislation that deals with trade unionism and industrial relations will come only through agreement between the two sides of industry.
  5.38 pm
  Mr. John Browne: At the last general election, millions of working men and women, many of them trade union members, voted Conservative. They did so as a cry for help. They wanted protection—yes, protection—in many cases against their own bully-boy trade union leaders. Specifically, they voted for an end to union-only contracts, an end to the closed shop, an end to opting-in—rather than opting out—of the political levy, and the introduction of a voluntary shop floor secret ballot. Those were all basic democratic issues.
  I believe that history will show that the Bill, as amended, will be a most important Bill, and that it will be widely heralded as a workers' charter. In effect, it will be a modern Magna Carta, bestowing protection on working men and women. I believe, without hesitation, that my right hon. Friend the Secretary of State will soon be seen as the champion of workers' freedom. In a few years' time, I believe that working men and women in this country will say to their friends and families "That man Norman Tebitt is our champion; he's our lad!"
  Our national weaknesses since the Second World War reflect, above all, the weakness of successive Governments. It is weak government more than any other single factor that has allowed the great abuse of power by trade union leaders. It has allowed trade union leaders—not all, but in some serious cases—to bully their members. It has allowed them to be elected to office for life. As my hon. Friend the Member for Mid-Sussex (Mr. Renton) said, in some cases, such as that of Mr. Clive Jenkins, the leaders are not even elected. Yet they masquerade as though there had been a democratic election. It has allowed trade union leaders to use gross rather than
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  net—that is, actual net votes approving their action—block votes to force action, yet still call it democratic.
  Even more serious, Government weakness has allowed trade union leaders to come between management and the shop floor. Indeed, managers in many companies are barely allowed to talk to their employees. As is demonstrated on television and in the newspapers, trade union leaders give their version of what management wishes to say to the shop floor. This unhealthy abuse of trade union power has come between management and workers. The result is restrictive practices, closed shops, intimidation and a general lack of competitiveness. The final result is that Britain now has one of the worst paid work forces in the developed world.
  Mr. Mikardo: I wish to take up the hon. Gentleman's point about trade union officials coming between management and the shop floor. Is he aware that last week the management of the trucks division of British Leyland refused to talk to shop stewards and demanded a meeting with national officials? It is a pity that the hon. Gentleman followed the advice of his hon. Friend the Member for Mid-Sussex (Mr. Renton) about the election of officials. We do not elect the permanent secretary to the Department of Employment because the elected Secretary of State is responsible. We do not elect a town clerk because the elected council is responsible. My union did not elect Mr. Clive Jenkins because he is the servant of an executive that is elected each year.
  Mr. Browne: In the interests of brevity, all I can say is that that is a matter of opinion. The hon. Gentleman cited British Leyland. One cause of its present demise is the practice that I have outlined. That may not be happening now under the present leadership of British Leyland—I hope that it does not happen again—but that is not to say that, as an unhealthy generality, it does not happen.
  In my opinion, the three key clauses in the Bill are clause 15, which redefines a trade dispute, updates it and makes it more honest; clause 10, which deals with the abolition of union-only contracts; and clause 12, which renders trade unions liable for the unlawful acts of their officials. That last provision is especially critical—I hope that the hon. Member for Bethnal Green and Bow (Mr. Mikardo) agrees with me—because it will encourage the voluntary internal reform and modernisation of trade unions. It will reduce unofficial action—the scourge of our modern industrial relations. It will also reduce the propensity towards martyrdom by individuals putting themselves in a position where they can be sent to jail, which caused so much of the industrial trouble that we saw in the early 1970s. The provisions of those clauses are good, but they are long, long overdue.
  I have four specific reservations about the Bill. I am amazed and hurt to learn that the Conservative Party still accepts the legitimacy of a closed shop. Even if we accept the existence of the closed shop, a point of detail arises in this proposed legislation concerning the voting rules for ballots. Rather than providing that the agreement should apply if not less than 85 per cent. of those who voted were in favour—which leaves the whole position wide open to intimidation—should we not restrict the provision to section 58A(1)(a) and delete section 58A(1)(b) This

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  would then provide that the agreement should apply if not less than 80 per cent. of those entitled to vote were in favour.
  The limitation of trade union immunities is a major step to protect trade union members. However, many outdated immunities will still exist when the Bill is passed. I urge my right hon. Friend the Secretary of State to introduce new clauses to tie the existence of the continuing immunities, on a tit-for-tat basis, and urge the unions to agree procedures and accept formal agreements. We should then no longer have the ridiculous position that has arisen in the ASLEF dispute—a dispute which is causing untold damage to the nation and the railways and to the jobs of railway trade union members. That dispute arises from an obvious twisting of an agreement reached a year ago. The Secretary of State should require that procedures and formal agreements are adhered to in return for allowing some of the less damaging trade union immunities to continue.
  My next point concerns the political levy. I agree with the right hon. Member for Stockton (Mr. Rodgers) that it is imperative that the Secretary of State should legislate against opting out and in favour of opting in. Such a provision is long overdue. I shall press for a new clause to deal with that point.
  I am disappointed and amazed that no measure has been taken to introduce a voluntary shop floor secret ballot. It is a basic democratic right for shop floor workers. I urge my right hon. Friend the Secretary of State to reconsider his position and to introduce a clause to deal with the matter. I shall press for that because it is a key issue. Whether or not electors read the Conservative Party manifesto, many of them voted for the Conservative Party because they believed that it would abolish the closed shop and introduce a voluntary secret ballot. The Government have not yet done either of those things.
  In general, I strongly support the Bill. I urge my right hon. Friend to act on the four points that I have raised: the closed shop; a formalisation of agreements and the observance of procedures; the political levy; and the voluntary shop floor secret ballot.
  Everyone in our country, especially trade union members and working people, not only expect that to be done, but have the right to expect it to be done—especially by a Conservative Government.
  If he does these things, I am sure the cry really will go out—"Norman Tebbit is our champion and our lad".
  5.51 pm
  Mr. Stan Crowther: I must make it clear at once that I am a sponsored member of the Transport and General Workers' Union and proud to represent the biggest union in Britain. Unlike the right hon. Member for Stockton (Mr. Rodgers), according to what he told us recently, I still support my union. He was evidently happy to accept the sponsorship of his union long after he concluded that the trade union movement ought to be subjected to crippling legislation. I am sorry that he has departed, because I would have liked to say that in his presence.
  I was interested to hear the hon. Member for Winchester (Mr. Browne) explain the reasons behind the misguided actions of certain trade unionists who voted Conservative in May 1979. He gave a catalogue of the
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  things that they were voting for. Unfortunately, he did not tell us whether they were also voting to have nearly 2 million of their members added to the dole queue
  Mr. John Browne: Of course not.
  Mr. Crowther: It is a pity he did not mention that. Were they voting at the same time to have their factories closed and firms made bankrupt? Those were the major factors which occurred, according to him, as a result of what they did, if he is right in saying that they voted Conservative.
  I certainly do not say that there is no place for law in industrial relations. Of course there is a place for —to protect the rights of working people to organise themselves in the defence of their vital interests. However, the legislation of this Government, in the Bill and in the 1980 Act, takes away their rights to organise and defend themselves. That is why we are so strongly opposed to the Bill.
  Admittedly, there is little of surprise in the Bill. We were given ample warning in the Green Paper and the consultative document that the Government were preparing a further savage attack on the rights of trade unionists, but clause 1 is surprising and astonishing.
  I wonder whether the Secretary of State appreciates the dangerous ground on which he is treading. He quoted what he believed to be a number of precedents for this sort of "retrospective compensation", but they were not really precedents at all. For example, to suggest that the Pneumoconiosis Etc. (Workers' Compensation) Act 1979 is a precedent for this measure is pure nonsense. That Act was to assist people who had contracted an appalling disease while at work. They did not ask to get pneumoconiosis; it was not the result of their deliberate decision. However, the people to be compensated out of public funds under the Bill lost their jobs as the result of a deliberate conscious decision not to join a trade union—not to join their fellow workers in contributing to the union protecting their interests. People are entitled to take that decision, but is it right to pay £2 million out of the public purse to those who put themselves into that position? There is no possible comparison with the Pneumoconiosis Etc. (Workers' Compensation) Act 1979 or anything similar to it.
  I am much more concerned about the next part of the Bill—the further serious attack on union membership agreements. The Secretary of State was right to resist the strident demands of his right hon. and hon. Friends to make the closed shop illegal. However, he has come within an ace of doing so, and has made it almost unworkable by the proposals in the Bill. The Secretary of State is providing not only a charter for freeloaders, to which my right hon. Friend the Member for Chesterfield (Mr. Varley) referred, but a positive inducement—a huge financial incentive—to trouble—makers. That aspect needs to be considered a little further.
  Unless I have completely misread clause 2, it will be possible in future for a person who is already a trade union member with a firm which has a union membership agreement merely to say that he does not intend to remain a member—the phraseology in clause 2 is
  "to refuse…to remain a member"—
  Knowing full well that, as a result, he will be dismissed. The employer may be pleased to get rid of him, because he may have caused disruption in the firm anyway, but that dismissal will be regarded as unfair unless the agreement

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  has been approved by an 80 per cent. vote of all those eligible to vote, if it is the first ballot, or an 85 per cent. vote of those voting if it is the second or subsequent ballot on the agreement within the preceding five years. If that has not happened, it will be unfair dismissal. That will be an open invitation to irresponsible people, tempted by the huge sums available—possibly more than £30,000 in certain circumstances—to create trouble for their employer and union. I believe that I am properly interpreting clause 2. If I am wrong, no doubt the Secretary of State will tell me.
  Mr. John Gorst: An alternative is that those in the closed shop could agree to allow the individual not to belong to the union and to work alongside him. Therefore the situation about which the hon. Gentleman is worried will not arise.
  Mr. Crowther: I shall come to that point shortly. In the meantime, I am concerned about what has been provided for under the Bill. It appears that the day after a ballot has produced an 84 per cent. vote in favour, people intent on causing trouble can take action of the kind to which I have just referred. On a first ballot, 80 per cent. of the eligible voters must vote in favour. Let us suppose that 79 per cent. vote in favour, 1 per cent. against, and, for various reasons, 20 per cent. do not vote at all. One would think that a 79 per cent. to 1 per cent. vote would be a handsome majority. However, it would not be enough of a majority to prevent the hypothetical trouble-maker immediately resigning from the union, getting the sack, and suing for £30,000 for unfair dismissal. The Secretary of State is leading us into that sort of situation. Therefore, he ought to reconsider that aspect.
  I am not surprised that many employers are extremely worried about clause 2. I do not understand why so much heat or righteous indignation is generated about the closed shop. We hear much talk about the rights of minorities. Do the majority not have any rights? The closed shop is about the rights of the majority.
  I believe that it is universally accepted that, but for the strength of the trade union movement over the years, the standards of all working people, whether trade unionists or not, would be much worse than they are today. I know of no one who seriously disputes that. If so, what is so immoral about a group of trade unionists saying that if someone is not willing to pay his share towards the cost of maintaining and trying to improve not only wages, holidays, working hours and conditions, but standards of safety, welfare, health and all the other matters with which trade unionists are properly concerned, they do not wish to work with him?
  Mr. Peter Lloyd: The hon. Gentleman asked whether anybody seriously disputes that unions have increased their members' standards of living. In general, that is easily disputed. Unions certainly succeed in increasing the money earned by their members, but it is doubtful whether they increase real wages because that can only be achieved by increased and improved working methods and efficiency which are seldom brought in, but are often opposed, by unions.
  Mr. Crowther: I am sure that if the hon. Gentleman seriously studied social history in this century, he would
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  not put forward such a foolish argument. There is no doubt whatever that only the existence of trade unions has improved the standard of living of working people during the present century and even before. Many employers fully understand the case for the closed shop and, indeed, welcome union membership agreements.
  The Bill will place both employers and unions in serious financial jeopardy merely for pursuing a sensible policy that has brought greater order into trade union negotiations.
  As my right hon. Friend the Member for Chesterfield said, there is considerable fear that small companies could be put out of business by these new unfair dismissal provisions. All that is needed is a few actions by the kind of troublemakers to whom I have referred and they could be placed in serious difficulty.
  The most savage attack on the trade union movement is in the latter part of the Bill, under which trade unions will become liable to crippling financial penalties for pursuing what have always been regarded as normal industrial practices.
  There is no recognition in the Bill, the Green Paper or the consultative document of the fact that disputes frequently begin as a result of bad management decisions. Apparently, it is always the workers who are to blame. I heard nothing from the Secretary of State to suggest that disputes are the fault of anyone other than the trade unions, but they are often the fault of someone else. The right hon. Gentleman should recognise that and not try to pretend that the fault always lies with the workers or the trade unions.
  The Secretary of State said that he was tempted to call this a workers' rights Bill, but there is nothing in it about workers' rights. For example, where in the measure are the rights of workers protected in a lock-out? The right hon. Gentleman talked a great deal about strikes but never once mentioned lock-outs, yet from time to time workers are locked out. That could well arise because of secondary action by an employer. Once again, this matter needs to be clarified.
  The Government's attitude to trade unions has reached the level of paranoia. The great majority of trade union members and officers are sensible, level-headed people who want peace in industry. They want to see the economy back on its feet. They do not welcome disputes, they do their best to create satisfactory and workable negotiating machinery. Above all, they want to conduct their affairs around the negotiating table rather than in the court room. The right hon. Gentleman must understand that even the most moderate of people may react angrily if they are pushed too far. It was wise of his hon. Friend the Member for Mid-Sussex (Mr. Renton) to warn him of that fact. I hope that he will take note of his hon. Friend's remarks.
  The Secretary of State may believe—I believe that he does—that the mass unemployment created by the Government, the ever-present threat of redundancy in so many industries and the spectre of closures have so demoralised the trade unions and their members that they will tamely accept this further erosion of their rights to defend their interests. He may be greatly mistaken in that belief.
  This is not a modest Bill, as the Secretary of State likes to describe it, but a deliberately provocative measure that is utterly irrelevant to the problems that beset British industry. It will meet the strongest possible opposition, both inside the House and outside. The Secretary of State and the Prime Minister—whose appointment of the right

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  hon. Gentleman to his post was a calculated insult and challenge to the trade union movement—must bear the responsibility for the damage that results.
  6.5 pm
  Mr. Gerry Neale: I shall return to some of the points made by the hon. Member for Rotherham (Mr. Crowther).
  I congratulate my right hon. Friend the Secretary of State on introducing the Bill and on its form, substance and practicability. Last Session I marshalled a campaign for further laws on the subject, which attracted the support of 180 right hon. and hon. Friends. In particular, I pay tribute to the main signatories of my early-day motion. I am, therefore, delighted to be able to make a few comments on Second Reading.
  It is tempting to pick out various points in the Bill and devote one's speech to those aspects. I shall deal quickly with those before commenting on the main opposition from Labour Members. I am delighted to see the compensation element in clause 1. The point that came over clearly in my right hon. Friend's submission to the Select Committee was that at last we were acknowledging the fact that the right of a person not to join a union is sacrosanct and is worthy of proper compensation if it is lost or surrendered because of the use of pressure.
  I represent a rural constituency with many small businesses, many of which have told me of the problems they have faced as a result of being blacked by certain trade union agreements. I am, therefore, pleased that trade union-only clauses in contracts are to be outlawed.
  I also feel strongly about the recurring ballot for closed shops. While I welcome the various provisions in the Bill, I regret that they fall short of mandatory ballots, which I would have preferred. I share the views expressed by several hon. Members about secret ballots on wider issues in the union movement.
  It is evident that Labour Members believe passionately and sincerely in the aims and objects of their respective unions. It is only right that they should. It is only right that on an occasion such as this the hon. Member for Rotherham should speak for his own union. However, while Labour Members may challenge the Bill in Committee, one senses that the opposition is not now, or to be, in the particular. It is to be a frontal assault on the Bill itself.
  That frontal assault seems to have two thrusts to it. The first is that Labour Members believe that it will do nothing for industrial relations, and therefore that it is an irrelevance and a waste of time. My right hon. Friend rightly pointed out that the Government and all Conservative Members are well aware that we cannot by law require, and obtain, any employer or employee to get on better together. It just cannot be done. Such a requirement is not in the Bill, but it is crazy to go on to say that no law at all is required.
  The hon. Member for Rotherham was good enough to admit that there is a place in industrial relations for some legal provision. I openly admit that in an area such as North Cornwall there is very little union activity—[Horn. MEMBERS: "Ah!"] Labour Members may judge that to be my only experience, but I am a director of a public company that employs more than 2,000 people and have run small businesses and employed people who were previously involved in larger industries and trade unions. When they joined those small businesses they realised the
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  different attitude that could prevail in a small business from that in a large company—trade union environment. I am also a lawyer, who has advised on employer. employee relations.
  Mr. John Evans: The Law Society is a closed shop, is it not?
  Mr. Neale: It seems to be argued that if we cannot guarantee that legislation will make drivers drive well and safely, we should not legislate to protect those who suffer as a result.
  Mr. John Evans: Rubbish.
  Mr. Neale: You say "Rubbish", but you may well be a member of a trade union—
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order.
  Mr. Neale: However, it would be as well if hon. Members like yourself realised—
  Mr. Deputy Speaker: Order. I should be extremely grateful if the hon. Gentleman would leave me out of his speech.
  Mr. Neale: I apologise, Mr. Deputy Speaker. 'The main thrust of the Opposition's assault against the Bill, which is emotionally and no doubt sincerely stated, is that the Bill removes legitimate trade union rights. They mean the almost unfettered rights and the complete immunity that have been cherished and lauded since 1906. Indeed, those rights are presented almost as if they were divine and incapable of change or even of reassessment. Although the great majority of the public hold the contrary view, it is dismissed as ill-formed. Although the majority of trade union members have been shown to support such legislation, that has been dismissed.
  When we talk to Labour Members and union leaders privately, they often confess to the difficulties that the Bill seeks to cover. However, as soon as Labour Members are in a public forum—in a conference or in the Chamber—they seem to become blind and to adopt different positions. A blind eye is turned to the evolution of our law since 1906 and to the evolution in our industry, commerce, production processes and technology. That blindness tries to blot out the development in the competitive skills of those countries that we must trade with and development in the codification of, and commitment to, national and international human rights.
  Opposition Members promote a sense of unreality about the economy. They dispute the essential relationship between the ability of an employer to meet a wage claim and the effort and input on behalf of the employee, and that only adds to the difficulties. Labour Members have pointed out some of the things that trade unions have done. There is no doubt that trade unions have made a phenomenal contribution to many aspects of British industry.
  Recently I spoke to a leader of one of our nationalised industries and he explained how the unions had cooperated and increased production by 80 per cent. in the past 12 years. He explained that manning levels were not nearly as high as people imagined and that manning had been reduced from about 10,000 to 6,200. He also said that the number of customers had increased. The unions played a part in that increased productivity. When I asked the general manager why he did not make more of that,

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  he said that the unions did not want him to. It is ridiculous that people will not accept that the two sides of industry have a role in common.
  Like millions of others in the country, and a few SDP Members, I welcome the Bill. However, the employment spokesman for the SDP threatens to demonstrate the leadership qualities for which the party is becoming renowned and is apparently going to lead SDP Members into the "No" Lobby, while the rest of the party go into the "Aye" Lobby. Parliament cannot continue to ignore reality. It is not only trade unionists, but the public as a whole, who want rights. To many of the public it is self-evident that if certain institutions and individuals have virtually unlimited rights and little or no liability in the exercise of them, those affected must, by the very nature of things, not only suffer a diminution of their rights, but must be prevented from obtaining the recompense for loss available to them through the courts.
  There is undoubtedly some apprehension among Conservative Members about the limited nature of the Bill. My right hon. Friend the Secretary of State will not need reminding that the Bill falls short of the expectations of the various declarations and conventions on human rights, such as article 20 of the Universal Declaration of Human Rights, article 8 of the International Covenant on Economic, Social and Cultural Rights, and article 11 of the European Convention on Human Rights. My right hon. Friend deserves considerable congratulation on having taken us a stage nearer to meeting those expectations. However, I hope that he will not let the Bill be the last word for several years on the reform of employment law.
  During the Conservative Party's campaign at the last election my hon. Friend the Member for Winchester (Mr. Browne) made it clear that we believed in a step-by-step approach to employment law. In the Green Paper on trade union immunities, published by the then Secretary of State for Employment, now the Secretary of State for Northern Ireland, that approach was reiterated. Conservative Members were spurred on towards supporting the campaign for more legislation last Session by the fear that the Government might be committed to a jump-by-jump approach—one jump in each Parliament.
  Many Conservative Members are still apprehensive about the gap between the law—including the Bill's provisions—and the expectations of those who believe that the closed shop and the immunities in respect of action taken by trade union members against those other than their immediate employers are wrong. The hon. Member for Rochdale (Mr. Smith) referred to his commitment, and the House well knows how strongly he feels.
  That apprehension could be reduced immediately if my right hon. Friend—with his customary candour and common sense—would confirm his determination to keep employment law under continual review. I am sure that he has seen the submission made to the Select Committee on Employment on 8 April 1981 by the Lord Chancellor. In his submission the Lord Chancellor pointed out that in the last century company and trade union law had threatened the fundamental principles of British law. Company law has undergone a far greater evolutionary change than have trade union and industrial law. The balance must be redressed.
  The Lord Chancellor said:
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  "The scene of industrial relations is not static. If existing rights or immunities are abused, either to the detriment of individuals, groups or the public, Parliament will demand that they be modified and public opinion will support that demand, once the nature of the mischief is identified, the remedy defined and seen to be effective."
  My right hon. Friend the Secretary of State will be aware that certain mischiefs have been identified and that remedies have been defined, yet they are not included in the Bill. However, my right hon. and hon. Friends will be much more relaxed about their absence when they hear the reassurance that this legislation is not my right hon. Friend's last word on employment law relating to employers, their employees and particularly those represented by unions.
  6.19 pm
  Mr. Ron. Leighton: The Secretary of State, like many ill-fated people before him, is wandering into a mine-strewn quagmire. They all became stuck and regretted it and I believe that he and his right hon. and hon. Friends will come to regret this legislation. Why is the Bill being brought before us now? It is not so long ago that we had the Employment Act 1980. Some hon. Members spent the best part of a year listening to Ministers then extolling the virtues of that measure and telling us that they had got the balance right. Are they now saying that, after all, they got the balance wrong? Is that the meaning of bringing forward more legislation even before the ink on the 1980 Act is dry?
  Mr. Tebbit: First, I have a deep sense of symmetry and 1978, 1980 and 1982 seems an attractive theme. Secondly, I am a progressive.
  Mr. Leighton: I wonder in what direction the Secretary of State is progressing. Before the ink is dry on the 1980 Act and before we have had a chance to consider its effects here come the Government with new legislation. Is the Secretary of State, as a progressive, saying that that Act was defective, useless, misconceived, a mistake and that we all wasted our time? Is it a vote of no confidence in the previous legislation and the previous Secretary of State? If the provisions of this legislation were so necessary and so patently obvious to the Conservative Party, why did it not put them in the 1980 Act? I see the hon. Member for Hendon, North (Mr. Gorst) smiling wryly.
  Mr. Gorst: The hon. Gentleman is a printer, so he will know that if the print is rather faint it is necessary to have another edition. To use the vernacular of Conservative Members, the footprint of the first step was not well-trodden and therefore it is necessary to have one that makes an impression.
  Mr. Leighton: I am grateful for that help and clarification. I remember that the hon. Gentleman was in a minority of one in Standing Committee which considered the previous measure. It now appears that he is in the majority. All the Ministers who extolled the virtues of the 1980 Act were wrong and he alone was right that the footprint was defective. Now the hon. Gentleman's point of view prevails in his party.
  The Secretary of State at Question Time not too many days ago boasted of Britain's good industrial relations. He said that fewer days are lost through industrial disputes than 40 years ago. In that case, why do we need his new legislation? Of course there are some difficulties. The

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  ASLEF dispute has been mentioned, but would the Bill affect that dispute in any way? It would have no effect upon it at all.
  Mr. Gard-Jones: For the time being.
  Mr. Leighton: We keep hearing the phrase "for the time being". The Conservative Party is saying that this is only one bite of the cherry and that they will be back later for a much larger bite. I see Conservative Members nodding their heads. I wonder what my erstwhile colleague the hon. Member for Leicester, East (Mr. Bradley) thinks about that.
  Is another reason for the legislation that the trade unions are now relatively weak? They have been weakened by unemployment. They do not have the political influence and muscle that they had before. Do the Government believe that they can now give full rein to their bitter prejudice and animosity towards the trade unions? Does the Secretary of State believe that one should kick a man when he is down and that, now that the trade unions are down, that is the time to kick them? Is that what motivates the Conservative Party?
  Was it because the previous Secretary of State believed that this measure was unwise and that it would be imprudent to embark upon punitive legislation that he was sent across the Irish Sea into exile? Not only was he sent into exile—no doubt the hon. Member for Hendon, North will smile again—but all the Ministers who were on that 1980 Act Committee have disappeared. One has been moved sideways. The hon. Member for Beeston (Mr. Lester) has been sacked altogether. We have new faces to do the dirty work.
  With what sort of faces are we confronted? I quote a Daily Mail editorial about the new Secretary of State. I emphasise to the Secretary of State that they are not my words. He might believe that I am being slightly rude, but he knows that unlike him, I am not. The Daily Mail stated:
  "His trademarks have been the sneer, the snarl and the predatory prowl".
  The Daily Mail was not criticising the Secretary of State for that, but was praising him. It wished to see more of it. The editorial went on to say:
  "This is not the time for him to show his nice side."
  I am bound to say that he has been remarkably successful in carrying out that advice.
  We are still in some mystery about why we are having this legislation. Perhaps it is the easy option of inserting what we might call a cheap political gimmick. The right hon. Member for Stockton (Mr. Rodgers), from the SDP, who has disappeared, as is their wont, quoted the MORI poll. It would seem that unions tend to be unpopular and unloved. Is the attack on the trade unions seen as a diversion to deflect attention away from other matters such as 3 million unemployed and the state of the economy? Is it an attempt to make the unions the scapegoats and to depict them as monstrous tyrannies that are causing all the problems? Is this the Government's opportunity to injure, main and shackle and the unions while they have a majority?
  It is clear from the legislation that the screw is to be tightened by major steps in the Government's offensive against trade union freedoms. We have had all sorts of inane and uninformed talk about so-called immunities, as though the trade unions were above the law. I do not know whether the hon. Member for Winchester (Mr. Browne), formerly with an honourable regiment and now usefully
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  employed as a banker, is familiar with such matters. The so-called immunities derive from statutes passed in the House, so how can the unions be beyond the law? Such talk is mischievous and misleading.
  Our British system is not based on a written constitution which lays down rights, but on common law. The immunities are statutory safeguards against common law liabilities when carrying out legitimate trade union activities. If we translate the word "immunities" into plain English that anybody can understand it means rights and freedoms—the inalienable rights of free men. They distinguish us from slaves or serfs. Sometimes freedoms and rights are inconvenient. We see that in the ASLEF dispute. Throughout the world societies either accept those rights or they rule by the bayonet. I know the way that I want Britain to go.
  Mr. Garel-Jones: Do any other organisations enjoy such so-called rights?
  Mr. Leighton: We recently discussed the Lloyd's Bill, when the word "immunity" was given great prominence.
  This Bill is a major assault on historic rights and freedoms. Through the unemployment levels the Government are taking us back to the 1930s. In many important respects the Secretary of State is taking us back to before 1901 and to the nineteenth century. I am interested in the SDP and Liberal attitude because the Asquith Liberal Government of 1906 gave the so-called immunities or rights and freedoms to trade unions.
  The Secretary of State says that he wants to neuter the effects of the closed shop. Yet voluntary negotiated union membership agreements are an integral and accepted part of industrial relations in many industries. They are often welcomed and accepted by employers as well as workers. They apply as naturally to plumbers and printers as to doctors and lawyers. They often promote a sense of community at shop floor level. They safeguard standards, job qualifications and safety.
  Such agreements are here to stay. The Industrial Relations Act 1971 made them illegal, but they remain—they will not go away. The Secretary of State says that he is a man of the world and will not be misled by people who say "Let us make them illegal". He knows that that is not possible. What will he do? First, he will remove immunity from refusing to work with non-union labour. Secondly, he will offer huge financial inducements, possibly at trade union expense and perhaps to people with a grudge against the trade union movement, not to become or to cease to be trade union members. With the sums involved I should be surprised if some people did not try it on. I should be surprised if some people were not persuaded by others to try it on. The Bill is a bounty hunter's charter and a recipe for disruption.
  As my right hon. Friend the Member for Chesterfield (Mr. Varley) said, the CBI is worried about the high levels of compensation because some small firms could be bankrupted. Members of the CBI are practical men of affairs and they see the damage that could be caused.
  I turn to the biggest blockbuster of all. I have bad news for the Secretary of State. He will come a cropper. I refer to the curtailment of section 14 immunity under the doctrine of vicarious liability which would expose union funds to colossal damages by causing unions to be held responsible for their members' actions. Damages of up to £250,000 could be awarded in each case. A union might

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  be involved in four cases, so £1 million could be at stake. Theoretically, employers would be able to bankrupt unions.
  Let us imagine the scenario. The Secretary of State and the House should think about it. There will be injunctions and then contempt of court charges. Sequestration will occur. Does any hon. Member think that British workers will allow that to happen? That is stretching credibility too far.
  We remember what happened in the Con Mech case when enormous damages were involved. The union called a national strike and anonymous donors became involved. The unions have already said what they will do if the Bill is passed and fines are levied against them. They have said clearly, so that we know where we stand, that they will not pay. They have said that they will oppose them by taking industrial action.
  The Secretary of State might have been misled by public opinion polls. That is always a danger for politicians. The SDP will come unstuck by studying the opinion polls, finding out what the people want and offering it to them. The polls have always shown that the unions are unloved and unpopular. There is nothing new about that. In real life things are different.
  I am a member of a union and I know that members feel the same affinity and loyalty to their union as some Conservative Members feel to their regiment. Union members have the same gut reaction to their union which they might have joined at 14 years of age and which has given them a livelihood.
  Mr. Garel-Jones: Nonsense.
  Mr. Leighton: The hon. Member for Watford (Mr. Garel-Jones) does not understand, but there is so much that he does not understand. He will have to learn.
  Mr. Arthur Lewis: I thought that my hon. Friend would refer to the way in which the Government locked up the five dockers and how the Official Solicitor had to get them off the hook. Will the Government have to provide another batch of official solicitors to get them off the hook again?
  Mr. Leighton: I was about to remind the Secretary of State of the Pentonville five. I was about to say that when union officials are imprisoned and when the sequestrators move in and take away the furniture and typewriters there will be real resistance. There will be real grievances. He can forget the opinion polls.
  Whether or not the Secretary of State is snarling and whether or not his minions are on their bikes, any attempt to destroy the unions will fail. The Secretary of State should remember the ill-fated 1971 Act. He should remember the election that the right hon. Member for Sidcup (Mr. Heath) called to decide who rules. I believe in the rule of law. We should not endanger it by bringing the law into disrepute with such absurd legislation. It is dangerous. Respect for law is essential. Parliament is sovereign and supreme.
  There are only two limitations. The first is that this Parliament is sovereign and the same status will be enjoyed by its successors. That Parliament can undo this legislation and I am positive that it will do so if it is enacted. The second restriction on our apparently
  778
  unfettered sovereignty and supremacy is that if we pass laws that are so ludicrous or offensive that they are not obeyed by the people there will not be enough policemen to arrest them all if they show that they are willing to take the consequences. There will not be enough gaols to put us all in. We have law and justice by consent.
  We shall try to save the Government from themselves. We shall try to prevent them making asses of themselves and an ass of the law. However, if they insist on enacting this measure, we shall fight it all the way in the House and in industry outside the House. It is the right of the British people so to do and we shall do it. There is no need for any ambiguity or dubiety. We shall fight the Bill in the House and outside with all the forces at our disposal.
  Mr. Tebbit: Is the hon. Gentleman setting out as the policy of his party that he wants people to break the law if they do not like it?
  Mr. Leighton: If fines of £250,000 are levied on the trade unions and if their very existence is set at risk by the Government's foolish and mischievous actions, they will have a right to defend themselves. That is a right that extends to anyone else who is under attack—and it is a right that is enjoyed here as well as in Poland.
  6.43 pm
  Mr. Peter Lloyd: I take up the remarks of the hon. Member for Newham, North-East (Mr. Leighton) with a sense of déjà vu. I listened to the hon. Gentleman at considerable length on many occasions when we considered the Employment Bill in Committee. He may wonder whether what he said then was a waste of time as we are now considering another employment measure. As my right hon. Friend the Secretary of State said, the previous Labour Government introduced industrial relations measures in 1974, 1976 and 1978. If we are to follow that practice, we are due for one more employent Bill before we catch them up. Nevertheless, I hope that this will be the last Bill on industrial relations to be introduced in this Parliament.
  The hon. Member for Newham, North-East discussed immunities. He seemed to suggest that the Bill will remove all immunities, or that there is a desire on this side of the House to remove all immunities from trade unions and individuals in industrial disputes. That is not so. We are discussing exactly what the immunities are and how far they should extend. It is extraordinary that in speech after speech from Opposition Members in the House and from others outside the question is never directed to what the law should be. There is an ideological assumption that there can be no change in the law without damaging the freedom of individuals who may wish to associate with a trade union or belong to it.
  The hon. Member for Newham, North-East rightly spoke of the loyalty that members feel for their trade unions. That may not apply to every member or to every trade union, but many trade unionists have a deep loyalty, respect and affection for their union. They feel comfortable, warm and cosy in it. I know that that is often the feeling of those who have come to this House through the trade union hierarchy. That is admirable, but it would be healthier if trade unions relied on the loyalty and support of their memberships rather than legal immunities that are enjoyed by no other group or organisation.
  I am pleased to see the Bill before the House and I support most of its provisions. It is shrewd. It builds on

  779
  the 1980 Act and continues the latter's essentially non-ideological objective. I note that some Labour Members are laughing. The only ideology we have heard in the House is from them to the effect that no law is to be considered other than that which is presently on the statute book unless it is a proposal to increase union immunities still further.
  The Bill deals with specific abuses of which the public are well aware even if the right hon. Member for Chesterfield (Mr. Varley) and his hon. Friends are not. Some of my hon. Friends see the Bill making good what they regard as omissions in the 1980 Act. I think that my hon. Friend the Member for Cornwall, North (Mr. Neale) has that idea but I do not agree with him. The 1980 Act was well thought out and appropriate for the time of its introduction. However, to put industrial relations law on a just and sound footing after at least two generations of false starts and one-sided decisions will take two or three Bills and will spread over two Parliaments. These matters are far too important and complex to be passed through the House without detailed consideration and reflection at each stage. It is a mistake to try to do too much at once.
  It is too easy to construct a complex legal house of cards that could come tumbling down if a major element happened 10 be misjudged. Time is needed for managements, unions and the community generally to absorb what has been done at each stage. The reception that greets each instalment inevitably modifies the next one. That is the special achievement of the 1980 Act. It is now possible to argue industrial relations legislation on its merits, although that is not possible with some trade union leaders or Opposition spokesmen. However, it is now possible outside the House to argue generally whether a proposal is good or bad and what its effects might be.
  Before 1980 the main question used to be "Is it possible to legislate other than to extend still further immunities for unions?". Change was seen inevitably as forming a one-way street. We were glad to have SDP support for the Bill, convoluted and half-hearted though it might be. We are conscious that its support might have been given only because it thinks that the Bill reflects where the bulk of public opinion lies. It must have been disagreeable for the SDP to descend from the clouds of generalised good will and to make a firm policy choice.
  Mr. Mikardo: Have all the SDP Members made the choice?
  Mr. Lloyd: We shall not know until we see how they vote in the Division. It will be interesting to note what effect its decision to support the Bill will have on its special commitment to a statutory incomes policy. After tonight's vote benevolent neutrality from trade union leaders will not be an option. It has been shown in the past that brute legislation cannot work. We are left with the ingenious Heath Robinson devices of Professors Layard and Meade. They may sound good in sixth-form discussions and at Liberal and SDP conferences, but they would buckle and collapse in any real live pay dispute.
  I understood the right hon. Member for Stockton (Mr. Rodgers) to complain that the Bill will do nothing for industrial relations and efficiency within industry. The law does not create good industrial relations. Most of us on both sides of the House know that. Only managers and employees between them can achieve good industrial relations and efficiency.
  Mr. Jim Craigen: Is the hon. Gentleman aware that a number of employers are saying "We would like more time to enable the 1980 legislation to be experienced and developed. Do not start destabilising now"? Does the hon. Gentleman not hear that type of comment from employers in his constituency?
  Mr. Lloyd: I do not. However, I have read that some employers take that view. I have heard others express the hope that many of the provisions contained in the Bill will find their way on to the statute book. I have received letters to that effect. Many of them regret that certain measures that are set out in the Bill were not part of the 1980 Act There is a range of opinion throughout industry.
  It is foolish to expect the law to improve industrial relations, but it is sensible to look to industrial relations law to provide a healthier framework for such relations. The Bill modestly does that by increasing the remedies for those injured by unlawful and unfair conduct. Presumably that is why the SDP is giving the Bill reluctant and complicated support.
  Clauses 10 and 11 should assist industrial efficiency. Union pressures will no longer be able to prevent management from using efficient outside suppliers and contractors which may not be acceptable to the unions because they are not unionised.
  Mr. Mikardo: Cowboys.
  Mr. Lloyd: That is what the unions may call those who may do the job more profitably and efficiently than their members.
  Mr. Mikardo: And less safely.
  Mr. Lloyd: Unlike the previous Conservative Industrial Relations Act, the underlying merit of the 1980 Act and this Bill is that they are activated only when there is a victim suffering from unfair action and where a wrong is apparent to the public and should be put right. ft is appropriate that under clause 1 the Secretary of State can compensate victims of the 1976 closed shop legislation. It is a salutary reminder of the fact that when unions' legal privileges were at their zenith some unions, probably to the regret and shame of others, used their apparent powers spitefully and small-mindedly.
  Mr. John Evans: In equity and fairness, does the hon. Gentleman believe that workers who were sacked because they wanted to join a union, such as at Grunwick, should also receive retrospective compensation?
  Mr. Lloyd: I am not sure that that is why the employees at Grunwick were sacked. The only gain from that episode was to crystallise the public's view that reform was necessary. It also destroyed any moral authority that the unions might have to resist it.
  Mr. Tebbit: Had the workers at Grunwick been sacked for being members of a trade union, there was a remedy in law. They could have gone before a tribunal.
  Mr. Lloyd: I presume that none did, so either they did not feel that they could justify their case, or that was not the reason that they were sacked.
  Clause 12 makes union funds liable and brings union immunities into line with those for individuals and employer organisations. Unions should not be beyond the law. It has not benefited them. It has done their reputation

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  no good. They would have to endure far less hostility and criticism if they had to work within the law, like the rest of the community.
  I have a number of questions about the clause, but some have been raised already and most of the others are best left to the Committee. The right hon. Member for Chesterfield (Mr. Varley) mentioned the Green Paper, saying that some people may hope that by making unions liable for the actions of their officials they will increase discipline and their control over members, but it would be wrong for the law to bolster union leaders at the expense of members, and full-time officials at the expense of shop floor representatives.
  Will the Minister confirm that unions will be liable for their officials acting unlawfully only where they carry union authority according to the rules and are not repudiated? If so, the requirement of the law is essentially negative, so if a union visibly and in good faith withdraws its support and approval from an official's unlawful act, it should be I presume sufficient to make it immune from damages. Therefore, there is no requirement to discipline or expel an erring official to avoid damages.
  It would be a pity if the law encouraged the habit of taking away union cards. Unlike my hon. Friend the Member for Mid-Sussex (Mr. Renton), I am chary of using the law, even inadvertently, to influence the way that unions conduct their internal business.
  I have reservations about clause 2, which concerns dismissal for non-union membership in pre-1980 closed shops unless 80 per cent. of those affected or 85 per cent. of those voting have supported its continuance. To put it at its mildest, it is unsatisfactory that an individual's rights at law should depend on how his colleagues vote. He should either have protection and remedy at law or he should not. The matter should not be conditional.
  My hon. Friend the Member for Mid-Sussex mentioned a practical problem. What happens if there is a 75 per cent. vote for continuation? The preference having been given and then ignored, it would justifiably cause considerable resentment.
  The position is different with a new closed shop. That is why I accepted the proposal in the 1980 Act. It is reasonable to demand a weighted majority to alter the status quo. But clause 2 allows a minority to alter the status quo. It is the one part of the Bill that could create a conflict without a victim, the need for whose protection would be apparent and which would justify it to the public. A management anxious to oblige a union with which it has had a long-standing membership agreement might seek to ensure that the closed shop is sustained at a ballot by pre-entry vetting of job applicants or canvassing and influencing employees before a ballot.
  I am sorry that my right hon. Friend has gone down the ballot road. I fear that it may produce awkward problems without ending the closed shop. It would have been preferable to have left the proposal out of the Bill. My right hon. Friend could have then produced for the election manifesto a carefully thought out proposal to extend the undertaking to make dismissal for non-union membership, like dismissal for union membership, unfair in all circumstances, with the exception of perhaps the seamen's union and Equity, where there is a strong case to retain it.
  6.58 pm
  Mr. Cyril Smith: In the 10 years that I have been a Member of the House I have heard many discussions on employment legislation. Employment legislation is never-ending. The previous Government specialised in such Bills and this Government seem to be doing the same.
  I detected a possible split in the Tory Party. The hon. Member for Fareham (Mr. Lloyd) said that he hoped that this was the last such Bill in this Parliament, but previous Tory speakers called for more, and more appear to be possible.
  The arguments are always the same. We were promised that the 1980 Bill would be fought through the House. It has constantly been said in this debate that certain SDP Members have left the House. Despite the tremendous fervour of the official Opposition, only about 13 Labour Members have been here so far throughout the four hours of the debate. I do not criticise them, but I do not get the impression from that that they are in a lather and will fight the Bill all the way with red banners flying and heaven knows what.
  Mr. Mikardo: There will be more of us about when the hon. Gentleman has finished speaking.
  Mr. Smith: The truth is that most of these measures have little to do with employment as such and even less to do with good industrial relations. It is for the latter reason that I consider the Bill to be ill-timed. At a time when the economy is flat and struggling—whatever the Tory propagandists say, that is certainly the experience in my area—yet another Bill is introduced which contains important features, but not features to which a sensible Government would give priority at such a time.
  In the current situation, we should be attempting to create an industrial strategy which will lead to economic survival, and that strategy must include improved industrial relations. Industrial relations should be based not upon fear of the dole queue, which is the Government's attitude, but upon creating a structure based on a mixed economy which recognises that both capital and labour are essential ingredients in the mix of both sides of that economy.
  In our view, a Bill calling for worker participation in industry, which has been Liberal policy since 1928, greater profit sharing and incentives for profit sharing and legal recognition for works councils would have been more appropriate to present needs. A Government concerned to create partnership and which showed a proper understanding of the relationship of pay, prices, investment, productivity, employment and good industrial relations to a successful economy would be a very different Government from that which we now have. The Tory Government not only attack the trade unions, or so it is alleged, but constantly insult British industry by propounding the myth that those of us concerned with British industry were all grossly inefficient until they came to power.
  Nevertheless, we are stuck with the Government and we must therefore deal with circumstances as we find them. We are also stuck with the Secretary of State for Employment, who is scarcely noted for his compassion. Indeed, there are those who would argue that the right hon. Gentleman is more noted for his arrogance and his desire to go down in history as the champion of the Tory Right

  783
  than as the upholder of consensus views, and perhaps also more noted for an apparent belief in his own infallibility than for a desire to lead on a team basis.
  It seems that the Secretary of State has chosen to forget his past. There was a time when he believed in wider worker participation. In 1974, for example, he called upon the Government to recognise that
  "capitalism, if it is to survive, must undergo some major changes."
  There were times, too, when he apparently bitterly opposed the closed shop. On 9 December 1975, speaking about the closed shop, he said:
  "The importance of liberty is infinitely greater than the importance of 100 per cent. membership." — [Official Report], 9 December 1975; Vol. 902, c. 329ߝ30.]
  He seemed to have forgotten that when, on 23 April 1980, his hon. Friend the Member for Hendon, North (Mr. Gorst) moved an amendment, for which I voted, to give people in a closed shop established before the 1980 legislation the right to vote on whether they wished the closed shop to continue, he voted against that amendment. The right hon. Gentleman's actions in 1980 and today provide a perfect example of what ministerial office can do to a person's conscience and views and the way in which he votes.
  The Liberals, as a minority party, have very few rights, and the ability to determine the business of the House is certainly not one of them. Bills and motions are put before us and we must vote for or against them. If we abstain, we are mauled by the press—the tool of the Tory Party—for indecision. Abstentions are not recorded. If we vote with the Government, we are accused of being their puppets. If we vote with the Opposition, we face similar criticism.
  After almost 10 years as a Member of the House, that no longer bothers me. I judge an issue on its merits and vote accordingly. It is tempting to vote against the Bill because one is highly suspicious of the Secretary of State's motives, but if I vote against the Bill purely on that basis I should be committing the very fault for which I criticise the Government and the Opposition—judging the issue not on its merits but on the basis of its source. On its merits, I believe that the Bill should be supported, and I shall certainly support it. Moreover, lest there be any misunderstanding, I put it on record that early last week—I stress those words—after careful consideration and much internal party consultation, I advised my Liberal colleagues to do likewise.
  Mr. Sydney Bidwell: No one is surprised.
  Mr. Smith: I take the hon. Gentleman's comment as a compliment. So far as I know, all my colleagues will be voting in the Lobby with me. Incidentally, if some of them did not do so, I should interpret that not as a split in the party but as a manifestation of democracy—people exercising their individual right of thinking for themselves and refusing to be party political puppets. I should see that as a welcome distinction in party politics and a wind of change to be applauded.
  I said that I would vote for the Bill on Second Reading. I shall do so, first, because I welcome its proposals on the closed shop. They are certainly better than nothing. I have never made a secret of my hatred for the closed shop. I am probably the only hon. Member who in the past two years at his own expense has gone to the High Court for an injunction against a local authority to try to prevent a
  784
  closed shop being introduced. I hate the closed shop. I consider it to be a gross infringement of individual liberty. I believe that any person must have the right to belong to a trade union, but equally I believe that any person must have the right not to be a member. I took that line throughout the discussions on the 1980 Bill, and I take it now.
  Let it be said—indeed the Secretary of State conceded it—that the Bill does not make the closed shop illegal. Despite all his bravado and flag-waving at the last Tory Party conference, the Secretary of State has ducked that one. He has not made the closed shop illegal.
  Mr. Tebbit: The hon. Gentleman is being very fair. He will recollect that for many years, whenever I have said anything about the closed shop, I have made plain my dislike of it. Equally, I have made plain my belief that, certainly until now, we could not legislate effectively to make it illegal. That is why I have introduced the proposals in the Bill. Like the hon. Gentleman, I feel that they constitute a reasonable step to protect people against the worst excesses of the closed shop.
  Mr. Smith: I accept the latter part of the Minister's intervention and his personal view in the first part. Many of the problems stored up in the Bill—such as who will and who will not receive compensation, the amount of that compensation and the fact that people can be encouraged to go for high sums of compensation—would not exist if we had a clause saying that closed shops are not in accordance with the law and are an infringement of human liberty.
  The Bill goes way to helping those who are affected by a closed shop. I welcome and support that part of it. I am prepared to listen to arguments for a variation in the percentages for closed shop agreements—80 per cent. or 85 per cent. of those voting. I may or may pot be convinced by the arguments, but the principles involved are good and should be applauded.
  Equally, I share the worry that has been expressed by Opposition Members about the amount of compensation for dismissal. I am in favour of a high figure, but we must be careful to guard against unscrupulous individuals and those who may attempt to engineer dismissal to obtain high compensation.
  I also welcome the clause that outlaws union labour-only contracts. Such contracts are detrimental to small businesses and the self-employed.
  I support those clauses that repeal section 14 of the Trade Union and Labour Relations Act 1974. I would consider supporting a lowering of the financial penalties proposed against union offenders, but, again, I believe that the principle of taking away immunity is correct. Those clauses might have more chance of success if unions were more decentralised with strong local officials. While not disagreeing with clause 15, I regret that its interpretation will not be assisted by any requirement for effective consultation.
  There is much in the Bill with which I agree. Overlooking its timing, and judging it solely on its merits, I and my colleagues will support it in the Lobby. Some amendments to the Bill are needed. That is why we have Committee stages. However, in its present form, I do not see it as a bad Bill. I do not believe that it will destroy the trade union movement. I reject the notion that it is a union bashing Bill.

  785
  I believe in a strong trade union movement, properly led, democratically based, and seeking to improve the industrial lot of its members. I wish to see people encouraged to join their unions, but not bullied or compelled to join by law or by actions that will lead to their losing their jobs if they do not join. I see nothing in the Bill that is incompatible with those views and I see provisions in the Bill that are compatible with more individual liberty and choice. For those reasons, I shall support it.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Mr. Michael Shaw.
  Mr. Mikardo: On a point of order, Mr. Deputy Speaker. I raise this point of order with some diffidence, because I am aware that the selection of speakers is entirely within the discretion of the Chair. I respectively point out that we shall have had three speakers in succession in favour of the Bill without an intervening one against and that earlier in the debate, we heard two speakers in succession who were in favour of the Bill without an intervening one against.
  Mr. Gorst: Further to that point of order, Mr. Deputy Speaker. It may be that the wisdom of the Chair represents the view in the country as well.
  7.14 pm
  Mr. Michael Shaw: We have had the usual robust contribution from the hon. Member for Rochdale (Mr. Smith). Most hon. Members, certainly on the Conservative Benches, welcome his judgment of the Bill. I found his judgment a little less convincing when he seemed to detect a split on the Conservative Benches because of a difference of opinion that was apparent in two speeches. On the other hand, with regard to the possible action of his colleagues in going through different Lobbies, he seemed to detect not a split but a manifestation of democracy. Had he not made that distinction perhaps I would have taken more seriously some of his other remarks.
  I regret the hon. Member's critical remarks about my right hon. Friend the Secretary of State when he quoted to him what some of the newspapers had chosen to say. Having sat through the whole debate, I believe that my right hon. Friend has taken a reasonable attitude to all interventions and, indeed, the whole of his speech was a reasonable contribution to our consideration of the Bill. The difference between the hon. Member for Rochdale and the right hon. Member for Stockton (Mr. Rodgers) was that the hon. Member for Rochdale made his criticisms with a smile, and we all knew what was going on. I regret to say that the smile was absent in the other case.
  Mr. Tebbit: The right hon. Gentleman was being consistent.
  Mr. Shaw: Perhaps he was being consistent, but we react differently to the way that views are expressed. We are in for a period when views will be expressed and, perhaps reluctantly, decisions taken by SDP Members as to which way to vote. While they are making up their minds on the merits of the case, they will be at pains to show how distasteful is the company that they will will have to suffer when they go through the Division Lobbies.
  786
  While I was coming down in the train—I am glad to say that the train came down in good time from Yorkshire, and that the difficulties at Grantham seem to have been overcome—I had a chance to read in The Times an article by Mr. Brian Capstick. There were nearly five columns of criticism of my right hon. Friend's Bill and, it said—this was tucked away in one sentence—that on balance, the feeling of the SDP is that it is in favour of it. I felt that that was an extraordinary article. I hope that, in coming to these decisions, the members of the SDP will be more generous in their acceptance of the merits of the Bill and of those who put them forward. I took exception to the descriptions that were made of my right hon. Friend. I can only think that they were devised when the right hon. Member for Stockton was shaving this morning and something gave him cause to think along those lines.
  The Bill has already aroused considerable comment, particularly in the trade union movement. The hon. Member for Rotherham (Mr. Crowther) said that it is a savage attack on trade unions. It has been said elsewhere that we are out to destroy trade unions and that people will work actively against such a law and be prepared to take the possible consequences. I am waiting, like my right hon. Friend, to hear whether the full consequences of such a statement are to be applied and to be apprehended.
  I have also heard the statement that trade unionists are likely to be prepared to break the law if the Bill reaches the statute book. I hope that some clarity will emerge to show whether such a statement is true. I hope that it is not true. I do not seek to impugn the integrity of people who feel strongly about the Bill. I simply do not believe that such comments are justified.
  The trade union movement of today represents one of the most powerful and influential sections of our community. I hope that it may long continue to be so. I have always felt, as I have remarked on several occasions in the House, that the economic life of this country depends very much on close collaboration involving the unions, the employers and also the Government who represent the interests of the public as a whole. I am equally convinced that collaboration must take place within a fair framework of law that must be subject to change.
  The contents of the Bill, particularly the modification of trade union immunity rights, arouse strong feelings. From time to time, Parliament examines such matters as company law. There have been changes in the status of shareholders, the obligations of directors, the manner in which accounts are presented and the rights of employees and the public at large to information. The law relating to monopolies and international companies is relevant in considering trade unionism today. One also needs to take account of consumer legislation. In all these areas it is regarded as right and proper, as, indeed, it is, that changes should be made from time to time. It must therefore be right that from time to time hon. Members should examine and where necessary revise the law relating to trade unions and all aspects of industrial relations.
  Under the Bill the Secretary of State is empowered to pay compensation at his discretion to certain people previously dismissed for non-membership of a trade union where there has been a union membership agreement. This power would relate to cases of dismissal that occurred after the 1974 Act and before the coming into force of the 1980

  787
  Act where such a dismissal would have been unfair had the 1980 Act already been in existence. This gives rise, I believe, to consideration of retrospective legislation.
  I have always been opposed to retrospective legislation, with one proviso. I have always regarded it as absolutely acceptable, and, indeed, desirable if it is for the righting of a clearly identifiable injustice. This injustice, in the view of Conservative Members, was put right as soon as the Government came to power. Confirmation of our view that it was an injustice was contained in the judgment of the Strasbourg court which came into effect, I think I recall correctly, shortly after the Government came to power. The court decided that the circumstances surrounding the dismissal of the three railwaymen had put us in breach of our obligation under the European Convention on Human Rights. Since it is possible to identify both the injustice and the individuals upon which it has been perpetuated, I welcome the new proposal.
  As some of my hon. Friends have averred, the main changes in the Bill—those limiting the immunities, affecting compensation, unfair dismissal and the like—may not cover as many matters as some would wish. I believe that they are important changes. Above all, they are relevant to modern conditions of industrial and commercial life. They cannot be regarded, as Opposition Members have sought to show, as an attempt to destroy the trade unions. They are in fact a means of making the trade union movement more effective and, indeed, more powerful. They are in addition a continuing recognition of the great changes that have come about in the strength and status of trade unionism.
  I stated in the debate on the Queen's Speech that the Government were right to adopt a step by step policy. I expressed my feeling that the 1980 Act should have been a rather bigger step than it was. However, our having taken that first step, it is right that this next step should result from proposals that have been given the widest possible consideration. It should not be forgotten that the present Secretary of State for Northern Ireland produced the Green Paper for further moves. To say that my right hon. Friend the Member for Lowestoft (Mr. Prior) has been banished to Northern Ireland is insulting. Anyone going to Northern Ireland to work out that great task for the people of this country deserves full credit for all that he is doing. My right hon. Friend the present Secretary of State for Employment took up the Green Paper and produced, I am glad to say, a further consultative document. Now he has produced the. Bill. There has been the widest possible consultation.
  Mr. Bidwell: With the memory of the Donovan report, a massive study, in the background, has the hon. Gentleman allowed it to enter his mind that trade union officials could lose control of an industrial situation? I am not fully aware of the hon. Gentleman's experience of industry. Is he aware that workers could act on their own and that a breakaway situation might result from the Bill?
  Mr. Shaw: I would not say that the situation has been 100 per cent. proof in the past. This is a matter that can be discussed in Committee.
  While the Bill may be changed in detail during its passage through the House, I believe that it already represents a reasonable and necessary measure of reform. I hope that the debates that take place upstairs and on Report will be conducted in a reasonable and constructive
  788
  manner. The subject deserves that sort of consideration. It is of the utmost importance that the Bill is treated in such a manner. In support of my hon. Friend the Member for Fareham (Mr. Lloyd), I believe that the country should have time to digest the measures when they have gone through the House. Unless there are the strongest possible reasons, I believe that we should not seek to amend the law again during the life of this Parliament.
  7.29 pm
  Mr. Ian Mikardo: I hope, Mr. Deputy Speaker, that you were not offended by the point of order that I raised a short while ago. Since the debate began we have had a little over 150 minutes of speeches for the motion before the House, and 78 minutes of speeches against the motion. In over 30 years in the House I cannot recall a single previous occasion—whatever the motion and whatever the merits—on which one side of the House had double the time that the other side had in a debate on a motion.
  The Secretary of State is not here at the moment, but he has been here nearly all the time and I do not make any criticism. Has he noticed, as I have—if he has, he will be grinning to himself, as I am—where his support has conic from? The only support that he has had—some of it modified, some of it rather critical—from Conservative Members for a Bill that touches the heart of industrial relations and the heart of our industry has come from the great, teeming, throbbing centres of British industry—from Mid-Sussex, with its great roaring steel mills belching out colour into the night; from Winchester, with its massive shipyards and all its workers; from North Cornwall, with its great textile industry and its looms bashing away; from the shipyards of Fareham, presumably on the edge of Porchester Creek; and, above all, from the coal mines of Scarborough. That is where his support has come from.
  Mr. Tebbit rose—
  Mr. Mikardo: I should be glad if the right hon. Gentleman would wait. I know that he cannot resist responding. Does the right hon. Gentleman attach any significance to the fact that he has not had any support from any Conservative Members from Sheffield, Newcastle, Manchester, Liverpool, Birmingham?
  Mr. Churchill rose—
  Mr. Mikardo: What have we had? We have sat here and listened to lectures from the Conservative Benches on how working men behave, what they are like and what they feel, from two company directors, one accountant, one banker, and one lawyer who is a member of the tightest closed shop in Great Britain. They have been telling us what working men are like and how working men think. The right hon. Gentleman must attach the same significance to that as I do.
  Mr. Tebbit: As the hon. Gentleman knows, I never can resist these things. I cannot resist pointing out to him that I am happy that at least there are rather more Government supporters behind me than there are Labour supporters behind the hon. Gentleman, despite all the talk of the outrage and fury that the Bill would cause. The South of England has a very good record of industrial relations. Most of the great new modern industries are not springing up—unfortunately, in my view—in those areas

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  in the North to which the hon. Gentleman has referred but along the Thames Valley and down into Bristol and South Wales. There may be some significance in that.
  Mr. Mikardo: That is a very good try. The right hon. Gentleman is a good trier. He will be the first to recognise that what he said is stretching the elastic a bit tight. The right hon. Gentleman has been here throughout the whole of the debate. He is entitled to the drink for which I think he is just departing.
  A few days ago I spent an evening drafting some amendments to the Bill. The first amendment that I drafted was to the title. The Bill should never have been called the Employment Bill. It has nothing to do with employment. There is a great deal to talk about at the present time regarding employment. Indeed, if all the time that will be wasted in the House and in Committee on the Bill were devoted to putting our heads together about the real problems of employment—especially about how to reduce that hideous total of 3 million unemployed—we should be better occupied.
  What is there in the Bill about employment? There is not a line in the Bill that will provide a single job for any of the 3 million unemployed. It is an affront and an offence to those 3 million people that the Bill, which is a mechanism for carrying out—as we have heard from Conservative speakers—a piece of extreme Right-wing Tory ideology, should be called the Employment Bill. It is a calculated offence to every one of the 3 million unemployed.
  The first amendment that I have drafted to the Bill is to the title—to delete "Employment" and insert "Anti-Trade Union"—because we ought to have an honest and accurate description of the Bill instead of the dishonest and inaccurate one that we have.
  Mr. Arthur Lewis: My hon. Friend may not have been present to hear the acting leader of the Liberal Party say that four new jobs will be created by the Bill. As the hon. Member for Rochdale (Mr. Smith) is a former member of the Labour Party and a former Labour mayor, I am assuming that he is correct. It will make a big impression, will it not, on the figure of unemployed? There will be four new jobs.
  Mr. Mikardo: I am deeply grateful to my hon. Friend for pointing out that four new jobs will be created in the Department of Employment. That will be absolutely marvellous.
  Mr. Whitney: On the very important question of employment, would the hon. Gentleman care to comment on the experience in the United States? In the "right to work" states—the 20 states in which the closed shop has been outlawed—employment has been increased by over 1 million in the last few years. In the 30 states in which the closed shop still operates, employment opportunities have been destroyed and jobs lost.
  Mr. Mikardo: I would comment on that intervention if I had made a deep study of employment in all the states. I do not believe that any one factor can account for changes of that sort and differences of that nature. I fear that that analysis is as superficial as most of those made by the hon. Gentleman.
  790
  What worries me is not only that the Bill will not create employment but that it may reduce the economic health of the country as a result of all the friction and the dislocation that it will cause.
  I can now see very clearly why the right hon. Member for Lowestoft (Mr. Prior) was moved out of the Department of Employment. He would not have introduced this Bill. I notice that he is not one of its sponsors. I am sure that he is happy that its provisions do not apply to Northern Ireland. I am wondering whether that is because he put in an oar in that direction. I shall be interested to see whether he is in the Lobby tonight or whether he has an unavoidable commitment in Belfast which will prevent him from voting for a Bill for which I do not think he cares very much.
  The right hon. Member for Lowestoft thought hard about the complexities of industrial relations. He did not always get the right answers, as we saw in relation to some aspects of his own Bill, but at least he listened to the people who know something of the subject. He listened to the CBI, to the TUC, and to the organisations of professional managers, whereas the present Secretary of State listens to nobody but the Prime Minister. Doubtless that is why he has got on as quickly as he has—unlike those of his colleagues who have minds of their own, like the right hon. Members for Chelmsford (Mr. St. JohnStevas) and for Amersham and Chesham (Sir Ian Gilmour.)
  I want to say a brief word about a number of anomalies, and in some cases a number of dangers, which I believe are inherent in the Bill. First, the Bill claims—and the Secretary of State and other Conservative Members have underlined the claim—that it will extend freedom. Of course, everyone wants to extend freedom. However, the Bill destroys one important freedom, and that is the freedom of a man to choose with whom he wants to work. That, too, is a freedom. A man should not be compelled to work with people with whom he does not want to work. There are strong feelings among some workers against those who, sometimes on the ground of genuine conscience, but more often—here I speak from experience—speciously pretend to have a conscience which enables them to take the benefits achieved by trade union organisation without contributing a penny or a minute of work.
  Mr. Richard Needham rose—
  Mr. Mikardo: I shall give way in a moment, provided that the hon. Gentleman speaks some sense, and I am a little doubtful about that.
  I have spent a fair amount of my lifetime in factories, and I have met a lot of these chaps who have a conscientious objection to belonging to a trade union. In the whole of my working life I have not met one who had a conscientious objection to taking the wage increase that had been negotiated. In a factory one never meets the bloke who says "It is very nice. We have an increase of 30 bob in the wages this week, but I shall not take it because I do not belong to the union that negotiated it, because I have a conscientious objection". My experience, on the contrary, is that it is the money grabbers, those who will not pay, who are the first in the queue with their hands out as soon as the union has negotiated a wage increase or an improvement in conditions.
  Mr. Needham: I am grateful to the hon. Gentleman for giving way. Surely there is nothing in the Bill that compels reinstatement. It merely puts a financial onus on the employer and the union if they do not reinstate. The Bill does not take away a freedom because there is no compulsion in it.
  Mr. Mikardo: All right. I shall say to the hon. Gentleman "I do not mind you doing what you are about to do. All that I shall do is to take £100,000 off you if you do", and he will say that I am not compelling him to do so or preventing him from doing so.
  The Bill is intended to take away, and will take away, a man's right to work with those with whom he chooses to work. Moreover, the Bill gives those money grabbers—those who have a conscience about joining trade unions, but no conscience about taking the wage increases—a huge financial incentive, sometimes at the expense of the trade union, to pursue their selfish behaviour. That clause is a charter for the litigious—and there are many litigious people. The Minister of State smiles. I am not sure whether he is a lawyer. If he is not, he is not one of those who will get all the benefit. The lawyers are grinning all over their faces. They will get some gravy out of this legislation. They will have a wonderful time. Moreover, there are outside organisations that will inspire and finance people to go to court.
  I am worried, too, about what may happen to the atmosphere in a workplace as a result of the periodical review ballot of membership agreement. There will be nasty arguments in the factory canteen, in the pits, and in the pubs where the chaps stop for a drink on their way home. The seeds of serious dissension will be sown in the middle of working groups which, up to that point, had worked in harmony.
  There is another freedom that the Bill will take away, and that is the freedom of discretion, in some cases, of employers. At present, an employer who wants to avoid difficulty and who has good relations with his work force and wants to maintain those good relations can decide for himself whether to involve the unions in tribunal proceedings. One or two do; most do not. They can decide for themselves. Each employer can decide in accordance with the circumstances of his industry and of his own workplace and, above all, in accordance with the sort of atmosphere that exists in his workplace. He can decide whether he wants to involve the trade unions. The Bill takes away that power of decision and discretion from employers.
  What is all this talk about increasing freedom? I have shown how, in some respects, the Bill takes freedoms away from workers and also from some employers.
  Mr. Churchill rose—
  Mr. Mikardo: I shall give way in a moment, although I should prefer to give way to those who have been here for the whole debate. The hon. Gentleman is bound to lead with his chin, and every boxer likes an opponent who does that.
  I come back to the business of compelling an employer to associate with a trade union whether or not he wants to, and whether or not he thinks that it is in his interests to do so. It amounts to this, that the Secretary of State reckons that he knows what is in a particular employer's interests
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  better than that employer himself knows. That is arrant nonsense. Now let us have another piece of arrant nonsense.
  Mr. Churchill: Is the hon. Gentleman seriously seeking to defend the supposed right which he is advancing of a trade union or an employer to victimise individuals who work at a given plant or factory? If so, that is directly counter to the European Convention on Human Rights. Perhaps he has little concern for human rights when they involve individuals on the shop-floor.
  Mr. Mikardo: As I expected, that intervention shows that the hon. Gentleman has not been here listening to the debate, because that matter has been discussed by right hon. and hon. Members on both sides a number of times. If hon. Gentlemen wish to intervene, they should spend some time in the Chamber.
  Mr. Churchill: Answer the question.
  Mr. Mikardo: I shall answer the question. I do not believe in victimising anyone. I have never taken part in victimising anyone, and I do not want to see employers or workers victimised. I did not like it when the workers at Grunwick were victimised because they wanted to join a trade union. My memory does not stretch to any recollection that the hon. Gentleman was affronted by that gross victimisation. He is one—and one of many—who apply double standards to these matters.
  I come now to the union labour-only contracts. We have seen what has happened where such contracts are not applied. We are discussing not theory but practice. It has opened the door to cowboys, tax evaders and moonlighters. One hon. Member asked what was wrong with cowboys if they did an efficient job. They may do the job more cheaply, but they cut corners in safety, legal and tax areas. They have lower labour costs, because their wages do not go through a wages book. I am concerned chiefly about cuts in safety standards. Any hon. Member who doubts that that happens should consult the Health and Safety Executive about the safety records of non-union and union labour in such industries as steel erection. The difference is very great indeed.
  I wish to deal now with the ruling out of trade dispute; affecting matters outside Great Britain. As my hon. Friend the Member for Hackney, Central (Mr. Davis) said, British unions alone among all unions in the world will be forbidden to take part in the International Transport Workers Federation campaign against unsafe ships sailing under flags of convenience. I give the Secretary of State the benefit of the doubt, because I do not believe that he intended that that should happen. He probably did not realise that that would be an effect of the provision. I. hope that he is willing to reconsider the matter now that that point has been made clear to him.
  That circumstance is not the only one in which the welfare of British workers may be directly affected by matters outside Great Britain. That is especially true for employees of multinational companies. For example, if Ford decides to concentrate its design activity at Cologne or Valencia, where it has factories, that would affect employment in Great Britain, with possibly thousands of people losing their jobs. Why should it be improper for workers at Ford, Dagenham to take action in that matter?
  Much has been said about the Bill promoting the intentions of the Social Democratic Party. If I have an

  793
  opportunity I shall introduce a motion to change the name of the SDP to the Common Market Party, because the only policy on which its members agree is that Britain should continue to bear the burden of membership of the European Community. Some SDP Members will vote for the Bill, some against and some will abstain.
  As we heard from the lips of the right hon. Member for Stockton (Mr. Rodgers), his attitude is dictated by the fact that he was smitten by a blinding light on the road to Limehouse. I am sure that this SDP attitude is what is meant by the phrase "breaking the mould". SDP Members use that phrase all the time. Until now I have never understood what it meant—it means that some vote for something, some vote against it and some abstain. It will be fascinating to know whom they intend to nominate to serve on the Committee considering the Bill. Will it be someone who voted for it, against it or abstained? Hon. Members may laugh, but it is a serious matter.
  The Social Democratic Party is putting itself forward as a possible next Government. The electors are entitled to know the policy of any such Government. On its pantomime performance today, no one could know its policy on industrial relations. Will it be determined by my ex-hon. Friend the Member for Leicester, East (Mr. Bradley), who has been in the Chamber for most of the debate? He has been a lifelong trade unionist. He was president of his union for some years and he took money from his union to sponsor his candidature in the House. Or will policy be determined by Mr. Roy Jenkins, who, throughout his political career, has shown trade unions, workers and the working class at best a lofty condescension and, at worst, eminent contempt? People are entitled to know the answer to that question?
  I conclude with a friendly word of warning to the Secretary of State. When he goes to his office tomorrow he should ask his private secretary to dig out the name and address of the Official Solicitor and type it on a card, which he should put in his wallet and carry around with him. During the next 12 months he will jolly well need it.
  7.57 pm
  Mr. George Gardiner: It is always with fascination, occasionally tinged with delight, that I listen to the hon. Member for Bethnal Green and Bow. Since the days when, as a journalist, I listened to him compering the cabaret that was held on the eve of the Labour Party conference, I have enjoyed his performance. He has never let me down. That cabaret no longer takes place, and its place has been taken by the deputy leadership elections within the Labour Party, with the Transport and General Workers Union performing the role of contortionist.
  The hon. Gentleman's speech brought out one remarkable feature of all our debates on this subject—the blinding incomprehension of the Opposition of the need for any reform of industrial relations practice or trade union law. It illustrates the Opposition's deafness to the widespread public demand for such reforms, which they do not recognise at all.
  Some hon. Members cannot understand why the Bill is now being brought forward. I do not believe that my right hon. Friend the Secretary of State or the Government could do anything other than bring forward a Bill of this nature in the present circumstances.
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  After publishing a Green Paper on trade union immunities, which brought responses from a wide range of those engaged in business and industry, representing large and small firms—they showed an amazing degree of unanimity—there was no way that the Government could have ducked their responsibilities. After the disgraceful behaviour of certain Socialist local authorities in persecuting individuals who refused to be press-ganged into joining a trade union, there was no way that the Government could turn a blind eye to what had been done. After every recorded measure of public opinion, including the judgment of the majority of trade union members, there was no way that the Government could sit back and do nothing. Indeed, my right hon. Friend the Secretary of State was earlier chided for not representing the consensus in British politics. If ever there was a consensus across the country in support of a piece of legislation, it exists for this Bill.
  Finally, after the ruling from the European Court of Human Rights, which should make Opposition Members crawl under their seats in shame, there was no way that any responsible Government could avoid introducing legislation to rectify at least that situation. The Bill falls broadly into two parts.
  Mr. Harold Walker: Will the hon. Gentleman tell us which part of the Bill relates to and does anything to remedy the position of those railwaymen to whom he referred who went before the European Court? What has it to do with that case?
  Mr. Gardiner: As I understand it, the Bill provides compensation for those who suffered the injustice—
  Mr. Walker: Not to those.
  Mr. Gardiner: —of losing their jobs while the right hon. Gentleman's Government were in power. I shall return to that point shortly. The Bill deals, first, with matters concerning the closed shop and, secondly, with trade union immunities. I shall cover those two aspects separately.
  Opposition Members frequently speak in these debates and lecture us as if they had some monopoly of experience. The hon. Member for Bethnal Green and Bow (Mr. Mikardo), teases us now and has teased me regularly about my constituency; there are no throbbing industries, steel mills or shipyards in Reigate. It is always amusing when he delivers such lectures. He does it with great charm and grace, but I simply tell him that my constituents and those of every other hon. Gentleman he chose to mention, contribute as much to the economic life of Britain as do his constituents and those in other constituencies he mentioned.
  I joined a trade union voluntarily—not in a closed shop—and I still belong to it. I have worked in a closed shop so the hon. Member for Bethnal Green and Bow might allow me to make some observations on it.
  It is often asked what great objection Conservative Members and a great number of the British public have to the closed shop as an institution. First, there is an objection in principle. To many, it seems to constitute a fundamental injustice; someone can lose his job simply because he does not wish to join a trade union or even because he has fallen out with the officials of the trade union to which he formerly belonged. That matter was very well brought out in the European Court of Human Rights judgment.

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  It is correctly said that the Bill does not eliminate the closed shop or seek to ban it, however objectionable we find that institution. In my submission, it should not, because we must proceed by legislating for what is practicable and on laws can be made to stick.
  However, I am pleased that this legislation offers some redress to those who lost their jobs during the years when Labour were in power through the threat of, and great powers then given to trade unions to impose closed shops, almost regardless of their members wishes. I am therefore pleased to see the compensation provisions which at least remove the disgraceful blot from Britain's record at that time of fairness and freedom.
  Secondly, I am concerned—I slightly part company here with my hon. Friend the Member for Fareham (Mr. Lloyd) —that in those years, workers who were dragooned into closed shops without having any right of decision or ballot and who decided not to make a great issue of principle but to knuckle under and put up with it, should at some point have the chance to vote, decide and ballot again on that issue. I would accept my hon. Friend's criticisms of the provisions, if there had been a ballot of those members in the first place. However, in the absence of such a ballot, it is right that future ballots on whether closed shops should continue should be on broadly the same terms as ballots that occur where it is suggested that new closed shops should be introduced.
  I mentioned objections to closed shops on the grounds of principle and human rights, but there is also the objection which from my experience is particularly valid—that it gives trade union organisations the muscle power to enforce decisions against the wishes of their members.
  I am sure that we have all had experience, particularly during the winter of discontent, of being contacted by lorry drivers, for example, saying "Look, we were never ballotted on this or asked to vote for it, but when we contact our shop stewards and ask whether there is any chance of being consulted and having a proper ballot, all they say is `Look, sunshine, you had better keep quiet or you'll lose your union card'". Equally, I recall the position in my union where members of a chapel—the union branch in a newspaper—were flatly opposed to a certain course of action but were ordered from on high to take it, in support of action elsewhere, under threat of disciplinary action being taken against them. The muscle power, of course, came from the closed shop provisions under which we worked.
  Therefore, I believe that the proposals that my right hon. Friend the Secretary of State advanced will also make trade unions rather more responsive to their members' wishes.
  My right hon. Friend said that fairly restrictive amendments are being proposed on trade union immunities. The general immunity granted to legitimate trade union action is not being affected in the least. However, when approaching this aspect, we must ask what the objective of the law is. The law surely has the task of providing a framework for good industrial relations. It is often said "Let the lawyers stay out of this. Just leave it to negotiations between the employers and their shop stewards and they will get it all sorted out. There is no role for the law here."
  I am always amazed when I hear that argument, because I know that those putting it take a very different view about industrial safety legislation. They would never
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  argue that that should be left purely to negotiation between the employer and the trade union representatives. They rightly argue that it should not. Equally, they never suggest that it should be left to whites and blacks to work out their own relationship within a community. Rather, they argue that there is a role for the law in providing the proper context and framework for good community and race relations.
  The law is needed to provide a framework for good industrial relations. Whatever improvement we might have seen in our strike record over recent months, there is no doubt that in the past our pattern of bad industrial relations has held back the country and its economy time and again. The argument was well set out in paragraphs 1 and 2 of the Green Paper on "Trade Union Immunities" which stated:
  "For at least a generation now our industrial relations have failed us because they have inhibited improvements in productivity, acted as a disincentive to investment and discouraged innovation. The results are apparent in our poor industrial performance and lower standard of living compared with our major competitors overseas."
  It continued:
  "The persistence of restrictive practices, of outdated working methods and of overmanning have contributed just Is powerfully, if more insidiously, to our economic problems. Such practices and the attitudes that they embody have stood in the way of the achievement of high productivity, high output and high real wages."
  We must break with that past: and at least start to identify those limited areas where a reform of immunity covering certain kinds of trade union action will be of great benefit to our economy as well as to trade union members.
  There has been some talk of alleged gaps in the Bill. There are matters that some hon. Members would like to see included. Obviously, we shall discuss in Committee matters such as pre-strike ballots and the provision for opting in or out of the political levy. At this stage, I express my disappointment about one feature of the Bill. I believe that we should take the opportunity that it offers to reform the law in such a way as to encourage procedural agreements and their observation.
  Of all the submissions that came from a wide range of employer bodies to the Green Paper proposals. it is interesting that the proposal to withdraw union immunity for action taken in breach of an established disputes procedure, or before ACAS or an independent conciliator had sought a solution, attracted support from the CBI, the Institute of Directors, the Association of British Chambers of Commerce, the British Institute of Management, the Contractors Plant Association, the Federation of Civil Engineering Contractors and other bodies. It is a pity that we have not used this opportunity somehow to qualify immunity so as to encourage the conclusion of procedure agreements and to ensure that they are adhered to. It may be necessary to have a lengthly phasing-in period. That is a matter for discussion, but it is disappointing that we have allowed this opportunity to pass without covering that point.
  I agree with my right hon. Friend the Secretary of State that the Bill will not revolutionise industrial relations overnight or even by next year. Nevertheless, it should be welcomed for a number of genuine reasons. I believe that it will create a fairer balance between the rights and duties of the trade union movement. as we promised during the general election. It recognises the strength of the closed shop system and the extent to which it has been built into our industrial relations, certainly in our old heavy

  797
  industries. It offers protection to the individual who falls foul of that system. It gives workers a chance to choose whether they want a closed shop to continue, and it protects workers and union members from many of the current abuses of union power against them, through qualifying at the margin existing trade union immunities.
  It will put the majority of wreckers within the trade unions much on the defensive and will thereby give greater protection to our economy against much of the damage
  The Bill takes a significant step in strengthening the right of employees to choose. It is my hope and prayer that thereby it will assist the development of a more responsible trade union movement that is more responsive to the needs and views of its members.
  8.17 pm
  Mr. John Prescott: When the hon. Member for Reigate (Mr. Gardiner) talked about a responsible trade union movement, I think he meant a more timid one. That has been the view of most Conservative Members throughout the debate.
  I am a sponsored member of the National Union of Seamen. I was a seaman for 10 years and am, therefore, moulded by my own experience. I want to speak about the effects of the Bill on a trade union activity of which I am fully aware, and I should also like to explain how we maintain trade union activity in the seafaring industry.
  Seafaring is a unique industry that poses unique problems. That is why I believe—and I shall seek to prove—that this is an anti-trade union Bill. It is ridiculous to call it the "Employment Bill", because it will most certainly create job losses in that industry. It is anti-trade union, because by its very content it takes a major step towards destroying any sense of trade unionism in the seafaring and shipping industries.
  The arguments that I shall deploy can be applied equally to other trade unions, but I shall limit my remarks to seafaring. I belonged to, and operated in, a closed shop. I therefore address my remarks to clause 2. The Secretary of State said that this was a British law for British workers. The members of my union work in an international business that is involved in international law and international consequences. A closed shop is required to maintain the organisation of that industry. That is also true of Equity. Earlier, an hon. Member pointed out that Equity and the seafaring unions had been given certain exemptions under previous Tory legislation.
  About 100,000 people work in the seafaring industry, including Asian workers who come under the British flag and British law. When I heard the right hon. Gentleman suggest that this was a workers' charter, I could not help but feel that he was refusing to extend to Asians on board British ships the same rates of pay as are available to white seafarers. Those Asians are exempt from the provisions of the racial discrimination measure, which requires equal pay for all people.
  Some time ago, during the period of the last Labour Government, there was a recommendation to end that discrimination—my hon. Friend the Member for Hackney, Central (Mr. Davis) was very much responsible for it—yet this Government are refusing to implement a recommendation jointly agreed with the industry to ensure that Asian seafarers on British ships should get the same
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  rate of pay as European seamen. Therefore, the Bill might have been more of a workers' charter if the Secretary of State had corrected that Act.
  There are 1,000 vessels under the British flag and they sail all over the world. Some of them do not return to Britain and crews have to fly out to them. The industry has a high staff turnover of almost 25 per cent., but that is not necessarily due to the conditions of the industry. Young men go into the industry, but they want to settle down when they marry. Such factors affect all countries that have a traditional seafaring industry and lead to a high turnover of staff.
  Obviously, a high turnover means problems for trade union organisation. In addition, criminal law extends more to seafaring than to other forms of industry. Seamen can face criminal charges for disobeying a captain's command. There are various reasons for that. When there is an industrial dispute on the other side of the world, it is not only industrial problems that result, but perhaps criminal charges and gaol sentences. That is a further complication of the industry.
  Since 1921, the industry has had a closed shop. It is interesting that this very evening many Members will have received a report from the General Council of British Shipping. The report makes it clear that no problems have arisen as a result of closed shop agreements and that no dismissals have been recorded for non-compliance. It believes that the closed shop is needed for the maintenance of an orderly supply of manpower. The work force is scattered throughout the world on 1,100 ships and the tensions in a community that lives and works together make it desirable for potentially divisive issues to be eliminated as far as possible. Therefore, seafarers face more potentially explosive situations than other workers.
  The Industrial Relations Act 1971 had at its heart the concept of equal rights—that each worker should have the right to belong or not to belong to a union. That reminds me that employers used to say that it was their right not to employ workers just as it was the workers' right not to work for them. They said that as if the rights were equal, but they were not. We are talking about a balance of power, and equal rights must be considered against that background.
  Conservative Members may talk about individual rights and freedoms, but the history of the trade union movement and much of Britain's social history shows that Governments have not given rights and that people have had to take collective action. People have had to demand their rights—sometimes break the law—in order for Parliament to change the legislation. There are many examples to show that individual rights have been achieved through collective strength. We have not heard much about the collective right to combine together and guarantee those individual rights.
  In an industrial dispute, the balance of power is all-important. If only 10 per cent. of the work force belongs to a trade union, the employer will not talk to it. If 50 per cent. of the work force belongs to a trade union, the employer might talk to his workers. If 80 per cent. of the workers belong to a union, the employer will listen seriously. Therefore, the degree of organisation determines trade union activity and the strength of workers to determine their wages and conditions in a basically unequal situation. Such matters must be taken into account.

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  In the seafaring industry it is claimed that in order to maintain any trade union organisation, a closed shop is necessary. Given the many ports in Britain and all over the world and the fact that crews are flown home from various parts of the world, it is impossible for officials to contact workers about the conditions of their membership and to contact those who might not wish to join a trade union.
  Mr. Whitney: How have the present arrangements and the closed shop in British shipping contributed to the prosperity of that industry and the preservation of jobs?
  Mr. Prescott: I shall come to that point later. I suggest that the hon. Gentleman should consult the British shipping industry as it has provided a two-page document endorsing the closed shop. [Interruption] I wish that I had not given way. The hon. Gentleman's experience of seafaring is about as limited as his experience of most of the other things upon which he makes observations in the House.
  A closed shop is necessary to maintain organisation. It is also necessary if seamen are to maintain simple organisational links that normal trade unions take for granted. The Tory Party came to power having said that it would ban the closed shop and make it illegal. However, in 1971 the Tory Government were forced by the weight of argument—particularly in relation to seamen—to change the then Bill to include an approved closed shop. That allowed the closed shop to be endorsed, as it was in my industry. Therefore, the Government had to change the provision about banning the closed shop and recognise that in some cases, such as shipping, the rights are not equal in treatment.
  The Bill apparently states that there can be closed shops, but that there must be periodic reviews by means of ballots. I shall cite one example of the difficulties facing the industry. Any idea of 80 per cent. polls or 85 per cent. majorities is impossible for seafarers. The industry's document points out that in the latest wage poll in the industry, only 30 per cent. took part. It would be impossible to achieve such high levels of participation. The industry states that such provisions are totally unrealistic and that
  "company ballots would be quite inappropriate for an industrywide agreement."
  The industry has some experience of this subject and holds that view strongly. Indeed it held that opinion in 1971 and it presumably convinced the Government that they were wrong. As a result, that Bill was changed. If consent is not gained, it appears that the law of the bounty hunters will prevail.
  Given that the industry has a turnover of 25 per cent. and that many seamen fly to different parts of the world, an individual could fairly easily cause the maximum disruption possible on the issue whether to join the union. In addition, the compensation levels of £12,000 to £30,000 make such activity extremely attractive. The industry points out the difficulties that would arise in such a situation. Hon. Members should consider how trade unions can send instructions to members on ships all over the world. It is extremely difficult to maintain communications at the best of times. I do not know whether a union would be liable if it sent a telegram or letter when a ship was held up half-way round the world. Such a situation defies the imagination.
  If a ship on which a closed shop operates finds that a crew member who has joined it on the other side of the
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  world does not want to become a member of the union, its crew might refuse to sail with him. A serious situation would develop on the other side of the world. The document points out that it would be very expensive: for the company to fly the rest of the crew home. In addition, there are legal requirements about manning. If one able seaman refused to sail, there might not be sufficient skilled men to sail the ship. There is a whole area for guerrilla warfare, and shipowners can foresee the difficulties.
  Although I do not like to say it, the closed shop means discipline. Many condemn that, but the House enacts measure after measure in the belief that greater discipline for seamen means greater safety. When we consider the closed shop organisation for the maintenance of trade union discipline, individual liberty is then talked about. The whole panoply of industrial relations in the seafaring industry means greater discipline and safety with more powers given to captains to endorse that discipline Some questions should be asked of the people who support the legislation.
  I assume that the Bill is hostile. It will destroy my union if it is allowed to continue along the way that I have suggested. The clauses that try to outlaw sympathy strikes will create further difficulties for the British seafaring unions. We are an international industry and we require international solidarity. The growth of the flags of convenience fleets, which undermine British shipping, are another danger. On some of those fleets, seamen are paid £50 a month instead of the average wage of £500 a month. British seamen cannot be competitive unless they go back to the free market and agree to work for £50 a month. That may be the reality of this legislation.
  Some ships which enter ports all round our shores impose no standards of safety, exploit slave labour and have low standards of manning. They sometimes sink with much loss of life and, in some cases, no inquiry. The only people who can check that abuse of power are the trade unions. We black those ships when they enter our ports, We might not be a direct party to the dispute, but those workers appeal to us for help and we give it. The only way in which we can do that is by saying that the tugs will not take the ship out or that the harbour gates will not open. The Bill tries to make that illegal, although Lord Denning, completely endorsed that action as part of legitimate trade union activity, as my hon. Friend the Member for Hackney, Central said.
  What is much worse is that flags of convenience ships, which represent 30 per cent. of the world's fleets, lose four times as many ships as traditional fleets. Some are sunk deliberately for insurance money. Some are sunk with the loss of lives about which no one gives a damn because they sailed under flags from which no redress could be obtained. It is an intolerable position which will be made worse by this legislation. That is why we shall oppose it.
  The International Transport Workers Federation has done much to recover millions of pounds in back wages and to enforce safe, internationally-agreed manning levels on ships where Governments have turned a blind eye. It is the only means of defence for thousands of foreign seamen. Some may say that seamen sue through the flag. That is not always possible. Last month a ship came into Hull flying a Panamanian flag. When a dispute started, the ship changed to a Maltese flag and before she left the harbour she changed to another flag. How can one get

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  justice in that position if the trade unions do not act as did Mr. Ken Turner the Hull NUS official in this case? There is no workers' charter in the Bill to correct such matters.
  The Bill will make matters more difficult for our campaign. Another alarming aspect is the fact that the Philippines fleet requires 2,000 men. However, 200,000 Filipino seamen are being hawked as slave labour around the world. It is no coincidence that the international ship owners are backing this legislation and calling for full support, because once it is illegal for the trade unions to conduct their campaign, free market forces will suggest that British seamen being paid £500 a month should be replaced by Asian seamen who work for only £50 a month. It may be more competitive, but it is not in our interests. Nor is it in the interests of those who take the jobs. Therefore, the legislation is trying to cripple the seafaring trade union in its domestic and international campaign and to assist the shipowner to employ labour wherever he wishes around the world.
  Seamen have not changed anything in the world without breaking the law. I have heard much hoo-ha about breaking the law, and I understand the importance of the issues involved, but we have never received help without breaking the law. If we are told that we shall be destroyed by the Bill and that we cannot help the many thousands of seamen who are being exploited, we say "Go to hell with your law. We will oppose it."
  8.33 pm
  Mr. Den Dover: I speak this evening as a Member for an industrial Lancashire area. It is appropriate that I should speak because we have nearly 10,000 British Leyland workers on strike.
  In 1980, my hon. Friend the Member for Winchester (Mr. Browne) put down an amendment to the Employment Bill that workers should have the freedom to take part in secret ballots. Since then we have heard only trade union leaders calling for secret ballots. I deplore the fact that workers cannot ask for a secret ballot and decide for themselves whether they wish to support or to end a strike. I wish that the Bill, although I appreciate its appearance in the House, contained that requirement.
  The Secretary of State mentioned one occasion where blacking would be stopped under the Bill, but I am sure that he would agree that it relates to less than 1 per cent. of all blacking. I object to the fact that secondary action is sanctioned by the Employment Act 1980; instead, we should be stamping down hard on blacking and secondary action, which is so much a factor in reducing the efficiency of British industry.
  The hon. Member for Bethnal Green and Bow (Mr. Mikardo) said that union-labour-only clauses in contracts were to be desired. I have been responsible for hundreds of workers in the hon. Gentleman's constituency. I am sure that he was not seriously saying that union members take the right safety measures and that non-union members do not. I welcome the clause which bans union-only contracts as someone with 20 years' experience in the construction industry. That provision will increase efficiency in industry. Safety measures are more a function of management and safety officers than of workers who are in, or not in, a union.
  My main topic is the closed shop. I was interested to hear what the Secretary of State said about it. He said that
  802
  it was a most unhappy arrangement, that unions tend to dictate who works for a firm, and that it was not possible effectively to legislate to make it illegal.
  The hon. Member for Rochdale (Mr. Smith) talked about the freedom to belong or not to belong to a trade union. In February last year my Freedom of Association Bill was given a First Reading. It tried to enshrine that right in legislation. The hon. Member for Rochdale was a member of the Standing Committee which had a close vote on the issue two years ago. I ask members of the Committee on this Bill to table such an amendment.
  We must decide whether we are interested in the freedom of individuals, and whether we want a Western-type democracy in industrial relations, or whether we are out for an Eastern European-type regime where everyone is drummed into membership. I cannot understand why it is not possible for 85 per cent. or 90 per cent. of a work force to belong to a union while the rest are allowed not to be members.
  I welcome the Bill. It is a major step forward compared with the Act of two years ago. It will increase employment and improve industrial prospects. I hope that the Bill has a speedy and effective passage.
  8.39 pm
  Mr. Michael Martin: The Bill attacks ordinary workers and implies that only the workers, not the employers, create trouble in industry. Nothing could be further from the truth. In the disputes in which I have been involved as a shop steward and a trade union officer I have found that it takes two to create an argument.
  Only today I received a telephone call from a constituent who has been locked out by his employer. He was employed as a blacksmith and had never been out of work in the last 20 years. He worked for 20 years without a break. Because of an argument involving other workers he was locked out with 50 other blacksmiths.
  That happened three weeks ago. The man has been refused social security benefit. His previous employer has refused to talk to ACAS and has refused to give an interview to the unemployment benefit officers or the social security officers. The officers cannot obtain confirmation about whether the man left his job voluntarily or whether he was dismissed. That makes a difference to a person's right to unemployment benefit.
  I worked out an arrangement whereby the man would be considered to be in dispute with his employer. That would allow some benefit to go not to him but to his wife and four children. However, £12 will be deducted from whatever benefit is given to his wife and children because it will be assumed that his union is giving him £12 a week. He said "I am being punished for being a trade unionist." There is nothing in the Bill that will ensure that action can be taken against employers of the sort who employed that constituent of mine. It is a scandal that such abuses should take place in 1982.
  My constituent told me that when the press went to his previous employer it was told that industrial relations were bad within the firm during 1980–81. However, there has never been a strike there. My constituent, who was a shop steward, can recall making only one complaint. He approached his employer to take up the lack of toilet facilities. It seems that the employer interpreted that complaint as bad industrial relations.

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  I come from a city which has a history of being involved in the trade union struggle. My father and grandfather were shop stewards and were active in the trade union movement. I worked on the tool and most of my working life was spent as a metal worker in engineering shops. The Secretary of State is kidding himself if he thinks that working men and women will tolerate this type of legislation. They will fight against it. If the Bill becomes law it will make no difference if working people do not accept it. I feel that they will oppose the Bill at every stage. If I supported it in any way, I should be turning my back on those from whom I came and with whom I worked.
  8.42 pm
  Mr. John Gorst: I have some sympathy with the arguments advanced by the hon. Member for Kingston upon Hull, East (Mr. Prescott). Some of his comments had some merit, if the tone in which he finished did not. We must recognise that most of the shrill tones of protest from the official Opposition are echoes of the protests that have been heard down the ages from barons, bishops and monarchs who have had their powers curtailed.
  Mr. John Evans: The hon. Gentleman is representing the Tory Party!
  Mr. Gorst: It is interesting that so many trade unionists and Labour Members talk liberally about rights. They seldom realise that they are talking about powers and not rights. It is axiomatic in this place that what Parliament has conferred, Parliament can remove.
  Mr. John Evans: The hon. Gentleman should not worry, because we shall.
  Mr. Gorst: Parliament in its wisdom will be removing certain immunities and powers because there is no longer any necessity for them. Their removal does not necessarily mean that they have always been abused. We are living in 1982, not 1882.
  I welcome the Bill, for two reasons. First, it will substantially reduce union immunities where there is no justification for them. I part company from my right hon. Friend the Secretary of State when he describes the Bill as a moderate measure. It is not a moderate measure in that sense. It is tough, relevant and effective. It copes with everyday occurrences. It seeks to deal with real and not strange and archaic abuses. It stops unions from doing things that they should not do and permits them to carry on doing legitimate things.
  The second and more important reason why the Bill should be welcomed is that it moves towards establishing a most important principle—that it is the union to which a man belongs, and not just the man himself, that should bear responsibility for what he may have done in combination with others if it has been offensive or damaging to another party. It has always been wrong to penalise individuals for what probably could have occurred only because they were either incited or emboldened to act as part of a group. The Bill recognises the need to make the differentiation between what men do as individuals and what they do in concert with others.
  I am less happy about the way in which the Bill deals with the abuse of individual rights, especially when those rights are curtailed within a closed shop. The closed shop is wrong in principle and should, in principle, be
  804
  abolished, but on the ground of expediency the Government have decided that it should remain, at least so far as permitting it under the law in certain circumstances.
  I give a qualified welcome to the alternative pragmatic approach, as it is grounded in practical expediency. We should realise the reality of precisely how my right hon. Friend is going about this. The Government have put forward a measure which will not outlaw the closed shop but which will, in practice, I hope, price it out of existence when it is illiberally conducted. Many closed shops will find it too expensive to compensate their victims. I hope that in the process they will adopt the alternative and live with the people whom they do not have in membership of their union.
  Mr. John Evans: The trade unions may respond in an equally pragmatic way, perhaps by negotiating wage increases only for people who are members and ensuring that non-members do not benefit from pay rises.
  Mr. Gorst: That is a matter for the trade unions to decide, if it is within the law. What the union leaders promise and what they will do when they have consulted their members may be two different matters.
  I have said that I welcome the Bill for two good and basic reasons. It is worth while and necessary. It is basically the first meaningful step that the Government have taken to reform trade union practices. It goes a long way, but not the whole way. Improvements could be made, and there are certain omissions. One weakness is that, although the proposals remove immunity in a number of legitimate respects, they fail to remove immunity from those who take industrial action before they have observed procedural agreements or been involved in meaningful conciliation. I believe that that should be covered in the Bill. Indeed, had it been part of the law of the land, it is difficult to believe that we should have had the problem with the railways that we now face.
  I draw the attention of the House to the fact that the Select Committee on Employment came to the conclusion that this was an important matter which should be added to our trade union reform. It also recommended that there should be secret ballots before a strike and that the matter of strikes in the essential services such as health or social services, where health or safety might be involved, should be tackled urgently.
  The Secretary of State made it clear when he appeared before the Select Committee last week that it was his policy to implement proposals which commanded widespread support among the public and elsewhere. He wishes public opinion to be ahead of him, not behind. That point was made by the Lord Chancellor when he appeared before the Select Committee last summer.
  Since my right hon. Friend gave evidence to the Select Committee it has become clear that the whole weight, if I may so put it, of the Liberal Party is also behind the proposals. It is also clear that, schizophrenic though it may be, the Social Democratic Party, or at least some part of it, which will be measured in an hour or so, is also behind them. That adds to the consensus that existed only a week ago.
  I hope that my right hon. Friend will regard that as widespread support and will not, as I think he was indicating in his speech, stick narrowly to the proposition that anything that may affect the internal affairs of a trade

  805
  union should lie outside the scope of the Bill. The inclusion of procedural agreements is essential and urgently necessary. If there is now a consensus in many parts of the House, we should not be mealy-mouthed and turn our backs on the possibility of adding our voice to the views expressed by the nation at large.
  Politics are about timing, not about putting things in tidy pigeonholes or filing away the right Bills at the right time. Here is an opportunity to add meaningful improvements to the Bill. The tide is moving towards such changes. We should catch the tide while it is flowing and not miss it when it turns to ebb.
  8.54 pm
  Mr. Ray Powell: First, I condemn the hypocrisy that we have heard from the Conservatives today. I condemn outright this mean, contemptible, outrageous, vindictive, perverse and prejudiced measure, compiled to put new legal shackles on the trade unions. Legislation such as this could only have been dreamed up by someone with a sick mind who wished to show his utter contempt for the trade union movement.
  The Government's policies have caused soaring unemployment, falling living standards and drastically-reduced social services. Unions are the only defence that working people have against the effects of these pernicious policies. That is why the Government want to weaken unions. That is the reason for the appointment of a union-bashing Secretary of State. Tebbit's Law, as the Bill is called, will be fought line by line, and campaigns will be waged by millions of trade unionists throughout the country. The Government have made a declaration of war on the trade unions and they will live to regret it.
  These measures are intended to smash the existing arrangements and agreements with employers about trade union membership. They are designed to see unions and officials dragged into court to face penalties of up to £250,000. They will make outlaws of people who give assistance to other workers in dispute. They are compiled to allow employers to sack workers who refuse to be forced back to work until a dispute is fairly settled.
  The whole Bill represents a further step in the Government's sustained offensive against trade union freedoms. It is far worse than anything proposed in the Industrial Relations Act 1971. It is yet another measure to give work to the Law Lords who, in the past two years, have shown no understanding of the trade union movement. The Bill contains enough controversial measures to give the legal profession yet another bonanza.
  Will the legislation encourage foreign firms to come to this country? A number of us are hoping to see a major Japanese firm set up a development in Wales or elsewhere in this country. Will the Bill encourage that firm to come here? Only this week the Prime Minister and the Secretary of State for Wales have openly said to foreign companies that this is the country to come to and that industrial relations here are second to none.
  Active, law-abiding trade union leaders may not wish to flout or break the law, but they want to protect the rights of their members and there is a number of ways in which they can express their opposition to the Bill. They are members of the NEDC and it has been suggested in some quarters of the trade union movement that they should withdraw their support from the council.
  806
  Alan Sapper of the TUC has said that the reason for the high quality of goods and the high level of production in this country is the relatively high level of membership of democratic trade unions. Why has the Secretary of State not considered the views of the TUC? I warn the Government that the trade union movement has already suggested that there will be an explosion in industrial relations if the Bill becomes law.
  Trade unions may withdraw their support from numerous bodies in which they participate, including the NEDC and its associated bodies and any Government body that has as its objective the application of Government economic policies. Other TUC activities on many other tripartite bodies will be reviewed and the trade unions are also considering whether to sit on tribunals dealing with issues arising from the proposed legislation. Noncompliance with ballots on closed shops will also be considered.
  The Secretary of State mentioned last week law and retrospective legislation. He referred to the law on closed shops between 1974 and 1980 as transient legislation. According to the Oxford Concise Dictionary, the word "transient" means "fleeting, not permanent". That is how we shall interpret the Bill, or Tebbit's Law.
  This transient law will be repealed as soon as we return as the next Labour Government. I say to the Prime Minister that this active BOAC pilot she has employed as Secretary of State for Employment to introduce this Bill will be called the Tories' kamikaze pilot before the next election.
  9 pm
  Mr. Harold Walker: I understand the sense of déjà vu that has been expressed in relation to this debate. I should like to start on a gentle note. I hope that I do not offend too many hon. Members when I say that I welcome the support of the Social Democratic Party and especially of the right hon. Member for Stockton (Mr. Rodgers) for industrial democracy. I look forward to that party's support on the issue in the future. I am bound to say, however, that when my right hon. Friend the Leader of the Opposition, my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) and myself were trying our best to see some degree of industrial democracy established in Britain, I did not discover any fervour in the approach of the right hon. Gentleman and his right hon. and hon. Friends. I hear mutterings from below the Gangway. I say, with all sincerity, that when some of them, as departmental Ministers, had the opportunity to act directly to introduce industrial democracy, they did nothing.
  It is astonishing that the speech of the right hon. Member for Stockton—I am glad to see him now in his place—did not produce any single, coherent, credible reason for supporting the Bill other than the implicit suggestion that there were votes at the end of the road that leads to Hillhead. The right hon. Gentleman spoke in a vein different from what many hon. Members had thought was the authentic statement of the SDP on reading the The Times this morning. He ignored the article by Mr. Brian Capstick, a member of the SDP trade union reform group, which was headed
  "Why we are backing Tebbit's bad Bill."
  The article states that
  "despite its popularity with the electorate, the Bill is unlikely to do much to improve industrial relations."

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  and that it
  "is largely irrelevant to the contemporary industrial relations scene."
  The article talks of the
  "big cash prizes for the successful litigant"
  and goes on to refer to
  "local groups of activists and militant shop stewards. Mr. Tebbit's Bill will do nothing to restrain their activity, and may even encourage it."
  Another passage states:
  "The worst evils of the closed shop, such as the well-known British Rail cases, are largely a thing of the past and were due as much to management ineptitude as to union militancy."
  The article adds:
  "In many respects therefore the Bill is ill-thought out"
  and concludes that
  "the Bill is sadly irrelevant to the more pressing issues of the day."
  It is all the more extraordinary therefore that the right hon. Member for Stockton and his hon. Friends, including the right hon. Member for Crosby (Mrs. Williams), should be going into the Lobby to support the iron heel of the Government.
  The motion on the Order Paper referring to the political levy and the remarks of the right hon. Member for Stockton fill me with astonishment. Without the commitment of the trade unions to political activity—I am unashamed of their significant role in the creation and support of my party—few of the hon. Members now representing the Social Democratic Party would be present in the House. The trade unions were the making of the Labour Party. The Labour Party was the making of the standing of most of those right hon. and hon. Members. Yet they will go into the Lobby tonight, hand in hand, under the iron heel of the Government, ready to bite the hand of those that fed them. I could not help recalling at the conclusion of the remarks of the right hon. Member for Stockton a comment attributed to Nye Bevan who said of someone that he felt he wanted both the crown of thorns and the 30 pieces of silver.
  The closed shop that was established in British Rail and that set the three railwaymen—Mr. Young, Mr. James, and Mr. Webster—off on the long road to Strasbourg, was concluded in 1975 between British Rail and the three railway unions—the National Union of Railwaymen, the Associated Society of Locomotive Engineers and Firemen, and the Transport Salaried Staffs Association. The president of the Transport Salaried Staffs Association at that time—I am glad to see him nodding in assent—was none other than the hon. Member for Leicester, East (Mr. Bradley).
  This afternoon the Secretary of State indulged in a bout of loutish, brutal, bullying union bashing of a crudity that I have never witnessed either inside or outside the House. Whatever it did for the Secretary of State's conceit and ego, it certainly did no good for industrial relations.
  Two years ago at the Dispatch Box, I forecast that the Employment Act 1980 would not exhaust this Government's determination to cripple the trade union movement. Nor would it end the sustained attack by the Conservative Party on the whole range of statutory safeguards and protections which Parliament, perhaps belatedly, but none the less properly, has granted to working people in recent years. They were safeguards and rights that not only the British Parliament, but Parliaments throughout Western Europe, thought it proper to provide in one form or another.
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  It gives me no consolation to be proved right. I never expected a measure so ill-judged as that which we have before the House this evening.
  The right hon. Gentleman says that the proposals are formulated
  "to safeguard the liberty of the individual from the abuse of trade union power"
  Who will safeguard working people from a malevolent and malicious Secretary of State?
  The Secretary of State said that he considered calling his measure the workers' rights Bill. Let me remind the House how this Government have safeguarded individual workers' rights. My right hon. Friend reminded us this afternoon that as early as July 1979, before the dust of the general election had settled, they had doubled the qualifying period for protection from unfair dismissal. At a stroke they removed that protection from hundreds of thousands of employees. At the same time, the Government cut the obligation on employers to consult about proposed redundancies.
  Next there was change in the procedures of the industrial tribunals, deliberately aimed at making it harder for a person to claim that he had been sacked unfairly. The Government followed that, not only by shifting the burden of proof that the dismissal was reasonable from the employer, but also by making what is fair or otherwise depend on the size and administrative resources of the employer.
  Then, the Government doubled yet again the qualifying period for a claim of unfair dismissal where an employee worked for a small firm. As if that was not enough, the Government then abolished the minimum award for someone who had been unfairly sacked and provided for cuts in the basic award of compensation.
  In addition, they have cut, cut and cut again, the value of the payments for unfair dismissal, with the exception of payments provided for in the Bill. They have cut redundancy and guarantee payments. Furthermore, contrary to the spirit of the Redundancy Payments Act 1965, employees now have to contribute to the redundancy fund. Not even pregnant women have escaped the zeal of this Government to cut workers' rights. The Employment Act severely curtailed their right to return to work following confinement. The protection that was contained in schedule 11 of the 1975 Act, which in principle had been available for 40 years or so, often the only protection for lower paid workers, has been snatched from that particular group.
  This is not the complete indictment, but it is more than sufficient to expose the cynicism and the mendacity of the Secretary of State when he poses as a protector of workers' rights. It hardly touches upon the Government's attack upon the collective rights of workers—a matter to which I shall return shortly—nor does it start to take account of the simultaneous injury being inflicted by other Ministers, with the erosion of benefits, the withdrawal of earnings. related benefit, and the termination of industrial injury benefit and related benefits. What is more, it will go on as long as this Government are in office.
  Clause 7, among other things, encourages employers to victimise individuals in an industrial dispute. In the Secretary of State's speech was the hint of yet more to come—a step-by-step approach. In reality, it is the slice-by-slice approach, the salami approach, cutting down to size the trade union and the people they represent.

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  The Government say that the Bill will improve the operation of the labour market. What an extraordinary and unsubstantiated defence of the Bill from a Government whose policies have taken unemployment to more than 3 million and from a Secretary of State who last week deprived the Manpower Services Commission of the services of a highly respected expert in labour market matters and replaced him with a totally inexperienced political stooge.
  Mr. Tebbit: The right hon. Gentleman should know that that is a contemptible attack on a devoted public servant who has served in both the public sector and the private sector, and has served long and faithfully in an international organisation devoted to training.
  Mr. Walker: It is a little rich for the Secretary of State, who has poured out such venom and abuse on working people this afternoon, to show such sensitivity on behalf of one of his appointees. The fact is that the man who has been appointed has gained his experience of these matters in the Centre for Policy Studies, a Tory set-up.
  The Government also say that the Bill will curb the number of continuing abuses of trade union power. When will the Government address themselves to the continuing abuses of employer power, such as the declaration of war on the print unions by Mr. Pole-Carew, the Nottingham Evening Post proprietor? No doubt the Secretary of State feels an affinity with him, since many of Mr. Carew's workers refer to him as Mr. Polecat Carew.
  Mr. Pole-Carew, in advising representatives of newspaper employers—according to the publication Print of November 1980—"advocated petrol bomb threats" against trade union officials, and
  "explained how he deliberately set out to humiliate union representatives, and urged that strikes should be prolonged by managements for at least three months to break the spirits of workers."
  My right hon. Friend the Member for Manchester, Openshaw (Mr. Morris) rightly drew the attention of the House to the outrageous behaviour of Mr. Arthur Snipe. I feel that I am entitled to refer to him, as the headquarters of his company, Mining Supplies Ltd, is in my constituency. That company took over Lawrence Scott and Electromotors Limited of Openshaw in Manchester. An apparently profitable business was taken over as a result of some commercial manipulation. It was shut down with inadequate notice to the workers. Many of them had given a lifetime of service to the firm, and they were chucked out of their jobs with the minimum of compensation. When they tried peacefully to communicate their plight to their fellow workers at the firm's headquarters, legal action was taken to terminate their employment under the terms of the 1980 Act.
  Mr. Charles R. Morris: Will my right hon. Friend give way?
  Mr. Walker: If my right hon. Friend will forgive me, I am trying to make his case for him. When in despair the workers tried to keep the factory intact, there was a re-run of the raid on Entebbe, with helicopters, a battalion of bailiffs and a small army of supporting police. [Interruption] What about that for an abuse of employer power? Is that the acceptable face of British capitalism? Is that a reasonable use of employer power? Perhaps the Secretary of State secretly applauds the use of such SAS guerrilla tactics in industrial relations.
  810
  The Government's total silence on such behaviour, involving the peremptory and arbitrary sacking of over 600 people who had done nothing wrong, contrasts very sharply with the kind of outspoken remarks made by the Secretary of State this afternoon concerning the four dinner ladies. The other day in Committee, the Under-Secretary ranted and raged against the "inherent wickedness" of the closed shop which led to the dismissal of Joanna Harris. He said that the closed shop could result in the most gross attack on the individual's rights. He talked of the terrible assault on the lady's rights. It should be borne in mind, of course, that that lady had a statutory remedy at the time of her dismissal, and to the best of my knowledge she has never exercised that remedy.
  The House should compare the excessive emotion shown on that occasion by the Minister with the more level-headed approach of the management professionals who are engaged day in, day out in these matters—the Institute of Personnel Management. In its memorandum to the Secretary of State on the subject of the closed shop it said:
  "The Institute is concerned that a few highly publicised cases in the public sector which have attracted political attention have been used as grounds of prejudicing a system which has been shown in many industries in the private sector to be a stabilising influence".
  I point out to the hon. Gentleman, who was sceptical when it was suggested that it might have the effect of encouraging trade unionists to negotiate only on behalf of trade unionists, that it went on to say:
  "If trade unions are prevented by law from excluding non-unionists by virtue of these new closed shop provisions, there will be increasing pressure on employers to apply the benefits derived from trade union negotiations to their members only. This process has already started".
  Elsewhere in its paper, the institute expressed a number of reservations about the Government's proposals, its anxiety about the fragmentation of bargaining arrangements and its concern about the balloting provisions. It makes it clear that it has tested the proposals against their effect on industrial relations. That, of course, is a proper test to apply.
  Unhappily, there is little evidence that the Government have done likewise. The Government's continued attack on trade unions and on union membership agreements has little to do with the needs and the reality of industrial relations and has everything to do with the political dogma of the Conservative Party.
  I shall say a word about the carefully cultivated myth of the effect of the 1974 and 1976 Acts on dismissal where there is a union membership agreement. The Secretary of State said that those Acts created a situation which, in his words, was morally indefensible by sanctioning the dismissal without compensation of employees in a closed shop solely on the ground of their non-membership of a specified union. The truth is that, although closed shops have existed for many years, statutory compensation was available for only two years—from 1972 to 1974. In all the years before 1972, the Conservatives had not shown a glimmer of interest in providing any statutory right of redress for any dismissal, whatever the reason. The only remedy that was available previously was the remedy at common law for wrongful dismissal. There is nothing in any statute, including the 1974 and 1976 Acts, which in any way diminishes those common law rights.
  It is true, of course, that the introduction of the statutory unfair dismissal provisions was effected by the Tory

  811
  Government of the right hon. Member for Sidcup (Mr. Heath), but that Government only implemented, in a slightly watered-down form, the proposals in Mrs. Barbara Castle's Bill that was presented to the House in 1970.
  I repeat, for the benefit of the Secretary of State, that to the best of my knowledge, the first reference in any statute to a closed shop was provided by the Government of the right hon. Member for Sidcup in the Industrial Relations Act. Having first sought completely to outlaw all closed shops, that Government found it necessary to face reality and make provision for what they called approved closed shops.
  The seamen, to whom my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) referred with his enormous knowledge of that industry, will face the same problem, as will their employers. Incidentally, the document referred by my hon. Friend related to the employers, not the National Union of Seamen, stating the harmful and disruptive effects of not having a closed shop in the seafaring industry. It continued that it was not only the National Union of Seamen, but the four unions representing officers, that had similar closed shop arrangements. The document also referred to the other provision in the Bill, which has been mentioned so often in debates, about the "bounty hunters" and the inducements which lead people suddenly to find that they have a conscience and a reason for dropping out of the union.
  The General Council for British Shipping said:
  "there can be little doubt that there would be clever and rapacious seafarers who would be tempted by the extremely high levels of the special award in clause 3".
  The departmental blurb which accompanies the Bill says that it seeks a fairer and more balanced framework of industrial relations law. Of course, that is the cautious and restrained—as it should be—language of the Department's press officer. However, when the Secretary of State comments, he blurts out the blunt truth. What does he say? He says that he wants to "neuter" the unions; to castrate them; to render them impotent. I see him shaking his head in dissent but, as I understand it, that word—
  Mr. Tebbit: Would the right hon. Gentleman like to give the quotation, and say where it came from and on what authority he gives it?
  Mr. Walker: The Select Committee on Employment received evidence from the TUC that the Secretary of State had used that remark. [Interruption]
  Mr. Speaker: Order.
  Mr. Walker: If right hon. and hon. Gentlemen will be patient, they will learn that when the Secretary of State appeared before the Select Committee on Employment last week, that was put to him and he did not challenge it.
  Mr. Tebbit: The right hon. Gentleman knows perfectly well that that is not true. I did not challenge it. I told the Select Commitee that I wanted to neuter the worst effects of the closed shop. The right hon. Gentleman might get his quotations right.
  Hon. Members: Withdraw.
  Mr. Walker: If I were a shade in error, of course I apologise for that. The TUC published a document about the Government's proposals in which it said that the closed shop proposals— [Interruption] I hope that hon. Gentlemen will listen. The Government's intention is
  812
  clearly to render effective union membership agreements virtually inoperable or, in the Secretary of State's words, to "neuter" their effects. I am prepared to apologise to the right hon. Gentleman and the House for the extent of my error but I believe that the right hon. Gentleman made it clear that it does render the unions impotent and castrated.
  Mr. Tebbit: The right hon. Gentleman really must get it right.
  Mr. Walker: No, the right hon. Gentleman— [Interruption]
  Mr. Speaker: Order.
  Mr. Tebbit: It is time that the right hon. Gentleman distinguished between the closed shop and the trade union movement, because no other country finds such difficulty in distinguishing between the two. He thinks that our unions need conscription.
  Mr. Walker: The right hon. Gentleman is now trying to go off on a very dificult tack. I shall readily pick up the point he just made. For example, the closed shop is widespread in the United States, and on both the Western and Eastern seaboards, nobody works on the docks, irrespective of the state, unless he is a member of the appropriate trade union.
  Mr. Elaine Kellett-Bowman rose—
  Mr. Walker: It is a growth industry in the United States and the right hon. Gentleman— [Interruption]
  Mr. Speaker: Order.
  Mr. Walker: The right hon. Gentleman made a long speech and has repeatedly intervened during other hon. Gentlemen's speeches and in my speech. I do not re sile from what I have said. I am astonished, after the abuse that the right hon. Gentleman heaped on the trade unions and workers this afternoon, that he should show such sensitivity. No one could be blamed for thinking that his approach and words were intended to render impotent the trade union movement.
  The Secretary of State quoted Donovan on trade union immunities, but he did not go on, as he might have done, to tell us what Donovan recommended. I do not have a copy of that report to hand, but I well remember that it recommended virtually no change in trade union immunities, except that it should be made clear that the immunity conferred upon trade unions by section 3 of the 1906 Act should be extended to cover all contracts, not only contracts of employment. I make that point only to illustrate the fact that, contrary to the impression the Secretary of State tried to create, the Donovan commission had serious doubts about so-called trade union immunities and was satisfied that they were appropriate and relevant. That was confirmed in its recommendations.
  Perhaps the most fundamental conclusion of the Donovan committee. was that a voluntary system of collective bargaining between efficient management and well organised trade unions was the best basis for British industrial relations. Until this Government took office, I thought that everyone concerned about and caring for good industrial relations accepted that as a basic premise.
  The continuing role chosen by the Government, the 1980 Act, the Bill now before the House and the Secretary of State's crude hostility to trade unions, not only

  813
  undermine the Donovan concept but mean that what I thought were shared assumptions about the basis of our system are no longer common ground.
  Clearly, the Government do not want well organised unions. It seems that they are prepared to tolerate only emasculated, yellow dog unions. Professor Lord Wedderburn, probably the country's best informed legal expert on these matters, concluded his memorandum to the Select Committee on Employment with these words:
  "My submission to the Committee is that the law of 1980 diminished trade union rights in Britain to a point where it can properly be said that organised workers have never had fewer rights to take action since 1906".
  He went on:
  "The Green Paper should have concentrated on reversing instead of accelerating that trend; for only by restoring a reasonable balance of legal rights to trade unionists is any Government likely to gain the willing co-operation from working people which will inevitably be required to save Britain from decay".
  My hon. Friend the Member for Newham, North-East (Mr. Leighton) reminded us, if we needed any reminding, that we were told by the Government that the 1980 Act had restored the necessary fair balance between employers, workers and trade unions. He was right to ask how, if that were true, this new assault on trade unions could be other than unfair. How can these new proposals be justified as fair and providing a balanced framework of legislation, when the last piece of legislation was claimed to have achieved those aims already?
  We are also told that the Bill has popular backing. That explains why some people have now had a dramatic conversion on the start of the road to Hillhead. I remember all those things claimed in support of the legislation introduced in 1971. Nothing has been said in support of this Bill that was not said in support of the Industrial Relations Act in 1971. Following the enactment of that legislation, we had the worst year for industrial relations since the general strike. A total of 24 million working days were lost as a consequence of that Act. Two years later, that legislation was condemned by the CBI's director general as "disastrous".
  George Bernard Shaw said:
  "What history and experience teach us is this—that people and Governments never have learned anything from history, or acted on principles deduced from it".
  That has again been illustrated by the Government's behaviour. What weight does the Secretary of State give to the views of those who will have to live with this legislation, such as the personnel managers to whom reference has been made? The institute's memorandum to the Secretary of State states:
  "another round of major industrial relations legislation at this time could be counter-productive, deflecting management from its present urgent task of managing and raising industrial efficiency."
  I fear that the Bill may have wider and more far-reaching consequences than those of deflecting industrial managers from their proper objectives, serious though that might be. The appalling occurrences in some of our inner city areas last year were only a symptom of the crumbling social fabric of our society and the deepening social divisions within it. The Bill will only feed those who seek to exploit such divisions.
  Rarely in our peace-time history has there been a greater or more acute need for the Government to encourage the maximum co-operation and good will of the
  814
  organisations of workers on whom we all ultimately depend for our livelihoods. Without the help, advice and involvement of those organisations, we shall not recover from the consequences of the Government's economic and political strategy, or rid ourselves of the scourge of mass unemployment and the rising social tensions that it brings.
  Yet the Government have chosen this moment—for what can only be blind, ideological reasons—to introduce a highly provocative Bill that will alienate trade unions and that has already inflamed such moderate men as Mr. Duffy, Mr. Bill Sirs and Mr. David Basnett. To paraphrase the words of the noble Lord Wedderburn—whose evidence to the Select Committee I commend to the House—we should be advancing to employment practices and a legal framework that can fruitfully develop towards a wider democracy at work as part of a more humane working environment and a more just society. Instead, we have been offered a Bill that is totally irrelevant to the problems facing the country, that is already fostering tension and strife and that may well prove a prescription for conflict and confrontation.
  For those reasons, we shall not only vote against the Bill but, as my right hon. Friend the Member for Chesterfield (Mr. Varley) said, we shall fight every inch of its progress through the House and, at the earliest moment, wipe it from the statute book.
  9.31 pm
  The Under-Secretary of State for Employment (Mr. David Waddington): It might be convenient to get out of the way at the beginning— [HoN. MEMBERS: "Go on then."] —the junketings of the SDP. We should all thank the SDP for having given us quite an enjoyable afternoon. There was almost a carnival atmosphere when the right hon. Member for Stockton (Mr. Rodgers) addressed the House.
  As we all know, the SDP has proved one thing in the last few days—the infinite divisibility of the smallest and most insignificant fraction of matter. The first time that the SDP has been required to say where it stands on an important matter of policy it has been revealed for what it is— [HON. MEMBERS: "Tories.") —a group of individuals who are united only by the common belief that the Labour Party will lose the next general election and so they had better rat and leave the ship before it sinks.
  The trouble is that those SDP Members who are minded to support us tonight have spent far too much time studying the polls. They looked at the "Weekend World" poll and found that 72 per cent. of their supporters favoured curtailment of trade union immunities. They looked at the same poll and found that 60 per cent. of their supporters wanted to ban the closed shop. I think that it was Sir Winston Churchill who said that it was all very well having one's ear to the ground, but it often leads to a very undignified posture.
  SDP Members have had their ears far too close to the ground for far too long. We can all do very well without "Tebbit's troopers", as they were described by the right hon. Member for Leeds, East (Mr. Healey). I guess that those troops would be pretty unreliable in battle. They certainly were not very courageous freedom fighters in 1974 and 1976. They were not courageous fighters for freedom when they were party to the placing on the statute book of some of the most illiberal legislation that has ever been passed by the House. The right hon. Member for Stockton. said that he was a recent convert to industrial

  815
  relations legislation. He can say that again. He was not a convert to that belief when he stood as a Labour Party candidate in 1979, which was long after the worst abuses of the 1974 and 1976 legislation had been exposed.
  I have gone through the Division lists of the Second Readings of the 1974 and 1976 Acts. Almost every member of the SDP today voted each time for the closed shop against the freedom of the individual.
  Let us consider the Instructions to the Committee proposed by the SDP. The first concerns the political levy. The SDP members did not mind about the system of contracting out when they were in the Labour Party, but now that they are out they wish to get their sticky fingers back in the honey pot.
  I must remind my hon. Friend the Member for Winchester (Mr. Browne) that contracting out was not considered in the Green Paper. It is not strictly a matter of industrial relations, but more a matter of the financing of political parties. No one in the House can have been surprised to find that it did not feature in the Bill presented by my right hon. Friend.
  As to employee participation a rigid legal framework would be bad, and mere platitudes and generalisations would be pointless. That is why I have some reservations about the wish of my hon. Friend the Member for Mid-Sussex (Mr. Renton) that we should legislate in that area. However, I remind the House that we have already legislated in two important respects. We have encouraged share ownership schemes and we have made provision in our privatisation measures for sales of shares to employees.
  As to trade union elections, mention has been made today of the behaviour of the Transport and General Workers Union over the election of the deputy leader of the Labour Party. No one could seriously deny that there is need for more democracy within the trade union movement when one considers the trade unions, including ASLEF and the NUR, which have been busy during the years purchasing votes at 40p a time so that they can poll more votes in elections at Labour Party conferences than they have members who subscribe to the political levy. We have been careful not to interfere with union rules, which caused the trade union movement such offence in 1971.
  Mr. Leighton: On a point of order, Mr. Speaker. Can the Minister tell us under which clause these items come?
  Mr. Speaker: Order. This is a Second Reading debate.
  Mr. Waddington: I do not suggest that they appear under any clause, Mr. Speaker, but you gave the House the impression that it was right for us to debate the matters raised by the Social Democratic Party in the proposals that it put on the Order Paper.
  Although 1 sympathise with what my hon. Friend the Member for Mid-Sussex said when he called for union elections by secret ballot, this is not the time to do that. Clearly, if the trade unions do not reform themselves, pressure will build up over the years for further measures to be taken.
  The speech by the right hon. Member for Doncaster (Mr. Walker) was a catalogue of irrelevancies. He mentioned the new chairman of the MSC. That has a most tenuous connection with the Bill's provisions. We have heard a great deal of synthetic anger from the Opposition today. We heard similar synthetic anger in 1980. There
  816
  were threats in 1980 of the dire consequences that would follow the passing of that measure. I take the threats today with a similar pinch of salt.
  The Opposition know that in certain areas no responsible Government could have failed to act. The right hon. Member for Chesterfield (Mr. Varley) said that free trade unionism was essential to our liberties. He knows that nothing in the Bill affects that freedom in any way.
  It is all very well for the Labour Party and the TUC to declare war on the Government. We would like to know whether they will now declare war on the European Court of Human Rights. If, as a result of some stroke of fate, a Labour Government were returned to power tomorrow, would they go back to the pre-1980 position and give no protection to existing employees when a closed shop is formed? If that is their view, they are flying in the face of international law. If that is what they say, their views are as quaint as the views of those who believed that the earth was flat.
  Mr. Clinton Davis: As the hon. and learned Gentleman is such a great upholder of the law, does he approve of Lord Denning saying that to take away the power of blacking from the international seafaring movement would destroy its ability to deal with the extraordinary extortion by owners? Why does he not address himself to the real exploitation that exists?
  Mr. Waddington: Opposition Members are selective in their quotations from the words and judgments of Lord Denning. Normally he is cast by the Opposition in the role of a villain. I shall deal with the seamen later.
  Still we wait for an answer from the Opposition. They will not stand up and apologise for their illiberal legislation. They do not say whether, if they were returned to power, they would return to the pre-1980 position. We are met with a deafening silence.
  I assure the Opposition that the Bill was not conjured up by my right hon. Friend the Secretary of State when he was bicycling from in Waltham Forest. The Bill is the product of a long period of consultation, beginning with the publication of the Green Paper. The Bill's proposals reflect industry's view. That is why—and I answer the question asked by the hon. Member for Newham, North-East (Mr. Leighton)—the time has come to take a further step. It is always wise to move in step with public opinion. That is precisely what we are doing.
  Many people wanted us to go further. It is clear from today's debate that some people wanted the immunities for the breach of procedural agreements removed. My hon. Friends the Members for Winchester, for Reigate (Mr. Gardiner) and for Hendon, North (Mr. Gorst) are of that view. That is not surprising when there are still too many examples of strikes being called without regard for the damage to the country as a whole and with no moral justification whatsoever.
  We have tried to create a balanced package. Because it is seen as a fair and balanced attempt to deal with some of the worst abuses it continues to attract widespread support. We do not exaggerate the importance of the Bill. In spite of what the right hon. Member for Stockton said, it will not get rid of all irresponsible action. It will not get rid of the ASLEF dispute, for example.
  In a free country there has to be the right to strike. However, there will always be those who abuse that right. I have never pretended that the problems of industrial

  817
  relations can be solved by legislation. We cannot overestimate the need for new initiatives from management to break down the old "them and us" attitudes in industry and create an atmosphere of partnership. The Bill will continue the progress that was begun with the Employment Act 1980 of bringing some sanity and fairness into our legal framework of industrial relations. It will also give better protection for the individual against the abuse of industrial power. It will mark more clearly than before what the community regards as acceptable and what is clearly not acceptable in an industrial dispute. It will remove some of the more obvious barriers to economic recovery.
  Clause 1 is an act of belated justice to about 400 people who were dismissed between 1974 and 1980 under the Labour Government's legislation. It was welcomed by my hon. Friend the Member for Fareham (Mr. Lloyd), and rightly so. It was welcomed by my hon. Friend the Member for Scarborough (Mr. Shaw), but I did not agree with him when he said that the Bill was retrospective legislation. It is not, because it will not make unlawful that which was lawful. It will not make any employer or individual subject to any new proceedings in respect of past dismissals.
  Mr. George Cunningham: Surely it is retrospective legislation in the sense that it is authorising expenditure in respect of past behaviour which would be unlawful but for this legislation. Do the Government not see the awful precedent that is being set? Successive Governments will use public funds as an opportunity to reimburse groups towards which they think their predecessors acted unfairly.
  Mr. Waddington: It is no more retrospective than the War Damage Act 1941, the Pneumoconiosis Etc. (Workers' Compensation) Act 1979 and the Vaccine Damage Payments Act 1979, for example. I do not want to quote some of the precedents and antics of the Labour Government. As usual, they were pretty shabby antics with which one does not wish to be associated. However, the right hon. Member for Leeds East, when he was Chancellor of the Exchequer, included in the Finance Act 1975 provisions that freed unions from the consequences of not registering. Then we had the disgraceful legislation that freed the Clay Cross councillors from their penalties.
  There are many arguments against the closed shop, including many economic arguments. The principal argument against it is that it is an affront to liberty. There is nothing wrong with 100 per cent. trade union membership if it is brought about by voluntary means, but we object to compulsory trade unionism. Despite all that has been said by the right hon. Member for Doncaster, it is disgraceful that the Labour Government positively encouraged closed shops by declaring closed shop dismissals fair. If the right hon. Gentleman needs reminding, they did that in the 1974 Act in paragraph 6 of the first schedule, and that made history.
  We considered making the closed shop unlawful. Many of us wished to do so. However, we were not encouraged by the experience between 1971 and 1974. They are well-established, if undesirable, institutions in this country. That is no reason why we should not pass legislation to protect those who suffer from the worst effects of the closed shop.
  818
  I have heard much this afternoon about the free rider of free loader. Such arguments are a load of nonsense. Why should any union fear the free rider? If a trade union provides a good and effective service people will want to be members. They will not want to leave.
  Opposition Members may not recognise the fact, but many people find trade union political objectives unacceptable. They are not prepared to strike if it causes hardship to the public or to other innocent third parties. Why should they be compelled to strike just because they are members of a closed shop? The free rider argument presupposes that employees always stand to gain if their pay and conditions are negotiated by trade unions. I do not accept that for one moment. As my hon. Friend the Member for Fareham said, some people are far from convinced that inflationary wage claims and clinging to restrictive practices are in the long-term interests of employees. One can think of many instances where the rights of working people have been gravely harmed by irresponsible industrial action.
  Mr. Eric Ogden: Will the Minister assure us that the Government have no intention to outlaw closed shops in industries such as coalmining and seafaring, and for airline pilots?
  Mr. Waddington: The Bill does not outlaw any closed shop.
  Mr. Ogden: Not just in this Bill.
  Mr. Waddington: The Bill provides compensation for people who are unfairly dismissed where the closed shop operates.
  I owe it to my hon. and learned Friend the Solicitor-General to say a word about what the right hon. Member for Chesterfield said about the European Court of Human Rights' case. At no stage in Strasbourg did we argue that the Labour legislation of 1974 to 1976 was other than disgraceful, but my hon. and learned Friend believed that there should be a ruling on whether there was a breach of article 11 of the convention, whether there was a right not to belong as well as to belong and whether the Government, although not the employer of the railwaymen, were liable for the actions of British Rail. As my hon. Friend the Member for Cornwall, North (Mr. Neale) said, as a result of the 1980 Act we are in compliance with article 11, which was not the case when the Labour legislation was on the statute book.
  I turn to the subject of trade union immunities. Incidentally, the right hon. Member for Doncaster talked about the Donovan commission, but he does not seem to remember that it recommended that trade union immunities should be limited to acts done in contemplation or furtherance of a trade dispute, so some of the proposals in the Bill are in compliance with its recommendations.
  We are moving in line with public opinion. A recent poll showed that 70 per cent. of the public and 60 per cent. of trade unionists want trade unions to be sued if they organise secondary action. It is wrong in principle to set trade unions above the law. It is absurd that they should be given an immunity not even offered to their own officers. They do not need it.
  The immunity in the 1906 Act came about by historical accident. On one night the Solicitor-General of the Liberal Government was arguing fervently that no immunity should be granted to trade unions. The next day he had

  819
  changed his mind and the Liberal Government marched into the Lobby in line with the new Labour Members. That is an example of the behaviour of Liberal Governments over the years.
  My right hon. Friend the Secretary of State quoted from a Royal Commission report. Following the Taff Vale case that Royal Commission stated:
  "There is no rule of law so elementary, so universal and so indispensable as the rule that a wrong-doer should be made to redress his wrong. If trade unions were exempt from this liability they would be the only exception and it would then be right that the exception should be removed."
  As we have heard, little Sidney Webb was a member of that commission. We may also remember that, later, in their book on the history of trade unionism, Sidney and Beatrice Webb spoke of the Act conferring an extraordinary and unlimited immunity that was quite unjustified.
  Mr. John Evans rose—
  Mr. Waddington: No, I shall not give way. I have only a few more minutes.
  My hon. Friends referred to the part of the Bill which limits the damages that may be awarded against trade unions. I remind the House that in putting into the Bill that limitation on damages, we are thereby still conferring upon trade unions an element of privilege not afforded to anyone else who commits an unlawful act. It therefore comes ill from Opposition Members to cavil about the exact amount of compensation that may be awarded.
  With regard to the definition of a trade dispute, what could be more absurd than to give protection for a trade dispute when there is no argument between the employer and his employees? A case was brought to my attention shortly before Christmas in which a trade union official sought to black the goods from a poultry packing firm because the union wanted recognition rights. There was no dispute within the firm. There was no dispute between the employer and his own employees. Yet the trade union official was prepared to jeopardise the employment of those people and if necessary drive the business into bankruptcy. To my mind, that kind of behaviour cannot be condoned.
  With regard to shipping, of course there are special problems in the shipping industry in relation to closed shop ballots. I undertake to look into that matter, and I know that my right hon. Friend will do so. It must be remembered, however, that communications are very much better today then they were in the past. Strike ballots have been held on many occasions, apparently without all that much difficulty, so it is not self-evident that it would be impossible to hold a ballot on the closed shop.
  I fear that I have not been able to respond to all the points raised by the Labour Members. I confess that, on the whole, I found their contributions deeply depressing. Any element of fairness and objectivity that the Labour Party may have possessed seems to have been mortgaged to the trade unions. It is the old story. Labour Members know of no other posture than to lie on their backs and wait for their tummies to be tickled by their block vote brandishing paymasters. That is a good posture for a whore, but an undignified and disgraceful posture for a Member of Parliament, unworthy of a representative of the British people.
  We have heard not one word of support from the Labour Party for those thrown out of their jobs between 1974 and
  820
  1980 as a result of closed shops. There has been not a flicker of recognition that the Labour Government's legislation which permitted those dismissals has been found to be in breach of the European Convention on Human Rights. We have heard not a whisper of condemnation of councils such as Sandwell and Walsall which have sacked low-paid workers in defiance of the Employment Act. There has been not a hint of unease among Labour Members at the threat by a number of trade union leaders to defy a law passed by Parliament and supported by the vast majority of the British people.
  We have seen today the extent to which the Labour Party has sold itself morally and financially to the trade unions. Those who oppose the Bill are offering a society in which the interests of trade unions must be protected before all others and in which the collective will must prevail over the rights of the individual. But as the European Court said about the British railmen, democracy does not simply mean that the views of the majority and powerful must always prevail. A balance must be achieved which ensures the fair and proper treatment of minorities and avoids any abuse of a majority and dominant position. That is precisely what we have done in the Bill.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 348, Noes 241.

  Division No. 59]

  [10.00

  AYES

  Adley, Robert

  Bulmer, Esmond

  Aitken, Jonathan

  Burden, SirFrederick

  Alexander, Richard

  Butcher, John

  Alison, Rt Hon Michael

  Butler, Hon Adam

  Alton, David

  Cadbury, Jocelyn

  Ancram, Michael

  Carlisle, John (Luton West)

  Arnold, Tom

  Carlisle, Kenneth (Lincoln)

  Aspinwall, Jack

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

  Atkins, Rt Hon H. (S'thorne)

  Cartwright, John

  Atkins, Robert(PrestonN)

  Chalker, Mrs. Lynda

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

  Channon, Rt. Hon. Paul

  Baker, Kenneth (St.M'bone)

  Chapman, Sydney

  Baker, Nicholas (N Dorset)

  Churchill, W. S.

  Beaumont-Dark,Anthony

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

  Beith, A. J.

  Clark, Sir W.(Croydon S)

  Bell, SirRonald

  Clarke, Kenneth (Rushcliffe)

  Bendall, Vivian

  Clegg, Sir Walter

  Bennett,Sir Frederic(T'bay)

  Cockeram,Eric

  Benyon, Thomas(A'don)

  Colvin, Michael

  Benyon, W. (Buckingham)

  Cope, John

  Best, Keith

  Cormack, Patrick

  Bevan, David Gilroy

  Corrie, John

  Biffen, Rt HonJohn

  Costain, SirAlbert

  Biggs-Davison,SirJohn

  Cranborne, Viscount

  Blackburn, John

  Critchley, Julian

  Blaker, Peter

  Crouch, David

  Body, Richard

  Dean, Paul (North Somerset)

  Bonsor, SirNicholas

  Dickens, Geoffrey

  Boscawen, HonRobert

  Dorrell, Stephen

  Bottomley, Peter (W'wich W)

  Douglas-Hamilton,LordJ.

  Bowden, Andrew

  Dover, Denshore

  Boyson, Dr Rhodes

  du Cann, Rt Hon Edward

  Bradley, Tom

  Dunn, Robert(Dartford)

  Braine, SirBernard

  Du rant, Tony

  Brig ht,Graham

  Dykes, Hugh

  Brinton, Tim

  Eden, Rt Hon Sir John

  Brittan, Rt. Hon. Leon

  Edwards, Rt Hon N. (P'broke)

  Brocklebank-Fowler,C.

  Eggar, Tim

  Brooke, Hon Peter

  Elliott, SirWilliam

  Brotherton,Michael

  Ellis, Tom(Wrexham)

  Brown,Michael(Brigg&Sc'n)

  Emery, Sir Peter

  Browne, John (Winchester)

  Eyre, Reginald

  Bruce-Gardyne,John

  Fairbairn, Nicholas

  Bryan, Sir Paul

  Fairgrieve, SirRussell

  Buck, Antony

  Faith, MrsSheila

  Budgen, Nick

  Farr, John

  821

  Fell, SirAnthony

  Lawson, RtHon Nigel

  Fenner, Mrs Peggy

  Lee, John

  Finsberg, Geoffrey

  LeMarchant, Spencer

  Fisher, Sir Nigel

  Lennox-Boyd, Hon Mark

  Fletcher, A. (Ed'nb'ghN)

  Lester, Jim (Beeston)

  Fletcher-Cooke, SirCharles

  Lewis, Kenneth (Rutland)

  Fookes, Miss Janet

  Lloyd, Ian (Havant & W'loo)

  Forman, Nigel

  Lloyd, Peter (Fareham)

  Fowler, RtHon Norman

  Loveridge, John

  Fox, Marcus

  Luce, Richard

  Fraser, Peter (South Angus)

  Lyell, Nicholas

  Freud, Clement

  Lyons, Edward (Bradf'dW)

  Fry, Peter

  Mabon, RtHon DrJ. Dickson

  Gardiner,George (Reigate)

  McCrindle, Robert

  Gardner, Edward (S Fylde)

  Macfarlane, Neil

  Garel-Jones,Tristan

  MacGregor, John

  Gilmour, RtHon Sir Ian

  MacKay, John (Argyll)

  Ginsburg, David

  Maclennan, Robert

  Glyn, Dr Alan

  Macmillan, RtHon M.

  Goodhart, SirPhilip

  McNair-Wilson,M.(N'bury)

  Goodhew, SirVictor

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

  Goodlad, Alastair

  McQuarrie, Albert

  Gorst, John

  Madel, David

  Gow, Ian

  Major, John

  Grant, Anthony (HarrowC)

  Marland, Paul

  Gray, Hamish

  Marlow, Antony

  Greenway, Harry

  Marshall, Michael (Arundel)

  Grieve, Percy

  Marten, RtHon Neil

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

  Mates, Michael

  Griffiths, Peter Portsm 'thN)

  Maude, RtHon Sir Angus

  Grimond, RtHon J.

  Mawby, Ray

  Grist, Ian

  Mawhinney, DrBrian

  Grylls, Michael

  Maxwell-Hyslop, Robin

  Gummer, JohnSelwyn

  Mayhew, Patrick

  Hamilton, Hon A.

  Mellor, David

  Hamilton, Michael (Salisbury)

  Meyer, SirAnthony

  Hampson, Dr Keith

  Miller, Hal(B'grove)

  Hannam, John

  Mills, Iain(Meriden)

  Haselhurst, Alan

  Mills, Peter(West Devon)

  Hastings, Stephen

  Miscampbell, Norman

  Havers, RtHon Sir Michael

  Mitchell, David(Basingstoke)

  Hawkins, Paul

  Moate, Roger

  Hayhoe, Barney

  Monro, SirHector

  Heath, RtHon Edward

  Montgomery, Fergus

  Heddle, John

  Moore, John

  Henderson, Barry

  Morgan, Geraint

  Heseltine, RtHon Michael

  Morris, M. (N'hampton S)

  Hicks, Robert

  Morrison, Hon C. (Devizes)

  Higgins, RtHon Terence L.

  Morrison, Hon P. (Chester)

  Hogg, HonDouglas(Gr'th'm)

  Mudd, David

  Holland, Philip (Carlton)

  Murphy, Christopher

  Hooson, Tom

  Myles, David

  Horam, John

  Neale, Gerrard

  Hordern, Peter

  Need ham, Richard

  Howe, RtHon Sir Geoffrey

  Nelson, Anthony

  Howell, RtHon D. (G'ldf'd)

  Neubert, Michael

  Howell, Ralph (NNorfolk)

  Newton, Tony

  Howells, Geraint

  Normanton, Tom

  Hunt, David (Wirral)

  Nott, RtHon John

  Hunt, John (Ravensbourne)

  Onslow, Cranley

  Irving, Charles (Cheltenham)

  Oppenheim, RtHon Mrs S.

  Jenkin, RtHon Patrick

  Osborn, John

  Jessel, Toby

  Owen, RtHon Dr David

  JohnsonSmith,Geoffrey

  Page, John (Harrow, West)

  Jopling, RtHon Michael

  Page, Richard (SW Herts)

  Joseph, RtHon Sir Keith

  Parkinson, RtHonCecil

  Kaberry, SirDonald

  Parris, Matthew

  Kellett-Bowman,MrsElaine

  Patten, Christopher (Bath)

  Kershaw, SirAnthony

  Patten, John (Oxford)

  Kilfedder, James A.

  Pattie, Geoffrey

  Kimball, SirMarcus

  Pawsey, James

  King, RtHon Tom

  Percival, Sir Ian

  Kitson, SirTimothy

  Pink, R. Bonner

  Knight, MrsJill

  Pitt, William Henry

  Knox, David

  Pollock, Alexander

  Lamont, Norman

  Porter, Barry

  Lang, Ian

  Prentice, RtHon Reg

  Langford-Holt,SirJohn

  Price, Sir David (Eastleigh)

  Latham, Michael

  Proctor, K. Harvey

  Lawrence, Ivan

  Pym, RtHon Francis

  822

  Raison, Timothy

  Tapsell, Peter

  Rathbone,Tim

  Taylor, Teddy (S'end E)

  Rees, Peter (Dover and Deal)

  Tebbit, RtHon Norman

  Rees-Davies, W. R.

  Temple-Morris, Peter

  Renton, Tim

  Thatcher, RtHon Mrs M.

  RhodesJames, Robert

  Thomas, Mike (Newcastle E)

  RhysWilliams, SirBrandon

  Thomas, RtHon Peter

  Ridley, Hon Nicholas

  Thompson, Donald

  Ridsdale, SirJulian

  Thorne, Neil (IlfordSouth)

  Rifkind, Malcolm

  Thornton, Malcolm

  Rippon, RtHon Geoffrey

  Townend, John (Bridlington)

  Roberts, M. (Cardiff NW)

  Townsend, CyrilD, (B'heath)

  Roberts, Wyn (Conway)

  Trippier, David

  Rodgers, RtHon William

  Trotter, Neville

  Roper, John

  van Straubenzee, Sir W.

  Rossi, Hugh

  Vaughan, DrGerard

  Rost, Peter

  Viggers, Peter

  Royle, SirAnthony

  Waddington, David

  Sainsbury, HonTimothy

  Wainwright, R.(ColneV)

  St. John-Stevas, RtHon N.

  Wakeham, John

  Sandelson, Neville

  Waldegrave, HonWilliam

  Scott, Nicholas

  Walker, RtHon P. (W'cester)

  Shaw, Giles (Pudsey)

  Walker, B. (Perth)

  Shaw, Michael (Scarborough)

  Walker-Smith, RtHon Sir D.

  Shelton, William(Streatham)

  Wall, Sir Patrick

  Shepherd,Colin (Hereford)

  Waller, Gary

  Shepherd, Richard

  Walters, Dennis

  Shersby, Michael

  Ward, John

  Silvester, Fred

  Warren, Kenneth

  Sims, Roger

  Watson, John

  Skeet, T. H. H.

  Wellbeloved, James

  Smith, Cyril (Rochdale)

  Wells, Bowen

  Smith, Dudley

  Wells, John(Maidstone)

  Speed, Keith

  Wheeler, John

  Speller, Tony

  Whitelaw, RtHon William

  Spence, John

  Whitney, Raymond

  Spicer, Jim (West Dorset)

  Wickenden, Keith

  Spicer, Michael (SWorcs)

  Wiggin, Jerry

  Sproat, lain

  Wilkinson, John

  Squire, Robin

  Williams,D. (Montgomery)

  Stainton, Keith

  Williams, RtHon Mrs (Crosby)

  Stanbrook, Ivor

  Winterton, Nicholas

  Stanley, John

  Wolfson, Mark

  Steel, RtHon David

  Wrigglesworth, Ian

  Steen, Anthony

  Young, SirGeorge (Acton)

  Stevens, Martin

  Younger, RtHon George

  Stewart,A.(ERenfrewshire)

  Stewart, Ian (Hitchin)

  Tellers for the Ayes:

  Stokes,John

  Mr. Anthony Berry and

  Stradling Thomas, J.

  Mr. Carol Mather.

  NOES

  Abse, Leo

  Carmichael, Neil

  Adams, Allen

  Carter-Jones, Lewis

  Allaun, Frank

  Clark, Dr David (S Shields)

  Anderson, Donald

  Cocks, RtHon M. (B'stol S)

  Archer, RtHon Peter

  Cohen, Stanley

  Ashley, RtHon Jack

  Coleman, Donald

  Ashton, Joe

  Concannon, RtHon J. D.

  Atkinson, N. (H'gey)

  Cook, Robin F.

  Bagier, Gordon A.T.

  Cowans, Harry

  Barnett, Guy (Greenwich)

  Cox, T. (W'dsw'th, Toot'g)

  Barnett, RtHon Joel (H'wd)

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

  Benn, RtHon Tony

  Crowther, Stan

  Bennett, Andrew (St'kp'tN)

  Cryer, Bob

  Bidwell, Sydney

  Cunliffe, Lawrence

  Booth, RtHon Albert

  Cunningham, G.(lslingtonS)

  Boothroyd, Miss Betty

  Cunningham, DrJ.(W'h'n)

  Bottomley, RtHonA.(M'b'ro)

  Dalyell, Tam

  Bray, Dr Jeremy

  Davidson, Arthur

  Brown, Hugh D. (Provan)

  Davies, RtHon Denzil (L'lli)

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

  Davies, Ifor (Gower)

  Brown, Ron (E'burgh, Leith)

  Davis, Clinton (Hackney C)

  Buchan, Norman

  Davis, Terry (B'ham, Stechf'd)

  Callaghan, RtHon J.

  Deakins, Eric

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

  Dean, Joseph (Leeds West)

  Campbell, Ian

  Dewar, Donald

  Campbell-Savours,Dale

  Dixon, Donald

  Canavan, Dennis

  Dobson, Frank

  Cant, R. B.

  Dormand, Jack

  823

  Douglas, Dick

  McGuire, Michael(Ince)

  Douglas-Mann,Bruce

  McKay, Allen(Penistone)

  Dubs, Alfred

  McKelvey, William

  Duffy, A. E. P.

  MacKenzie, RtHonGregor

  Dunnett, Jack

  McMahon, Andrew

  Dunwoody, HonMrsG.

  McNally, Thomas

  Eadie, Alex

  McNamara, Kevin

  Eastham, Ken

  McTaggart, Robert

  Edwards, R. (Whampt'n S E)

  McWilliam, John

  Ellis, R. (NED'bysh're)

  Marks, Kenneth

  English, Michael

  Marshall.D (G'gowS'fon)

  Ennals, RtHon David

  Marshall, DrEdmund(Goole)

  Evans, loan (Aberdare)

  Marshall, Jim (LeicesterS)

  Evans, John (Newton)

  Martin, M (G'gowS'burn)

  Ewing, Harry

  Mason, RtHon Roy

  Faulds, Andrew

  Maxton, John

  Field, Frank

  Maynard, MissJoan

  Fitch, Alan

  Meacher, Michael

  Fitt, Gerard

  Mellish, RtHon Robert

  Flannery, Martin

  Mikardo, lan

  Fletcher, L. R. (llkeston)

  Millan, RtHon Bruce

  Fletcher, Ted (Darlington)

  Miller, Dr M.S. (EKilbride)

  Foot, RtHon Michael

  Mitchell, R.C. (Soton Itchen)

  Ford, Ben

  Morris, RtHon A. (W'shawe)

  Forrester, John

  Morris, RtHon C. (O'shaw)

  Foster, Derek

  Morris, RtHon J. (Aberavon)

  Foulkes, George

  Morton, George

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

  Moyle, RtHon Roland

  Freeson, RtHon Reginald

  Mulley, RtHon Frederick

  Garrett, John (NorwichS)

  Newens, Stanley

  Garrett, W. E. (Wallsend)

  Oakes, RtHon Gordon

  George, Bruce

  Ogden, Eric

  Gilbert, RtHonDrJohn

  O'Neill, Martin

  Golding, John

  Orme, RtHon Stanley

  Graham, Ted

  Palmer, Arthur

  Grant,George(Morpeth)

  Park, George

  Grant, John (IslingtonC)

  Parker, John

  Hamilton, W. W. (C'tralFife)

  Parry, Robert

  Hardy, Peter

  Pavitt, Laurie

  Harrison, RtHon Walter

  Pendry, Tom

  Hart, RtHon Dame Judith

  Powell, Raymond (Ogmore)

  Hattersley, RtHon Roy

  Prescott, John

  Haynes, Frank

  Price, C. (Lewisham W)

  Healey, RtHon Denis

  Race, Reg

  Heffer, EricS.

  Radice, Giles

  Hogg, N. (EDunb't'nshire)

  Rees, RtHon M (Leeds S)

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

  Richardson, Jo

  HomeRobertson, John

  Roberts, Albert(Normanton)

  Homewood, William

  Roberts, Allan(Bootle)

  Hooley, Frank

  Roberts, Ernest (Hackney N)

  Howell, RtHonD.

  Roberts, Gwi lym (Cannock)

  Hoyle, Douglas

  Robertson, George

  Huckfield, Les

  Rooker, J. W.

  Hughes, Mark (Durham)

  Ross, Ernest (Dundee West)

  Hughes, Robert (AberdeenN)

  Rowlands, Ted

  Hughes, Roy (Newport)

  Ryman, John

  Janner, HonGreville

  Sever, John

  Jay, RtHon Douglas

  Sheerman, Barry

  John, Brynmor

  Sheldon, RtHon R.

  Johnson, James (Hull West)

  Shore, RtHon Peter

  Johnson, Walter (Derby S)

  Short, Mrs Renee

  Jones, RtHon Alec (Rh'dda)

  Silkin, RtHon J. (Deptford)

  Jones, Barry (East Flint)

  Silkin, RtHon S. C. (Dulwich)

  Jones, Dan (Burnley)

  Silverman, Julius

  Kaufman, RtHon Gerald

  Skinner, Dennis

  Kerr, Russell

  Snape, Peter

  Kilroy-Silk.Robert

  Soley, Clive

  Kinnock, Neil

  Spearing, Nigel

  Lamborn, Harry

  Spriggs, Leslie

  Lamond, James

  Stallard, A. W.

  Leadbitter, Ted

  Stoddart, David

  Leighton, Ronald

  Stott, Roger

  Lestor, Miss Joan

  Strang, Gavin

  Lewis, Arthu r (N'ham NW)

  Straw, Jack

  Lewis, Ron (Carlisle)

  Summerskill, HonDrShirley

  Litherland, Robert

  Taylor, Mrs Ann (Bolton W)

  Lofthouse, Geoffrey

  Thomas, Dafydd (Merioneth)

  Lyon, Alexander (York)

  Thomas, Jeffrey (Abertillery)

  McCartney, Hugh

  Thomas, DrR.(Carmarthen)

  McDonald, DrOonagh

  Thorne, Stan (Preston South)

  824

  Tilley, John

  Willey, RtHon Frederick

  Tinn, James

  Williams, RtHon A.(S'sea W)

  Torney, Tom

  Wilson, Gordon (DundeeE)

  Urwin, RtHonTom

  Wilson, RtHon Sir H.(H'ton)

  Varley, RtHon Eric G.

  Wilson, William (C'trySE)

  Wainwright,E.(DearneV)

  Winnick, David

  Walker, RtHon H.(D'caster)

  Woodall, Alec

  Watkins, David

  Woolmer, Kenneth

  Weetch, Ken

  Wright, Sheila

  Welsh, Michael

  Young, David (BoltonE)

  White, Frank R.

  White, J. (G'gowPollok)

  Tellers for the Noes:

  Whitehead, Phillip

  Mr. Austin Mitchell and

  Whitlock, William

  Mr. James Hamilton.

  Wigley, Dafydd

  Question accordingly agreed to. Bill read a Second time.
  Mr. Michael Cocks rose—
  Mr. Dennis Skinner: On a point of order—
  Mr. Cocks: I beg to move, That the Bill be committed to a Committee of the whole House.
  Question put:—
  The House divided: Ayes 236, Noes 353.

  Division No. 60]

  [10.13pm

  AYES

  Abse, Leo

  Davis, Terry (B'ham,Stechf'd)

  Adams, Allen

  Deakins, Eric

  Allaun, Frank

  Dean, Joseph (Leeds West)

  Anderson, Donald

  Dewar, Donald

  Archer, RtHon Peter

  Dixon, Donald

  Ashley, RtHon Jack

  Dobson, Frank

  Ashton, Joe

  Dormand, Jack

  Atkinson, U.(H'gey,)

  Douglas, Dick

  Bagier, Gordon A.T.

  Dubs, Alfred

  Barnett, Guy (Greenwich)

  Duffy, A. E. P.

  Barnett, RtHon Joel (H'wd)

  Dunnett, Jack

  Benn, RtHon Tony

  Dunwoody, Hon MrsG

  Bennett, Andrew(St'kp'tN)

  Eadie, Alex

  Bidwell, Sydney

  Eastham, Ken

  Booth, RtHonAlbert

  Edwards, R. (Whampt'nSE)

  Booth royd, M iss Betty

  Ellis,R.(NED'bysh're)

  Bottomley, RtHonA.(M'b'ro)

  English, Michael

  Bray, Dr Jeremy

  Ennals, RtHon David

  Brown, Hugh D. (Provan)

  Evans, loan (Aberdare)

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

  Evans, John (Newton)

  B rown, Ro n (Eburgh, Leith)

  Ewing, Harry

  Buchan, Norman

  Faulds, Andrew

  Callaghan, RtHonJ.

  Field, Frank

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

  Fitch, Alan

  Campbell, Ian

  Fitt, Gerard

  Campbell-Savours, Dale

  Flannery, Martin

  Canavan, Dennis

  Fletcher, L. R. (Ilkeston)

  Cant, R. B.

  Fletcher, Ted (Darlington)

  Carmichael, Neil

  Foot, RtHon Michael

  Carter-Jones, Lewis

  Ford, Ben

  Clark, Dr David (S Shields)

  Forrester, John

  Cocks, RtHon M. (B'stolS)

  Foster, Derek

  Cohen, Stanley

  Foulkes, George

  Coleman, Donald

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

  Concannon, RtHon J. D.

  Freeson, RtHon Reginald

  Cook, Robin F.

  Garrett, John (NorwichS)

  Cowans, Harry

  Garrett, W. E. (Wallsend)

  Cox, T. (W'dsw'th, Toot'g)

  George, Bruce

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

  Gilbert, RtHon Dr John

  Crowther, Stan

  Golding, john

  Cryer, Bob

  Graham, Ted

  Cunliffe, Lawrence

  Grant, George (Morpeth)

  Cunningham, DrJ. (W'h'n)

  Hamilton, James(Bothwell)

  Dalyell, Tam

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

  Davidson, Arthur

  Hardy, Peter

  Davies, RtHon Denzil (L'lli)

  Harrison, RtHon Walter

  Davies, Ifor (Gower)

  Hart, RtHon Dame Judith

  Davis, Clinton (HackneyC)

  Hattersley, RtHon Roy

  825

  Haynes, Frank

  Parry, Robert

  Healey, RtHon Denis

  Pavitt, Laurie

  Heffer, Eric S.

  Pendry,Tom

  Hogg, N. (EDunb't'nshire)

  Powell, Raymond (Ogmore,)

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

  Prescott, John

  HomeRobertson, John

  Price, C. (Lewisham W)

  Homewood, William

  Race, Reg

  Hooley, Frank

  Radice, Giles

  Howell, RtHonD.

  Rees, RtHon M (Leeds S)

  Hoyle,Douglas

  Richardson,Jo

  Huckfield, Les

  Roberts, Albert(Normanton)

  Hughes, Mark(Durham)

  Roberts, Allan(Bootle;

  Hughes, Robert (Aberdeen N)

  Roberts, Ernest (Hackney N)

  Hughes, Roy (Newport)

  Roberts, Gwilym(Cannock)

  Janner, HonGreville

  Robertson, George

  Jay, RtHon Douglas

  Robinson, G. (Coventry NW)

  John, Brynmor

  Rooker, J. W.

  Johnson, James (Hull West)

  Ross, Ernest (Dundee West)

  Johnson, Walter (DerbyS)

  Rowlands, Ted

  Jones, RtHon Alec (Rh'dda)

  Ryman, John

  Jones, Barry (East Flint)

  Sever, John

  Jones, Dan (Burnley)

  Sheerman, Barry

  Kaufman, RtHon Gerald

  Sheldon, RtHon R.

  Kerr, Russell

  Shore, RtHon Peter

  Kilroy-Silk.Robert

  Short, Mrs Renée

  Kinnock, Neil

  Silkin, RtHon J. (Deptford)

  Lambie, David

  Silkin, RtHon S. C. (Dulwich)

  Lamborn, Harry

  Silverman, Julius

  Lamond, James

  Skinner, Dennis

  Leadbitter Ted

  Snape, Peter

  Leighton, Ronald

  Soley, Clive

  Lestor, MissJoan

  Spearing, Nigel

  Lewis, Arthur (N'ham NW)

  Spriggs, Leslie

  Lewis, Ron (Carlisle)

  Stallard, A.W.

  Litherland, Robert

  Stoddart, David

  Lofthouse, Geoffrey

  Stott, Roger

  Lyon, Alexander(York)

  Strang, Gavin

  McDonald, DrOonagh

  Straw, Jack

  McGuire, Michael(Ince)

  Summerskill, HonDrShirley

  McKay, Allen (Penistone)

  Taylor, Mrs Ann (Bolton W)

  McKelvey, William

  Thomas, Dafydd (Merioneth)

  MacKenzie, RtHonGregor

  Thomas, DrR. (Carmarthen)

  McMahon, Andrew

  Thorne, Stan (PrestonSouth)

  McNamara, Kevin

  Tilley, John

  McTaggart, Robert

  Tinn, James

  McWilliam, John

  Torney, Tom

  Marks, Kenneth

  Urwin, RtHon Tom

  Marshall, D(G'gowS'ton)

  Varley, RtHon EricG.

  Marshall, Jim (LeicesterS)

  Wainwright, E. (Dearne V)

  Martin, M (G'gowS'burn)

  Walker, RtHon H.(D'caster)

  Mason, RtHon Roy

  Watkins, David

  Maxton, John

  Weetch, Ken

  Maynard, MissJoan

  Welsh, Michael

  Meacher, Michael

  White, Frank R.

  Mellish, RtHonRobert

  White,J. (G'gowPollok)

  Mikardo, lan

  Whitehead, Phillip

  Millan, RtHonBruce

  Whitlock, William

  Miller, DrM.S.(E Kilbride)

  Wig ley, Dafydd

  Mitchell, Austin(Grimsby)

  Willey, RtHon Frederick

  Morris, RtHon A. (Wshawe)

  Williams, RtHon A. (S'seaW)

  Morris, RtHon C. (O'shaw)

  Wilson, Gordon (DundeeE)

  Morris, RtHon J. (Aberavon)

  Wilson, RtHon SirH.(H'ton)

  Morton, George

  Wilson, William (C'trySE)

  Moyle, RtHon Roland

  Winnick, David

  Mulley, RtHon Frederick

  Woodall, Alec

  Newens, Stanley

  Woolmer, Kenneth

  Oakes, RtHon Gordon

  Wright, Sheila

  O'Neill, Martin

  Young, David (Bolton E)

  Orme, RtHon Stanley

  Palmer, Arthur

  Tellers for the Ayes:

  Park, George

  Dr. Edmund Marshall and

  Parker, John

  Mr. Hugh McCartney.

  NOES

  Adley, Robert

  Arnold, Tom

  Aitken, Jonathan

  Aspinwall, Jack

  Alexander, Richard

  Atkins, RtHon H.(S'thorne)

  Alison, RtHon Michael

  Atkirns, Robert(PrestonN)

  Alton, David

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

  Ancram, Michael

  Baker, Kenneth(St.M'bone)

  826

  Baker, Nicholas (NDorset)

  Farr, John

  Beaumont-Dark.Anthony

  Fell, SirAnthony

  Beith, A.J.

  Fenner, Mrs Peggy

  Bell, SirRonald

  Finsberg, Geoffrey

  Bendall, Vivian

  Fisher, SirNigel

  Bennett, SirFrederic (T'bay)

  Fletcher, A. (Edfnb'ghN)

  Benyon, Thomas(A'don)

  Fletcher-Cooke, SirCharles

  Benyon, W. (Buckingham)

  Fookes, Miss Janet

  Best, Keith

  Forman, Nigel

  Bevan, David Gilroy

  Fowler, RtHon Norman

  Biffen, RtHon John

  Fox, Marcus

  Biggs-Davison, SirJohn

  Fraser, Peter (South Angus)

  Blackburn, John

  Freud, Clement

  Blaker, Peter

  Fry, Peter

  Body, Richard

  Gardiner, George(Reigate)

  Bonsor, SirNicholas

  Gardner, Edward (SFylde)

  Boscawen, HonRobert

  Garel-Jones, Tristan

  Bottomley, Peter (Wwich W)

  Gilmour, RtHon Sir Ian

  Bowden, Andrew

  Ginsburg, David

  Boyson, DrRhodes

  Glyn, DrAlan

  Brad ley, Tom

  Goodhart, SirPhilip

  Braine, SirBemard

  Goodhew, SirVictor

  Bright, Graham

  Goodlad, Alastair

  Brinton, Tim

  Gorst, John

  Brittan, Rt.Hon. Leon

  Gow, Ian

  Brocklebank-Fowler.C.

  Grant, Anthony (HarrowC)

  Brooke, Hon Peter

  Grant, John (IslingtonC)

  Brotherton, Michael

  Gray, Hamish

  Brown, Michael(Brigg&Sc'n)

  Greenway, Harry

  Brown, Ronald W. (H'ckn'yS)

  Grieve, Percy

  Browrne, John(Winchester)

  G riff iths, E.(B'ySt, Edm 'ds)

  Bruce-Gardyne,John

  Griffiths, Peter Portsm'thN)

  Bryan, Sir Paul

  Grimond, RtHonJ.

  Buck, Antony

  Grist, Ian

  Budgen, Nick

  Grylls, Michael

  Bulmer, Esmond

  Gummer, JohnSelwyn

  Burden, SirFrederick

  Hamilton, HonA.

  Butcher, John

  Hamilton, Michael (Salisbury)

  Butler, HonAdam

  Hampson, Dr Keith

  Cadbury, Jocelyn

  Hannam, John

  Carlisle, John (Luton West)

  Haselhurst, Alan

  Carlisle, Kenneth (Lincoln)

  Hastings, Stephen

  Carlisle, RtHon M. (R'c'n)

  Havers, RtHon Sir Michael

  Cartwright, John

  Hawkins, Paul

  Chalker, Mrs. Lynda

  Hayhoe, Barney

  Channon, Rt. Hon. Paul

  Heath, RtHon Edward

  Chapman, Sydney

  Heddle, John

  Churchill, W.S.

  Henderson, Barry

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

  Heseltine, RtHon Michael

  Clark, Sir W.(CroydonS)

  Hicks, Robert

  Clarke, Kenneth (Rushcliffe)

  Higgins, RtHon Terence L

  Clegg, Sir Walter

  Hogg, HonDouglas (Gr’th’m)

  Cockeram, Eric

  Holland, Philip (Carlton)

  Colvin, Michael

  Hooson, Tom

  Cope, John

  Horam, John

  Cormack, Patrick

  Hordern, Peter

  Corrie, John

  Howe, RtHon Sir Geoffrey

  Costain, SirAlbert

  Howell, RtHonD. (G'ldf'd)

  Cranborne, Viscount

  Howell, Ralph (NNorfolk)

  Critchley, Julian

  Howells, Geraint

  Crouch, David

  Hunt, David (Wirral)

  Dean, Paul (NorthSomerset)

  Hunt, John (Ravensbourne)

  Dickens, Geoffrey

  Irving, Charles (Cheltenham)

  Dorrell, Stephen

  Jenkin, RtHon Patrick

  Douglas-Hamilton, LordJ.

  Jessel, Toby

  Dover, Denshore

  JohnsonSmith, Geoffrey

  du Cann, RtHon Edward

  Jopling, RtHonMichael

  Dunn, Robert (Dartford)

  Joseph, RtHon Sir Keith

  Durant, Tony

  Kaberry, SirDonald

  Dykes, Hugh

  Kellett-Bowman, MrsElaine

  Eden, RtHon Sir John

  Kershaw, SirAnthony

  Edwards, RtHon N. (P'broke)

  Kilfedder, JamesA.

  Eggar, Tim

  Kimball, SirMarcus

  Elliott, SirWilliam

  King, RtHon Tom

  Ellis, Tom (Wrexham)

  Kitson, SirTimothy

  Emery, Sir Peter

  Knight, Mrs Jill

  Eyre, Reginald

  Knox, David

  Fairbairn, Nicholas

  Lamont, Norman

  Fairgrieve, SirRussell

  Lang, Ian

  Faith, MrsSheila

  Langford-Holt, SirJohn

  827

  Latham, Michael

  Porter, Barry

  Lawrence, Ivan

  Prentice, RtHon Reg

  Lawson, RtHon Nigel

  Price, SirDavid (Eastleigh)

  Lee, John

  Proctor, K. Harvey

  LeMarchant, Spencer

  Pym, RtHon Francis

  Lennox-Boyd, Hon Mark

  Raison, Timothy

  Lester, Jim (Beeston)

  Rathbone, Tim

  Lewis, Kenneth (Rutland)

  Rees, Peter (Dover and Deal)

  Lloyd, Ian (Havant&W'loo)

  Rees-Davies, W. R.

  Lloyd, Peter (Fareham)

  Renton, Tim

  Loveridge, John

  Rhodes James, Robert

  Luce, Richard

  RhysWilliams, SirBrandon

  Lyell, Nicholas

  Ridley, HonNicholas

  Lyons, Edward (Bradf'dW)

  Ridsdale, SirJulian

  Mabon, RtHon Dr J. Dickson

  Rifkind, Malcolm

  McCrindle, Robert

  Rippon, RtHon Geoffrey

  Macfarlane, Neil

  Roberts, M. (Cardiff NW)

  MacGregor, John

  Roberts, Wyn (Conway)

  MacKay, John (Argyll)

  Rodgers, RtHon William

  Maclennan, Robert

  Roper, John

  Macmillan, RtHonM.

  Rossi, Hugh

  McNair-Wilson,M.(N'bury)

  Rost, Peter

  McNair-Wilson, P. (NewF'st)

  Royle, Sir Anthony

  McNally, Thomas

  Sainsbury, HonTimothy

  McQuarrie, Albert

  St. John-Stevas, RtHon N.

  Madel, David

  Sandelson, Neville

  Major, John

  Scott, Nicholas

  Marland, Paul

  Shaw, Giles (Pudsey)

  Marlow, Antony

  Shaw, Michael (Scarborough)

  Marshall, Michael (Arundel)

  Shelton, William(Streatham)

  Marten, RtHon Neil

  Shepherd, Colin (Hereford)

  Mates, Michael

  Shepherd, Richard

  Maude, RtHon Sir Angus

  Shersby, Michael

  Mawby, Ray

  Silvester, Fred

  Mawhinney, DrBrian

  Sims, Roger

  Maxwell-Hystop,Robin

  Skeet, T. H. H.

  Mayhew, Patrick

  Smith, Cyril(Rochdale)

  Mellor, David

  Smith, Dudley

  Meyer, SirAnthony

  Speed, Keith

  Miller, Hal(S'grove,)

  Speller, Tony

  Mills, Iain(Meriden)

  Spence, John

  Mills, Peter (West Devon)

  Spicer, Jim (WestDorset)

  Miscampbell, Norman

  Spicer, Michael (S Worcs)

  Mitchell, David (Basingstoke)

  Sproat, lain

  Mitchell, R.C. (Soton Itchen)

  Squire, Robin

  Moate, Roger

  Stainton, Keith

  Monro, SirHector

  Stanbrook, lvor

  Montgomery, Fergus

  Stanley, John

  Moore, John

  Steel, RtHon David

  Morgan, Geraint

  Steen, Anthony

  Morris, M. (N'hamptonS)

  Stevens, Martin

  Morrison, HonC. (Devizes)

  Stewart, A. (ERenfrewshire)

  Morrison, Hon P. (Chester)

  Stewart, Ian (Hitchin)

  Mudd, David

  Stokes, John

  Murphy, Christopher

  Stradling Thomas.J.

  Myles, David

  Tapsell, Peter

  Neale, Gerrard

  Taylor, Teddy (S'endE)

  Needham, Richard

  Tebbit, RtHon Norman

  Nelson, Anthony

  Temple-Morris, Peter

  Neubert, Michael

  Thatcher, RtHon Mrs M.

  Newton, Tony

  Thomas, Mike (NewcastleE)

  Normanton, Tom

  Thomas, RtHon Peter

  Nott, RtHon John

  Thompson, Donald

  Ogden, Eric

  Thorne, Neil (IlfordSouth)

  Onslow, Cranley

  Thornton, Malcolm

  Oppenheim, RtHon Mrs S.

  Townend, John(Bridlington)

  Osborn, John

  Townsend, Cyril D, (B'heath)

  Owen, RtHon Dr David

  Trippier, David

  Page, John (Harrow, West)

  Trotter, Neville

  Page, Richard (SW Herts)

  van Straubenzee, Sir W.

  Parkinson, RtHon Cecil

  Vaughan, DrGerard

  Parris, Matthew

  Viggers, Peter

  Patten, Christopher (Bath)

  Waddington, David

  Patten, John (Oxford)

  Wainwright,R.(ColneV)

  Pattie, Geoffrey

  Wakeham, John

  Pawsey, James

  Waldegrave, HonWilliam

  Percival, SirIan

  Walker, RtHon P.(W'cester)

  Pink, R.Bonner

  Walker, B. (Perth)

  Pitt, WilliamHenry

  Walker-Smith, RtHon Sir D.

  Pollock, Alexander

  Wall, SirPatrick

  828

  Waller, Gary

  Wilkinson, John

  Walters, Dennis

  Williams, D.(Montgomery)

  Ward, John

  Williams, RtHon Mrs (Crosby)

  Warren, Kenneth

  Winterton, Nicholas

  Watson, John

  Wolfson, Mark

  Wellbeloved, James

  Wrigglesworth, lan

  Wells, Bowen

  Young, SirGeorge (Acton)

  WellsJohn (Maidstone)

  Younger, RtHon George

  Wheeler, John

  Whitelaw, RtHon William

  Tellers for the Noes:

  Whitney, Raymond

  Mr. Anthony Berry and

  Wickenden, Keith

  Mr. Carol Mather.

  Wiggin, Jerry

  Question accordingly negatived.
  Bill committed to a Standing Committee pursuant to
  Standing Order No. 40 (Committal of Bills).
  Mr. Dennis Skinner: On a point of order, Mr. Speaker. I merely seek the necessary information about the composition of the Committee that will deal with this matter, in view of the fact that we do not yet have the Hansard proceedings. As many Social Democrat Members voted with the Government, some voted against the Bill and others abstained, it is important to ascertainprecisely what variety of SDP Members will be serving on the Committee. I wonder whether you can give us anyadvice.
  Mr. Speaker: It is so long since I voted that I can give no advice at all.
  Mr. Arthur Lewis: Further to that point of order, Mr. Speaker. You, and some hon. Members, will know that there is a difference between a Committee upstairs and a Committee of the whole House. Many hon. Members can genuinely argue that they cannot get into the Committee upstairs because of the method of selection. As you and I know, that method of selection cannot apply if we have a Committee of the whole House. The fact that SDP Members voted against that shows that they do not even want to get on the Committee. Otherwise they would have voted for it.
  Mr. Speaker: As usual, I am grateful to the hon. Gentleman.

  EMPLOYMENT [MONEY]
  Queen's Recommendation having been signified— Motion made, and Question proposed.
  That, for the purposes of any Act of the present Session to provide for compensation out of public funds for certain past cases of dismissal for failure to conform to the requirements of a union membership agreement; to amend the law relating to workers, employers, trade unions and employers' associations; to make provision with respect to awards by industrial tribunals and the procedure of the Employment Appeal Tribunal; and for connected purposes, it is expedient to authorise—

  (a)the payment out of money provided by Parliament of any expenses incurred by are Secretary of State in consequence of making provision for payments towards compensating individuals who, on or after 16 September 1974 and before 15 August 1980, were dismissed from employment; and

  (b) any payment into the Consolidated Fund.—[Mr. Tebbit.]

  The House divided: Ayes 345, Noes 239.

  Division No. 61]

  [10.28pm

  AYES

  Adley, Robert

  Aspinwall, Jack

  Aitken, Jonathan

  Atkins, RtHonH. (S'thorne)

  Alexander, Richard

  Atkins, Robert(PrestonN)

  Alison, RtHon Michael

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

  Alton, David

  Baker, Kenneth (St.M'bone)

  Ancram, Michael

  Baker, Nicholas (N Dorset)

  Arnold, Tom

  Beaumont-Dark, Anthony

  829

  Beith, A. J.

  Fletcher, A. (Ed'nb'ghN)

  Bell,SirRonald

  Fletcher-Cooke, SirCharles

  Bendall, Vivian

  Fookes, Miss Janet

  Bennett, SirFrederic (T'bay)

  Forman, Nigel

  Benyon, Thomas(A’don)

  Fowler, RtHon Norman

  Benyon, W. (Buckingham)

  Fox, Marcus

  Best, Keith

  Fraser, Peter (South Angus)

  Bevan, David Gilroy

  Freud, Clement

  Biffen, RtHonJohn

  Fry, Peter

  Biggs-Davison.SirJohn

  Gardiner, George (Reigate)

  Blackburn, John

  Gardner, Edward (SFylde)

  Blaker, Peter

  Garel-Jones, Tristan

  Body, Richard

  Gilmour, RtHon Sir Ian

  Bonsor, SirNicholas

  Ginsburg, David

  Boscawen, HonRobert

  Glyn, DrAlan

  Bowden, Andrew

  Goodhart, SirPhilip

  Boyson, DrRhodes

  Goodhew, SirVictor

  Bradley, Tom

  Goodlad, Alastair

  Braine, SirBernard

  Gorst, John

  Bright, Graham

  Gow, Ian

  Brinton, Tim

  Grant, Anthony (HarrowC)

  Brittan, Rt. Hon. Leon

  Gray, Hamish

  Brooke, Hon Peter

  Greenway, Harry

  Brotherton, Michael

  Grieve, Percy

  Brown, Michael(Brigg&Sc'n)

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

  Browne, John(Winchester)

  Griffiths, Peter Portsm'thN)

  Bruce-Gardyne, John

  Grimond, RtHonJ.

  Bryan, Sir Paul

  Grist, Ian

  Buck, Antony

  Grylls, Michael

  Budgen, Nick

  Gummer, JohnSelwyn

  Bulmer, Esmond

  Hamilton, HonA.

  Burden, SirFrederick

  Hamilton, Michael(Salisbury)

  Butcher, John

  Hampson, Dr Keith

  Butler, Hon Adam

  Hannam, John

  Cadbury, Jocelyn

  Haselhurst, Alan

  Carlisle, John (Luton West)

  Hastings, Stephen

  Carlisle, Kenneth(Lincoln)

  Havers, RtHon Sir Michael

  Carlisle, RtHon M.(R'c'n)

  Hawkins, Paul

  Cartwright, John

  Hayhoe, Barney

  Chalker, Mrs. Lynda

  Heath, RtHon Edward

  Channon, Rt. Hon. Paul

  Heddle, John

  Chapman, Sydney

  Henderson, Barry

  Churchill, W.S.

  Heseltine, RtHon Michael

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

  Hicks, Robert

  Clark, Sir W. (CroydonS)

  Higgins, RtHon Terence L

  Clarke, Kenneth (Rushcliffe)

  Hogg, HonDouglas (Gr'th'm,)

  Clegg, Sir Walter

  Holland, Philip(Carlton)

  Cockeram, Eric

  Hooson, Tom

  Colvin, Michael

  Horam, John

  Cope, John

  Hordern, Peter

  Cormack, Patrick

  Howe, RtHon Sir Geoffrey

  Corrie, John

  Howell, RtHonD.(G'ldf'd)

  Costain, SirAlbert

  Howell, Ralph (NNorfolk)

  Cranborne, Viscount

  Howells, Geraint

  Critchley, Julian

  Hunt, David (Wirral)

  Crouch, David

  Hunt, John (Ravensbourne)

  Dean, Paul (NorthSomerset)

  Irving, Charles(Cheltenham)

  Dickens, Geoffrey

  Jenkin, RtHon Patrick

  Dorrell, Stephen

  Jessel, Toby

  Douglas-Hamilton,LordJ.

  JohnsonSmith, Geoffrey

  Dover, Denshore

  Jopling, RtHon Michael

  du Cann, RtHon Edward

  Joseph, RtHon Sir Keith

  Dunn, Robert (Dartford)

  Kaberry, Sir Donald

  Durant, Tony

  Kellett-Bowman, MrsElaine

  Dykes, Hugh

  Kershaw, SirAnthony

  Eden, RtHon Sir John

  Kilfedder, JamesA.

  Edwards, RtHon N. (P'broke)

  Kimball, SirMarcus

  Eggar, Tim

  King, RtHon Tom

  Elliott, SirWilliam

  Kitson, SirTimothy

  Ellis, Tom (Wrexham)

  Knight, MrsJill

  Emery, Sir Peter

  Knox, David

  Eyre, Reginald

  Lamont, Norman

  Fairbairn, Nicholas

  Lang, Ian

  Fairgrieve, SirRussell

  Langford-Holt, SirJohn

  Faith, Mrs Sheila

  Latham, Michael

  Farr, John

  Lawrence, Ivan

  Fell, SirAnthony

  Lawson, RtHon Nigel

  Fenner, Mrs Peggy

  Lee, John

  Finsberg, Geoffrey

  LeMarchant, Spencer

  Fisher, Sir Nigel

  Lennox-Boyd, HonMark

  830

  Lester, Jim (Beeston)

  Renton, Tim

  Lewis, Kenneth (Rutland)

  Rhodes James, Robert

  Lloyd, Ian (Havant&W'loo)

  RhysWilliams, SirBrandon

  Lloyd, Peter (Fareham)

  Ridley, HonNicholas

  Loveridge, John

  Ridsdale, SirJulian

  Luce, Richard

  Rifkind, Malcolm

  Lyell, Nicholas

  Rippon, RtHonGeoffrey

  Lyons, Edward (BradfdW)

  Roberts, M. (Cardiff NW)

  Mabon, RtHon Dr J. Dickson

  Roberts, Wyn (Conway)

  McCrindle, Robert

  Rodgers, RtHon William

  Macfarlane, Neil

  Roper, John

  MacGregor, John

  Rossi, Hugh

  MacKay, John (Argyll)

  Rost, Peter

  Maclennan, Robert

  Royle, Sir Anthony

  Macmillan, RtHonM.

  Sainsbury, HonTimothy

  McNair-Wilson, M.(N'bury)

  St. John-Stevas, RtHon N.

  McNair-Wilson, P. (NewF'st)

  Sandelson, Neville

  McQuarrie, Albert

  Scott, Nicholas

  Madel, David

  Shaw, Giles (Pudsey)

  Major, John

  Shaw, Michael(Scarborough)

  Marland, Paul

  Shelton, William(Streatham)

  Marlow, Antony

  Shepherd, Cohn(Hereford)

  Marshall, Michael(Arundel)

  Shepherd, Richard

  Marten, RtHon Neil

  Shersby, Michael

  Mates, Michael

  Silvester, Fred

  Maude, RtHon Sir Angus

  Sims, Roger

  Mawby, Ray

  Skeet, T. H. H.

  Mawhinney, DrBrian

  Smith, Cyril (Rochdale)

  Maxwell-Hyslop,Robin

  Smith, Dudley

  Mayhew, Patrick

  Speed, Keith

  Mellor, David

  Speller, Tony

  Meyer, SirAnthony

  Spence, John

  Miller, Hal(B'grove)

  Spicer, Jim (WestDorset)

  Mills, Iain(Meriden)

  Spicer, Michael (SWorcs)

  Mills, Peter (WestDevon)

  Sproat, Iain

  Miscampbell, Norman

  Squire, Robin

  Mitchell, David (Basingstoke)

  Stainton, Keith

  Moate, Roger

  Stanbrook, Ivor

  Monro, SirHector

  Stanley, John

  Montgomery, Fergus

  Steel, RtHon David

  Moore, John

  Steen, Anthony

  Morgan, Geraint

  Stevens, Martin

  Morris, M. (N'hamptonS)

  Stewart, A.(ERenfrewshire)

  Morrison, HonC. (Devizes)

  Stewart, Ian (Hitchin)

  Morrison, Hon P. (Chester)

  Stokes, John

  Mudd, David

  Stradling Thomas.J.

  Murphy, Christopher

  Tapsell, Peter

  Myles, David

  Taylor, Teddy (S'end E)

  Neale, Gerrard

  Tebbit, RtHon Norman

  Needham, Richard

  Temple-Morris, Peter

  Nelson, Anthony

  Thatcher, RtHon Mrs M.

  Neubert, Michael

  Thomas, Mike (Newcastle E)

  Newton, Tony

  Thomas, RtHon Peter

  Normanton, Tom

  Thompson, Donald

  Nott,RtHon John

  Thorne, Neil(IlfordSouth)

  Onslow, Cranley

  Thornton, Malcolm

  Oppenheim, RtHon Mrs S.

  Townend, John(Bridlington)

  Osborn, John

  Townsend, CyrilD, (B 'heath)

  Owen, RtHon Dr David

  Trippier, David

  Page, John (Harrow, West)

  Trotter, Neville

  Page, Richard (SW Herts)

  van Straubenzee, SirW.

  Parkinson, RtHonCecil

  Vaughan, Dr Gerard

  Parris, Matthew

  Viggers, Peter

  Patten, Christopher(Bath)

  Waddington, David

  Patten, John (Oxford)

  Wainwright,R.(ColneV)

  Pattie, Geoffrey

  Wakeham, John

  Pawsey, James

  Waldegrave, HonWilliam

  Percival, SirIan

  Walker, RtHon P.(W'cester)

  Pink, R.Bonner

  Walker, B.(Perth)

  Pitt, William Henry

  Walker-Smith, RtHon Sir D.

  Pollock, Alexander

  Wall, SirPatrick

  Porter, Barry

  Waller, Gary

  Prentice, RtHon Reg

  Walters, Dennis

  Price, SirDavid (Eastleigh)

  Ward, John

  Proctor, K. Harvey

  Warren, Kenneth

  Pym, RtHon Francis

  Watson, John

  Raison, Timothy

  Wells, Bowen

  Rathbone, Tim

  Wells, John(Maidstone)

  Rees, Peter (Dover and Deal)

  Wheeler, John

  Rees-Davies, W. R.

  Whitelaw, RtHon William

  831

  Whitney, Raymond

  Wrigglesworth, lan

  Wickenden, Keith

  Young, SirGeorge (Acton)

  Wiggin, Jerry

  Younger, RtHon George

  Wilkinson, John

  Williams,D. (Montgomery)

  Tellers for the Ayes:

  Williams, RtHon Mrs (Crosby)

  Mr. Anthony Berry and

  Winterton, Nicholas

  Mr. Carol Mather.

  Wolfson, Mark

  NOES

  Abse, Leo

  Evans, loan (Aberdare)

  Adams, Allen

  Evans, John (Newton)

  Allaun, Frank

  Ewing, Harry

  Anderson, Donald

  Faulds, Andrew

  Archer, RtHon Peter

  Field, Frank

  Ashley, RtHon Jack

  Fitch, Alan

  Ashton, Joe

  Fitt, Gerard

  Atkinson, N. (H'gey)

  Flannery, Martin

  Bagier, GordonA.T.

  Fletcher, L. R. (Ilkeston)

  Barnett, Guy (Greenwich)

  Fletcher, Ted (Darlington)

  Barnett, RtHonJoel (H'wd)

  Foot, RtHon Michael

  Benn, RtHon Tony

  Ford, Ben

  Bennett, Andrew(St'kp'tN)

  Forrester, John

  Bidwell, Sydney

  Foster, Derek

  Booth, RtHon Albert

  Foulkes,George

  Boothroyd, MissBetty

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

  Bottom ley, RtHonA. (M'b'ro)

  Freeson, RtHon Reginald

  Bray, Dr Jeremy

  Garrett, John (Norwich S)

  Brown, Hugh D. (Proven)

  Garrett, W. E. (Wallsend)

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

  George,Bruce

  Brown, Ron (E'burgh, Leith)

  Gilbert, RtHon DrJohn

  Buchan, Norman

  Golding, John

  Callaghan, RtHon J.

  Graham, Ted

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

  Grant,George(Morpeth)

  Campbell, Ian

  Grant, John (Islington C)

  Campbell-Savours,Dale

  Hamilton, James(Bothwell)

  Canavan, Dennis

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

  Cant, R. B.

  Hardy, Peter

  Carmichael, Neil

  Harrison, RtHon Walter

  Carter-Jones, Lewis

  Hart, RtHon Dame Judith

  Clark, Dr David (S Shields)

  Hattersley, RtHon Roy

  Cocks, RtHon M. (B'stol S)

  Haynes, Frank

  Cohen, Stanley

  Healey, RtHon Denis

  Coleman, Donald

  Heffer, Eric S.

  Concannon, RtHon J. D.

  Hogg, N. (EDunb't'nshire)

  Cook, Robin F.

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

  Cowans, Harry

  HomeRobertson, John

  Cox, T. (W'dsw'th, Toot'g)

  Homewood, William

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

  Hooley, Frank

  Crowther, Stan

  Howell, RtHon D.

  Cryer, Bob

  Hoyle, Douglas

  Cunliffe, Lawrence

  Huckfield, Les

  Cunningham, DrJ. (W'h'n)

  Hughes, Mark (Durham)

  Dalyell, Tam

  Hughes, Robert (Aberdeen N)

  Davidson,Arthur

  Hughes, Roy (Newport)

  Davies, RtHon Denzil (L'Il)

  Janner, HonGreville

  Davies, Ifor (Gower)

  Jay, RtHon Douglas

  Davis, Clinton (HackneyC)

  John, Brynmor

  Davis, Terry (B'ham,Stechf'd)

  Johnson, James (Hull West)

  Deakins, Eric

  Johnson, Walter (DerbyS)

  Dean, Joseph (Leeds West)

  Jones, RtHon Alec (Rh 'dda)

  Dewar, Donald

  Jones, Barry (East Flint)

  Dixon, Donald

  Jones, Dan (Burnley)

  Dobson, Frank

  Kaufman, RtHon Gerald

  Dormand, Jack

  Kerr, Russell

  Doug las, Dick

  Kilroy-Silk, Robert

  Dubs, Alfred

  Kinnock, Neil

  Duffy, A. E. P.

  Lambie, David

  Dunnett, Jack

  Lamborn, Harry

  Dunwoody, Hon Mrs G.

  Lamond, James

  Eadie, Alex

  Leadbitter, Ted

  Eastham, Ken

  Leighton, Ronald

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

  Lestor, MissJoan

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

  Lewis, Arthur (N'ham NW)

  English, Michael

  Lewis, Ron (Carlisle)

  Ennals, RtHon David

  Litherland, Robert

  832

  Lofthouse, Geoffrey

  Ross, Ernest (Dundee Nest)

  Lyon, Alexander(York)

  Rowlands, Ted

  McCartney, Hugh

  Ryman, John

  McDonald, DrOonagh

  Sever, John

  McGuire, Michael(Ince)

  Sheerman, Barry

  McKay, Allen (Penistone)

  Sheldon, RtHon R.

  McKelvey,William

  Shore, RtHon Peter

  MacKenzie, RtHon Gregor

  Short, Mrs Renée

  McMahon, Andrew

  Silkin, RtHonJ. (Deptford)

  McNally, Thomas

  Silkin, RtHon S. C. (Dulwich)

  McNamara, Kevin

  Silverman, Julius

  McTaggart, Robert

  Skinner, Dennis

  McWilliam,John

  Snape, Peter

  Marks, Kenneth

  Soley, Clive

  Marshall, D(G'gowS'ton)

  Spearing, Nigel

  Marshall, DrEdmund (Goole)

  Spriggs, Leslie

  Marshall, Jim (LeicesterS)

  Stallard, A. W.

  Martin, M (G'gowS'burn)

  Stoddart, David

  Maxton, John

  Stott, Roger

  Maynard, MissJoan

  Strang, Gavin

  Meacher, Michael

  Straw, Jack

  Mellish, RtHon Robert

  Summerskill, HonDrShirley

  Mikardo, lan

  Taylor, Mrs Ann (Bolton W)

  Millan, RtHon Bruce

  Thomas, Dafydd (Merioneth)

  Miller, Dr M. S. (E Kilbride)

  Thomas, Dr R. (Carmarthen)

  Mitchell, R. C. (Soton lichen)

  Thorne, Stan (PrestonSouth)

  Morris, RtHon A. (W'shawe)

  Tilley, John

  Morris, RtHon C. (O'shaw)

  Tinn, James

  Morris, RtHon J. (Aberavon)

  Torney, Tom

  Moyle, RtHon Roland

  Urwin, RtHon Tom

  Mulley, RtHon Frederick

  Varley, RtHon Eric G.

  Newens, Stanley

  Wainwright, E.(DearneV)

  Oakes, RtHon Gordon

  Walker, RtHon H. (D'caster)

  Ogden, Eric

  Watkins, David

  O'Neill, Martin

  Weetch, Ken

  Orme, RtHon Stanley

  Welsh, Michael

  Palmer, Arthur

  White, Frank R.

  Park, George

  White, J. (G'gow Pollok)

  Parker, John

  Whitehead, Phillip

  Parry, Robert

  Whitlock, William

  Pavitt, Laurie

  Wig ley, Dafydd

  Pendry, Tom

  Willey, RtHon Frederick

  Powell, Raymond (Ogmore)

  Williams, RtHon A.(S'sea W)

  Prescott, Joh n

  Wilson, Gordon (Dundee E)

  Price, C. (Lewisham W)

  Wilson, RtHon Sir H.(H'ton)

  Race, Reg

  Wilson, William (C'trySE)

  Radice, Giles

  Winnick, David

  Rees, RtHon M (Leeds S)

  Woodall,Alec

  Richardson, Jo

  Woolmer, Kenneth

  Roberts, Albert (Normanton)

  Wright, Sheila

  Roberts, Allan (Bootle)

  Young, David (Bolton E)

  Roberts, Ernest (Hackney N)

  Roberts, Gwilym (Cannock)

  Tellers for the Noes:

  Robertson, George

  Mr. Austin Mitchell and

  Robinson, G. (Coventry NW)

  Mr. George Morton.

  Rooker, J. W.

  Question accordingly agreed to.

  STATUTORY INSTRUMENTS, &c.
  Motion made, and Question put forthwith, pursuant to Standing Order No. 73A(5) (Standing Committees on Statutory Instruments, &c.)
  CIVIL AVIATION
  That the draft Aviation Security Fund Regulations, which were laid before this House on 18th January, be approved.—[Mr.Bien.]
  Question agreed to.

  Legal Aid
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]
  10.40 pm
  Mr. John Ryman: I declare an interest in a professional sense in the provision of legal aid. My purpose in raising the subject is to ask the Government to express their views on a number of topics arising from the administration of legal aid.
  With the recent publication of the 31st annual report of the Law Society and of the Lord Chancellor's advisory committee it is perhaps an appropriate time to remind the Government of the serious anxiety felt by many people about deficiencies in the legal aid system. I am sure that the Solicitor-General will give helpful consideration to the points of which I gave him notice informally before tonight's debate. I believe that there is not much disagreement between the Government and myself upon this matter. The question is: how are they to be dealt with by the Government?
  Despite our natural pride in the administration of legal aid—which is very fine; and many hardworking men and women work for the system successfully, both in civil and criminal legal—there are serious shortcomings and deficiencies of which the Government are well aware. The Government have been considering them for several years.
  What specific decisions are being made? It is universally acknowledged by all parties that serious hardship exists. Before the Attorney-General leaves the Chamber and I address my remarks to the Solicitor-General, I should like to ask him to deal with some specific points. In such a short debate there is insufficient time to deal with all the problems. Perhaps he can express the Government's view about some specific subjects of which I have given him notice.
  Have the Government reached a conclusion on the provision of legal aid for parents in care proceedings? The Government are aware of the problems. The existing position is extraordinary. In proceedings by local authorities in respect of a child— these are obviously heartbreaking and serious proceedings involving the future of the child—the child may be granted legal aid under the regulations for legal representation, but neither of the parents may be granted legal aid. That seems extraordinary. It involves necessarily a dispute between the local authorities and the parents. Solicitors can be instructed on behalf of the child, which in practice means being instructed by the parents to represent the child's interests, but the parents can have no separate legal representation through legal aid.
  If the parents cannot afford legal representation, they are unrepresented. This provides acute problems for the instructing solicitor, as he may find that there is a conflict of interest between the child and the parents. For example, the very reason why a local authority may be taking steps to remove the child from the parents' custody may be an allegation of cruelty against the parents. I appreciate that guidelines have been issued to solicitors where a conflict of interest arises, and no doubt solicitors will pay careful attention to these, but it seems supremely unsatisfactory that in something as painful and important as proceedings between a local authority and parents the parents have not in law a right to avail themselves of the legal aid system.
  834
  I apprehend that the Government will not disagree that there is a need to cure this defect. The cost of curing it is something that the Law Society has considered in some detail. I understand that about £1 million has been mentioned as necessary to make legal aid available to the parents. That may be only an approximate figure because we do not know how many additional proceedings might be taken if parents were legally aided, or how many proceedings would be defended which have not been defended because of the absence of legal aid. However, I mention that approximate figure to give the Government some idea of the cost involved.
  The next type of proceeding in respect of which there is no legal aid—it seems extraordinary that there is not—is that which takes place before mental health review tribunals. There is a Bill passing through Parliament—the Mental Health (Amendment) Bill—which will do nothing but good and which is to be wholly welcomed. It will increase the work of the tribunals and provide greater safeguards for those whose cases are considered by the tribunals. The future augurs that more proceedings will take place before the tribunals as a result of the legislation that is in the pipeline.
  Although excellent legal advice can be given under the green form scheme, anybody appearing before a mental health review tribunal has not in law a legal right to legal aid. That is a terrible state of affairs because one cannot envisage circumstances involving the liberty of the subject at which there is no right to legal aid. Therefore, the person whose case is being considered does not have the opportunity of making representations through legal representations to the tribunal. We must be realistic about the sort of people who appear before the tribunals. They would not appear before them unless they were not in a disadvantaged position.
  A layman might be able to argue a case before an industrial tribunal, but these people are especially in need of legal representation. By the very nature of the proceedings, these people are incapable of conducting legal argument. Legal aid for such proceedings should be provided urgently. The Law Society has again supplied me with the costing. A modest £60,000 per annum would provide the legal aid in these cases.
  The third point is the absence of legal aid for bail application to the Crown court before committal proceedings are completed. It is possible to get legal aid to apply to a judge in chambers—for example, on a long remand where the magistrates have refused bail. But no legal aid is available where a defendant has been refused bail by the magistrates and wishes to apply to the Crown court, which is the court to which the prosecution is seeking committal. The Law Society tells me that if legal aid was available for such applications great savings could be made. No affidavit would have to be sworn and no documents prepared for such an application.
  The Government will be concerned about the cost and where to find the money. But for some time the Law Society has made representations to the Government about how huge sums can be saved in the administration of legal aid. I cannot identify all the ways in which that can be done, but I shall give two specific cases.
  The first is the way that people are assessed for legal aid. The procedure is complicated. The Department of Health and Social Security investigates the means of an applicant. Frequently the applicant is interviewed. It costs about £4 million per annum to decide whether applicant

  835
  for civil legal aid is entitled to such aid. The authorities then decide the amount of the applicant's contribution, if any. It is a thorough but cumbersome system. It would be simpler if the applicant filled in a form, backed with penalties for not supplying truthful information. A committee of the Law Society in each region could make the decision. If there was uncertainty, the applicant could then be interviewed and the merits of his case considered. This would allow for discretion in borderline cases.
  I am asking the Government to abolish the existing cumbersome and expensive machinery for assessing legal aid and to replace it with a greatly simplified form of assessment involving self-assessment by the applicant, subject to the right to scrutinise every application and, if necessary, to interview the applicant. If, prima facie, a person is not entitled to legal aid, that will be dealt with straight away. If further information is required, it can be requested from him. The present cumbersome machinery is not only expensive and time-consuming. It is slow, because, unless there is an emergency of some kind, inevitably decisions cannot be made sufficiently quickly, The person may not seek legal aid sufficiently early and only at the last moment when he is served with the documents by the other side does he go to a solicitor who advises him to apply for legal aid at once.
  My other suggestion is that the Government should consider the whole subject of committal proceedings and whether legal aid money is wasted on purely formal proceedings. Under the existing system there are many formal attendances and a huge sum is wasted when solicitors instructed on behalf of defendants have to appear, knowing full well in advance that nothing contentious will be said and that there is really no reason why they should appear. If the system were simplified, it could be made clear in advance that a person would appear at a particular magistrates' court on a particular day and would then be remanded until another day . The defendant's interests would thus be safeguarded and it would be unnecessary for his solicitor to attend at all.
  I am conscious of the time, and I wish to give the Solicitor-General sufficient time to reply to these points. I have raised three particular subjects and made two specific suggestions as to where savings could be achieved. I should have liked to develop all those themes more fully, but there is insufficient time to do so. I therefore conclude by simply asking a question.
  I apprehend that the Government are sympathetic to all these points and that they have been considering them for some time. Can the Solicitor-General tell us when the Government propose to make decisions about these matters? In their annual reports this year, the Law Society and the Lord Chancellor's advisory committee were distinctly critical of the pace of reforms. Both are responsible and knowledgeable bodies which do not make criticisms lightly. In the light of those criticsms, will the hon. and learned Gentleman tell us what the Government's intentions are?
  10.57 pm
  The Solicitor-General (Sir Ian Percival): The hon. Member for Blyth (Mr. Ryman) very courteously informed me in advance of the specific subjects that he wished to raise, and I shall do my best to reply specifically to them.
  First, however, I make one or two general observations. The hon. Gentleman very courteously assumed that the
  836
  Government shared the anxieties and objectives behind what he said; and I confirm that that is so. He also rightly referred to the natural pride that we can and should take in our legal aid scheme. It is a fine scheme—I doubt whether there is any better in the world—but that does not mean that we should not continually try to build on it. It is right that the many claims for improvement are frequently referred to in the House. The problem lies in deciding which of the many areas which invite our attention can receive the money necessary to extend legal aid to them. The hon. Gentleman has referred to three, which were also referred to in the Law Society report and which excite considerable interest among many people.
  The first issue was the question of providing legal aid for parents in care proceedings. I say without hesitation that the Government recognise the desirability of parents being eligible to receive legal aid to cover the cost of being legally represented in such proceedings. I have no better figure of the cost involved than the hon. Gentleman's estimate of £1 million. It does not sound much, but it is a not insignificant sum when included in the list of improvements that we should all like to make. That extra £1 million is not the highest priority, but more money is being spent on legal aid and the £1 million will have a high priority when extra funds become available.
  The hon. Gentleman will appreciate that there are many things that the Government are doing, not least in the Legal Aid Bill which is before the House, to make savings on the existing expenditure, 'which has become enormous, so that the money may be put to what we would all consider better uses, including the three purposes to which the hon. Gentleman has referred.
  The hon. Gentleman said that legal aid was available for the child. It may seem surprising that it is available to parents in some cases only, but I think that the hon. Gentleman will agree that, when it is not possible to make aid available to the child and the parent in case, it is right that priority should be given to ensuring that there is representation of the child's interests.
  There are statutory provisions which, when fully implemented, will enable courts to make legal aid available to parents as well as to the child in proceedings where the court considers that there is a conflict between the interests of the child and those of the parent. Those provisions have been partially implemented so that in a Maria Colwell-type case, where the local authority does not oppose an application to discharge a care order, the separate representation of child and parent under legal aid is already catered for.
  The hon. Gentleman will know that parents have always been entitled to green form advice and assistance. I know that it stops short of representation, but it is right that I should summarise what is available to parents. 'The green form advice and assistance is always available, subject to means, and in the cases to which I have referred legal aid may be available to parents as well as to children. When the whole of the statutory provisions have been implemented, aid will be available to parents in even more cases.
  I cannot promise the hon. Gentleman an early change in the present situation, but I repeat, so that it is clear, that the Government accept in principle the desirability, when circumstances allow, of extending legal aid to parents involved in care proceedings.
  The hon. Gentleman also raised the question of legal aid for applicants at mental health review tribunals. I

  837
  accept at once the force of the point that he made about the nature of the disabilities of applicants in such cases. The Government recognise the desirability in principle of extending legal aid or assistance by way of representation, which is a new form of legal aid introduced by this Government. It goes under the phrase "assistance by way of representation" which meets one of the tests that the hon. Gentleman has postulated. It is given without all the formalities that have to be gone through in many civil legal aid applications. The investigation of means is infinitely simple—more simple even than the proposal that the hon. Gentleman put before the House. The solicitor fills in the same details that would appear on the green form application and decides himself whether legal aid can be given.
  The cost of the extension and the availability of funds are kept under constant review. The hon. Gentleman quoted a figure. One difficulty in deciding what would be the cost of the extension is that legislation is before Parliament in the form of the Mental Health (Amendment) Bill that would materially increase the opportunity of access to the tribunal by patients. The hon. Gentleman will, I think, share the Government's view that it is desirable that there should be such increased access. This means that the number of applicants to tribunals would almost ex hypothesi be greater and, perhaps, substantially greater. It is therefore difficult to assess the likely cost.
  The Government accept in principle the desirability of doing what the hon. Gentleman wishes. I can say only that it is one of the numerous matters that are high on the list of the improvements that we want to make in this sphere as and when the money is available. I wish to thank the voluntary arganisations that do so much to assist applicants in these circumstances.
  I wish to say, before my speech is cut off in full flight, that I wish I had chance to deal with every point. There are remarks that I would have liked to make to balance the picture, but the time is not available. I hope that the hon. Gentleman will come and talk to me about the pearls of wisdom that lie beyond the time barrier of this debate.
  On the question of the Bail Act, the hon. Gentleman has, I believe, got the situation wrong. The question that
  838-840
  arises is not giving legal aid for applications that can now be made to the Crown court. If I am right—it can be checked in the morning—a person in the situation to which the hon. Gentleman referred, namely, a person before the magistrates before committal, has no right to go to the Crown court to make an application for bail. In order to bring about the situation that the hon. Gentleman would like to see, one would have in effect to establish an appeal procedure from the magistrates' court to the Crown court and then grant legal aid for that appeal procedure.
  Once a man has been committed for trial, he may then apply to the Crown court. If he has legal aid, that aid will cover his application for bail to the Crown court. It is not simply a question of providing legal aid for an existing right of appeal to the Crown court. He would also have the right of appeal. Although my noble and learned Friend the Lord Chancellor accepted in principle in Committee on the Supreme Court Act that defendants in custody should be enabled to apply for bail to the Crown court, this case is perhaps not so strong as the two previous ones. There are already two procedures by which such a person may apply for bail in the High Court. One is what is known as the Crown Office procedure. The other is an application made by the Official Solicitor on behalf of the applicant.
  The number of cases being dealt with under the Crown Office procedure is increasing and the number by the Official Solicitor going down. The former qualifies for legal aid. It consists of an oral hearing for which legal aid can be obtained. The procedure whereby the application is made by the Official Solicitor has no oral hearing. The best development for applicants wishing to obtain bail is perhaps the Crown Office procedure with its twin advantages of an oral hearing as distinct from affidavits and the benefit of legal aid.
  The hon. Gentleman has referred to two suggestions made by the Law Society for simplifying the procedure. I should like to draw attention to the simplification already achieved through the process introduced by the Legal Aid Act 1979—
  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 ten minutes past Eleven o'clock.

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

Nurses: Recruitment in the NHS
Lord Molloy: 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 plans they have to improve recruitment to the nursing profession in the National Health Service.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Elton): My Lords, over the Government's first two years of office the number of trained nurses in the National Health Service, expressed in whole-time equivalents, rose by 21,000. The noble Lord may perhaps regard this as a market of modest success achieved by existing policies.
Lord Molloy: My Lords, while I thank the noble Lord for that reply, may I ask him whether he appreciates that many of these state registered nurses and state enrolled nurses who comprise that figure started their training some two or three years ago and that what has happened in subsequent years is that it is dropping off? May I also ask him this: in so far as there has been some concern in the nursing profession about remuneration, will he allow the National Council to try to put things right and remove this injustice? Since Halsbury, the average wage, inflation notwithstanding, has risen by 3 per cent. but for nurses it has dropped by 3 per cent. I am sure the National Council wish to put that right—
Several noble Lords: Order, order!
Lord Molloy: My Lords, can I ask the noble Lord whether the Government—
Lord Elton: My Lords, as to the first part of the noble Lord's Question, I am not aware that an increase in 21,000 represents a decline in recruitment. As to the second part of his question, I shall refuse, as I refused last week, to follow him into a debate on nurses' pay which it would not be proper to pursue either in terms of this question or in terms of the negotiations now going on.
Lord Wells-Pestell: My Lords, may I ask the Minister whether he is in a position to tell the House how many nurses have had to withdraw during training as a result of lack of accommodation and to what extent we have had to rely more and more upon agency nurses?
Lord Elton: My Lords, I am afraid I could not catch what it was that the nurses have had to withdraw because of.
Lord Wells-Pestell: My Lords, I apologise if I was not distinct. How many nurses have had to withdraw from training owing to lack of accommodation?
Lord Elton: My Lords, no, I am not aware of the answer and I shall have to write to the noble Lord.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that, while the figures he gave are certainly to some extent encouraging, there is still a shortage of nurses in many areas? Furthermore, is he aware that now in recent months training places have been reduced because of the financial restrictions imposed on health authorities and that many would-be nurses are restricted and unable to take up training for some considerable time?
Lord Elton: My Lords, there are inequalities over the country both between areas and between specialisms.

3
The Government are aware of these and seek to reach a balance in their policies for recruitment. In London that is particularly the case, and I am aware of what the noble Lord says.
Lord Wallace of Coslany: My Lords, the noble Lord has not referred to the training places having been reduced. In the South-East and Metropolitan areas that is certainly the case.
Lord Elton: My Lords, as I say, things differ from one area to another, but the current increase in the number of nurses working seems to me to be good news, not bad.
Lord Wells-Pestell: My Lords, as the noble Lord was good enough to say that he would write to me regarding the first part of my question, may I ask him to include an answer to the second part of my question with regard to agency nurses?
Lord Elton: Yes, my Lords.
Lord Molloy: My Lords, may I assume from the noble Lord's answer to me, for which I am grateful, that this time when the National Council meets—not as in previous years such as last year and the year before—there will be no Government interference? Will they be free to negotiate the rise which the nurses think they are entitled to have?
Lord Elton: My Lords, I really do think that is another question and not a subject we should pursue now.
Baroness Jeger: My Lords, while we welcome the increase in nursing recruitment, can the noble Lord refer to the number of nurses who are unemployed? Is he aware that in another place the figure for last September was given as over 5,000 nurses, many of whom are seeking employment which they cannot get because of cuts in the money available?
Lord Elton: My Lords, the profession is a large one and the figure is not relatively large when you consider that not every nurse is going to live next to every vacancy. There really is a question of adjustment, and people sometimes do not want to work where the work is.

UNICEF: UK Contributions
2.43 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 contributions they make to the United Nations Children's Fund (UNICEF), and whether they will substantially increase the amount in view of the statement in the fund's annual report that 17 million
4
children are likely to die in 1982 and that their deaths could be prevented at the cost of £2·50 each.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Trefgarne): My Lords, we share the concern of the noble Lord for the plight of the world's children and are strong supporters of UNICEF. Following a contribution of £5·9 million in 1981—Her Majesty's Government's highest-ever contribution to UNICEF's regular programme—we shall, subject to parliamentary approval, contribute the same level of assistance in 1982. In 1980 and 1981 we were the fourth highest donor to UNICEF's regular programme.
Our support for UNICEF is only part of our aid programme of benefit to women and children. We aim to concentrate our bilateral aid on the poorest countries where such people are among the most disadvantaged. We also give substantial support to the World Bank and other multilateral bodies whose programmes benefit them as well.
Lord Brockway: My Lords, while thanking the Minister, may I ask him whether the Government can take the initiative in a special fund of an international character for this purpose? Would it not cost only £33 million, which is insignificant compared with expenditure upon arms?—£2·50 to save one child. May I also ask the Government this? While this is a governmental responsibility, would the Government support an appeal in this country, Europe, America, the world, for a fund for this purpose? With donations at only £2·50, surely in the world 17 million people would reply to such an appeal.
Lord Trefgarne: My Lords, I think that there is a danger of over-simplifying these matters. For example, there are some children, I fear, whose lives would need a good deal more than that amount if they were to be brought up to an acceptable standard. But, of course, UNICEF receives funds from sources other than governments. For example, there is the United Kingdom Committee for UNICEF—an autonomous body which receives no assistance from public funds. It has been steadily increasing its contribution to UNICEF over recent years and gave £815,000 in the year 1980–81.
Lord Inglewood: My Lords, can my noble friend tell us how this figure of £2·50 is calculated and what it is supposed to cover, because it seems remarkably unrealistic?
Lord Trefgarne: My Lords, as I said, there is a danger of oversimplifying calculations of this kind. The figure does not itself appear in the report to which the noble Lord, Lord Brockway, referred, but is derived from certain other figures appearing in that document.
Lord Avebury: My Lords, may I ask the noble Lord the Minister whether he is aware of the refugee children from El Salvador who are in the neighbouring country of Honduras? Is he aware that last week, when I was visiting the refugee camps there, I was told that cases of Kwashiorkor developed among the children after

5
they had crossed the frontier? While the United Nations High Commissioner for Refugees is, no doubt, very grateful for the contribution of £200,000 which the Government have made to the programme for refugees in Central America, will the noble Lord consult with the UNHCR to see whether any additional help can be provided?
Lord Trefgarne: My Lords, we are, of course, in constant touch with the United Nations High Commissioner for Refugees and we help him as best we can in the light of our limited resources and in the light of his needs. But UNICEF, to which the Question on the Order Paper relates, does indeed have a programme in El Salvador and, doubtless, that is of some benefit there.
Baroness Macleod of Borve: My Lords—
Lord Brockway: My Lords, if some of us—
The Chancellor of the Duchy of Lancaster (Baroness Young): My Lords, my noble friend Lady Macleod has been trying to get in for some time.
Baroness Macleod of Borve: My Lords, may I ask my noble friend whether he is aware that the Save the Children Fund, through a sub-committee of the Stop Polio campaign, is doing a very great deal to help save children in Africa from getting polio? They are having a big campaign in three countries to immunise children against polio and are, therefore, probably saving the lives of many children.
Lord Trefgarne: Naturally, my Lords, I welcome those activities.
Lord Brockway: My Lords, if some of us organised an international voluntary appeal, signed by representative people in the world, would Her Majesty's Government give support to that appeal?
Lord Trefgarne: My Lords, we shall certainly give consideration to any appeal that comes to our notice. But I would again draw the noble Lord's attention to the United Kingdom Committee for UNICEF, which is already active in this area.

US Nuclear Bases in Britain
2.47 p.m.
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware that opinion polls suggest that a majority of people in this country favour the removal of American nuclear bases from this country and whether they will revise their defence policy with this in mind.
The Minister of State for Defence Procurement (Viscount Trenchard): My Lords, some recent opinion
6
polls have indicated that a substantial number of those questioned gave answers opposed to United States nuclear bases in this country. But they also have shown that a very large majority of people in this country favour the continued membership of NATO by the United Kingdom. The American nuclear guarantee, which has included the stationing of United States nuclear capable forces in the United Kingdom and elsewhere in Europe for 30 years, is the fundamental underpinning of the alliance's deterrent strategy. The Government welcome and strongly support the continued presence of United States nuclear capable forces in this country.
Lord Jenkins of Putney: My Lords, speaking as one who, from time to time, worked with the American forces in the last war, is the noble Viscount aware that they are not immune to what used to be called a "cock-up"? Is he further aware that this cannot be afforded in the nuclear age? In these circumstances, will he discuss this matter again with his colleagues, with a view to recovering operational control over American missiles in this country, including a dual key arrangement?
Viscount Trenchard: My Lords, the noble Lord has previously had an answer to the question of dual key —I think last week. I have nothing further to add to it and we are entirely satisfied with the control arrangements based on our joint decision agreement. So far as the United States are concerned, I, too, soldiered alongside them in the last war which they fought in Europe for our defence.
Lord Peart: My Lords, may I ask my colleagues to look at the figures, which show that 67 per cent. are in favour of the retention of Britain's own nuclear deterrent and that 73 per cent. want Britain to stay in NATO. That was the result of a national opinion poll and I think it explains why we must have adequate defence.
Viscount Trenchard: My Lords, I am very grateful to the noble Lord for producing those figures, which I can confirm. Indeed, I think that in the free democracies it is sometimes a pastime to criticise ourselves and our allies, particularly our strongest ally. I believe that we all have a responsibility in the free world to help the public keep in perspective criticisms of our fellow members of our defensive free alliance. My worry is that questions of this nature might have the opposite effect.
Lord Gladwyn: My Lords, while agreeing, broadly speaking, with what the Minister has just said, may I ask the Government whether they agree that to pay too much attention to public opinion polls, which in any case fluctuate wildly, would be not only foolish but also essentially undemocratic?
Viscount Trenchard: My Lords, I so much agree with the noble Lord on that point. The timing of a particular opinion poll, the order of the questions, the type of the questions—and I have looked at all of them in some detail—can very much affect the answers.
Lord Kinnaird: My Lords, would not my noble friend the Minister agree that if the defence policy of this country were always revised according to opinion polls we might soon, or before long, have no country to defend?
Viscount Trenchard: Yes, my Lords; I agree.
Viscount Hanworth: My Lords, would not the noble Viscount agree that, while most of us do not like the stationing here of American nuclear missiles, we nevertheless feel it to be our duty to have them and that therefore an opinion poll is not really very satisfactory?
Viscount Trenchard: My Lords, I am not in agreement with the noble Viscount. I think we should be extremely grateful to the United States for paying for and stationing their nuclear weapons in Europe to ensure that we have an adequate deterrent to deter the Warsaw Pact Alliance.
Lord Brockway: My Lords, would not the Minister agree that at the least there is in this country very divided opinion upon this issue? Since there is to be a general election within two years, would it not be realistic for the Government to go slow in their policy on this issue in view of the divided opinion that there is in this country?
Viscount Trenchard: My Lords, I do not agree with the noble Lord and I do agree with the noble Lord the Leader of the Opposition. The British public are entirely sound in the main areas. They agree with keeping up defence expenditure, with NATO, and even, contrary to the noble Lord's wishes, no doubt, with keeping our own independent deterrent. If the British public had all the details of the real choices before them as to how one keeps up a deterrent in the Alliance, I have no doubt about the soundness of their response.
Lord Kennet: My Lords, can the noble Viscount confirm—
Several noble Lords: Order, order!
Baroness Young: My Lords, I think it is the turn of my noble friend Lord Derwent. We should have a question from this side of the House. Then it will be the turn of the noble Lord, Lord Kennet. Afterwards, I suggest that we should move on to the next Question.
Lord Derwent: My Lords, can my noble friend think of any subject upon which there are not divided opinions?
Viscount Trenchard: No, my Lords.
Lord Kennet: My Lords, can the Minister confirm that at present there are no American nuclear weapons in this country and that if the Geneva talks on intermediate range nuclear missiles come to a fortunate conclusion it may be possible that there never need be?
Viscount Trenchard: My Lords, the noble Lord is in error. At the moment we have outdated United States bombers, as we have rather ageing British bombers, capable of delivering the nuclear deterrent. The plan to which the noble Lord alludes is the plan to modernise the necessary deterrent at an intermediate range. The fact that that modernisation plan is tied to disarmament talks the noble Lords knows well, and is another subject.
Lord Kennet: My Lords, my question was related to missiles. I think the House is aware of the aeroplanes.
Lord Jenkins of Putney: My Lords—
Baroness Young: My Lords, it really is time that we moved on to the next Question.
Several noble Lords: Hear, hear!
Lord Jenkins of Putney: My Lords—
Several noble Lords: Order, order!
Lord Jenkins of Putney: My Lords—
Lord Denham: Sit down.
Lord Jenkins of Putney: No.
Baroness Young: My Lords, three minutes ago I indicated that after we had taken the question from the noble Lord, Lord Derwent, as we had had few questions from the Conservative side, and after we had had the question from the noble Lord, Lord Kennet, I thought it was right that we should move on, as we had then spent between six and seven minutes on this Question. I think it is the wish of the House that we should now take the next Question.
Several noble Lords: Hear, hear!
Lord Wedderburn of Charlton: My Lords, may I ask the noble Baroness, purely for the information of their Lordships in order that they should be clear, whether it is not a convention of the House that the noble Lord who asks a Question, especially having heard hostile questions, should therefore have the right to ask the final question?
Several noble Lords: Order, order!
Baroness Young: My Lords, I should like to make it quite clear that it is not a convention of the House that the noble Lord who has a Question down on the Order Paper has any right of reply at the end of it.

Immigration: Bombay Entry Clearance Procedures
2.56 p.m.
Lord Avebury: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the average length of time taken to prepare an explanatory statement following the refusal of an entry certificate application to a person wishing to enter the United Kingdom as the elderly parent of a person who is settled here, at the British Deputy High Commission in Bombay.
Lord Trefgarne: My Lords, I regret that, as my noble friend Lord Belstead informed the noble Lord in a Written Answer on 1st February, the delay at Bombay is currently about eight months. This long delay has been caused because the post have had a backlog of statements which they arc slowly clearing. They expect to fall into line with other posts by the second half of 1982.
Lord Avebury: My Lords, would it not have been possible, and is it not still possible, to even out the disparity between the other posts in the Indian subcontinent where the delay, I understand, is less than three months in every case, by transferring the staff from the other posts to Bombay? Is the noble Lord aware that even at the end of the eight months when the explanatory statement is supplied by the entry certificate officer very frequently it occurs that the adjudicator requires clarification of some point contained in it? Therefore, the eight months which the noble Lord mentions is not the time taken between the refusal of an entry certificate and the preparation of the case by the appellant before the adjudicator. It may be as much as two years. When we are talking about these elderly people, they may die before the case is resolved.
Lord Trefgarne: My Lords, I agree of course that the preparation of the statement, which is the subject of the Question, is not the end of the matter in regard to these appeals. However, in January 1981 the number of entry clearance officers in Bombay was increased. At that time, Bombay did have a considerable backlog of paper work. I am happy to say that that has been somewhat reduced now and I hope it will be eliminated later this year.
Lord Mishcon: My Lords, does the noble Lord recollect, as many of us do, the assurance that was given on behalf of the Government at the time of the discussion of the Nationality Bill, that the utmost humanity and reasonableness would be shown in dealing with applications for immigration and naturalisation? Does not the noble Lord know that quite obviously it is inhuman that old people of the kind whom the noble Lord has described in his Question should be kept for almost two years before a proper decision on their application is made? Does he further—and lastly, I assure the noble Lord—know that the delays which are occurring in the Home Office Department in regard to naturalisation and immigration are absolutely unconscionable at the moment?
Lord Trefgarne: My Lords, like the noble Lord I am anxious about the delays that there are in some of these cases. As the noble Lord, Lord Avebury, knows, we have in certain areas been able to introduce a modest
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element of priority for certain particularly compassionate cases, but one has to remember that if one grants priority to too many cases those who do not enjoy priority considerations then get even further delayed.
Lord Foot: My Lords, would the noble Lord tell us, first, how many applications are refused in Bombay in the course of a year and, secondly, why it is when once a refusal has been decided upon that it takes longer than, say, half an hour to draw up the explanation as to why the refusal has been made?
Lord Trefgarne: My Lords, if we can consider the case of elderly parents, who are a particularly important area of dependants, who apply through Bombay and some of the other posts in the subcontinent, I understand that 157 such persons applied as aged dependent parents in 1981. Of these, entry clearances were issued to 29, 83 applications were refused and 45 were either referred to the Home Office or deferred locally for further inquiries.
Lord Foot: My Lords, does it follow from that that, in the case of only 83 refusals in the course of the year, it took an average of eight months to prepare the explanatory statement as to why the refusals were made?
Lord Trefgarne: My Lords, there is a very considerable amount of work necessary in the preparation of these appeal statements. The answer to the noble Lord is, therefore, Yes; that was the time taken.
Lord Avebury: My Lords, is not the consideration to be satisfied in these cases that the parent in question is wholly or mainly dependent on the child to whom he or she would like to go in the United Kingdom and that the child concerned is able and willing to support them? Are not these matters of fact which will be known to the entry certificate officer at the time of his decision? And what is he doing during the whole of those eight months?
Lord Trefgarne: My Lords, it is not just a question of determining whether or not an aged parent is dependent on the person in the United Kingdom. There are matters of identity, for example, which may have to be established, and sometimes these things are very difficult.
Lord Mishcon: My Lords, in view of the obvious feeling that exists, will the noble Lord undertake that his noble friend the Minister will be made very much aware of the discussion here today? Is there the possibility, too, of looking very speedily into administration, in order to find out whether these matters cannot be speeded up?
Lord Trefgarne: My Lords, as a matter of fact these matters fall to me as the responsible Minister, because the entry clearance arrangements in the sub-continent are handled by the Foreign Office, and it also happens that I am intending to visit the sub-continent in the near future to look into these arrangements.

Laker Airways: Future
3.1 p.m.
Lord Balfour of Inchrye: My Lords, I beg leave to ask the Question of which I have given Private Notice.
The Question is as follows:
To ask Her Majesty's Government whether they can inform the House of the latest position as regards Laker Airways and prospects for possible survival of all or part of its organisation, thereby securing the positions of all or some of the air crews and ground personnel?
Lord Trefgarne: My Lords, my honourable friend the Parliamentary Under-Secretary of State for Trade made a Statement in another place last Friday about the events which have overtaken Laker Airways. Since then I understand that one financial institution have been exploring ways of raising additional finance to save the airline. The Receiver has made clear that, if they succeed in doing so, they will need the concurrence of the other major creditors who have loaned money to Laker Airways. Strenuous efforts were made by the banks in recent months to find ways of marshalling additional financial support, and I cannot be optimistic that this effort will succeed.
It is hoped that the tour operations will survive and result in continuity of employment for some of Laker's staff. It is too early yet to say what arrangements may be possible to preserve employment for the remainder under new ownership.
Lord Balfour of Inchrye: My Lords, I thank the Minister for his reply. Will he agree that Laker has pioneered mass air travel and that, while fares must, of course, be at a level which will give a reasonable return on capital, never again, as in past years, shall we see the high level of fares, exploitation of the public, by means of what I would term cosy cartels, monopolies and international traffic pools? May they never be countenanced again. That is my question to Her Majesty's Government.
Lord Trefgarne: My Lords, my noble friend is certainly right when he suggests, as I think is the main gist of his question, that things will never be the same again in international air transport, even though Laker himself may or may not be part of them. The fact is that Laker gave birth to a new era in international air transport and will certainly always be remembered for that, if nothing more.
Baroness Burton of Coventry: My Lords, while being glad to hear the tone of the Minister's reply, may I ask him whether it is not true that in the past Governments and airlines have co-operated to keep out competition and, as a result, air fares have been kept high? As the noble Lord has just said, Laker posed a challenge to this cartel in air travel. Would the noble Lord agree that that is why there has been such an incredible response to this situation from the public, from his pilots and from all the employees of Laker? I wonder whether the noble Lord could tell us whether it is not right to say that established airlines will make a mistake if they think that what Laker worked for has dis-
12
appeared. Can the Minister help us by going a little further? Can he convey to the Government, if it is necessary, that this very strong force of public opinion has surfaced because Laker offered to the public something they had never had before? He made it possible for people to visit distant parts of the world and see their relatives, whereas before the cost had been much too high. May I ask, finally, whether that is not too valuable a thing to lose, and will the Government do all in their power to retain what is possible?
Lord Trefgarne: My Lords, as I said to my noble friend Lord Balfour, things will never be the same again in international air transport. I am thinking particularly of the competitive arrangements that exist in some markets. It is certainly the case that the British Government find themselves at variance with some overseas Governments with regard to fare levels and other conditions which attach to air services around the world. But, having said that, we are, of course, obliged to operate in the existing international environment. We are doing our best to change that environment, not least in Europe.
Lord Campbell of Croy: My Lords, may I ask my noble friend whether it is correct that a time limit has been set for any decisions on the future, reported to be six days from last Friday, and, if so, what organisation has required this time limit and is it necessary, bearing in mind that all the Laker aircraft are grounded?
Lord Trefgarne: My Lords, I understand that the Civil Aviation Authority have given notice of their intention to suspend and, in due course, if need be, to revoke the air transport licences held by Laker Airways. That is a necessary concomitant to what has happened, because of course the CAA have to have regard to their duty as laid down in civil aviation legislation, which is to ensure in general terms that the operators are in a fit state to discharge the obligations of their licences.
Lord Ponsonby of Shulbrede: My Lords, I should like to agree with a lot of the sentiments expressed by the noble Lord, Lord Balfour of Inchrye. We are concerned that this tragic demise of Laker Airways should not lead to a return of the high fares of the past. I think that the question which this particularly poses is whether the Government feel that they should be reconsidering their whole policy on the question of air routes and air traffic; whether the lesson of Laker is something which the Government should learn in regard to their policies about control of air routes. Immediately one is concerned about the welfare of those passengers who may be stranded; that all possible is being done to ensure that no individual passengers are unable to return home, and that there are no losses so far as those who have booked potential flights—
Noble Lords: Question!
Lord Ponsonby of Shulbrede: My Lords, my question is whether the Government have any plans to review their policy in this area.
Lord Trefgarne: My Lords, I am not quite certain what aspect of policy the noble Lord thinks we ought to review. The general policy towards air transport, as with other industries, is that they should be allowed to compete fairly and squarely with all the other international companies in the business. That is in fact our main bone of contention at present—and I fancy the main bone of contention of Lady Burton of Coventry as well—that British airlines are not allowed to compete on all fours with other airlines in the world market.
Earl Amherst: My Lords, if the Government agree that the sudden collapse of Laker Airways now raises most important questions regarding consumer interest, taxpayers' money and route licensing, let alone the livelihood of the large Laker Airways' staff and many other issues that now arise in what is now a vast international business, will the Government issue now, or urgently, a statement of what is to be their future policy for civil aviation?
Lord Trefgarne: My Lords, we have had many debates lately on a number of different aspects of civil aviation policy. It is, of course, the case that the British independent air transport industry, as a whole, actually made a profit last year, albeit a small one, and so I do not think that we need to have any fears or cause for concern for the long-term future of the British independent air transport industry. As for the nationalised side of the air transport industry, our policy remains, as I have reported to your Lordships on a number of occasions, that British Airways itself should be privatised as soon as is practicable.
Lord Cledwyn of Penrhos: My Lords, in view of the profound implications for so many people of the collapse of Laker Airways, would Her Majesty's Government consider setting up an inquiry—because there are many lessons to be learned from this—to find out precisely what went wrong, why it went wrong and what part Her Majesty's Government played or should play in this? Would he also consider what bearing Section 165 of the Companies Act has on this collapse?
Lord Trefgarne: My Lords, the policy of Her Majesty's Government with regard to the British independent air transport industry is, of course, that it should stand on its own feet and flourish or otherwise, as its own management determines. It is unhappily the case that, as a result of various factors—some of which I think were outside Sir Freddie's control, but perhaps not all of them—Laker Airways has found itself in difficulties. A number of things are going on, as the Question indicates, and it is too early to say yet that Laker Airways is finally finished. I must say that I hope that it is not, but it is not the Government's policy to stand behind Laker Airways or, indeed, any other commercial company of this nature in these circumstances.
Lord Cledwyn of Penrhos: My Lords, I should like to address the Minister further because he has not dealt with my question. In view of the concern which has been expressed by Ministers from the Prime
14
Minister downwards on this issue, and in view of the profound public concern which has been expressed by individuals, by newspapers and by the media over the last three days, does he not consider that there is a strong case for a full public inquiry into this issue so that lessons may be learned and so that the errors that have been committed, if there were errors, may not be repeated in the future?
Lord Trefgarne: My Lords, I do not think that I would agree with the noble Lord. I think that the difficulties which have caused Laker Airways to come to this sorry pass—as, indeed, it is—may to some extent be a result of misguided decisions within the management of Laker Airways and may to some other extent be as a result, for example, of fluctuations in the currency rate which Laker himself has referred to. But I think that a profound reinvestigation of the British civil aviation industry is not appropriate in this context. As I said earlier, the independent sector of British civil aviation taken as a whole actually made a small profit last year and I think that there is no reason for any long-term worry about the future.
Viscount St. Davids: My Lords, would the noble Lord be surprised if there are a number of persons, some within this House and many, many outside it, who feel that, although Sir Frederick may well have been the author of some of his own troubles and also that public money should not now be put to his support, yet public support should be given to him? Moreover, would he be surprised if I myself was willing to sign a list, under the heading of some greater personage perhaps—or if they were not willing to do so, to start a list on my own—of those in this House and elsewhere who were willing to express the wish that in some form support should be given for keeping Sir Frederick flying an independent airway?
Lord Trefgarne: My Lords, the difficulty is that once he gets Government support he ceases to be an independent airline and that is the view which, I think, Sir Freddie himself takes: it is certainly the view that the Government take. The public have been very forthcoming just lately in the various undertakings that have been given and I have heard of figures of £1 million or so that various people have undertaken to put in. But I have to say that, in the context of the figures as I understand them with regard to Laker Airways, £1 million is nowhere near enough.
Lord Molloy: My Lords, would the noble Lord at least not reconsider the reply he gave to my noble friend on the Front Bench that perhaps a public inquiry might contribute in regard to the sadness that has happened with regard to Laker Airways, particularly in this savage world of cartels and multinationals where it would appear that it is the well-intentioned who are driven to the wall and finished off? Also it would appear that a lot of people are contributing small sums and large sums which they think will save Laker. What will happen to their money if there is no saving of Laker? Will it be returned to them?
Lord Trefgarne: My Lords, the money to which I referred has, I think, been contributed to private funds

15
destined for some rescue operation with Laker Airways. I understand from what I have read that if the rescue is not mounted and the funds are not therefore used, then the funds will indeed be returned.
Lord Campbell of Alloway: My Lords, does my noble friend the Minister agree that it would be wholly premature to seek to set up any inquiry until consideration has been given to the international cartel arrangements to which my noble friend Lord Balfour of Inchrye has referred?
Lord Trefgarne: My Lords, Laker, of course, was a fairly doughty opponent of the international cartel arrangements to which my noble friend refers and had, indeed, achieved a very considerable measure of success in being allowed to operate free from the restrictions of that cartel—witness the obvious fact of his Skytrain service across the North Atlantic, which was, of course, operated outside the confines of IATA; and, indeed, the other scheduled services which he had in mind would likewise have been operated outside the confines of IATA. IATA, of course, is not a Government body, as people often seem to think: it is, in fact, an association of airlines, and the Government's views on that matter have been frequently expressed.
Lord Cledwyn of Penrhos: My Lords, will the Minister confirm that a public inquiry can, in fact, be set up without reference to any cartel?
Lord Trefgarne: My Lords, I have no doubt that it can if the circumstances merit it: I do not think that they do on this occasion.

Agricultural Training Board Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I understand that no amendment has been put down to this Bill or to the next Bill which stands in my name on the Order Paper, and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee on either of these Bills. Therefore, unless any noble Lord objects, I propose to move that the Orders of Recommitment successively on each of these Bills be discharged. I beg to move that the Order of Recommitment on the Agricultural Training Board Bill be discharged.
Moved, That the Order of Re-commitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

Industrial Training Bill [H.L.]
The Lord Chancellor: My Lords, for the reasons which I have just stated, which apply equally to this Bill, I beg to move that the Order of Re-commitment be discharged.
Moved, That the Order of Re-commitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

Reserve Forces Bill [H.L.]
The Earl of Avon: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Commitment be discharged.
Moved, That the Order of Commitment be discharged.—(The Earl of Avon.)
On Question, Motion agreed to.

Shipbuilding Bill
Lord Cullen of Ashbourne: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Commitment be discharged.
Moved, That the Order of Commitment be discharged.—(Lord Cullen of Ashbourne.)
On Question, Motion agreed to.

Antiquities Bill [H.L.]
3.21 p.m.
Lord Denham: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Antiquities Bill, have consented to place their interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Lord Abinger: My Lords, I beg to move that this Bill be now read a second time. The purpose of this short Bill is to give a more permanent protection to those small antiquities which, from time to time, are found in the ground or elsewhere, and it seeks to do so by amending the law of treasure trove. These small antiquities are often of historic importance, of scientific importance, or of artistic importance, and sometimes they are all three. They include rather infrequently objects made of gold or silver, but more often made of other metals or of clay, stone, wood or glass; they include jewellery and ornaments, ancient tools, weapons and household utensils, ceramics and mosaics, manuscripts, deeds and scrolls, together with many other ancient artefacts. With the exception of those objects made substantially of gold or silver, which receive a rather tenuous protection under the law of treasure trove, these antiquities, it seems, receive no permanent protection in law at all.
Although they might rightly be considered an important part of the national archaeological heritage, as the law now stands they would generally belong to the owner of the ground or the building in which they are found, although I must say that the law of finders is rather complicated. It is, of course, true that some of these antiquities find their way into our museums through the generosity and public spirit of their owners; but many do not—we know not what proportion and we know not how important. They can be neglected,

17
displaced, damaged, destroyed or disposed of abroad as an uninterested owner chooses. This is a matter of great and increasing concern to archaeological opinion in the country, particularly in view of the increasing popularity of the hobby of treasure hunting with metal detectors.
I would refer here briefly to the Ancient Monuments and Archaeological Areas (Protection) Act, 1979. This Act was greatly welcomed by archaeologists, but it gives no permanent protection to antiquities. Under the Act, the Secretary of State or certain local authorities may designate areas of archaeological importance. They may then, if they choose, authorise a competent examination of any antiquities found on the site, but that is all. Under the Act, examination is authorised; protection is not given.
A further weakness of the Act, in my view, is that designated areas seem to be very few and likely to remain very few. Neither the Secretary of State nor a local authority can authorise even an examination of the larger number of antiquities found outside designated areas.
I would suggest that this lack of permanent protection of small antiquities for our national heritage is a serious omission in the whole corpus of our conservation law. The public is conservation-minded now and, quite rightly, in recent years Parliament has reflected this public concern by passing a whole series of conservation measures. We have the very detailed Town and Country Planning Acts; we have legislation to protect flora and fauna, and to protect ancient monuments and historic buildings. Areas of outstanding natural beauty and sites of special scientific interest can be protected and, among other things, so can individual trees and underwater wrecks at sea in coastal waters. But there is nothing to protect small antiquities.
I do not know what the noble Earl, Lord Avon, who is speaking for the Government in this debate, will say. I would emphasise though that there is plenty of evidence that Her Majesty's Government, their advisers and the legal profession have for a long time been aware of this rather unsatisfactory position. I do not want to go back too far to give illustrations, but for a start I would remind the House that our country was represented at a UNESCO conference in New Delhi in 1956 where it was recommended and accepted that member states should apply certain principles of legislation to protect their archaeological heritage. Our own delegates agreed. Although resolutions passed at UNESCO general assemblies are certainly not binding on member states, it was a matter of great disappointment to the archaeological profession in this country that Her Majesty's Government took no notice at all of the resolution.
Rather later, in 1971, the Brodrick Committee presented its report to Parliament. His Honour Judge Brodrick, has been chairman of a committee appointed by the Government to review the powers of coroners. Among other things, his report recommended that coroners should continue to carry out their functions in regard to treasure trove:
"until comprehensive legislation is introduced to deal with the whole question of the protection of antiquities".
The Brodrick Report came out 11 years ago, and we have not seen very much since. Again, I should like
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to quote Mr. Justice Dillon in a recent High Court case concerning treasure trove, Attorney-General for the Duchy of Lancaster v. Overton Farms Ltd. Mr. Justice Dillon commented during the hearing of the case:
"the position in which the preservation of recently discovered antiquities depends on a prerogative"—
that is, the Crown's prerogative in relation to treasure trove—
"which originated for a quite different purpose is not satisfactory".
He then went on to describe the topic as one which could well merit the attention of Parliament for the adoption of criteria in keeping with modern thinking and the ways of modern life. In introducing this Bill, I am endeavouring to solicit just that.
Before referring to the Bill in detail, I should like to say a few words about treasure trove, which has been described by a distinguishing jurist writing in a recent issue of the Modern Law Review, as being an instrument of almost pitiable inadequacy for archaeological preservation. I feel sure that your Lordships will be familiar with treasure trove, so I need not say very much, but the current interpretation of treasure trove appears to me to be that objects discovered in the ground or elsewhere and which have no known owner are deemed to be treasure trove, first, if they are substantially made of gold or silver, and, in addition, if it is adjudged that their original owner hid them with a view to eventual recovery and did not just lose or abandon them. If deemed treasure trove the objects of course become Crown property and receive the permanent protection forthwith.
That is about all there is to say about treasure trove and it does not get us very far towards protecting antiquities. It is part of the common law of England going right back to Anglo-Saxon times. In those days it was not a conservation measure at all; it was a sort of fiscal penalty to discourage the hoarding or secreting of wealth. And one must really ask whether a measure which may have suited King Alfred the Great or King Ethelred the Unready very well is appropriate for the more sophisticated times in which we live.
It is our coroners, sitting with a jury, who have to decide whether an object is treasure trove or not. In particular they have to decide what the lawyers call the animus revertendi; whether the original owner had intended to recover his possession or whether he had just lost it. Well, I know that our coroners are conscientious, hard-working officers of the Crown, but it is really asking too much of them to be able to give guidance to a jury on the intentions of the owner of an object who may have lived 1,000, 2,000 or 3,000 years ago.
This Bill therefore seeks to amend treasure trove. The operative clauses are Clauses 1 and 3. Subsection (2) of Clause 1 would widen the categories of object that can be deemed treasure trove and therefore Crown property, and therefore in receipt of permanent protection if thought fit. Subsection (2) paragraph (a) I think speaks for itself. Paragraph (b) would extend treasure trove to objects which happen to lie with other objects deemed treasure trove under this subsection of the Bill. To give an example of this: if a hoard of coins is discovered, some made of gold and some of

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bronze, as the law stands at the moment only the gold coins could qualify as treasure trove perhaps, while under this clause of the Bill all the coins would, and so would their container, and so perhaps would any objects lying very close to them. We have to bear in mind that intrinsic worth has really got nothing to do with archaeological importance.
Paragraph (c) of subsection (2) delegates powers to the Secretary of State. It is not thought that he would use such power frequently, lightly, or retrospectively. But it is worth mentioning that although under Scottish law the Secretary of State has not got this power, another body has, and I confess I do not quite know what that body is. I think it is called the Crown Commissioners. That may be a Scottish office. But that has worked perfectly well in Scotland for many years. Treasure trove can be widened there at the discretion of the Crown Office to take in all sorts of other artefacts that arc not gold or silver. Clause 1(3) abolishes the animus revertendi. And I have suggested already that it is a bit of a nonsense to have to establish the original owner's intention.
I would attach importance to Clause 3 of the Bill. At the moment if interesting antiquities are found at other than a designated site, there seems to be nothing in law to prevent the owner, or people authorised by him, digging feverishly, unskilfully and roughly for further objects, whereas archaeological science demands a minimum of disturbance by unskilled excavators. If a site is not skilfully excavated, great and lasting damage can occur to it and the contents in it. This clause seeks to prevent such damage being done.
The Bill does not seek to be a basis of a statute of antiquities such as exists, I would say, in most modern states now, because I think that would be beyond the scope of a Private Member's Bill. Nor is it, I think, a radical Bill in any way. But it tries to go far enough to meet the wishes of contemporary archaeological opinion. It is worth noting that our former Colonial Office initiated, or endorsed, many good antiquities Bills for the territories for which it was responsible. Very often—not always—it did it by a simple amendment to the British law of treasure trove. Malta and Cyprus, for instance, had excellent antiquities statutes; so did the dependency of Aden and the Protectorate of Tanganyika. I find that Sarawak did, too. And the best of all, I think, was the former Indian Empire's statute dating back as long ago as 1878. They were often based on a simple extension of treasure trove.
Coming nearer home, and of no concern to the Colonial Office, I find that Northern Ireland and the Isle of Man have considerably better legislation in this field than England does. I find that Scotland has much better legislation in this respect. And, for aught I know, the Bailiwick of Guernsey or the Island of Sark may do so. Therefore, I would suggest that it is surely time for consideration to be given for the better protection of antiquities in England and Wales too.
I can say that this Bill has the support of the British Museum—possibly a qualified support—and I think that my noble friend Lord Windlesham will have a little more to say about this when he speaks. I can say that the Bill has the wholehearted support of the Council for British Archaeology, which is quite one
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of the most respected representative bodies in the country of archaeological opinion. In commending this Bill to your Lordships, I very much hope that you feel that it merits your support too, and that you will give it a Second Reading. My Lords, I beg to move.
Moved, That the Bill be now read a second time—
(Lord Abinger.)
3.38 p.m.
Baroness Birk: My Lords, I think that we are all grateful to the noble Lord, Lord Abinger, for raising this matter once again. This time I think it is probably an improvement on the last Bill, which was intended to do away with treasure trove, because I do not think that at the moment any Government of either side would wear that. This is a difficult subject because the whole concept of treasure trove is wreathed in a romantic aura of ancient history. The words conjure up romance, adventure and also of course financial advantage.
Governments have left the law as it is for hundreds of years—in fact, for more years than the centuries of this country. It goes back to quite primitive times and is of ancient origin. Nevertheless, it comes into the category to which Governments prefer to turn a blind eye. In 1979 the Ancient Monuments and Archaeological Areas Act referred to by the noble Lord, Lord Abinger, was passed. I was the Minister at the Department of the Environment during the run-up to that when the consultation paper was put out and the Bill was drafted.
I do not think it is giving away any secrets to say that it really was very hard to get that much-needed Bill into the legislative programme. All Governments have other matters which they think are of far more importance and far more urgency than anything to do with conservation, the arts, or archaeology, so they come far down the list. It is also perfectly true that, as we all know, you have to make certain compromises otherwise you are going to lose the whole Bill. In the end we were pleased to get what we did.
The noble Lord, Lord Abinger, referred to Section 42, which deals with the restriction on metal detectors near scheduled monuments and in archaeological areas of special importance. I quote from the consultation paper which was issued in 1977 and was the precursor to the Act:
"The principal Act of 1913 … a different age with a different climate of opinion—so it is not surprising that in spite of amendments in 1931 and 1953, the framework needs modernisation to cope with new situations and to accord with present-day legislative and administrative practice".
That referred to the Ancient Monuments and Archaeological Areas Bill, as it was then, and finally we got something brought forward. Now we are talking about treasure trove and, although I would be the first to agree that it would he preferable if a Bill of this sort were introduced by the Government, I believe that to be so highly unlikely that, after a great deal of consideration, I find myself very much in support of this Bill. It is true that there may be some points which may need to be amended in Committee, but that does not alter the main principle of the Bill.
To give an example of the way things work at the moment: probably the finest treasure this country will ever see was the hoard of the Sutton Hoo ship

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burial, which was found in 1939. It represented the superb possessions of a high king of the Anglo-Saxon heptarchy—the overlord of the English kingdoms. It included gold, silver, jewellery, arms and regalia. In terms of artistic importance as well as financial value, the hoard was absolutely priceless and undoubtedly it was a national treasure of great pre-eminence; and it was unthinkable that such a treasure should be anywhere but in the British Museum. Incredibly, however, there was no process of law—there was not then and there is not now—which could protect it and secure it for the nation. Treasure trove was not applicable because it was not a case of the goods having been hidden; that was found by the coroner and his jury. Therefore the Sutton Hoo treasure was free to be sold off piecemeal; and the same situation could arise today if there were another hoard of comparable importance. That case demonstrates devastatingly the inadequacy of treasure trove for archaeological purposes. Happily, there was a good ending to that case; the treasure was preserved for the nation because of the generosity of the woman to whom it would have belonged, who was extremely public-spirited and who, incidentally, refused an honour which was offered to her by Winston Churchill. Purely by chance there-fore, due to one woman's generosity, that tremendous hoard of treasures found its way into the British Museum.
By any test, the present position over treasure trove can be shown to be defective and in urgent need of reform. Today everything is different compared with the time when distinctions were first made between objects hidden away for retrieval later and those which were lost or abandoned. How can that have any relevance whatever to our lives today, bearing in mind our present archaeological activities, our economic and social life and the activities of our whole community? It makes absolute nonsense, especially as the coroner and his jury are very often left to make some sort of inspired "guesstimate", almost like tossing a coin, about whether an article should go into the category of treasure trove.
There is a strong groundswell now for change, and it has been increasing certainly since the passage of the 1979 Act: that measure activated thought in a great many other areas. One sees in the academic world that teachers of law are mounting increasing criticism of the present treasure trove law and many judges are extremely uneasy about the position. The noble Lord, Lord Abinger, referred to the Overton case and to what Mr. Justice Dillon said. That case went to the Court of Appeal, where the Master of the Rolls, Lord Denning, said—and the judges sitting with him agreed—that he had to go back to Sir Edward Coke's interpretation of treasure trove and, reading that judgment, one can see that he had with great reluctance to go back to the basic origin of it, in that it had to be objects of either gold or silver, but no other alloys. I think one would find that many Law Lords would be in favour of a change in the law.
The Bill would not overturn the present law by doing away with treasure trove. Nor is it such a devastatingly revolutionary Bill. It simply aims to complete the circle in respect of gold and silver objects; it would mean that we should not have the present highly artificial and absurd division between articles which have been hidden for retrieval and those which
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have been lost or abandoned. As the noble Lord, Lord Abinger, pointed out, it would also allow for alloys to be included as well, and that makes great sense.
It may be said—some have said it—that the Bill would be a weapon used against treasure hunters with their metal detectors. In fact, if one reads the measure carefully—and it has the advantage of being a short, simple and, in my view, extremely well drafted Bill—it is clear that it has no part in any campaign against treasure hunters. If anything, it could be argued the other way, that it favours treasure hunters by increasing the amount of treasure trove material. In any event, it is about time we were realistic about the whole matter, particularly as more and more metal detectors are used. At this time, when there are more treasure hunters, we should get things under some sort of proper control so that we do not lose the great many treasures which we are still losing today.
It is possible—indeed, it is highly probable—that there will be protests from the Treasury, in that more will have to be paid because the museums will be forced to buy a great many objects which would not otherwise have been treasure trove, so that they will be faced with large expenditure in respect of which they will go to the Treasury. In fact, there will be no compulsion on anybody to buy anything. If, for example, the British Museum has an article which is very similar to or is a better example of a particular antiquity, it does not have to buy it. Nobody would be forcing it to buy the object, and it would go back to the finder and, as there is now, there would be a reward.
The Bill may also be criticised for being disadvantageous to landowners, yet I understand that the National Union of Farmers supports the measure. However, many landowners feel they are losing out under the present system, so the answer to that criticism would be to revise the system of rewards so as to recognise the claim of landowners and, if necessary, there could be a share-out between the finder and the landowner, but that is a matter of prerogative which the Bill leaves unaffected.
We may have some discussion about the penalties that are proposed. Clause 4(2) creates an absolute offence, and there may be differences of opinion about that. I have always been taught that ignorance of the law is no defence, and we have a number of other absolute offences in our law. I would only comment that in the magistrates' courts we can give an absolute discharge if we think the circumstances merit that.
Another point which will probably be raised by noble Lords relates to reporting a find not later than 48 hours afterwards. This is a difficult matter. Perhaps there is a case for extending the period to seven days, but I am slightly worried about it. I believe that the majority of people who find the kind of objects with which the Bill is concerned know all about such matters and are fairly professional. I do not think that the period should be long enough to enable them to "flog" the objects—to put it crudely—with the result that the finds might be abroad before there is a chance to declare them as treasure trove.
Previously the Government were able to shelter behind the misgivings of the British Museum.

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It is perfectly true that the British Museum had misgivings—I am glad that the noble Lord, Lord Windlesham, who is a trustee of the museum, is to speak particularly over the idea of abolishing the concept of treasure trove. However, I understand that in 1974 the trustees agreed that the concept of treasure trove should be retained, but amended, and I believe that with certain reservations, which I do not think are really major, the trustees are happy with the Bill.
Finally, in the last few years we have been more conscious of our national heritage than we have been for many years. We become very worried, letters fly here and there, and there are demonstrations and meetings if pictures, furniture or other objects are to be sent abroad. Yet we tolerate a situation where not only is there the absurd anachronistic conumdrum of "hidden, lost or abandoned ", but, as the noble Lord, Lord Abinger, pointed out, since the law applies only to gold and silver, no bronze object, no stone object (such as the Willendorf Venus) no iron object (such as the Sutton Hoo chain) no bone or ivory (such as those Norse chessmen in the British Museum) could be classed as treasure trove under present legislation. Above all, there is pottery. Old pottery plays such an enormous part in the heritage of every country. It seems absolutely wrong to exclude such objects and it is becoming archaeologically irresponsible to let the situation remain as it is.
I doubt whether the Minister will be able to give an undertaking that the Government will bring in a Bill. This is not a party point; the situation is very difficult and I do not think that he would get very far if he were to say to the Government, "I should like to have a nice little Bill on treasure trove". Therefore we should at least go ahead with the Bill of the noble Lord, Lord Abinger, and I believe that the least the Government can do is to view it with a positive benevolence.
3.53 p.m.
Lord Windlesham: My Lords, as the mover of the Bill has indicated, I intervene in the debate in my capacity as a trustee of the British Museum. I do so with some hesitation because sitting next to me on this Bench is the former chairman of the trustees, Lord Eccles, who had a far longer association with the British Museum than I have had the good fortune to have. The trustees have considered this Bill and I have been asked to speak today on their behalf. As the noble Baroness, Lady Birk, has just remarked, the British Museum declined to support a previous Private Member's Bill, also sponsored by the noble Lord, Lord Abinger, largely because it abolished the concept of treasure trove and made no reference to the system of rewards which in our view is essential to prevent the concealment of finds. It also seemed unlikely that the role of the coroner in establishing the facts of a find would survive had that Bill become law.
The present Bill as now drafted meets those objections. It retains and redefines the concept of treasure trove, which was the approach preferred by the British Museum trustees when they considered the state of treasure trove law in 1974 and 1975. Accordingly, the Bill has the support of the trustees of the British
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Museum, as well as of the director and the senior staff who are directly concerned.
Having said that with the authority of the trustees, let me add one or two personal comments on my own account, which might or might not be shared by my colleagues. Strange and archaic as it might appear to be, the ancient Crown prerogative of treasure trove has undeniably been of considerable benefit to museum collections, the national collections and increasingly to local museums as well. In addition, it has led to greater knowledge about the way in which people lived in the past.
To my mind the Bill has two particular virtues, one of which is highly topical in view of the decision in the Court of Appeal relating to the Coleby find, which has already been mentioned. Part of the judgment related to the proportion of gold or silver which needed to be present in gold or silver objects, usually coins, if they were to be classed as treasure trove. The Court of Appeal ruled that the gold or silver content should be "substantial ", but stated that no percentage was to be cited.
My Lords, problems with monetary systems are far from a new manifestation. On many occasions in the past the currency has been progressively debased. For example, in the Roman coinage of the Central Empire and the Gallic Empire in the third century AD the silver content fell as low as 1 per cent., while in Tudor England the lowest legal definition of silver coins in the middle of the 16th century was between 23 and 25 per cent. These coins have traditionally been regarded as silver and have been collected and studied as such. But would coroners' courts find such low contents to be "substantial "? Some coins in a hoard might be found to come up to the required level, with a substantial content of gold or silver, whereas other coins in the same find might be found to fall below the level.
At the very least the Court's ruling has held out the prospect of the verdicts of coroners' juries varying from case to case, some of them no doubt open to challenge on appeal. This Bill would overcome the problem, since Clause 1 states that
"Treasure trove shall comprise not only gold and silver but also any object which is … made of any alloy containing gold or silver".
The second advantage of the Bill lies in the extension of treasure trove from solely gold or silver objects, as at present, to the containers in which they are found, together with any adjacent objects. To archaeologists or historians the containers or adjacent objects might be as interesting as the gold or silver objects themselves. Moreover, it is important that a find should be described and studied in its total context, wherever possible with the co-operation of local archaeological units or museums in the area. The widening of the definition of treasure trove in the Bill should help to keep hoards together rather than split them up, which happens when the gold or silver articles in a reported find are declared to be treasure trove, with the non-silver or gold elements remaining the property of the landowner.
In preparing for this debate I made some inquiries into the incidence of reported treasure trove in order to get some idea of the scale of the activity which we are debating today. The Treasury Reviewing Committee considered 51 finds over a four-year period from 1977 to 1981. This is not, however, an inclusive list since

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it excludes finds in the Duchy of Cornwall, the Duchy of Lancaster and the City of London, so the total number would be somewhat larger. But it does give an indication of the approximate frequency of reported finds.
A further aspect worth having in our minds as we discuss this subject is that, contrary to popular mythology, the sums paid out as rewards, representing, as they do, the full market value, are more often a few hundred pounds rather than the occasional much higher figure which attracts the headlines.
So, my Lords, this Bill, while it seeks to retain a well-established procedure which has endured for many centuries, seeks to modify it and strengthen it in order to meet modern conditions. As the mover reminded us in his opening speech, this is in line with comments made recently from the bench in the High Court. As such, I believe the Bill deserves our support, and I hope it receives a Second Reading.
4.3 p.m.
Lord Adeane: My Lords, in thanking the noble Lord, Lord Abinger, for introducing his Bill I must first acknowledge an interest in it myself, through the Royal Commission on Historical Monuments (England), of which I am chairman. We are mainly concerned with recording—recording the archaeological and architectural remains of this country—and it is on this aspect, which has already been mentioned by other noble Lords, that I propose to concentrate rather briefly.
In this connection, we shall be greatly helped by Clause 3 of the noble Lord's Bill. This makes it obligatory for the finder of any object covered by Clause 1 to report it at once to the police or to any other appropriate authority while leaving the object itself alone and the place of its discovery undisturbed. Such finds are numerous nowadays, mainly because of the widespread use of metal detectors. I think we should not be too dog-in-the-manger about this. Many people get a lot of interest and amusement out of the use of metal detectors, and provided they remain within the law they perhaps do not do very much harm. As the noble Baroness, Lady Birk, has already mentioned, it is in their interests as well as in every-body else's interests that the law on these matters should be a great deal more closely defined than it is at the moment.
As to the objects themselves, whether they are of intrinsic value or not is really beside the point so far as the historian is concerned. But—and here I come to our main interest—if they are reported at once they can be recorded and related to sites which are already known and probably appear in maps, or at any rate on air photographs. As such they may add greatly to the public knowledge of our ancestors and their life. If they are not promptly recorded, their provenance will probably be lost or confused and their discovery will really be worthless from an archaeological point of view, or very nearly so.
I do not want to detain your Lordships longer. Other noble Lords have added many useful points to the consideration of this Bill, but I believe this particular matter that I have raised to be important from the point of view of proper record and public education.
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I give all my support to the Second Reading of the Bill.
4.6 p.m.
Baroness White: My Lords, I wish very briefly to welcome this Bill most warmly, and to thank the noble Lord, Lord Abinger, for introducing it, on behalf of those of us in the Principality of Wales who are interested in these matters. We have of course included in the Bill a reference to our National Museum of Wales in Cardiff. It is not as ancient or as grand as the British Museum, but it has nevertheless a number of exhibits of very considerable distinction. I have spoken recently with the director of our National Museum and with the Keeper of Antiquities, and both of them most warmly welcome the proposals which are included in the Bill which is before us this afternoon.
I do not wish to weary your Lordships by going into detail—previous speakers have covered it most competently already—but it might perhaps be interesting to give two examples of the difficulty experienced with the current law of treasure trove. Only last Wednesday afternoon, your Lordships might be interested to learn, a telephone call was received at the National Museum in Cardiff from the local museum in Hereford, who very kindly observed the privileges of the National Museum of Wales to be concerned with archaeological finds within the Principality.
Two gold bracelets had been found near Presteigne in Radnorshire, and the Keeper of Antiquities explained to me that he thought they probably had enough gold, under the present law, to qualify, but that had it been one bracelet he would have been in the greatest possible difficulty in claiming that it was treasure trove. He was greatly heartened that there were two bracelets, because this would be very helpful before the coroner's court in persuading the coroner that these two bracelets had probably been hidden with a view to ultimate retrieval, whereas had it been but one the chances were that the coroner would have found it very difficult to reach a favourable verdict.
The Keeper of Antiquities also said that he was delighted with the provision in the Bill that objects subject to treasure trove provisions could now be of an alloy containing gold or silver, because again he produced a most convincing example of a fairly recent experience. In 1975, in Cardiff itself, a hoard of Roman coins of, I must admit, very poor quality was discovered—probably in the period referred to by the noble Lord, Lord Windlesham, in his speech. Nevertheless, they were allowed to be treasure trove and were duly consigned to the museum. A little later what appeared to be the other half of this hoard, so to say, was discovered. It was of the game period, and was almost adjacent. But in the meantime the Dillon judgment had been confirmed by the Master of the Rolls, the noble and learned Lord, Lord Denning, and the other part of the hoard was disallowed because the quality was inferior.
So one has two admirable examples from the Principality of why the current law needs to be amended in the respects described in this Bill. I have no doubt that the other provisions in the Bill will be equally valuable, though I would have thought that there might be one or two arguments in Committee about

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the drafting of one or two of the provisions. So far as treasure trove at least is concerned, this Bill is very warmly to be welcomed and I am sure that we shall be gravely disappointed if the noble Lord, Lord Avon, who is to reply, is anything other than encouraging to its progress.
4.11 p.m.
Viscount Hanworth: My Lords, this is a very moderate Bill and it is not making any major reforms, but it is of enormous importance to archaeologists. That point has already been made today. Treasure trove, which they may rely on for getting evidence in anything that is, for example, buried, only helps to a very limited extent because the archaeologist is not primarily concerned with, let us say, the gold coins: he is just as interested if they are not made of gold, and he might be just as interested in the container, because what he is trying to do is get the evidence for reconstruction.
It is worth looking at the law as it is, because, quite apart from the archaeological point of view, I think that it is clear that the law, which is derived from at least a thousand years ago, is completely out of date and in many ways really a nonsense. Treasure trove belongs to the Crown if and only if it is gold or silver and is hidden with a view to recovery—not simply lost—and there is no owner. One can see, my Lords, that it is very difficult to find this out at a long distance in time, and so the law has made all sorts of presumptions which are considered in the coroner's court. For example, if a single item, it is presumed to be just lost. If buried with the dead, it is presumed that there was no intention of recovery. if there is a low content of gold or silver it is not treasure trove. A coroner's court is not in this way doing a very useful job, and the law by any standards is not very satisfactory. I would emphasise that the Bill in no way alters the present system of rewards.
Finally, what we are worried about of course is more treasure coming to light because of the metal detectors which are used today. This gives a far greater urgency to this Bill than perhaps would have been the case 10 years ago. So I very much hope that at last something will be done and the Government will support this Bill.
4.13 p.m.
Viscount Monckton of Brenchley: My Lords, I speak purely personally—on behalf of nobody and no one other than myself. As many of you know, I spend a considerable time at the bottom or half way down trenches in the earth excavating Iron Age and Romano-British items which I am lucky to have on my own land. I therefore welcome this Bill enormously. I am grateful to my noble friend Lord Abinger for having introduced it.
I was a little worried to hear from some speakers about the use of metal detectors. I always fear those. I am quite sure that sometimes they can be of use to experts working on spoil heaps or even locating before digging; but their use alone I believe to be terrifyingly dangerous. Just think of the Saxon warriors found at Lenham, in Kent, during the war, my Lords. A metal detector would have found the sword and belt stud, but nothing else. If the person with a detector
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had dug down he would not have worried about the bones all he would want would be the precious jewellery. I hope therefore that we can try to forget this part of it. It is not in the Bill, I am glad to say.
The only worry that I have is on Clause 3, which the noble Baroness, Lady Birk, mentioned. This is the requirement to report finds not later than 48 hours following discovery. I do not know whether that is sufficient time for anyone to declare what they have found or indeed to know what they have found. I often do not know for a week what I have found. I put the item in a plastic bag, with the level mark and the reference number on it, and, when there is a bad day, I wash and mark the finds. Then I ask the experts about anything that I do not know. I cannot accept what the noble Baroness said: that it would give too much time for somebody who is going to sell a gold ring or wristlet. I do not think there is very much in the business of selling finds between 48 hours and a perhaps more suitable time of 7 days. It seems too much fair-weather archaeology to me. The rescue archaeologists who work in rain and snow on motorways, and those kinds of projects, probably do not have time to see what they have found.
A few weeks ago, working on the site at home, a small coin came up. I had no idea whether it was gold, silver or bronze; nor did I care. All I wanted to know was whose head was on it, which I could not see. I put the coin in cotton wool, left it for a week and I then gave it to an expert who could preserve it and tell me what it was. It turned out to be fourth century. Everything else he had been digging was first and second century. So it was immediately an extremely interesting piece.
On another field, if there had been a metal detector the person going down would have found a small broken bronze brooch—not very valuable in itself. They would have taken that brooch. They would have left above it a tiny rim of pottery which would have been thrown away. I picked that up and took it. That was fourth century. It was a double proof that there was a fourth century presence in what had otherwise been entirely first and second century.
I wish there could be something to preserve the stones from stone circles which are still buried and therefore not put down as proper sites. Some of your Puritan ancestors, my Lords, destroyed all the stone circles, whereas some of my Catholic ancestors Christianised them and put their churches on what was already holy ground. I do not know how we can do this, because some of those stones are still buried and still to be found and are not yet protected by this Bill. What is so good to see is that other burials—true burials and cremation burials—are dealt with by this Bill. Therefore, my Lords, having spoken for long enough, I fully support this Bill.
4.18 p.m.
Lord Fletcher: My Lords, I wish to intervene only very briefly. My excuse for doing so is this: I was a trustee of the British Museum at the time when the earlier Bill was being debated in 1974 and 1975. Therefore I had something to do with that Bill in my capacity as a trustee. As the noble Lord, Lord Windlesham, has said, that Bill did not meet with the approval of the trustees. On the other hand, this

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present Bill, which I consider a great improvement on the earlier Bill, has the blessing of the trustees from the British Museum—perhaps with one or two minor reservations.
I welcome the Bill and I hope that this House will give a Second Reading. I would, however, observe—as I observed when the earlier Bill was under consideration by the archaeological authorities and Government—that this is a highly difficult subject for legislation. It is always difficult to put into a statute modifications of a law which has hitherto resided in that branch of the law known as the common law. I do not want to weary the House, but I hope that the Minister or his advisers, in considering the draft of the Bill, will bear in mind that in my view, and in the view of those who were concerned in 1974, it seems to call for certain improvements in draftsmanship. I would ask the Minister, who presumably will be speaking for the Home Office and taking the advice of the legal advisers to the Home Office, to refer to a memorandum which I submitted to the Treasury solicitors in 1974 and which was answered by a detailed letter, dated 20th December 1974, sent to me by the then Treasury solicitor, my friend Sir Henry Ware. If the Minister has not had it or wishes to see it, I should be happy to send him a copy of it.
It seems to me that among minor points of draftsmanship that require consideration, perhaps the first is that there is no definition of "treasure trove" in this Bill. There have been attempted definitions in the judicial pronouncements over the centuries but none of them is authentic and I am not sure that any of them is satisfactory. To take one small point, it is assumed, and I assume, that treasure trove applies only to hoards. That may or may not be correct, but I think it is a reasonable assumption that it does not apply to isolated finds of the kind to which the noble Viscount who has just spoken referred. Maybe it ought to do so, maybe not; but it is a matter that requires definition, for, obviously, this Bill affects the finders (whether legitimate finders or not) of isolated objects.
Several noble Lords and, particularly, the noble Baroness, Lady Birk, have referred to the fact that we should not have had the benefit of exhibiting the treasures found at Sutton Hoo if it were not for the fact that the owner of the land, Mrs. Pretty, by her very generous and public-spirited gesture, gave up any rights that she had to the property—the coroner had found that it was not treasure trove—and allowed the British Museum to acquire it. I think that, as the noble Baroness said, that is perhaps a glaring case of the anachronistic nature of the present law as to treasure trove. It is an undoubted fact that it would be of the greatest benefit to archaeology if the present law was improved, either by passing this Bill as it stands or with such amendments as your Lordships' House and the Government think necessary.
However, I do not think that it is entirely true to say that treasure trove, as it has been administered over the centuries, has been a failure. It is easy to point to the Sutton Hoo decision as an extreme case; but there have been numerous cases the other way. Perhaps one of the most important of recent years was the coroner's finding about the very important hoard found at Water Newton, which consisted of a most valuable collection of silver objects inscribed with
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Christian monograms. I should have thought that that find, declared by the coroner to be treasure trove, was, historically, if not from the archaeological point of view, at least as important as the Sutton Hoo find.
My Lords, I do not want to pursue this. We do not know what the Minister will say. I hope that the House will give a Second Reading to the Bill, and that the Government will listen to what has been said on both sides and consider what improvements can be made in the Bill to enable it to have a speedy passage.
4.23 p.m.
Lord Elwyn-Jones: My Lords. I apologise for not putting down my name on the list of speakers. I was engaged in business, if not of the House, of the Privy Council at the beginning of the debate. This has been a debate in support of a Bill which has had overwhelming backing not only unanimously so far from this House but from the great institutions, the great bearers of our national heritage, who are supporting it: the Council for British Archaeology, the Royal Commission on Ancient Monuments and the great museums, the British Museum, and last, but not least, the National Museum of Wales. I have a feeling that if the Minister the noble Earl, Lord Avon, had his own way he, too, would give it his enthusiastic support.
It may be that he will do so; it may be that a number of points will arise. So far in this debate, nothing of substance has been brought forward, but a number of Committee points have been brought forward and this House is well qualified to deal with such matters when they come. In principle, I submit that this Bill ought to be supported. As a matter of law, it is supported. It is common ground that the present state of the law is an anachronism and in some respects—I hate to admit this—the law in this field is "a ass "; and this is an unacceptable position for this House to have to contemplate. I hope therefore that we shall receive from the noble Earl a fair wind for the further progress of this Bill.
4.26 p.m.
The Earl of Avon: My Lords, I thought that there was 100 per cent. support for this Bill before the noble and learned Lord got to his feet. It must now be 110 per cent. in favour. It has been a worthwhile discussion this afternoon, with a number of fascinating vignettes thrown in. I am grateful to my noble friend Lord Abinger for his lucid introduction. The noble Lord must be happy both for the interest that has been shown and also the support this afternoon. It is now for me to make some comments on behalf of the Government.
In England and Wales, this Bill would make a fundamental change in the laws of property and in citizens' rights of ownership. The general rule is that the owner of land is entitled to any object, not the property of any known person, which is found under, or attached to, his land. The entitlement of the Crown under the law of treasure trove to finds of gold or silver is an exception to that rule. The Bill would now entitle the Crown, in addition, to finds of objects made of alloys of those metals not currently regarded as treasure trove and objects lying within or adjacent to treasure trove. The Crown would also be entitled to such additional classes of objects as the Secretary of

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State might later specify by order. I understand that promoters of the Bill have in mind that such an order might specify that treasure trove was to include, for example, all coins found in the ground, regardless of their composition or all such coins more than x years old.
The Bill itself would widen the circumstances in which the owner of land did not own the finds on his property; and those circumstances could subsequently be widened again by order. If the Bill is to secure its objective of getting more finds recorded and available for skilled investigation and display, then it needs to command the support of the people affected. We should not disguise the fact that the Bill proposes a curtailing of centuries-old rights of ownership. I am sure it is wise to acknowledge this fully and openly.
On the other hand, no one claims perfection for the present arrangements. When a find is made, its historical and archaeological value may owe as much to the juxtaposition of items as to their individual qualities. It may make no sense to treat part of the find in one way, and part in another, and, indeed, splitting it up for that purpose may greatly diminish its historical value. The Bill's proposals address this problem. It is a moot point whether solutions should be sought to specific and limited problems by changes to ancient and fundamental rights; but, in the absence of other legislation on antiquities as such, perhaps this is the only way to go about it.
The noble Baroness, Lady Birk, has rightly mentioned the deep thought that was given in 1979 both to possibilities of improving the arrangements for the reporting of finds and to problems about metal detectors. The 1979 Ancient Monuments and Archaeological Areas Act, newly brought into force last October, now makes it an offence to use a metal detector at the site of a scheduled monument or at the site of a monument in the care of the Secretary of State or the local authority without first obtaining prior permission of the Secretary of State. His permission is also required to remove any finds from these sites, and therefore I suggest that sites of national importance are already protected. This Bill would go very much further and would affect all land in England and Wales.
There are a number of specific points that I wanted to make about the Bill's provisions, some of which have already been mentioned. First, it seems clear that the Bill's intention is to leave unchanged the coroner's functions of inquiring into treasure trove and simply change the definition, since the Bill is silent about the matter. If the Bill is meant to change the coroner's functions, it does not in fact do so.
Secondly, I should like to draw attention to Clause 1(2)(c) where the word "contained "has caused some slight confusion. At first glance it can appear to have something to do with the container in which an object is found. For clarity, I would suggest finding a different expression.
Thirdly, the Bill as now drafted would make offenders of a great many people whose activities are entirely proper. Under the provisions of Clause 3, anybody who finds an object as defined and fails to report it, is guilty. He does not have to take it out of the ground—indeed the same clause tells him not to—but it seems
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that if anybody incidentally uncovers such an object and then covers it up and goes away, he is guilty. The ploughman is guilty if he finds a lump of metal and, not recognising its antiquity, throws it aside and goes on ploughing.
Fourthly, most archaeological finds are made during authorised excavations, which are usually supported by public funds and fully recorded. Clause 3 of this Bill would mean that a trained archaeologist on a dig, perhaps in some remote spot, must go at least every two days to a police station to report all the metallic finds, but he must not lift them meanwhile. I say "all the metallic finds" because it could be impossible to tell the precise composition without prior detailed examination. What the Bill seems to need, to make Clause 3 workable, is wording to allow a defence of reasonable excuse for not complying.
Finally the wording ought to take account of such practicalities as who is supposed to do what, after a find has been reported. I can see that more precise wording might be difficult to frame without leaving loopholes for the unscrupulous—I think I have the noble and learned Lord's agreement—but I am sure that Clause 3 is partly too sweeping and partly too vague to serve as it stands. However, if the House wishes to give the Bill a Second Reading, these are matters which can be ironed out in Committee.
The Government will consider with care what has been said this afternoon. There have been some interesting suggestions from the noble Baroness, Lady Birk, for example, about the reward for landowners and also from the noble Lord, Lord Adeane, about recordings. We shall also have regard to the weight of opinion—and on this, of course, we heard from my noble friend Lord Windlesham, with the support of the British Museum, and from the noble Baroness, Lady White, for the Principality. For the present we do not wish to hinder the Second Reading. The subject involves complicated and difficult considerations, many of them legal, as this afternoon's debate has underlined, and particularly the remarks of the noble Lord, Lord Fletcher, which I much appreciated. I shall certainly look at his letter of 1974. I may say I have been advised by a number of legal departments, but so far on this Bill not the one he mentioned. Having said that, may I say to my noble friend Lord Abinger that the Government, for the time being, wish to keep an open mind on this Bill.
Lord Abinger: My Lords, I am, of course, very glad that this Bill seems to have had a generally sympathetic reception and I should like to thank all the speakers who have taken part in this debate. They have made some very good points which, if the Bill goes forward, we could possibly deal with at a later stage.
I confess to being a little disappointed by the reply of the noble Earl, Lord Avon. One point I think he tries to make is that there is some fundamental change involved in the law of property if objects found become, as this Bill proposes, a wider range of objects. But the principle is already established, surely. We have treasure trove now.
There are other things as well. I am not completely familiar with the law on these matters, but I think I am right in saying that mineral rights do not belong to the landowner, and I am absolutely certain that if you are

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lucky enough to find oil on your land you will not be able to keep it. Also there is the position about ancient monuments, some of which are not relics but are in use. They have this protection, and I would not myself accept that any fundamental change is being proposed. May I say also that I am a farmer and have had a chance to discuss this Bill with my colleagues. I have never myself met a landowner or farmer who takes a narrow, proprietorial interest in antiquities found on his land. There may be some who do but, if so, I think they are wrong to claim proprietorship of part of the national heritage.
Having said that, I would contend that anything I say is really of little importance. The House should take note of what was said by the noble Lord, Lord Windlesham, expressing the view of the British Museum and also of the noble Baroness, Lady White, expressing the view of the National Museum of Wales. They should also heed the noble Lord, Lord Fletcher, who is in fact an ex-trustee of the British Museum and has a great record of service to British archaeology. My noble friend Lord Monckton of Brenchley was a little modest in saying that he spoke for himself, because in fact he is very active in archaeological circles in Kent and may be able to speak for others at least in that part of the country.
As with all private Member's Bills, there is tremendous scope for improving this one. I take note of the comments that have been made and I would thank all the speakers for the valuable comments they have made. The noble Baroness, Lady Birk, made a very wide-ranging and helpful speech, and I have made a note of her points. I would now ask the House to give the Bill a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

ECC 4th Report: Annual Accounts of Banks
4.39 p.m.
Lord Plowden Lord Plowden rose to move, That this House takes note of the Report of the European Communities Committee on Annual Accounts of Banks (4th Report, 1981–82, H.L. 42).
The noble Lord said: My Lords, perhaps it would be useful if I could first say something about the draft directive with which our report deals. The origins of the draft directive on the annual accounts of banks and other financial institutions lie in an earlier directive, the fourth company law directive: that is one of a series of directives aimed at harmonising company law throughout the Community. Its purpose was to provide a common lay-out for balance sheets and profit and loss accounts and to set out the rules for the way in which the various items in them are to be valued. It was adopted by the Council of Ministers in 1977 and is being implemented in the United Kingdom by the Companies Act 1981, although the relevant part of that Act has not yet been brought into force. Its effect in this country will be to introduce a greater degree of standardisation into company accounts. It will mean more disclosure in some respects, but it will not bring any fundamental change.
The need for a directive on the annual accounts of banks arises from the fact that there is a gap in the coverage of the fourth directive. Member states have been allowed to exempt banks and other financial institutions from its requirements. This gap was left because of the obvious difficulty of forcing the accounts of financial institutions into the same mould as those of industrial companies. In taking advantage of this exemption, the Companies Act 1981 does not apply the new fourth directive accounting rules to institutions coming under the Banking Act—that is, recognised banks and licensed deposit-takers or, for that matter, insurance companies—all of which, for the time being, continue to prepare their accounts as before. The present draft directive is designed to fill the gap, so far as banks and similar institutions a r e concerned, and in due course there undoubtedly will be a draft directive dealing with the accounts of insurance companies.
The fourth directive and the present draft directive deal only with the accounts of single companies or single banks. They are not concerned with the consolidated accounts of groups of companies, parent and subsidiaries, for which separate directives will be needed. The draft seventh directive, on the consolidated accounts of companies generally, has now reached an advanced stage in Brussels and a draft directive dealing specifically with the group accounts of banks has not yet appeared.
From what I have said so far, noble Lords could be forgiven for supposing that we are concerned with a purely technical measure, dealing with obscure and arcane matters of interest to few outside the ranks of the accountancy profession. But, in fact, this is not so. In drawing up the draft directive, the Commission has departed in several respects from the policy adopted in the fourth directive. One of these—undisclosed reserves—has been the subject of lively controversy, and it is in the confident expectation that many noble Lords with expertise in banking and financial matters will be able to throw light on this question that I am taking up the time of the House.
I propose to outline the main respects in which the draft directive's approach departs from that of the fourth directive, and to indicate the view which the Committee took in each case. I shall deal with the first three briefly and save up the most difficult till the end. Whereas the fourth directive was concerned solely with limited companies, the draft directive would apply not just to banks which are limited companies, but also to banks with other forms of organisation. Banking is an industry in which mutual and co-operative societies of various kinds are flourishing, and in this country the building societies and the Trustee Savings Banks both represent an important segment of the market.
The article of the draft directive which sets out its proposed scope is expressed in terms of the utmost obscurity, and it is not at all certain which institutions would be covered. But it is likely that building societies and Trustee Savings Banks would be covered and the committee, in considering this, thought it to be wise. There is much to be said for having a common accounting framework for all the main types of institutions which take deposits from the public. The committee also had to consider other equally obscure provisions in the draft directive, which would extend its scope to certain bodies which did not take deposits

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from the public. This was a point on which conflicting evidence was taken and was given. I shall not go into the details, but will simply say that, on balance, the committee felt that it would be altogether much tidier if only deposit-takers were covered.
The second notable departure from the fourth directive is the absence of any exemptions for smaller institutions. The committee agreed with the Commission that bodies which take deposits from the public should be prepared to provide full information, however small they are. The third difference, to which I wish to direct your Lordships' attention, is the greater degree of rigidity which characterises the proposed layout of a bank's financial status. In the fourth directive, these companies have a degree of choice as to how they present the detailed information in their accounts. But the draft directive would place banks in a much tighter strait-jacket, by removing much of the flexibility that was built into the fourth directive.
The Commission seems to have taken the view that one bank is much like another and that there is, therefore, no need for flexibility. This seemed to the committee to be a mistake. The discount houses are an example of a class of bank that is quite different from other banks. Quite apart from the diversity among banks themselves, there is a great diversity in the way that different money markets function; not just the domestic money markets of the various member states, but also the Euro-currency market and the markets in third countries. In the view of the committee, this makes it impossible to lay down standardised definitions and to prescribe categories of balance sheet items without producing misleading results.
The most important respect in which the draft parts company from the fourth directive is in its failure to uphold the principle of true and fair viewing, which noble Lords will recall is the cornerstone of the fourth directive. Since the draft contains a provision which would allow banks to create secret reserves, and to disguise their true profits by making secret transfers to and from those secret reserves, it must be obvious that accounts produced under the draft directive's rules could not be regarded as true and fair within that definition.
In deciding to go down this path, the Commission were no doubt fortified by the knowledge that banks are, in fact, allowed to have undisclosed reserves of one form or another in nearly all countries of the Community, including, of course, the United Kingdom—the cradle of the true and fair view. Nevertheless, it seems to the committee that this was a matter which needed to be looked at afresh, especially since it has been the subject of controversy or discussion—at least, in this country, for a number of years. There is something decidedly odd about a bank directive which aims to harmonise bank accounting throughout the Community, presumably in order to help people to compare one bank with another, but which denies to users of accounts the very information that they most need to know in order to do this.
It was because the true and fair view seemed to us to be desirable, at the very least, in its own right and especially in the context of comparing one set of accounts with another that the committee adopted as its starting point the proposition that it was for
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the advocates of undisclosed reserves to make out the case for them. The burden of proof, we felt, rested on the draft directive's defenders, not on its critics. I believe that the noble Lord, Lord Benson, will later in this debate say something about the history of undisclosed reserves in this country. The banks, still making use of their exemptions to use undisclosed reserves, comprise chiefly the accepting houses and the discount houses. Both groups want to retain their exemptions. The committee examined with care their arguments for doing so.
There are three main lines of argument in favour of allowing undisclosed reserves. The first is that the profits of banks, especially of small banks and specialised banks, can—and do—fluctuate erratically from year to year. The profits of any one year can be heavily influenced by the arbitrary incidence of the accounting date in relation to the timing of external events such as a rise in interest rates in the case of a discount house. As a result, it is said that fully disclosed profits could be misleading. But this is equally true of other businesses, besides banks. Moreover, it is always open to a company to provide further information to explain fluctuations in profits and otherwise to assist people in interpreting the figures.
The second line of argument rests on the view that disclosure of true results can jeopardise the confidence of depositors—not just depositors in the bank which discloses but possibly in others, too. The Jenkins Committee described this risk as remote. The committee were told that in present day financial markets it is very remote indeed. Not only are markets better informed and less likely to be seized by panic at the appearance of bad news but it is very doubtful whether in a real crisis the ability to conceal the truth can be effective in allaying anxieties. Surely the best way of stopping damaging rumours is often to be open and to give the facts.
The third line of argument is concerned with competitive equality between different types of bank. It can be argued that full disclosure might make it harder for accepting houses to attract business and that this would place them at an unfair disadvantage when competing with banks elsewhere in the world that still maintain undisclosed reserves. On the other hand, not only the clearing banks but also the American banks, who are the leading force in the international banking markets, disclose fully. It has been suggested that full disclosure would place small banks at an unfair disadvantage relative to large ones. This does deserve consideration, but smallness and flexibility is often a great advantage in dealing with massive and often slow-moving institutions. But in view of the many weighty objections to undisclosed reserves, smallness seems a doubtful reason for allowing them to remain. In short, the committee were not convinced by the arguments in favour of undisclosed reserves and came to the conclusion that they should not be permitted.
I look forward to listening to your Lordships' views on this, in particular those of the noble Earl, Lord Airlie, and the noble Viscount, Lord Chandos, who are both making their maiden speeches and who occupy such prominent positions in different parts of the City of London. I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on Annual

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Accounts of Banks (4th Report, 1981–1982, H.L. 42)—(Lord Plowden.)
4.55 p.m.
Lord Lever of Manchester: My Lords, I am sure that we are all deeply grateful to the noble Lord, Lord Plowden, and his committee for the careful consideration they have given to the problems which will arise in considering the new proposed directive.
May I begin on a rather abrasive note? I cannot help lamenting that the Commission so often gives pleasure to its antagonists when directing its mind, or that of its highly erudite and intelligent agencies, to very important areas by focusing on the marginal problems of that area rather than on its fundamental problems. It seems to me rather odd at the present time, when we ought all to be very much more concerned and more knowledgeable than we have been in the past about the structure, management and approach of our great banks, that we are now focusing the attention of the Commission, and in our own case the attention of one of the weightiest and most knowledgeable committees that the House enjoys, on the question of the undisclosed reserve problem, which has been with us for some time. I will give the House my views on that question, but it is right that I should utter a word of anxiety that, to use a phrase for which I cannot claim copyright as it is not possible to copyright it, people with great responsibilities, when faced with hard problems, have the unfortunate and damaging reflex, instead of focusing on the centre of those problems, of tending to frolic on the margin. I must say that for so much brain power, wisdom and experience to be focused on the margin of the European banking problem, as it has been in this committee, seems to me to be a great waste.
I should have liked our select committee to have had the opportunity, for example, to consider the way in which banks lend money to sovereign states, which may be of considerably more importance to their solvency and their ability to meet their liquidity. I am not criticising the committee, I hasten to say, because that was not their mandate, but I should very much like the Commission, and hence our own appropriate bodies, to consider some of the dangerous situations which arise from the vast lendings—unstructured, unsupervised, uncontrolled and largely unknown as to extent—that are going on at the present time from our great banks in an outflow of their funds in all sorts of directions from Poland to Chile, Brazil, Zambia, Zaire and the like. These matters, which are far more relevant to the necessity for maintaining a European banking structure of solid reliability, ought to have priority over the issues that we are discussing today. Important though the latter are from an administrative point of view, they are not of any great urgency. It seems to me that we must not allow the commission to get into the habit of putting last things first and ignoring first things altogether in matters of this gravity.
Turning to the report, at first sight it must be very easy to obtain unanimous assent for the idea that every company in every circumstance should present a true and fair report of its trading and activities. I think nobody would cavil at that proposition as a general one. When we come to real life, we find that in
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practice it is not always possible to achieve this desirable objective, or to place a formal legal obligation on companies to achieve it in a meaningful way. For example, I think we should have to have detailed disclosure of all property assets of all companies, and a fairly continuous revaluation of them, if we are to decide on how much capital is being employed in the company, and I think it is absolutely right that stocks, for example, of a trading company, or a finance company which has its own stocks, should be stated on the basis of cost or market price, whichever is less. But when it comes to assessing the market price there is no means by way of statute that can produce a result which guarantees either to a potential creditor or to a shareholder that he is adequately informed as to what has happened to the company.
Take the case of a company which is rather different from, say, a discount house. A discount house's stock is gilt-edged stock and bills it has discounted and advances it has made. There it would not be easy for them—especially, for example, in the case of gilt-edged holdings—not to disclose exactly what the market price was. It is not a matter of taking a kindly view of the market price; it is there in the daily papers every day, very precisely. But, if it is a leather company or a textile company, it may have millions of pounds of stock at cost, may be much of it left over from years gone by; it is in the happy position that it can, if it wishes, take an optimistic, or an over-optimistic, view of the likely realisation. I am not suggesting that directors, if they have a balance against them, take an over-optimistic view; they have a duty and a reputation for integrity which they have to preserve. The same goes for debts, incidentally. A judgment on the value of debts and what provision has to be made for debts is always, again, subject to optimism—deliberate optimism sometimes, and deliberate pessimism sometimes, though deliberate pessimism, to be effective fiscally, requires the rather difficult task of persuading the Inland Revenue to share that deliberate pessimism, and they want a certain caution, but it does not stop a company from achieving this. So let us not start this with an artificially naïve assumption that every company actually can or does succeed in achieving the absolutely sensible, honourable, desirable objective of a true and fair view of the accounts.
Against that background, I look at the question of the argument for banks achieving undisclosed reserves. For quite a long time—here the noble Lord, Lord Benson, will probably assist—the great banks in this country used to join with the small banks in asserting that their depositors would have a fit of great nervousness if they were to learn the true accounts, day to day, year to year, unadjusted by the movement of concealed reserves. Eventually, the laughable nature of that argument, I assume, made the great banks voluntarily offer to abandon secret reserves. Nobody can suppose that Barclays or Nat West, or any of our great banks, are in a tremor of trepidation every annual account about their deposits being moved if their accounts show truly what the profits are. Although, again, I must make the reservation that truth is not an easy objective to achieve in these matters, in the sense that there are various versions of the truth that can be properly held by honourable men facing very complex accounts which have to be valued.

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Still, the great banks seem to have survived, without undue injury to their depositors' confidence, the abandonment of secret reserves. Why do the smaller banks require it? I can see that it is embarrassing to a bank, or to anybody, to show that he has had a bad loss during the year. I can see that, in the case of quoted companies, it could call upon the heads of directors a certain amount of critical comment about how they perform, and, very often, unfair comment. Nevertheless, I think that, in order to claim that you should have an undisclosed body of cash to modify the results, you need a very substantial argument for doing so. The only argument that I know of is that depositors would be alarmed if they saw the true position.
It raises two questions. First, anxiety is proper in certain circumstances and eliminating it by adjusting your profits out of concealed reserves may be unfair to a man who ought to feel anxious. I really do not know that as an abstract principle the case has been made in any way for making this provision for secret reserves in the case of bankers on the ground that depositors would be worried. It may be that they ought to be worried in certain circumstances. It may be that they will learn that fluctuations in banking profits, especially in discount houses and acceptance houses, is a normal matter. I know that noble Lords who are very knowledgeable about discount houses and acceptance houses will tell me of all the agonies of revealing year by year what has happened. I can see that it is much more agreeable for them not to have to reveal it. But I cannot see, and I have not heard, the case which makes me see the justification for discount houses and acceptance houses enjoying the privilege of distorting—I am not using this word offensively; adjusting, if you like—favourably, one year's profits by using, unknown to the shareholders, unknown to the creditors, unknown to the public, profits which have been put by secretly in years gone by.
And I can see, quite apart from the general merits, some very serious objections to this. First, shareholders are entitled to look at the balance sheet in order to assess the performance by the directors in the handling of their assets. Let us take the recent period. The gilt edged market has recently moved into a kind of frenetic condition which was never known before. It is very proper that shareholders should wish to know, or potential investors in the company should wish to know, whether their management has adapted shrewdly, wisely, cautiously, or, if you like, adventurously, to the new frenetic conditions of the gilt edged market. If the company had huge secret reserves, the company could have reacted in the most reckless, foolish, ill-considered way, and could appear to have improved their performance, compared with their rivals, who have apparently performed worse, but in reality, better. I cannot see that that can be a desirable state of affairs.
There is something else that troubles me. Directors, in my opinion, ought to be welcomed as shareholders in their companies. There is nothing more in accord with the enterprising spirit than that a man puts his money where his work is—in the case of banks, in his own bank—to some extent, and he must judge the extent. It seems to me that if you have provision for undisclosed reserves you are going to place directors of
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smaller banking companies quoted on the stock exchange in a very ambiguous position of difficulty in investing in their own company or divesting the shares in the company. When he goes to buy the shares, however much subject to regulations about directors buying shares and disclosing shares, he is buying with greater knowledge than the man in the street has, or than the man selling the shares has. I may hold discount market shares and I may be bid a larger price than usual, and I may part with the shares, not realising that it is a director of the company who has bought them, and, of course, not realising what is the amount of the secret reserves and assets in the company, which again may very much affect the judgment of a share-holder in parting with shares or buying shares. Secret reserves, by adjusting the profits within a very wide range according to the size of the reserves, may give the impression that the company is performing well when it is performing badly. Secret reserves may equally give the impression—I see that the noble Lord says that I am wrong; if he cares to correct me I shall gladly give him the opportunity of doing so—that the company is doing well, relatively speaking, when it is doing badly. Secret reserves may give the impression that the company is doing nothing particularly well when in reality it may be enjoying a bonanza. For all those reasons—
The Earl of Limerick: My Lords, I wonder whether the noble Lord would be kind enough to allow me to comment on that point because it is rather fundamental? There are strong accounting conventions which are enforced by the auditing profession which would prevent the thing which the noble Lord, Lord Lever of Manchester, has premised—that is, that the disclosed results of one of the banks which is subject to the Schedule 8 exemptions would not run counter to the trend of profits. In a year in which they had actually done worse they would never disclose a higher result or vice versa. This would have the effect of smoothing, but not of reversing the trend.
Lord Lever of Manchester: My Lords, I am sorry if I did not make myself plain in detail. In a year in which banking profits have gone up by the discount market—normally by, say, 15 or 20 per cent.—if I am a discount house and have large secret reserves there is nothing whatever to show, by taking a lesser amount than I have done in previous years to the secret reserves, that this year I have made 30 per cent. Nobody could complain. I have made 30 per cent. The only difference is that I have not added my usual substantial wad to secret reserves, but a very much lesser sum. So the impression that those figures will give will be that I have made an outstanding profit in the discount market. In reality, because I have denied myself the usual £3 million to secret reserves and only placed £¼ million—no accountant or auditor would object to it if I reduced that amount because my secret reserves are ample by this time—I give the impression of having out-performed everybody on the discount market. When I made the point I think I did add, "relative to other people". When you have done badly relative to other people, when you are making only a 5 per cent. increase in your profits whereas the generality are making 20 per cent., you could shows

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yourself well in the van by simply reducing the amount from your secret reserves or contributing something from your secret reserves.
Having said all that, I still am in very grave doubt as to whether this is a proper matter for the European Commission to legislate on and I take that view for the following reason. The great objection I have is that directors have an embarrassment in dealing in their company shares because they have a higher stake of information than the market, than the man in the street. Nevertheless, the shareholders of the company can themselves, to some extent, modify this. It is not a great and urgent matter. But I, therefore, wish to raise a doubt as to whether the long-established practices of the City in this area should be overridden by the Commission. I am quite sure that if they are to be overridden then they have to be overridden by a different directive from the one proposed. The proposed directive proposes to allow secret reserves but in a manner more usually present on the Continent than in this country and different from the one which by long tradition has been maintained here and without, so far as I know, the monitoring supervision of the Bank of England which takes place here.
So, although I see no case in principle for secret reserves, if the House were debating whether we ought, as a matter of national legislation, to modify or remove secret reserve provision for the discount houses, as at present minded I would vote for the abolition of this right to secret reserves and the right to adjust profits by the use of the secret reserves. However, we are not giving that examination. We are not likely here to go into the detail into which we would go with national legislation. I know of no reason for harmonising this matter at present and I know of no reason why, if there are to be these provisions, they should be harmonious throughout the Community in regard to reserves. I must confess that If would any day prefer the existing secret reserves, which I do not support, but monitored by the Bank of England—and it is a very restricted number of companies who are entitled to keep them—to the general provision proposed which allows people to create a secret reserve in the manner suggested in the draft directive.
I should like to make one or two small points in addition. I am not sure that the proposed directive is wrong in demanding the accounts of branch banks. I think that there is a difference between asking Barclays to produce a branch account for its local branch in Manchester or Liverpool and asking a foreign bank to come to a foreign land to produce branch accounts. I must say that I am not necessarily persuaded that that should be abandoned in favour of forcing the bank to reveal a balance sheet—which they have to reveal anyway, I would hope, before they are allowed to trade continuously to the public—perhaps stated in currencies which are not understood and the assets of which are not checkable in Europe itself.
As to the other matters recommended by the Committee, I have no hesitation in giving them my full support and I must say that I would agree with their judgment if we were discussing an Act of Parliament that the whole case for secret reserves on discount houses and accepting houses should be reviewed. I do not think that this is a matter which should be changed in the way proposed and I am not at all
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sure that it is necessary to change it by Community legislation.
5.18 p.m.
The Earl of Airlie: My Lords, I have to confess to having some sense of guilt because this is the first occasion on which I have spoken in your Lordships' House. As some of your Lordships will know, I have had the option to do so for a little time now. I am not sure, therefore, whether I have the right to ask for your Lordships' indulgence, but, nevertheless, I would like if I may to do so.
I am anxious to participate in this debate on the Select Committee's report on bank disclosure, and I would like to speak in my capacity as chairman of one of the accepting houses in the City of London. I would like to confine my remarks to the effects that the recommendations of the Select Committee would have on that body. I am very conscious that the Members of the Select Committee are very distinguished Members of your Lordships' House. I fully appreciate that they have a very great knowledge and experience on the subject which they have been studying. It is, therefore, with some degree of hesitancy that I would like to take issue with them.
But I am bound to say that I am not a little concerned about their recommendation that accepting houses should not be permitted to maintain undisclosed reserves. I do not think that sufficient attention, or perhaps weight, has been given to the special circumstances of accepting houses and the need to be prepared to deal with them or to treat with them differently, because I believe that they are different from the clearing banks.
The differences are quite material. Merchant banks, as they are very often known, are basically wholesale banking businesses. They are not large retail banks with many branches throughout the world. As such, they have a very much smaller capital base and, as a result of this, deposits, of course, are not so widely spread. Likewise, the loans that they make are primarily made to corporate bodies and they tend to lend, in quite large figures, related to their capital base. So the loan-loss provisions can have greater impact than is the case with the clearers.
Of course, over and above that there is the whole field of investment banking—to use American terminology—which is a very important part of an accepting house's business. It covers a whole range of activities which include underwriting of both domestic and foreign securities and, of course, portfolio investments. The point I am trying to emphasise is that the nature of a merchant bank's business is such that it is less predictable—if I can put it that way—than that of a clearing bank.
As a result, independent merchant banks have to manage—and I think do manage—and conduct their business as prudently as possible. As part of that posture I, for my part, think that it is just sensible, prudent and wise to be allowed to smooth the peaks and the troughs in profits when it is thought appropriate. The case for prudential reserves has been made by the Accepting Houses' Committee in a memorandum which it submitted to your Lordships' Select Committee. Here and now I should like to say that, of course, I

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support the contents of that memorandum and its recommendations.
However, perhaps I could demonstrate my concern by asking your Lordships for one moment to assume that the Select Committee's recommendation has become effective. Let us also assume for one moment that some economic or financial crisis has developed. Let us make that assumption. In those circumstances an accepting house would, of course, be faced with making certain provisions, and these would have to be made at their year end, which, of course, I would emphasise is an entirely arbitrary date. In most instances these provisions would be purely subjective decisions—they would be purely a matter of judgment. They would, of course, include the need to provide for bad debts, but, under this proposal, these would no longer be allowed to be averaged over five years, which is an important point.
There could also, of course, be certain provisions which are required to be made in respect of their investment portfolios or any outstanding underwriting positions. The decline in profits in that year would, of course, in this example be fully disclosed. But it may very well be that in the following year the economic and financial tide has totally changed, and we shall then find that there is a need for writebacks, and a great increase in profits would then be shown in that year. I would suggest to your Lordships that it would be much better to have been in a position to smooth the accounts over that period, thereby, in my personal opinion, presenting what I would regard as a truer and fairer picture of the bank's position and condition.
In fact, I shall be surprised if the continental banks will readily agree to the Select Committee's recommendations. However, I should very much hope that, if foreign banks are allowed to continue to maintain prudential reserves, no unilateral decision would be made by the United Kingdom.
Lord Lever of Manchester: My Lords, it is not prudential.
Noble Lords: Order, order!
The Earl of Airlie: My Lords, I think that this really would put the accepting houses at a competitive disadvantage with foreign banks. I am fully aware that intellectually a case can, of course, be made for full disclosure and I understand the arguments and appreciate them. Indeed, they have been very ably made by accountants, journalists and stockbrokers who gave evidence to the Select Committee. But my belief is that you would expect that from them. That has to be their professional approach.
But I want to emphasise that we are dealing with sensitive and entrepreneurial institutions which, I think it is fair to say, have been in the forefront of the development of the City of London as a major international financial centre. I believe that if they are no longer permitted to maintain prudential reserves, not only will they be put at a competitive disadvantage with the bigger banks, but in my judgment will become, somehow or other, just less enterprising, that much less aggressive and, therefore, less successful in the market place.
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I think that they could probably be less willing to risk supporting industry, particularly in the areas where the Government are so anxious to gain support. I do not think that this is the outcome which your Lordships seek. I ask whether it is worth running these risks. I, personally, do not believe so. So I should like to recommend, the adoption by the Commission of our existing practice—which has been well tried—of presenting our accounts. But on the basis that a non-United Kingdom system is to be adopted, I would recommend that Article 37 of the directive be retained, but that it would have to be amended as proposed by the accepting houses in their submission to your Lordships' Select Committee.
5.28 p.m.
Lord Benson: My Lords, I should like to congratulate the noble Earl, Lord Airlie, on his maiden speech. I do not often disagree with him, either in the City or in other spheres, and I have some reservations about what he has said to this House today, but the clarity, lucidity and, indeed, the gentleness with which he has expressed his views commend them to everybody in this House.
I should like to support the noble Lord, Lord Plowden, in moving the reception of this report. I believe that the whole substance of it rests on this one single point of secret reserves, and I shall address my remarks only to that point. In 1948 a new era occurred in the history of financial administration in the United Kingdom when the Companies Act 1948 was passed. That required all companies—but banks were exempted—to show their true profits and losses, and did away with the practice, which previously existed, of having secret reserves. The words "true" and "fair" were invented; they were enshrined in the Act, and they have been used in every auditors' report since that time.
In 1978 the fourth directive was issued. That applied to all companies, excluding banks, but in that fourth directive the words "the principle of true and fair" were enshrined, and a great deal of credit rests on the accountancy profession in this country, and a great many others who have helped them, who were able to persuade our colleagues in Europe to follow that principle.
The position as regards banks is different. In 1948, when the Companies Act was passed, it was then the view, now generally believed to be mistaken, that it was necessary for the creditworthiness and the stability of banks that they should be allowed to maintain secret reserves. Since 1948 thought and sentiment have changed. It is now generally the view—and I shall explain why in a minute—that all banks should be required in future to show their true profits and losses and not to conceal them by transfers through secret reserves.
The reason why I say that this view is generally held is this: it is the view of the accountancy profession worldwide. In this country it is the considered view of the clearing banks. It would be welcomed by the stock exchange. The financial analysts who speak on behalf of shareholders and investors strongly support that this exemption should no longer exist. Your Lordships might therefore feel that the report is pushing at an open door, but this is not so. There

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is a pocket of resistance and, as has been pointed out, the 16 accepting houses and the 12 discount houses in the country have made representations that the exemption should continue.
Your Lordships' committee, which includes in its number many eminent bankers and industrialists, did not feel that there was much merit in their proposal. Indeed, their case has been gravely weakened because it is common knowledge that they are divided among themselves and are by no means unanimous on this issue. What is important is that we should isolate the precise reason why this exemption is claimed.
In the past numerous reasons have been given: special risks; competition, national and international; type of business; size; the interest rate cycle, and the economic cycle. My Lords, those shibboleths have now been discarded, and have rightly been discarded, because they apply to every business in the Kingdom and they apply to a great many businesses with much greater severity than they apply to banking institutions.
The sole reason why the exemption is claimed—and I shall give your Lordships the references in a minute—is to preserve the confidence of depositors. That is the sole argument that is now advanced. Lest there be any doubt on that issue, I draw your Lordships' attention to paragraph 42 on page 28 of the report. This was the evidence given by the British Bankers' Association, the evidence of the leader of that association, who himself comes from an accepting house. He was speaking about the confidence of depositors. He said:
" My own view is that that is the only basis for this case for hidden reserves ".
Then, in case there was any doubt as to what he meant, he repeated it, and said at the end:
" we are asking for the privilege as bankers who take deposits from the public and for no other reason ".
He made the same remarks on a previous page in paragraph 39. No evidence, written or oral, was put before the committee to justify the assertion that you lose the confidence of depositors if you tell them the truth. On the contrary, there is an abundance of evidence, to which I shall draw the House's attention, showing that if you do tell the depositors the truth you retain their confidence.
I shall revert for one moment to talking about the "smoothing" of profits. This is an anodyne phrase which is spattered all over the evidence, and I am sure we shall hear it from time to time in this House this evening. What should be appreciated is that the smoothing of profits is only a euphemism for the concealment of losses or of inadequate profits. There is nothing wrong with making losses. Anybody who engages in business knows that you cannot make profits without being prepared to make losses, but what is unsatisfactory is concealing them and their amount and how often they take place, so that the quality of management cannot be appraised.
I should like to give you the six reasons—I suggest that they are compelling reasons—why the views of the accepting houses and discount houses should not prevail. The first compelling reason is that anybody who has the care and custody of another person's property should account for it frankly and openly. Particularly losses should never be concealed. This is the first principle of accountability. I hope that neither
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the Government nor this House will ever be deflected from holding that principle as inviolate.
The second compelling reason is that shareholders, creditors, depositors, investors, staff and employees, each for their own separate reasons, are entitled to know the strength and weaknesses of any banking business in which they are interested. Common sense dictates that this information should be available to them. They cannot make a balanced judgment if the truth is concealed from them.
The third compelling reason is the experience of the clearing banks themselves. They had the right, as other speakers have pointed out, to this exemption under the 1948 Act. They abandoned it no less than 13 years ago. It was not necessary, and they did not need it. They have thousands upon thousands of depositors and hundreds of millions of pounds at stake, but there has been no loss of confidence by depositors by reason of telling them the truth. Time is against me, else I would read to your Lordships the considered view of the clearing banks, but may I just direct your Lordships' attention to it in case you want to look it up; it is in paragraph 63 on page 31 in the left-hand column, which puts the position of the clearing banks with remarkable and straightforward clarity.
The fourth compelling reason is this: that if an acceptance house or a discount house, or indeed any other undertaking, wishes to obtain a listing on the stock exchange, it is required by law to declare its true profits and losses and its true assets. That must also be done in subsequent mergers and amalgamations. This situation has happened in numerous occasions in recent years. The true profit and losses of those houses have been disclosed, but there has been no loss of confidence by depositors. It really is absurd to suggest that the true profits and losses are disclosed for one purpose, and immediately thereafter the policy of concealment is followed for fear that the confidence of depositors is impaired.
The fifth compelling reason is this, that credit worthiness, trust, reputation and stability are dependent on telling the truth and not concealing it. If any customer were to go to any banking house and say, "I wish to do business with you. These are my accounts. They do not show the correct position. They conceal my profits and losses. They conceal my assets", he would be sent away with a flea in his ear. That is made abundantly clear in the evidence before the sub-committee. There is no reason why the same standard of financial behaviour should not apply to the banking houses; what is sauce for the goose is sauce for the gander.
The sixth compelling reason is the situation in America and Canada. There are in those territories many hundreds of banks of every sort, size and type, national and international, specialist and otherwise. For long years they have been required to disclose their true profits and losses and their reserves, but there has been no loss of confidence of depositors there. It verges on the ridiculous that that should be the experience in those two great countries, yet at least 28 houses, divided as they are among themselves, should require this exemption which they are now claiming. For all those reasons I suggest that the report of the subcommittee is soundly based and should be followed.

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We should for a moment look at the position in the other European territories. In Holland and Germany they are entrenched in the view that they should maintain secret reserves. In Luxembourg and France the position is confused and obscure, but I suspect they indulge in the smoothing of profits. Italy claims that all its banks disclose all their profits, but having had some experience of Italian accounting in the past, I have a nagging belief that that claim may not be justified. In Belgium, the Banking Commission urges the banks to make full disclosure, but there is no law of compulsion requiring it. In Ireland, full disclosure takes place in practice. In Denmark, secret reserves are prohibited by law. In the light of that mess and confusion I suggest it is high time that all banks should now be put on a proper basis and should no longer be allowed to conceal their reserves.
It is fitting that I should end on a simple point relating to the attitude in Germany. The Germans are the most entrenched and most vociferous on this issue. They were kind enough to allow three of their members to come and give oral evidence before the committee. I think it is not unfair to say that the answers they gave were not very convincing. However, there is one particular question and answer which really exposes the attitude of mind in Germany to which I draw your Lordships' attention. In paragraph 109 on page 53 a very simple question was put to them. It was never in fact answered, but in the reply that was made this extraordinary statement emerged:
" This might sound hostile from my side but I think if you give someone information, delicate, difficult to understand, who is not in a position to understand it, to work with it, that is more dangerous than to give him no information ".
In other words, he was saying that the depositors are such a bunch of ignorant ninnies that the bankers are entitled to deceive them. Apart from the arrogance of the statement, it displays an attitude of business morals and business ethics which I find totally repugnant.
5.44 p.m.
Viscount Chandos: My Lords, I am grateful to the noble Lord, Lord Plowden, for raising this subject and allowing me to speak on it. If it is appropriate for one novice to congratulate another, I should like to add my congratulations to the noble Earl, Lord Airlie, for an exceptional maiden speech.
The noble Lord, Lord Plowden, and others whom follow and who will follow me have far greater experience not only of speaking in your Lordships' House but also of the world of banking and industry. I should none the less declare an interest as a banker. However, in surveying the collective financial experience of your Lordships here today, I feel that I should not present my views as those of a banker but more as those of a layman who has begun to disentangle a few of the mysteries of banking.
As noble Lords who have spoken before me have covered the principal arguments highlighted by the report of your Lordships' committee, I feel that I should make my contribution as brief as possible. The European Community set out in its draft directive to harmonise the way in which the accounts of banks and other financial institutions are presented throughout the EEC. If that could be achieved without undue problems to the banks, which have previously adopted
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differing standards, then it seems to me that it is an objective worth striving for. There will, however, inevitably be some costs in introducing harmonised standards and I believe this debate offers an opportunity for your Lordships to assess whether those costs are justifiable.
The area which inevitably attracts most controversy relates to the right which banks in most Community countries, as the noble Lord, Lord Benson, explained, and certain banks within the United Kingdom, have to conceal their true profits. As Lord Benson said, the whole question hinges on the matter of confidence, which is essential to the functioning of any banking system. However, the role of the Central Bank as lender of last resort and guardian angel for the national banking system has now become arguably a more important factor for maintaining confidence than the existence of undisclosed reserves.
Banks and financial institutions that were not bastions of the British financial market have been supported in the past by the Bank of England and in many cases the scale of losses has been such that undisclosed reserves may well have been irrelevant. If it could be argued that the maintenance of undisclosed reserves by British banks lessened the level of monitoring and the degree of potential support which the Bank of England had to give, then perhaps the principle of hidden reserves would not have to be seen as a luxury.
The noble Lord, Lord Benson, and other noble Lords who have served the Bank of England are far better qualified to assess that question than I am. I believe, however, the potential costs in terms of the efficient working of the banking system may be too high and I shall explain why in a moment, but first I should like to comment on one piece of evidence given to your Lordships' committee. It was suggested to the committee that the inherent volatility of the financial markets and the banks' exposure to that volatility was far greater than anything that inflicted industrial companies.
Recently one of the major discount houses, Smith St. Aubyn, revealed losses which it stated had eliminated its disclosed and undisclosed reserves. Last year one of the country's major high technology companies, ICL, having two years previously appeared to be flourishing, saw all its existing capital eliminated in a single year through the combination of trading losses and exceptional write-offs. Even since Smith St. Aubyn reported its losses, an improvement in the gilt edged market has restored some proportion of the capital which it had previously lost. The efforts of the new management at ICL to combat the formidable competition in its industry and the adverse economic climate worldwide will take longer than one month to bear fruit.
Therefore it seems to me to be unjustified to argue that banks face a uniquely hostile environment in which to make consistent profits, since changes in demand and technological developments are formidable problems for a manufacturing company to face, in addition to the influence that changing financial markets can have on them as well.
The interlinking of banks and other financial institutions may of course be greater than that which applies to other industrial companies, but it certainly should not be thought that the loss of confidence is relevant

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only to the business of banks. The recent unhappy collapse of Laker Airways undoubtedly owed something to the loss of confidence among customers and travel agents in Laker's ability to weather its current financial problems.
Therefore I feel that the case for banks being granted privileged treatment compared with other limited companies is not proven, and I need to be convinced that their ability to build up undisclosed reserves is a substantial contribution to the maintenance of confidence in the banking system.
I should also like to make one other comment concerning the possible effect of concealing the true profitability of banks. As the noble Lord, Lord Benson, said, the interest of shareholders should certainly be borne in mind, and I believe for one particular reason. Just as a bank's business is dependent on its ability to attract deposits, so its expansion of business is dependent on the growth of its own capital. At times banks need to raise new capital from existing shareholders and other investors, and the terms on which they can do so arc often dictated by those investors' views of the banks' profitability and prospects. Sadly do not expect that the revealing of the true profitability of banks would transform investors' views of the banks. Indeed, many banks which reveal their true profits suffer as poor a rating in the stock market as those which do not.
None the less, the importance of bank's role in the economy, both in lending to domestic industry and in recycling international liquidity, makes their capitalisation of more than academic interest to almost everybody. In my view, any trend away from full disclosure is in the long run more likely to inhibit the proper valuation of banks and reduce their potential growth of business. I believe therefore that the European Community's proposals represent a retrograde step and an unjustified cost in terms of the efficiency of both British banking and the banking system throughout the Community.
5.53 p.m.
Lord Seebohm: My Lords, first, I should like to congratulate the noble Viscount, Lord Chandos, on his splendid speech. In fact I should like to congratulate both the maiden speakers whom we have heard this evening. They did not exactly seem to agree with one another, but I think that it will be all to the benefit of the House if we hear them both again in the future, very likely taking opposite views. They will certainly be well worth listening to, and I congratulate them.
I have been told that in the late 'eighties or early 'nineties of the last century my grandfather, who was a senior partner of a small country bank, rather dismayed his banking colleagues by insisting on having an outside audit. I believe that the auditors' certificate ran something like this:
" We have examined the bearer bonds, the Treasury bills, and the cash, and found them correct ".
I gather that someone asked my grandfather whether Mr. Waterhouse, who was the auditor, had looked at the accounts and the loans, to which my grandfather replied, with some indignation, "What, show them the private ledgers?—not on my life!".
That was some time ago, and things have moved some way forward—or have they? I remember, too,
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when I first joined the board of a clearing bank, which was just after the Cohen Report, in about 1947, many directors of the bank felt that full disclosure was quite unthinkable. In fact in a few years' time—I think it was in 1951—we were rather glad to have quite a lot of reserves which we could use internally. As your Lordships might recollect, that was the year when Dalton's song in his heart died, when his 2½ per cent. Treasury bills without a date fell about 20 points in a matter of weeks, and it was extremely difficult—in terms of 31st December—for the banks to draw up balance sheets. So far as I know, they used up all their inner reserves, and even then were not able to show their gilt-edged investments at the market price in the balance sheets.
Things moved on, and I am glad to say that after some years the banks were able to build up their reserves again. By the time it came to 1969 there was no question in the minds of I think practically all the clearing banks that the days of concealed reserves were over, and it so happened that my bank was the first to appear, not because it was any more original than any other bank, but because it happened to have a year ending in September rather than in December.
The fifth directive that we are discussing this evening is a complicated one, and of course any attempt to harmonise the accounting framework of financial institutions and banks is bound to be exceedingly difficult for the simple reason that not only do they differ among themselves, but they vary from country to country. If we take the discount houses here as an example, I do not think that there is any comparable institution in any other country in Europe. As I say, most of the problems are technical, and probably will be ironed out in various discussions that are bound to take place. But the question which everybody here seems to be interested in—that of hidden reserves—is by far the most important and contentious subject. I shall deal with this matter first. Though everyone else who has spoken so far has dealt with it, I should like to mention certain matters that I do not think have been completely touched upon.
First, I realise that feelings run very high on this matter and that some of the most experienced and leading figures in the City are still very anxious to retain the principle of undisclosed reserves. So I believe that this is a subject that we must handle with great care, and we must think seriously about the various arguments. I should like to repeat what I think are the four most important arguments and say why I cannot really go along with them. The reasons put forward by the acceptance houses are as follows. First, being smaller, they cannot have the same spread as the bigger banks of either lendings or deposits, which means that they would have much wider fluctuations in loss experience; and with that I agree. The result of this situation on the profit and loss account can cause wide fluctuations from year to year, so that the accounts of any one year cannot accurately reveal the real success or failure of the business.
The next reason—I think quite an important one—is that in a different year the fluctuation could cause a loss of confidence by the depositors, with a possibly disastrous effect on liquidity. Tie last reason with which I wish to deal is that the abolition of the undisclosed reserves can only favour the competitive position

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of the bigger banks, which is not necessarily desirable.
In my view, all those arguments have weight, but what we have to decide is, how much weight? I am not very impressed by the accountants' argument that they cannot certify a report of a company, shelting under the provisions of the 1948 Act, as true and fair. In fact, well before we made full disclosure, the report and accounts of my own company were always audited by four of the major accounting firms in the City of London as true and fair, subject to the qualifications in the 1948 Act. Quite frankly, I think that "true and fair" has become a sort of meaningless phrase. It has been used for too long, and I really do not quite know what it means. For instance, can the accounts be true and unfair, or can they be untrue and fair? What in fact is really meant when an auditor signs the accounts of bank and says that they are true and fair?
The assets of all financial institutions can be valued only on the basis of judgment. I should like to take the example now of Polish debts. For example, one bank may well say, "The situation in Poland is so disastrous that we must make full provision or write them off in this year's accounts". A second bank may quite well say, "No single country behind the Iron Curtain has so far defaulted, so obviously the USSR cannot lose face in this respect. They will stand behind the Polish debts, and, therefore, there is no need to make a reserve". The third bank (which I think might be me) might say, "We really do not know what is going to a happen, but it will probably be prudent to write if off over, say, a five-year period, during which time we will be able to see what is happening, and it would be only fair, perhaps, to load some of the future profits with this slightly doubtful proposition".
The auditors will audit the accounts of all those three banks. Are they true and fair? Are they all true although they have taken entirely different decisions on very large debts? I do not know. Anyway, my point here really is that it is the directors and the directors only of a bank who can decide what is the proper valuation of an asset. The auditors can express a view to the directors if they wish to do so, but I do not think it is necessarily right that they should have to say that the accounts are true and fair. This may be a small point, but it is certainly one of the arguments that some of my friends in the City have raised. This may be an extreme example, but every asset in a bank has to be valued yearly by someone.
I do not think I need go on about that, but certainly in my experience the auditors, with one or two variations of phraseology, have been perfectly happy to certify the accounts of banks with undisclosed reserves for decades, if not since the beginning of the century. That is their case, and now I am going to say why I do not go along with it.
First, it will be remembered that when the clearing banks undressed in public there was general surprise expressed by the media that the inner reserves were so small. I wonder what would happen to a merchant bank if it was found that they were very large. This did not shake the public in the least; nor, in my view, will it shake the customers of the smaller institutions now that the Bank of England has taken much firmer steps of supervision and has shown by the lifeboat exercise that
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no responsible institution is to be allowed to fail simply because of a lack of deposits.
Secondly, British merchant banks perform quite a different role from that of the clearers, as any large industrial or commercial company will tell you. They will remain just as competitive; in fact, everybody knows that they take more risks, and that is one of the reasons for their high reputation. What the merchant banks will need to do is to be very much more forthcoming in explaining to their shareholders and the public the reasons for increased or decreased profits, and rather more explicit in forecasting. Finally, I really do believe that, by removing a rather comfortable cushion, the spur to efficiency, managerial discipline and competition will be beneficial.
Before leaving the subject altogether, I must refer to the German position, which I believe to be more sensitive for historical reasons which are well known, and also to the present somewhat desperate situation in which many banks in Germany find themselves. This is rather going back to the situation in which the British banks found themselves in 1951. However, one of the reasons why they are in these difficulties, as I think most people realise, is that they have been encouraged since the war, owing to the lack of other financial institutions, to lend money far too generously and gear far too highly the many companies they financed. This is now proving absolutely disastrous in a period of recession, and I think some members of the Wilson Committee might take note of that, and possibly some members of the Government.
My Lords, most of the matters are adequately covered by the Select Committee's recommendations. There are, however, one or two matters that I feel I should mention. First—still on the subject of asset valuation—the value of maturing securities should certainly be valued on the basis of remaining maturities and not on cost. The latter proposal makes no sense at all.
Then, as I think has already been mentioned, there is the question of branch balance sheets. This, again, makes no sense to me. Quite apart from the arguments put forward by the noble Lord, Lord Lever, I believe it is impossible to make them mean anything because reserves are usually made centrally, profits can be made either at head office or in the branch, or wherever you like in the bank, and to get a realistic picture of a branch would be quite impossible.
Finally, I hope, though, that there will be more flexibility in the presentation of accounts when this matter is finally settled, as functions differ so very greatly from country to country and from institution to institution. I strongly support the report.
6.6 p.m.
Lord Roll of Ipsden: My Lords, perhaps I may begin by joining with other speakers in congratulating the two maiden speakers, the noble Earl, Lord Airlie, and the noble Viscount, Lord Chandos. I hope we shall hear them often in this House. I have to declare an interest, as did the noble Earl, Lord Airlie. I, too, am chairman of a merchant bank which is a member of the Accepting Houses Committee and, as such, is included in the list of companies which are exempted from the Schedule 8 provisions of the 1948 Companies Act and

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which have up to now been allowed to have undisclosed inner reserves. If the principal conclusion of the Select Committee whose report we are debating today were to be implemented, then the accepting houses would be among the most affected, perhaps the most affected, of our financial institutions. Of course, I do not speak on behalf of the accepting houses as a body, but I am well aware of their views and I know of the concern which they have regarding the committee's recommendations.
In this connection, I must, I am afraid, say that I regard it as a matter of considerable regret that the committee, with its distinguished membership presided over by my noble friend Lord Plowden, did not call for oral evidence from the accepting houses. They heard the views of the clearing banks, of the accountancy profession, of a financial journalist who was an accountant, of a stockbroker and of representatives of the German banks. Of all these, only the last named were directly concerned in this matter of the provision of undisclosed prudential reserves. I am afraid the committee's report is in error in referring to the evidence of the accepting houses "through the British Bankers' Association". The British Bankers' Association is not in a position to speak for the accepting houses, and their witnesses explicitly disclaimed that they were so speaking.
I want to confine myself in my remarks to the matters of prudential, "inner", secret or undisclosed reserves, whatever one may call them, and then only to the question of principle; that is, of whether they are justified in the case of merchant banks. I do not speak for other financial institutions, which may well be in a different position from that of merchant banks and where, again, I venture to think—and this was clearly brought out in the excellent remarks of the previous speaker, my noble friend Lord Seebohm— despite the apparent uniformity, practices differ a great deal through valuation of assets and through provision for bad debts.
Thus one could debate, of course, a number of detailed questions that would arise if the directive which the Select Committee was examining were adopted; namely, for example, if secret reserves were to be permitted, whether they should be of the extent allowed by the draft directive, whether they should apply to all banking institutions or only to some, and whether they should apply to this item or to that item in the balance sheet. But, of course, none of these questions would really arise if the final conclusion of the Select Committee were adopted, because the committee completely rejects the idea of undisclosed reserves altogether.
I should like now to turn to the substance of this question. A financial journal, anticipating our debate today, described this as a debate between "progressives", on the one hand, and "defenders of the status quo", on the other. I am very happy to have the members of the distinguished committee whose report we are debating described as "progressives", and I do not myself mind, on suitable occasions, defending the status quo; but these terms and some of the emotional words that are associated with this issue and have been used in the media—and I fear to some extent even in this House today—are not best calculated to enable a sensible conclusion to be reached.
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The report, I am afraid, contributes to this by saying that the draft directive runs into conflict between the need for a true and fair view and the belief that it is necessary for banks to conceal their true profits and reserves.
I think it would be most unfortunate if it were thought that this was the distinction between what the Committee recommended and what, after all, has been the long-standing practice in the City of London. I hope that the Committee and, if I may say so, with humility, the speech of my noble friend Lord Benson today, will not carry with them the suggestion that what has been done, so far as the accepting houses are concerned, in regard to their accounts for decades in some way or other has not presented a true and fair view. It would be most unfortunate if that suggestion were to be accepted in respect of that most honourable segment of the City and one which has contributed as much as, if not more than, any other, to the preeminence of the City of London in the world of finance. But this is a point to which I shall return a little later.
When we come to the Committee's reasons for their conclusions, we find not a great deal beyond assertion in effectively two paragraphs, paragraphs 14 and 15. What are these reasons for recommending a departure from the existing practice in respect of the accepting houses. The first is that there is now a greater sophistication in the financial markets and less risk of misinterpretation of banks' financial statements that would undermine confidence. I am not sure what this means; but it seems to me to argue either way. Certainly, the sophisticated members of the financial community, for example those stockbrokers who regularly analyse the position of the merchant banks, are perfectly capable or arriving (as they have arrived for years) at an intelligent assessment notwithstanding the practice of inner reserves.
The report goes on in just one paragraph, paragraph 15, to give what appears to be one of its main substantive reasons. It says:
" meaningful comparison between one bank and another would be severely hampered if neither the profitability nor the net worth of the bank were disclosed ".
And my noble friend Lord Benson made much of this in his speech. At one point he seemed to me to be saying that all banks are alike and indeed all enterprises are alike and the accounting practices must be the same for all of them. On the other hand, my noble friend Lord Plowden said quite clearly, if I understood him aright, that the draft directive is wrong in assuming that one bank is much like another and that flexibility is needed. Indeed, it is.
But what is this meaningful comparison that the report has in mind? One of the characteristics of the City is its high degree of specialisation. Are the committee thinking of comparing a clearing bank with a vast network of high street branches and with tens of thousands of employees, with balance sheet totals running into billions and engaging, notwithstanding the many changes in recent decades, essentially still in the business of deposit banks with an enormous number of customers and having what is known in the City as the endowment effect of substantial noninterest-bearing deposits, on the one hand, with a London merchant bank which probably has no branches at all, whose employees are numbered in the hundreds, who do

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relatively little "retail" business and whose activities in the highly risky capital markets, domestic and international, and in corporate financial advisory work, produce a totally different pattern of earnings, of profit-and-loss accounts and of balance sheets.
If, however, it is a question of comparing banks within the group of accepting houses, then the argument is irrelevant, once a fairly common practice exists among them. Or is the report, perhaps, thinking of comparing a London merchant bank with, say, a German universal bank—with whom, incidentally, we compete, as I am sure some noble Lords will confirm. Let us take the most formidable of them, the Deutsche Bank. That bank would be rather like a very large, at least, one very large commercial bank, with a huge branch network, a series of investment banks or merchant banks, and a whole series of stockbrokers rolled into one. Is this a proper comparison with a London merchant bank and, as already has been pointed out by previous speakers, the German banks do practice undisclosed reserves and will resist strenuously any change in their flexibility.
The report then says that to allow undisclosed reserves would "drive a wedge between Europe and America". This seems to me to be the most curious statement of all in this report. It is based, presumably, on the fact that there are no undisclosed reserves in the United States. Let us look at this. First what does the Committee mean by "Europe" in this connection? In paragraph 8 of the report—and my noble friend Lord Benson made this point—the Committee reviews the practice in different European countries. It shows that of all the countries in the EEC, only one, Denmark, does not permit undisclosed reserves. All the others do so in one manner or another. Outside the EEC, Switzerland, a not unimportant country in the world of banking also has undisclosed reserves; and so does another country which has now achieved a commanding position in the international financial community, Japan.
But even if the Committee were not thinking of the situation as it exists today in Europe but of some hypothetical situation in the distant future, when uniformity had been achieved in Europe, the statement is still very difficult to understand; for the draft EEC directive, such as it is, is, at any rate, a first attempt at such uniformity. It allows for undisclosed reserves and this the Committee rejects.
If we look at the other half of this curious comparison, the United States, we must remember how totally different is the financial structure there. First of all, it is largely governed by a multitude of statutes such as for example, the Glass-Steagall Act. Secondly, it is ruled over by the formidable Securities and Exchange Commission—and parenthetically perhaps I may ask whether the Committee "in order not to drive a wedge" between Europe and America would advocate the setting up of such a Commission in this country and in Europe generally. But the functions of the different parts of the financial community are quite different from ours.
Let us take, for example, the Wall Street investment banks—I suppose, the nearest equivalent to the London merchant bankers'—we find, first of all, that many of them are partnerships so that the present debate
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does not apply to them; and, secondly, the range of their activities is quite different. For example, while they are, or can be, members of the stock exchange, merchant bankers are not and cannot be. On the other hand, Wall Street houses do not do the sort of banking, business such as lending through advances and acceptance credits and so on, which the London merchant banks do and which approximate to the commercial banks.
The case for inner reserves as far as the accepting houses are concerned, is essentially a simple one. If I repeat what was said by the noble Earl, Lord Airlie, and perhaps will be said by the noble Earl, Lord Limerick, I apologise, but it cannot be said too often. Transfers to and from inner reserves are used to smooth to some degree—it cannot, in the nature of things be more than that—the fluctuations in the financial conditions of merchant banks which are, or can be, large because of the nature of their businesses. This fact was recognised by at least one of the members of the committee when examining witnesses from the British Bankers' Association. My noble friend Lord Plowden has said that fluctuations are common in other businesses, too. Indeed, they are; but in his introduction, he, himself, made it clear that he believes banks to be different from industrial companies, and this is one of the reasons why the gap left by the fourth directive may need to be filled.
The merchant bankers' lending portfolios tend to consist when compared with the large commercial banks of a relatively small number of relatively large loans. In addition, much of their other business, such as underwriting in highly volatile capital markets, adds a further substantial risk element which in each case is large in relation to the total volume of their business. It is when one or other of these relatively large risks materialises that the ability to smooth, not to eliminate, the trend of profits becomes important.
My Lords, I am sure that the painful memory of the Rolls-Royce calamity is still present in your minds. The accepting houses were heavily involved. Would it really have contributed to "a true and fair view" if the initial loss had been fully accounted for when it was first revealed, rather than partly or wholly to have been covered by transfer from inner reserves, these being replenished—by instalments over about three years—when the book loss was finally recovered? I venture to think that the practice then adopted gave a much truer and fairer view of the conditions of the accepting houses and their business than would otherwise have been the case.
There is, however, another point of great importance to which I must draw your Lordships' attention, and that is the role of the supervisory authority. The accepting houses arc under continuous close supervision by the Bank of England. Their special status, perhaps today not quite as exclusive as it once was, is matched by a very stringent oversight, covering every aspect of their activity, including management. I must say with all possible respect to my noble friend and his eminent colleagues that I am amazed that nothing whatever is said in the report about supervision, although the subject was referred to a number of times in the examination of witnesses.
There is no section of the financial community of the City of London, I venture to think, that is more respon-

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sive to the governor's eyebrows—and more than the governor's eyebrows are often involved—than are the accepting houses.
There is a great deal more than can be said, but I should like to finish on one very general point which I regard nevertheless as being of crucial importance. Even the staunchest supporters of the European Community—and I count myself among them—will from time to time have had the fear that the standardising, harmonising and unifying zeal of the Commission may be excessive.
Here, however, we have a draft directive which, whatever may need to be done about some of its detailed provisions, contains the elements of a sensible compromise between different laws, traditions and practices in the countries of the Community. As such it was, I understand, defended recently in a meeting in London by the Commissioner responsible for it. I am greatly tempted to believe that the pragmatic approach to this question which is evidenced by the Commission in this draft directive had something to do with the fact that the Commissioner in question is British and served for a number of years in another place as a most distinguished Member for the Cities of London and Westminster. In all sincerity, I must say to my noble friend that it is a great pity that this committee should have chosen to respond in so rigidly dogmatic a manner. I profoundly hope—indeed I strongly urge—that those who will have the task of discussing these matters within the institutions of the Community, will not be guided by such doctrinaire views.
Lord Bruce of Donington: My Lords, before the noble Lord sits down, would he be good enough to clarify one point? He will be aware that Article 37 of the draft directive in question proposes a limitation to these various transfers to and from secret reserves. His own speech does not indicate whether he accepts this 5 per cent. limitation as proposed by the Commission, I wonder whether he would kindly answer that point?
Lord Roll of Ipsden: My Lords, I will attempt to do so. I quite explicitly tried to avoid going into the details. I said—the noble Lord will recall—that there are many questions of detail that will need to be discussed; namely, what should be the extent? Should it be applied to all financial institutions? To what items in the balance sheet or in the profit and loss account should it apply? I was concerned primarily with the principle, and indeed only with the principle, as applied to the accepting houses.
6.25 p.m.
Lord Cobbold: My Lords, first, may I add my congratulations to the two maiden speakers today? The noble Earl, Lord Airlie, put very clearly and strongly the points which were made to us by the Accepting Houses Committee, and I am sure it was of great value to hear it from so distinguished a member of the Accepting Houses Committee. Also, the noble Viscount, Lord Chandos, gave a "happy fairy" commendation to the Bank of England. I shall be returning towards the end of what I have to say to the Bank of England's position regarding some of these matters. May I take up one point on the speech of the noble Lord who has just preceded me. He said that because of some of the
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rather rough things that have been said today some may leave this Chamber thinking that the accepting houses had not performed as a very admirable part of the City of London or had not enjoyed great respect for very many years. I can assure the noble Lord that nobody leaving the House is likely to have any doubts on that point. I may speak for myself, I most certainly have no doubts on that point.
I am afraid that I am bound to be a little repetitive of what was said by the noble Lord, Lord Plowden, and others because this argument covers the same ground. I will be as short as I can. The draft directive proposes in Article 37 that banks should be allowed to keep a percentage of undisclosed reserves. We have felt and percentage of undisclosed reserves. We have felt—and it has been supported by a good deal of what has been said today—that that would be going back both on the "true and fair" conception of the fourth directive, though I agree with the noble Lord, Lord Lever, that the truth of the "true and fair" is not always very easy. Still, it is also moving backwards, away from the general movement over the past 20 to 30 years—certainly in this country—towards fuller information and more sophisticated accounting.
We felt that that was a pity and in paragraph 15 the report suggests that Article 37 of the directive should be deleted. But, from evidence received, it seems likely that in various EEC countries—certainly in Germany—there will be support for Article 37 or something like it. The committee have taken the view that the right policy, if harmonisation is to be achieved, is to work towards a uniform "no undisclosed reserves" régime. This would be in line with the present policy and practice, as has been stated, of the London and Scottish clearing banks. The committee recognise that there will be many points of accounting lay-outs which will need adjustment to meet particular cases. There will in any case be a general need for much mare flexibility in the directive and also far more clarity and harmony between the fourth directive and the draft directive we are now considering.
Obviously, there are many differences in banking practice and accounting practice in different EEC countries—harmonisation is bound to raise many difficulties large and small. The committee were glad to hear in evidence from the British Bankers' Association that a lot of useful discussion on technical points was taking place between banking representatives in the various member states.
Long discussions seem inevitable. If—and one must repeat "if" —it proves possible to build a Common policy on the lines recommended in the report, it would have the advantage not only of uniform practice in the member states, but also of bringing Common Market practice into line with North America. That is surely an important point. I accept what the noble Lord just said: banking is a little different the other side of the Atlantic from what it is here but it is an important point.
I turn to the difficult question of possible exemptions from the draft directive. The London Discount Market and the Accepting Houses Committee put forward strong arguments for exemption, both on the grounds of their specialised functions and of the practical difficulty of fitting their accounting procedures into the requirements of the directive. The special

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accounting problems of the discount houses are referred to in paragraph 22 of the report.
After hearing quite a lot of evidence from both banking and non-banking sources, the committee have concluded, as the House knows, that though these arguments are of great importance to their proponents, they are outweighed by the view that the right objective is a uniform "no undisclosed reserves" régime which, as I have said, is in line with the practice of the clearing banks. If any exemption were given it would be difficult to maintain that it should be given to some categories and not to others. This might raise difficulties on the home front and it would certainly raise them on the Common Market front as a whole.
It was made clear in evidence that practice varies a great deal in different EEC countries, especially in Germany, where a special need for latitude (largely for historical reasons) was argued by representatives of German banks. A wide extension of exemptions to various categories in various EEC countries would surely lead to confusion and to the feelings of unfair competition which it is the object of the directive to avoid.
There have been suggestions in the press, and to some extent today, that a "no undisclosed reserves" régime might have adverse effects on the credits of of some institutions, particularly the smaller ones. On this point, I would have the following comment to make. Bearing in mind the development in recent years of Bank of England supervision of the banking community and also the history of the 1973–74 banking troubles, it would seem most unlikely that any bank of importance would be allowed to fail. This seems to me to have particular force in the two categories which have argued for exemption: the discount market, with its special functions and intimate connection with the Bank of England, and the accepting houses with their very close connection with the Bank of England. It is impossible to go into the very many matters of technical detail covered by the report, but there are three such matters which I think should be on the record in this debate, two of which were mentioned by the noble Lord behind me. One was, in paragraph 23, the proposal—considered by the Committee to be "entirely misconceived" —that banks based outside the EEC might be required to publish the accounts of their EEC branches, which seemed to all of us not to be a good idea.
There are two points in paragraph 27: first, the problem of how to deal with set-offs and, secondly, the use of residual rather than original maturity in valuations. These are detailed points, but important ones. To quote from the final paragraph, paragraph 28, of the report:
"it is also clear that there are wide differences of practice and philosophy between Member states. Much work remains to be done in the Council working party if all the problems are to be satisfactorily resolved ".
6.33 p.m.
The Earl of Limerick: My Lords, may I add my voice to the others that have been already heard raised in admiration of the two maiden speeches this afternoon from my noble friend Lord Airlie and from my noble colleague, if I may so describe him, Lord Chandos, sitting opposite. I hope that the style of oratory we
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have heard from them today we shall continue to enjoy in the future.
As befits one who comes all too infrequently to your Lordships' House, I will confine myself to a single topic, with only a passing word of approbation for the Select Committee's distrust of accounting by putting figures in boxes. From the beginning of this debate, I have been a great supporter of the auditor's discretion and of the "true and fair" concept, to which I shall revert in relation to the second point I shall refer to—that of the inner reserves of the eight scheduled banks.
I should like to echo the regret expressed by the noble Lord, Lord Roll, that there was no oral evidence at all from the accepting houses in the consideration of the Select Committee's findings; but it will not have escaped remark that the accepting houses do not lack personal advocates in this House; and at this stage, it would be right for me to remind the House of my interest as a director of one of the accepting houses, and indeed as a chartered accountant who, for a period was responsible for the preparation of their accounts. In that capacity, I had cause to think about the nature and magnitude of the risks with which this debate is concerned. This was 10 years ago, and I think that the risks are more, rather than less, daunting.
We should ask: Why are our banks different from other companies? Confidence is the point which has been stressed—and rightly, in my view—as being paramount. Confidence in the stability of banks is more a matter of public concern, and the effects of failure generally are more damaging than for non-banking companies. And, having been in countries where there was a collapse of confidence in the banking system, it is not a situation I would wish to see in any country, least of all Britain.
Secondly, the public and perhaps most of all the politicians expect of British banks two quite contradictory things. They expect, first, that they should be as sound, to coin a phrase, as "the Bank of England". Secondly, they expect them to be more adventurous than they are commonly thought to be in certain ways—first, in the mounting of rescue operations, which may involve an equity element, risk capital, supporting ailing industries in the public interest and in the interest of maintaining employment. Secondly, they would be required to be more adventurous in providing venture capital for support of new businesses and, thirdly, in foreign lending, whether on private or sovereign risks, in support of our export trade. In all these areas, banks are being exhorted to be more adventurous than perhaps their commercial judgment would always lead them to be.
To go one stage further, since the clearing banks have no longer found it necessary to claim the exemptions of the eighth schedule, why should it be thought necessary that the accepting houses should continue to do so? I think the reasons were given very properly and forcefully by my noble friend Lord Airlie and therefore I will not repeat them in detail. I think there is a persuasive argument in the ants and the elephants. I think we all recognise that there is more excitement in all quarters over one rogue elephant than there is over 10 rogue ants. These things are prominent in the accounts of the accepting houses in a way that they are not in the clearing banks. But I believe there is a more substantial point, and it is one which was first

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raised by the noble Lord, Lord Lever. I should like to pursue this: it is the question of the valuation of the stock in trade. The commonest debate between a company and its auditors concerns the value of its stock. The commonest speculation of financial commentators probably concerns stock valuations. Every audit involves an element of discretion—a point which was very well made by the noble Lord, Lord Roll, in commenting on the interesting speech of the noble Lord, Lord Benson. At the end of the day it is a matter of judgment as to what is "true and fair"—and long live the "true and fair" concept.
In 1973, I was somewhat involved in the early European skirmishings, trying to establish the acceptability of this concept, and my faith in its importance has in no way diminished. But surely the point is this: the noble Lord, Lord Benson, based his powerful speech on the principle of "the whole truth", and I thought it was just a little detracted from by overstatement. He was really basing his argument in on the fact that banks should be made equal with other companies. However, the mere withdrawal of the eighth schedule would not make banks equal with other companies, but less equal. They would be in an unequal position.
Why do I say that? I say that, because the normal basis of stock valuation is whichever is the lower, cost or market values. The auditors in a manufacturing or trading business will accept the commercial view of the directors as to the value of the company's trading stock—which was a point made by the noble Lord, Lord Seebohm—but what is the loan portfolio of a banker but his trading stock? And why should bankers be less equal in claiming a judgment that the market value of their loan stock, looked at item by item or overall, in given circumstances may be less than its cost—namely, the amount of currency originally advanced? This would be to put them in a less equal position.
There is also a curious belief that the building up of inner, or prudential, reserves is an end in itself, or, perhaps, a devious plot to conceal the truth, to the detriment of depositors, shareholders, employers, employees, stockbrokers, financial journalists and Uncle Tom Cobbleigh. But, surely, it is better for the prudent banker—and prudence is the first requirement by a depositor of his banker—for him to risk understating his principal asset, his loan portfolio, or understating his annual profit, than to risk overstating either of these items. The truth comes out in the end. It is better to be prudent.
I would further argue, from some personal experience, that the effect of the eighth schedule is considerably exaggerated. I say that for three reasons. First, there are very well-established accounting conventions which severely constrain the creation and use of inner reserves. Secondly, the Bank of England, as the regulatory body, exercises its own strict supervision. Thirdly, and I think most persuasively, there are compelling commercial reasons why inner reserves will never become absolutely very large, simply because it would be commercially stupid to allow them to become large. Banks rely for their funds on their depositors, and the accepting houses rely substantially on other banks, as their source of deposit funds. Therefore, the substantial understatement of profits,
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and substantial understatement of net worth brought about by the creation of these inner reserves, would be a plain act of self-denial, restricting the ability to trade.
I come now to something which my noble friend Lord Camoys has not yet said, but which I suspect he may be going to say, judging from a reading of the red book; that is, that in some ways, the existence of prudential reserves constitutes a licence to over-trade. Not so, my Lords—quite the contrary. Banks, especially foreign banks—certainly, those dealing with mine—do not deal on what they guess our inner reserves to be, or on some journalist's assumption. They give us credit for what they see on the face of our audited accounts. If that is understated, it is an act of self-denial on our part and not one which we are likely to overplay. Secondly, they rely immediately on the known supervision of our banking system by the Bank of England, but that point, happily, is not at issue.
So far, I have concentrated on loans, but there are other considerations which have not been mentioned much this evening, all of which affect the accepting houses to a greater degree, at least, than the other banks. I refer, first, to interest rates. Sudden fluctuations in interest, such as we have seen in recent years, have a certain rather startling effect. First, the economic climate may change, the likelihood of repayments being made on time may sharply diminish and the number of bankruptcies may sharply increase. Therefore, there is a risk for capital or, at least, a risk for funding. Secondly, the bond portfolios held by banks may vary very sharply in price in a short period.
Thirdly, violent movements in exchange rates are often associated with these movements in interest rates, and exchange rates are, on the whole, weak when interest rates are high, so the effect is compounded. Fourthly, the increased cost of the shorter-term funding of a loan portfolio when interest rates rise can be quite dramatic until it has worked its way through the system. All of these may have a big impact on annual profit.
Then there is another category of risk with which the accepting houses are much concerned; that is, contingent liabilities. I shall single out just two cases. The first is the obvious one of acceptance credits—not allowed for at all in the commission's consideration—where a lot of the credit given to customers is not by way of direct loans, but by way of lending a name, but with no less risk attaching to the signing of the bill of exchange. Then there is the area of bonding. Banks may be liable for non-performance of their bonded customers, often for very large sums. Here there has been a reiterated plea for the banks to be more broadminded, more far-seeing in the way, in which they treat their bonding liabilities; not to regard them merely as if they were the equivalent of an overdraft, but to treat them more on an underwriting basis. If they are to do that, then there has to be some consideration for the risk involved and of the impact of the calling of a very large bond on one of the bank's customers.
Yet another category—that of political lending—has already been alluded to this evening. There may be countries in trouble—we have the current case of the Polish debts—there may be industries in trouble, where banks are asked to give special consideration to rescue packages, in the interests of the national wellbeing

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or employment, and there is the area of venture capital. In all these areas we have some conflict between the duty of the banker, as he would see it, to use his depositor's funds prudently—as the depositor has a right to expect—and his own feeling, and the feeling that is constantly being urged upon him, that he has some other duty in the national interest to use them in a more adventurous way. This conflict which can best be reconciled if there is a basis for smoothing the unduly large impact on a given accounting year of a rogue elephant, or, maybe, two or three rogue elephants who get loose in the same accounting period.
I shall endeavour to come to a conclusion, which is that the EEC roposals—Article 37 and the 5 per cent. formula related to loans—is a compromise and, in my judgment, it is an inelegant one. The figure of 5 per cent. is unnecessarily large to achieve the purpose that is in mind in relation to a loan portfolio—considerably too large—although, if banks who are lending a substantial amount of their credit on bills of exchange, on acceptance credit, had to take that into account, you would have to apply some factor to that 5 per cent. But worse, perhaps. this formula offers no scope for considering the value of the non-lending risk assets, which are very much part of the business, the daily stock in trade, of the accepting houses.
So I do not delude myself that the eighth schedule will abide forever, nor, personally, with, two provisos, would I greatly regret its demise. The first proviso is that bank directors, as the directors of other manufacturing, commercial and trading companies, should have reasonable discretion, supervised by their auditors and the Bank of England, in the year-end valuation of their risk assets, including their loan portfolios. The second proviso is that some formula not for concealing the truth, but for spreading the impact of the more volatile profit and loss items over more than one accounting year, should be agreed upon and adopted as common accounting practice. Meanwhile, although I do not believe that the Article 37 formula is a particularly suitable substitute for the eighth schedule, I suggest that this whole subject merits a lot more attention, before we conclude that this compromise, imperfect as it is, should be rejected and that the eighth schedule banks should have no ability at all to deal with these very difficult questions.
6.48 p.m.
Lord Camoys: My Lords, I should like to thank the noble Lord, Lord Plowden, for providing the opportunity for this debate and for the way in which he has presented the conclusion of the Committee, on which I was privileged to sit. Like others, I must declare my interest as a merchant banker, though not one involved with any member of the Accepting Houses Committee. But I should like to emphasise that the views which I express—and they may be fairly forceful—are my own and are not necessarily those of my employers. I should also very much like to congratulate the noble Earl, Lord Airlie, and the noble Viscount, Lord Chandos, on their maiden speeches. I admire them very much for having chosen a contentious subject, and they have shown great courage in doing so. I also admire them for
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the beautiful way in which they presented their arguments. I hope that the noble Earl will forgive me if I put rather different views. I am sure, however, that he will agree in the words of Mark Twain that
"it were not best that we should all think alike: it is difference of opinion that makes horse races"—
and, one might add, fees for merchant bankers.
I think that the report is very sensible and, while I believe that each of the conclusions is important, I, like many others, will confine my comments to the first conclusions; namely, that banks should not be permitted, as some in this country now are under Schedule 8 to the Companies Act, to maintain undisclosed reserves, by whatever means, whether by undervaluation of loans, money market assets or investments. One reason why I believe this issue to be important is that under the Companies Act 1981 I understand that it is open to licensed deposit takers as well as any recognised bank incorporated in this country to apply for Schedule 8 exemption. In theory, therefore, the number of deposit takers who could maintain undisclosed reserves in future could escalate quite dramatically. Therefore, the progress, as I would see it, that has already been made in this area of disclosure could be more than turned back.
Most important and first, however, it seems to me to be fundamentally irrational for this directive to suggest that all banks within the EEC should be allowed undisclosed reserves up to 5 per cent. of their loan portfolio and yet stipulate that this draft directive should, as has been said before, be read in conjunction with the fourth directive, which specially insists that all businesses should provide accounts for their users which present a "true and fair view" of the business. Amazed by this inconsistency I turned to my dictionary where I read:
"True, in accordance with fact, not erroneous, representing the thing as it is".
And:
"Fair, just, unbiased, equitable".
Yet if this directive is implemented as it stands, including Article 37, banks will be able to undervalue their loan portfolio by five per cent., a figure which could both equal published capital and reserves and enable smoothing of published profits by the equivalent of as much as three or four years' average profits. The potential degree of smoothing is therefore vast and in my view could let through at least 10 rogue elephants.
Among the large amount of evidence that was heard it became clear that three groups were most vociferous in seeking to hang on to the privilege—a doubtful privilege, in my view—of maintaining undisclosed reserves, claiming, as we heard from the noble Earl, Lord Limerick, that in fact the directive was too limiting in that respect. I must confess that my understanding of German philosophy and psychology proved to be too limited.
So far as the discount houses are concerned, here I agree with what the noble Viscount, Lord Chandos, said. We now have ample evidence that the revelation of true losses, even when they are very large, does not produce a panic in the financial system. But it is on the arguments of my friends, and I admit competitors, in the accepting houses that I shall concentrate. Their written arguments are more accurately expressed in the

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body of the report but I hope noble Lords will forgive me some licence if I say that my understanding of their argument is as follows.
Accepting houses, for historical reasons, have relatively modest capital bases. We deal in a relatively small number of very large transactions and as a consequence our level of risk is higher than for many other banks whose risk portfolio is more widely spread. Our profits are unpredictable and therefore subject to great fluctuations. For this reason our position is made the worse because we have to produce accounts every 12 months, which is an awkward period. Our relatively few large customers sadly cannot be trusted with true figures since they might take fright if they are volatile. Consequently, in order to avoid the risk of a banking crisis and our shareholders losing money, we have to smooth profits by way of undisclosed reserves. That way, nobody really knows how much true capital we have and we are able to trade at a higher level than would otherewise he possible. That is not over-trading because the Bank of England keeps an eye on us, as they do on the discount market. Further, it is in the nation's interest that we be protected from the cold wind of having to produce full accounts since we have been the innovators in the banking industry and we have been the competitive force.
While I fully accept that it is in the public interest to preserve public confidence in banks, and particularly those which are well run, I personally cannot accept that the accepting houses have made a sustainable case for the maintenance of the present position. In making their case they ignore the fact that there are now many banks—not only clearing banks but their merchant banking subsidiaries—carrying out similar lines of business who, to date, have survived quite comfortably without this privilege.
Although I have the highest regard for the accepting houses and their management, it must be pointed out that no longer are they the only innovators in our banking industry—if ever they were. Certainly they did provide competition, and still do, but so do many, many others. With only some 4 per cent. of the deposit banking business in this country, the competitive point cannot be that important. Indeed, in 10 years their share of the deposit market has halved. So far as the particular types of risk which concern them so much are concerned, they do not have to take those risks. They are not under any obligation to do so. If they can only do so with the advantage of, as they would sec it, hidden reserves, I suggest that is not perhaps the best basis, becasue, as we know, those hidden reserves could disappear without any of their customers or users knowing it.
So far as advisory services are concerned and where the accepting houses are still obviously very successful, I cannot think of any service which is not carried out by banks who do not have hidden reserves. Further, I still do not even know why hidden reserves are necessary to be innovative. Indeed, if a case can be made, in my opinion it would be much better made by a manufacturer than by a service industry.
Quite obviously I believe that the accepting houses in their evidence are just possibly overstating their importance in the banking industry today. Times have changed. They are very efficient but not unique any more. In their concern, I believe that they belittle
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themselves and, rather strangely, as the noble Lord, Lord Benson, said, they have certainly belittled their few large customers. Perhaps I should add that if I was one of those not considered to be able to read their full accounts responsibly, I would certainly consider moving my business elsewhere. The noble Lord, Lord Roll of Ipsden, emphasised the obviously very important role carried out by the Bank of England in its supervisory position. May I make one point, but very gently: that the discount market would claim that they are equally closely supervised. I think recent experience perhaps demonstrates something there.
I said earlier that I fully concur with the view that confidence in banks is vital to the nation. Having been a banker during the secondary banking crisis and having seen the calm reaction to the publication of very bad losses which have been mentioned tonight, I certainly conclude that banks now operate in a sophisticated environment which expects and requires full disclosure and which can cope with that responsibility. I cannot believe that an accepting house would not be able to brave the realities of genuinely true and fair accounts. Rather I believe that ignorance of the true situation and the consequential risk of rumour are much more dangerous. Ignorance is not bliss. It is dangerous.
In so far as the draft directive legislates for undisclosed reserves, it is a bad one. It contradicts another and is one of those which is liable, in my opinion, to bring EEC directives, draft or otherwise, into disrepute. The business of banks, as we all agree, is based on and all about credibility. Hidden reserves and their use, in my opinion, do not increase credibility—rather the reverse. I strongly commend the report to your Lordships.
6.58 p.m.
Lord Redesdale: My Lords, so much has been said already about disclosure that I feel I should start by disclosing an interest—that I work for an American bank. May I go on to congratulate my noble cousin the Earl of Airlie on an excellent speech to which I listened with considerable interest. But I have to confess that I did not agree entirely with everything that he said. I should also like to congratulate the noble Viscount, Lord Chandos, on an equally fine speech. I found that I agreed with him rather more. My congratulations go on to include the noble Lord, Lord Plowden, and his committee on producing such an excellent report with which I totally and wholeheartedly agree.
May I ask your Lordships' indulgence in listening to a few comments that I should like to make at the end of a rather long batting run. However, we are in the home straight and I shall be very brief. Therefore, your Lordships can breathe a sigh of relief. The point I wish to raise and emphasise primarily is the requirement for branch accounts for non-EEC banks. I wholeheartedly agree with the view of the committee. I believe that branch accounts would be misleading, discriminatory and have a very negative effect on London as a financial centre.
First, why should it be misleading? The argument for branch accounts is that they would give sufficient information to give confidence to local depositors and

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investors. But branch accounts cannot give a true picture. What does count are full accounts of the parent bank, since it is the overall condition of the bank that allows the investor or the depositor to judge just how sound an institution it is.
American banks have far greater disclosure than European banks, as so clearly stated by the noble Lord, Lord Benson, in his excellent speech. Most American banks with branches in the EEC take great pains to publicise their full accounts in Europe, a point I can personally vouch for as publicising the accounts of my bank is one of my responsibilities. Many of the non-European banks have stock quoted on European stock exchanges, so anyway most of them have a statutory responsibilility to publish their accounts.
My second point is that the requirement for branch accounts would be discriminatory. First, would branch accounts provide the necessary information for investors and depositors? The answer is no, because it is only the total accounts of the parent body that give sufficient information for the investor to judge just how sound an institution it is. In fact, the sort of information that would be produced would really only be of use to competitors, not to investors.
The third point is that it could have a harmful effect on London as a financial centre. There are far more non-EEC banks with branches in London than such banks in any other European capital. I must emphasise that I am talking about non-EEC banks in Europe. If your Lordships will bear with me I will give the figures, just to give some idea. Non-EEC banks with branches in Europe: Belgium 16, Denmark 4, Eire 5, France 44, Germany 45, Italy 14, Luxembourg 9, Netherlands 16—but the United Kingdom 170. So the main force of this directive would affect London.
Finally, I agree with noble Lords who believe that full disclosure is necessary. The argument used in Germany was that confidence had to be created to overcome those memories of runs on banks in the 1920s, and that smoothing is totally necessary. I think this is a fallacious argument, because back in the 1920s there were a considerable number of runs on US banks, and as a result legislation was required to ensure full disclosure. Since then American banks have gone from strength to strength. So surely full disclosure would probably have a very healthy effect on banks in Europe.
7.3 p.m.
Lord Bruce of Donington: My Lords, we have had a very long and interesting debate, and it is my first duty and indeed pleasure to congratulate the noble Earl, Lord Airlie, on his maiden speech, which, if I may say so, was delivered with obvious technical knowledge, was set out with very considerable logic, and was indeed very pleasant to listen to. I would like also to congratulate the noble Viscount, Lord Chandos, who also addressed the House in very persuasive terms, and, if I may say so, with a degree of modesty which seemed to belie the depth of knowledge which he showed of his subject. I am sure the whole House will be looking forward to receiving early and frequent contributions from both noble Lords.
The House will be particularly grateful to the noble Lord, Lord Plowden, and his committee for the very
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comprehensive and detailed report they have prepared on draft Directive 5692/81. It is quite clear that they have gone into the subject most thoroughly. Anyone who reads through the detailed proceedings will see the persistent questioning, the persistent desire to clarify many technical points that arise on a subject of this kind. I am sure your Lordships would wish to congratulate all members of the committee, and in particular Lord Plowden, for the service they have performed.
Inevitably much of the discussion this afternoon and this evening has gone on to the whole question of the propriety or otherwise of creating and maintaining and altering hidden reserves. My noble friend Lord Lever pointed out some of the difficulties in arriving at what is called a "true and fair view". The noble Lord, Lord Seebohm, went so far, I believe, as to challenge the whole concept of true and fair by saying, what could be meant by "true and unfair" or "untrue and fair"? Perhaps I can best encapsulate all this by saying that it is possible for accounts, or indeed a report, to be quite truthful in every particular, and yet in telling the truth, if some part of the truth is omitted, it becomes unfair. A report can be technically true but it cannot be both true and fair unless there has been a full and adequate disclosure of all the facts that have a bearing on the accounts that are being reported on, or the accounts that are being published, or the report that has been made. By the same token, a set of accounts that are untrue, or a report that is untrue, cannot in any circumstances be fair.
This, I believe, is the stand that is taken by the profession to which I have the honour to belong. Your Lordships will have seen, and I hope will have read, the evidence that was given by the Consultative Committee of Accountancy Bodies on this subject. Your Lordships will find that they come out quite unequivocally that there should be full disclosure. If I may say so, the point was made even more forcefully in the elegant and strong, and, if I may say so, brilliant contribution to the debate by the noble Lord, Lord Benson, who I believe spoke for the entire accountancy profession in laying down with such devastating clarity exactly why there should be an insistence on full disclosure. I do not think the noble Earl, Lord Limerick, need look any further when expressing his support for, as he quaintly put it, spreading the load or spreading the impact by non-disclosure. He need do no more than re-read the speech that was made by the noble Lord, Lord Benson.
The committee came to their conclusion, after listening to all the evidence, in the terms which appear at paragraph 15 of their report. It says:
"They have concluded that banks should not be permitted to maintain undisclosed reserves, and that Article 37 should be deleted from the draft directive. They recommend that the United Kingdom delegates press this view strongly in the forthcoming negotiations ".
I should like to add force to that very moderately expressed opinion. I not only think that the United Kingdom delegates should press this view; I think that the United Kingdom delegates should insist on this view to a point where, if it is not agreed with by the remaining EEC members, they should decline to pass the directive. There should be an insistence on this point.

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As has been pointed out by many noble Lords, there really is not a necessity for this directive at all. It does not really confer any profound benefit on member states of the European Community. The fortunes of ordinary people in each of the member states are not going to be vastly shaken by the fact that the accounts of the various banks in the various countries are not to be standardised. I do not think that it will really have a profound effect upon their lives.
I agree with the view that the EEC could concern itself with far more important matters than this which is very peripheral. But if we are required as a country, and our representatives are required as a country, to hold consultations at COREPER level in councils and if, after taking into account the views of the Economic and Social Affairs Committee and after taking into account the views of the European Assembly, they are required, ultimately, to state a view upon this subject, then I think that unless Article 37 is deleted completely, the representatives of the United Kingdom should have no part of it at all. That will, of course, not absolve the United Kingdom Government in due course, when it thinks that there is some priority to be accorded to it, so to legislate within the United Kingdom in order to accomplish the final step which the report envisages—in other words, the complete disclosure and the prohibition, in effect, of the creation of secret reserves. This may happen, and as and when it does happen we on this side of the House will give it fair wind. In the meantime, we suggest that there are far more grave and important priorities affecting the vast number of people of this nation to be dealt with first.
I would not wish, particularly at this time of night, to go over again all the matters that have been dealt with in the report and which have been so ably dealt with by the various noble Lords wh0o have spoken this evening, most of whom, of course, are expert in this field. In fact, save for my own role as an accountant, I feel very much like an amateur among professionals. But I remain, as indeed I believe my profession will remain, firmly and clearly in support of the fact that there should be, at all times, applicable under all circumstances and to all concerns, the requirement for accounts to be drawn up and for an auditor's report to be made upon them and that they, together with the notes, the schedules or whatever else comes with the accounts, should show a true and fair view.
I cannot believe that there will be any significant movement in the country which would seek to reverse not only the opinion of the select committee, but also the views of the accountancy profession as so clearly set out by the Consultative Committee on Accountancy Bodies. But if, peradventure, this subject does find itself high on the list of Government priorities, if—to be mildly controversial—they find that one way of filling in time might be to introduce a measure of this kind, then may I ask, I think with the support certainly of the accountancy profession, that if legislation ultimately results from the passing or agreement to this draft directive in whatever form it ultimately materialises, it be not by statutory instrument but be by a separate Act of Parliament? I gave notice to the noble Lord that I was going to raise this aspect of the matter, because I think it a matter of some importance.
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When judges come to consider the litigation arising from the Companies Act 1981, which as your Lordships know was rushed through this House in its concluding stages, they might well have time to reflect that it would have been far better had your Lordships' House been able to subject it to the same kind of meticulous examination that the Select Committee on this occasion have devoted to the annual accounts of banks. So if there is to be any legislation resulting from any finally agreed version of this draft directive, we would hope that it would be by a Bill rather than by a statutory instrument, so that some detailed examination of it can take place and so that if necessary some amendments may be accepted.
I conclude as I commenced by congratulating the noble Lord, Lord Plowden, and his committee and once again emphasising my own pride, as a professional accountant, in the magnificent speech that was made by the noble Lord, Lord Benson, with which I agree 100 per cent.
The Earl of Limerick: My Lords, before the noble Lord, Lord Bruce, sits down, I do not know whether he heard the whole of my speech, but as a fellow accountant will he address himself to the question that I raised, which was that the directors of banking companies should have at least the same discretion as the directors of manufacturing, trading or commercial companies in assessing the value of their stock in trade —namely, in this case their loan portfolio—and should have the same ability to convince their auditors of a proper valuation of that stock?
Lord Bruce of Donington: My Lards, yes, I am happy to answer the noble Earl's question. I entirely agree that bankers should have the same opportunity as is afforded to the directors of manufacturing companies in the valuation of their stock. The problem is not so much the convincing of the accountants, although as a profession we normally check very meticulously indeed all kinds of stock. That is not the question. It is not the question of being prudent. It is the question as to whether or not the prudence should be disclosed. That is the problem; not the act of valuation itself or its accuracy; it is the provision that is made. If the
provision is a proper one and is prudent, our view is that it should be disclosed. That is all.
7.21 p.m.
Lord Trefgarne: My Lords, it is an extraordinary thing that the debates which follow reports of the noble Lord, Lord Plowden—very often introduced by the noble Lord himself—bring forward a fine array of maiden speakers. I recall that some years ago the nobel Lord headed a committee which inquired into the future of the British aircraft industry, and I recall that I made my maiden speech in your Lordships' House upon that debate. Today we continue the tradition with the maiden speeches of my noble friend Lord Airlie and the noble Viscount, Lord Chandos.
I have a particular link with the noble Viscount, although he may not know it, because my father served under his grandfather in the Coalition in the last war when the noble Viscount's grandfather was, I think, the Minister of Supply in that famous Administration and my father was the humble Parliamentary Secretary in

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the same department. I cannot claim the same links with my noble friend Lord Airlie, but I must say that the two maiden speeches which we have heard today were of a particularly high standard, and, like other noble Lords, I look forward to the intervention of both noble Lords again very soon and often thereafter.
First, I should like to add my voice to those of your Lordships in congratulating the Select Committee on an admirably clear and forthright report, and on the expert way in which the noble Lord, Lord Plowden, introduced and amplified the report in his opening remarks. Your Lordships' committee has taken a keen and valuable interest in the various elements of the Community's programme for the harmonisation of company law. In matters of accounts, for example, which are particularly relevant in the present context, it made substantial reports on the fourth directive (on individual company accounts) and on the seventh directive (on group accounts). In both cases the reports were, and indeed still are in the case of the seventh directive, of considerable benefit to the Government in the conduct of negotiations in Brussels.
I should like to add that it is not just the reports themselves that are so valuable but the evidence taken as well. Of course, the Government have their own sources of information and, indeed, make a point of consulting very widely with interested parties outside Government. But the expert and highly pertinent questioning by your Lordships' committee certainly succeeds in eliciting illuminating replies from the various organisations and individuals who respond to the committee's invitation to give evidence.
As the report states, the draft directive on the annual accounts of credit institutions is a sequal to the fourth directive. That point has been made by more than one noble Lord this evening. It was envisaged when the draft fourth directive was first published in 1971 that such accounts would have to be dealt with in a separate directive, and Article 1(2) of the fourth directive, as adopted in 1978, permits member states not to apply the provisions of the directive to banks and other financial institutions pending subsequent co-ordination. The draft directive is the fruit of extensive consultations which the Commission has had, particularly over the period since the adoption of the fourth directive, with specialists in this field in the Community and indeed with member states. However, it was only adopted as the Commission's formal proposal in March of last year. No one is committed to its contents, and it is only now that the legislative process in the Community will get under way. I shall touch on the point raised by the noble Lord, Lord Bruce, in a moment, if he will allow me to do so.
Because the draft directive meets a commitment resulting from the fourth directive, exemption for banks and other financial institutions, the Government recognise its rightful place within the Community's Company Law Harmonisation Programme, notwithstanding our continuing concern about the demands imposed by that programme on the resources not only of Government, but also of the business sector and the interested professional bodies, not to mention in passing the time of your Lordships.
The noble Lord, Lord Lever, was I thought rather grudging in suggesting that the Commission and thus,
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I think, the Select Committee were addressing themselves to the wrong question— "frolicking on the periphery", as the noble Lord rather colourfully described it. However, the fact is that for reasons which the Select Committee explained, the accounts of banks have their place in the Community's agenda for company law. That is not to say that the Commission or, indeed, the supervising authorities in the various member states are not addressing themselves to the much larger questions in the field of banking.
As the Select Committee's report notes, the draft directive is currently under consideration by the European Parliament and by the Economic and Social Committee. I understand that our latest information is that the European Parliament at least is now unlikely to report on the proposal until well into this year. It is possible that the Commission will then consider it desirable to make some amendment to the draft before its consideration by a Council working party commences. The immediate timetable is therefore somewhat uncertain. However, we believe that the Belgian presidency do not at present have any plans for meetings of the Council working party during their tenure, and it seems very likely that negotiations will not now commence before the autumn at the earliest, and possibily even later.
Given this likely course of events, the Government will, of course, not finalise their negotiating objectives until the position is a little clearer, and I am sure that your Lordships would not expect a definitive exposition of the Government's views at this stage. The Select Committee's report, which it is already clear will be an invaluable catalyst to further discussion in this country, quite apart from the valuable debate we have had this evening, will be one of the elements in our consideration of the issues, and it and the evidence will need careful study.
So will the responses to the consultative document published by the Department of Trade in July last year. These responses, a number of which have come in only relatively recently, provide a wide and informed range of opinion both on the major and on the more technical issues. We are grateful for the thought and effort that has gone into these responses, which I believe illustrate the growing realisation that those who wish to influence a Community directive must get in at the beginning, however far ahead final adoption may appear.
Turning now from procedural matters to the substance of the draft directive, I am sure that the Select Committee was right, if I may say so, to concentrate on the major issues of undisclosed reserves and of scope. This is borne out by the debate today which has, to a large degree, concentrated on the question of undisclosed reserves.
On the former, the Select Committee expresses unequivocally the view that banks should not be permitted to maintain undisclosed reserves. We note that this was the general view expressed to the committee by users of accounts, but that certain categories of bank at least felt strongly that undisclosed reserves should be permitted. It is not surprising that the pattern of responses to the department's consultative document is very similar.
As the report points out, the facility for undisclosed reserves has a long history in this country, and the last major review, as far back as the Jenkins Committee in

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1962—I think the noble Lord, Lord Plowden, referred to that—concluded that on balance they should be retained. But, given the other changes that have taken place since 1948 in the accounting requirements placed on companies, it is perhaps a little surprising that there should have been so much stability in this particular aspect since that time. It may be that this has always been regarded—except of course by those directly concerned—as a somewhat peripheral element in the general statutory accounting requirements. Be that as it may, we now have to weigh up in earnest the pros and cons of full disclosure by credit institutions.
However, I think that it would be right to emphasise that the outcome of this directive is not a matter for determination by the United Kingdom alone. We have carefully noted the committee's recommendation that the United Kingdom should press strongly in the negotiations for the removal of the elements in the draft directive which would permit the use of undisclosed reserves. However, we also note the very interesting summary in paragraph 8 of the committee's report of the position in other member states, and elsewhere. The fact is that at present the great majority of member states do permit undisclosed reserves, as do a number of important countries elsewhere in the world. It is true, and very material, that undisclosed reserves are not permitted in the United States and Canada. The significance of a change to full disclosure for the institutions concerned in the Community should, however, not be underestimated. I take note of the strong view of the noble Lord, Lord Bruce, about Article 37. I assure the noble Lord that that view, which he is not alone in holding, will be fully taken into account in forming the Government's final conclusions.
As I said earlier, the Government are not in a position at this stage to indicate definitively their negotiating position, and this is as true of their attitude to undisclosed reserves as on other matters. However, what is clear is that the merits of undisclosed reserves will have to be very critically examined in the negotiations. We would agree with the committee that the burden of proof rests with those who believe in the necessity for the retention of undisclosed reserves. The purpose of annual accounts is to provide a record of a company's performance and state of health. The purpose of the efforts to harmonise the law on accounts within the Community is to enhance the comparability of accounts. A facility to retain undisclosed reserves must be regarded as derogating from both these objectives. That is not to say that the arguments for such a derogation should be dismissed, and indeed the Select Committee has set out the arguments put to it with great fairness.
The Government have not yet reached a final view on this question. But, not least because of the Select Committee report, and in view of the considerations to which I have just referred, we are certainly approaching the subject in a critical frame of mind. Notwithstanding that the Companies Acts have for many years provided certain exemptions for banking and discount companies, this policy has not been systematically reviewed for a number of years, and the onus must now be on those, whether in this country or in the Community, who support a provision for undisclosed reserves to justify such a facility in the light of the kind of arguments which your committee has so trenchantly expressed.
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A number of noble Lords this evening have put the case for undisclosed reserves, particularly in respect of accepting houses, with considerable force and conviction. We shall of course take all the views expressed in this debate both by the progressives and by the defenders of the status quo—as I think the noble Lord, Lord Roll, put it—into account in deciding our position.
A number of noble Lords have referred to the concept of "true and fair" in this context. Some indicated that a bank could not maintain undisclosed reserves and show a true and fair view. Others denied strongly that the two concepts are incompatible. The noble Lord, Lord Seebohm, was certainly on the first end of that spectrum. Perhaps I should make two comments on this. First, as the noble Lord, Lord Benson, said, it was an important achievement of the United Kingdom negotiators to introduce the concept of "true and fair" into the fourth directive.
I would not seek to explain all the implications of "true and fair" to your Lordships this evening. That might be something for perhaps an accounting seminar, to which the noble Lord, Lord Bruce, would doubtless wish to contribute. What I would say is that the alternative to an overriding concept such as the "true and fair" one is for accounts to be subject to detailed, prescriptive, and perhaps inflexible requirements which allow little, if any, discretion for accounts to reflect the particular circumstances of a particular company.
Secondly, the present law in this country, the eighth schedule, to which reference has been made this evening, makes it clear that accounts which take advantage of the exemptions which enabled undisclosed reserves to be maintained shall not, by virtue of that, be deemed not to show a true and fair view. On the other hand, the law does not say that such accounts do show a true and fair view. In essence, therefore, the matter has been left to the auditors. I believe that in recent years it has become increasingly the practice for auditors to draw attention to the fact that advantage has been taken of the exemptions, and not to report therefore that the hank's accounts show a true and fair view. In short, this is a matter which will need careful consideration in the course
of the negotiations.
I have here, in fact, two sets of accounts relating to financial institutions. Both, it happens, to be signed by the same firm of accountants. In one of them they say:
"In our opinion the statements have been prepared in accordance with the provisions of the Companies Acts 1948 to 1980 applicable to banking companies".
And in the other they say:
"In our opinion the balance sheet of the company gives a true and fair view of the state of affairs at the particular date in question, and complies with the Companies Acts 1948 to 1980, and the consolidated balance sheet"—
and so on and so forth. So it is clear that the practice is not identical even within the same firm of accountants.
Apart from the question of principle, the Government will have to consider other important aspects. For example, if undisclosed reserves were to be permitted by the directive, is the form and scale proposed appropriate? Should they be regulated by member states or, as is proposed in the present draft, should it be left to the undertakings themselves whether or not they

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take advantage? These are sensitive questions, perhaps the most important ones that arise on the directive, and the Government will give full weight to the Select Committee's views before coming to their own conclusion.
Turning now to scope, the committee favours comparability between deposit-takers whatever their legal form but sees no need to extend the scope of the directive to those who grant credit without taking deposits. It also considers that building societies might be brought into the ambit of the directive from the outset and that the directive should provide sufficient flexibility to accommodate the special characteristics of institutions such as discount houses.
In its consultative document of July 1981, the Department of Trade expressed its initial view that the acknowledged purpose of the draft directive—that is to fill the gap left in the fourth directive—would best be met by limiting the scope of this directive to credit institutions that are limited companies since it is only to such entities that the fourth directive applies. Extension of the scope to other kinds of entity, partnerships or incorporated associations for example, would break new ground in the harmonisation of accounts both domestically and so far as the Community's harmonisation programme is concerned and could well give rise to serious legal procedural difficulties in this country since our present arrangements for the filing of accounts are directed at companies.
We have received very mixed views on this matter in response to our consultative document. Indeed, each of the our options exposed in the paper has its advocates, and there is no weight of opinion in favour of one option or another. It has to be said that the full implications of the directive as now drafted are obscure in some respects so far as scope is concerned, and both the Select Committee's report and the responses to the consultative document indicate that there are a number of technical aspects that need further exploration and which the Department of Trade will pursue with the bodies concerned.
The Government noted with interest the reference in paragraph 23 to a possible further draft directive on the accounts of branches of banks. One or two noble Lords have mentioned that this evening. The Government agree with the committee that such a directive would be entirely without value, and we have made this view known to the Commission. In any event, we see little point in work on such a proposal preceding adoption of a directive on the accounts of banks themselves.
The third major issue dealt with by the Select Committee, albeit briefly, is the question whether the directive should provide exemptions from the disclosure of information for institutions covered by the directive which fall below a certain size; the model would perhaps be the exemptions provided in the Fourth Directive for small and medium-sized companies. At present no exemptions are provided in the draft directive. The Select Committee agree with that position for this directive if it is to apply only to deposit-taking institutions. If the scope of the directive goes wider, the committee consider that other institutions should be treated similarly to their counterparts covered by the fourth directive.
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Perhaps surprisingly, this was not an aspect which attracted the attention of many of the respondents to the department's Consultative Document. Of those that did address themselves to the matter, there was virtual unanimity against the provision of exemptions for small institutions. Indeed, a number argued that the smaller the institution, the more desirable it was that its financial position should be fully disclosed. We can at least conclude at this stage that there is no widespread demand in this country for such exemptions.
Your Lordship's committee did not pursue in detail the host of technical matters that arise on the draft directive. The Department of Trade has itself received a considerable amount of detailed comment on these aspects, which it is now assimilating, but I consider that the committee's reference to the concern expressed about undue rigidity is very pertinent. There is obviously a tension between the objectives of harmonisation and enhanced comparability, on the one hand, and the practical need in the real world for adequate flexibility, particularly in a directive that aspires to cover a whole range of institutions and activities. But what is important is that at the end of the day the directive should be a practical document which will result in the preparation and publication of meaningful information.
I come to the specific point raised by the noble Lord, Lord Bruce, about the form which the legislation might in due course take. Although implementation of the directive is several years away, I recognise the interest of your Lordships in the matter and the concern expressed that there should be proper parliamentary control. There are of course two general points. The first is the question whether primary or secondary legislation is appropriate in a particular case, and that is a general one which is not confined to company law or Community initiative; no Government today can carry on business without making use of secondary legislation.
Secondly, the European Community Act 1972 makes a general provision for any Community obligation to be implemented by secondary legislation. Certainly not all Community obligations should be dealt with by that route, but it is a fact that the crucial period for debating and modifying a Community project comes before its adoption, not afterwards.
With those general considerations in mind, the Government will no doubt consider which legislative route is appropriate to any particular obligation, when it arises. As your Lordships will recall, the two Companies Bills which we have introduced in the present Parliament have dealt with two significant company law directives, and I do not believe that any Government would carry through what amounts to a fundamental re-writing of a large part of company law other than by Act of Parliament. On the other hand, there are some directives of a technical nature which make relatively insignificant changes to our existing law. In those circumstances, secondary legislation is likely to be appropriate and in such cases your Lordships' House would have an opportunity to express its views when implementing regulations are laid.
As this stage I am afraid it is not possible to come to a view on what will be the most appropriate legislative route for the particular draft directive we are dis-

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cussing this evening. It is at an early stage of its life and changes may well be made to the draft by the Commission following the observations of the European Parliament and the Economic and Social Committee. Furthermore, significant changes may well be made by the Council of Ministers during what I expect to be fairly lengthy negotiations. As I said, the time to take a decision on the legislative route to implement a particular draft directive is when the obligation arises; that is when the directive is implemented and when we can be certain of the nature of the obligations it creates. At that time we shall of course pay full regard to the views expressed on the matter during the course of this debate.
The Government are grateful to your Lordships' committee not just, as I said earlier, for its invaluable work on this directive and for eliciting such informative evidence; we are also grateful to the committee for recommending its report for debate by this House and thus for enabling the Government to have the benefit of the contributions of great hority that have been made today. I do not believe there is another institution within the Community which could bring so much personal experience and eminence to bear on this subject as your Lordships' House. It will be evident that there is a good deal of further work to be done on this draft proposal, both in this country and in Brussels. I believe the Government can, without undue immodesty, take credit for exposing the issues for public debate at the earliest possible opportunity. The Select Committee's report, and this debate, have also made a major contribution to the clarification of the issues that arise. As I indicated earlier, it now appears that there will be an interval before the negotiations start in Brussels. The Government propose to use that interval profitably by studying the responses to their consultative document, as well as the Select Committee's report, not to mention the important contributions made in your Lordships' debate today
7.47 p.m
Lord Plowden: My Lords, we have had a most interesting debate in which differing views have been expressed forcefully and persuasively. I join with other noble Lords in congratulating the noble Earl, Lord Airlie, and the noble Viscount, Lord Chandos, on their maiden speeches. They put forward somewhat differing views delicately, gently and persuasively and I hope they will not delay in joining us in further debates in this House.
I wish to comment on a remark of the noble Lord, Lord Roll. He and I worked together for many years and very rarely did I disagree with the advice he gave me, or in the discussions we had, but I am bound to say that I did not agree with the view he took tonight. I found, in listening to him most carefully, that he did not put forward any argument as to why the disclosure of reserves would do any harm to the accepting houses or imperil the confidence of their depositors and clients. Further, he and the noble Earl, Lord Limerick, expressed the view that we had not given sufficient consideration to the views of the acceptance houses on the question of undisclosed reserves. If one counts up the columns of evidence, it will be found that out of 23 columns, about 12 relate to the discussion on undisclosed reserves.
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Moreover, of the representatives of the British Bankers' Association who attended and gave evidence, two of them were from acceptance houses and one from a clearing bank; one was indeed a partner of the noble Earl, Lord Airlie. The discussions we had concentrated so much on the question of undisclosed reserves that one of the witnesses, a director of an accepting house, asked us to pay more attention to the views of the clearing bankers—at question No. 63 that is set out—and moreover, the acceptance houses submitted to us, after the British Bankers' Association saw us, an additional paper which they asked us to consider, which we considered very carefully; but they asked us not to print it in the report, so we did not do so.
As the noble Lord, Lord Trefgarne, has pointed out, most of the debate has concentrated on the question of undisclosed reserves, but in our report we made a number of other recommendations, and these are summarised in paragraph 29. I was encouraged by what the noble Lord said about the attitude of the Government—that they would be considering this matter.
Of course, the noble Lord pointed out, in relation to this draft directive, that it is not for the United Kingdom alone; the other members of the Community will have to be persuaded, or will have to decide what happens. But I think the noble Lord said that, so far as the United Kingdom is concerned, the Government would be considering this matter, and considering it in such terms—using the phrase that we used—that the burden of proof was on those who wished to retain undisclosed reserves, and not on those who criticised them. I quite understand that it will take some time for the Government to consider all these matters, but I know that the noble Lord will forgive me if at some time later in the year we ask him a Question as to how they are getting on.
On Question, Motion agreed to.

Western Isles Islands Council (Loch Roag) Order Confirmation Bill
Brought from the Commons; read a first time, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read a second time and reported from the Committee.
  AIR WEAPONS:CAMPAIGN AGAINST MISUSE
  AIR WEAPONS:CAMPAIGN AGAINST MISUSE
  FORESTRY: SELECT COMMITTEE REPORT
  FORESTRY: SELECT COMMITTEE REPORT
  INDUSTRIAL BUILDING ALLOWANCES
  INDUSTRIAL BUILDING ALLOWANCES
  RUGBY INJURIES: SPINAL UNIT ADMISSIONS
  RUGBY INJURIES: SPINAL UNIT ADMISSIONS
  COPYRIGHT LAW REFORM
  COPYRIGHT LAW REFORM
  POLAND: NATO MEMBERS' CONSULTATIONS
  POLAND: NATO MEMBERS' CONSULTATIONS
  CZECHOSLOVAKIA: UK CLAIMS
  CZECHOSLOVAKIA: UK CLAIMS
  HELSINKI FINAL ACT: SOVIET UNION AND EASTERN EUROPE
  HELSINKI FINAL ACT: SOVIET UNION AND EASTERN EUROPE
  BASKET I: SECURITY IN EUROPE: PRINCIPLES GUIDING RELATIONS BETWEEN PARTICIPATING STATES: CONFIDENCE-BUILDING MEASURES AND CERTAIN ASPECTS OF SECURITY AND DISARMAMENT
  BASKET I: SECURITY IN EUROPE: PRINCIPLES GUIDING RELATIONS BETWEEN PARTICIPATING STATES: CONFIDENCE-BUILDING MEASURES AND CERTAIN ASPECTS OF SECURITY AND DISARMAMENT
  BASKET II: CO-OPERATION IN THE FIELD OF ECONOMICS, OF SCIENCE AND TECHNOLOGY, AND OF THE ENVIRONMENT
  BASKET II: CO-OPERATION IN THE FIELD OF ECONOMICS, OF SCIENCE AND TECHNOLOGY, AND OF THE ENVIRONMENT
  BASKET III: CO-OPERATION IN HUMANITARIAN AND OTHER FIELDS
  BASKET III: CO-OPERATION IN HUMANITARIAN AND OTHER FIELDS
  TECHNOLOGY TRANSFER: COCOM AGREEMENT
  TECHNOLOGY TRANSFER: COCOM AGREEMENT
  UNESCO CONFERENCE: PROPOSAL FOR NEWS AGENCIES
  UNESCO CONFERENCE: PROPOSAL FOR NEWS AGENCIES
  LAW OF THE SEA CONFERENCE
  LAW OF THE SEA CONFERENCE
  VEHICLE REGISTRATION NUMBER SYSTEM
  VEHICLE REGISTRATION NUMBER SYSTEM
  MULTI-HANDICAPPED BLIND PEOPLE
  MULTI-HANDICAPPED BLIND PEOPLE