Sitting of 20 February 1984

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

    Bogside Mine, Fife
    Mr. Douglasasked the Secretary of State for Energy if he will make a statement regarding the consultation which took place between the National Coal Board and his Department before the announcement on 3 February of the cessation of production at Bogside mine in Fife.
    The Under-Secretary of State for Energy (Mr. Giles Shaw): Colliery closures are a matter for the National Coal Board, which has well-established arrangements, agreed with the mining unions, covering procedures at local and national level. These do not call for consultation with my Department, and none took place.
    Mr. Douglas: Is that not an extremely innocuous reply in the circumstances? As in England, the NCB sees fit, in its wisdom, to ask the mine managers' union to give cover, while in Scotland it has decided not to request similar cover for maintenance and safety, will the Minister institute an inquiry, preferably public, into all the elements surrounding the problems affecting the Bogside closure on 3 February, so that there will be a halt to the NCB's vindictive attitude in Scotland, which is causing disruption in the coalfield?
    Mr. Shaw: I regret that the hon. Gentleman should see fit to criticise the NCB management in any part of the United Kingdom on such a matter. I do not intend to intervene in a matter involving safety provision. That must be for the local NCB management and the active discussion of those involved.
    Mr. Mason: In view of the increasing numbers of pit closures in recent months, what changes have taken place in the closure procedures used by the NCB? Is the Minister aware that there seems to be a new element of dictatorship in pit closures? Who is responsible for the introduction of that dictatorship—the chairman, Ian MacGregor, or the Department of Energy?
    Mr. Shaw: The right hon. Gentleman is referring to a range of pit closures, all of which have been through the normally accepted procedures, and all of which have resulted in closure by voluntary redundancies. The right hon. Gentleman should recognise that over 11 years there were 295 closures and over the years both management and many others commenting on the industry have said that that is essential if the industry is to recover some viability with its enormous loss-making capacity.
    Mr. Orme: I support my hon. Friend the Member for Dunfermline, West (Mr. Douglas) on his strong point. Does the Minister agree that there appears to be a change in procedure and an escalation in the effect of pit closures? Will he comment on the report in The Observer yesterday, which forecast the loss of 37,000 more jobs over the next 12 months, with 30 pits to close? Will that also lead to a change in procedure? What has the Minister to say to that?
    Mr. Shaw: The right hon. Gentleman is wrong to infer that there has been any change in procedure. The procedure for the evaluation of pits is traditional in the industry, is annual in extent, and covers every pit in the United Kingdom, as the right hon. Gentleman knows. The facts of the closure are similar today in relation to decisions taken to those during the period of the Labour Administration when, in 11 years, 295 pits closed.
    Mr. Douglas: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

    Gas-gathering Projects
    Mr. Wallaceasked the Secretary of State for Energy what consultations he has had regarding further North sea gas-gathering projects; and whether he will make a statement.
    The Secretary of State for Energy (Mr. Peter Walker): I am in regular touch with the oil industry over its plans for offshore developments, including, as appropriate, plans to expand or extend the present gas-gathering infrastructure.
    Mr. Wallace: As the Government's failure to back an integrated gas-gathering project in 1981 now means that we have to import more expensive Sleipner gas, and as private industry has failed to respond to the initiative at the end of last year for a gas-gathering system in the central North sea, do not the Government have a duty to take an initiative in this matter to ensure future continuity of supplies from our resources and to avoid the loss of, according to one estimate, up to 20 per cent. of our North sea gas reserves?
    Mr. Walker: Before making such remarks the hon. Gentleman should learn more about the facts. It is wholly untrue that, as a result of not preparing certain pipelines in previous years, we shall now be dependent upon importing gas from Norway. As the hon. Gentleman should know, we have been importing gas from Norway for some time. It can even be argued that certain changes in the pipelines in the period that the hon. Gentleman mentioned will mean that the gas will be available in the 1990s, when it will be more needed.
    Mr. Rowlands: Is the Secretary of State aware that in 1981 the integrated gas-gathering line proposal was sunk and sabotaged by the Cabinet, against the advice, it appears, of the right hon. Gentleman's predecessor and the Minister of State of the day? When shall we have in place a comprehensive gas-gathering pipeline, whether financed by the private or the public sector?
    Mr. Walker: The hon. Gentleman will be delighted to learn that a great deal is going on at present. Three major schemes have been approved during the past year. I am very confident that what we are now seeing is the

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    completion of a network which will bring us a great deal of gas at the time when we need it. Compared with 1979, for example, the amount of gas flaring now required is down by 45 per cent.

    Energy Efficiency Office
    Mr. Rostasked the Secretary of State for Energy if he will make a statement on the policy objectives of the Energy Efficiency Office.
    Mr. Peter Walker: The objectives of the Energy Efficiency Office are to encourage increased efficiency in energy use; to help all consumers to get better value for money from the energy they consume, and to increase industrial and commercial competitiveness.
    Mr. Rost: Does my right hon. Friend agree that one measure of success ought to be the effectiveness of the energy efficiency industries, which are now working at well below capacity? Will he brief himself on the recent meeting between the Energy Efficiency Office and the Structural Insulation Association, at which weaknesses in the working of the Homes Insulation Act 1978 and inadequacies in the building regulations were pointed out?
    Mr. Walker: We are very carefully studying the results of that meeting. I am pleased to say that for the coming year there will be a substantial increase in the provision of grants for home insulation. I hope that full advantage will be taken of this. In all spheres, industrial and domestic, we are encouraged by the very considerable increase in activity over the past few months.
    Mr. Orme: What discussions has the Secretary of State had with the Secretary of State for the Environment to enable financial guidelines to be given concerning insulation work for housing?
    Mr. Walker: I am delighted to say that in one or two places where there were snags in the last few months of this financial year, as a result of overspending of capital allocations, it has been possible to have allocations of more than double for next year.

    Domestic Energy Prices
    Mr. Canavanasked the Secretary of State for Energy if he will list the increases in the domestic prices of coal (pithead price), electricity and gas that have taken place since January 1981.
    Mr. Peter Walker: The Department of Employment index shows that the domestic price of coal has increased by 22 per cent. over the period January 1981 to December 1983, that of gas by 54 per cent. and that of electricity by 21 per cent. The average pit-head price of domestic coal increased by 21 per cent. over the same period.
    Mr. Canavan: Bearing in mind the excessive nature of the increases, particularly with gas, where the price increase has been over twice the rate of inflation, why are the Tory Government, who claim to be non-interventionist, intervening to put prices up, thereby plunging hundreds of thousands of families into fuel poverty? Will the Secretary of State give us an absolute assurance now that no further demands will be made on the energy supply industries to raise their prices even further?
    Mr. Walker: If the hon. Gentleman holds those views, he should start canvassing vigorously for the Tory
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    candidate in Chesterfield. During the period for which the Labour candidate for Chesterfield, Mr. Benn, was responsible, domestic coal prices soared at much faster rates, as did gas and electricity prices.
    Mr. Skeet: In view of the Government expenditure programme for 1984 to 1987, under which the electricity and gas supply industries will have to pay considerably more to the National Coal Board, would it not be a fairer result to allow electricity and gas to make a takeover bid for the NCB?
    Mr. Walker: I have detected no signs of eagerness on their part to do so.
    Mr. Hardy: Does the Secretary of State agree that the figures he gave the House confirm that the Government's commitment to energy conservation is based overwhelmingly on a reliance on pricing? Does he further accept that present domestic prices of coal, gas and electricity are higher than they need to be, higher than they ought to be, and that, for industry, they are higher than those charged by our competitors who pursue more intelligent policies?
    Mr. Walker: No, Sir. Before the hon. Gentleman makes assertions of that kind he should look, for example, at the recent CBI survey, which shows that in the majority of industries that simply is not true. The CBI identifies a minority of industries where there are some problems, but it says that the majority of industries are very competitive. The astronomic increases in industrial charges that took place under the last Labour Government are in stark comparison with what has happened under this Government.
    Mr. Rathbone: How do the prices of coal, gas and electricty in this country compare with those in other EC states?
    Mr. Walker: Certainly over the past year prices in, for example, France, Italy and other European countries, have risen far faster.

    British National Oil Corporation
    Mr. Haywardasked the Secretary of State for Energy if the Government have any intention of altering the status of the British National Oil Corporation.
    Mr. Peter Walker: I do not envisage changes in the status of the corporation. The review of BNOC's operations promised by my predecessor to the Select Committee will be completed shortly.
    Mr. Hayward: Does my right hon. Friend the Secretary of State accept that the creation of Britoil has been fairly successful, and that BNOC would benefit from a further splitting off into separate entities?
    Mr. Walker: At present I have no plans to do that, but I agree that Britoil has been successful.
    Mr. Douglas: What would be the status of agreements with the oil companies, in terms of oil coming to BNOC, if any changes were made, and what losses does the right hon. Gentleman expect BNOC to make?
    Mr. Walker: I do not at present anticipate any losses by BNOC, and I hope that during the past year it will have made a profit.
    Mr. Rowlands: I remind the House of the crucial role that BNOC played in trying to stabilise oil supplies in this country during the crisis in 1979. In view of the serious

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    situation that is developing now between Iran and Iraq in the Gulf, will the Secretary of State hold urgent discussions with BNOC and the International Energy Agency to ensure that we are better prepared than we were in 1979?
    Mr. Walker: I agree that stability in prices is very important, and BNOC has an important role to play in that connection. As for consultation, I am in constant contact with BNOC.

    Coal Subsidies
    Mr. Rogersasked the Secretary of State for Energy what is the current level of production subsidies to the coal industries of the United Kingdom, Belgium, France and Germany, respectively.
    Mr. Peter Walker: Production benefits both from capital investment financed by the Government and from direct subsidies on coal production. The figures from the European Commission for production subsidies and investment finance in 1982 are:

    £ million

    United Kingdom

    1,088

    Federal Republic of Germany

    682

    France

    347

    Belgium

    138

    Mr. Rogers: Does the Secretary of State accept that in giving the figures in that way he is distorting them? [HON. MEMBERS: "No."] I know that the Secretary of State is an expert at realigning figures. Will he not accept that it would be far fairer to relate the answer to the total tonnage and the number of people involved, instead of distorting the picture, as he did in his answer?
    Mr. Walker: I am willing to compare those figures with those for any country in western Europe. No country in western Europe currently has such a good record towards its coal industry as this Government have towards ours. I suggest that the hon. Gentleman has a good look at the record of the Socialist Government in France on the coal industry there during the past two years.
    Mrs. Currie: Does my right hon. Friend agree that subsidies of £1,000 million during the past year to the British coal industry are far too high, particularly bearing in mind everything else that we have to spend money on? Does he agree that they simply put off the evil day when loss-making pits must be closed?
    Mr. Walker: It is correct to invest heavily in new coal production, because that will be far more efficient and economic for the future. The coal industry has an important part to play in supplying the country's future energy resources. This year the NCB will receive more than £900 million in subsidies, which is equivalent to £90 per miner per week.
    Mr. Foulkes: Is it not true that the Secretary of State has twisted the figures yet again, and that the subsidy per tonne of coal produced in Belgium, France and Germany is much higher than in the United Kingdom? Those countries are supporting their coal industries for patriotic reasons, but once Mr. MacGregor has his way, under the direction of the Secretary of State, the coal industry in Wales and Scotland will be devastated, and the social consequences of running the industry down in the
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    peripheral areas will be disastrous. Will the right hon. Gentleman admit that compulsory redundancies in the coal industry will be inevitable?
    Mr. Walker: I find that sort of nonsense from the Opposition quite remarkable. It could not be better illustrated than by the fact that their candidate at a certain by-election is the man who was the last Labour Minister responsible for the industry. In real terms, he paid the miners less, invested less in the mining industry, achieved lower productivity and gave less generous payments to redundant miners than at present.

    Privatisation
    Mr. Marlowasked the Secretary of State for Energy if he will outline his timetable for privatisation within the energy industry.
    Mr. Peter Walker: I am of course examining the scope for transfers to the private sector in the state-owned energy industries. I will inform the House in due course of my conclusions.
    Mr. Marlow: Since, as my right hon. Friend just said, the coal industry is costing everybody in work in this country nearly £1 per week, does he have any plans for privatising it, and if not, why not?
    Mr. Walker: I do not believe that the coal industry at the present time is in a situation in which we can consider privatisation. The important thing is to ensure that one takes advantage of the massive investments being made in order to produce an efficient and economic industry. That is what we are doing.
    Mr. Lofthouse: When does the Secretary of State expect the sale of the Wytch farm oilfield to be completed? Does he support the stand of the British Gas Corporation in refusing to sign and complete the arrangements abroad, given that such completion would deny the Government £3 million in stamp duty? Will the right hon. Gentleman give an assurance that that asset, and any other assets, will be sold only at the full economic value? Is the right hon. Gentleman aware of a letter sent by his predecessor, advising the BGC to sell the Wytch farm oilfield to the Dorset bidding group at less than the full economic value?
    Mr. Walker: I expect that completion of the Wytch farm sale will take place within a very short period of time. Contrary to the hon. Gentleman's suggestion, I know of no such objections by the BGC. As the hon. Gentleman knows, the BGC has been negotiating with the group that put in the highest tender.
    Mr. Renton: With his customary vigour, will my right hon. Friend ensure that, by the time of the next election, the domestic consumer has more than one choice as to where to buy his electricity or gas? Is my right hon. Friend aware that natural gas is still not available to many hundreds of houses in my constituency and that the local gas board has no plans to make it available? Surely the consumer would welcome competition in the industry, just as he welcomes it in British Telecom.
    Mr. Walker: It is highly unlikely that two supplies of gas and two supplies of electricity would be available to individual domestic consumers anywhere in the world. There are not many free enterprise countries—certainly not Japan, America, Germany, for example — where

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    there are two such options. I am certainly in favour of those industries being as efficient as possible. Under the 1983 Act, anyone is entitled to set himself up as a supplier, in competition, if he so wishes.
    Mr. Allen McKay: Will the Secretary of State reconsider his answer to the hon. Member for Northampton, North (Mr. Marlow)? The right hon. Gentleman spoke about there not being privatisation at the present time. Does that mean that he intends to privatise the industry at some future date?
    Mr. Walker: I have made it clear several times from the Dispatch Box that I should be willing to consider any offer by the miners to form a workers' co-operative. If at any stage they wish to do that, individually or collectively, I shall be interested in considering it.
    Mr. Heathcoat-Amory: Does my right hon. Friend agree that, although a change of ownership is necessary, the overriding need is for greater diversity of competition? Will my right hon. Friend therefore be cautious about privatising such industries without first removing their privileges.
    Mr. Walker: I shall carefully examine any privatisation proposals to discover the advantages and disadvantages. I know that my hon. Friend, with his knowledge of the industry, will recognise that there is little likelihood of each household in his constituency being offered two gas supplies and two electricity supplies. That is the reality. Certainly one could have a system which is far less bureaucratic, less subject to political interference and with more incentive to efficiency than the present system.
    Mr. Mason: Will the Secretary of State reassure the House that he has no intention of privatising deep coal mine output? Can he now tell the House what he has in mind for privatising ancillary activities?
    Mr. Walker: I repeat that at present I have no plans for the privatisation of the coal industry—certainly in the foreseeable future. The long-term future is a matter to be considered in the future. If we could put the coal industry in a position so that we could find a better system of ownership in the interests of the country, I should like to pursue that.
    Mr. Rathbone: When encouraging or attracting private capital to present operations, will my right hon. Friend encourage the suppliers of energy to report their performance in return-on-investment terms, which are more comparable with the normal private sector measurements than the terms presently used?
    Mr. Walker: Yes. That is a valid point which we shall look at.
    Mr. Orme: Are the electricity and gas showrooms included in the Secretary of State's timetable for privatisation?
    Mr. Walker: I have no specific timetable or proposals for privatisation at present. I am examining all the prospects, and I shall be delighted to inform the House as soon as conclusions are reached.

    Gas (Self-sufficiency)
    Mr. David Atkinsonasked the Secretary of State for Energy how long he estimates Great Britain will be self-sufficient in gas.
    Mr. Peter Walker: Estimates of proven United Kingdom continental shelf gas reserves are equivalent to some 14 years of gas consumption in Britain at 1983 levels. The life of United Kingdom continental shelf gas reserves is, however, prolonged by the availability of gas imports, which currently provide between 20 and 25 per cent. of total supplies to the British market.
    Mr. Atkinson: I thank my right hon. Friend for that reply. In view of his answer to the hon. Member for Orkney and Shetland (Mr. Wallace) today, will he comment on Friday's press reports that the British Gas Corporation is seeking to import Norwegian gas at a price one-third higher than the cost of producing from British fields? Does my right hon. Friend or British Gas have any plans to import gas from Siberia?
    Mr. Walker: I have no plans to import gas from Siberia.
    Mr. Foulkes: Why not?
    Mr. Walker: I should certainly like to send certain people to look at it.
    The British Gas Corporation is in the process of conducting negotiations with Norwegian gas suppliers. Of course it will report to me on the state of those negotiations, but nothing has been finalised.
    Mr. Hardy: Does the Secretary of State accept that extended self-sufficiency is hardly assisted by the extensive gas flaring to which he has already referred. Does he further accept that the position in 1979 was due largely to the special circumstances of the Brent field? Should we not have learnt to do a great deal better in the intervening five years?
    Mr. Walker: The hon. Gentleman will be delighted to know that we have done a great deal better. Gas flaring is now about 45 per cent. less than it was then.
    Sir Dudley Smith: Further to the point made by my hon. Friend the Member for Mid-Sussex (Mr. Renton), is my right hon. Friend aware that a varied minority of my constituents are extremely puzzled by the fact that, although some of them live within a mile of a gas pipeline, they cannot get gas supplies? I suspect that that applies in many areas. In the circumstances, because of their feelings in this respect, will my right hon. Friend have discussions with the chairman of the British Gas Corporation about the problem and consider bringing forward fresh legislation to make it much easier to extend gas supplies?
    Mr. Walker: If my hon. Friend draws my attention to a specific case in his constituency, I shall be only too delighted to refer it to and ask the chairman of the BGC to consider it. The coverage of domestic users in this country is very high compared with most other countries. In many countries where there is freedom to operate private as well as public utilities, substantial numbers of the population do not have gas supplies made available to them.

    Electricity Generation (Nuclear Power)
    Mr. Berminghamasked the Secretary of State for Energy if he will indicate the percentage of generated electricity produced by nuclear power in 1981, 1982 and 1983, respectively.
    Mr. Giles Shaw: In England and Wales, nuclear power supplied 11 per cent. of total electricity generated in 1981–82 and 14 per cent. in 1982–83. The latest estimate for 1983–84 is 14 to 15 per cent. Matters concerning electricity generation in Scotland are the responsibility of my right hon. Friend the Secretary of State for Scotland.
    Mr. Bermingham: In view of the excess that already exists in generating capacity in Britain—the percentage of excess depending, of course, on how one calculates it —does the Minister agree that any further investment in PWR-type reactors would be a waste of money, because we have more than enough capacity, in any event, without increasing investment in that area?
    Mr. Shaw: The hon. Gentleman's reference to the Sizewell B inquiry must remain sub judice for the time being. On his general point, he must agree that the importance of diversity in fuel policy lends great weight to the sensible development of alternative technologies, of which nuclear technology is one, and that is a central part of the Government's policy.
    Mr. Crouch: Does my hon. Friend think that the figures that he has given for generated electricity from nuclear power will be sufficient in future? Does he agree that by the end of the century we shall need at least 20 per cent. of electricity to be generated by nuclear power?
    Mr. Shaw: My hon. Friend is right. One of the obvious facts of comparison between generation costs in this and other European countries is that there are significantly greater percentages in European generation, and that of itself has given rise to complaint that our electricity prices are not quite so low.
    Mr. Campbell-Savours: If the Minister wishes to retain an efficient nuclear power industry in Britain, would it not be better to retain it within the public sector? May we have an absolute assurance that BNFL will not be privatised during the lifetime of this Government?
    Mr. Shaw: The hon. Gentleman knows that the future of BNFL is a matter which at present is naturally causing the greatest possible examination. He will agree that the operations of this industry must be of the highest possible standard of safety. That question will, therefore, continue to concern the Government, and we have committed full resources to achieve that.
    Mr. Kenneth Carlisle: Is not the price of electricity in France much cheaper than it is here because so large a proportion is generated by nuclear power?
    Mr. Shaw: My hon. Friend is right. The average price in France is significantly less for industrial users because of the high proportion of nuclear generation.
    Mr. Chapman: In answer to an earlier supplementary, question my hon. Friend referred to Sizewell B. Has he been given any information about when the inquiry will conclude and when the report of the inspector will be presented to his right hon. Friend?
    Mr. Shaw: The timing of the inquiry and all matters relating to it are in the extremely capable hands of Sir Frank Layfield, and he will come to his own conclusions.

    Coal Industry (Investment)
    Mr. Burtasked the Secretary of State for Energy what was the annual level of capital investment in the coal industry during the years 1974 to 1983.
    Mr. Giles Shaw: Total capital investment during the years April 1974 to March 1979 and April 1979 to March 1983 was £1,472 million and £3,138 million respectively. I have arranged for the annual breakdown of these figures to be published in the Official Report.
    Mr. Burt: Will my hon. Friend confirm that the NCB's investment in the Asfordby pit is the largest since approval was given by the 1970–74 Conservative Government for the Selby project? Is this not a further reason why the good voters of Chesterfield will be knocked over in the rush of miners to be first to the polls on by-election day to vote for the Conservative candidate?
    Mr. Shaw: There can be no question but that investment by Conservative Governments in the coal industry has been second to none. In the period between 1974 and 1983, £7·5 billion in real terms was invested in the coal industry. My hon. Friend is right to say that Asfordby is a powerful demonstration that the coal industry has a future, provided that it is productive, efficient and competitive in price.
    Mr. Boyes: Is the Minister aware that 700 men at Herrington colliery in my constituency are interested in his opinion that the coal industry has a future? They will set that against their meeting with Mr. MacGregor last week, when they argued that the pit should be kept open. As my hon. Friend the Member for Rhondda (Mr. Rogers) suggested, would it not make sense to use some of the Government's investment to keep pits open where there is still coal, rather than create longer dole queues?
    Mr. Shaw: The hon. Gentleman will have to choose between exploiting reserves at prices that the market will find acceptable and regarding the coal industry from an entirely different point of view and allowing it to decline. When the Asfordby investment is completed, it will yield about 2·2 million tonnes per annum at highly competitive prices. Each coal board area must recognise these factors, and I believe that there is that recognition.
    Mr. Eggar: As the National Union of Mineworkers has failed to live up to its part of "Plan for Coal", is my hon. Friend satisfied that the nation is getting a decent return on its investment in the coal industry?
    Mr. Shaw: The nation has not been getting an adequate return on its investment in the coal industry for decades. It is high time that the Government, having control of the nation's economy, made strenuous efforts to ensure that that position is reversed. That is the object of my right hon. Friend's policy.
    Mr. Rowlands: Does the Minister agree that some of the finest investment has been in some of the oldest pits and that that has resulted in production as well as productivity records being broken? Those engaged in the mining industry in my constituency can testify to that. We have read press reports over the weekend of Mr.

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    MacGregor's so-called survival plan. Is the hon. Gentleman aware that it will be seen in many coalfields not as a survival plan but as a recipe for the destruction of the industry?
    Mr. Shaw: I agree that there have been many instances of good returns from investment in old pits. There have also been many instances of considerable productivity improvements. However, the hon. Gentleman will be aware that an average improvement of 4 per cent. a year was achieved only last year, when it was the intention of "Plan for Coal" to achieve an annual improvement in the rate of produtivity of 4 per cent. That is the way in which the industry has to go.
    Following is the information:

    Total additions to fixed assets in the United Kingdom including interest and leasing:

    Year

    Capital Investment £ million

    1974–75

    145

    £1,472 million in five years April 1974 to March 1979

    1975–76

    217

    1976–77

    280

    1977–78

    350

    1978–79

    481

    1979–80

    661

    £3,138 million in four years April 1979 to March 1983

    1980–81

    807

    1981–82

    812

    1982–83

    858

    1983–84*

    800

    *Approved.

    Energy Conservation
    Mr. Mark Robinsonasked the Secretary of State for Energy what assessment his Energy Efficiency Office has made of potential savings from energy conservation in industry, and, in particular, the steel industry.
    Mr. Peter Walker: The Energy Efficiency Office estimates that British industry could save 20 per cent. of its energy use from cost-effective energy efficiency measures. In 1982 prices, that is equivalent to a saving of £1·3 billion. There is considerable potential for further savings in the steel industry.
    Mr. Robinson: I believe that my right hon. Friend's answer demonstrates the value of the Energy Efficiency Office. Is assistance available to firms which wish to monitor energy conservation? Are any specific energy conservation projects available to the steel industry?
    Mr. Walker: I assure my hon. Friend that grants are available for energy surveys and audits, for example. The Allied Steel and Wire project at Cardiff has produced energy savings of 90 per cent. with a six month pay-back. I am glad to say that the Government contributed to the survey that resulted in that success.
    Mr. Wallace: Is the Secretary of State aware that 30 per cent. grants are not available for firms in Scotland investing in ventilation control, draught exclusion and cavity wall insulation? What consultations has he had with the Secretary of State for Scotland on this issue?
    Mr. Walker: I have the closest collaboration with my right hon. Friend the Secretary of State for Scotland. A great deal of progress is being made in Scotland as well as in England.

    Alternative Forms of Energy
    Mr. Chapmanasked the Secretary of State for Energy if he will report progress on United Kingdom research into alternative forms of energy.
    Mr. Peter Walker: Continuing progress is being made in research on those technologies with the best prospects.
    Mr. Chapman: I appreciate that Government grants for research into alternative forms of energy have increased more than fourfold in the past five years. Will my right hon. Friend confirm that research work is being undertaken in collaboration with other EEC countries to ensure that there is no waste or duplication of necessary effort?
    Mr. Walker: I am grateful to my hon. Friend for asking that supplementary question, because I think that there is waste and duplication. I have recently had talks with a number of European colleagues who are responsible for energy to ascertain whether we can collaborate more closely. I am having talks next month with the American Secretary of State for Energy to see whether similar collaboration can be achieved with the United States.
    Mrs. Renée Short: What support is the Secretary of State giving to British firms that are developing wind energy as an alternative source of energy for the desalination of sea water, bearing in mind that that has considerable interest for Third-world countries and the export potential for British firms?
    Mr. Walker: This matter is of interest. I know that the hon. Lady will be pleased to hear that a few months ago I gave the go-ahead for a £3·2 million wind generator project at Carmarthen bay.

    Industrial Gas and Electricity Supplies
    Mr. Tony Lloydasked the Secretary of State for Energy if he has issued any guidelines about the termination of gas and electricity supply to industrial users; and if he will make a statement.
    Mr. Giles Shaw: No, Sir. This is primarily a matter for the judgment of the gas and electricity supply industries.
    Mr. Lloyd: Does the Under-Secretary of State accept that industry and employment already suffer because of high energy prices and that in the tragically all too frequent number of firms going into receivership the gas and electricity boards have a responsibility to be flexible, especially towards companies such as James H. Dennis, in my constituency in Trafford Park, which went into receivership? Does the hon. Gentleman consider that the North-Western electricity board, in insisting on being treated as a secure creditor for all outstanding debts before it maintained the electricity supply was irresponsible, threatening as it did the survival of the company? Will the Minister reconsider the answer that he has just given?
    Mr. Shaw: I shall not reconsider my answer. I accept that there are occasions when there must be flexibility. I am sure that, as a matter of course, the gas and electricity boards have such flexibility. It is important that they act commercially in relation to their supply contracts. I believe that the hon. Gentleman has a particular constituency case in mind. I am sure that my noble Friend

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    the Under-Secretary of State who is responsible for these affairs in the Department of Energy will see him and discuss those matters.

    National Coal Board
    Mr. Dormandasked the Secretary of State for Energy when he next proposes to meet the chairman of the National Coal Board.
    Mr. Jannerasked the Secretary of State for Energy when he next expects to meet the chairman of the National Coal Board.
    Mr. Peter Walker: I meet the chairman of the NCB regularly.
    Mr. Dormand: Is it not suspicious that Opposition Members cannot get a straight answer about the reports in yesterday's edition of The Observer about the Government pressing the chairman of the NCB to close 30 pits and get rid of 30,000 jobs? When will the Secretary of State realise that closing a pit destroys a whole community? We are talking, not just about miners and their families, but about small and large businesses, the location of industry, and so on.
    Mr. Walker: There is no direction from the Government to close any number of pits over a particular period. Therefore, any such report is untrue. Of course I recognise that pit closures cause difficulties to local communities. The hon. Gentleman, who has been a Member for a long time, will recognise that over eight years of Conservative government there were 68 pit closures, but over 11 years of Labour government there were 295 pit closures.
    Mr. Ryman: Does the Secretary of State appreciate the enormous seriousness of the rumours circulating in the north east of England about possible pit closures and redundancies, particularly the Bates colliery in Blyth? For example, is the right hon. Gentleman aware that a rumour is circulating that about 800 men are to be made redundant in the north east as a result of secret redundancy plans of the NCB?
    Mr. Walker: There is no such thing as secret plans, in the sense that there is an agreed procedure with the National Union of Mineworkers that has to be followed when pit closures are proposed.
    Mr. Orme: Why does the Secretary of State not give a direct answer to the question about the MacGregor survival plan? It does not represent survival for the industry, as we see it. Are the facts in yesterday's edition of The Observer true or not?
    Mr. Walker: I gave a direct answer. There is no direction from the Government about the number of pit closures taking place. Mr. MacGregor is following the procedures that were followed by the Labour Government when they closed 295 pits.

    Cross-Channel Electricity Link
    Mr. Hannamasked the Secretary of State for Energy when he expects the new cross-Channel electricity link to come into operation.
    Mr. Giles Shaw: I am advised that the CEGB expects to commission the first stage of the link in 1985, with the
    558
    second following a year later. The House will recall that the link was approved in principle in 1978, in order to facilitate the transfer of electricity in both directions.
    Mr. Hannam: I welcome my hon. Friend's reply. Does he agree that there are two main benefits from that link: first, that there will be greater flexibility of supply at times of peak demand; and, secondly, that we shall be able to sell our surplus electricity to the European grid system at good prices?
    Mr. Shaw: Yes, my hon. Friend is quite right. There was, and is, intended to be a two-way benefit from the supply and distribution of electricity.

    Electricity Council
    Mr. Cohenasked the Secretary of State for Energy when he will next meet the chairman of the Electricity Council.
    Mr. Peter Walker: I have regular meetings with the chairman of the council.
    Mr. Cohen: Will the Secretary of State consider discussing with the chairman the question of electricity prices, particularly the disparity of prices for electricity from the same grid? The cost in inner city areas can be higher than the cost in nearby areas. Some of my constituents have to pay 15 per cent. more than people living in Chingford, just down the road in the same borough.
    Mr. Walker: There are variations between different electricity boards. That has been so since the various electricity boards were set up in the regions. The hon. Gentleman has a problem in that his constituency covers the border between two electricity boards. I am sure that his constituents are relieved that the overall increase in the price of electricity is 2 per cent., and that the increase in standing charges is nil.

  HOUSE OF COMMONS

    Oral Questions
    Mr. Wareingasked the Lord Privy Seal if he will arrange for the rota of oral questions to be amended to accommodate a period for the Parliamentary Secretary to the Treasury.
    The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): No, Sir.
    Mr. Wareing: Does the Lord Privy Seal recall the abuse of Executive power in the House on 18 November 1983 when I attempted to relieve the distress of many disabled people by introducing a private Member's Bill? Does he agree that the Minister who was responsible for the Whipping on that day should be answerable in the House? Does he further agree that private Member's days, especially the abuse of Executive power on such days, should be fully investigated by the Select Committee on Procedure?
    Mr. Biffen: I cannot share the hon. Gentleman's anxiety about there having been an abuse of Executive power on the date that he introduced his private Member's Bill. It seems to me that what happened then was exactly what had happened in the preceding Parliament on 21

    559
    February 1969 on the Disabled Persons' Pensions and Miscellaneous Provisions Bill introduced by my right hon. Friend the Member for Waveney (Mr. Prior). Consideration of such matters in a Procedure Committee is a possibility for the future.
    Mr. Aitken: Although the idea of Chief Whip's questions has a superficial attraction for both sides of the House, will my right hon. Friend firmly resist it, not least because he will know better than anyone else that the House works only because the usual channels are an entirely private method of communication?
    Mr. Biffen: I must agree with my hon. Friend. The virtues of the present convention of the usual channels are overwhelming, and it is that much more attractive than the prospect of the eloquence of my right hon. Friend the Chief Whip.
    Mr. Foulkes: If the Lord Privy Seal will not look at that type of oral question, will he have another look at the position whereby Welsh Question Time is in a three-week cycle, whereas Scottish Question Time, about which twice as many hon. Members are concerned, and in which many subjects involve the Scottish Office, is in a four-week cycle? Does the Lord Privy Seal agree—
    Mr. Speaker: Order. Is the hon. Member asking that the Parliamentary Secretary to the Treasury should answer those questions?
    Mr. Biffen: The powerful position of Scottish business in the affairs of the House excites general concern, but the matter raised by the hon. Gentleman could first be considered by the usual channels, and possibly ultimately by the Procedure Committee.

    Private Members' Motions
    Sir John Biggs-Davisonasked the Lord Privy Seal if he will propose the establishment of a Select Committee on Procedure to consider the procedure governing private Members' motions.
    Mr. Biffen: I hope to bring forward very shortly proposals for the establishment of a Select Committee on Procedure. If these are agreed to by the House, it will be open to the Committee to review any aspect of our procedures.
    Sir John Biggs-Davison: Declaring a non-interest as one who drew lucky in the ballot for private Members' motions, may I ask my right hon. Friend whether he will give favourable consideration to the proposal that I have put forward on a number of occasions, in vain, that Members of the House should be given a better chance in the ballot by those who are successful having their names withdrawn for the Session or Parliament?
    Mr. Biffen: I took note of my hon. Friend's remarks at the beginning of his speech in a recent debate that he initiated on this topic. However, the matter should be considered further within the answer that I have given.
    Mr. Mason: Instead of considering another Select Committee, will the Leader of the House consider abolishing the lot?
    Mr. Biffen: I suppose that that would provide a natural break in the sequence of events in our affairs. I shall give quite serious consideration to that point, but not until the next Select Committee has been established.
    Mr. Robert C. Brown: Does the Leader of the House agree that as long as there is time for private Members' motions, Front Bench speakers should have no right to abuse private Members' time, as they have increasingly tended to do?
    Mr. Biffen: All I can say is that it is an abuse, if that it be, practised by the Administration of which the hon. Gentleman was privileged to be a member.

  CIVIL SERVICE

    Redundancy Policy
    Mr. Chapmanasked the Minister for the Civil Service if he will make a statement on redundancy policies affecting civil servants.
    The Minister of State, Treasury (Mr. Barney Hayhoe): As my hon. Friend is aware, by April 1984 the Government will have reduced the Civil Service by over 100,000 since 1979. About 10 per cent. of that reduction will be accounted for by redundancies, and it is our policy to rely on natural wastage to the greatest extent possible.
    Mr. Chapman: How many of that 10 per cent. were industrial civil servants who, by the nature of their employment, were doing specialist jobs and who therefore could not be offered alternative employment within the Civil Service? In the further proposals for a reduction of 37,000 civil servants by 1988, have the Government estimated the likely number of involuntary redundancies that will be entailed?
    Mr. Hayhoe: I cannot give the figures in precisely the form for which my hon. Friend has asked, but, of the 10 per cent., about 2,500 were non-industrial civil servants and about 8,000 were industrial civil servants. In the future rundown of the Civil Service we shall continue to rely on natural wastage as much as we can.
    Mr. Meadowcroft: In view of the Minister's previous sympathetic reply on the question of secondment, is he prepared to consider secondment before redundancies are made for senior civil servants?
    Mr. Hayhoe: I am not entirely clear what the hon. Gentleman means by secondment in connection with the retirement of senior civil servants. There is a premature retirement arrangement which is used across the Civil Service, but I am not sure which of the examples the hon. Gentleman has in mind. If he writes to me, I will try to give him a detailed reply.
    Mr. Burt: Will my hon. Friend ensure that the search for reductions in the Civil Service does not become an end in itself rather than a means to an end? In the Inland Revenue, civil servants who are taken away from inspecting taxes may be bringing in more than the Government save by axeing their salaries. Will my hon. Friend advise caution? Will he advise that, where reductions are made, they are effective and not just for the sake of reducing the head-count?
    Mr. Hayhoe: Yes. My hon. Friend is right in saying that we should make reductions for the sake of effectiveness. The question of civil servants in the revenue Departments—the Inland Revenue and the Customs and Excise — was referred to in our debate on the Civil Service last October. I refer my hon. Friend to the remarks that I made then.
    Dr. McDonald: Is the Minister aware that the non-mobile, low-paid civil servants at GCHQ have three options — redundancy, accepting the ban on union membership, or being found work in one of the 10 Civil Service establishments within daily travelling distance of Cheltenham? Is he further aware that there are, at best, only 1,000 posts in the grade in question within daily travelling distance of Cheltenham and that there are over 1,000 civil servants in that grade in GCHQ? Do those civil servants not therefore have to choose between giving up their right to union membership and being blackmailed into redundancy?
    Mr. Hayhoe: There is no question of blackmail. The hon. Lady's facts are entirely correct. She drew them from my replies to questions. She should address her suppositions and detailed questions to my right hon. and learned Friend the Foreign Secretary.

    Financial Management Inititative
    Mr. Eggarasked the Minister for the Civil Service if he is satisfied with the speed of implementation of the financial management initiative.
    Mr. Hayhoe: Good progress is being made in strengthening financial management in Government Departments but a lot remains to be done.
    Mr. Eggar: Exactly what role is the Management Personnel Office carrying out to ensure that the more that needs to be done is done?
    Mr. Hayhoe: Central Departments are advising Departments. I know that my hon. Friend takes a close interest in these matters. He will find that progress is being made. We are committed to a White Paper in July this year to report on the plans that were announced last September. I am sure that it will show that significant progress is being made.

    Trade Union Membership
    Mr. Teddy Taylorasked the Minister for the Civil Service what percentage of civil servants are members of trade unions.
    Mr. Hayhoe: Detailed figures of the total number of civil servants who are members of trade unions are not available.
    Mr. Taylor: Apart from the major dispute, when the Government felt it right to withdraw automatic pay comparability, relations with the Civil Service unions have been marked by responsibility, integrity and co-operation. Will the Government bear that favourable record in mind when seeking solutions to current problems?
    Mr. Hayhoe: I am sure that they will.
    Mr. Winnick: Do not the reports show that quite a number—possibly a majority—of staff at GCHQ are refusing to abandon their trade union membership? Is the Minister aware that there can only be admiration for those who refuse to sell their rights in a democracy for 1,000 pieces of silver?
    Mr. Hayhoe: I utterly repudiate the hon. Gentleman's emotive language. My right and learned Friend the Foreign Secretary has been answering questions about the figures involved at GCHQ. There is at least one more question on the Order Paper for answer later this week.
    Sir Kenneth Lewis: Will my hon. Friend confirm that among the civil servants employed in the Cabinet Office and other top echelons of the Civil Service there are many trade unionists and that there is no difference between their position and that of those at Cheltenham?
    Mr. Hayhoe: As I have already said, detailed numbers right across the Civil Service are not held, but there will certainly be civil servants in the Cabinet Office who are members of unions. I suppose that throughout the Civil Service about three out of four civil servants are members of unions, but the proportion varies considerably between Departments, between different levels in the service and between different locations.
    Dr. McDonald: How does the Minister know so accurately the number of trade union members at GCHQ, but not throughout the Civil Service?
    Mr. Hayhoe: I have not replied to a question about the number of civil servants at GCHQ who are members of unions. That information is not available to me. The hon. Lady will know that where the check-off system is working, we know how many civil servants are subject to that system; but we also know that there are other civil servants who are members of unions but whose subscriptions are not worked through the check-off system.
    Mr. Dubsasked the Minister for the Civil Service what percentage of civil servants are members of trades unions.
    Mr. Hayhoe: I refer the hon. Gentleman to the reply that I gave to question No. 41.
    Mr. Dubs: Is the Minister aware that this Thursday there will be a mass lobby of Members of Parliament by civil servants because they wish to assert their rights to be members of trade unions? Can the Minister explain why there appears to be a deliberate policy on the part of senior Civil Service officials to deny leave to those civil servants who wish to exercise their democratic right this Thursday to lobby their Members of Parliament?
    Mr. Hayhoe: A note has been circulated by the industrial relations division of the Treasury, as is normal in such circumstances. Granting leave is subject to management discretion. Departments will be dealing with leave requests in accordance with normal procedures.
    Mr. Teddy Taylor: Is my hon. Friend telling us that quite a number of civil servants at GCHQ and elsewhere are not trade unionists but that people at Cheltenham who never have been, do not intend to become and perhaps, for reasons of conscience, do not want to be members of a trade union will be offered £1,000 not to join one?
    Mr. Hayhoe: I understand that the offer of £1,000 is made to all staff at GCHQ who fulfil the conditions.
    Mr. Foulkes: Has the Minister noted the increase in the percentage of senior civil servants who are not members of trade unions, who retire on large salaries and then take up highly paid jobs in industry, the City and commerce? Is it not about time that the rules governing that were looked at again?
    Mr. Hayhoe: The rules governing that were looked at by a Select Committee about three years ago, and certain changes followed. I understand from reading press reports that there is a possibility that the Select Committee will wish to look at the matter again.
    Mr. Winnick: On a point of order, Mr. Speaker. Question No. 37, standing in the name of the hon. Member for Berwick-upon-Tweed (Mr. Beith), was not called. It deals with Opposition time and taking into account the composition of the House. Is it not interesting that the Liberal Member who tabled the question is not here to ask it, although the question relates to a topic that is of great interest to the House?
    Mr. Speaker: The hon. Member for Berwick-upon-Tweed (Mr. Beith) withdrew his queston. That is not unusual.
    Mr. Meadowcroft: Further to that point of order, Mr. Speaker. It might interest the House to note that question No. 2 was also withdrawn, although that covered an important topic. As you said, Mr. Speaker, that often happens.

Withdrawn Drugs
3.32 pm
Mr. Michael Meacher:(by private notice) asked the Secretary of State for Social Services if he will make a statement about the circumstances in which withdrawn drugs can still be prescribed.
The Minister for Health (Mr. Kenneth Clarke): The circumstances in which the four drugs mentioned in recent press reports have been withdrawn are varied. In some cases the drugs have been withdrawn by the manufacturers, even though their product licences have not yet been withdrawn. In other cases product licences have been withdrawn on the advice of the Committee on Safety of Medicines.
In all cases, however, action has been taken to prevent further uninformed or unintentional prescribing of the drugs. Letters were sent to every doctor and pharmacist informing them of the withdrawal, and in each case the manufacturing company withdrew its stocks from wholesalers and retail pharmacists, reimbursing them for the cost of stocks reclaimed. However, a few pharmacists have retained stocks.
Doctors are free to prescribe whatever treatment they think necessary in the interests of their patients, even where a drug does not have a product licence. It is an important part of the exercise of doctors' clinical judgment that they should be free to decide whether the benefits resulting from the use of a particular product for a given patient outweigh the risks involved.
The Government's first responsibility is to ensure that the professional people concerned are fully informed of the position and that the drugs are not freely available. I am, however, concerned about the position revealed by reports in the Daily Mail. I propose to investigate further whether existing arrangements are operating satisfactorily and shall seek the advice of the Medicines Commission on those provisions of the Medicines Act 1968 which exempt doctors and pharmacists from the controls imposed on products by the Act.
Mr. Meacher: Is it not an extremely serious failure of Government regulations that four drugs linked with 29 deaths are still being prescribed several months—in one case 11 months—after they were withdrawn? Will the Minister ensure that the inquiry that he is undertaking will find out precisely how widespread is the breakdown in controls, whether the present voluntary arrangements need to be replaced by regular use of the prohibition powers under the 1968 Act and why the Government monitoring system failed to pick up the need for the use of those powers in the four cases?
Is it not a serious anomaly that it is not illegal for either a doctor to prescribe or a pharmacist to dispense drugs whose withdrawal has been called for by the Committee on Safety of Medicines? Will the right hon. and learned Gentleman undertake to amend the law as necessary to ensure that death in those circumstances will never be allowed to happen again?
Mr. Clarke: It would not be right to make it absolutely illegal ever to prescribe or dispense drugs that have lost their product licence. After the withdrawal of the licence from the drug Opren, a doctor at University hospital in my constituency approached me, anxious to get supplies of
566
that drug for patients suffering from psoriasis, who were visibly deteriorating before her eyes because they were unable to get the only drug to which they responded. The doctor believed that the clinical risk was worth taking to restore those patients to fit and healthy life.
In this case, the doctor who prescribed the drugs did so in the public interest as a test case and knew that he was prescribing drugs that had been withdrawn from the market. The majority of the pharmacists who were approached were puzzled by the prescription and asked the patient to return to the doctor and consult him about the prescription. In only three out of 30 cases was the drug, with reluctance, dispensed. 'That was legal. However, I agree that it is worrying that this is happening on slightly more than rare occasions. Therefore, the Government are considering the evidence supplied by the Daily Mail and we are asking the Medicines Commission to examine the operation of that part of the Act.
Mrs. Jill Knight: I assure my right hon. and learned Friend that there will be much satisfaction over the fact that he has at once announced that he is setting up an inquiry into the matter. Does he not think it ludicrous that a committee of 20 highly paid and extremely expert people spend their time under a chairman deciding which drugs are safe and which are not—even to the extent of producing or refusing a product licence—yet doctors are free to prescribe the drugs which those experts have said should not be prescribed?
Mr. Clarke: In this case the doctor obviously knew what he was doing. It was a test case in the public interest, but he knew exactly what the problem was with those drugs. Each and every pharmacist had also been written to and told why the drugs were being withdrawn from the market. They were offered reimbursement in full for the stocks that they returned to the manufacturing company. For the reasons that I gave, small stocks might legitimately be held by some pharmacists.
As I explained to the hon. Member for Oldham, West (Mr. Meacher), I am describing rare and exceptional circumstances, where doctors and pharmacists should be free to prescribe a drug to a patient. What this evidence shows is that there were more stocks of the drugs about and that they were more available than would have been expected. I agree with my hon. Friend that we should look into that.
Mr. Michael Meadowcroft: There will be general satisfaction at the Minister's statement that there is to be an inquiry into the evidence. Does he accept that section 62 of the Act exists precisely to cope with the circumstances outlined in the report? Will he therefore accept that there is a need for action to be taken in view of the existence of that section?
Mr. Clarke: I assure the hon. Gentleman that the Government would not hesitate to use section 62 in a proper case, just as we have not hesitated in the case of any of the four drugs either to withdraw the licence or to ensure that the product is withdrawn from the usual market. Section 62 is appropriate where, to take an extreme example, one has a batch of a drug contaminated with cyanide, which would not be safe in any circumstances. Under section 62 we would call in Me drugs and ensure that no pharmacist could legally dispense them.

567
That would be too draconian in the present case, where the occasional doctor may wish to prescribe one of the drugs because his patient, who is suffering acute pain, will not respond to any other drug. In the present case, therefore, section 62 is not appropriate. However, an urgent inquiry into the position on these four drugs is appropriate, and that is what we are undertaking.
Dr. Brian Mawhinney: The quick action of my right hon. and learned Friend is much appreciated. Will he confirm that a patient who, without his knowledge or agreement, is prescribed a product whose licence has been withdrawn for safety reasons is free to take legal action against the manufacturer, doctor or pharmacist if he subsequently develops the symptoms and difficulties which were originally suggested might follow from the administration of that drug?
Mr. Clarke: It would be open to the patient to take legal action only if the doctor had been negligent in prescribing the drug, or the pharmacist negligent in dispensing it. If a doctor makes the clinical judgment that the benefits to the patient outweigh the risks to him, he is free to prescribe the drug. It is a matter for the doctor how far he advises the patient about the calculated risk that he is taking.
To return to negligence, I emphasise that in this case 27 out of 30 pharmacists approached would not dispense the drug and sensibly told the patients to return to the doctor, presumably so that the doctor would have the opportunity to think twice about whether this drug was the one that he intended to prescribe. The legal position is as I have described it.
Mr. Laurie Pavitt: When did the Minister last examine the mechanism of procedures for informing general practitioners about pharmaceuticals, not only in this sort of case but on the whole question of values? Is the procedure now computerised? Is the Minister satisfied that the procedures, apart from the law, for the Committee on Safety of Medicines are satisfactory? Is he aware that, outside this provision, sweeteners have recently been shown to be injurious to health? They are not medicines, but what powers can he take to protect those who take damaging sweeteners?
Mr. Clarke: We are always revising our procedures and ensuring that we inform professional people of the risks of drugs, and we act promptly when we discover that there are unacceptable dangers associated with some drugs. We intend to computerise the system by which doctors notify the Committee on Safety of Medicines of adverse reactions to drugs. We inform doctors of problems by writing to them individually when a product loses its licence or is withdrawn from the market. They are told what has happened and why it has happened. In the case of all drugs that are freely available, many of which have adverse side effects for some patients, data sheets are readily available and should be consulted by every doctor.
Sweeteners are a separate issue, and I should be happy to discuss the evidence with the hon. Gentleman on another occasion.
Mr. Robert McCrindle: Have we not stumbled almost accidentally on a rather worrying grey area, in that until now most members of the public
568
will have assumed that medicines which are effectively banned by the Committee on Safety of Medicines are not permitted, in any circumstances, to remain in circulation? Will my right hon. and learned Friend take this opportunity to clarify what powers the committee possesses and, in the process, help those members of the public who may be worried to get the matter into perspective?
Mr. Clarke: I agree with my hon. Friend that all of us assume that once a product is withdrawn, and especially when its licence is suspended, it vanishes from the market and is no longer prescribed or dispensed by anyone. As I said, in some cases that can be an error, because there are rare exceptions to the rule. Nevertheless, I and those who advise me were surprised by the extent of the evidence produced by the Daily Mail showing that these drugs are being dispensed to a number of patients. We shall examine the matter and will go to the Medicines Commission, which is the best qualified body in this area of the law, to give us urgent advice.
Mr. D. N. Campbell-Savours: Now that it has been proved that Professor Turner, the chairman of the Government's toxicology sub-committee which approved aspartame and its use, had a commercial interest in Searles of the United States, the manufacturer, through the Synthelabo Foundation—an organisation that funds its own research—does that not place a major question mark over the use of aspartame? Should not the decision that was taken last October be reviewed, and can that product be withdrawn from the market pending further investigation by the Government?
Mr. Clarke: This is not the occasion on which to examine the evidence for and against the safety of aspartame. There are clear rules about the declaration of interests by those involved in advising us. In the first place, the Government must go to leading experts in any area to get the best possible advice for the public on the safety of drugs. Inevitably, a number of those whom we approach are involved with manufacturers and pharmaceutical companies. However, the rules are clear: they declare their interests and keep out of decisions on matters where they have a direct interest. We ensure that we take the best objective advice on the products involved.
Sir Dudley Smith: The hon. Member for Oldham, West (Mr. Meacher) gave a figure, but can my right hon. and learned Friend say definitely how many deaths due to adverse reactions to the drugs have been reported to his Department?
Mr. Clarke: I regret to say that, off the cuff, I cannot give the total number of deaths due to adverse reactions to the four drugs. I have a feeling that the figure given by the hon. Member for Oldham, West was more or less correct.
Mr. David Crouch: The House will appreciate the concern that my right hon. and learned Friend has shown and the care with which he has answered questions on this worrying matter. Where a drug has had its licence withdrawn on the advice of the Committee on Safety of Medicines, is it not unlikely that a pharmacy in a hospital would issue such a drug to any consultant or doctor in that hospital seeking to prescribe that drug? Does that not show that in hospitals at least there is tight control

569
once a drug has had its licence withdrawn, and is that not different from the looser application of the regulations that appears to operate in general practice?
Mr. Clarke: We are all anxious that dispensing should be tightly controlled both in the hospital service and in general practice. I agree with my hon. Friend that when we acted as promptly as we did to suspend the product licence for Flosint, our expectation was that supplies would rapidly go back to the manufacturers and no more patients would receive it, and that if any patient received Flosint again it would only when a doctor had made a considered judgment about an individual patient whom he found reacted to that and nothing else and who suffered serious symptoms which would not otherwise be alleviated. I accept that, on the face of it, the Daily Mail report shows a rather looser approach than that being adopted by a few pharmacists. We shall look into that to see whether the law needs tightening.
Later—
Mr. Campbell-Savours: On a point of order, Mr. Speaker. In reply to my question about an interest of the chairman of the DHSS toxicology sub-committee, the Minister for Health replied that sometimes there are medical links between research foundations and individual members working—
Mr. Speaker: Order. I am not certain that this is a matter on which I can rule. I hope that the House will understand that we are getting rather too many points of order concerning unsatisfactory answers. If we allow that sort of thing to happen we shall not get very far with our business.
Mr. Campbell-Savours: To abbreviate the point, Mr. Speaker, may I lay it on the record that the Government, in a reply to me—
Mr. Speaker: Order. That is just what I feared. It is not a matter for me.
Mr. Campbell-Savours rose—
Mr. Speaker: Order. I think that the hon. Gentleman has shot his bolt for today.

Oral Questions (Transfer)
3.47 pm
Mr. Speaker: Following the points of order on Wednesday last, I undertook to make a statement about a question addressed by the hon. Member for Monklands West (Mr. Clarke) to the Secretary of State for Scotland, which was transferred to the Secretary of State for Trade and Industry.
This question was tabled on 1 February to the Secretary of State for Scotland and came out No. 5 in the shuffle on that day. On 2 February it was transferred to the Secretary of State for Trade and Industry. I understand that, at the request of the hon. Gentleman, the Table Office checked twice with the Scottish Office that this transfer was exactly as intended, and this was confirmed. The position, therefore, remained as on the Order Paper on Wednesday last, namely, that the question stood addressed to the Secretary of State for Trade and Industry at No. 39 and not to the Secretary of State for Scotland at No. 5. I can find nothing in this process to which exception can be taken on procedural grounds.
May I reaffirm two points which I made on Wednesday. The first is that, as my predecessors and I have said many times, the Chair has never had any responsibility for transfers between one Department and another: it is entirely the Government's responsibility to decide which Minister is to answer a question. The second is that the Table Office is concerned with establishing the responsibility of the Government for answering a question and therefore whether or not it is in order. It does its best to advise hon. Members on which Minister a question should be addressed to, but clearly it can have no responsibility for the choice of Minister to answer a question.
Mr. Robin Maxwell-Hyslop: Further to that point of order, Mr. Speaker. Is it not open to any hon. Member, if he wishes so to do, before tabling a question at the Table Office to telephone the private office of the Minister or the Secretary of State of the Department concerned and ask whether the Minister or the Secretary of State will accept a question in the form in which he wishes to table it? If the answer were in the affirmative, the hon. Member would have a real grievance if the Minister then did not do so. Is not that protection open to any hon. Member— it is his choice, not that of the Table Office—in deciding to which Minister he should put his question?
Mr. Speaker: I understand that this has been done frequently.

Written Answers (Press Release)
3.50 pm
Mr. Gerald Bermingham: On a point of order, Mr. Speaker. The Order Paper for today contains a written question, No. 312, the answer to which is not yet available to the House. The question deals with a matter of grave public importance, namely, the increase in summary fines under section 143 of the Magistrates' Courts Act 1980. Many of us will have learnt the details of the written answer through the newspapers this morning, or heard them on the radio programme, on which a junior Minister gave the details.
This is a matter of great importance to many of our citizens who will be affected by the increase in fines and whose ability to pay may be affected; indeed, their liberty may be at stake. Should not such a matter be dealt with by an oral statement, so that hon. Members who have views on it can bring them to the attention of the Minister concerned?
Mr. Speaker: The hon. Member for Surbiton (Mr. Tracey) tabled a written question, No. 312, and it has been answered.
On the general point about answers being available to the press before being made available to the House, the House knows my strong views. I believe that the House should always hear the answers first before they are given to the press.

Oral Question (Clarification)
3.52 pm
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. It is on a completely different subject.
Mr. Speaker: Provided that it is, I shall hear the hon. Gentleman.
Mr. Campbell-Savours: It relates to the intervention of the Leader of the House in the middle of a question that I asked during business questions on Thursday last. The words in the Official Report do not accord with my views, because I was prevented from putting the balance of the question. It was not you, Mr. Speaker, in your wisdom, who prevented me from placing my views on the record; it was the Leader of the House. Would you permit me to add to the words in the Official Report in order to ensure that my views as expressed in my question are not misrepresented?
Mr. Speaker: I regret that I cannot allow the hon. Gentleman to do that. As I was saying a few moments ago, we are getting a considerable number of points of order raised on unsatisfactory answers, or because hon. Members have not made themselves plain. I think that we had better leave it at that.

Statutory Instruments, &c.
Mr. Speaker: With the leave of the House, I shall put together the Questions on the three motions relating to statutory instruments.
Ordered,
That the draft Carriage by Air Acts (Application of Provisions) (Overseas Territories) (Amendment) Order 1984 be referred to a Standing Committee on Statutory Instruments, &c.
That the Grants for Guarantees of Bank Loans (Extension of Period) Order 1984 be referred to a Standing Committee on Statutory Instruments, &c.
That the Scented Erasers (Safety) Order 1984 (S.I., 1984, No. 83) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Donald Thompson]

European Communities (Budget)
Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition.
3.54 pm
The Economic Secretary to the Treasury (Mr. Ian Stewart): I beg to move,
That this House takes note of the Preliminary Draft General Budget of the European Communities for 1984, of the Draft General Budget for 1984, of the Letter of Amendment to the 1984 Budget, of European Community Documents Nos. 10447/83, 10105/83, the Modifications and Amendments by the European Parliament to the 1984 Budget, of the Decisions by the Council on modifications and amendments by the European Parliament to the 1984 Budget, of European Community Document No. 11094/83, financial compensation for the United Kingdom and Germany for 1983, and of Official Journal C 357, the Annual Report of the Court of Auditors for 1982; and supports the Government's efforts to secure budgetary procedures and control which are in the best interests of the United Kingdom and of the Community.
These days the European Community figures large in the proceedings of the House. We all recognise that the Community has reached a crossroads and must take important decisions about its future. Decisions on financial reform, on the CAP, on enlargement by the accession of Spain and Portugal, would have far-reaching effects. Unfortunately, although these are decisions about the future, they have to be taken alongside the now customary annual dispute about refunds due to Britain in respect of an earlier period. Today's debate covers a series of documents related to the Community budget recommended by the Scrutiny Community for consideration by the House, and provides a further opportunity for us to discuss many aspects of the Community and our membership of it.
In each of the past two months, we have had major debates on European matters. We discussed various proposals relating to the Community's future financing arrangements and the CAP on 1 December, just before the Athens summit, and again on 26 January, in the context of the White Paper covering developments in the Community during the first six months of 1983.
The documents under review today cover the past and the present, as well as the future. The Court of Auditors report considers the implementation of the 1982 budget. The documents on the refunds regulation relate to the mitigation of our net contribution to the 1983 budget. The 1984 budget documents, covering the whole of the budget timetable between June 1983 and the eventual adoption of the 1984 budget by the President of the European Parliament on 20 December, set out the arrangements for the year ahead.
Taking the documents in chronological order, I welcome—as I hope, will the House—the inclusion of the annual report of the Court of Auditors on the 1982 budget in the motion today. In the past two years, we have considered these reports separately in short debates, but I hope that by incorporating this year's report in today's debate hon. Members will have a further opportunity to comment on this important document, if they wish. Last year, my right hon. Friend the then Financial Secretary sent copies of the debate on the court's report to Mr. Christopher Tugendhat, the Budget Commissioner, as well as to the chairman of the European Parliament's Budgetary Control Committee. I shall be happy to do the same this year.
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Perhaps I should first remind the House about the procedures governing the Court of Auditors reports. In June each year, the court audits the Commission's accounts for the previous financial year. It then presents its comments to the Community institutions by 15 July. The institutions must reply by the end of October, so that the court can formally send its report to the Council and the Parliament by 30 November. The Council's Budget Committee then considers the report in detail. This is the stage that we have now reached on the 1982 report.
Our objective when examining the Court of Auditor's report is to ensure that the management of the Community's finances is no less efficient than we would expect in the United Kingdom and other individual member states. The court does a valuable job in scrutinising financial procedures and exposing waste or irregularity within the Community budget and administration. We do not believe that the court's activities should be limited to this, however, since it also has an important role to play in assessing value for money from Community expenditure more generally.
In this context, I draw the House's attention to the court's report on financial management within the Community, which was considered by the European Council at Stuttgart last summer. The court's report, which was issued last October, contained strong criticism of the CAP and the own-resources system, much of which we would endorse. On the own-resources system, for example, the court argued that it had not led to sufficient assessment of the effectiveness of the Community's expenditure policies, because the Community's automatic revenue was not so directly seen as a charge on taxpayers as in the case of national taxes. Partly for this reason, the Community budget has continued to be largely expenditure-determined. We aim to change that so that revenue available governs expenditure, and not vice versa.
Mr. Teddy Taylor: How?
Mr. Stewart: If my hon. Friend the Member for Southend, East (Mr. Taylor) will be patient, I shall come later in my speech to the proposals that we have put to our European colleagues.
Mr. Tony Marlow: There was a rather distasteful caterwauling at the back of the Chamber just then, and I say to my hon. Friend the Minister that I was not participating in it. However, I have an important question for him. He is talking about the control of Community expenditure. As he knows, there was a debate last week in the European Assembly concerned with the national veto. There is, in June, an election to that European Assembly. Will my hon. Friend say what the Government's policy is with regard to that veto, because if that veto is abolished, the powers of this House will be removed, bit by bit, piecemeal, and taken across the Channel to Europe? As this is a very important democratic process, and as constituencies are about to select and adopt their candidates for the European election, will my hon. Friend be very careful to tell the House so that the whole country will know what is the Conservative party's policy on the veto in the European Assembly?
Mr. Stewart: I hope that the House and the country already know that the Government's view is that no such change should be made. We shall oppose any proposals to do so. Indeed, they could not be introduced without the approval of individual member states.
Mr. Nicholas Budgen: I understand that 22 members of— I believe it is not called the Conservative party but the Democratic party —voted for the abolition of the veto. Although a lot of money is spent by the European institutions on publicising their activities, I have so far, sadly, found it impossible to discover the names of those 22 members. I am sure that my hon. Friend has excellent relations with the European institutions and I wonder whether, through them, he could suggest that the names of those individuals should be published so that those who wish to uphold the European ideal at its highest level may know whom to congratulate.
Mr. Stewart: I shall have to leave my hon. Friend to do his own research. The Government and, I hope, Conservative Members would be strongly against the suggestion of my hon. Friend the Member for Northampton, North (Mr. Marlow).
On the court's report on the 1982 Budget, we agree with many, though not all, of its criticisms and recommendations and will be pressing the Commission to implement them. But we could not agree with its criticisms of the Commission's action in implementing the agreement on 1982 refunds. In establishing a special account into which the refunds were paid the Commission was simply acting in proper accordance with the conclusions of a Council decision.
Meanwhile in 1983 Community expenditure continued its relentless increase. Agricultural guarantee expenditure rose by more than 25 per cent. to over £9 billion or nearly 16 billion ecu. Britain therefore again faced the prospect of a heavy net contribution. It was against this background that my right hon. Friend the Prime Minister sought and obtained agreement at the European Council in Stuttgart last June to a refund for 1983. The net figure agreed for the United Kingdom for 1983 was 750 million ecu or about £430 million. The refund documents in the motion are the regulations to allow these refunds to be paid.
In the Commission's preliminary draft budget there had been no provision for the British and German refunds in respect of our 1983 contributions. These, therefore, had to be entered in the budget by the Budget Council last July. The Council decided that the refunds should be spent on energy, employment and transport measures in the United Kingdom. The Council agreed that the refunds should be entered "on the Budget line", which had the effect of allowing them to be paid as soon as the regulations were approved; and also that they should be classified as obligatory expenditure, so that the Council and not the Parliament should have the last say. The House will know that in adopting the budget the European Parliament has moved our refunds to the reserve chapter 100 of the budget and has re-classified them as "non-obligatory", thereby giving the Parliament the final say on their repayment. At the Budget Council in December I was supported by other delegates in an attempt to restore our position. But agreement with the Parliament could not be reached and the budget was then adopted with our refunds in the reserve chapter and classed as non-obligatory. The Council has recorded its objection to this outcome. But it means that for the bulk of our refunds to be paid before the end of March—and that is our firm aim—not only must the Council approve the regulations and the Commission propose a transfer of the refunds out of the reserve chapter, but this transfer proposal must also be approved both by the Council and the Parliament.
Mr. Roland Boyes: Will the Economic Secretary comment on last week's press reports that the Government might ask the European Parliament to hold a special sitting to obtain approval for the measures to go through in time? Is it not ludicrous that the Government should have to beg the European Parliament to hold a special sitting?
Mr. Stewart: As I hope to say later in my speech, the current arrangements between the Community's institutions for dealing with the Budget process are unsatisfactory. However, my right hon. and learned Friend the Foreign Secretary is today at a meeting of the Foreign Affairs Council where that process will be discussed. No doubt the hon. Gentleman's question will be considered in that forum.
I shall say a word about the regulations themselves. The employment measures regulation, under which we would receive about £158 million, or nearly £280 million ecu, will enable us to help the unemployed. The principal programme to benefit is likely to be the job release scheme which—as hon. Members know—creates opportunities for unemployed people by encouraging employees nearing retirement age to give up work earlier than they would otherwise have done.
Under the transport regulations we are due to receive some £265 million and we are submitting projects to ease traffic bottlenecks and to improve routes that are important for the movement of people and goods within the Community. Projects that we are putting forward range from the A9 in Scotland to the M25 motorway and the outer London ring-road.
Mr. Marlow: Surely the job release scheme and what happens to roads within the United Kingdom, particularly round London and in Scotland, are matters that are wholly within the interest and competence of the United Kingdom Government. Is it not nonsense to receive handouts from Brussels on such issues? Should we not retain the money in advance and not pass it to Brussels to be laundered and returned, havind had a severe fraction taken off on the way?
Mr. Stewart: Decisions on road building are for the Government to make, and will remain so. However, I hope that my hon. Friend will welcome, as much as I do, any Community funds that are available to assist with the financing of such roads and to solve the problem of our refunds.
Under the energy regulations, we are putting forward a number of large-scale power station construction projects by the CEGB and various smaller projects throughout the United Kingdom which are of considerable practical and technological interests both here and in the Community, such as the cross-Channel power link. We should receive about £150 million under this regulation.
These regulations, which enable public expenditure programmes in the United Kingdom to be sustained at levels higher than we could otherwise afford, have now been sent to the European Parliament and the Court of Auditors for a formal "opinion". The Parliament considered the regulations last week but declined to issue an opinion after some of its proposed amendments for the regulations had been found unacceptable by the Commission. There is no doubt that these amendments would make it more difficult for the United Kingdom to receive the bulk of our funds by the end of March.

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For instance, the Parliament has proposed that the refunds should finance only projects initiated after 1 January 1983. This can be regarded only as a wrecking amendment—[Laughter.] I do not know why that is a matter of so much amusement to the House. I should have thought it important that we try to safeguard our interests in this area. There are simply not enough major new infrastructure projects to allow us to receive our refunds in full. Moreover, even those projects started since January 1983 have relatively small expenditure implications in the early years. Furthermore, the Parliament, with the shameful support of British Labour members, is seeking to reduce the rate of grant on eligible projects from 70 per cent. to 50 per cent. Seventy per cent. has been used in all the special measure regulations for refunds since 1980 and there is no reason why it should be reduced now.
Acceptance of the 50 per cent. rate would make it very difficult to secure our full refunds. Instead of tabling an amendment urging the Government to withhold contributions to the Community budget today, the Opposition would do better to prevent their representatives in Europe from voting to make it harder to obtain our refunds in time. We have repeatedly made it clear that we expect to receive the bulk of our refunds by the end of March. If we do not do so, we shall have to take whatever steps are necessary to safeguard our position, but I have no doubt that to withhold payments today, as the Opposition amendment proposes, would be premature and counter-productive.
Mr. Budgen: Does the principle of additionality apply to such projects, or is the money to replace money which would have come from our domestic resources in any event?
Mr. Stewart: I thought that I had made it clear earlier that the refunds which we have obtained, amounting to about £2½ billion over the last four years, have enabled public expenditure in the United Kingdom to be maintained at levels which could not otherwise have been reached. In that sense my hon. Friend's question has already been answered.
The obstacles that we currently face in obtaining our 1983 refunds from various expenditure programmes and the similar problems that we have had in the past confirm the Government's view that the solution to the problem of budget imbalances must be implemented, not by expenditure, but on the revenue side of the budget. It is simply not realistic to expect that new expenditure can be implemented on a scale which would sufficiently reduce our net budget contributions.
Mr. Teddy Taylor rose—
Mr. Stewart: I have already answered my hon. Friend the Member for Southend, East and there have been many other interventions.
We were told throughout the 1970s that this was how the problem of the British net contribution would be solved, but the opposite has happened. Indeed, to achieve the same effect as our refunds in the last four years, the regional fund for example would have had to be increased by about 30-fold. Clearly, this is not practicable and we must therefore have an automatic arrangement—like the safety net which we have proposed—designed to correct inequitable burdens on any net contributor. The solution
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must also be a long-term one that lasts as long as the problem. I hope that no one in Europe is under any illusions about that.
Mr. Teddy Taylor: I am sure that all hon. Members on both sides of the House will be delighted that the Government—my right hon. Friend the Chancellor of the Exchequer, my right hon. and learned Friend the Foreign Secretary and my right hon. Friend the Prime Minister—should say that terrible things will happen if the continentals, or the Common Market, default on 31 March. We have heard that strong action will be taken, although we do not know what it is.
What will be done about the default of £42 million which happened on 31 December in relation to the 1982 rebate? The Minister kindly told me that my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs sent a letter to the Commission on 3 January. When I asked about it last week I was told that no reply had yet been received. How can the continentals accept that the Government are firm, because when they defaulted by £42 million all that we did was to send them a letter to which we have not yet had a reply?
Mr. Stewart: My right hon. and learned Friend the Foreign Secretary wrote to the Commission. I understand that he received a reply over the weekend, although I have not yet seen it. I have no doubt that the reply will be considered and that we shall take whatever steps are necessary over the 1982 risk-sharing refund. The document before the House today—
Mr. Teddy Taylor rose—
Mr. Stewart: If my hon. Friend does not want to hear the answer to his question I do not propose to comment further on what he said.
Dr. Oonagh McDonald: The hon. Member for Southend, East (Mr. Taylor) has rightly questioned the Minister about the letter. It is astonishing that the Minister has not seen a copy of the reply. Since the debate will continue until 10 o'clock, will the Minister send a message so that the letter is brought here and read out since it is an important part of the debate?
Mr. Stewart: I am sure that my hon. Friend the Minister of State has heard that request. I understand that the letter is addressed to my right hon. and learned Friend who is in Brussels— [Interruption.] That might be a matter for mirth to Opposition Members, but fortunately the Government treat such communications seriously and do not deliver judgments before they have had time to consider them.
Mr. Marlow: On a point of order, Mr. Speaker. As the letter is obviously of importance to the debate. is it possible to ensure that somehow a copy of it is put on the Table of the House so that hon. Members who wish to participate in the debate may be made aware of its contents?
Mr. Teddy Taylor: Further to that point of order, Mr. Speaker. We are talking about a vital document containing the Community's response to a default issue. Would it not be sensible to adjourn the debate and to meet again tomorrow when we may know the response now received to a letter that my right hon. and learned Friend the Foreign Secretary sent on 3 January? Could we adjourn the debate and meet again tomorrow?
Mr. Speaker: That would be possible, but I do not think that I can accept such a motion. Laying the letter on the Table of the House is a matter for the Government. The letter has not been quoted in the House and therefore has no official status.
Mr. Stewart: Further to that point of order, Mr. Speaker. The 1982 risk-sharing refunds are not among the matters being considered in today's motion.
Mr. Robin Cook: Even if that issue is not formally before the House, matters involving significant sums are the subject of debates on such occasions. The Economic Secretary cannot expect the House to accept that, because the only copy is in the Foreign Secretary's vanity case in Brussels, it is not possible to produce the letter. There are such things as photocopies and telex. We are not still living in the days of the pigeon post. May we have an undertaking that by the end of the debate the letter will be produced, because it may have a bearing on the way in which some Government Back Benchers vote in the Division?
Mr. Stewart: If my hon. Friends were influenced by it they would be misguided because it is not included in today's motion. There is a difference between the 1982 risk-sharing refunds and the 1983 refunds, in that the risk-sharing refunds are -the subject of disagreement between the Government and the Commission and the Council, whereas the 1983 refunds which we are discussing today are supported by the Commission and the Council who agree that we should receive them.
We believe that a system such as the safety net would provide a lasting solution to the budget imbalances problem in a simple and fair manner, and that it does not conflict with either the principles or the objectives of the Community. Indeed, to the extent that it would encourage economic convergence it would significantly further one of its main objectives. There is a further point about the current system. At the moment, it works in such a way as to encourage member states to look at every policy primarily in terms of what they get out of it against what they have to pay towards it. But with a proper arrangement to ensure that individual members are not placed in an unacceptable position overall, coupled with effective control of agricultural and other expenditure, this problem should diminish. National Governments could more readily assess items of Community expenditure on their intrinsic merits. Our proposals are therefore in the interest not only of the United Kingdom but of the Community as a whole.
Although our 1983 refunds have dominated much of the discussion of the 1984 budget, they are in total a relatively small part of the budget as a whole. Of the documents under review today the first in the budgetary process is the Commission's preliminary draft budget which was sent to the Council in June last year. In this the Commission proposed a Budget totalling nearly £15 billion. This would have used up almost all the Community's resources under the 1 per cent. VAT ceiling.
The Council of Ministers was concerned about going so close to the ceiling without leaving any margin for error. In July it therefore established a draft budget for 1984 which reduced the Commission's spending plans by about £400 million. The Council sent its draft budget to
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the Parliament last autumn, and the Parliament, which has the final say on non-obligatory expenditure, then reinstated most of the reduction.
The main reason why the Community budget has now reached the 1 per cent. ceiling is that expenditure, particularly on agriculture, has consistently risen faster than the revenues of the Community. The own resources of the Community grow more or less in line with the economies of member states through the link with VAT expenditure and levies and duties on imports. But the Community expenditure has far outstripped this. Agricultural expenditure in 1983 took nearly two thirds of the whole Budget, and there is no doubt that had it not been for the 1 per cent. VAT ceiling, the 1984 guarantee provision would have been even higher.
As it is, this year's farm price-fixing exercise is, for the first time, being conducted against the painful reality that the money is running out. The CAP problem is not, however, just a financial one. It makes no sense to leave unreformed a policy that results in increasing surpluses for which there is no market at economic prices.
This experience reinforces our conviction that a strict and effective financial guideline for agricultural expenditure must be established. We have proposed that the rate of increase in CAP guarantee expenditure in any year should be lower than the increase in the Community's budget overall. Although all member states agree in theory that agricultural expenditure should be contained this involves difficult decisions for us all and there has been no agreement so far on how it should be done. This is one of the key items on the agenda for the European Council in March.
It is not enough, however, to control agricultural expenditure alone. The Community budget should be subject to no less discipline than public expenditure in individual member states. Various proposals have been put forward, notably by the Commission, by the Dutch and by Mr. Delors, the French Finance Minister. We need a system that is binding and effective in practice, and I believe that the Delors proposal could form the basis of such an agreement.
The 1984 budget adopted by the European Parliament contained a number of features which are not agreed by the council, such as the level of commitment appropriations; the classification of certain budget lines, including in particular those for British refunds; the Parliament's additions to the revenue side of the budget; and the inclusion of a new special category of commitment appropriations for the Parliament's proposed European industrial policy.
Mr. Marlow: Will my hon. Friend explain the Delors proposals?
Mr. Stewart: The Delors proposals are at present confidential to the negotiations — [Interruption] —and again, I fail to see why that should be a subject of such amusement to Opposition Members. I should have thought that if the representatives of members states were not able to negotiate these difficult matters in confidence, it would be much harder for them to reach agreement.
Current arrangements for resolving disputes between the council and the European Parliament are not satisfactory. Reform of the budgetary processes is, therefore, another central element on the Brussels agenda.

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Whatever mechanism is adopted, it must be firmly and formally embodied in the budgetary procedure of the Community.
Control of the budget and the CAP would give scope for the Community to consider other worthwhile and more cost-effective projects. To take the 1984 budget as an example, expenditure under the common fisheries policy and the regional development fund—two categories of expenditure from which the United Kingdom benefits—have both been increased. Spending on fisheries is up by almost 45 per cent. on 1983, while regional fund expenditure in 1984 has been increased to over £800 million. Provision for the social fund, from which we are also net beneficiaries, is now over £700 million, and spending on transport, industry and research and investment all show increases. But the development of all of these programmes has been hampered by excessive expenditure on the common agricultural policy.
I conclude my remarks on the budget documents for 1982–83 by looking further to the future. Unlike the Opposition, the Government are committed to the Community and to making a success of our membership of it. We want, and intend, to play a constructive role in the development of Europe. Many of our proposals need not impose burdens on the taxpayer. We are anxious to see the creation of a true common market both in goods and services, which was meant to be the foundation stone of the Treaty of Rome.
The practice has fallen well below those aspirations. British traders, manufacturers and business men are daily confronted by a range of non-tariff barriers and administrative restrictions. We want to see simplification of frontier controls, the liberalisation of air services and lorry movements, a free market for financial services, particularly insurance, among many others.
Until the financial and budget problems are resolved, it is difficult to make progress in other ways. The Community faces momentous decisions in the coming weeks, but I believe that our partners are coming to acknowledge the strength of the case that we have put forward. We are determined to see the present negotiations reach a successful conclusion, but as for the budget, it must be a conclusion which recognises the interests of those who pay for the Community as well as those who gain from it.
I commend the motion to the House.
4.25 pm
Mr. Robin Cook: I beg to move, in line 11, to leave out from "and" to the end of the Question and to add instead thereof:
"urges Her Majesty's Government to withhold from the United Kingdom's contributions to the 1984 Budget a sum equivalent to the unpaid rebate for 1983."
If the speech of the Economic Secretary served any clear purpose, it was to demonstrate the importance of this House having another opportunity to debate the wider issues relating to European affairs before the summit in March. The hon. Gentleman referred to a reply—a copy of which is not, apparently, available anywhere in Whitehall or in London—and to Mr. Delors' proposal, which apparently the Government find satisfactory but dare not tell the House in case hon. Members should find it slightly less satisfactory.
They may all be matters which at present cannot be shared with the House, but I assure the Economic
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Secretary that hon. Members would take a dim view of the matter if the leading representatives of the Government were to disappear to Brussels in March without the House having had the opportunity to give its view on whether it finds the Delors' proposals satisfactory.
Before we could do that, we should need an assurance that the Delors' proposals went rather further than the proposals attributed to Mr. Delors. They were trailed in the press just before the Athens summit in a way which suggested that all that Mr. Delors had in mind was a new mechanical relationship between the Finance Council and the Agriculture Council so as to give Finance Ministers a say in the agricultural farm price review.
That may be desirable and an advance, but it certainly does not add up to reform of the CAP. I assure the Economic Secretary that there can be no question of the official Opposition agreeing to an increase in own resources on such a cosmetic change in the CAP regime as was proposed by Mr. Delors in December.
Every time we have debated this matter in the past three months we have been greeted with evidence of further movement in the Government's position in relation to own resources. Last week's report of Europe Agence Internationale quoted Mr. Mitterrand at the Hague as saying that an increase in own resources was essential and adding that
"most of the Heads of government have already spoken along the same lines."
The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind): Most.
Mr. Cook: The quotation continues:
"Mrs. Thatcher confirmed that she will not oppose this increase, if agricultural expenditure is controlled and the present imbalances corrected."
Those who have followed these debates closely in the last two months will detect in that yet another movement. The previous position adopted by the Prime Minister was that, if agricultural expenditure was controlled and the present imbalances corrected, she would be prepared to consider an increase in own resources, but to consider it on its merits. If she is being correctly quoted in her conversations with Mr. Mitterrand, then, according to what Mr. Mitterrand has been sharing with his audience at the Hague, the Prime Minister has now gone one stage further and on condition that her two requirements are met, she has already given an undertaking not to oppose the increase in own resources.
I do not expect the Economic Secretary to confirm such a statement; doubtless these statements are all confidential and the only copies of what was said are in Brussels. However, it is clear from what is seeping out from the holes and cracks in briefcases as they go across the Channel to Brussels and elsewhere that another movement is going on in the British position.
If the Economic Secretary is really genuine in the view that revenue should determine expenditure, rather than expenditure determine revenue, there is no better way of ensuring that than by resisting pressure for the increase in own resources. No hon. Member can be under any illusion that if more revenue were available we should, for instance, be witnessing even more expenditure in the farm price review this year.
In the negotiations that are going on in confidential places with confidential documents, the figure that is now being proposed for the increase in own resources is no

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longer 1·4 per cent. in VAT, as we understood in December, but now represents a target of 2 per cent. of VAT from each member state, a higher target precisely to free the Commission and the EEC from the awkward necessity to go back to national Parliaments at a future date to get further increases beyond 1·4 per cent. I am sure that if such a figure is laid before the House it will meet with opposition in all quarters.
Mr. Marlow: The hon. Gentleman is obviously concerned about what the Government might do, what changes there might be in Government policy, and whether the Government will give in or will not give in on the subject of own resources, but is this not a major constitutional issue as to whether we give more resources and whether we surrender even more sovereignty to the European Community? It is not the Government who decide that, and it is not the Government who dispose. Those responsibilities lie with the House of Commons. Does the hon. Gentleman not have faith in the House of Commons and the decision that it will reach in those circumstances?
Mr. Cook: I have already made it clear in what I have said today and in previous debates that unless there is an unprecedented breakthrough, for which the Government have given us no grounds for belief, the official Labour Opposition—I cannot answer for all parties who sit on the Opposition Benches, and one Opposition party has already said that there is a case for caving in now—will oppose an increase in own resources. I am sure that we shall be supported by other parties.
The hon. Member for Northampton, North (Mr. Marlow) asked whether I have faith in the House. The answer to that question depends entirely on how many Conservative Members have the strength of their convictions and the courage to put their votes where they have already put their voices. I am sure that the hon. Member for Northampton, North will vote with the Opposition. I look to him to let me know whether I can have faith in an adequate number of his hon. Friends joining him.
Mr. Rifkind: Does the hon. Gentleman accept that the outcome will depend in part on how many of his right hon. and hon. Friends bother to vote in the Division? On the previous occasion when there was a vote at the end of an EC debate — that event was not so long ago — the Opposition were defeated by 312 votes to 69. Does he have any confidence that more than 69 of his colleagues will turn up on that evening?
Mr. Cook: I can happily assure the Minister that there will be more than 69 of my colleagues with me in the lobby that evening.
Mr. Rifkind: How many? Will there be 71, for example?
Mr. Cook: I live in hope — perhaps the hon. Member for Northampton, North can assist me —that even 69 Conservative Members will vote with the Opposition.
Mr. Hugh Dykes rose—
Mr. Cook: With great respect to the hon. Gentleman, I wish to proceed with my speech. I have no doubt that he will find something with which he disagrees in a later part of my speech, and he may wish to intervene at that stage.
I trust that the House will not regard me as eccentric if I make some initial comments directed to the expenditure side of the budget. After all, there are two sides to a balance sheet. The purpose of raising revenue is to meet the commitments on the expenditure side. This year's budget opens with the startling statement that it is the first step in translating into reality the commitment by President Thorn to double the structural funds. Although that statement is contained in the text, I find in the tables that it is by no means certain that the process of doubling the structure of the funds in five years is likely to be achieved.
The Economic Secretary to the Treasury claimed that there had been an increase in expenditure on the regional fund. That is true, but expenditure overall on regional policy will fall by 20 per cent., instead of doubling over five years. Expenditure on industrial policy will fall by 7 per cent. The budget is very much the same as previous budgets and contains the same major imbalance. It is dominated by expenditure on agriculture.
In the draft preliminary budget, the proportion of resources to be spent on agriculture rises from 64·2 per cent. in 1983 to 67·4 per cent. in 1984. President Thorn has been obliged to revise his own bold objective of doubling expenditure on the structural funds. He said last week in Strasbourg to the European Parliament:
"If there is no solution to the Community's financial crisis very soon, either member states will have to reach a unanimous agreement to foot the extra bill themselves or cuts will have to be made in, say, the social fund, or the regional fund, to make more money available for agriculture."
There we have it. As bankruptcy approaches over the horizon, it is the 5 or 6 per cent. of the budget that goes to the regional fund, the social fund or the industrial fund, which will be expected to absorb financial constraints to protect the agriculture lobby, which will continue to receive the lion's share of the budget. In the present year the draft preliminary budget provides for a increase in agricultural expenditure of 17·4 per cent. That will take place in a year in which the Commission expects the rate of inflation throughout the EC to be 7 per cent. I concede that there is no reason why the rate of inflation in agriculture should be precisely the same as the standard rate of inflation. Equally, it is implausible that the rate of inflation in agriculture will be 250 per cent. of the standard rate of inflation.
The increase cannot be explained away by referring to the need for support to be given to support small marginal farmers, a laudable objective which we are always told is at the heart of the CAP. Paragraph 32 relates to structural measures for less favoured areas, and we find that it provides for only a 3·5 per cent. rise. In other words, after inflation, expenditure on small marginal farms will fall rather than increase.
We are confronted with a general increase in support expenditure because, yet again, more products will be produced than will be needed, there will be larger surpluses and we shall pay higher prices for some commodities. Once again there will be a widening of the disparity between the incomes of large and small farmers and a widening of the disparity between the incomes of those who produce commodities that are favoured by the

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CAP, such as milk and cereals, and the incomes of those who are in the sectors that are neglected by the CAP, such as poultry and pigmeat.
The increased expenditure on agriculture will be 250 per cent. in excess of the rate of inflation. That is being proposed in precisely the same year in which we are assured that the Commission is likely to go bust. Against that background, we can well understand the exasperation of Mr. Dalsager, the Commissioner with responsibility for agriculture, when he complained that some seemed to think that reform of the CAP means ordering smaller oysters and cheaper brands of champagne. The Government cannot escape complicity in the crisis that we face. During their first three years in office they were happy to order the most expensive champagne on the menu. For the first three years they supported increases in farm prices which were even greater than those requested by the Commission.
We are now assured that the Government are of reformed character and that they are committed to the reform of the CAP. However, we have noted as the debates have proceeded over the past few months that what the Government mean by reform of the CAP, instead of gaining in clarity and precision, has gained imprecision. It reached a new depth of vacuity last month when the Economic Secretary, in reply to my question on what was meant by reform of CAP, said:
"The hon. Member for Livingston discussed reform. I believe that the changes needed to deal with Community expenditure and with the CAP amount to a need for reform. We can see only as negotiations develop and as new decisions are taken what that means." — [Official Report, 26 January 1984; Vol. 52, c. 1139.]
When I first heard that, I assumed that it would be one of the instances in which a private secretary would rush to Hansard to rescue sense from the rubble of the Minster's syntax. When I received my copy of Hansard, I was delighted to discover that the gem had been preserved on the record.
The Economic Secretary came close to saying that we can ascertain what the Government mean by reform of the CAP once they have discovered what they have got out of the negotiations. That will not do. If the Government are sincere in their desire to obtain reform of the CAP, one test of their resolve is coming up in the immediate future, and may even be presented to them before the Brussels summit.
The test will come when the Government make their decision on the farm price review. Although the review has its weaknesses, it is more realistic than anything we have seen yet. I cannot resist referring to a speech by Commissioner Tugendhat while in Britain only a week after our previous EC debate. He said:
"It is not surprising that the agricultural lobbies throughout the Community have criticised these proposals"—
or the farm price review—
"they are simply doing their job. What does surprise me is the eerie silence of leading politicians from those Governments who are on record as deploring the excesses of the CAP and urging the need for lower prices".
About whom could he have been thinking? I hope that he did not care to make that speech in Britain because he was thinking of the British Government. I hope that the British Government will not only speak out in support of the Commission's proposals, but will ensure that there are no increases above those proposed by the Commission. I warn
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the Economic Secretary that the Government's commitment to reform of the CAP will ring hollow if they permit any increases above those already on the table.
There is one other test which the Economic Secretary might turn over in his mind when he returns to the Treasury, because it is a matter wholly within the gift of the Treasury and the Ministry of Agriculture, Fisheries and Food. This matter was referred to also in Commissioner Tugendhat's speech. Unless any hon. Member suspects that Commissioner Tugendhat may be a partial witness in these matters, I put it on the record, since legions of new Conservative Members of Parliament have joined us since Commissioner Tugendhat left us, that he once sat on the Government Benches, and, I believe, is still a Conservative party member.
A fortnight ago Commissioner Tugendhat said that
"it is now nearly four years"—
my arithmetic tells me that that does not put it within the period of this Government—
"since the positive monetary compensatory amounts —a tax on imports which effectively raises the price of food—have been applied in the UK. In everyday terms this means that prices paid by processors, and ultimately by consumers, have been higher. generally by at least 5 per cent. and often by much more, than the Community level. This is tantamount to an additional tax which is in no way imposed on the UK by the Community. It is a self imposed food tax".
The reality, as I am sure that the Economic Secretary would be the first to confirm, is that not even this Government would dare to come to the House and ask for 5 per cent. VAT on food prices. Yet it is precisely that effect that the Government are achieving by the way in which they operate MCAs. If the Government are serious about reforming the CAP and genuine in their claim that they are not the party of the farm lobby, let them show it by acting — this does not require further negotiation, further confidential proposals from Mr. Delors or further exchanges of letters — to eliminate the positive MCAs and abolish the iniquitous 5 per cent. tax on food.
Mr. Robert Jackson: If the hon. Gentleman is so keen to find a minimum definition of the reform of CAP, perhaps, instead of asking the Government for their views, he might help them by enlightening them what he would regard as a mimimum definition of reform of CAP.
Mr. Cook: I am surprised that the hon. Gentleman needs to ask me about that point. He will recall that during the period when MCAs were in operation under the previous Labour Government matters were so arranged that the MCAs were negative rather than positive, which ensured that food prices were lower than they would otherwise have been. The Conservative party came to power in 1979 with a commitment to realign MCAs with the exchange rate over the lifetime of a full Parliament. They did so within nine months, and since then have deliberately kept MCAs below the level of the exchange rate. That is where the contrast lies. So long as we are to have MCAs, let us keep them above, rather than below, the exchange rates.
Mr. Jackson rose—
Mr. Cook: I hope that the hon. Gentleman will forgive me, but I wish to make progress in my speech.
We find a major imbalance also on the revenue side of the budget. That imbalance must be even more disturbing to the House than the imbalance on the revenue side. The

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imbalance is clearly represented in the report by the Court of Auditors, which shows that in 1982 Britain paid 29 per cent. of agricultural levies and received in return 11 per cent. of the CAP expenditure. We find in those two contrasting figures the structural deficit in which Britain finds itself in relation to the budget. Had it not been for the accession of Britain in 1972, the EEC would have entered upon its financial crisis at least one year earlier than it has done.
We enter upon the year of this budget with no agreement on a rebate for this year and with no agreement even that there should be a rebate this year. We enter the year also without payment of the rebate for 1983. It is with respect to the 1983 rebate that the Labour party has tailored its amendment to recommend to the Government that they withhold payment from the 1984 budget in respect of that 1983 rebate. We do so in a spirit of being helpful to the Government.
There are three reasons for the amendment. The first reason is equity. Britain is one of only two net contributors to the EEC budget, yet it is one of the four poorest member states. Only Italy, Ireland and Greece have a lower per capita GNP than Britain. Italy contains two separate distinct economies, and it is arguable that per capita GNP in northern industrial Italy is now higher than in Britain.
Officially, Britain is now a less prosperous country. If we are in the position of being designated by the EEC as a less prosperous country, why should the EEC continue to regard us as the milch cow of the EEC? Against that background, the demand that we achieve a broad balance in contribution to expenditure is one of stunning moderation. It is not clear why a nation as poor as Britain should have as its highest ambition the wish to get back as much as we put in when much wealthier nations get more than they put in. The present method of financing the EEC budget resembles only too closely the inequity of the Government's domestic taxation policy, in which the heaviest burden is put on the poorest while only the wealthiest pay less.
The second reason for the amendment is one of common prudence. We are assured, by the Government themselves, that o the EC is running out of money. Last autumn the commission ran out of money for a while and for a short period suspended agricultural payments. One can be certain that when the EC suspends agricultural payments, it must have its back to the wall. It might, therefore, be simple prudence to anticipate and avoid the outcome in which we do not receive a rebate because the money is not available.
Thirdly—we come to the nub of the reason why we urge the amendment on the Government—in so far as we can understand the Government's strategy, it is to rely on the imminence of bankruptcy and the threat of the bailiffs to oblige the EEC to mend its ways and to come to terms. Let us do what we can to hasten that happy moment. Let us make a deduction from the monthly receipts from the second largest net contributor to concentrate minds on the required reforms. If we do so, it may be possible to reach settlement at the March summit, rather than twiddle our thumbs waiting until the June summit, hoping that, by then, the bank manager will have sent for the Commission.
I listened carefully to the Economic Secretary. If I picked up correctly what he was suggesting to the House,
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it was that the Government do not propose to accept the Labour party's modest amendment. In so far as I could find a reason for the Government's resisting our modest amendment, it was that they believed that action before 31 March would be premature and that we should wait until 31 March to find out whether we shall be paid our 1983 rebate. That attitude is hilariously out of touch with reality. If there were anyone sufficiently complacent to imagine that our rebate might have been paid by 31 March, that person would surely have had his dreams shattered by last week's meeting of the European Parliament. The European Parliament is now on record not only on insisting on a permanent solution to the financing of the budget, which, as far as that Parliament is concerned, means an increase in own resources, but in demanding a greater say on how that rebate is spent in Britain and suggesting—this suggestion must have caused palpitations among Treasury officials when they heard of it — that expenditure of the EC's rebate on Britain should be matched by equivalent sums from the British Government. Having imposed all those conditions, the European Parliament then announced that it would not finalise the precise details of the controls until it met again on 12 March, only a fortnight away from the deadline.
It should be noted in passing that that motion was carried in the European Parliament in the same week in which it debated and adopted the Spinelli report on European union. The report recommends a federal structure for Europe that is akin to the constitution of the United States of America, if I could use an analogy which the Minister of State, Foreign and Commonwealth Office unhappily stumbled on in our last debate. That report was voted on last week in Strasbourg, the same week in which the same Parliament took a stand hostile to the British interest. Yet a majority of Conservative Members of the European Parliament who cast a vote in that debate voted for the Spinelli report on European union. Of the 30 present, 23 voted for European union.
I do not know where the rest of the Conservative Members of the European Parliament were, but I know where the most distinguished was. The leader of the group of Conservative Members was not present to give them resolute leadership on that issue, nor even to let us know what he felt about the Spinelli report. Sir Henry Plumb had returned to Britain on the night of the vote. The engagement to which he returned is revealing with regard to the priorities of the Conservative group of European Members of Parliament and lobbies that are influential on them. Sir Henry Plumb missed the vital vote on European union so that he might attend the annual dinner of the National Farmers Union.
Mr. Marlow: Perhaps I can reassure the hon. Gentleman yet again. He has heard forthright statements of the Government's policy from my hon. Friend the Economic Secretary to the Treasury with regard to the veto. The Government's policy is that the veto must remain in the foreseeable and far future. It is obvious that the Members of the European Assembly who were so bold as to vote against the veto last week will either not put themselves forward for election at the forthcoming European elections, or, if they do, will not be selected in Conservative constituencies.
Mr. Cook: I fear that what the hon. Gentleman has said will be taken down and used in evidence, if not against

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him, against some of his colleagues. I note what he says. It is a matter of passing interest to us in the Opposition, as we move towards the completion of the process of adoption of candidates, that the Conservatives are still only at the early stages of the process. I am delighted at the hon. Gentleman's comments. We shall watch carefully which existing Conservative Members of the European Parliament are adopted in the constituencies and make sure that the hon. Gentleman's remarks are shared with Labour candidates standing against them.
Mr. Russell Johnston: The House will recall that when the hon. Gentleman became a spokesman on this matter he took time to go to Strasbourg and talk to his Socialist colleagues. Is it not a matter of political concern to him that, when he talks about the European Parliament taking a specific attitude, he is talking about Members of the European Parliament right across the spectrum, notably his own apparent political colleagues?
Mr. Cook: Representatives of all groups voted for the Spinelli report. However, I am happy to assure the House and the hon. Gentleman that no member of the British Labour group voted for the Spinelli report. I do not believe that any responsible leading politician in the United Kingdom, given our historic experience of the EEC over the past decade, could, while the fate of the issues that have given us that unfortunate and unsatisfactory experience hangs in the balance, responsibly advocate further union through the various institutions which have imposed upon us the handicaps of recent years. Presumably, had the hon. Gentleman had the opportunity to be in Strasbourg for the vote, he, too, would have voted for the Spinelli report on European union along with the massed ranks of the European Liberal group, which supports it. I am sure that that commitment will be noted with interest by electors throughout the highlands and islands of Scotland, where the hon. Gentleman is standing. I shall make sure that his view on the matter is also conveyed to the Labour candidate who will stand in that constituency.
Mr. Eric Forth: Will the hon. Gentleman comment on the position of the bulk of the Socialist group in the European Parliament and its attitude to the Spinelli vote, because it will be relevant for the electorate to know how the British Labour group has influenced the Socialist group and how in future the British Labour group might fit into the Socialist group, in view of that group's voting on Spinelli?
Mr. Cook: We have made it clear that those elected as Labour Members of the European Parliament in Strasbourg will take a place in the Socialist group and will seek to influence the views of that group, and to reach a common view, whenever that is possible. However, at the same time we shall of course reserve the right to defend our national interest when we differ from our colleagues, as they differ from us in turn. We are not afraid of entering into a joint group and having a debate with our colleagues of a similar political persuasion. We do not propose, like the Conservative group, to rope ourselves off into a separate clique with only a few hangers on from independent reactionary parties in Europe.
I am disappointed, but not surprised, at the priorities of Sir Henry Plumb, but I am both disappointed and surprised
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that the Government have not chosen to accept our amendment. After all, the Government have hinted that they will stop at nothing to make sure that they get a fair deal in the EEC and will even withhold their contributions to do so. When 31 March comes, no doubt we shall be told that a letter of complaint is on its way. No doubt when we meet to debate the matter in April we shall be told that the reply has been received and is in Brussels with the Foreign Secretary.
We have put to the test the Government's bluster. They shrink from matching bold action to their resolute rhetoric. I am disappointed that they will not accept our amendment, but I have the satisfaction of having called their bluff. There may be something in the jest that part of the payments of the United Kingdom for the variable sheepmeat premiums are in respect of our Foreign Secretary.
There is another reason why I am disappointed that we shall not be able to make progress on the matter tonight. It is that, as long as this undignified debate on the budget continues, the whole of Europe will be distracted from the much more fundamental problems facing us, which are at present being wholly ignored. While we are fixated with how we pay to support 8 million farmers, we drop into a memory hole the 12 million unemployed or the 30 million or more citizens in Europe who experience unemployment in any one year. If there is a challenge to Europe, that is the challenge that should be taken up. Instead, all the exciting work on pan-European co-operation in the economy is taking place outside the EEC, on projects such as the "out of crisis" project of voluntary economists gathered together in ad hoc bodies, or in the OECD. which revealed in a study last week that, for any additional public investment expenditure, the stimulus in any one state is doubled and the adverse effect on its fiscal deficit and trade balance is halved if its neighbours make the same increase in public investment at the same time.
The challenge facing us is whether we can break out of the sterile stagnation imposed upon us by competitive deflation, in which we each vie in vain to grow strong by beggaring our neighbour. We should substitute in its place a programme of co-ordinated reflation in which we can expand together out of this slump. That is the true perspective in which to view the budget. The true perspective in which the budget must rest is the billions of pounds worth of production that has been destroyed by the monetarist dogma now in the saddle of so many capitals in Europe.
Mr. Rifkind: What about France?
Mr. Cook: The hon. Gentleman refers to France. The mistake that the French Government made when they first came to power and started making a dash for growth was that they assumed that the rest of Europe would behave rationally. They were wrong. The rest of Europe responded irrationally. One of the strongest advocates of co-ordinated reflation is the French Socialist party, because the difficulties of any one country breaking out of the slump on its own have been exposed to it. It is on that experience that we can found the case for co-ordinated reflation, so that we can all get out of the slump together. If we try to get out together, the cost for any one member state will be halved. That is what we should be concentrating our minds on.
Mr. Rifkind: Spinelli.
Mr. Cook: The hon. Gentleman must get this right. It is not Spinelli. It would involve co-ordination and cooperation which might well transcend the EEC and bring in other countries.
Mr. Rifkind: The hon. Gentleman has just made the remarkable statement that the French Socialist experiment failed because it was unable to get the support of the rest of the European Community. Does that mean that the Labour party will call for a single economic policy in the EC, and greater economic integration?
Mr. Cook: If we are to say that the French Government's economic policy has failed, we will be unable to find terms of abuse sufficient to describe the economic record of the present Government of this country.
Mr. Dykes: The hon. Gentleman is changing the topic.
Mr. Cook: No, I shall take up the Minister of State's point in a moment. I wish first to make it clear that we do not accept his entirely false premise. [Interruption.] If the hon. Member for Harrow, East (Mr. Dykes) will be kind to his hon. Friend the Minister, I will give the Minister an answer. I presume that the question was intended to elicit a reply from me. [Interruption.] It is disappointing for me to have said nothing in the past half hour with which the hon. Gentleman disagrees sufficiently to intervene from a standing posture.
The record of the French Government's economic policy is better than that of any other member of the EEC. The increase in unemployment in France is lower than it is anywhere else in Europe. Unemployment fell for most of the first two years of the French Socialist party's period in office, while during the first two years of the hon. Gentleman's Government unemployment nearly doubled.
It is not a matter of economic integration. It is a question of arranging together to carry out domestic policies which reinforce and support each other, rather than following domestic policies which deflate competitively against each other. I assure the hon. Gentleman that the Socialist parties of Europe are indeed discussing apace a co-ordinated programme which we could offer Europe in place of the stagnant sterility and barreness which they are offered by the monetarism that rules from here to Bonn.
Mr. Forth rose—
Mr. Cook: No, if the hon. Gentleman will forgive me, I have been generous in giving way and I am concluding my speech.
It is for these reasons that we must put behind us the arguments over the budget and resolve the deficit of the millions of pounds by which we are out of pocket because of it. This budget is both irrelevant to the real economic problems of Europe and perverse in the way in which it is financed. Above all, it offers no hope to the 12 million unemployed in Europe who should be our first priority.
5.3 pm
Mr. Geoffrey Rippon: We are all very grateful to the Economic Secretary for the lucid way in which he introduced the weighty documents before the House, even though he was not helped on his way by some of the interruptions. I agree with the hon. Member for Livingston (Mr. Cook) on at least one point. He is right to say that we must put some of these budgetary issues in
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a much wider perspective. We all know that the Athens summit was a failure, but it was not necessarily a disaster. I believe that the Prime Minister was right in rejecting yet another botched-up compromise—another communiqué in the same old terms leaving all the issues that face us to become even more acute and more difficult to resolve in the years ahead.
On the other hand, we know that genuine solutions to the major issues of budgetary policy and effective control of agriculture and other expenditure are the precondition of the Community's future development, and that, in that regard, time is running out. Judging from the press reports, we cannot be particularly encouraged by what has been happening over the weekend, at yet another meeting of the Council of Foreign Ministers. Clearly we must give the highest priority to negotiating a settlement that strikes a fair balance to the mutual advantage of all member states. That must be our purpose, because if we fail to reach that agreement we shall all suffer. Some right hon. and hon. Members are a little unfair in asking my hon. Friend the Economic Secretary exactly how those negotiations are being conducted. They must be conducted at every level, and particularly at the diplomatic level, because the last thing that we want is another frustrating summit where Heads of State are asked to resolve issues that ought to be dealt with at ministerial level long before strategic decisions have to be made.
As the Prime Minister has said, we are not half-hearted members of the Community. We are in, and we are in to stay. I welcome what my hon. Friend the Economic Secretary said about the Government's constructive approach. We must defend British interests as others defend theirs, but British interests are indissolubly and inevitably linked to European interests. We all have complementary interests, and they go far beyond either the existing budget proposals or the common agricultural policy.
I welcome the Government's willingness—provided that the immediate issues are resolved—to consider an increase in the total resources of the Community. That is the only way to carry out the proposals that the British Government have themselves made concerning transport and energy policy, the environment, innovation and advanced technology.
Many criticisms are made of the CAP but we should not forget its contribution to the interests both of the British farmer and of the British consumer by putting the source and the price of our food on a stable economic basis. Milk and other surpluses have got out of hand, but since we joined the Community our farmers' home food production has increased from 60 per cent. to 75 per cent. of our needs and that has certainly been in our national interest. We will be glad of that import saving when North sea oil runs out. While agriculture expenditure must be contained, we would be wrong to ignore the effect on farmers' incomes, and so on farm workers' wages, of savage cuts in support prices or an excessive devaluation of the green pound. We should not forget that, as we are not members of the European monetary system, the pound sterling is liable to fluctuate much more violently than the currencies of our partners.
With the budget it is a case of the chicken and the egg, and the members of the Community may be playing at brinkmanship. It must be in the interests of the Community as well as of Britain to change the size and shape of the budget, as the hon. Member for Livingston has hinted. Our

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criticisms of the present budget and its impact on financial flows between members states can be solved ultimately only by developing common policies on a scale which will put the budget and CAP into a much truer perspective. I entirely agree with the hon. Member for Livingston—and I assume that his view is the view of the Labour party —that the biggest challenge to the Community lies in the industrial sector, with an overriding need to deal with the rising levels of unemployment.
As the hon. Member for Livingston pointed out, more than 12 million people in the EC are unemployed. That represents 11 per cent. of all adults. Worse is the fact that among the under-25s the level of unemployment is between 25 per cent. and 27 per cent. According to commissioner Mr. Ivor Richard who is responsible for these matters, if we do nothing about that we can expect unemployment of 15 million by 1985–86 with the same horrifying 25 per cent. to 27 per cent. youth unemployment. The social and political consequences of unemployment continuing at that level makes the budgetary dispute relatively insignificant. We must revitalise and modernise European industry. We know that it is falling behind the United States and Japan in nearly every aspect of technology and innovation. That is why the ESPRIT programme, for example, which the British Government fully support, must be implemented without undue delay. The ESPRIT programme will not close the growing technological gap between Europe and the United States and Japan, but without it we shall have little chance of catching up. It is only through such measures on a Community scale that we can create jobs to the desired extent.
McKinsey's, the consultants, have estimated that if information technology is developed in Europe as it has been in the United States, 2 million new jobs could be created by the end of the decade. However, it points out that if we continue to fall behind we shall lose 2 million more jobs in that sector alone. In information technology alone about 4 million jobs are at stake.
I agree with my hon. Friend the Minister and the hon. Member for Livingston that British interest in the EC is not confined to those matters which are or ought to be covered by the budget. As has been said, there is a major interest in policies which do not involve substantial spending, notably the dismantling of trade barriers and bottlenecks at frontiers.
When it is finally agreed, our budget contribution could be much more easily justified and acceptable if our Community partners made a real effort to create a genuine free market in goods and services which is provided for in the treaties to which they rightly attach such importance. We all know that freedom of trade in services hardly exists. Customs officials are as numerous as ever and some customs regulations have recently become more rather than less stringent as protectionist policies have developed.
Mr. Forth: In this context would my right hon. and learned Friend say that we should make the relaxation of the restrictions on freedom of movement a quid pro quo of any increases in the Community's resources, or would he rather that there was a maintenance of a ceiling in the resources until we get guarantees on that vital aspect of the Community — abolition of internal markets for goods and services?
Mr. Rippon: It is a fair negotiating point. It is sometimes a mistake to express these matters in terms of a quid pro quo. Our position would be easier and more acceptable — and it would be in the interests of the Community—if progress were made on these matters. I should like our partners to show more willingness to meet us on this point. Perhaps my hon. Friend the Minister will say in his winding-up speech whether the French Presidency has in mind meetings of the internal market council in the next few months. I would be happier about some of the French Foreign Minister's remarks if he could show some willingness to make progress in this regard. We might make common cause with the French lorry drivers, one of whose grievances is frontier delays.
Some reference must be made to the European Parliament, as we describe it by courtesy. It might have shown itself to be more constructive and have a more realistic approach. Although we give the European Parliament that courtesy title, it should remember that it is constitutionally only an Assembly and that its best hope of acquiring more authority and influence lies in its acting reasonably and responsibly. It has not helped the cause of European unity by blocking he budgetary refund to which the United Kingdom is entitled or by pursuing a will o' the wisp of a new treaty on European unity which is highly unlikely to materialise. There is no great objection to the Spinelli resolution and initiative. It is a vision of the future to which people may legitimately aspire but I should have thought that we must make a greater success of the treaties that we have already signed before contemplating entering new ones.
Members of the European Parliament would do better to hold the Heads of State and Government to the terms of the solemn declaration on European union which they adopted and signed at Stuttgart last year. Our Prime Minister was one of the signatories. The declaration provides a basis on which we can hope to move forward —as President Pompidou used to say—step by step with realism. The Stuttgart declaration declares the signatories' will to move towards a European union, however that may be defined, and sets out at considerable length the way in which the Heads of State and Government are determined to deal with many matters which should be reflected in the Community budget — social, regional, industrial, technological and cultural.
There is no reason why we should hold up the proposals made by Heads of State and Government for culture. They could be implemented at little cost and in areas on which we all agree. At Stuttgart the Heads of State and Government decided, among other things, to develop the activities of the European Foundation and the European Institute of Florence. They also decided to increase exchanges of students and teachers, to promote joint action to protect, promote and safeguard cultural heritage and generally to intensify exchanges of experience, especially among young people — trade unionists as well as academics. The European Parliament would do better to press the Heads of State and Government to implement the decisions that have been made.
Britain is not always the laggard. We are the only country so far to have ratified the treaty which establishes the European Foundation. That treaty was agreed in Rome to mark the 20th anniversary of the signing of the Treaty of Rome, and was signed in Brussels to mark the 25th anniversary of that treaty. I wish to declare an interest in that I am a member of the preparatory committee for the

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establishment of the European Foundation. I am afraid that the powers-that-be have failed to agree after 18 months on the appointment of the co-ordinator for whom the Heads of State and Government called. If we are having so much difficulty getting ratification and implementation of a treaty which simply involves a few million pounds a year spread among all the members of the Community, it seems a little unrealistic to believe that we can carry forward the Spinelli proposals within a reasonable period. We should do better to concentrate on matters in which there is a reasonable hope of progress.
The documents which we are debating are interesting and detailed. You, Mr. Deputy Speaker, will no doubt have studied them carefully to ensure that no right hon. or hon. Member strays beyond their confines. They cover almost every human endeavour. Some of our debates on them are rather trivial in the context of the circumstances in which Europe finds itself today.
Everyone in the House must recognise that a European Community divided and disorganised will exercise no influence in the world; it will continue to fall steadily behind its competitors—notably the United States and Japan; unemployment will rise and social policies will be increasingly threatened. The political dangers of disunity are even greater.
I am glad that my right hon. Friend the Prime Minister has pledged that she and her Ministers will work for the unity of Europe as a force for peace, freedom and democracy. That must remain the firm purpose of us all because it is a common European interest. It has been well said that dogs in a kennel snarl at each other, but when a wolf comes along they become allies. If we in Western Europe are not careful we may be too late.
5.21 pm
Mr. Russell Johnston: It is a pleasure to follow the right hon. and learned Member for Hexham (Mr. Rippon), to whom I have listened on many such occasions. One of the sad aspects of these debates is that so few Members attend —and those who do are always the same Members.
Mr. Robin Cook: The hon. Gentleman was not present at the last debate.
Mr. Johnston: The whole pattern of the debates becomes predictable. The right hon. and learned Gentleman said that the solution to the budgetary problem must be a fair balance of mutual advantage. I could not agree with him more. In the end, the solution must be a package. There is no getting around that; it is a political reality. Looking at the hon. Members in the Chamber, I suspect that much of the debate will be confrontational and critical in tone. It is a great pity that the right hon. Member for Old Bexley and Sidcup (Mr. Heath) is not here. It is rather sad that he does not attend at least some of the European debates.
Mr. Rippon: My right hon. Friend spoke in the debate in December.
Mr. Johnston: I would have liked to have heard the right hon. Member for Old Bexley and Sidcup develop some of the points that he made in an interview in The Times, which I found extremely interesting. He dealt at length on the need for a consensus approach in general
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matters; he pointed out that we always talk about the Community in confrontational terms, while at the same time calling for closer and more sustained East-West dialogue. I am not in any way arguing against that; I am simply pointing out the contrast. There has been too great a confrontational approach during the past few years.
There was a rumour in the newspapers last week that the Prime Minister intends to appoint two Conservative commissioners to the Commission when the span of the present commissioners, Mr. Richard and Mr. Tugendhat, runs out. I hope that that is not true. There has been a good example in the appointments so far of the importance of sustaining some national political consensus at the very heart of Community institutions. There is a case for a Liberal or an apolitical person to be appointed. This is another example of the contrast in the way that European countries approach these matters compared with Britain's approach. The approach that I suggest would be regarded as normal in most Community countries. I hope that the Prime Minister does not appoint two Conservatives. I further hope that she does not, as reports suggest, see the task of the two British commissioners as being to advance the British interest solely—which is quite contrary to the notional job. If that is true, clearly her concept of the national interest is close to her view of the Conservative party.
Mr. Forth: Would the hon. Gentleman prefer the appointment of an anti-European Labour person or a pro-European Conservative person to the second place in the Commission?
Mr. Johnston: It would not make any sense to appoint someone who is opposed to the whole operation of the Community. But I have no doubt that there are plenty of people within the Labour party who are in favour of the European Community.
Mr. Boyes: The hon. Gentleman is asserting that there should not be two Conservative commissioners, and I understand that the alliance is calling for wider consultation with its members. This is the second debate in quick succession on EC matters, but on the last occasion no representative of the Social Democratic party entered the Chamber. Indeed, we do not need to be mathematicians to count how many of them are present today.
Mr. Johnston: It is true that we do not need to be mathematicians—there are only six Social Democratic party Members, and they cannot be everywhere at once — and there are only six of them because of our electoral system.
As the right hon. Member for Old Bexley and Sidcup said in the newspaper interview, it is more difficult to find a consensus solution with people who disagree than to embark on the attacking approach adopted by many hon. Members—such as the hon. Member for Southend, East (Mr. Taylor) who, in an earlier intervention, spoke about "the continentals" as though that was some leprous breed of humankind to whom one would not dare to speak or to touch.
Mr. Teddy Taylor: I am accustomed to the hon. Gentleman's unjustified and unfair attacks. He talks about consensus, but never tells us what that is. When I referred to continentals, I meant the non-British members of the EEC. If he can think of a better or shorter definition perhaps he will tell me.
Mr. Johnston: I am grateful to the hon. Gentleman for his intervention. There are Irishmen who, as far as I know, do not live on the continent of Europe, However, I shall not pursue that matter further.
I come now to the budget and the budgetary solution. There was a meeting of Liberal leaders in Stuttgart in January. It was attended by four Foreign Ministers from the Community, a number of Finance Ministers and the President of the Commission. It was a representative meeting at which persons involved in the decision-making process could talk together for the better part of a day. Despite the differing national positions that emerged, at the end of the day they agreed a common approach and a common communiqué—part of which I shall draw to the attention of the House.
The statement had three basic elements. First, there was the acceptance that steps must be taken quickly to contain agricultural production. To subsidise agricultural production where there is no market makes no sense. That is the key reason why the budget is out of balance. At the same time, we must face the fact—some hon. Members do not—that if we cut agricultural production, as we must do — whether by price or by quota — we cannot do anything immediately. It will take three or four years if we are to do it in an acceptable way. I mean acceptable not only on the continent or in Ireland, which is a classic example, but in Great Britain. The idea that we can produce a magical reform of the common agricultural policy which can be implemented the day after tomorrow is nonsense.
There should be a budgetary settlement which involves a system of correcting the injustices in revenue and an increase in own resources. The communiqué says:
"The Community's budgetary problems must be resolved, in particular and in combination"—
I stress the words "in combination"—
"by:—the introduction of stricter rules on budget spending, although the need for savings must not be used as a pretext for blocking the Community's development."
That refers to a matter that comes later. The communiqué continues:
"—the creation of a better balance between the Community's policies"—
that refers to the preponderance of the CAP
"and the ensuring of a fairer distribution of the financial burdens between Member States."
That is a direct reference to the British position and what would become in time the Portuguese position and is becoming the German position. It then refers to
"the rejection of the system of 'juste retour'."
If we go on the basis of "juste retour", there will be no redistribution of anything in the Community. That would be quite contrary, one would have thought, to the views held on the Opposition Front Bench.
The communiqué goes on:
"— the increase of own resources by raising the ceiling of VAT paid to the Community. The sacrifices entailed by these reforms and the raising of the ceiling on own resources will be all the more justified in order to enable the Community to embark on a new stage in its internal development and to admit Spain and Portugal as new members."
Spain's and Portugal's prospective adherence has not yet been mentioned, and perhaps hon. Members do not think that it is relevant to a budgetary debate, but it is. Their impact on the budget will be considerable, and the political imperative of including them is important. We may have to pay a price for it.
Mr. Nigel Spearing: In view of the importance of the document, which represents a strand in pan-European thinking, will the hon. Gentleman tell the House whether it went so far as to give a percentage of the VAT base, which has been canvassed by the Commission and the Italian Government? I believe that 1·4 per cent. and 2 per cent. have been mentioned. Did the group come to any conclusions?
Mr. Johnston: No, we did not come to a conclusion on that because the representatives of the countries taking part held different views. However, we all agreed that there should be an increase and that the minimum increase should be in line with the Commission's proposal of 1·;4 per cent. I favour the higher increase, but there was no agreed figure.
Mr. Teddy Taylor: The hon. Gentleman said that the group wants eventually to reduce agricultural production. Will he give me some idea of how it thought that that could be achieved? That would help many hon. Members.
Mr. Johnston: The hon. Gentleman asks me how agricultural expenditure will be reduced. Is that right?
Mr. Taylor: The hon. Gentleman referred to the gathering of Liberals and Democrats, who agreed that a reduction could not be done quickly, but who aimed in time to reduce agricultural production. I listened to his words carefully. Did those great Liberal thinkers show how they would recommend to this Government or other Governments how such production would be reduced?
Mr. Johnston: I shall give two answers to the hon. Gentleman. I shall take his point in a serious and straightforward manner. The communiqué refers to
"the introduction of guarantee thresholds which can be varied according to the product concerned."
That refers to operating the price mechanism as a means of containing production. There are many difficulties in that, as the hon. Gentleman knows. If we are to have an immediate impact on production through the price mechanism, we would probably need cuts of about 20 per cent., which would have the gravest effect in Europe. Seventy per cent. of dairy production comes from about one-quarter of the producers. If there was a 20 per cent. price cut, those people would be affected, although not all that adversely. The great milk factories would take their own measures, but many small farmers would be severely affected. Therefore, we must grade the reduction.
The concept of quotas met with more favour. The hon. Gentleman knows that we can argue from dawn till dusk about the quota for the common fisheries policy, and the right hon. and learned Member for Hexham would agree. Quotas would be one way of varying it. If quotas were fixed for Ireland on 1981 or 1983 production, the difference would be 17 per cent., because the Irish have been expanding like fury. It would be difficult for and unacceptable to the Irish Government if such draconian steps were immediately taken. As I said earlier, whatever we do about the CAP, we cannot do it instantaneously but must phase it over a period of time.
The third element in our approach was to seek to develop a programme for expansion. There can be no programme of expansion unless there is an increase in own resouces. Even if we contain or reduce expenditure on the CAP, we could not do it quickly enough and we would not

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release enough money. We would need more own resources to tackle unemployment in the way that it should be tackled.
The essence of what we would commend to the Government for the Council meetings on which they are about to embark is contained in the communiqué:
"Our common experience of recession over the last decade has demonstrated that economic recovery is impossible to achieve if nations act independently. To restore our industries' competitiveness and to fight unemployment, our priorities must be:

— more vigorous action by the Commission to prevent Member states from introducing technical trade barriers designed to protect their own markets;

—full achievement of the internal market to ensure that the vast efforts, in terms of research, training, and investment required by the challenge of new tachnology, can be rapidly made profitable and brought to fruition".

The German Foreign Minister agreed to that, although the Germans are major culprits in that area. The communiqué continues:

"—establishment of a genuine European policy for the research and development of new technology, with the immediate adoption of the ESPRIT programme … as a first step towards a commitment to the sectors of the future represented by telecommunications and biotechnologies;

—consolidation of the area of economic and monetary stability created by the European Monetary System, which must be extended to all the Member States."

The Minister said nothing about that today, nor did the right hon. and learned Member for Hexham.
Mr. Rippon: I did mention it— although I cannot cover everything—when I referred to the difficulty of altering the green pound at a time when sterling fluctuates wildly because we are outside the European monetary system, which I believe we should join.
Mr. Johnston: I apologise to the right hon. and learned Gentleman and I know that he has always said that in the past.
The basis of the agreement exists, but the question is whether the requisite will exists to do something about it.
I was disappointed with the speech of the hon. Member for Livingston (Mr. Cook), which was good, but very cutting. He has a cutting edge to him and a silver cutting tongue, but there was no positive element in his speech. It was almost like an accountant's speech at a board meeting that dealt with all the bits and pieces, but said nothing about policy. Towards the end of his speech the hon. Gentleman had the gall to talk about strategy. I had not heard a word about strategy previously, unless it was the old strategy of the Duke of York—marching up and down and sometimes wandering round in the middle.
I am not sure what the Labour party's present policy is on the European Community. It used to be that we should withdraw, but I understand that it has changed. The hon. Member for Livingston suggested an in-out approach—one day we would be in, and the other day we would be out. But I should not be flippant. It is bad for Britan if the Labour party is isolated from its natural political allies in the rest of the European Community. Much fun is poked at the European Parliament, but it provides a great opportunity for politicians of all shades to meet and work together, to understand each other, and to go back and make contact with their Governments. The Labour party lacks that quality.
The Conservative party also lacks that quality. I agree with the hon. Member for Livingston that it is remarkable
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that the Conservative group in the European Parliament could not link with any other Conservative group. The Christian Democrats, for example, regarded the British Conservative group as being too Right wing.
Mr. Robin Cook: Who is the hon. Gentleman going to link with?
Mr. Johnston: I am linked already, thank you.
Mr. Allan Rogers: Which group will the hon. Gentleman join in the European Parliament if he stands in the June election?
Mr. Foulkes: He is trying to do an old lady out of a job.
Mr. Johnston: I am not laughing at the interesting but somewhat ill-informed question from the hon. Member for Rhondda (Mr. Rogers), but at the sedentary observation of the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). I would join the Liberal group in the European Parliament. British Liberals are members of the European Liberal Democrats, who are represented in the Parliament by the Liberal group.
The Government must stress the fact that Community States can create more jobs and achieve industrial renewal only by expanding their economies together. The Government should press the Community to take an initiative in advocating joint international action. They should join the Europen monetary system and should support an expansion of the regional and social funds to create more jobs and to help people to adjust to industrial change. If they take such a positive approach, the other necessary element—that the revenue side of the budget must be changed to take account of the present position —will follow. The Labour Government negotiated that budget and we had a referendum on it. The other members of the Community who become a little short-tempered about the budget are entitled to do so, because we came to an agreement but now we want to change it again. But they have accepted the fact that it must change again, but that will not happen immediately.
It is clear that the common agricultural policy is out of control. Therefore, we must reduce intervention prices for products in surplus, while ensuring income support for the poorer farmer. We must phase that in in a way that is politically acceptable and reasonable. The CAP should be linked with a reshaped budget so that contributions from member states reflect their ability to pay. That is what the Government are trying to do.
The Community is nearing the crunch. Its survival and expansion is of the utmost importance to our own survival and industrial expansion, and we must never forget it.
5.44 pm
Mr. Hugh Dykes: One is bound to agree with much of what the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) said. I agree with his inference that, at a time when the Community is facing a serious crisis, once again the House of Commons has a traditional EC debate. The posturing of the Labour Opposition produces, as the hon. Gentleman said, no positive demonstration of their policy for not only the survival of the Community but its revival, reinforcement and augmentation in the future. All hon. Members will dismiss the remarks of the hon. Member for Livingston (Mr. Cook) for what they are. The Opposition must remain as united as possible, although that is very difficult.

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Labour party members are psychologically committed withdrawalists, but cannot admit it. They have had to back away from that policy and at the same time try to satisfy what one might describe, without breaching parliamentary rules, as the new Kinnock wing and the old Benn wing of the Labour party.
Mr. George Foulkes: Will the hon. Gentleman give way?
Mr. Dykes: Not at present.
Mr. Foulkes: Come on.
Mr. Dykes: I shall not give way now, because the hon. Gentleman might welcome an opportunity to intervene later when I have concluded my opening remarks.
It is inevitable that the Labour party will never make a positive suggestion about how to make progress in the Community. One saw again the awkwardness of the hon. Member for Livingston when he tried to describe the so-called relationship between the British Labour Members of the European Parliament—I emphasise the word "Parliament" because it is developing into one—with the members of the enlarged Socialist group in that Parliament. Labour Members do not know how to play this game. They want to indulge in their little Englander of nationalism, which has been the hallmark of the Labour party for decades, yet they must pretend to be reasonably enthusiastic members of Socialist International.
Mr. Boyes: Will the hon. Gentleman give way?
Mr. Dykes: I am becoming so enthusiastic about this theme that I shall not give way. I may do so in a moment, but I wish to conclude this part of my speech.
There may be some suggestions from the alliance, but we must rely on my hon. Friends the Minister of State and the Economic Secretary to the Treasury and the Government to put forward suggestions for making real progress in the Community. I am a well-known enthusiastic adherent to our membership of the Community, and I wish it to develop properly in the future so that we can get through the crisis. However, I have reservations about some signs of the Government's lack of enthusiasm for developing the Community.
Mr. Boyes: The hon. Gentleman made the accusation that British Labour Members of the European Parliament were petty nationalists. Does he agree that at least British Labour Members sit in a group with nine other nations and about 12 other political parties, whereas the British Conservative group has not managed to attract another full group anywhere in the political spectrum, except for two Danes? Are not the Conservative MEPs the isolated petty nationalists in Europe?
Mr. Dykes: I shall answer the hon. Gentleman's point with a personal opinion. Since we were in the old European Parliament, I have been on record as being in favour of British Conservatives linking with the Christian Democrat group.
I hope that my hon. Friend the Minister of State will say something about the meeting this weekend at St. Cloud. I missed the first few minutes of the debate, so perhaps my hon. Friend the Economic Secretary made some reference to it then—[HON. MEMBERS: "No."] It would be helpful—
Mr. Foulkes: They are still all over there.
Mr. Dykes: There may be problems at the GPO, but let us focus on the fact that there was an important meeting at the weekend and that it is difficult, to say the least, for the House comprehensively to debate this matter without some reference to what happened at that meeting, or at least an allusion.
It is ironic that had the Community developed in the way that good Europeans in all members states would wish, and had we by now proceeded to qualified majority voting on financial and budgetary matters—this is a tentative suggestion, but I am becoming more convinced of it in the context of recent European history —probably a year ago, or little more than that, the panoply of the United Kingdom's rebates would have been agreed, for at that stage only one or two members states were being difficult. The rest were more and more inclined to agree with us.
My right hon. and learned Friend the Member for Hexham (Mr. Rippon), in his otherwise excellent speech, perhaps overdid his omission in not understanding fully the feeling of collective frustration shown in the European Parliament among all political groups at the failure of the other institutions to develop the Community as a cohesive entity. The European Parliament, through various resolutions, through its reaction to the Spinelli report--again, often irrespective of political groups—repeatedly expresses its frustration — indeed anger — that the Community is not making progress at a time when the whole of western Europe is facing such grave issues that it should be doing so. Therefore, it falls exclusively to the European Parliament, which is constitutionally weak -- that is also why it feels frustrated—to try to take this development forward, but it cannot because the member states will not themselves do anything about it and because the European Council is a quasi-autonomous institution overlaying the European Parliament and the Council of Ministers and further slowing down the collective development process.
That applies to the budget as well. That is why it is right for Members of the European Parliament and, I hope, hon. Members here to realise the validity of developing all this, and be in favour of the budget evolving, as well as the EEC as a whole. It is a great sadness that the budget is not larger. What a miserable little instrument it is for cohesive financial decision making, developmental progress, reducing unemployment, building up the regions and so on, particularly when so much goes on agriculture, although that has a positive regional effect that must not be ignored.
The fact remains that the gross myopia of all the member states' Governments, irrespective of political complexion or the majority in any of their Parliaments, has in recent years produced a gradual paralysis of the Community, which is not merely disturbing but terrifying. Therefore, I hope that Her Majesty's Government will understand again their solemn obligations and not only drat which is the immediate prerogative and preoccupation of the debate — getting through the budget crisis and finding a just and fair solution for the United Kingdom..
Without exaggerating that requirement—which is valid but should not be overstated at the expense of other,—there are even more important policy requirements. I hope that on that basis and, I hope, a successful resolution at the end of March at the summit on this short-term crisis, the Government will become one of the most enthusiastic member states of the European Community. They will have

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seen that, despite the constitutional rigidity and institutional paralysis of the Community, the other members states—allowing for their exasperation with us, which must also be acknowledged, although it does not make me unpatriotic to say this—have come our way and agreed with us. Many of them feel that in Brussels, in the other institutions—the Commission and elsewhere — the United Kingdom has exaggerated these problems, although we feel differently for understandable reasons.
The amounts involved are minuscule and the EEC budget is an unrealistic instrument for gradual EEC fusion, harmonisation, collective policies, or European union, to use that convenient but vague constitutional term. That is why I am enthusiastic about going through the own resources ceiling as soon as possible and do not feel alarmed at the idea of 2 per cent., which may seem radical and over-dramatic, but is not in that sense anything other than the beginning of what could be the first stage of a realistic Community budget.
There is no way in which farm spending can be significantly reduced in absolute terms. It may be possible to reduce some of the surpluses — and even they are exaggerated, except the dairy surpluses—but only to a limited extent. If farm spending is to be kept more or less in broad terms at existing levels, allowing for a normative annual increase, it will be unrealistic to do other than increase the size of the EEC budget and spend money on other desirable areas.
What a farce it is that the British Labour party Is unwilling, despite the fact that it is obsessed with spending public money in this country, and the more the better, to agree to that in the European context, when so many of its Socialist colleagues are involved in the European Parliament and elsewhere. What an exaggeration it is for this national Parliament and others to talk about the need for financial discipline and to avoid bankruptcy in the EEC budget. We all know that that term is even more technical than in the concept and sense of domestic bankruptcy. At least the EEC budget does not have a deficit, as do all other national Parliaments. The budget deficit in Italy is £50 billion; in ours the borrowing requirement is about £9 billion. The EEC budget needs to be bigger. I hope that in future there will be a change in the treaty that will produce a debt ratio gradually developing as long as that money is to be invested in desirable purposes throughout all member states.
There is a need for proper financial discipline, and the Court of Auditors has been rightly critical in a number of important aspects. It also criticises us, as much as the other member states, on certain financial matters, so we are not uniquely virtuous in any sense in that context. There are many criticisms about the way in which money can be transferred from one chapter to another—the so-called continental habit of budgeting and financial expression —and rightly, on both sides of the House, criticism about the way in which amounts can be taken from one annual period to another and all the rest, which is a different approach. Morever, there is no case, other than in the past few years of severe deflation in this country, for saying that there is instrinsically less financial discipline in the management and operation of the EEC budget than there is in the member states, with the possible
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exception of one or two. I hesitate to mention them now, because I do not want to annoy some of our colleagues on the other side of the Channel.
Therefore, if that is so, let us maintain a sense of realism about these matters. Let us go into the resolution of the present short-term crisis and build up and enlarge the Community budget thereafter with equanimity and enthusiasm, because we know that the United Kingdom will benefit substantially from spending money in other sectors where budgets are held back artificially by the unreality of maintaining the own resources limit, which is getting increasingly out of date.
Mr. Budgen: My hon. Friend is courageously putting forward a view that is not popular on this side of the House.
Mr. Rippon: It is to some of us.
Mr. Budgen: I am grateful to my right hon. and learned Friend the Member for Hexham (Mr. Rippon) for that correction.
All of us are listening to the Government's remarks with great care, and those of us who disagree with my hon. Friend's proposition take the view that the Government's position is ambivalent. It may be that my hon. Friend has heard remarks from the Government that support his view. If so, we are grateful, because it is something that we fear but are at present open minded about.
Mr. Dykes: I am not sure to whom my hon. Friend was referring when he said "we".
Mr. Budgen: Those of us who disagree with my hon. Friend.
Mr. Dykes: The "we" might have been verging on the royal. I think that Government policy has been and is clear —I support it—and I think that what I am talking about is also clear.
Mr. Budgen rose—
Mr. Dykes: I shall continue, if my hon. Friend will allow me.
There is no problem in that context. As the stages of negotiation have continued — and this is the normal process — the Government have developed more enthusiasm for those objectives in the future than they had at first, when they were naturally preoccupied with trying only to get the rebates fixed in amounts and obtain them from the budget Council and summit meetings.
We have proceeded beyond that stage, which is logical, and there is no divergence between what I am saying and what appears to me to be the Government's policy. Therefore, there is an opportunity to be used after the March summit. It is reassuring that the summit is in the hands of the French presidency. Although in the conventional mythology we suggest in this House that everybody on the continent is basically wicked, but that the French are even worse than the rest, I do not believe that to be the case. The Socialist Government of France are concerned to resolve the immediate crisis and to try to develop the Community further. They, too, know that the old pattern of saying that the budget is mostly concerned with agriculture spending, with only a little on the rest of the items, is no longer valid. The Community has to pass beyond that paralysed stage of inefficiency and lack of achievement. It is important for the Government to recognise those factors.

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It is asking a lot to have a system that will continue for ever, so we may have to have a compromise mixture of annual periods of adjustment in the rebate and a safety net system, with some kind of mixture coming out of the very intricate negotiations. I hope that the Government will remember—as others should—that the amounts involved are very modest. I am not referring to the total excess payment, which we could regard as an aggregate rebate concept. We would, after all, settle for some deficit payment—some net contribution. Although we might think that it is unfair, we have already said that it would be justified.
Therefore, the amount of money that we are discussing is equivalent only to three days' public spending in the United Kingdom. That is the measure of the crisis that has been precipitated by the excessive adherence to nationalism in all the member states, including the United Kingdom, at the expense of the Community, for the sake of objectives that have assumed all too great a political posture, way out of proportion to the amount of money involved.
Therefore, it is not only a matter of establishing a proper rebate system, and the amounts of money which should be in an enlarged budget in the future; we should be doing other things conjointly with economic decision making. In the end, it is also a matter of joining the EMS. It is sad that the Government have not yet been able to make the decision. The EMS has been an unqualified success, apart from several hiccups which were only a matter of adjustment in the rates, and entirely within the operational framework of the policy. The Government are already halfway there as a member of the reserve sharing system, so that it would be a good idea to go the whole way and join the EMS.
My conclusion must be that the motion is correct, that the Government are pursuing exactly the right policy to get the correct result at the end of March, and that the Opposition's policies are ludicrously irrelevant and outdated. They even embarrass their own members. We have seen nothing of the alliance today, apart from the few hon. Members who appeared during the concluding remarks of the hon. Member for Inverness, Nairn and Lochaber. It is for the European party par excellence in this House—that is, the Conservative party—to find the right solutions.
6.3 pm
Mr. Nigel Spearing: This is only the second occasion in about 14 years when I must resist the temptation to reply to some of the remarks of the hon. Member for Harrow, East (Mr. Dykes)—particularly his opening and closing remarks—but I have no doubt that my hon. Friends will deal with them adequately in due course.
The debate and the motion illustrate some of the problems facing the House in grappling with the issues of the European Community. We have five issues before us in the motion, mostly related to finance.
I think it would be in order for me to comment on at least one point made by the hon. Member for Harrow, East, who is advocating up to 2 per cent. of VAT base as the limit to which the Community can draw on our funds. I remind the hon. Gentleman that that would mean that about 22 per cent. at the current rate of our VAT take
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would have to be transferred to Brussels. He may well feel that that is proper, but I suggest to him that there would be, some debate at least in this House over such a figure.
The first of the five topics, at which the House is looking simultaneously is the draft budget, together with the two amending documents. These were described in HC 78-ii, the Second Report of the Scrutiny Committee, over which I have the honour to preside.
The second topic relates to the repayments to the United Kingdom and Germany. They were discussed earlier in the debate, together with the importance of their being either obligatory or otherwise. Those matters were reported in HC 78-xi, the Eleventh Report of the Committee.
We also have before us, as third topic, the Court of Auditors' report for the financial year 1982—OJ C357—running to 243 pages, on which the Scrutiny Committee reported on 5 February in HC 78-xiv, which is not yet published.
We have before us also the motion which refers to future financing, and the Scrutiny Committee reported to the House on that in HC 78-vi. The Foreign Secretary appeared before us on 15 February last, giving us further evidence.
Finally, the Opposition's amendment deals with the policy of holding back our rebates.
Mr. Anthony Nelson: If I heard the hon. Gentleman correctly, he said about a minute ago that 2 per cent. would amount to 22 per cent. of the VAT yield. Would he care to explain that in relation to the point about 2 per cent. of 15 per cent.?
Mr. Spearing: I shall try to answer the hon. Gentleman's question, although I do not want to take long over it. I am not at all surprised at the hon. Gentleman's surprise, but one of the functions of the Scruntiny Committee is to look at some of the essential facts which might otherwise escape the attention of the House, the country, or some of the other members of the European Community.
When we speak of the all-important 1 per cent. of VAT, we remember that there have been various interpretations. I admit that some time ago I thought that it was 1 per cent. of our VAT take; other people thought that it was a 1. per cent. rate on the current 15 per cent. VAT. But it is 1 per cent. maximum of the assessed VAT base, which works rather like a rateable value, in that it is assessed annually by the Commission and by the Council. It is a rate of up to 1 per cent. of that base which has to go to the EC. The current rate—I think it was last year's rate—amounted to no less than 11 per cent. of the VAT take.
I should add that the amount every year will necessarily vary because the base can vary marginally. The percentage of the base can vary, and, in addition, the rate of sterling against the ECU will also vary. If sterling goes down., our contribution goes up, even if the notional rate is the same. I hope that I have fully explained the matter to the hon. Gentleman. I am obliged to him for his inquiry, because this point has not been very well understood. Indeed, it has perhaps emerged only in the last few months.
I do not want to spend too long on any of the five issues. I want to concentrate on two points in particular—the Court of Auditors' report for 1982 and the report of the Scrutiny Committee on it—and also on some of the major points arising from the Committee's Sixth Report dealing with the future financing of the Community.

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I turn to document HC78-xiv, which is available in the Vote Office. Unfortunately, although the Committee reported on 8 February, it is not yet fully available to the House. The process whereby the Court of Auditors' report is discharged is perhaps crucial in the control of the Council of Ministers over the way in which money is spent. Last year we heard from the Minister that letters had been sent to the Council and that things had been said. I hope that he will be able to give us assurances again, because we understood that in the past the discharge of the Court of Auditors' report had sometimes been taken as an "A" point in the Council of Ministers and had not even received very much discussion. It is a pity, because, as is said in paragraph 6.26 of the Court of Auditors' report, in respect of the European regional fund—which is often a feature of our debates on these matters—there is a
"narrow conception of regional development measures … the impact on the region of the various national and Community policies—agricultural, industrial or social—is mentioned for the record only, without any attempt to translate it into figures or indeed any precise indication of what results are envisaged".
It appears that the all-important regional fund does not contain much evaluation of the results that are expected from the expenditure authorised.
I wish to draw particular attention to the report of the Court of Auditors on the European development fund. It is funded direct from the Vote of the Overseas Aid Appropriation, and is not part of the EC budget formula that we have just been considering. The report that we made on that subject to the House illustrates the many serious difficulties encountered in the implementation and programming in favour of developing countries. The Court of Auditors' report, and our report to the House, pointed to one or two issues where there have been difficulties, including a spectacular failure in relation to a road in the Congo. Some 33 million ECU were spent on 77 kilometres of road, the expenditure being nine times that of the initial estimate. The report points out that it was an exception to the general rule, but it raises disturbing issues.
I also wish to draw attention to the Court of Auditors' report, paragraph 15.72, dealing with the place of the European Investment Bank in the activities of the European development fund. It states:
"The Commission's files regarding projects for which it has paid an EDF contribution to the EIB are inadequate to permit the Court to perform the duties imposed on it by the Treaties".
It goes on to say that insufficient material is available for its scrutiny. Paragraph 15.78 — it is an extraordinary admission—also states:
"The Commission delegations"—
the Commission's own diplomatic representatives abroad—
"are rarely informed of EIB financing decisions and project progress. In Mauritius, it was only through the local press that the delegate learned of a decision to grant an EIB loan with EDF interest subsidy."
There are other points about the EDF accounts, in particular, the arrangements — or lack of them — for monitoring scholarships. Paragraph 15.12 says that
"from July 1981 to December 1982, there was no record in the EDF accounts of the expenditure incurred by the scholarship management agencies in Belgium and France."
It goes on:
"It is therefore impossible to check the accuracy of the figures presented."
I mention these matters only because the Court of Auditors' report, which is about 240 pages long, is our
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only method of control over EC public expenditure—or, rather, its advisability and proper accounting method. This is a matter that exercises our minds equally on both sides of the House—indeed, if anything, perhaps more so on the Government Benches, where nowadays many hon. Members hold particular views on public expenditure. The matters dealt with in the report are just as much public expenditure as is expenditure in this country when it comes to scrutiny by this House.
Mr. Dykes: I am sure that the hon. Gentleman would be the first to agree with me, not only because of the modest sums involved but because the problem has not yet been solved by the House of Commons, that the problem in the Community pales into insignificance compared with the problems that face the British Parliament.
Mr. Spearing: I am not sure that I agree with the hon. Member for Harrow, East, but as Chairman of the Committee I cannot go too far down that road. I suggest to the hon. Gentleman that the powers of the Public Accounts Committee and of the Comptroller and Auditor General, now an Officer of the House, put him in a position vis-a-vis our domestic expenditure that is somewhat different from his position vis-a-vis EC expenditure. I commend that point to the hon. Gentleman.
Before leaving the subject of the European development fund, I point out that in the Second Report of the Select Committee on Overseas Development on the renegotiation of the Lomé convention—Lomé II—HC 586 of Session 1977–78, the then Government clearly said:
"Experience has shown that such programming"—
of the EDF—
"needs to be conducted with care and that projects within programmes should not be considered as commitments until they have been examined in detail".
That was the view of the then Government in negotiating Lomé II. We are now negotiating Lomé III, and I hope that the remarks of the Government and the Select Committee at that time can be incorporated into the negotiations that are now in progress in producing Lomé III.
I turn now to the second part of my comments, about the future financing of the EC and the problems inherent in it. We read in the press this morning of a triangle of forces between the institutions. In its report to the House on 23 November last—HC 78-vi—the Select Committee tried to give an objective summary of the problems now facing Her Majesty's Government and the House. I draw attention to the table on page 7 of the report, which sets out the full position on payments; the sources of payments to the EC and the receipts that we received. The last full figures are for 1982. They show that our total gross payments amounted to £2,863 million, of which the VAT contribution was £1,554 million. Our net contributions for that year, without refunds, amounted to no less than £1,600 million, although our refunds for that year were £1,000 million, giving a net payment of £600 million. Of course, much of that £1,000 million of refunds was on expenditure in this country, which we would have to bear under our own Budget were we not a member of the EC.
However, I draw attention to the fact that of the total of receipts—£1,238 million—no less than £791 million came under the heading of the European agriculture guidance and guarantee fund. I stress that £791 million—virtually £800 million, some two thirds of the receipts from the EC—went to the agriculture sector. In view of the discussions that are now taking place, partly in the National

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Farmers Union and partly in other circles, we should realise that the receipts to Britain come largely within that one economic sector.
In the summary of United Kingdom expenditure, given in the equivalent report to the House by the Intervention Board, Cmnd. 8963, for the same financial year, the split in some of these figures is interestingly set out. Cereals support was £184 million, dairy support £170 million and support for whisky was £81 million. We had export refunds of £27 million for sugar and £28 million for the private storage of sugar. So there was £737 million in agriculture at that time.
The problems that we face are well illustrated by the question and answer session that we had with the Economic Secretary on 21 November 1983. The questions and answers were fully taken into account in the Sixth Report, which was published on 23 November, and show that the Government have a formidable task ahead in pursuing the Stuttgart objectives. Question 90 asks:
"Who will take those decisions—Treasury or Agricultural Ministers?"
The Economic Secretary replied:
"There has been a proposal that Finance Ministers should be more involved with the decisions, but the mechanism has not yet been agreed."
That illustrates the nub of the problem facing us all. Agricultural expenditure is rising as production increases, so the ceiling is rising. Such expenditure needs to take account of world prices, which we cannot control. If world prices fall, so the floor will go down.
Therefore, the problem for the Government in controlling agricultural expenditure—the condition that they have put down, which is supported by both sides of the House — is how to achieve that aim. From our question to the Economic Secretary, it is clear that control is not yet to he vested in our equivalent of the Chancellor of the Exchequer. It is to remain largely in the hands of Agriculture Ministers. The distinction between those who have the responsibility for raising money and those who have the responsibility for spending it lies at the heart of the problem. Indeed, it goes to the question of control by the House—the control that it used to exercise, that it obtained from elsewhere and that it still holds.
That is the measure of the problem. Therefore, it will come as no surprise to hon. Members that difficulty and controversy will continue, at least until the summer, and perhaps even longer.
6.21 pm
Mr. Robert Jackson: When I was elected to this honourable House in June last year, I hoped that I might have the chance on one or two occasions to bend the ears of my colleagues on the subject of the European budget and the CAP, on which I have specialised as a Member of the European Parliament. However, as things have turned out, we have had many more than one or two —some might say too many—opportunities to discuss such matters. So may I congratulate the usual channels on the number of European debates that they have sponsored in the past few months. Certainly no one can say that Back Benchers have not had the opportunity to express their views on the issues currently under negotiation in the Community.
In that spirit I shall discuss the principal points at issue in one important sector of the current Brussels negotiations. I refer to the reform of the European budget.
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I call this only "one sector", because budget reform is only a single element among the several that comprises these negotiations. Another crucial element, which was mentioned by the hon. Member for Newham, South (Mr. Spearing), is the reform of the finances of the CAP. However, I shall not address myself to that subject today, but will instead focus on the problems raised by our efforts to install an automatic budgetary corrective mechanism in the European budget.
The first question concerns the way in which such a corrective mechanism should operate. The Government have proposed that it should be done by an abatement of the revenue contribution from the United Kingdom—that is to say, by an abatement of the payments that flow out of the United Kingdom to the Community budget rather than, as has been done since 1980, by means of exceptional measures of Community expenditure in the United Kingdom. After four years in the European Parliament, I have no doubt that this is the correct approach, because, among other things, as long as compensation for excessive net contributions takes the form of special expenditure in Britain by the Community, it will continue to be very difficult to get public opinion in the other member state to understand that Britain has not sought, and is not obtaining, any form of special treatment. I hope, therefore, that the Government will stick to their guns with regard to the method by which the corrective mechanism is to be paid.
The second question concerns the method of calculation of the amount to be paid, or, rather, to be abated, by way of compensation. I hope that the Government will not relax their position on the method of calculation of the size of the net contribution that has to be corrected. Here I am referring not only to the Commission's ideas about how to redefine the British share of that Community expenditure: those ideas are not and never have been acceptable.
More seriously, the Government should not be willing to accept that in calculating the size of the British gross contribution, the so-called traditional own resources—that is to say, customs duties and levies—should be left out of account. It is a specious argument that a corrective mechanism that includes a measure of compensation for the duties and the levies would somehow be incompatible with the principle of Community preference. Community preference would in fact continue to operate if duties and levies were thus taken into account, because it would continue to apply to the decisions made by economic operators who have to decide how much to import. The question of how much compensation is paid to the United Kingdom Government in terms of public expenditure would be quite irrelevant to the decisions of those operators—so as far as they are concerned the principle of Community preference would continue to hold.
I hope, therefore, that the Government will maintain their position that the total gross contribution must be taken into account in assessing the gap which has to be compensated. I say this because there is a danger that if we accept that the net contributions gap should be calculated only in relation to the VAT contribution, the amount of compensation that is eventually agreed may appear to be too large in relation to a net contribution which is measured on such a narrow basis. And if it appears to be too large, it will be very difficult for us to explain and justify it to opinion elsewhere in the Community.

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However, while the Government should stand firm on how to calculate the size of the net contribution, I hope that they will show some flexibility in the design of the compensatory safety net that we must and will have for Britain. I am afraid that it will not prove to be workable for the net contribution of any member state, including Britain, to be limited to a fixed ceiling, whatever the size or rate of growth of the Community budget. Our purpose should be to obtain equity in the Community's budget system rather than merely to attempt to put a ceiling on the net contribution of any single member state.
Consideration of this question of equity leads us to one of the most difficult issues in the negotations, which is how budget compensation for the United Kingdom and the Federal Republic of Germany should be financed. It is very tempting for British people to feel that it is not really a problem for us, and that the main thing that we have to worry about is obtaining the money rather than fussing about how it is to be paid. I shall yield to that temptation by not dwelling on this point other than to say that we in the Community cannot go on putting on the backs of the Germans a heavy financial burden to pay for all the rest of us. Germany has been willing to make a very substantial net contribution to the operations of the Community. The German attitude has reflected the historical and political situation of Germany since 1945. However, a new generation is rising in that country, and it is not acceptable or understandable to it that Germany should continue to be in such a position.
Mr. Marlow: Is it not the case that the Germans have a massive surplus in exports of manufactures with the rest of the Community, and that therefore it is worth while for the Germans to pay a considerable membership fee for the Community whereas the opposite is true for the United Kingdom which has a massive manufacturing deficit?
Mr. Jackson: I entirely agee with my hon. Friend. But he must recognise that we cannot overload the Germans, because the political consequences of a change of attitude on this point could be very serious.
So the first point to make about who should pay is that it should not be only the Germans. What we must do is to get the Community's richer net beneficiary countries to pay their fair share. I shall take the case, for example, of our good friends the Dutch. They have indeed been good friends to us in Europe. The point I want to make to them should appeal to them because they are not only a businesslike but also a conscientious people. The Netherlands has one of the highest incomes per capita in western Europe and, indeed, the world. Nevertheless, that country has been a net beneficiary from Community expenditure since the Community's beginning. And over the past three years it has been a net beneficiary of such expenditure to the tune of some £200 million per year.
Since about half of all the net benefits in the Community are paid for by the United Kingdom—the other half is paid for by Germany—a quick back-of-the-envelope calculation shows that we in Britain have been transferring resources to the Netherlands to the tune of about £100 million a year. It is not, I think, wholly unfair to compare that figure with the £110 million in resources that we transfer to India each year. Our Dutch friends
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should appreciate that we through the Community transfer more resources to the Netherlands than we do to India. They should try to do something about it.
Another crucial question in the negotiation is that of the duration of the proposed budgetary corrective mechanism. The ideal must be to obtain for us a mechanism which, as my hon. Friend the Economic Secretary said, would "last as long as the problem lasts". Indeed, it would not be acceptable if the mechanism operated only for an arbitrary number of years. It could not be logical for the Community to recognise the problem of net budget contributions and then to decide that the solution to the problem should operate for only a few years rather than for every year in which it arises.
I fear, however, that the Community may not yet be ready to undertake the changes in the budget system which are necessary to solve the problem permanently. I hope that it is, but I fear that it may not be. I fear, therefore, that it may be necessary for us to accept that the duration of the mechanism will be linked to the duration of the proposed increases in own resources.
I should regret that outcome because it can only store up future problems for Britain and the Community. But I should be prepared to accept it—as should the House, if the Government propose it as being the best deal that we can obtain in the present negotiations.
In accepting such an arrangement, however, we should recognise what it implies. At the risk of being thought unhelpful, I shall spell out the implications as I see them. The price of a further renewal of the budget when the next tranche of own resources is exhausted is likely to be our agreement to a still further increase in the Community's own resources in due course.
If that analysis is correct, we must recognise that the time is coming when Britain will have to have a more fully developed policy for Community public expenditure. Such a policy must, of course, include the elements on which we have hitherto laid such stress — the control of agricultural expenditure and other manners of control to which the Minister has referred. We must indeed continue to maintain a policy of vigilance and care to ensure that Community expenditure is cost effective.
But if the size of the Community budget is to be increased as a result of the current negotiations—and I believe that it will be—and if the perspective is of further growth in Community expenditure in the future, it will be necessary for us to think more deeply about what sort of expenditure and what sort of policies we want for Britain out of the growing Community budget. In this context what the hon. Member for Newham, South said about the proportion of VAT that might have to be paid across is correct.
The Government must take the initiative in this task. And I am sure that it will be the occasion for many more agreeable European debates in the future.
6.33 pm
Mr. Roland Boyes: The right hon. and learned Member for Hexham (Mr. Rippon) said that the social and political consequences of unemployment made the budgetary debate insignificant. I agree with him, in part. The political and social consequences of unemployment on the European scale will be tragic unless something is done about it.
I am the Rapporteur of a report on the social consequences of unemployment which was prepared by a

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committee which examined suicide, illness and other problems which affect unemployed people. The debate is not insignificant, because it illustrates the relationship between the Community's institutions and the consequential problems into which the Government have got themselves.
Until June 1984 I shall be a Member of the European Parliament. From day one over the last five years I have continually opposed the right of the European Parliament to interfere in the budgets of member states. I am even more against the right of the European Parliament to determine how the budget rebate is spent. In three or four years' time, or perhaps sooner if the Prime Minister continues to have the same problems, the Labour party will be in power in the United Kingdom. I shall certainly not then welcome a Right wing-dominated European Parliament trying to block our moves towards socialism.
Mr. Rifkind: The hon. Member for Houghton and Washington (Mr. Boyes) says that he strongly opposes the European Parliament interfering with the way in which refunds are spent. Can he explain why the British Socialist group in the European Parliament, of which I presume he is a member, voted against previous practice and against other British Members of the European Parliament to try to insist on the rate of refund for projects on which the refund is spent being reduced from the normal 70 to 50 per cent.?
Mr. Boyes: The Minister has been misinformed about the voting.
Mr. Rifkind: No, I have not been misinformed.
Mr. Boyes: I am the one who goes there. If you would like to discuss it with me after the debate I shall be happy to do so. I am making you an offer. I do not usually make offers of a chat to Conservatives, but on this occasion I am prepared to bend my self-imposed rules and discuss the matter with you.
Mr. Speaker: Order. The hon. Member is bringing me into the debate. I should love to talk to him, but I fear that he does not mean me.
Mr. Boyes: I was referring to the Minister. Why is the European Parliament taking such a negative attitude? I regret to say that part of the reason is the isolation of the elected Conservative group in the European Parliament.
Mr. Forth: Can the hon. Gentleman comment on the isolation of the Socialist group in the European Parliament and on the number of times that it has been at odds with Socialist colleagues in that group?
Mr. Boyes: If the hon. Gentleman will be patient for 10 seconds, I shall come to that.
Mr. Budgen rose—
Mr. Boyes: I am trying to make a short contribution and I hope that the interruptions will be taken into consideration.
Mr. Budgen: The hon. Member for Houghton and Washington (Mr. Boyes) is being unkind to the Conservative group in the Assembly. It has given up its old-fashioned name "Conservative". It has allied itself with Danish parties. It has called itself the Democratic group to show that it is new and European, and 22 of its members voted against the veto. Surely that is an indication that a large section of the Conservative group has a splendid idealistic view of a future United Europe.
Mr. Boyes: The interesting point about that facetious comment is the way in which the hon. Member for Wolverhampton, South-West (Mr. Budgen) described the Conservative group because its members call themselves European Democrats. They are not democrats in a European way and they do not act democratically.
Mr. Jackson: I would like to make a serious point out of an amusing exchange. It is arguable that Conservatives in the European Parliament are isolated, but it could be said that Labour Members in the Socialist group are isolated. The important thing is that our country should not be isolated in European discussions.
Mr. Boyes: I promise to deal with that, because a number of Conservative Members have said, erroneously, that the British Labour group is anti-European, when in fact we are greatly pro-European. [Interruption.] On a number of issues we work closely with our European colleagues. For example, we are working together for a nuclear-free Europe and we are working within the European trade union movement for some control over multinational companies.
Mr. Budgen: How does that square with what the hon. Gentleman said—
Mr. Boyes: If the hon. Gentleman will rise to his feet, I shall give way.
Mr. Budgen: The hon. Gentleman says, on the one hand—
Mr. Boyes: No, the hon. Gentleman did not get to his feet quickly enough. I shall not give way if he cannot come out with whatever he wants to say straight away. In any event, I hope that I shall be permitted to make at least one complete point without being interrupted.
The Government have got themselves into the ludicrous position of having to beg the European Parliament to convene a special meeting so that we can get some of our money back. The British Government should examine this situation carefully to ensure that it cannot recur. The European Parliament is in no mood to compromise with the British Government, and it is this Government in particular with whom the European Parliament is concerned because it knows that any rebate is simply absorbed into our public sector borrowing requirement. When I write to the Chancellor of the Exchequer pointing out the effects of high unemployment on my constituency and asking how, when we receive a rebate, it will affect areas such as mine, I am usually told that the money will be absorbed and that he regrets he cannot do anything to help us.
Mr. Teddy Taylor rose—
Mr. Boyes: I promise to give way to the hon. Gentleman later.
I regret that one of my sparring partners, who obtained for me much publicity in the past, a former President of the European Parliament, the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), is not in his place, because many of the problems that we are discussing occurred because of the road down which he took us. I do not want to attack him in his absence. I wish that occasionally when we have European debates such as this he would attend so that we can make points about what he did. As I say, I do not want to make such comments in his absence, especially as there are no representatives of the SDP in the Chamber.

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The British Government should now demonstrate what they feel about the European Parliament's interference, and to do that we should call its bluff and repeat the words that appear in the Opposition amendment today. Let us make it absolutely clear that we shall stop paying money into the Community if we do not get a fair deal in return.
One of the most disgraceful speeches affecting people such as my constituents was made by the President of the Commission, Mr. Gaston Thorn, to the European Parliament in Strasbourg on 15 February 1984, and I hope that I shall be forgiven for quoting rather more extensively than did my hon. Friend the Member for Livingston (Mr. Cook) from his remarks on that occasion. Having referred to a few small advantages resulting from the activities of the Community, he said that
"the fact of the matter is that even these modest achievements will come under threat if the Community persists in displaying an inability to adapt to change and face up to the new challenges posed by the march of time."
He mentioned in particular the common agricultural policy and said that it was
"perhaps, the most striking example of this inability to adapt."
The solution to the problem concerns me, because he went on:
"You know that this year we have our backs to the wall and little room for manoeuvre. The Commission will keep you abreast of developments"—
he was talking to the European Parliament—
"and, at all events, I will be reporting to this House on the Brussels European Council. Clearly, if no decisions have been taken by then to ensure the financing of agricultural expenditure, the Commission will eventually be forced to propose appropriate action, however harsh, to the budgetary authority."
Mr. Thorn's speech was printed in the document that I have with me. However, we were all issued with an addendum. In other words, the addendum was not designed to contain some slack words, as it were, added to the speech by some civil servant. The words of the addendum must have been carefully thought out, and they include this passage:
"Let us have no illusions. You know only too well that if it does come to this, there are only two ways to balance the 1984 Budget. Either the Member States will have to agree — unanimously, as you well know — to foot the extra bill themselves, or cuts will have to be made in, say, the Social Fund or the Regional Fund to make money available for agriculture."
The Foreign Secretary, at a meeting in Paris in recent days, made his position clear. Alan Osborn, Common Market correspondent of the Daily Telegraph, reported:
"Britain has insisted that it will not consider any increases in the EEC's annual income from member governments until its two demands are met … and those are … sweeping reforms to reduce EEC farm spending and correct imbalances in the budget."
Thus, the only solution left is to cut the social fund. Small though it is—I said in a debate earlier in the year that the amount of cash available was analogous to trying to treat a man run over by a steamroller with a Band-aid—the Commission is proposing to reduce the amount of cash available to the social fund to try to solve the Community's problems.
When we remember that there are at least 12 million people unemployed in the EEC — and the trend is upwards—with more than 35 million people living in poverty, it is wise to consider what cutting the social fund would mean. Over the next three years, £500,000 has been earmarked for a poverty programme. A simple calculation—a calculation slightly more difficult that counting the
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number of SDP Members present in the Chamber today — shows that if only £500,000 is available for 35 million people living in poverty, not much more than 1p per person will be available. Yet Gaston Thorn has the audacity to stand before the European Parliament and say that, because of the present crisis, money will have to come from perhaps the only fund that is designed to help the people whom we in the Labour party represent—the unemployed, the poorest and the young people without jobs.
Mr. Forth rose—
Mr. Boyes: What a disgrace to propose such cuts.
Mr. Johnston rose—
Mr. Boyes: If hon. Members wish to intervene, I will take them one at a time.
Mr. Johnston: The hon. Gentleman might feel, on reflection, that he is being a little unfair to the President of the Commission. Does he agree that the Commission has in the past, and under Gaston Thorn, pressed for increases in regional and social funds, as has the Parliament itself, but that those efforts have been blocked by the Council? Is he aware that what the President was saying, in effect, was that if one was in a budgetary crisis one would have to fulfil the obligatory expenditure, and that the only area of fluidity was the non-obligatory expenditure to which one was not legally committed?
Mr. Boyes: I cannot agree with that. I tried to illustrate the ethos of Mr. Thorn's speech by quoting extensively from it. They were his remarks; I was not reading from a newspaper report of what he said. He was speaking to the European Parliament, and that is why I stressed that it was not any slip of a pen but a well thought-out and determined policy.
Mr. Forth: We know that there is a British Socialist representative in the Commission and we assume that he must have agreed with the collegiate view that was expressed by Mr. Thorn. However, does he agree that the British Government's position is entirely different and that they have consistently laid stress on control of the agricultural sector to maintain programmes involving the regional and social funds?
Mr. Boyes: The cash that is available for the social and regional funds is still extremely limited. One of the most serious problems with the EC is that Members of this place can question a Minister only when he has been to an EC meeting. The House has no way of determining what he should say when he gets there. The remarks of Government representatives of the Ten are said to be confidential and secret. That being so, I cannot be sure what half of them have been trying to do. On a number of social issues—for example, the Vredling issue—only one Government have stood out against all the other member Governments, and that it is the British Government. Our record on social measures in the Council of Ministers is—
Mr. Allan Rogers: Appalling.
Mr. Boyes—bad. The matters that we have discussed will be well understood by those who are present. We all understand how the various institutions interrelate. But much of what has been said will mean little to those

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outside this place. I shall illustrate the interrelationship of the institutions in a way that everyone whom I know will understand.
The Commission has taken the British Government to court over the harmonisation of tax on wine and beer. I speak as an ex-working men's club secretary and a member of about a dozen working men's clubs in my constituency. In case you ever invite me for drinks, Mr. Speaker, I must ask you to ensure that tomato juice is available, as I do not drink alcoholic drinks. I declare an interest in clubs and the price of beer, but I do not have a vested self-interest.
The European Court has determined that the tax on wine and that on beer must be brought more closely together. This is an issue which my constituents and those in the region understand very well. They know what an additional 7p on the cost of a pint of beer means. None of us really understands what 300 million ecu or £1 million means. The figures are so huge that they are beyond comprehension. Much of what we have discussed this evening has been beyond comprehension, but a man knows what an extra 7p on his pint means. A man who runs a club knows that 7p a pint on his beer will close his clubs. Most of us know that the clubs and pubs are now under threat.
Brewery representatives know, too, that an extra 7p on a pint of beer will so reduce the amount of beer that is bought that unemployment will increase as a result.
Mr. Marlow: I wish to agree with the hon. Gentleman and support him, particularly as more working people actually vote for the Conservative party than any other party in the country. There are many people on this side of the House who would be very anxious indeed if the Government were to increase taxes on beer so that we could subsidise claret for the Social Democratic party. I should like to go back to the point that the hon. Gentleman was making about social policy. Does he believe that social policy should be decided by Brussels—
Mr. Boyes rose—
Mr. Marlow: —or decided here?
Mr. Boyes: Can I decide to give way to an intervention, Mr. Speaker, and subsequently decide not do so?
Mr. Speaker: No. However, the hon. Member may now respond to the inteventon of the hon. Member for Northampton, North, (Mr. Marlow).
Mr. Boyes: I wish to concentrate on beer prices and the mess from which the Government must extricate themselves as a result of the European Court's ruling that taxes on wine and beer must be brought closer together. The harmonisation of tax on wine and beer does not relate directly to tax matters. The issue has arisen because there is a surplus of wine and there is a wish to sell more of it. It is hoped that the harmonisation of taxes will cause the British people to drink more wine than beer. I concede that the amount of wine that is being consumed in Britain is increasing slightly, but I cannot envisage the miners, shipyard workers and other working people in my constituency going into pubs and beginning to be white wine drinkers. They will want a pint of beer.
What are the revenue implications? According to the best information that I can obtain, an increase of 1p in the cost of a pint of beer will bring the Chancellor of the
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Exchequer an additional £95 million. An increase of 1p on the cost of a bottle of wine will bring him in only £5 million. If the Chancellor increases the price of a pint of beer by 7p, he will rapidly lengthen the dole queues. I know that the Government have not cared about that for the past five or six years, but I think that the implications of lengthening the queues still further are now becoming apparent and alarming to them.
If the Chancellor of the Exchquer reduces the price of wine, he will want to retrieve the loss of revenue from another source. It is not in the nature of this Government to give away money. For example, if he reduces the price of a bottle of wine by 19p, he will have to collect nearly £100 million from somewhere else. Where will he find that extra revenue?
The problems that are caused by the interrelationship of the institutions will continue for as long as we have a European Parliament that can block the budget and a Commission that can take member states to court. If the results of this messy interrelationship are allowed to work their way down to ground level, we shall find that an extra 7p a pint will be added to the price of a pint of beer. We shall continue to find ourselves in severe difficulties from time to time if the present interrelationship is allowed to continue.
The Government must take two measures. One is important and the second is vital. First, they must examine the interrelationship between the institutions. We cannot have the European Parliament determining what happens to the budget. Secondly, we must make it clear that we shall not solve the problem of the CAP by putting the greatest imposition on the poorest people in Britain, especially the working people. It is vital to ensure that 7p is not added to the price of a pint of beer and that we find another solution to the problem that is caused by the Italian wine lake.
6.58 pm
Mr. Teddy Taylor: The hon. Member for Houghton and Washington (Mr. Boyes) seemed to give way to almost everyone under the sun, and I am only sorry that he chose not to allow me to intervene. He obviously knows far more about the European Assembly than anyone who has contributed to the debate so far, and he explained that to us in detail. As someone who has spent so much of his time in that institution and who realises the amount of time and energy that it consumes, perhaps he can say whether working people in his constituency and in mine would be any worse off if we did not have a European Assembly or Parliament. Having listened to all those who have spoken about the great problems within the Community and how nothing can be done to solve them, it seems that the first step that we could usefully make would be to abolish the European Assembly as from tomorrow. No person in Britain or elsewhere in the Community would be worse off, and a little more help would be provided for some of the worthy interests supported by hon. Members on both sides of the House.
The hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) in a thoughtful speech said that the House was empty. He made that point the last time he spoke in a similar debate. He tried to make it clear that that had nothing to do with the fact that he was speaking and that he was not scaring other hon. Members away. I believe he knows why the Benches are empty. It is clear that the

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parties are put in the difficult position of arguing the opposite of their usual arguments. The Conservative party has just published a White Paper pointing to the importance of cutting public expenditure and the Government not making decisions about where money goes in investment. The Government want to stop expenditure in Britain, but they are supporting it in the Common Market.
The hon. Member for Livingston (Mr. Cook), who usually makes good speeches, will admit that he was knocked for six by a splendid intervention from my hon. Friend the Minister of State, Foreign and Commonwealth Office, who suggested that if he were arguing for European co-operation and spending for jobs and welfare, he was arguing for the further development of the Common Market.
A major problem is that the Labour party clearly sees that in the Common Market it has the vehicle to achieve all that it—the Labour party—wants for society. The Labour party can have its developed regional policy, an extended social fund and many bureaucrats running around deciding how to spend more and more public money in the hope that somehow it will solve the problems of unemployment. That is Labour's rightful place. It should be enthusiastic in developing the Community and extending its budget. I suggest that, for the same reasons, it is ridiculous for the Conservative party, while arguing as it rightly does for the curbing of public expenditure and state interference, to think that Community problems would be relieved by increasing the amount spent by the Community.
The most interesting speech made from the Conservative Benches came from my hon. Friend the Member for Harrow, East (Mr. Dykes). He referred to the amount of the budget taken by agriculture. His solution to the percentage problem was to increase spending elsewhere. I hope that the Government will reject that proposal. It is similar to saying to one of our constituents, worried about the fact that he is spending more than half his income on whisky, "If you spent more on tobacco and gambling, you could cut that amount to 25 per cent." That is what my hon. Friend was suggesting, and I hope that it will be rejected.
It is timely that we should be debating the Common Market budget a few days after publication of the White Paper on future public expenditure in Britain. The two documents show the stark difference between the spending attitudes of those institutions. The White Paper is marked by savage restraint in spending, while the Common Market budget shows its usual casual disregard for the use of taxpayers' money. It is possible to go through the long pages of the Community budget in a nit-picking way, commenting on the many examples of profligacy and waste that we have come to expect from the Common Market, but the real issue is the vast percentage of the total budget taken by agriculture and—this is more important to me—the huge proportion of the agriculture budget that is swallowed by the disposal of surpluses. That is done either by increasing the size of mountains and lakes or dumping the surpluses at knock-down prices in the Soviet Union and elsewhere.
I hope that my hon. Friend the Minister of State will take some steps to explain some of the items of expenditure in the Community budget. Page 25 of the
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document refers to a fixed entertainment allowance of £1·5 million. At the foot of page 25, there is a reference to entertainment expenses of an additional £650,000. Who receives those substantial allowances? What is done with them? I understand that they relate only to a small number of people appointed by the Commission. The high level of entertainment expenses may account for the alarming amount that appears to be spent on invalidity allowances for the Commission's staff. Why is it necessary to pay in invalidity pensions to a staff that is smaller than the Scottish Office and smaller than the GLC more than is paid to the entire British Civil Service? What is wrong with the Community? Does it spend too much on entertainment and, therefore, its staff are invalidity-benefited, or is there some other reason? I hope that the Minister can give us the answer.
We know that the Community is spending vast amounts of money—
Mr. Allan Rogers: Did the hon. Gentleman say that the pension of the retired President of the European Commission was larger than that for the whole of the British Civil Service?
Mr. Taylor: I was referring not to an individual, but to invalidity benefit pensions which, I understand, differ from the pension received by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). The fact that there are never members of the Social Democratic party at these debates should not be taken as a sign that they have been invalided out. I understand that they are busy people who want to go to lots of places, except the House of Commons.
What is meant by the reference to spending several hundreds of thousands of pounds on informing young people in the European spirit? I believe that the Minister is aware that most of us, people in towns and guilds, doctors and dentists and those who have positions in society, have been invited to join the traditional free trip to Strasbourg to meet the Commissioners. We know that a vast amount is spent on publicity, including handing out silly glossy pamphlets. At any conference there is always a European stall at which free glossy pamphlets are handed out. They are usually rubbish and end up in the bucket.
There is now a new venture—a special programme to inform young people in the European spirit. On what is the money being spent? How and by whom is it being spent? What are the Common Market and the Government doing —I hope that this is not an extension of entertainment—in giving so much money to support the so-called European Movement — an organisation promoting federalism, which today the Government said we oppose? I understood that my hon. Friend the Economic Secretary to the Treasury was worried about the fact that some Conservative, so-called European Members of Parliament have been voting against the veto and in favour of federalism. The Economic Secretary to the Treasury said that that was against all that the Conservative party stands for, yet we are giving a vast amount of money, through Common Market funds, and, I am ashamed to say, British Treasury funds, to keep that organisation going. That organisation is fully in support of the Spinelli plan and advocates it publicly.
That costly enterprise, the Commission, is spending most of its money on agricultural policy, which promotes waste and extravagance.
Mr. Marlow: My hon. Friend has told the House about various items of Community expenditure. He is a great expert and knows more about the Community than probably any other hon. Member. He may be aware that last December the Commission opened plush new premises in London. Does he know how much those premises cost and how much larger they were than those occupied previously? I have asked the Government for information on that subject, but so far I have not received any.
Mr. Taylor: I am afraid that my hon. Friend will find that what the silly European Assembly spent is not controlled by this Government. We are on a totally new spending exercise at a higher level. The Commission's expenditure is an unfortunate example of public expenditure getting out of control. That is shameful. We should be more careful with public funds. I know that some hon. Members take the silly view, "What is £1 million here or there?" If they realised the worry people face in paying their taxes—not just on their income but every time they spend money in the market — they would have a more careful attitude towards public spending. Although there is that careful attitude within the Government, it is not shown in the EEC.
We are all worried about the amount of spending on agriculture, but I am more worried about the huge amount being spent not on farms in France, Britain elsewhere, but on dumping agricultural surpluses. According to written answers that I have received, 40p in every pound spent by the Common Market is used in disposing of agricultural surpluses. That is done by selling them at knock-down prices to the Soviet Union or other countries. A great deal of damage, distress, poverty, misery and death is caused to the poorest countries.
Some of us get upset—I am sure that our friends at the Treasury are more upset than anyone—at the way in which Common Market money is wasted. If we as a nation and the Common Market are stupid enough to pay our farmers prices that are vastly above the world price, that is up to us. If we want to ensure that every farmer has 10 Mercedes cars, that is a matter for us or the Common Market. We are entitled to take those decisions, whether they are right or wrong, but we are not entitled—I hope that the Government will do something about it—to cause so much damage, hardship and distress to some of the poorest countries, which are trying to get a decent return from their agricultural produce, but cannot because of Common Market dumping.
I had the pleasure to visit Pakistan early last year. It is an ideal country for sugar growing. There are perfect conditions for it. The people are trying to get a decent price for it, but cannot. I am sad to say that when they try to sell their produce. they find that the price is rock bottom, because the Common Market is dumping surpluses. The world price for sugar is about £120, but the price for British, French and Italian producers is about £350 to £360 — about three times the world price. It is the same for dairy products and cereals.
The Stuttgart summit made it clear that we accept the structure and principles of the CAP, and that all we are looking for are modifications and adjustments. That should be said in case some of our supporters or members of the public were disappointed. The Government are asking not for a reform of the CAP, but for modifications and adjustments.
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I hope that those who have influence in the Common Market will at least agree that, whatever we do, we should not wreck the world markets. If we want to charge our people five times the world price for butter, that is our decision. If we want to charge them three times the world price for sugar, fair enough. If we want to charge people double the world price for cereals, that is our business and our stupidity. However, we must not wreck the poorest countries. I am surprised that some of the great Church leaders, who are always marching up and down complaining about the Government's policies, never protest outside the doors of the Common Market Commission about the damage, poverty and distress caused to the poorest people. If there is any place those leaders should demonstrate, it is there.
Some of my right hon. and learned Friends talk about the Brandt report and how we must try to help the underdeveloped world. Why do they not also say that the CAP is doing great damage to the world's poor and stopping those countries from getting a decent living? They cannot get it because Common Market salesmen are ruining the world market by indiscriminate dumping at knock-down prices.
Mr. Bryan Gould: That is exactly right.
Mr. Taylor: It is exactly right. But what are we going to do about it? That is the important thing.
Mr. Foulkes: What have the Conservative Government done?
Mr. Taylor: I do not want to become involved in party political points. The hon. Gentleman must know that at least the Conservative Government have achieved a little more than the Labour Government. They got the famous rebates. We are still arguing about them.
Mr. Foulkes rose—
Mr. Taylor: The hon. Gentleman is and always has been a troublemaker. However, I shall give way.
Mr. Foulkes: The hon. Gentleman said that the Government got the rebates. Yet, earlier, he said that not only has the rebate for 1983 not been paid, but the rebate of £42 million has not been paid. Can he tell us when we shall get the rebates?
Mr. Taylor: I am afraid that that information is not available to me. I was going to come to that point. The hon. Gentleman should not try to stir up animosity. The parties are on the wrong sides. He and his hon. Friends are attacking the Common Market, which stands for all the things that Socialists should support. I see some Opposition Members nodding. We should accept this, as it would make things so much easier. If we want the workers to control industry, we will never get it through the British Parliament or the Labour party, but we will get it through the Common Market. If we want a great European policy for spending vast sums of money to try to resolve unemployment in Europe, we will never get it through a Labour Government—they thought that they would, and they know how they were stopped—but we will get it through the Common Market. If we want grand harmonisation measures, a European social policy, and bureaucrats sitting on boards all over the place deciding how Governments, civil servants and social subsidies can solve problems, we can get that through the Common Market. One of the tragedies is that the Labour party should be enthusiastically shouting for it.
Mr. Austin Mitchell: Will the hon. Gentleman tell us how we could get a policy for shovelling money into the pockets of farmers, who constitute such a large majority in the Cabinet and one quarter of Conservative Members of the European Parliament?
Mr. Taylor: We cannot change anything in the Common Market, except by unanimous agreement. The Labour Government tried to do a little about the CAP, but not much. This Government cannot and have not achieved anything. They can do so only by unanimous agreement, or if the money runs out.
The House should not think for a moment that I am suggesting that industry, commerce and agriculture are in favour of free enterprise and competition. Far from it. When there is a carved-up market, nobody likes to complain—neither the manufacturer nor the consumer. If there is a cosy arrangement, nobody complains.
We have talked about CAP reform for 10 years since joining the Common Market, but progress has been impossible because we require unanimous agreement for any changes. However, now that we have the first chance to achieve CAP reform because additional resources require the consent of every Parliament, it is regrettable that the Government have agreed to refrain from even asking for reforms. Our position, as I understand it, is that if the Common Market agrees to a permanent budget reform providing for us to pay about £400 million a year net and if it agrees to restrict the rate of increase in agricultural spending, we shall agree to even more cash going into the EEC. If the Government agree to a permanent solution, restricting our annual contributions to about £300 million, £400 million or £500 million, and if they agree to restrict the rate of increase in agricultural spending, more cash could be forthcoming. Such modest demands throw away the first and perhaps only chance that we shall have of changing the Common Market.
We should make it abundantly clear to the EEC that its budget shows that there is no need to increase resources. If we are spending 40p of every pound already on dumping food abroad, how is it possible to say that there is a need to expand the resources of the Community? As long as we talk about spending 70 per cent. of all the money on the CAP, how can we say that more spending is required? One simple solution that would sort out the problem for six years would be to take milk out of the CAP and let each member state look after its own milk production and milk surpluses, and do what it wishes.
The wasteful CAP should be drastically reformed, or have its throat cut. Apart from our national budgetary interests, there can be no security for British agriculture in the long term so long as it operates under a policy that has round its feet the ball and chain of the vast and growing continental food surpluses that nobody wants. There is no point in denying that British farmers have done extremely well—perhaps remarkably well—out of the CAP. That is why most of them have supported it until now. However, they must realise that in the long-term future, when Britain has had a dramatic increase in production and the continental countries are poised for an even greater increase, there will be no security for British farming so long as there are vast agricultural surpluses on the continent.
In considering the budget, we are also considering the EEC policies that the budget finances. While we preach the importance of freer trade and always talk about the
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importance of cutting down trade barriers, the various EEC economic policies seem to be aimed at increasing protectionism rather than freedom of trade. If those policies succeed, we shall be saddled with a series of common policies for steel, coal, chemicals, and so on, which will simply ensure that industrial basic costs in Europe are higher than those of our manufacturing competitors. That cannot suit Britain, which depends on world exports to survive. Nor should we look with any favour on the various devices that are used to get round the GATT restrictions on tariff increases. The so-called voluntary restraint agreements with Japan and other countries — for example, on video recorders and television sets—are simply devices to raise prices in Europe and so give protection by requiring countries, such as Japan, to charge us more for such products than they would normally do. The agreements were presented as a means of protecting jobs in Europe, and were supported by Socialists. We asked the Japanese kindly to charge us more for their videos. The Japanese must have been laughing all the way to the bank.
The Davignon steel regime has been applied in a way that is brutally unfair to Britain. It is well on the way to becoming another CAP. Even if Mr. Davignon were able to get all that he wants—
Mr. Foulkes: Viscount Davignon.
Mr. Taylor: I apologise. I am not quite as aware of such matters as the hon. Gentleman. Even if Viscount Davignon were able to achieve all that he wants and to cut down on production all over Europe, how precisely would we be able to maintain the gap between European and world prices? Again, the only answer will be the creation of a CAP. We are already well on the way to that. The control of industry on the basis of bureaucracy, subsidy, back-door tariffs through bogus health and safety requirements, quota production control and central direction is wholly at odds with the sensible policies that the Government are pursuing at home.
Before we provide the Common Market with greater resources to develop its policies, we should carry out an impartial assessment of the impact on our economy to date. The consequences on trade have been disastrous. We always had a surplus in trade in manufactures with the EEC before membership, but there has been a substantial deficit every year since then. In the first nine months of 1983, the deficit was about £6 billion. If we use the rather suspect comparisons that are used to make the claim that 2 million British jobs depend on trade with Europe, we can conclude that the change in the pattern of trade has cost Britain 750,000 jobs since we joined the EEC. Some people say that that is the fault of the lazy British workers, inefficient British management, and so on. However, despite those so-called problems, our trade with the rest of the world has improved dramatically and sharply.
The cash drain has been horrendous. We have contributed net about £4 billion. No country can afford such a transfer in aid to other countries without damaging itself. The budget demonstrates the extent to which the Common Market has become a spendthrift, bureaucratic, protectionist trading block, wholly opposed to the principles of conservatism. It would be an outrage if we responded to the budget by supplying even more resources which could be used to develop policies which are an affront to commercial common sense and damaging to the future of our nation.

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The one encouraging theme that we have heard from the Government on several recent occasions has been a warning that there will be dreadful consequences for the Common Market and for Europeans if we do not get our rebate on 31 March. I am sure that my hon. Friends will have heard and approved the ringing tones in which Ministers have warned of the appalling consequences for other countries if we do not get our money on time. If we do not get £450 million by 31 March, they say that something dreadful will happen.
If we are to react to a default in that strong and substantial way. what have we been doing since 31 December when the Common Market defaulted on £42 million of the money due in 1982? The issues were just as clear then. The money was due to us. What did we do? Did we send the fleet? Did we alert our lorry drivers to be ready to block French roads? No. On 3 January, our splendid Foreign Secretary sent a letter to the Commission. Week after week since then, I have embarrassed and troubled the Government by asking when the reply was to arrive. We were told earlier today that it arrived at the weekend, but we do not yet know what it contains, because the Foreign Secretary has it in his possession in Brussels.
I hope that we shall hear today the Commission's response. I hope that we shall not have to engage in long correspondence. I am not opposed to long correspondence, but, if we are sending out warning signals to the Common Market, it could undermine our position if it were thought that our only response to a default is to send a letter and to wait six weeks for a reply.
I hope that the Government will realise that the best answer to all the problems is to say, "No more resources." I would find it difficult to tell my hard-pressed constituents in Southend that, although we have to cut down—rightly, I believe—on many areas of local government —on housing benefits and health and social services—we are going to pour more billions into the extravaganza of the Common Market. That does not make sense. I hope that we will be cautious in our spending at home, and realise that the best way to bring about reform of the EEC is to give it no more money at all.
7.27 pm
Mr. Bryan Gould: It is common ground throughout the Chamber that the EC is in crisis because it is about to run out of money. The recognition of that fact was perhaps the only shaft of realism that penetrated the fog of fantasy that has characterised some of the speeches that we have heard. The EC is in crisis not simply because the sums do not add up. I agree with the hon. Member for Harrow, East (Mr. Dykes) that it is not simply a shortage of resources—that it is not the usual budgetary problem. The range of European resources available to meet the relatively small increase in expenditure which is required is enormous. The significance of the budget dilemma is that it reflects what is wrong with the structure of the EC. It is the structure of EC policies which has plunged it into crisis, and it is the unwillingness of the Government to go along with that structure that will in the end—I believe and hope—mean that we shall not allow an increase in our payments to the EC.
The EC is unusual or perhaps unique in that it has policies that stimulate spending. The only consequence of providing additional resources to the EC, as the hon. Member for Harrow, East advised us to do, would be to
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encourage even more spending. The more money we provide, the greater will be the incentive to increase expenditure. The only way to get a grip on the situation is to get control of that expenditure and limit it. That is the dilemma. That is the hard fact that the EC faces. That is why it is in crisis—not because it cannot raise an extra £100 million.
There is of course a subsidiary problem. The budget also creates circumstances in which Britain must make an unfairly large contribution. There are those who are so carried away with their Eurovisions that they are inclined to say that that must be Britain's fault. They say that we have not adjusted, that we are constantly demandeur, and that that shows how un-European we are. There is an implication of moral culpability in that charge.
We are un-European. In the past 100 years or more our economy has developed quite differently from continental economies. When, towards the end of the previous century, the real price of world food dropped we, who had had our industrial revolution, responded by opening up our markets to the cheapest and most efficient producers so that we could feed our large urban and industrial populations as cheaply as possible. We then developed an agricultural policy that ensured that prices for the consumer were kept low. Our continental rivals protected their agriculture. They kept it at its then size and kept it inefficient. They reaped an uncovenanted benefit in that they then had to adjust to higher industrial costs and to do that they had to become more efficient manufacturing nations.
Because of that different economic history and because we remain net importers of food, we are inevitably penalised by the EC arrangement. There is nothing that we can do about that. No fault is involved. It is simply that our economy does not suit the way in which the EC works. Indeed, in some ways it was because our economy does not suit the structure of the EC that we were brought in in the first place. We contribute to the EC twice. We make our budget contributions and we make another enormous contribution as consumers. If we were not foolish enough to be buying EC food surpluses at roughly twice the world price, the enormously expensive surpluses which the hon. Member for Southend, East (Mr. Taylor) rightly identified as a major head of expenditure would cost even more to store and dispose of.
It suits the Government to take the simple fact that I have outlined, look at the net direct payment and identify it as our major problem with the EC because they believe and hope that they can do something about it. They can quantify it, hold it up to the British people and say, "We shall reduce it in some way and bring money back. Once we have done that our problems with the EC will be over." I do not argue that the budget and our contribution to it is not important, but it is far from the only or most important element in the damage that we suffer from being members of the EC.
According to the Institute of Fiscal Studies, the common agricultural policy costs Britain £1 billion a year in real resource terms. In trade in manufactured goods —my figures are even greater than those cited by the hon. Member for Southend, East—we had a deficit last year of £8 billion and we have had a turn round in our trade in manufactured goods of £10 billion since we joined. At a conservative estimate, that is worth 1 million jobs in British industry. That is the important damage that we have suffered from being members of the EC.

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I agree with the Government that the budget is a salient issue as it provides us, perhaps for the first time, with a lever. We can use it to exert pressure. We are now able for the first time legitimately, within the terms of the treaty of Rome and our treaty of accession, to refuse to make payments to EC coffers unless we get some fundamental change that suits us. Having that opportunity means that the Government are posed with a real challenge. They will now be asked to do something as they have an opportunity to do it. They can no longer take refuge behind the fundamental sell-out that occurred when we first joined. Nor can they take refuge behind the intransigence of our partners because at long last they have an instrument which will enable them to achieve what they say they want to achieve. All that is needed is political will.
I am the first to concede that, in trying to secure that objective, the Government are handicapped by at least two major factors. The first is that throughout our membership of the EC Britain's major diplomatic failure has been not explaining to our European partners, the politicians, officials and the man in the street what is damaging us and why we, uniquely, always appear to be asking for something. The Foreign Office has been so anxious to represent the EC in Whitehall that it has forgotten that its principal job is to represent Britain's interests abroad. I hope that the Minister who will wind up will give some assurance that at long last the Foreign Office understands its responsibilities.
The second factor is the responsibility not so much of the Foreign Office as of successive politicians who have appeared at the Dispatch Box to discuss these matters. In the 10 years of our membership, successive Governments have talked tough with an eye on the electorate, but have regarded it as essential to placate the Helmuts, the Valerys and the others.
Mr. Dykes: And the Francoises.
Mr. Gould: Indeed. That has been the key to Britain's European policy. It is little wonder that, in those circumstances, when the Government start talking tough again our European partners think that it is merely for domestic consumption and that the British political establishment recognises only too well the weakness of their position as demandeur.
Mr. Jackson: The hon. Gentleman refers to talking tough. He is a distinguished lawyer and has said correctly that the British Government have a powerful lever in whether to increase own resources. How does the hon. Gentleman, as a lawyer, square the Labour party's proposition that we should resort to illegal action with his view that we have available to us a powerful negotiating weapon which, as he said, is perfectly legitimate?
Mr. Gould: I shall deal with both of those issues in a moment. My point is that in limbering up or girding their loins to face those issues, the Government have been fatally handicapped by the record of successive Governments. Time and again Governments and officials have said—we hear the weasel words even now—that it is necessary to make concessions, to show ourselves to be good Europeans and to go through the humiliating process of asking for £300 million or £400 million back each year. I cannot believe that negotiations on a budget mechanism,
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a safety net or whatever else will resolve our problems with the EC. They will merely reinforce our position as supplementary benefit claimants in a wider European economy. That is not right for Britain.
The legal issue as to whether we should make more payments while an agreed refund is outstanding is an open question. In those circumstances, I certainly support the Opposition amendment and urge the Government — I hope that this is their policy—that if the refund is not paid on the due date to offset it against any future contributions that might be demanded.
Mr. Jackson: If it is an open question the hon. Gentleman must, as a lawyer, accept that the method by which such questions are normally determined is by reference to a court. There is a court in this matter. Why then does he propose that action along the lines that he suggests should be taken?
Mr. Gould: I do so because it is by now well established EC practice that, in such circumstances, the defaulting party should wait to be taken to the court. I believe that we should simply pursue a policy that, for once, suits our interests. If we are then taken to court, we can argue our case.
There is a more important question than that of the refund, which I consider to be of marginal importance only. Far more important is the question of the demanded increase in what is laughingly called own resources. In fact, they are increased contributions from the VAT payments made by every man and woman in Britain. The Government have told us repeatedly that that issue can be decided only in conjunction with some fundamental reform of expenditure — principally the common agricultural policy. We should examine precisely what is meant by that. The Foreign Secretary has said recently that they are linked issues that must be considered together, and that they can be linked also with budgetary refund. That is not good enough. It is not what he was saying a few months ago. I see that the Minister is shaking his head —I presume paradoxically in agreement with what I am saying, which is that the Foreign Secretary is not to be thought of as saying that.
Mr. Ian Stewart: We have always maintained that there is no connection with the current negotiations about our refund and the future financing of the Community.
Mr. Gould: I am glad to hear that. But there are signs from the Foreign Secretary that the issues are intermingled and the distinction between them is not as clear as the Minister has just indicated. I am glad to hear him speak in that vein.
On the link between the increase in own resources—the demanded payment from us—and the reforms that we seek, our refusal to countenance an increase in payments is not simply a precondition of securing the changes that we need. It is more than that—it is the only mechanism by which we can secure such a reform. We have a unique opportunity. If we fail to press that advantage we shall never have the opportunity again. That is why I believe that this is the acid test for the Government. It is the time when all their protestations about their keenness to reform agricultural spending and to limit public expenditure in that form are being put to the test. Their bluff is being called. The power exists to ensure that the Government need not agree to that expenditure.

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In principle, the position allows the Government the luxury of saying that, whichever way it turns out, there is no case for increased payments. Without the reforms that we are demanding, the Government are entitled to say no increase. Yet with the changes that we are demanding, the Government are equally entitled to say that there is now no need for an increase. It is not only I who say that; the Commission, in its budgetary estimates, made it clear that without any change in the CAP, and on assumptions about substantial increases in the regional and social fund expenditure, the actual increase in VAT contribution—the level of take that would be required over the next few years—would be fairly marginal.
If we were to obtain the sort of limitation on spending that would significantly reduce the 40 per cent. of EC expenditure referred to by the hon. Member for Southend, East, the case for any increased payment in the light of those changes would melt away. I hope very much that the Government will show their mettle. There are great advantages to them to throw off the image with which we have been saddled for so long—talking tough but acting weak. The quicker that the Foreign Secretary and the Government can convince our partners that they mean business, the easier the position will become and the quicker we can arrive at a solution, whatever it might be.
I apologise that I did not hear the Minister's opening speech. One thing that the Government must now do, both because it is practically desirable and necessary, and because it is tactically useful, is to make it clear that we have in place contingency arrangements for the moment when, at some point during the year, the money runs out and our farmers say, "From where is the money to come?" We should have made legal, financial and practical arrangements to make national payments to our farmers in those circumstances.
That would provide a great opportunity for us to detach our agricultural policy from the whole miasma of the CAP. We could actually pursue the more flexible, rational policy that the Government have professed that they want to see. It is a great opportunity for the Government to prepare for such a position and to say precisely in what way they wish to change the CAP to introduce a much more adaptable and convenient national agricultural policy.
We have a great distance to go. As my hon. Friend the Member for Houghton and Washington (Mr. Boyes) said, the speech made by Mr. Gaston Thorn a few days ago demonstrates beyond any words that I could use just how impregnable is the CAP—how much it is in the centre, how much is it is a fundamental edifice and how much the other fripperies of the regional and social funds are simply trimmings. It is the CAP that our friends in Europe will protect and defend to the last breath. We must, therefore, seize the opportunity that will be presented when the money runs out to detach our agricultural policy from that disastrous failure.
I entirely endorse the Opposition amendment. I and many other hon. Members, and others elsewhere, will be watching the Government closely. We suspect that the Government are very much more in the pockets of the farming industry than they care to admit. This is the acid test. This is when we shall know whether they are prepared to abandon those interests in the interests of the country as a whole. We shall watch carefully to see whether the Government's actions match their words.
7.47 pm
Mr. Robert Hicks: Sadly, I detect that in debates on EC issues there is a disturbing tendency to fall into the trap of magnifying our differences, of accentuating some of the anomalies and absurdities and, as a consequence, of failing to put the subject into true perspective. That is why I think it essential to put the current discussion and disagreement about the Community budget and the future financing of the EC into perspective.
At present, the Community budget takes just 0…8 per cent. of the aggregate gross national products of the 10 member states. Of course the budget issue must be settled —I hope as a matter of urgency—but it is important that the United Kingdom, and especially the House, should not allow itself to become bogged down in eternal bickering about the size of our contribution and related matters. It amounts to a fraction of 1 per cent. of our national income. At the same time, we are allowing the very policies from which the Community and ourselves stand to gain so much to go by default.
Many of us who voted on 28 October 1971 with enthusiasm for the principle—
Mr. Marlow: Guilty men.
Mr. Hicks: I do not consider myself a guilty man. It was the most significant debate in which I have participated during the 14 years that I have had the honour to be a Member of the House. Some hon. Members voted with enthusiasm on that historic occasion for the principle of United Kingdom membership of the European Community. Sadly, we are to some extent disappointed by subsequent events. This is not the occasion to expand on the reasons for that unfortunate position. Some are international, others relate to the workings of the Community and, in that context, British Governments have not always been as helpful and as imaginative as I would have wished.
My right hon. and learned Friend the Foreign Secretary, however, has on more than one occasion in recent months clearly stated the British Government's position. As I interpret it, the United Kingdom will be prepared to consider an increase in own resources provided, first, that an agreement is reached on effective control of the rate of agricultural and other expenditure and, secondly, that it is accompanied by an arrangement to ensure a fair share of the financial burden. Inherent in that is a settlement for an adjustment of current imbalances, to which hon. Members have referred this afternoon.
Ministers are right to emphasise to their European colleagues the importance of achieving a permanent arrangement to ensure that budgetary burdens are shared equitably between member states. The safety net formula which the Foreign Secretary first suggested in June 1981 in a speech at The Hague, which has since been modified, merits further attention. I hope that those proposals featured highly in the discussions which took place at the weekend and which are taking place in Brussels today.
As to the required constraint on agricultural expenditure, which accounts for almost seven tenths of Community expenditure, I remind the House that inherent in the CAP are not only farm support prices but food aid expenditure, and an important component part which can be described as a rural development fund. Hon. Members are all too well aware of the deficiences of the CAP. Prices

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have been set unnecessarily high, especially in the grain sector. The relationship between demand and supply has been ignored, with the consequence that too many producers are merely producing for intervention, and these surpluses have become increasingly expensive to store and to dispose of.
Mr. Dykes: Despite the problems, would my hon. Friend concede that in many comparisons the policy stands up rather well? Does he agree that it can in no way be compared with the grossly wastefully and extravagant United States farm support system? Does he agree that if we had our domestic farm support system of the old days, it would now be much more expensive than our contribution on farm spending, and that in those days we also produced surpluses of dairy products?
Mr. Hicks: My hon. Friend is correct. To take one of his points, had we carried on with the pre-1973 domestic support for agricultural production, the cost to the United Kingdom Treasury is estimated to be almost £3,000 million a year.
Mr. Marlow: Who by?
Mr. Hicks: I refer my hon. Friend to parliamentary replies given to questions in the House on a number of occasions.
The point that I wish to develop in this context was made correctly by the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston). He said that whatever modifications and adjustments may be made during the discussions of the next few months in Europe, those modifications and adjustments — whatever their character—cannot be made overnight. There will not suddenly be a dramatic change in the financing of the Community. I go further—I expect the hon. Gentleman and other hon. Members who have spoken will agree—and say that when the financial decisions are made, which in turn will affect the level of expenditure on the CAP, I hope that Ministers will be aware of the effects that they will have not only on producers but on the economic structure and social fabric of the countryside.
Mr. Marlow: I understand why my hon. Friend says that. He is a generous man and is enthusiastic in supporting and agreeing with the point made by my hon. Friend the Member for Harrow, East (Mr. Dykes). One of his points was that there were massive surpluses in dairy products before we joined the Community, but I shall correct that. There are now sufficient butter stocks in surpluses and intervention stores in Great Britain to fill the Chamber 20 times over. Before we joined the Community we were 16 per cent. self-sufficient, and so we had to import 84 per cent. There were no surpluses then, but there are surpluses now. My hon. Friend was wrong on that point, as he was on all the others.
Mr. Hicks: All hon. Members can choose examples to suit their cases. As a child I lived in a small village in the west country, and I remember that our previous system of deficiency payments encouraged a surplus of milk, which was poured down the drains, quite legitimately. I do not have to go back so far; I remember the difficulties in the autumn of 1973. It is far better to have products marginally in surplus than to have shortages. My hon. Friend will not disagree with that general principle.
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In conclusion, I return to the fundamental point that I have attempted to get across to the House. The European Economic Community was founded for political purposes. The expansion of the European economy from 1956 until the mid-1970s provided a prosperity which formed a sound basis for its political objective. The momentum has been lost in recent years.
Mr. Gould: I have heard that argument used so frequently that I cannot resist the opportunity to point out that the economy of the member states grew faster before the EC was set up than in the decade after it was set up.
Mr. Hicks: The circumstances in the late 1940s and early 1950s were somewhat artificial. During those postwar years the Marshall plan and all manner of other additional economic aids and forms of assistance were being given to Europe. Therefore, to make the generalisation that the aggregate economy of the EC grew more quickly before 1956 than after 1956 overlooks those facts. The hon. Gentleman is a fair man and will acknowledge that one can argue one's case either way, both of which stand up intellectually.
The effect is that the momentum has been lost during the past decade. However, my right hon. and learned Friend the Foreign Secretary claims that the basis upon which the British case proceeds in looking for radical solutions to the current problems of the Community is that the process of Community development must be accelerated and given a much higher priority. That means speeding the negotiations towards enlargement, to include Spain and Portugal. It also implies giving a higher priority and greater impetus to extending and completing the Community's internal markets, as well as work in other areas, such as industrial, regional, social, environmental and energy co-operation.
Not surprisingly, I welcome that wholeheartedly. However, in bringing about what I consider to be those sound objectives, the Government may have to adopt a more flexible and amenable approach than hitherto to the preconditions on additional own resources and increasing receipts as part of the budgetary settlement.
8.1 pm
Mr. Allan Rogers: I am pleased to be able to speak in the debate, although I step with some fear and trepidation into the rather incestuous discussion about whether British farmers tipped away more milk before we joined the EEC or after we joined it. I do so because I know that the experts are in the Conservative party. They know what the farming industry has been doing for many years, and they know how the British consumer has been taken for a ride for many years.
However, I must speak in the debate especially because of the celebrations of European solidarity that have gone on this weekend in the Alps. It is especially appropriate that we should have the debate today after that great festival. I am pleased that the French lorry drivers enjoyed themselves, because at least now they have taken action against their Government's policies rather than taking it out on British lorry drivers in the essential spirit of the European Community in which they always act. I wish that some of our lorry drivers and workers would behave towards French imported goods as the French behave towards ours.

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We should do well to remember that, as a device to create disharmony in Europe, the EEC has made a greater contribution during the past few years than anything else. That underlines the need for reform.
As the hon. Member for Southend, East (Mr. Taylor) said, the European Parliament has little function, and as a Member of the European Parliament for the past four and a half years I have been a sorry witness to the continual grovelling of the British Government to try to get our money back from Europe. We are asked to believe that the Prime Minister rides out on her white horse to recover the money from the bandits of Europe, but the money belonged to the people of Britain originally. We are not getting a handout from Europe — the money properly belongs to us.
The hon. Member for Harrow, East (Mr. Dykes) said that he wishes to join us in the European Parliament, or that if he was with us he would wish to join the Christian Democrat group. I know some of the members of that group. and although Habsburg-Lothringen and von Bismarck might welcome his company, the friends of Mr. Strauss and the other neo-Nazis in the Christian Democrat group would not.
Many Conservative Members have spoken about the common agricultural policy. The hon. Member for Southend, East described the problems in the sugar industry resulting from the CAP, but he did not say that action has already been taken. It is not a matter of saying that Pakistan would be a wonderful place to grow sugar cane; there are wonderful places that can grow sugar cane which have already been destroyed by the CAP. British Guyana's economy was completely destroyed. As well as the jobs lost in the sugar refining industry in Liverpool, the sugar cane industry of the West Indies was destroyed by the CAP and the dumping of sugar on world markets. Who benefits from that? The supporters of the Conservative party—especially the big business farmers in the east of England.
When Conservative Members got into an incestuous argument about surpluses, they did not say that one of the biggest contributors to surpluses in Europe is the British farmer—not the hill farmers of Wales and Scotland, nor the smallholders in the west country, but those who have invested in the east of England and who have ploughed up the hedges in their money-grabbing exercises. They have not only destroyed the countryside, but have laid waste to other countries' economies.
It is extremely important to put the budget in the wider context of a continual sell-out of British interests. What disturbs me greatly is the fossilised attitude of. Pro-Marketeers in the Conservative party. The right hon. and learned Member for Hexham (Mr. Rippon) — [Interruption.] I hope that the House does not mind if I drop an "h" here and there. I come from the valleys and did not go to a public school, as did most Conservative Members. In the vernacular of the Welsh valleys we sometimes drop our "h's".
The right hon. and learned Member for Hexham said that we are in the Community and that we should stay in. What a fossilised attitude. We are in an economic union that is already many years out of date and is coming apart completely at the seams. Why should we stay in, and for whom? The union was structured in a post-war Europe that had special tensions, political problems and food
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problems. That was the basis of the CAP. But now that we have moved on, the fossilised argument is that we should stay in because were are in. That attitude is negative.
Mr. Johnston: What is the bright, non-fossilised alternative?
Mr. Rogers: The bright, non-fossialised alternative would be to renegotiate, at the very least, the present treaties.
Mr. Marlow: I thought that we had done that.
Mr. Rogers: Yes, but it was done badly. We were sold down the river, but at least the Labour party had the courage to put it to the electorate. However, as a result of the propaganda and lies spread at that time, the British public became slightly confused about the issues.
The economic union to which we belong is completely out of date. It needs revising, but it is incapable of revision because of the vested interests that are so manifest not only within itself but within the budget, which is coming up in the same form as it has in other years. I am further disturbed by the Goebbels-like repetitions from the Conservative Benches that if one is anti-Market, one is anti-Europe. It is complete nonsense to suggest that the Common Market is all of Europe. Europe is far larger and wider than the Common Market. One cannot confine a geographical continent within an economic treaty. I am sure that that offends the people of Norway, Sweden, Finland, Spain, Portugal. Austria, Czechoslavakia, Romania, Bulgaria, Yugoslavia and European Russia. On this point, I wonder whether Conservative Members would, in their European idealism and at the appropriate time, accept as members of the European Community some of the latter countries, especially as the leader of their party has recently visited some of them.
The English nationalist movement within the Conservative party holds the same view as I do— that we should withdraw from the European Community, —but I base my opinion on different reasons. I believe that we should be looking for progress in Europe and proper relationships with other countries. We should be looking at progress and defining why and in what sectors we need this progress.
I am concerned by the moves in Europe towards economic and political union. On 19 June 1983 we had the Stuttgart declaration, which was signed by the Prime Minister. What was this declaration, which is often referred to so loosely? Here is a selection of some of its propositions and statements. It says that it is
"resolved to continue the work begun on the basis of the Treat les of Paris and Rome and to create a united Europe … determined to achieve a comprehensive and coherent common political approach and reaffirming their will to transform the whole complex of relations between their States into a European Union … Desiring to consolidate the progress already made towards a European Union".
Throughout the document runs the Prime Minister's affirmation that she wants us to move to a European union. What is the proposition arising out of the summit, and what is the legitimacy of the statement? We saw the answer in the European Parliament last week, with the preliminary draft treaty to establish a European union. The basis of that was the Stuttgart declaration, which is mentioned throughout the Spinelli explanatory statement, besides being specifically mentioned in the draft treaty.
Many hon. Members have spoken of Spinelli as though he is a visionary, but if he is, he is having the wrong

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visions, particularly if they result in what is proposed in the document. It proposes to sell away the democratic rights of the peoples of this country. Conservative Members of the European Parliament supported these moves towards European union. It will be interesting, in the run-up to the European election on 14 June, to see what the Conservative party's views will be. Will they be the late views of the Prime Minister and the Government, who want to adopt a hard policy towards our European partners, or will it be the policy that Conservative Members of the European Parliament support?
Conservative Members have to come clean eventually. I challenge the Government to come clean tonight as to their position on European union. They must tell the country exactly where they stand on this issue. Do they stand with Conservative Members of the European Parliament, of whom 22 voted for the resolution and only six against, with four chickening out by abstaining and 19 who, even worse, did not bother to turn up to vote even though they were around? They did so because they did not have the courage to indicate which way they would vote. Some of the Members who did not have that courage are hon. Members of this House. If the Minister does not believe in what those hon. Members did last week, he should be taking them to task.
Mr. Johnston: Will the hon. Gentleman remind the House that Spinelli is a Left-wing Socialist?
Mr. Rogers: Yes, but I am sure that the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) will accept that there are many brands of Left-wing Socialism, and Mr. Spinelli is a European Communist who wears garbs that are different from ours. Mr. Spinelli and his Committee are proposing to remove from the member states the right of veto on all the issues relating to the development of Europe towards a European union. The document is alarming, and it disturbs many of us greatly.
The budget is not the only important issue before us this evening. We should remember that the Government, in bringing forward the budget in its present form, show that they have no real will to resolve the crisis and the problems in the European Community. There is an answer— withdraw from the European Community unless our partners are prepared to renegotiate the treaty from stage 1. If they are prepared to do that, we should go forward positively, but if they are not, we should get out so that the British people do not have to pay as much as they do in their present burden.
8.17 pm
Mr. Tony Marlow: The hon. Member for Rhondda (Mr. Rogers) talked about the disharmony and discord caused by the Community. One of the great tragedies of Community membership and the way that the Community has been structured so far is that it has caused a great deal of disharmony between countries which have a great many interests in common. I hope that is something that we can put behind us; but the hon. Gentleman is right in that, although I do not agree with many of the other things that he said.
The hon. Member for Rhondda asked the important question: where does the Conservative party stand on European union? I do not think that he heard what my hon. Friend the Economic Secretary to the Treasury said earlier,
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because he made it clear that the Conservative party is in favour of retaining the veto and is therefore against a federal Europe and a European union. That is reassuring for the hon. Member for Rhondda, although it may cause severe problems for some members of the European Democratic group, who will be going to selection meetings wishing to stand again for the European Assembly and who will then discover that they are out of sympathy with Conservative party philosophy and thinking on this issue. That could cause distinct and real problems as they seek to pursue their careers.
Mr. Austin Mitchell: As the hon. Gentleman is telling us about the determination of the Government to resist moves towards European unity and to insist on the national veto, why is it that in the debate on the Spinelli reports on the European union the Conservative Members of the European Parliament—who had a free vote on the issue, which is a curious thing for a party as committed as the hon. Gentleman suggests—divided, 18 for Spinelli, four against and three abstaining?
Mr. Marlow: As the hon. Gentleman probably knows, the best people to ask are the Members of the European Assembly, because I should not have taken that view. Whether one is pro-Europe or anti-Europe, I think it will be agreed that there has been much sterile argument over the years. If something in Europe is good, we are in favour of it: if we have the power to do it, we do it. If something in Europe is bad and we can stop it happening, we try to do so.
My hon. Friend the Member for Harrow, East (Mr. Dykes) has pursued his philosophy on Europe for a considerable time. Edward Pearce, that well-known correspondent of the Daily Telegraph, has described my hon. Friend as a "sacramental European". In his view, anything that comes from Europe is good. That is not the view of the party that I represent. We are in favour of the national interest. We are virtually attached to Europe. It is just across the Channel. We have friends in Europe, we have business in Europe, and we have interests in common with Europe. If something European is good, we are in favour of it; if it is not good, obviously we are against it; and if we can do something about it we do it.
We are now at a crucial and critical time for our relationship with Europe. We are embarking upon the relaunch of the Community. Obviously, the first thing that we have to tackle is the common agricultural policy. Hon. Members on both sides of the House have referred to the fact that the common agricultural policy accounts for about 70 per cent. of European expenditure. To be fair, that is not quite right. The common agricultural policy accounts for 70 per cent. of European expenditure if we gross it up and include the rebates that are paid to ourselves and the Federal Republic of Germany, but in terms of actual expenditure on actual programmes and policies of the Community, the common agricultural policy takes up nearly a staggering 80 per cent. of Community expenditure.
Not only is there much wrong with the common agricultural policy, and not only is it growing so fast that it is rapidly getting out of control, but it takes the overwhelming share of the Community budget, so that something must be done about it. What are we to do about it?
Opposition Members have said that the Conservative party is the party of the farmer. That idea is out of date;

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it is history. At the last general election, many Conservative Members were returned for seats which had not had Conservative Members for a long time. We on the Conservative Benches represent more working people and more urban constituencies than are represented by the Labour party. Of course, some of our constituencies are rural, but we have other very great priorities as well.
Mr. Austin Mitchell rose—
Mr. Marlow: I should like to finish my point before giving way to the hon. Member for Great Grimsby (Mr. Mitchell), for whom I have great respect. He took on the solicitors' monopoly in regard to conveyancing. I am delighted that the Government saw the problem in the same way arid that that monopoly will be overcome. The Government are taking on all monopolies, wherever they happen to be. The Government's policy is in favour of the consumer and in favour of the wide range of people in the country. The Conservative party is not just the party of the farmer. The hon. Gentleman may have seen in the newspapers last week the report that there are only five constituencies with Conservative Members where the farming community makes up the majority achieved at the last election.
Mr. Mitchell: I am grateful to the hon. Gentleman for defusing my point before I had made it, but there are several matters which arise from his claim about representation. What is important is not who actually voted for the Conservative party, but whose interests it serves. A party which has put 4 million working people out of jobs, shovelled money into the pockets of the farmers and caused an astronomical increase in land prices, which can benefit only the land owners, cannot claim to be representing the working class and must be representing the farmers.
Mr. Marlow: The hon. Gentleman is trying to reduce what I am trying to make as a general statement on European policy into a party political issue. I do not want to follow him in the direction of the generalities of economic policy.
What can we do? It would be nice — it will not happen — if we could knock 10 per cent. off cereal prices. The cereal farmer is currently getting too much; he does not need the amount of money that he is getting. If we did that, we would cut back on the price to the consumer, we would cut back on the cost of disposal of surpluses, and we would cut back on the price of feedstuff to the livestock sector, which currently is not making sufficient return. We would cut back on the price of land. We would cut back on the levels of Community expenditure on the common agricultural policy, and at the same time provide a sufficient and adequate return to farmers. That is one way that we could move.
We have had discussion about deficiency payments. I am not suggesting that we can embark upon a system of deficiency payments, or that we can persuade the Europeans to go for a policy of deficiency payments, but there has been a lot of nonsense and rubbish talked about deficiency payments and the expenditure that would be involved in going back to such a system. If we had deficiency payments, we would not have to make the massive contributions that we are currently making to the common agricultural policy. If we had deficiency payments, we could buy food on the world market at cheaper prices, allowing cheaper prices to the consumer.
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We would not have to buy expensive Community food. We could buy cheaper world price food. With deficiency payments there is a cheaper price of food to the consumer. When we add up the lower cost of food and the lower cost of taxation, we can see that the consumer and the farmer and everybody together in Britain would be better off under deficiency payments than under the existing system. In addition, those who are the weakest and poorest in our community, those who are dependent, as pensioners of the state, those on supplementary benefit or unemployment benefit, those on retirement pensions—a vast proportion of whose budget goes on food—would be better off, and they in real terms would be a lesser cost to the state. We may not be able to have deficiency payments, but let us not talk nonsense about them. We would be better off under a system of deficiency payments than we are under the common agricultural policy.
There is a third way in which we could tackle the problems of the common agricultural policy. We could have a similar regime to the one that we have at present. We could have lower levels of prices and a finite limit on the amount of money that each country could take from the common agricultural policy. If there were a growth of surpluses in one Community country or another, the national exchequer of that country would have to take up the excess expenditure over a certain level. That would have a highly beneficial effect.
Today, countries can vote for increases in prices knowing that they do not have to pick up the tab or to pay the bill; they do not have to go to their taxpayers for more money. They can satisfy their farmers by having higher prices but they do not have to upset the taxpayers, because the bill is picked up at Community level. Bring the bill home. Let the chicken come home to roost, so that those countries wishing to vote for higher common agricultural fund expenditure will themselves have to pick up the surplus expenditure that arises.
What are we to do about the budget? We have first to bear in mind that the budget is not the only financial burden that we bear as a result of Community membership. By being within the common agricultural policy we are force-fed with European food in preference to any other food from the world market. We are net importers of food. The food that we import largely comes from other European countries at twice world market prices, or even higher rates above world market prices. So we have the budget contribution to make and the food price contribution which our consumer has to make.
Mr. Cheysson, a Frenchman, says that we signed a treaty and that because we signed that treaty we have to accept all that follows from it. But not only did we sign a treaty; we had discussion at the time we signed the treaty. In the Government's document, "Britain in the European Community—the Budget Problem", students of the history of the European Community will see that it says:
"During the 1970 negotiations over Britain's accession to the Community, the British negotiators pointed out that the Community's financial arrangements, if unchanged, would leave Britain carrying an excessive burden from the budget after the transitional period. This was because of the dominance of the common agricultural policy, from which Britain's share of expenditure would be low because of the relatively small size of its agriculture.
The Community replied that this would not happen because the balance of the Community's spending policies would change, and in particular agriculture would take a much smaller share of

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budget spending. The Community added that should unacceptable situations arise, the very survival of the Community would demand that the institutions find equitable solutions."
Let us hope and pray that that is what will happen, because unacceptable situations have arisen. If unacceptable situations arise, the Community is destabilised by them.
Those who want to work together with our European friends for the policies that we hold in common will not be able to do so if Britain is unjustly and unfairly treated by the budget, as has happened in the past. We have a strong case. We have justice on our side.
The same document says that at the moment
"we are paying as much in our net contributions to the European Community as we pay in overseas aid".
It is fantastic that we should pay as much to the rich in Europe as we do to the Third world countries. This is reinforced by the disgraceful situation that, as my hon. Friend the Member for Southend, East (Mr. Taylor) said, we are dumping food on the world market, which prevents the poorer countries in the world from getting a proper price for the one product that they can produce to sustain the standard of living of their people.
We have conditions precedent before we talk about the possibility of an increase in moneys available for the Community budget. Those conditions must be satisfied before we even talk about it. In fact, it is rather strange that we heard observations from the Opposition that the Government had gone back on those conditions precedent and that everything was in the melting pot together. I am delighted that my hon. Friend the Minister said that these two issues, the budget and the common agricultural policy, have to be satisfied before we can start considering whether to increase Community expenditure. I am glad that we had it clear and loud today.
If those policies are satisfied, apparently we can consider increases in the budget contribution on the basis of new policies. Let us look at the possibility of these new policies. We may wish to increase expenditure to assist the introduction of Spain and Portugal into the Community. Are we saying that Spain and Portugal will not come into the Community unless we actually pay for them to come in? Instead of people applying for membership, and applying with a membership fee, do they have to be subsidised to come into the Community, and if so to what extent?
One asks that question and the answer is given that there are other things more important than money and that it does not matter. We hear great statesmanlike remarks that Spain and Portugal must come into the Community for other reasons than filthy lucre. We are told that money does not matter. It is a great issue of principle. That is why we have the problems that we have today—because in the past people were concerned about the great issues of principle and did not get involved in sufficient detail to prevent the injustices from which we are currently suffering.
The Government, quite rightly, want to move towards a common market in insurance. The Government, quite rightly, want to move forward in other areas of European policy. That will not cost any money. We do not need to increase the budget for that.
The Opposition have a whole realm and plethora of Socialist-type policies — regional policies, social policies, unemployment policies, training policies —which they would wish the Community to operate and run.
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Do they really believe that these policies are better directed from the Community? Do they really believe that our money should go across to Brussels to be laundered, reduced and sent back to us with strings attached before we introduce our own policies? Are we in favour of more Socialism, more bureaucracy, more control for Brussels? Do we not have sufficient confidence in our own ability to control and spend our own money? So, surely, that is not what we shall give more money to the European Community for.
Then there is the theory that unless we allow the VAT ceiling to go up those countries that will have to pay our enhanced rebate will not be allowed — within the existing VAT ceiling—to put enough money into the Community for it to be able to give us our money back. That is not right either. A look at the triennial estimates by the Commission, table 2, the alternative Commission figures, shows that there is plenty of money there to pay the rebate. So we do not need to increase the VAT limit to get our money back. We do not need to increase the VAT limit for Spain and Portugal, and why should we? We do not need to increase the VAT limit for the policies which Her Majesty's Government will rightly wish to pursue. We certainly do not want to increase the VAT limit for Socialist policies.
So there seems to be no case. I have to say that I have a great deal of confidence in my Government, and I am sure that if there is no reason for suggesting an increase in own resources they will not suggest an increase in own resources. However, if that unthinkable were to happen, if the suggestion were to be made that we should provide more money to the EC, an increase in own resources, that would be a major constitutional issue. We joined the Community and we signed up under certain finite terms with regard to agricultural levies, with regard to 1 per cent. VAT, with regard to the common external tariff.
At a time when we here are restricting our own public expenditure, cutting housing benefit, rate-capping, making savings in the Health Service, are we really going to say to our people that we must cut here but we can justify more expenditure in Brussels? Are we to say to our people here, at a time when daily we read in our papers of the waste of money, the maladministration of money within the European Community, that, instead of looking after and controlling our own money and our own policies here, we should be giving more money to the bureaucrats of Brussels to misapply, to miscontrol, to waste? At a time of lack of success of so many European policies, and the absurdities of the common agricultural policy, are we to say to our people here that we must give the Europeans more money so that they can have more control over more policies? It is unthinkable.
At a time when European policies are becoming increasingly dictated by the vested interests, by the institutions, by the Assembly, by the Commission, by the people who have an interest in European unity, are we to say to our people here, "Let them pursue our interests. Let us surrender just a little bit more sovereignty"? We have no proof that they know how to use it. We have no proof that it has been to our benefit. Are we to give more away in this respect?
This House — brought into being by Simon de Montfort to control expenditure by the Crown, this House which, when the Crown got too far removed from what the people of this country wanted, chopped his head off—

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not the Government, not the Council of Ministers, will decide in the fullness of time whether Europe gets an increase in its own resources.
8.37 pm
Mr. Austin Mitchell: I shall not follow the argument of the hon. Member for Northampton, North (Mr. Marlow). Essentially, I agree with what he said, because he was speaking for what is right. The misfortune in his speech was that in it he had to justify a Government who are not acting on what is right—certainly not in this instance.
There has been talk today of a crisis of the European Community. Crises are a way of life in the Common Market, and I have no doubt that the atmosphere of cliff-hanging tension has been exaggerated and projected as a way of getting more money out of us and of solving its own financial difficulties. It is not so much a crisis for the Common Market itself—as usual, it will fudge it or bludge it out of us—as a crisis of our relationship with a Community which basically does not suit this country. Because it is a crisis that affects all the basic aspects of that relationship, it is a chance to change it drastically for the better.
If we concentrate tonight on the financial aspects of the budget—the gains of a few million pounds here or the losses of a few million pounds there—we shall distract attention from the main issue. The budget in so far as it affects us, is the nature of the EC itself. It is a budget in which 64 per cent. —that is two thirds, for practical purposes—is devoted to agriculture. An institution that devotes that proportion of its spending on agriculture is not a great venture in European unity or international idealism. It is essentially the National Farmers Union turned into a system of government. It is an agriculture protection society. That is why the case for change for Britain is a strong one. As long as there is that emphasis on agriculture, we inevitably suffer, because we are and will remain a net agricultural importer. That means that we shall pay out more to the budget, and we shall receive less from the budget. It means that our problem can never be redressed. As long as that is the basic nature of the Common Market, there is no way round the problem.
We pay 29 per cent. of the agricultural levies paid in the EEC. That is the largest single contribution to agricultural levies. We pay 26 per cent. of the total custom duties. That is the second largest contribution. We pay 22 per cent. of the total of VAT. We are the third largest contributor in that respect. So, because of the emphasis on agriculture, our contributions will be bigger than anyone else's. We get back less. Our share of the CAP is 11 per cent. of total CAP expenditure. Given the comparative unimportance of agriculture in Britain, that relationship will always be the same. No amount of haggling, argument, or histrionics from the Prime Minister can change that.
Yet that situation should be changed. It is ludicrous in terms of our gross national product and our standard of living that we should be such a large contributor although we are one of the poorest states in the EEC. Indeed, it is ludicrous that we should contribute at all, as we suffer in so many other ways from our membership. We suffer from the £8,000 million lost in real resources through the CAP and we suffer massively because of the Common Market's impact on our manufacturing industry.
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Today, various estimates have been given of the deficit in manufacturing trade, but the basic fact is that from a surplus in manufacturing trade with the Six in 1970 we moved to a deficit last year of more than £8,000 million. That loss in manufacturing trade must be worth more than 1 million jobs in this country. In 1970, we exported eight cars to the Common Market for every five that we imported, but we now export one for every 10 that we import. In other words, there is a massive deficit in manufacturing trade, which has had a disastrous effect on jobs.
Hon. Members have asked about West Germany's contributions. However, that country's manufacturing industry reaps the benefit of having access to our market in a way that has destroyed our own manufacturing industry. A nation that stands in that relationship to the Common Market and that has to face that massive loss on agriculture and on industry should, at the very least, be paid to be in the Common Market and should not have to contribute as we do now. I am not talking about small contributions or even level pegging. We should benefit massively from the budget to compensate for the other disadvantages of membership.
Those disadvantages stem from the fact that we entered a club that does not suit this country or the basic realities of our agriculture or manufacturing industry. As the club suits the other members of the Community, the system will never be altered to suit us unless, as a result of the sort of crisis that we are now approaching, the crunch comes and so allows a fundamental readjustment. Without that readjustment our relationship with the EEC is bound to be a continual plaintive, miserable haggle. We shall be continually on the defensive and fighting to get back that which was sold away in the entry negotiations, and which will not be given back to us because it does not suit the Community.
Therefore, we need to seize the opportunity of bankruptcy. However, as far as I can assess the Government's approach, seizing that opportunity is not the Government's policy. It is worth asking why. The first reason seems to be the importance of farming to the Conservative party. Many Conservative Members have tried to play down that farming interest, but it alone seems to account for their deference to the EEC. Farming is the fifth column and has benefited by the Government's approach to the EEC. The rest of the country is suffering in order to keep the farmer fat.
A quarter of the Conservative Members in the European Assembly have a farming interest. We have a Cabinet that has a substantial landed and farming interest represented in it. We have a Government who, by their manipulation of the green pound, have totally reversed what happened under the Labour Government, when the green pound was used effectively to cushion the consumer. Because the green pound has not been revalued and because of the monetary compensation amounts that our farmers are receiving to export to France—to lead only to the sort of peasants' revolt and protest against British agriculture now witnessed there—the green pound is now being used to put money into the farmers' pockets and to tax the consumer.
That tax must put our food prices 5 per cent. or 6 per cent. higher in a club that already has the highest food prices in the world. That is a direct subsidy to the farmers

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and it has formed the whole basis of the Government's policy. It is a tax on the consumer in order to benefit the farmer.
Mr. Nicholas Soames: Does the hon. Gentleman seek to do to the farmers what he has done to the solicitors? Is this a genuine attack on a so-called privileged monopoly, or is he just seeking to make a point?
Mr. Mitchell: If the Government are against professional monopolies, they should be against that sort of subsidisation of the farmer. Indeed, such subsidies are not of direct benefit to the farmers themselves, although many of them misguidedly think that they are. Since we entered the Common Market, land prices have escalated enormously and so the benefit passes directly to the land owner. Therefore, we are pouring money into the pockets of a very small section of our society. In order to do that, the United Kingdom is bearing the onus of participation in an agricultural protection society that makes it difficult for us to carry on trading relationships with the rest of the world.
When the Treasury and Civil Service Committee went to Washington at the beginning of last year we were often asked in the Senate and elsewhere why Britain was joining an agricultural protection society and protecting agriculture to that extent when it was harming trading relationships with the United States of America and the developing countries. People said that it was not in our interest. Indeed, as net agricultural importers, it is not in our interest to have the burden of that agricultural protection society hung round our necks.
The second explanation of the Government's attitude is that, like so much of their approach to politics and to national issues, their approach to the EEC is one of government by public relations. It is not what they do so much as what they say. We saw that approach on the issue of taxation, when the Prime Minister proclaimed her intention to cut taxation. However, everyone is now bearing a higher burden of taxation. We saw the same attitude towards public expenditure. The Government proclaimed their determination to cut public spending, but public expenditure has increased by 3 per cent. per annum over the past three years, and as a proportion of gross national product. The same approach can also be seen in the Government's attitude to unemployment.
The Government's approach to the Common Market is that the Prime Minister bustles around in her busy fashion looking active while meanwhile there is government by Bernard Ingham. He is reinterpreting reality as though something had happened. That is not prime ministerial government, but an attempt to change reality. The real government consists of the public relations exercise that is carried on from No. 10. When it comes to the Common Market, we hear the din of battle and the Prime Minister declaring her determination to fight for the national interest as if something has been achieved, yet nothing is achieved. We do not change the terms of our relationship, although they are unfavourable to us, or even attempt to subvert the CAP, which is the most disastrous element of that disastrous relationship. However, the Government are not tackling that in any way.
We see continual claims about a budget rebate, but that rebate has been reduced every time. In 1981 it was worth £1,000 million. In 1982 it was worth £631 million, with
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a lot more strings attached than in 1981. In 1983 it was worth £457 million, but it was the rebate that never was and that we shall never obtain. Yet last June the Prime Minister told the House that she had not only achieved a settlement of the British refund for that year but had also made
"encouraging progress towards a long-term settlement of the financing problems which have so long bedevilled Community discussion." — [Official Report, 23 June 1983; Vol. 44, c. 146.]
That £457 million has not been paid. The Assembly has made it a condition of paying it that the Council meeting in Brussels in March should reach a satisfactory agreement on reforms. However, for the Assembly, a sine qua non of such a reform is an increase in own resources which this country cannot and must not agree to. If that deadline of 31 March is not met, the rebate will not be paid. Therefore, what the Prime Minister said about the rebate was incorrect. We are not going to get the money, and that is the only test. What she said about encouraging progress on a long-term settlement was also incorrect, because the speech of the President of the Council of Ministers, Mr. Cheysson, to the European Assembly on 18 January indicated no progress at all in the Government's demand for a permanent settlement to the problem of unfair budget contribution.
Mr. Cheysson said:
"There is a problem and it must be dealt with—at least for a certain period."
Britain has proposed a safety net system under which we would get back the overpayment on VAT the following year, but this would require a change in the April 1971 own resources treaty which requires that the same VAT rate for EC budgetary purposes be levied in all the member states.
Mr. Cheysson said:
"There is no question of amending the provisions of the treaties on this subject—and I am astonished that this has even been rumoured".
What is the Prime Minister talking about? There is no prospect of a long-term settlement. What is more, sacrifices have been made of vital interests to get even the budget repayments that we have. The Dublin mandate, which the Prime Minister won after all that eclat and noise, meant a budget refund, but the condition was that she did not question the fundamentals of the common agricultural policy and that we compromised on the common fisheries policy.
Fishermen in Grimsby and throughout the country were sold down the river by an inadequate settlement which is disastrous for the British fishing industry. The Prime Minister has sold out on issues of major importance to win temporary, inadequate deals on the budget.
If the Government cannot achieve the fundamental reforms to which they say they are committed with an Opposition who are and who have been committed to withdrawal, when will they achieve them? Without that voice in the country and that backing, what possibility is there?
Mr. Marlow: That is an interesting point. Is the hon. Member absolutely convinced that the Opposition are committed to withdraw from the Community at this moment?
Mr. Mitchell: In the period 1980–83 the clear commitment was to withdraw. We are now committed to withdraw as an option. That is important. Personally, I

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would withdraw from the Common Market tomorrow, as would the hon. Member for Northampton, North (Mr. Marlow). I do not decide what Government will decide in four years time when the Labour party will be elected. I am speaking of my personal view. For that period, and certainly at the last election, our commitment was to withdraw. In the face of such opposition, if the Government cannot win concessions from the Common Market, when will they? That is a straightforward question. The Government show no prospect of achieving concessions.
At the end of their abysmal record the Government are preparing to abdicate on the one negotiating power, the one lever and one spanner in the works that they have—the ability to wreck the system to produce fundamental change by the budget crisis. Already they are abdicating that power.
The Government are accepting that we remain modest net contributors. It is ludicrous to accept that disastrous burden. The Government are accepting that we shall increase the so-called own resources on two impossible conditions: first, a lasting solution to the budget problem—when there can be no such solution given the importance of the CAP—and secondly, that there be strict budgetary control, which cannot happen in that organisation.
On the basis of two conditions, both of which are almost certain to be fudged by an organisation which is a past-master at the art of fudging, the Government are preparing to abdicate the power to produce fundamental change. An increase in own resources, beguiling as it may sound, is a betrayal. It is rather like playing a bad record. It is not improved by turning up the volume because that makes the bad record worse. There is no guarantee that if we agree to an own resources increase other funds will develop.
It has been said by the President, Mr. Thorn, that other funds would have to be cut to make way for agriculture. That is the most appalling statement that I have heard in a long time. Agriculture is insatiable. Not only will other funds not increase, but agriculture will continue to be the drain that it has always been. With the certainty of more money automatically being generated, it will take an increasing share of funds.
There is no prospect of the Government's conditions being fulfilled. It is ludicrous that two thirds of the budget goes on the CAP and only one eighth on measures which grapple with unemployment. It is ludicrous because the Common Market supports 8 million farmers and 13 million unemployed. What a ridiculous division of budgetary resources that is. Resources are being used to support wealthy farmers, almost as if Hinduism has become the religion of the Common Market and the sacred cow was free to wander the streets of Brussels.
The only way out is to allow the crisis to bust the bank and to force reform. We must do that by an adamant refusal to increase own resources and then use the situation to redress terms which were inadequate at the start and which have remained disastrous. My hope is that the whole thing breaks up, but here is a heaven-sent opportunity to change a situation which every Government have said that they want to change but about which no Government have done anything. If we do not change, our future is one of a declining periphery, with development siphoned away to the golden triangle and an increasing tide of manufactured imports destroying jobs in the United Kingdom.
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The Common Market is not strong enough to help us, but it is strong enough to do positive harm to us. The distortion machine that has become part of the Community's way of life is one of the reasons for the prevailing alienation of politics. The gobbledegook and Goebbels-isation of British life, produced by attempts to explain membership of an institution which fundamentally does not and cannot suit us, is one of the main distortions.
That explanation and distortion has been carried on at our expense by the Commission's fifth column which has put over a totally inaccurate view of what is happening. It tries to tell us that decline is improvement; that black is white; that ruining our manufacturing industry is actually a benefit; that the burden of high food prices is an advantage; and that the budget to which we contribute on a large scale gives us access to opportunities which are not there. All these distortions have produced what I can only describe as the Goebbels-isation of British life.
It is, therefore, the duty of Opposition Members to put backbone into what has emerged, for all their brave talk, as a weak, nervous, grovelling and deferential Government who are on the point of abdicating the one weapon to have come into our hands in the EEC from 12 years of a disastrous relationship. They should use that weapon, abandon public relations and stand up for Britain and British interests. Perhaps I could offer the Government a slogan which, though it was not used all that successfully on the first occasion, has great potential in the Common Market. They should take up the slogan "Can't pay, won't pay."
9 pm
Mr. Kenneth Carlisle: I shall not follow the highways and byways taken by the hon. Member for Great Grimsby (Mr. Mitchell), or I should find myself in a quagmire of words.
This debate has no meaning unless it is seen in the wider context of our position in Europe and the reasons for our continued membership of the Common Market. Indeed, we should sink without trace if we got involved in the seven volumes of the draft budget. The failure of Europe is that it has not succeeded in persuading people that Europe is not just about things, such as the import of caramel and caramel products, but is concerned with much more important and fundamental matters affecting our future as a country. We can overcome the problems of, and opposition to, Europe only if we persuade people of the real meaning of our membership of the Common Market and if they are persuaded to understand that our membership is fundamental to the future of our country.
I believe that people understand in their hearts that our membership of the Common Market is necessary for our security with our fellow members. They understand that our membership is essential for our businesses and industry, as trade and jobs depend largely on our future in the EEC. They certainly understand that, if we were not members, there would be little future for us in the world and in the decisions affecting the future of the world.
I am often saddened by the Labour party's acceptance of our role as a little England and in the abdication of any role in the future decisions which affect the world at large. It is essential, therefore—if we are to accept the large issues that are at stake—that we find a solution to the budgetary problems. If we do that, we can concentrate more on the matters that are central to our future as part

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of Europe. And, if we accept that our future is in Europe, we are more likely to find a solution to the budgetary problems.
Budgetary reform is needed for two basic reasons. The first is that it is only fair that we should not contribute more than fellow members—that we should pay according to our wealth, a principle to which reference has been made several times during the debate. It is fundamental in our search for a solution that we should at least make a fair contribution. At the same time, I was glad to learn from the Economic Secretary that we are determined to secure in March the repayment which has been accepted for us.
The second reason why we need reform of the budget is that reform of the CAP is essential. As the hon. Member for Great Grimsby said, we are spending a large proportion of Europan money on the CAP. Without doubt, guaranteed prices only lead to surpluses. Indeed, without some market discipline it is impossible to get hold of the agricultural surplus system, because more will be produced. The Foreign Secretary was correct when he said that he would vote for an increase in own resources for the budget only if we have effective control of expenditure. That means getting a proper reform of the CAP and regaining a fair share of our financial burden.
My right hon. and learned Friend the Member for Hexham (Mr. Rippon) was right when he said that, as we face the reform of the CAP, farming should not be allowed to decline. It has an important part to play in the future prosperity of this country and of the rural areas. The hon. Member for Great Grimsby went overboard in his attack on the farming community and showed a complete lack of understanding of the position when he said that farmers benefited from rocketing land prices. Any true farmer does not want his land to be worth all that much because he will not sell it but farm it and will wish to pass it on to his sons, and that is impossible if the price of the land is too high.
However, we should accept the fact that the system of farm support is wrong. First, it produces surpluses and, secondly, it leads to the destruction of the countryside. Habitats for wildlife are at a premium in the United Kingdom. The Nature Conservancy Council claims that we shall have only just enough habitat to secure our wildlife for future generations if we stop the destruction now. It is one thing to farm existing farm lands as well as we can and quite another to destroy valuable habitat merely to produce surpluses.
The current system of support is encouraging surpluses and, in turn, destruction. This is happening in Ireland, for example, where millions of pounds are encouraging the drainage of hill river valleys. Valuable wetland sites for wildfowl and waders are being destroyed to produce surpluses of wheat that are not required, or excess dairy products. In Britain, it is CAP money that is encouraging, for example, the drainage of North Duffield Cans in Yorkshire, a water meadow site of international importance. Without the subsidies for wheat from the Common Market, such drainage would not be considered.
Any new farm support system that is evolved—we must have some such support—must avoid the plague of surpluses while linking farming development with proper consideration for conservation.
We have a skill in service industries, such as financial services, insurance and the provision of air services. We must wrest from the Common Market free competition for
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the service industries. In the recent past we have not been so competitive in manufacturing industries, but we have free competition in that sector. Let us now secure free competition for financial services.
In our fight to secure a reformed budget, I should like the Government to push for greater emphasis to be placed on the conservation of wildlife and habitat. That will be needed for the quality of life of future generations. Secondly, I urge the Government to press for fair competition for service industries. I hope that everyone in the House will accept that our future lies in Europe. If we are in Europe, we can have a wider vision of the world. We shall be able to play a full part without sinking into becoming an isolated and scorned little England.
9.7 pm
Mr. Phillip Oppenheim: It would be all too easy to talk about the many superficial absurdities of the EC—for example, the millions wasted on the absurd so-called EC information campaign. I could talk of the fact that Britain was meant to provide almost 20 per cent. of EC employees, but accounts for less than 10 per cent. I could talk also about the millions that are wasted internally by EC bureaucrats.
I had personal experience of trying to install a small network of micro-computers for the European democratic group. I tried to learn what I could of what the EC, the Commission and the Parliament had planned for their internal network. Whenever I contacted someone who was meant to have responsibility, I found invariably that he was out for lunch or taking a two-month sabbatical.
I discovered some appalling examples of waste. On some entirely dubious grounds, a large consignment of Italian word processors was ordered two years ago. The machines have still not been delivered or installed, yet the design has been out of production for nearly a year. This is ridiculous, but all this expenditure and waste is be a drop in the ocean compared with the cost of the common agricultural policy. The CAP is the key because it is the most developed part of the EC.
The CAP is much criticised and it is certainly far from perfect, but that should not obscure many of the sound reasons that lie behind it. Agriculture is entirely different from other industries. It is different because land is a finite resource. It is different because it costs more per unit of production the more we try to produce per acre. It is different also owing to the uncertainty of prices in a free market because of factors outside the producer's control. All those factors in a free market would serve to depress production, so that we would be not self-sufficient in Europe but heavily deficient in production.
Systems of guaranteed prices for agriculture are not unique to the EC. They are common to most developed nations, including the United States, and, before 1972, Great Britain. Guaranteed price systems iron out the worst of the market uncertainties and ensure reasonable levels of production. It is worth remembering that, although the EEC has a heavy surplus production in milk, it has only a 15 per cent. surplus in grain production, is in balance in beef production, and has a 30 per cent. deficit in sheepmeat production. It is no coincidence, however, that countries with guaranteed price structures have the best-fed consumers. Those without guaranteed price support often go short.
It is true that agricultural support costs money, but the money that British farmers receive from the EEC is less

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than the total spent on the coal and steel industries. Would Labour Members who call for the abolition of any support for agriculture be consistent in calling for the abolition of support and return to world prices especially for the coal industry? The coal and steel industries produce less and employ fewer people than agriculture.
It is far from true to say that, with the possible exception of sugar, the Third world suffers from EEC pricing policies. Quite the contrary, it is generally agreed that a lack of support for prices in those economies leads to food shortages. The low prices for which farmers in those economies must work encourage not production but subsistence farming leading to shortages for the mass of the population.
Assuming that one wants to get away from the system of guaranteed prices, what are the alternatives? One alternative is to go to world prices. If the EEC were to go to a system of world prices for farming products, it would mean a cut in production of about 30 per cent., which would bring Europe heavily into deficit for all products, except possibly milk. It would mean billions of pounds worth of imported food and total dependence for our food on the United States or, worse still, on South America. That would mean also a return to a huge rise in world prices. Anti-marketeers admit that EEC price support depresses world prices, but they must admit also that, if we went away from a guaranteed price structure, world prices would correspondingly increase. There is no doubt that if the EEC abolished price support and went on to a system of world prices, those world prices would increase sharply.
Another consequence of moving to world prices would be that small farmers, many of whom had invested heavily in capital equipment in the reasonable expectation of a certain price level, would be bankrupted. Ironically, it would be the larger grain farmers who would do well. It is true that they would probably have to cut grain production, but lower imputs per tonne of grain produced would mean higher margins on those tonnes of grain. A return to world prices would possibly even increase the profitability of the large grain farmers.
The consumers would suffer if we went to a system of world prices, because they would be totally dependent for food on North and South America and would have no protection against the fluctuations of world prices and supplies.
Another alternative to the current prices support system operated by the EEC would be a return to national policies of price support. That may be an answer, but, in terms of what United Kingdom farmers receive, price support would probably cost as much as it does now. After all, before 1972, British farmers received no more or no less in real terms than they do now. However, to argue that some form of price guarantee system for agriculture is necessary is not the same as saying that the current CAP does not need radical reform. It is surely 'grossly unfair to expect the British taxpayer to go on financing huge overproduction by the French and the Dutch. Not only do the French and Dutch seem to want our markets to sell their surplus goods to, but they want us to pay for the privilege. For every pound that we pay our own fanners, our taxpayers contribute a further 50p to French and Dutch farmers. Therefore, perhaps some national financing of overproduction over and above what the Community can absorb would help the French and the Dutch to see our point of view as well as theirs. I also cannot see the logic
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of asking our dairy farmers to cut back production by 6 per cent. just so that we can import more French milk. That seems to be an absurdity.
Another way in which the EEC should be going is to return more of the benefits of agricultural spending to the consumer. Deficiency payments schemes, where possible, such as the sheepmeat regime, achieve that purpose to some extent. Additionally, the sale of more intervention grain to the livestock sectors would lower feed costs and thus lower the cost of the end product. Surely that is the direction in which we should move.
We need to reform the CAP, but to use the CAP' s many excesses and absurdities as an excuse to scrap the whole policy would be to throw out the baby with the bathwater.
9.16 pm
Dr. Oonagh McDonald: In some quarters, the debate has been marked by complacency. For example, the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) appeared to be reading out the Liberal manifesto for the forthcoming European Parliament elections. He has disappeared from his seat. Perhaps the Liberal manifesto has overcome him. He talked about the need to reform the common agricultural policy, but it was a long and slow reform. Apparently neither he nor the Liberal party has any notion of the urgency of the matter as agricultural spending continues to increase and get out of hand. Perhaps that is typical of the alliance's approach to political problems, which is marked by the lack of a sense of urgency or reality.
By way of contrast, one or two Conservative Members seemed to delight in their praise for and adoration of membership of the European Community, so much so that they were prepared to tolerate an increase in the membership fee. If the Commission proposes to raise the VAT ceiling to 1·4 per cent., they will accept that. They might even accept a doubling to 2 per cent. Some of them seem to be unaware of its implications for taxation here.
As my hon. Friend the Member for Newham, South (Mr. Spearing) said, the present ceiling means that 11 per cent. of VAT is contributed to the European Community. Any rise in that ceiling would greatly increase VAT. Those who spoke in favour of raising the ceiling did not say where they expected the taxes to fall. There could be an increase in the already high 15 per cent. VAT, or there could be a widening of the base for the collection of VAT, perhaps to cover items at present zero rated, such as food and children's clothing. However, Conservative Members did not tell us what would be the effect on the British tax system of a raised ceiling.
The Economic Secretary took us on a brisk trot through the technicalities of the budget. I was particularly interested in some aspects of his speech. He welcomed the liberalisation of lorry movement throughout the Community. He must have had a busy few weeks in France, either stopping the hijacking of British lorries or heaving them out of the way when they are blocking the holiday routes.
More seriously, the Economic Secretary's speech had a couple of interesting features. First, he said that the EC was at a crossroads. That was a surprising understatement after Stuttgart and the abysmal failure of Athens. It was an astonishing statement to make when even Mr. Cheysson, the French Foreign Minister, sees the Community as galloping towards a precipice unless urgent action is taken by the end of March.

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The Economic Secretary also said that it would be premature to withhold payments. He said that we have until the end of March to get our rebate from the EEC. The end of March is not far away, and the signs do not yet seem very hopeful.
In view of the heavy weight of the documents, which we have, of course, all dutifully read over the past few days to prepare ourselves for this debate—[HON. MEMBERS: "Hear, hear."] I am glad to hear that hon. Members are so hard working. In view of the size of these documents, it seems churlish to complain of lack of information, but I shall do so.
The hon. Member for Southend, East (Mr. Taylor) referred to the missing letter—the reply to the Foreign Secretary's request for the £42 million owed to us since 1982. That reply is with the Foreign Secretary who is now in Brussels, having been in Paris over the weekend. I hope that we shall be given a statement this week giving us all the details of the discussions at St. Cloud near Paris at which the Foreign Secretary has been present. I hope that there will be a statement, because a number of issues arise from press reports today of the weekend meetings.
The Foreign Secretary was prepared to say that the meeting had been "mildly encouraging", but, despite that overt statement, the briefings which the press received do not encourage us at all, and I doubt whether the Foreign Secretary was as encouraged as he chose to pretend. For example, it appeared that some countries were not prepared to offer Britain the long-term budget settlement on which we quite rightly insist. That appears in a number of press reports, including one in The Times today. There is also a fear that President Mitterrand's visits to the various capitals of Europe may represent an attempt to put together a secret deal behind Britain's back. Other problems concern France's attempt to impose a five-year limit on any budget agreement and to keep the reduction in Britain's payments to less than 1 billion ecu. All those features of the weekend's meeting disturb us.
We also have no information about the various proposals which are apparently being discussed about the way in which the size of contributions to and rebates from the Community should be assessed. There are proposals from Mr. Delors and from the Dutch, and Gaston Thorn also has other ideas for new methods of calculating budgetary imbalances. It is not surprising for those who have heard Gaston Thorn's statements about Britain and our claims concerning a rebate that his proposals reduce the apparent net contribution and the potential rebate which Britain could hope to claim.
We cannot sensibly discuss the 1984 budget and any plans that the Government might have to get us out of our difficulties with it without knowing, in detail, what the proposals are. We should be able to examine them critically and, if necessary, offer other ways in which to assess each member country's benefit from the Community and the amount that it sacrifices or pays to it. Even with the enormous pile of documents involved, the debate has been a waste of time, although by that I do not wish in any way to be disrespectful to my hon. Friend the Member for Livingston (Mr. Cook), who made a brilliant speech, and to others who have spoken. I am merely setting out the debate which we should have before 31 March.
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We must examine the proposals in detail and know precisely why the Government regard the refusal to pay our contribution to the budget before the end of March as premature. We need to know the Government's detailed proposals to ensure that agricultural spending is controlled. We need to know what trade-off the Government are considering in terms of allowing our contribution to the budget to be raised or for allowing the ceiling to be raised. We all recognise the difficulties of engaging in a negotiating process such as this, but as the decisions are being taken in a crucial year, and as they could affect the development of budgeting for the Community for many years to come, the Government should take what the House has to say about these matters fully in account. As has been pointed out, there appears to be a gap between the Government's rhetoric and their actions. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) described that gap beautifully. I shall not attempt to follow his eloquent description of the activities of Mr. Ingham and the press office at No. 10. Nevertheless, we have all seen the gap and are worried about its possible extent in the future.
The report of the Court of Auditors provides us with much ammunition with which to defend Britain's stance. It mentions what happens to agricultural funds and argues that a large proportion of the £9·28 billion which is allocated to agriculture could be saved if the CAP were made more effective. Apparently, on CAP guidance for farm modernisation, the court deplores the absence of a clear and stringent programme which is designed to help farmers abandon production in surplus sectors. It also says that sound financial management is as much a key to averting the EC's cash crisis as raising the ceiling on the EC budget measures.
Many right hon. and hon. Members have rightly argued that strict financial controls—we all agree that they have their place—will not solve the problems of the CAP. It has a built-in tendency for overspending, as many factors can change in one year. In present legal circumstances, Brussels must meet the demands that are made of it. Changes in world prices, changes in the exchange rate and the way in which surpluses might unexpectedly build up all mean that spending on agriculture is bound to overrun. It has done so in the past—it increased by 183 per cent. during the 10 years from 1973 to 1983, and there is no reason not to expect it to continue to increase in the years to come.
We suspect that the Government will stop short of financial controls on the agricultural policy and will back off from the notion of the fundamental reform that needs to take place, not only to stop overspending, but to stop the build-up of the obscene surpluses—the butter mountains, the wine lakes, and so on. The surpluses are stored at enormous expense and occasionally released at knock-down prices to other parts of the world. That kind of policy is not only financially unacceptable, but is rapidly becoming morally unacceptable—not only in this country but throughout the remainder of the Community.
If the Government merely go for financial control they will be giving up an important part of the initial rhetoric, which was to go for fundamental reform of the agricultural policy. It is not surprising that the Government back off. My hon. Friend the Member for Great Grimsby was attacked for his statement about the importance of farmers to the Conservative party. A more acceptable source for

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the Conservative party, The Economist, also had its doubts about the Government's determination to press for a reform of the agricultural policy owing to the barnful of farming Cabinet Ministers responsible for such decisions.
Mr. Marlow: On a point of order, Mr. Speaker. Is it proper for the hon. Lady to suggest that members of the Cabinet let their personal fortunes come in the way of their decisions about the policies needed for this country?
Mr. Speaker: I did not hear the hon. Lady say anything that was out of order.
Dr. McDonald: It will be for the Minister to try to rescue the Government from criticisms.
The Opposition are concerned about another aspect of the current negotiations. Mr. Gaston Thorn talked yesterday about the possibility of plundering the EC funds that aid employment measures and the regions. It is true that the Commission is not under a legal obligation to continue those payments during 1984, although they have been laid down in the budget. It is, however, obliged to continue to meet all the demands made on it by the agricultural policy.
We want from the Government tonight an absolute assurance that they will reject any move by other member states and the Commission to spend on agricultural policy money that should be used to aid the impoverished regions of the Community or on employment measures. Admittedly it will be hard for the Government to do that, but if they were to make their objections clear that would give them an additional lever in the negotiations that must take place during the next few weeks.
The Community is in a crisis. It is wrong to dismiss the budgetary matters as though they were irrelevant to the development of the Community. They are not—they are a constant diversion and a constant source of bad feeling and hostility between members of the Community. They lead to wasteful spending on agriculture and raise the prices of food to consumers because of overspending. It is high time that the agricultural policy was thoroughly reformed, and if the Government keep their nerve they can do that. They can refuse to pay their contributions to the European budget this year, not only if they fail to receive their rebate but to ensure that the reform of agricultural policy, which must take place, actually does take place. To accept a short-term compromise solution now and to allow the moment of crisis to go by without taking the necessary fundamental and long-term action would be crass weakness on the part of the Government. Despite all their rhetoric, we fear that that is what is going on behind the closed doors at St. Cloud, and that the Government will not live up to what they say they want to do.
The Government have already backed down, as we have seen from their statements, and we are afraid that they will do so once again and take an easy compromise solution—the easy way out—and that consumers in Britain will end up paying more taxation as the budgetary contributions are increased because the ceiling on their own contributions is raised. The Government are prepared to go for the soft solution and to allow everyone else to pick up the tab for the weakness of their decisions.
The Opposition want a commitment from the Minister that all the information necessary for the House to make a decision will be revealed, that we may have a further debate before the Government come to a conclusion, and that they will not abandon their rhetoric, but will instead
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push for the fundamental reforms in the EC agricultural policy which are absolutely necessary if the EC is to survive.
9.37 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifland): The hon. Member for Thurrock (Dr. McDonald) and many other hon. Members who have spoken have quite properly concentrated their remarks on budgetary matters. I say "properly" not only because that is the subject of the debate—those were the issues recommended by the Scrutiny Committee—but because that issue is most central to the problems facing the Community now and the negotiations upon which all the member Governments are embarked.
The hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) and my hon. Friend the Member for Harrow, East (Mr. Dykes) emphasised their desire that during the negotiations the British Government should not address the matters in a narrow short-term frame of mind but that they should remember the broad, overall objectives of the Community and the long-term interests of Britain and the Community as a whole. The Government do not wish to dissociate themselves from that consideration. Hon. Members rightly and properly made that point.
It is equally important that all member states should consider it perfectly proper to emphasise to the Community during the negotiations the vital national interests that are at stake. It would be wrong and improper for anyone to expect any member Government, including the United Kingdom Government, not to take into account the vital national interests.
The Community was not invented and has not developed on the basis of ignoring the vital interests of member states. Rather it has survived and prospered by being able to reconcile the conflicting interests of many member states. That feature has survived over the years and is the essential strength of the Community.
During the past few years the United Kingdom has been in the forefront of calling for reform of the Community. That has led to some suggestion that the United Kingdom is not fully committed to membership of the Community, and that it is only a part-time member. My right hon. and learned Friend the Member for Hexham (Mr. Rippon) was right to emphasise that the 'United Kingdom is not half-hearted in its approach to Community membership, and that it is wrong for anyone to suggest otherwise. We reject and resent such accusations.
I recollect how, in the late 1960s, France under General de Gaulle was so anxious to protect its vital interests, as it saw them, that it withdrew from the Council of Ministers for seven months, without anyone trying to question its basic commitment to the Community. In the present negotiations every member state has vital interests, and one does not blame them for trying to ensure that they are respected.
I was astonished by the suggestion of the hon. Member for Great Grimsby (Mr. Mitchell) that the Labour party's commitment to withdrawal from the Community, at least until the previous general election, was an asset to the Government during the past few years in their negotiations with the Community. He has obviously not spoken to any of his fellow Socialists in Europe or to anyone else. The great embarrassment for the Government during the past few years has been that other member states, until the last

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election, could say, "What is the point of trying to reform the Community in the direction that the United Kingdom wishes if the advent of a Labour Government would mean British withdrawal in any case?"
Mr. Austin Mitchell: If, faced with the dire threat of an Opposition who are committed to withdrawal, the Government could get no concession from the EC, when do they hope to get concessions?
Mr. Rifkind: There are two fundamental errors in the hon. Gentleman's remarks. First, during the past few yars £2,000 million has been refunded, apart from the sum due at present. That compares favourably with the complete lack of success of the Labour Government. Secondly, the Hon. Gentleman must appreciate that as the other member states had no internal dissension such as Britain had until the previous election, that could not be an asset in the negotiations.
Several of my hon. Friends and other hon. Members referred to the unresolved dispute between the Government and the European Parliament about the net payment of £430 million arising out of our 1983 refund. Let us be clear what the dispute is not about. It is not about our entitlement to that sum. No one—not the Council of Ministers, the European Parliament, nor the Commission—oubts our entitlement to the sum. Nor is it a dispute between the United Kingdom and other member Governments. It is not a dispute with the Commission. At this stage it is a disagreement with the European Parliament, which is trying to insist that the payment of the sum should be linked to progress on the Stuttgart negotiations. The Government fundamentally disagree with that assertion, and I would go so far as to say that, in making that proposition, the European Parliament is acting improperly, unfairly, illogically, unwisely and dangerously.
First, its action is improper because there is no basis for establishing a link between progress on the Stuttgart negotiations and the payment of the refund. Anyone who reads the Stuttgart communiqué, and the speech of Herr Kohl, the German Chancellor, when he reported to the European Parliament, will be aware that no such link is justified.
Mr. Jackson: The European Parliament was not party to the Council meeting in Stuttgart and cannot, therefore, have been bound by its decisions. We should understand that in trying to evaluate the problems that have been caused by the Parliament.
Mr. Rifkind: My hon. Friend is correct to say that the Parliament was not bound by the Stuttgart negotiations. Nevertheless, it should take into account the basis on which this payment was agreed. The agreement did not depend on other factors; it was agreed because Britain is entitled to the refund. Any attempt to establish links would be improper.
Secondly, the proposition is unfair because in many respects—certainly following the Arndt resolution by the European Parliament—the United Kingdom is closer to the thinking of the Parliament than almost any other member state in its desire for a permanent solution to the budget problem and for sensible control of agricultural expenditure. Therefore, it is somewhat unfair of the
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Parliament to take such action against the country that is the closest to its own thinking in this respect. Thirdly, it is illogical for the Parliament to establish such a linkage because, if it is seeking to bring pressure on the Community as a whole, it is rather difficult to understand its policies. The suggestion that the French, the Italians or the Irish would be persuaded to be more reasonable on progress in the negotiations because a refund due to the United Kingdom is not being paid is rather illogical.
Mr. Johnston: On the point about the European Parliament, in which the hon. Gentleman is interested, he said that the Parliament was unfair because the British Government was more in tune with the views of the European Parliament than anybody else. That would suggest that the European Conservative group is more in tune with the views of the Parliament than Parliament itself, which is illogical.
Mr. Rifkind: On the contrary. The Conservative Members of the European Parliament have been in the forefront in pressing for the money to be paid within the due course of time, unlike the Labour group, which has not been helping the Conservative group and has been putting forward wrecking amendments to prevent the money being paid.
Fourthly, the Parliament's position is unwise because it spends a great deal of its time persuading member states to increase its powers and responsibilities. Anyone who might have been sympathetic to the approach will hardly be persuaded if the Parliament abuses it existing powers by seeking to withhold sums due for reasons that are not linked to entitlement to those sums.
Finally, the action of the Parliament if it refuses to pay these sums at the right time may be dangerous because clearly, as my right hon. Friend the Prime Minister has shown, this is not something to which the United Kingdom would acquiesce and we would take steps to defend our position.
The hon. Member for Livingston (Mr. Cook) has tabled an amendment that invites the House as of now to insist on the withholding of sums due to the European Community. The Opposition's amendment is both precipitate and irresponsible. I say that for two reasons. At the moment, no one is suggesting that the Community is in default of the £430 million. The United Kingdom has made clear all along that that is the sum that falls due to be paid by 31 March this year. Our actions cannot be questioned. If the House were so misguided as to accept the advice of the hon. Member for Livingston and the Opposition on this matter, that would put the United Kingdom in the wrong because it would have acted in a way that was hostile to the Community when its rights to the sum had not been attacked.
Mr. Marlow: While I accept and respect entirely what my hon. Friend has said, will he confirm to the House that if virtually all of the money is not paid by the due date, withholding is one of the options that will be considered by Her Majesty's Government?
Mr. Rifkind: My right hon. Friend the Prime Minister has made it clear that we cannot rule out any method of responding to such actions. It is not in the interests of the country to say at this moment what might happen if circumstances that we hope and believe will not occur should take place.
Mr. Robin Cook: The House will be rateful to the Minister for pointing out that action that is advocated by the Opposition is irresponsible on 20 February, but when advocated by the Government on 2 April is no longer irresponsible. As the Minister has spent the past five minutes fulminating at the illogicality, the danger and the lack of responsibility of the European Parliament, will he tell the House what possible reason there is after last week's sitting of the European Parliament for imagining that anyone will release the rebate in time for 31 March?
Mr. Rifkind: Two points need to be made. First, there is a fundamental difference between taking action after the Community has defaulted on a sum due to the United Kingdom and contemplating action today when no such default has taken place. Secondly, there is still no procedural reason why sums due to the United Kingdom should not be paid by the end of March. The European Parliament has itself indicated that it is fully aware of the significance of that date, and until that date has lapsed we are prepared to give the Parliament the benefit of the doubt. That, I believe, is the only reasonable, proper and responsible thing to do. [Interruption.] I do not expect Labour Members to act in a responsible or constructive fashion. They did not do so when they were in office, and it is hardly likely that they will do so in opposition. That is something that my hon. Friends will appreciate.
Mr. Jackson: In considering what is potentially a very serious matter, will the Minister explain what legal status the date 31 March has in any Community decision?
Mr. Rifkind: I shall not embark now on a detailed legal analysis, but my hon. Friend will be aware that in the past the sums have been paid by that date. It is not a matter in dispute, either in the Council of Ministers or in the European Parliament, that the proper course of action is that the sums due to the United Kingdom in respect of refunds are paid within the United Kingdom's financial year.
Mr. Teddy Taylor: While the House is greatly reassured to hear about the strong action that will be taken if the Common Market defaults on 31 March, will my hon. Friend say what strong action was taken following the default on 31 December last by the Community over the £42 million which should have been paid but was not, bearing in mind that the Foreign Secretary sent a letter on 3 January and that, we understand, a reply has just been received? I hope that the Minister will be able to tell us what that reply from the Common Market says.
Mr. Rifkind: The £42 million risk-sharing sum, unlike the other sums that we have been discussing, does not arise out of a dispute between the United Kingdom and the European Parliament. It arises from a quite separate basis—from a difference of view within the Council of Ministers as to the proper sum that is due for the risk-sharing element for 1982.
Secondly, the £42 million, unlike the other sum, is in dispute. I said earlier, with regard to the £430 million, that there was no dispute in any quarter of the Community as to British entitlement to that sum. That is not the case with the £42 million. The United Kingdom emphasises that that sum is due, arising out of the risk-sharing element. Other member states and the Council of Ministers do not take that view.
My hon. Friend the Member for Southend, East (Mr. Taylor) has referred to correspondence between the
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President of the Commission and Her Majesty's Government. I am not at liberty to indicate the contents of correspondence of that kind. In saying that, I am not saying anything new; it is a position with which the House is familiar. But the Commission agrees with the United Kingdom that the sum which has not been paid arises out of a political decision by the Council of Ministers and does not arise out of any legal entitlement or disentitlement that the Commission recognises. Therefore, this is a matter which now has to be dealt with within the context of the inter-governmental negotiations now taking place, and it is clearly an issue which will be raised in that context.
Mr. Boyes: Will the Minister give us an assurance that well before 10 pm he will have a word with me about a possible increase in the cost of a pint of beer? I know that Ministers do not give way once they reach 9.55 pm, because they are in a hurry then.
Mr. Rifkind: The hon. Gentleman will be aware that questions of excise duty are more a matter for my right hon. Friend the Chancellor of the Exchequer than for me, and the hon. Gentleman would not wish me to anticipate my right hon. Friend's decision in that respect. That is all I can say on that issue.
With regard to the more general question of the reform of the budgetary system and budgetary imbalances, what we are seeking to do, as several hon. Members have said—I was particularly attracted by the remarks of my hon. Friend the Member for Wantage (Mr. Jackson)—is to achieve an equitable system which is fair to all member states of the Community.
Before the own resources decision of 1970, there was, indeed, an equitable system, because then the three major states of the Community—France, Italy and Germany—each paid 28 per cent. of the Community's costs, with the remaining costs shared by the other three smaller members. That system was changed not because of any desire to move away from an equitable system but because of the perfectly reasonable desire to achieve a position in which the Community had its own resources. But that does not remove the need for a basic equity in those arrangements, and it is a fundamental part of the objectives of Her Majesty's Government that in the negotiations we should achieve a system in which there is an equitable burden shared between the member states, based on the relative prosperity of the stales in question.
My hon. Friend the Member for Southend, East and others suggested that the Government are not serious about the reform of the common agricultural policy. However, we believe that expenditure on agriculture and the Community's expenditure as a whole need to be reformed. We were the first to argue for the need to have a strict financial guideline to ensure, for the first time in the history of the Community, that there should be control of agricultural expenditure and of the Community's expenditure as a whole. Other member Governments, as well as other commentators, have suggested that we need declarations of intent, saying that the Council of Ministers, or the Agriculture Ministers, should declare their intent, their good faith, to try to control total expenditure. To those who say that, I commend the wise words of Lord Home, when Prime Minister, when he said:
"If a politician tells you that his word is as good as his bond, then always ask for his bond."
That is the approach that we are taking in the Council of Ministers. We are arguing that it is essential, if there is to

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be control of expenditure, for that control to be in the form of a change in the budgetary mechanisms, if there is to be a proper and adequate control of the Community's expenditure.
I listened with interest to the hon. Member for Livingston. Today, as on previous occasions when we debated these matters, he completely failed to reveal the alternative Labour policies on agricultural or budgetary matters or any other matters. If the House is to be denied the benefit of the Labour party's views it has at least one other way to discover what the hon. Gentleman believes. He is trying to identify what I am about to quote from, but I can tell him that it is our own local paper, the Edinburgh Evening News. It was the prime beneficiary of the hon. Gentleman's views on the matter, in a speech that he made to the Scottish Organisation of Labour Students. I shall quote his words to that august organisation. He gave Labour's four-point plan for contesting the European elections. He started by saying—this could be a reference to the Labour party, as well as to the European elections:
"Our job is to place internal problems and concerns within a European context".
We can only speculate on what he meant by that. He went on to say something quite remarkable in a speech that was meant to be about the European Community:
"To those concerned about the Health Service we must connect the cuts in public expenditure to the world recession and the contribution Ministers throughout Europe have made to it."
That is what the electorate will be subjected to in the debate on the European Assembly.
Mr. Robin Cook: The Minister will be well aware that shorthand in local newspapers is not all that might be desired. I am happy to assure the hon. Gentleman—who, I know, has listened to speeches from me during the past 15 years—that I said no such gobbledegook. As I have the privilege of the Minister's ear, and as he has tweaked me for having said nothing positive about what should be done on agricultural policy, I remind him that I made a strong and strenuous suggestion about what the Government should do as an earnest of their intention to reform the CAP, and that is to realign the green pound exchange rate and thereby abolish the 5 per cent. tax on food. That request was put also by Commissioner Tugendhat. Does the Minister propose to accept that recommendation as a positive step that can be taken on agriculture before we reach 10 o'clock?
Mr. Rifkind: I am interested to see the hon. Gentleman's anxiety to deny the words that he is reputed to have said in what is, after all, a most reputable newspaper.
Mr. Foulkes: Oh, not at all.
Mr. Rifkind: The correspondent who quoted the remarks of the hon. Member for Livingston was the paper's European correspondent—not some part-time reporter. Indeed, it is consistent with the Opposition's attitude, because throughout the past few months, in every public comment that they have made, they have emphasised their determination to avoid European issues which they know fundamentally divide their party, and they will try to fight the elections on domestic issues which they believe will bring them more satisfaction.
This debate has been about the Community budget. The Government have already achieved massive refunds for the United Kingdom taxpayer, and the fundamental objectives of our present negotiations are to ensure a fair deal for the British taxpayer and the British public in the years to come. The Community is, for the first time, addressing itself to those fundamental issues. We believe that we shall succeed, and I invite the House to reject the Opposition amendment.
Question, That the amendment be made, put and negatived.
Main Question put and agreed to.
Resolved,
That this House takes note of the Preliminary Draft General Budget of the European Communities for 1984, of the Draft General Budget for 1984, of the Letter of Amendment to the 1984 Budget, of European Community Documents Nos. 10447/83, 10105/83, the Modifications and Amendments by the European Parliament to the 1984 Budget, of the Decisions by the Council on modifications and amendments by the European Parliament to the 1984 budget, of European Community Document No. 11094/83, financial compensation for the United Kingdom and Germany for 1983, and of Official Journal C 357, the Annual Report of the Court of Auditors for 1982; and supports the Government's efforts to secure budgetary procedures and control which are in the best interests of the United Kingdom and of the Community.

European Communities (Budget)

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Occupiers' Liability Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Sainsbury.]

Orders of the Day
  Occupiers' Liability Bill [Lords]
  Not amended (in the Standing Committee), considered.
  Occupiers' Liability Bill [Lords]
    Clause 2

      VISITORS USING PREMISES FOR RECREATION TC.: MODIFICATION OF UNFAIR CONTRACT TERMS ACT I977
      10 pm
      Mr. John Morris: I beg to move amendment No. 1, in page 3, line 10, leave out from 'occupier' to end of line 12 and insert
      '(whether the occupier makes a charge or not) unless the granting of such access by the occupier constitutes a commercial activity'.
      I do not think that any hon. Member who sat on the Committee considering this Bill would accuse me of undue prolixity and I do not intend to alter my approach tonight. In Committee, we discussed two different amendments that had the same objective as amendment No. 1. Their objective, like that of amendment No. 1, was to remove anxiety from those who make their land available for recreational or educational purposes not being by way of business of the occupiers.
      On Second Reading the Solicitor-General said that five years of the working of the Unfair Contract Terms Act had resulted in one unintended effect. It had reduced access to the countryside and so the provisions needed fine tuning.
      That was certainly queried in the course of our discussions. At one stage the Solicitor-General said:
      "The question may be asked, 'Will landowners change their practice if the law is amended? Will they not continue to refuse access?"'
      The right hon. and learned Gentleman then said:
      "There is good reason for optimism."
      He concluded by saying:
      "For those reasons the object of clause 2 is one that I believe will be supported not only by the Central Council for Physical Recreation but by landowners who wish to see access to their land put back on a proper legal footing."—[Official Report, Second Reading Committee, 14 December 1983; c. 6.]
      I think that I said that the words "I believe" were akin to a rather weak affidavit on the part of the Solicitor-General, and that those words were not the firmest that he could have used if he had been confident that he would have the support of the Central Council for Physical Recreation.
      In due course we returned to the matter in Committee, but the Solicitor-General was quite satisfied that the clause, without any amendment being made, was "clear, unambiguous and helpful."
      In reply I said that he had pitched his flag rather high. I said that I would be pleased if the fears that I had expressed carried the message of the Central Council for Physical Recreation, the National Farmers Union, the Country Landowners Association and the Law Society and that there would be "great joy in heaven" if they were so satisfied with the Solicitor-General's observations that they withdrew their objections. I invited them so to do.
      The sky tonight is black with chickens coming home to roost. I have received a letter from the CCPR which states:
      "I regret that we are still most unhappy regarding the wording of clause 2 despite the reassurance given by the Solicitor-General. In fact, because this problem has been highlighted we
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      are fearful that landowners will be even less likely than before to grant access if in levying a charge to cover expenses they run a risk of being unable to contract out of liability for injury, etc."
      The Country Landowners Association differs in its view from what the Lord Chancellor said on Report in another place. He said that if one started charging one would be in difficulties because, broadly speaking, the activity would become a business activity.
      The Solicitor-General was much more robust. In Committee he said:
      "There will be cases of a small charge being made which might go to the gardeners' benevolent fund or to pay the wages of a gatekeeper who controls entry onto the land or into gardens. No one could sensibly say or would ever suppose that the occupier is thereby running a business."—[Official Report, Standing Committee J, 2 February 1984; c. 8.]
      I do not wish to intrude into the private grief of a conflict between the Lord Chancellor and the Solicitor-General, but the divergence of views does not assist those who must use and rely upon the clause. They are the people for whose benefit it is intended. The idea was to remove the anxiety, to ensure clarity and to ensure that the Government did good, not by stealth but openly. Unfortunately, having tried to do good, the Government have not satisfied the Country Landowners Association because it says:
      "Unless the amendment is made, CLO (and NFU, which supports this amendment) will not know how to advise their members; perhaps their advice should be to be safe rather than sorry."
      The National Farmers Union said:
      "we would like to place it on record that we do not consider his answer to the criticisms of Clause 2 to be adequate, because the Clause is concerned with very special circumstances."
      Earlier, it said:
      "If any occupier is in doubt as to his position and he is properly advised, he will refuse access for recreational or educational purposes rather than risk potentially costly litigation over a question which is likely to be of little or no consequence to him financially."
      Three out of the four bodies which I invited to give me an assurance that would have put me at my ease failed to give that assurance. If they had given that assurance, I should have been satisfied. The only body which did not rise to the bait was the Law Society. Perhaps, since the Government are proposing to give conveyancing rights to bankers, building societies and others, it has greater things to contemplate. It cannot be that the Government have failed in their mission, a worthy one, of seeking to allay anxiety, of seeking to avoid the unintended consequences of the Unfair Contract Terms Act and to ensure that people have access to the countryside. It is regrettable, however—it will remain the case unless an amendment of this kind is accepted—that those fears remain.
      Mr. John Heddle (Mid-Staffordshire): I feel greatly outnumbered this evening. I am not a lawyer, nor am I qualified to discuss the legal definition of "a business". I am a mere surveyor, but I joined the right hon. and learned Member for Aberavon (Mr. Morris) in tabling the amendment because I am a member of the legal and parliamentary committee of the Country Landowners Association.
      The right hon. and learned Gentleman said that the sky was not blue. I think that it is; indeed, in my view the economy is getting bluer by the day. It is certain, however, that the law is not black or white, and it is in an effort to ensure that the law becomes more clearly defined that we tabled the amendment.

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      The spirit of clause 2 is to amend, and perhaps more closely define, the terms of the Unfair Contract Terms Act 1977 so as to exclude from its strict liability provisions the situation where an occupier allows access to premises and is able to contract out of liability should those premises be opened up and used for educational and recreational purposes. In that event, the occupier will be able to contract out of liability for accidental damage occasioned to people who are invited on to premises, for example to look at a country house, at its contents or at the farming methods.
      The problem that arises is whether his intention is to carry out that activity—to invite on to premises members of the general public for educational and recreational purposes—for business purposes, which means for profit, or as part of his intention to educate those who do not readily have access to agricultural holdings, country estates, and so on.
      It seems that the definition of "a business" as drafted is somewhat vague. Perhaps when he replies the Minister will advise me—and so advise members of the Country Landowners Association—whether he feels it should be left in its vague definition as at present, or whether that vagueness should be tightened so as to make the legal definition of "a business" more black and white.
      Under clause 2 as drafted, the occupier will not know whether he can safely levy a charge for access to premises to enable the general public to look at the contents. For example, if he levies a charge he will be faced with the decision whether that charge is for a business activity or is simply to defray out-of-pocket expenses to cover the outgoings necessarily incurred in making those premises available to the general public.
      What happens if the occupier makes a profit, perhaps inadvertently? What happens, for example, if more people than he anticipated decide to take advantage of the facilities that he is offering to the general public for educational and recreational purposes? I understand that the word "business" suffers from a surfeit of conflicting definitions. Not being a lawyer, I do not know what those definitions may be. I only know that in Committee my right hon. and learned Friend said something along these lines: "There will be cases of a small charge being made which might go to the gardeners' benevolent fund or to pay the wages of a gatekeeper who controls entry into the land or gardens." No one could sensibly say whether those charges would go towards defining the business, or recreation and education purposes, as being a business in the legal sense of the word. There seems to be an area that is grey rather than black and white. I defer to my right hon. and learned Friend, but I ask him to consider whether it would not be better to have a more precise definition of what a business really is in the context of opening country houses, farms, estates and other premises that are used for recreation and education purposes, and for that definition to be built into the Bill.
      10.15 pm
      An occupier at one end of the scale who is in the "recreation business" should not benefit from the exemption from the 1977 Act. Obviously a person at the other end of the scale who gratuitously allows access should surely be able to benefit. What about the many who own farms and estates who fall within the two broad
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      categories? It is for them, who make up the broad membership of the NFU and the Country Landowners Association, that I thought it appropriate to append my name to the amendment.
      I started by saying that I am not a lawyer, but I am sure that, as in all other matters, lawyers will have the last word. I look forward to the honeyed and pearled words of wisdom of my right hon. and learned Friend.
      Mr. Andrew F. Bennett: I support the amendment. Somehow the law and recreation do not seem to fit together especially well in the United Kingdom. When I first became a member of a local council I became aware of the problems that were experienced with open spaces around schools. All the open spaces carried notices telling people not to trespass on them. When I made inquiries of the education department I discovered that it did not matter to it whether children went on to the land. The notices had been erected to satisfy lawyers in the legal department that, as long as notices were displayed telling people not to go on to the open spaces, the local authority would not be liable if youngsters used the open spaces and had an accident. That was the approach of the legal boffins.
      The Bill has entered the House largely because of the fear of landowners that if they allowed the public to climb on rocks, to pothole or to participate in water sports, they could become liable for accidents suffered by individuals because they had allowed them to go on to their land.
      I was out climbing recently and I stopped at a farm to ask whether it was all right to leave my car at the edge of a farmyard. I asked the farmer whether it would be in his way and, secondly, whether I could climb on to some of his rocks. He explained that he did not like giving permission for such things because he had been told by a lawyer who advised the NFU that if he said it was all right for someone to park his car and to climb on his rocks, he might be liable for any damage done to the car or for injuries if an individual happened to fall while climbing.
      I hoped that the Bill might make the present legislation much clearer. I hoped that it would make it clear that if people went mountaineering or rock climbing on someone's land, or if they went potholing or engaged in water sports on a river or lake within someone's land, the owner of the property would not be liable for any accidents they incurred. I understand that the main part of the Bill is designed to make that clearer, but within clause 2 we come to the problem of the possibility that someone who charges for something which is ancillary to the activity, or in some instances is necessary for it, may become liable for accidents that occur. I have not come across anyone who has had the cheek to charge for someone to climb on to rocks, but it is fairly common for people to charge for car parking on land close to where people climb. If a farmer charges someone to park his car on a field and firmly says that the charge is for car parking, I am not sure whether the owner of the land, under the Bill as it stands, is liable for accidents which occur while that person goes rock climbing. That would be absurd. If there is doubt in the legislation, it may encourage some farmers who do not wish to encourage rock climbing to be especially cautious.
      I could repeat the same arguments for potholing. There are the same problems. It is rare for farmers to charge someone to go down a pothole on their land, but it is common for them to charge for car parking, which is ancillary to the potholing.

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      The position is different with water sports. Frequently, a small charge is levelled for people to go fishing or boating. Usually, the justification is that it is necessary to maintain the waterway by providing drainage, repairing banks and carrying out other activities. It is important that it is made clear that, if people are providing services enabling water sports to be provided and are making a profit not necessarily from the water sport but from car parking and the provision of refreshments, they are not liable for any accidents.
      I am sure that people who go into the countryside for recreation—whether for climbing, potholing or water sports — are well aware that they are responsible for their own safety. They accept that it is their responsibility to apply for insurance. If they feel that the landowner has done something that makes the area less safe, for instance by putting barbed wire across fences which people have a right of way to cross, or by putting bulls in the field, they believe that the landowner should be liable. They would not want the landowner to be liable for actions which they had chosen to carry out. They would not want legislation that would discourage landowners from making rock faces, potholes and water areas available. I hope that the Solicitor-General can assure us that the legislation will not leave any ambiguity or the possibility that it will be more difficult for people to enjoy the countryside.
      I support the amendment. I hope that the Solicitor-General will accept the amendment or give assurances that the law will be clear and will encourage, not discourage, the use of the countryside.
      Mr. Gerald Bermingham: The Bill as drafted leaves open the question of the hon. Member for Mid-Staffordshire (Mr. Heddle) about what is meant by a business activity. While that question remains open, people who occasionally allow the use of their land on open days and for visits by a school or other groups to a farmyard—that is necessary for children who live in urban areas if they are to see anything of the countryside—or who let part of their farm or estate need to be thoroughly protected. That is why I support the amendment moved by my right hon. and learned Friend the Member for Aberavon (Mr. Morris).
      We should all like greater access to and use of these facilities. The matter has been discussed at length. If, after the Bill has been considered, people still have the same concerns and reservations about the use of facilities such as estates and farms, it is only right that the House and the Government should take note of what they are saying. Those people are speaking from experience and saying that the Bill as drafted fails to meet the problems which they foresee. There is a risk to those who allow occasional use of their land, whether for a small charge or no charge. They still face the risk of liability for incidents that might occur through no fault of their own when that land is used.
      The amendment is extremely simple and clear. I hope that the Government at this late stage will have the courage to accept that the wording is better than that in the Bill. It removes doubts and makes the situation such that all can understand it. I should have declared an interest at the beginning of my speech, in that I am a solicitor. There is nothing worse than passing an Act of Parliament that is left so wide open that, as with the current law, lawyers can play on the accidents and injuries of others. Surely it is not too much to ask the Government, even at this late stage, to accept the amendment, which removes that possibility
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      and means that ordinary people are granted greater access to the countryside. It also enables landowners to open up their land to many more citizens, without risk or worry on their part.
      The Solicitor-General (Sir Patrick Mayhew): I am grateful to hon. Members who have taken part in this short debate. It is one of those debates in which we find ourselves on common ground on the objective, which is that landowners should not be deterred by any provision of the law from granting access to their land for purposes of recreation or education. The possibility that they will be deterred is based upon the fact that the Unfair Contract Terms Act 1977 prevents people — I put this in shorthand—from excluding their liability for negligence, including the negligence referred to in the Occupiers' Liability Act, in circumstances in which people, in this context, are upon their land for business purposes.
      The Unfair Contract Terms Act was passed by Parliament. It was an all-party measure that won general agreement because it had for long been thought unfair that by putting a clause into one's contract, one could avoid liability for harm that befell someone through one's negligence and failure to carry out obligations to others. The Act had the unintended effect that people who, out of a sense of public obligation or sheer kindness, had previously allowed people to come on to their land but had sought to exclude liability in respect of harm that befell oncomers through the condition of the premises were advised that they should no Longer do so.
      The Law Commission thought about the matter because my noble and learned Friend the Lord Chancellor referred the issue to the Law Commission after the well-known case of Herrington, in which a boy of six was injured on the live rail of a railway after he had trespassed on to the railway, having reached the line by getting through a broken-down fence from a recreation field. The railway was found liable. There were five separate speeches in the House of Lords. Unfortunately, although they were unanimous about the right result, they arrived at it by slightly differing routes. That case therefore created some uncertainties about the exact state of the law. Everyone hopes that we can now overcome the fears that have led to the withholding of access. There is no disagreement about that. Nor—if I may say so to the right hon. and learned Member for Aberavon (Mr. Morris) —is there any difference between what I said in Committee, or what I am about to say now, and what my noble and learned Friend the Lord Chancellor has said on the question of a charge.
      10.30 pm
      The Lord Chancellor said:
      "I now come to the amendment of my two noble Friends. This question of a charge for entry is a red herring. I have taken advice about it since, and I was right in what I said in Committee-namely, that it is a factor which is relevant in the context of the whole facts of the case but it is not conclusive either way." — [Official Report, House of Lords, 8 November 1983; Vol. 444, c. 707.]
      That is also the essence of what I said in Committee.
      The amendment is identical in its terms to one moved in the House of Lords. I share its objectives of trying to make the statutory provision crystal clear. There should be no grey area, as my hon. Friend the Member for Mid-Staffordshire (Mr. Heddle) has said. However, in trying to do that, the amendment creates new difficulties. First,

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      it introduces two elements not in the existing clause—the express reference to a charge, and the replacement of the concept of access
      "within the business purposes of the occupier"
      by the idea of the granting of access itself constituting commercial activity.
      An identical amendment was moved in the other place, and two other amendments to similar effect have also been considered during the passage of the Bill. On the earliest of those occasions the Lord Chancellor said that a charge was relevant but not conclusive. It is relevant because the ordinary purpose for which one charges money for entry on to land or for carrying on activities on it is likely to be a business purpose—but that is not necessarily so. The idea of the business purpose is the key to the matter. That is the expression used in the Unfair Contract Terms Act, and the scheme of the Bill is to add to section 1(3) of that Act these words:
      "but liability of an occupier of premises for breach of an obligation or duty towards a person obtaining access to the premises for recreational or educational purposes, being liability for loss or damage suffered by reason of the dangerous state of the premises, is not a business liability of the occupier unless granting that person such access for the purposes concerned falls within the business purposes of the occupier."
      Whether a charge is levied is a matter to be taken into consideration, but it will not be conclusive one way or the other as to whether that is a grant of access
      "within the business purposes of the occupier."
      It is a matter for consideration, but it is only one consideration, and I do not see merit in making a specific reference to it in the Bill.
      As so often, hon. Members are expecting too much from legislation. One cannot sensibly try to legislate to cover every possible factual circumstance. One has to legislate in terms of a concept and to rely upon members of the public — and, if it comes to it, the courts—to judge, using common sense, whether the facts of a case fall within that concept or outside it.
      An example was raised by the hon. Member for Denton and Reddish (Mr. Bennett). In the use of a car park, if a charge is made reasonably to meet the cost of providing hard standing for cars in which people travel to look at famous limestone crags, for example, that is plainly not a business purpose of the landowner who generously makes his premises open to the public for that purpose. If, however, the car park charges form part of a great leisure complex which is a substantial source of income to the landowner who makes money commercially out of the leisure opportunities that his premises afford, it falls into a completely different category. It is not possible, for reasons that I hope I shall illustrate shortly, to specify in black and white terms exactly what the circumstances will be in every case.
      If the amendment were accepted, section 1(3) of the Unfair Contract Terms Act 1977 would contain the following two expressions side by side — "business purposes" and "commercial activity". Section 1(3) reads:
      '(3) In the case of both contract and tort, sections 2 to 7 apply (except where the contrary is stated in section 6(4)) only to business liability, that is liability for breach of obligations or duties arising—

      (a) from things done or to be done by a person in the course of a business (whether his own business or another's); or

      (b) from the occupation of premises used for business purposes of the occupier;

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      and references to liability are to be read accordingly.'
      If we import into that subsection the concept of commercial activity, we shall give rise to more difficulties than it is the intention of the sponsors of the amendment to get rid of. I am not sure what is intended by any distinction, but when there are different phrases in one Act of Parliament the courts must assume that they have different meanings. I confess that I do not envy the judge who, if the amendment is accepted, would be put to the task of examining the difference between "business purposes", which is already in the Act, and "commercial activity". That is a difficult matter for a court to determine, especially when there is no guidance as to what distinction is intended. Nor would I envy the unsuccessful litigant who had taken the issue to the courts and had ultimately to pay the costs, perhaps as far up the chain as the House of Lords.
      I acknowledge that it is a matter of regret, as the right hon. and learned Gentleman said, that the Country Landowners Association and the National Farmers Union are not yet satisfied that the matter is beyond doubt. It is also regrettable that we cannot make matters black and white, as my hon. Friend the Member for Mid-Staffordshire would have preferred. However, that is not possible and one gets into much more difficulty if one tries than if one concentrates on a concept such as "business purposes" which has done service for the past six years, has given rise to no difficulty and has occasioned no known case of a matter being taken to the courts for interpretation. It is better to build on a known and tried concept than to introduce a new concept in the same section and expect the two to live side by side without giving the courts any idea of what distinction is intended.
      Therefore, I fear that I must ask the House to reject the amendment. It is not a case of not having the courage to accept an amendment at this late stage, as the hon. Member for St. Helens, South (Mr. Bermingham) said; it is a matter of considerable thought, as my noble Friend made clear in another place. He went back to the parliamentary draftsman and put the matter to him. He asked whether there were grounds for misgivings. At the end of his speech he said:
      "I say quite seriously to the three noble Lords who have spoken that I have gone into this matter with very great care, absolutely conscientiously, without any kind of preconception that I am always right, or anything like that. I have been advised that I am right, and I still think that I am." — [Official Report, House of Lords, 8 November 1983; Vol. 444, c. 707.]
      It would be nice if any of us could say that more often.
      I say with great respect to the advisers of the important institutions, to whose opinions we pay great attention, that it does no service to their members or to the public who seek access to land for educational or recreational purposes to continue to harp upon fears that have received very authoritative consideration in another place. If I felt that there was any real means by which this legislation could be made clearer, I would be happy to accept an amendment.
      For the reasons that I have given, perhaps at undue length, I am satisfied that the amendment would do more harm than good. That alone is the reason why I must advise the House to reject it.
      Mr. John Morris: The fact that the Lord Chancellor says three times, "I am right, I am right, I am right" does add much greater weight than had he said it only once. We are duly impressed.

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      The Solicitor-General is right to criticise the words "commercial activity". I have no special attachment to any form of words. I am not the father of these words; they come from the organisations concerned. I make no apologies on that score because I have tried two other forms of words, with the same object in mind as that of the Solicitor-General and the Lord Chancellor. I have tried with three different forms of words to achieve certainty, but at the end of the day the siren voices from the organisations concerned make me unhappy. It may be that they are wrong and the Solicitor-General is right to tell them, "Go forth and give courage to your members". On the other hand, they may be right. In due course the courts may punish those who rejected the advice of the associations and followed the advice of the Solicitor-General. We know not.
      Mindful of the fact that not only did the Lord Chancellor say "I am right" three times but the Solicitor-General said in Committee, "I am right, too", and has said it again tonight, I hope that the statement five times of "I am right" will mean that the object of giving certainty has been achieved. That is our common purpose. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Order for Third Reading read.
      Queen's and Prince of Wales's consent having been signified—
      10.43 pm
      The Solicitor-General: I beg to move, That the Bill be now read the Third time.
      During my remarks a few moments ago I think that I adequately explained the purpose of clause 2 of the Bill. However, some of what I said — about the Law Commission—is appropriate to clause 1 rather than clause 2. It shows the care with which the Lord Chancellor has taken into account the fears that have been expressed. It will reassure the House if I say that both on the detailed wording of the Bill — our debate a few moments ago centred on the terms used—and on its broad purpose, which is set out in clause 1, considerable care has been taken by the Law Commission and by my right hon. and learned Friend the Lord Chancellor.
      The first objective of the Bill derives from the Law Commission's report on liability for damage or injury to trespassers and related questions of occupiers' liability issued in 1976, of which it implements parts Ito IV. The second is to effect an amendment to the Unfair Contract Terms Act 1977—a piece of legislation which might at first be thought remote from the world of occupiers' liability but which had an unforeseen and undesired consequence in the restriction of access to countryside by landowners.
      I have sufficiently, as did the Committee on the Second Reading procedure, followed through the history of this legislation. It is enough to say that the recommendation of the Law Commission, endorsed by the report of the Royal Commission on Civil Liability and Compensation for Personal Injury — the Pearson commission — finds its form in clause 1. I dwelt a little upon that in the previous debate.
      We have discussed clause 2, and I shall not repeat my remarks. It is sought through clause 2 to amend part of the Unfair Contract Terms Act and thereby once again to underwrite the opening of the countryside to those seeking access for recreational or educational purposes. Clause 2
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      does not seek to relieve from liability those occupiers whose granting of access falls within their business premises; nor should it do so. Those who do so from a sense of public obligation, or from kindness—they are many — should be free to exclude liability by taking their circumstances outside the ambit of the 1977 Act's business liability. The Bill achieves that.
      Those are two modest but worthwhile objectives, and I urge the House to give the Bill a Third Reading in that spirit.
      10.47 pm
      Mr. John Morris: I endorse the latter remarks of the Solicitor-General that this is a modest and useful Bill. The House will be grateful for his careful explanation, even at this late hour, because our other proceedings were in Committee and the world at large should hear what the Bill intends. In Committee we canvassed some of our fears about clause 1. Unfortunately, I visualise that there may be some resort to litigation, although the Government are seeking, in accordance with the recommendations of two commissions, to codify the common law and the five different and somewhat divergent ways in which the Law Lords reached their conclusion.
      We debated clause 2 a moment ago. It is a matter of regret that the certainty and the helpfulness which the Government hoped would be instilled into this area of ensuring that people have access to the countryside, and that those who were generous enough to afford such access would not run undue risk in so doing, are not yet plain. My fears remain, but the heart of the Government is in the right place on this matter, if on no other, so I advise the House to give this modest but worthwhile Bill a Third Reading.
      10.49 pm
      Mr. Andrew F. Bennett: I support the Third Reading of the Bill, hoping that it will achieve the objective that everyone has claimed for it, which is to encourage and make easier access to recreational facilities in the countryside. Although the Bill has gone through both Houses without much controversy, I hope that if it is found not to work the Government will bring it back at an early stage to make alterations that will meet the real problems.
      I also hope that groups such as the Country Landowners Association and the National Farmers Union will he able to go to their insurers and get an insurance policy which is cheap, or which might even be included in the membership of the two organisations, to cover their members who carry out the provisions of the Bill in the spirit in which we have discussed the measure. If the lawyers do not come up with a solution, perhaps the insurers can draw up a policy to cover the matters about which we have been concerned and, because it is such a small risk, do so in a way and at a cost that will not discourage those who are opening up their land to access.
      With those points met, I hope that the legislation will work. Most important, I hope that providing access will not lead to accidents, whoever may or may not be liable for them.
      Question put and agreed to.
      Bill accordingly read the Third time and passed, without amendment.

    STATUTORY INSTRUMENTS, &c.

      LOCAL LOANS
      Motion made and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments, &c.)
      That the draft Local Loans (Increase of Limit) Order 1984, which was laid before this House on 26th January, be approved.—[Mr. Garel-Jones.]
      Question agreed to.

  Street Prostitution
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]
  10.51 pm
  Mr. Tom Cox: The Adjournment debate this evening is on a subject that I have often debated in the House. I have lost count, over the years that I have been an hon. Member, of the number of debates and questions in which I have been involved that have brought to the attention of Ministers this problem in my constituency. Indeed, as long ago as when Mr. Alexander Lyon was the Under-Secretary of State for the Home Department, he met a number of residents from my constituency to discuss with them the problems that they faced from street prostitution.
  Prostitution in part of my constituency has been a problem for many years. The experience that women of all ages, including school girls, face day in and day out from the individuals who come to the area seeking to pick up prostitutes are invariably degrading and disgusting. The remarks and the threats are faced all the time. Equally, the experiences of local residents when they express their views to both the women and the kerb crawlers who are seeking them are disgusting. There are threats to local people from the pimps and minders who can be clearly seen in the area. Windows have been broken. In one case of which I am aware, a car was driven at a person. We are in no doubt who does such things. Parents find contraceptives outside their homes or in the car parking spaces where young children often play, and that is just another example of the problem. The list of the incidents that I could give is endless.
  Locally, I have had many meetings with the police and residents over the years. We accept that the police know of the problem and have sought to help, but we also know that they have had, and still have, manpower problems. I give them credit for drafting more officers into the area. Moreover, the women then move out and and it seems as though the problem is partly solved. However, we are then told by the local police that there is not evidence of prostitution on the streets in the area and they cannot therefore keep as many officers in the area doing such work. So the problem continues. The problem is not only in my area, but in many other areas such as London, Nottingham, Manchester, Birmingham, Southampton, Norwich and Leicester.
  I have here a press cutting of 24 June last year, which highlights the problem in Luton. So, sadly, the problem exists in many parts of the country.
  Last October, the problem was tackled in a different way. Nottingham police, who had suffered from the problem for many years, acted under a law that goes back hundreds of years. They took action against the kerb-crawlers under the Justice of the Peace Act 1361. Following that action and the success in the courts, other police forces took similar action. I welcome that, because at long last something is being done to try to rid areas of the problem.
  In London, the police operated under a different Act—the Metropolitan Police Act 1839, giving the right to take action regarding insulting behaviour that is likely to lead to a breach of the peace. I welcome that action, but I am far from happy with it.

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  We are trying to deal with a modern problem—the kerb-crawler — with laws that go back hundreds of years. I understand that most of the people who have appeared in courts have pleaded guilty, but a time will come when someone will plead not guilty. The case could well go to appeal, possibly even to the High Court. What the outcome will be, only time can tell. I am in no doubt—and when I speak to senior police officers I find that they, too, are in no doubt—that this will ultimately happen. No one — neither the Home Secretary nor anyone in the Home Office—can be happy with the present position.
  I put it firmly to the Minister that it is an abnegation of responsibility on the part of a senior Government Department, in dealing with a major problem in many parts of the country, not to seek to introduce a more modern law to tackle this problem.I do not have the figures in the cities that I mentioned of the number of offences that have been taken to the courts under soliciting for prostitution. However, I have the figures for my area. They highlight how drastic the problem now is in my constituency. In 1981, there were 145 convictions for soliciting. In 1982, the number had risen to 313. In 1983, the number had risen to 802. I suggest that similar figures could be given for all the other areas where prostitution is a problem. There is a problem, and no one denies it. Nor, I am sure, will the Minister dispute it. Unfortunately, the problem is getting worse. When I am told by senior police officers in my area that women who operate in the area can earn up to £600 a week, I realise that it can be a very profitable way of life.
  In December 1982, we had the report of the Criminal Law Revision Committee on offences relating to prostitution. The report clearly stated that the public wanted action to try to stop the problem, which, as I have said, exists throughout the country. In paragraph 344, it says about the kerb-crawler:
  "this offence should be punishable with one month's imprisonment or a fine of £1,000 or both".
  In the past, I have been told by successive Ministers—in the last Adjournment debate that I had on this subject it was the present Home Secretary who replied—that we would have to wait for the report. I have also been told that there could be problems in taking cases to court for conviction. Like many of my constituents, I refuse to accept that. If the Home Office is prepared to allow police forces up and down the country to take such people to court under laws that go back hundreds of years and that were not introduced for such an offence, it is inconceivable that it should say that, despite what the Criminal Law Revision Committee has suggested, there will be problems, so it cannot consider that point very seriously. I beg the Minister not to give me that sort of reply tonight.
  From the figures that I have given, it is clear that the situation has become worse. After all, how would the Minister feel if, when he got home, his wife told him that she had been accosted by a kerb-crawler who had asked how much she wanted for him to have sex with her? I am sure that he would be revolted by the fact that his wife had been through that experience. However, it happens day after day and night after night to women in my constituency, irrespective of their age.
  Kerb-crawlers come into my constituency—and into all the areas that face this problem—from the early afternoon until the early hours of the morning. The local
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  residents who attempt to voice their concern and to get such people out of the area are abused and threatened, as I have said, by the very people who live off prostitution. Some time ago I wrote to the Home Secretary about this issue, and he told me that he was not in a position to interfere with the actions of the courts. That may be so. However, the Home Secretary and the Lord Chancellor have made their views known to judges—and I have welcomed it—who have tried rape cases. Local people have complained that such people have been dealt with appallingly leniently given the offences that they have committed.
  Fairly recently, someone was charged at the local South-Western magistrates' court with living off immoral earnings. That person pleaded guilty and was fined £100. I bet that frightened that guy! I bet he shuddered when he heard his sentence. Therefore, I ask the Minister to consider that point. The time has come to introduce legislation under which the police can act. The cost in police manpower in those areas where the police are now acting must be enormous.
  I have outlined the problem in my area. I see the hon. Member for Southampton, Itchen (Mr. Chope) in the Chamber, and I am sure that he, along with many other hon. Members, could echo my remarks. We do not want any more expressions of concern. We do not want anyone to tell us to be patient because the problem will go away in time. We know that it will not go away in time. Therefore, we look to the Home Office to introduce a meaningful law to rid those areas of a problem that they have to live with day in and day out.
  The Minister and I know the Wandsworth Borough News very well, because it circulates in the borough that we represent. A statement by a senior local police officer appears in that newspaper this week. Talking of a meeting with local residents about the problems of prostitution in the area, he said:
  "Until a law is passed in Parliament which specifically allows us to arrest kerb crawlers the problem will never be solved."
  There speaks a senior police officer with responsibility for dealing with the problem. He sums up what I believe to be true, as do the vast majority of my constituents who have to live with the problem day in and day out.
  We accept that there must be discussion of the proposals by the Criminal Law Revision Committee. We beg the Minister to give us hope that in the foreseeable future meaningful legislation will be introduced to allow the police to take the action that they wish to take and which will once and for all rid such areas of the problem with which we have had to live for so long.
  11.5 pm
  The Under-Secretary of State for the Home Department (Mr. David Mellor): I am grateful to the hon. Member for Tooting (Mr. Cox) for giving us the opportunity once again to consider this important matter. It is a particular pleasure to me to reply to the debate since the hon. Gentleman is the senior Member of Parliament for the London borough of Wandsworth and I am one of the two junior Members. For me this is a local issue as well as being of national importance. Genuinely, and not in arty sense piously, I say that representing a neighbouring constituency I have noted the brave and determined stand that the hon. Gentleman has taken on the issue. I hope that in my response I shall show how important I regard his comments.

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  In the fight that the hon. Gentleman has sustained for so long, he has been well supported by local councillors. I am glad to see in the Chamber two former members of that council who are now hon. Members of the House—my hon. Friends the Members for Glanford and Scunthorpe (Mr. Hickmet) and Southampton, Itchen (Mr. Chope) —not in the latter case merely because of an interest in Wandsworth but because he has similar problems in his constituency.
  The hon. Member for Tooting has the support of his constituents and I understand the distress that they feel about the issue. We are under no illusions about the nuisance caused by prostitutes soliciting in the streets, or the genuine distress experienced by respectable and law-abiding residents who live in the vicinity of red light areas. This is particularly so in Bedford Hill where large numbers of prostitutes congregate and, through their presence, encourage large numbers of equally undesirable people who kerb-crawl and become involved in other offensive behaviour in their quest for prostitutes.
  It is clear that for some time the Bedford Hill area of SW12 has been an established haunt for street prostitutes. There is ample evidence, I am sad to say, that in recent years the number of women engaged in this activity has greatly increased.
  The hon. Gentleman rightly quoted the prosecution figures which show the extent of soliciting in the area. In 1980, 116 women were charged with the offence and 369 were cautioned. By 1982 the figures had risen to 318 charges and 676 cautions. Last year the figures were 802 charges and 415 cautions. That is evidence of the increased prostitute activity in the area and of the welcome increase in police attention to the problem.
  The hon. Gentleman was right to say how we would feel if it were members of our families who were insulted by the offensive behaviour that this activity involves. I can well understand how the residents of Bedford Hill feel about it, and I know that the consequences for them are very unpleasant indeed. It is clear beyond peradventure that many innocent women have been subjected in error to offensive overtures by the influx of largely car-borne men seeking the services of prostitutes and that the streets are made unsightly by great quantities of litter left by the men and women, a number of them items that one would not want members of one's family to come across.
  I also understand that, over a period of time, this obviously leads in the minds of residents to a general lowering of the tone of the area and that that works to the detriment of the whole area and, indeed, can gravely damage property values and so on. Plainly, people are right to be particularly concerned about their children.
  It is with pleasure that I can report to the House the activities that the police and the community have taken over a protracted period and the success that has been achieved in dealing with this issue in recent months. Until early in 1982, the police in the Tooting area had attempted to contain the problem by cautioning and, if need be, arresting prostitutes whenever offences came to light in the course of normal patrol. Additionally, from time to time as information about offences came to light, they proceeded against those persons who acted in control of prostitutes or managed brothels.
  But in the latter part of 1982 and in early 1983, in response to the rising number of prostitutes and growing
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  public concern, police action was stepped up. Considerably more police resources were deployed in the area against vice generally and street prostitutes in particular. Foot patrols were increased and the number of arrests rose, as I have demonstrated.
  Unfortunately, however, neither the overall number of prostitutes nor the level of their activities changed, and this was obviously deeply disappointing to the police and the local community; indeed, frustrating for those who had made such great efforts to bring about an improvement. Residents formed ad hoc associations and spokesmen arranged public meetings to discuss the subject so that the local community could be mobilised against it. Street meetings were held and local residents patrolled the streets in small groups, airing their feelings and trying peacefully to dissuade prostitutes and their followers from frequenting the area.
  In the final months of 1983, the police introduced a new line of action aimed at deterring prospective clients and, in particular, kerb-crawlers. It is not without significance that it is a relatively recent phenomenon that attention has focused on those who come to seek the services of prostitutes, not merely on the prostitutes themselves and those who are involved in the business of operating and controlling prostitutes.
  Police patrols were intensified and a proportion of officers were deployed in plain clothes. The police sought to involve the community to an even greater extent in these activities; meetings were held with officials and so on, and it was accepted on all sides that there was need for a really concerted effort. A marked police patrol van was deployed daily in the area as a centre of operations, so that there was a contact point for the public and visible deterrent to offenders.
  The major weapon that the police are using to deter the kerb-crawler—one which they believe has been most effective—is publicity. Since the inception of this latest campaign, every possible use has been made of national and local press, radio and television publicity. Happily, the work of the police and the community has been given wide coverage. Names and addresses of convicted offenders have been published in newspapers local to the areas in which they reside, and similar information has been published in The Standard and national daily newspapers.
  It is, therefore, pleasant to be able to report to the House that the Commissioner of the Metropolitan police informs me now that the overall picture in Bedford Hill is, for the first time and after all this effort, beginning to give some cause for satisfaction to both police and public. This happy situation has prevailed for the past three or four weeks. The number of kerb-crawlers has been reduced from literally hundreds daily at the beginning of the campaign to only a handful on most occasions recently. Officers employed on the prevention of vice have reported that the level of activity has greatly reduced. Arrests of prostitutes continue to be made in significant numbers. Eighty were arrested in the first six weeks of the year, but that is a reflection of the heightened police activity. The ratio of arrests to the number of prostitutes frequenting the area is much higher than before. The number of prostitutes on the streets is now down to a low level. The Commissioner intends that police action should continue at the present level and in the manner that I have described for the foreseeable future. The effort that has been made, now that it has had such results, must be maintained and, indeed,

  677
  will be sustained. I am sure that the House will agree that credit must be given to the Metropolitan police, in association with the community and the hon. Gentleman, for the efforts that they have made.
  Rightly, the hon. Gentleman was not merely concerned with the problem in his own constituency. He cast his net wider to the national scene, and I, too, shall direct myself to the more general question of prostitution. Loitering and soliciting for the purposes of prostitution carry a fine for first offenders of £50 and for subsequent offenders of £200. By the action of the Home Secretary announced today, taking effect in May, the fines will be doubled. I hope that the courts will not hesitate to impose heavy fines where it is clear that a business is being operated and only a heavy financial penalty will do.
  It was the clear wish of the House of Commons, expressed in Committee when the 1982 Bill was passing through the House, that imprisonment should be removed as a penalty for soliciting for prostitution, and that was done. I am bound to say that the penalties for those who control prostitutes, or live off immoral earnings, are rightly very high. Seven years' imprisonment is the maximum for each of these offences. I hope that the courts will not hesitate to use the powers that Parliament has given them to deal severely with those who are running a business out of these girls and causing distress thereby.
  We must address ourselves to the prostitute and those who control her and the kerb-crawler, and it is to the kerb-crawler that I wish to devote the remainder of my remarks. We do not underestimate the nuisance and annoyance, and the fear, that are placed in the minds of those in areas such as Bedford Hill when droves of men descend in cars and start openly touting for the services of prostitutes, propositioning respectable women as well as those who are involved in the trade.
  We must balance the factors that would militate both for and against the creation of a new offence. There is a real difficulty in catching kerb-crawlers who are the clients of prostitutes and differentiating them from others who may be innocently pulling up their car to ask for directions or something of that sort. If they are hauled before the courts, let alone convicted, a terrible threat could be posed to their future careers. If there is to be a specific criminal offence, we shall need to ensure that it is carefully formulated. I am sure that I take the hon. Gentleman with me when I say that.
  I recognise that this issue must be examined with care and with a sense of impetus. It is true that there are many
  678
  other areas apart from Tooting which suffer from the problem. We have the 1361 Act and, to some extent, the Public Order Act 1936. These measures have been employed with great effect in Tooting, where there were 34 convictions against kerb-crawlers in the last three months of 1983, and in other parts of the country. However, the hon. Gentleman is right to question, as did the Criminal Law Revision Committee in its working paper, whether in the longer run this is the appropriate way of dealing with the problem.
  I do not need to remind the House that the law in this area is being considered by the Criminal Law Revision Committee. It produced a working paper at the end of 1982 which proposed no fewer than three offences on kerb-crawling. It was not its final report. It was a working paper designed to stimulate a public response. It proposed that it should be unlawful for a man to accost a woman from a motor car for sexual purposes so as to put her in fear, to accost her for sexual purposes so as to cause her annoyance, or to accost her for the purposes of prostitution.
  The committee will shortly be re-examining these proposals in the light of the comments that it has received. In deference to the hon. Gentleman, I wish to say clearly that I recognise the importance that is attached to receiving its concluded recommendations. I have therefore asked the committee, bearing in mind the widespread concern, to give us its views on this issue as soon as it possibly can. I thought it right to ask Lord Justice Lawton whether the committee would find it possible, because of the particular concern that attaches to kerb-crawling, to bring forward its report on kerb-crawling in advance of its more general report on prostitution. I am glad to say that he has responded to this request extremely positively, as one would expect, and as a result we may expect to see the committee's final recommendations on kerb-crawling by the autumn. When we have the recommendations we shall all be in a position to know how best we should proceed. I assure the hon. Gentleman that we shall want to consider the recommendations with great care. The concern that he has expressed has not fallen on deaf ears.
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-one 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 Hereford.

EH.101 Helicopter
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how far advanced are the plans for the new Anglo-Italian helicopter.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, my noble friend is referring to the EH.101 helicopter which is to be developed under an integrated commercial and military collaborative programme by Italy and the United Kingdom. Memoranda of Understanding were signed last month between the two ministries of defence and the two industry departments. It is hoped that the main development contract can be signed within the next fortnight.
Lord Gainford: My Lords, I thank my noble friend for that Answer. Has he any information about how much of the production work will be done in this country and therefore how much employment prospect is involved?
Lord Trefgarne: My Lords, I anticipate that the production work will be divided about half and half. At its peak the programme should involve employment amounting to about 10,000 jobs which will be either preserved or created.
Lord Beswick: My Lords, is the noble Lord aware that I am happy to congratulate the Government on their decision in this matter? May I also join in the hope and expectation that there will be a flourishing civil business now that the decision has been taken on this joint European project on the military version? Finally, may I ask the noble Lord whether he can assure us, now that this sensible decision has been taken on this joint European project, that we can look forward confidently to a similar sensible and positive decision over the A.320?
Lord Trefgarne: My Lords, the noble Lord will be aware of the Government's general approach to collaborative projects. All of them of course involve an investment of one kind or another from the collaborative partners. That is one of the matters that have to be considered in regard to the other programme to which the noble Lord referred.
Lord Cledwyn of Penrhos: My Lords, while supporting the welcome which has been extended to this project, may I ask whether the noble Lord can indicate to the House where the jobs will be generated? A total
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of 10,000 jobs must be very welcome indeed at a time of unacceptably high unemployment. Can the noble Lord indicate whether these jobs will be found in areas of high unemployment?
Lord Trefgarne: My Lords, the principal contractors are likely to be Westland, the British helicopter company, and Augusta, the Italian helicopter company; so I imagine that the principal creation of jobs will be around and within those companies.
Lord Mayhew: My Lords, can the noble Lord say what is the size of the order, and what other orders are in prospect?
Lord Trefgarne: My Lords, this has yet to be finally decided. The noble Lord will appreciate that deliveries of this newly developed helicopter will not take place for some years, but the programme will be a very substantial one.
Lord Cledwyn of Penrhos: My Lords, if I may intervene again, in view of the noble Lord's last answer, can he say whether the 10,000 jobs will be generated in this country alone or whether they will be shared between this country and Italy?
Lord Trefgarne: My Lords, they will be shared between this country and Italy.
Lord Aldington: My Lords, would it be in order for me, while declaring an interest, to congratulate the Government on this decision? May I ask my noble friend whether he would not agree, in answer to the question about the number of sales, that the vast majority of the expected sales will be in the civil and utility field rather than in the naval field, which also will be very important?
Lord Trefgarne: My Lords, speaking as a defence Minister, I naturally attach importance to both markets to which my noble friend referred. Of course, my noble friend is quite right.
Lord Diamond: My Lords, can the noble Lord say whether the memorandum of agreement to which he referred is to be considered as a treaty, with all that flows from that, or as something of a lower status than that?
Lord Trefgarne: My Lords, I have to confess that I am not quite clear about the answer that I should give to the noble Lord's question. Perhaps I may ascertain the answer and write to him.
Viscount Trenchard: My Lords, would my noble friend go a little further than he did in answer to Lord Aldington's supplementary question, and confirm that the basic helicopter is one of the first instances of defence equipment which will be suitable for a very large civilian market? Also, does he agree that this represents an agreement (of which there have not been too many in the past) between the Ministry of Defence, the Department of Industry and industry itself to combine a civilian market and a defence market and this is to be welcomed in every way?
Lord Trefgarne: Yes, my Lords, my noble friend is quite right. What usually happens is that the military variant is developed first and then the civil variant follows later. In this case both of the variants are being developed side by side.

Bishop Muzorewa: Detention
2.42 p.m.
Lord Paget of Northampton: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware that Bishop Muzorewa has now been held in prison without charge for four months, and that it is alleged that at least three months of this detention have been contrary to the laws of Zimbabwe; and whether as fellow members of the Commonwealth they will make representations.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, Bishop Muzorewa's appeal has now been heard by the review tribunal, and the Zimbabwe Government have said that they will abide by its decision. The Zimbabwean authorities are aware of public concern in this country.
Lord Paget of Northampton: My Lords, I thank the noble Baroness for a welcome answer.
Lord Cledwyn of Penrhos: My Lords, can the noble Baroness indicate when the result of the review tribunal is expected? Would she not agree that keeping anyone in custody for this length of time is contrary to normal practice and is to be deprecated? Further, would the noble Baroness not agree that it would certainly increase confidence in the Zimbabwe Government if Bishop Muzorewa was either charged and tried or set free?
Baroness Young: My Lords, the noble Lord asked how long it will be before a decision is made. Of course, that is not a matter for us. The tribunal reports direct to the Zimbabwe Government; and, as I indicated in my original Answer to the noble Lord, Lord Paget of Northampton, the Zimbabwean authorities are aware of the public concern in this country.
Lord Broxbourne: My Lords, may I join in the welcome to the latest development in this unhappy saga? Do not the events leading up to it reinforce the plea which I made in last Wednesday's debate in this House for a British Government initiative to our Commonwealth partners to examine the possibility of strengthening the structure of the Commonwealth so as to make more effective the support for human rights and the maintenance of the rule of law? Will my noble friend the Minister urge this course upon her Government colleagues?
Baroness Young: My Lords, I listened with great interest to what my noble friend said in the debate last Wednesday, and of course it has been seen by my right
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honourable friend the Secretary of State. In the present circumstances, it would be wiser to say nothing more than I have already indicated in the House, in the interests of our relationship with Zimbabwe, and the interests of Bishop Muzorewa in particular.
Lord Wigoder: My Lords, has the hearing before the review tribunal finished; and, if so, when?
Baroness Young: My Lords, as I indicated in my Answer to the Question, the appeal has been heard by the review tribunal and we do not know when the answer will be given; but it is a matter that is reported to the Zimbabwe Government.
Lord Wigoder: My Lords, when did the hearing finish?
Baroness Young: My Lords, I do not have the actual date when it finished. We do know that it has been heard.
Lord Brockway: My Lords, would the noble Baroness consider the possibility of the Government taking the initiative in order to get an international convention for human rights, in view of the fact that a United Nations survey shows that 70 countries are denying human rights—unfortunately, many of them our western allies?
Baroness Young: My Lords, I think that the noble Lord's supplementary question is very far wide of the Question on the Order Paper.
Viscount St. Davids: My Lords, is it not true that any country is entitled to make its own laws? Is it not true that it is usually considered by countries that their own laws are good laws? When a country breaks its own laws, is it not pointing the finger of scorn at itself?
Baroness Young: My Lords, I can confirm that what the Zimbabwe Government are doing is not unconstitutional and is not illegal.

Acid Rain
2.47 p.m.
Lord Dean of Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what are the latest reports concerning the problem of acid rain, and whether any plans are in hand to deal with the situation.
Lord Skelmersdale: My Lords, the most recently published report is that of the Review Group on Acid Deposition in the United Kingdom, copies of which have been placed in the Library. A number of other scientific reports are expected in the next few months, including that of the Royal Society's discussion meeting last autumn on the ecological effects of deposited sulphur and nitrogen compounds. The Government plan to expand further their research on acid deposition.
Lord Dean of Beswick: My Lords, I am grateful to the noble Minister for that reply, but may I press upon him as a matter of urgency that when the Government do have some proposals they put them into effect as quickly as possible, bearing in mind the widespread ravages that acid rain is causing not only to this country but to some of our friendly neighbours in Europe?
Lord Skelmersdale: My Lords, to use a rather unparliamentary expression, I can confirm that the Government will not hang about on this matter. However, I should say that the scientific links between sulphur dioxide and nitrous oxide have not yet been proved to be the cause of the devastating effects that we are seeing in some places in Europe on the growth of trees and the absence of fish in some inland waters.
The Earl of Lauderdale: My Lords, would my noble friend not agree that this is a very complex matter where surprising contradictions arise, such as neighbouring lochs being unequally subject to acidity and one island in the Indian Ocean being worse off than anywhere else in the world?
Lord Skelmersdale: Yes, my Lords, I absolutely agree with my noble friend, which bears out what I have just said about scientific evidence so far being unclear.
Baroness Nicol: My Lords, can the Minister confirm that two of the very clear recommendations in the report to which he referred are being taken seriously? One is the need for more research and the other is the need for long-term funding in order to make more and better research available. Can he confirm that that has been discussed and that there is clear sympathy from the Government towards this view?
Lord Skelmersdale: Yes, my Lords, there is certainly sympathy. This year we spent £1 million on research into the effects and linkage of acid deposition. I confirm that next year it will be considerably more, but I do not yet have the figures available.
Lord Elwyn-Jones: My Lords, in the meantime, could everything possible be done to discourage factories and other premises from expelling sulphur into the air? There is no need for a great deal of research to establish the undesirability of such discharges.
Lord Skelmersdale: My Lords, the noble and learned Lord will know that since 1972 there has been a 30 per cent. reduction in the amount of sulphur dioxide put into the atmosphere. Regrettably, this has not resulted in a reduction in the effects of so-called acid rain. It is unclear exactly what is the cause. Therefore, it would be premature to fix such things as scrubbers to our big factory chimneys, which would be very expensive and which, as far as we can see at the moment, would not necessarily have the desired effect.
Lord Taylor of Gryfe: My Lords, does the noble Lord the Minister recall that about a year ago the same
456
Question was put down on the Order Paper in my name, and that at that time we were given the same assurances as we have been given today? Will he take into account the experience of Scandinavia and Germany, which have conducted similar research into the subject? Indeed, the Scandinavians blame the British for the pollution of the Scandinavian woodlands. Will the noble Lord expedite the research into this and take account of the fact that certain European countries have taken positive steps to limit the emissions from power stations of sulphur dioxide?
Lord Skelmersdale: Yes, my Lords, I am well aware that the Scandinavian countries have undertaken research, but they are no nearer a solution than we are in this country. I have already told the House that we plan an increase in funding for research and that we take this matter extremely seriously.
Lady Saltoun: My Lords, are the Government aware that some research being carried on in this country at the moment not only does not prove that there is a linkage between acid rain and the kind of damage imputed to it but suggests strongly that the causes of the damage are quite different?
Lord Skelmersdale: Yes, my Lords; I have read papers from various sources giving a different series of views. This is exactly the problem.
Lord Leatherland: My Lords, can the Minister tell me whether, as this acid rain falls upon the reservoirs from which we get our drinking water, there is danger in our continuing to drink water?
Lord Skelmersdale: Absolutely none, my Lords.
Lord Dean of Beswick: My Lords, the noble Lord the Minister will be aware that there have been responsible programmes on television indicating the appalling damage that has been done by acid rain to vast areas of beauty, not only in this country but on the continent as well. It is undeniable that we as a nation are the biggest contributor to this. When the Government decide on some action, will the noble Lord press them to act swiftly because of the damage that is being inflicted?
Lord Skelmersdale: My Lords, I can only repeat the answer that I gave the noble Lord in response to his first supplementary question.
The Earl of Lauderdale: My Lords, is my noble friend aware that the Central Electricity Generating Board, in its laboratories in Surrey, is eager to meet any Members of this House or of the other place to tell them what it is doing about exploring the sources of acid rain, and that the results so far are very confusing?
Lord Skelmersdale: No, my Lords, I was not aware of that; and I am very grateful to my noble friend for the information.

Demonstration: Central London Traffic Disruption
2.53 p.m.
The Earl of Halsbury: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why a politically-orientated demonstration was allowed to block motorised access to the Palace of Westminster during mid-morning to early afternoon of Tuesday 24th January; what warning, if any, was issued to the public that traffic in central London would be immobilised during this period; and when and by what means that warning was issued.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, the Commissioner of Police of the Metropolis has told my right honourable and learned friend the Home Secretary that on 24th January a march of about 15,000 people, organised by the "Save Local Government Campaign", went from Hyde Park to Jubilee Gardens. The march began at 12.15 pm and took some three hours to complete its route. There was some traffic disruption, which the police sought to minimise by signposting traffic diversions and by closing and opening roads as the march passed. All officers employed on traffic duty were instructed to assist the passage of Members of Parliament. The march did not contravene the directions given by the commissioner to his officers, in pursuance of the sessional orders of your Lordships' House and of another place, to facilitate the passage of Members to and from both Houses. The police placed signs giving advance warning of the likely traffic difficulties to motorists at 44 strategic points in central London on 16th January. In addition, local radio stations broadcast the information in motoring bulletins in the evening of 23rd January and on 24th January.
The Earl of Halsbury: My Lords, in thanking the noble Lord for his Answer to my Question, may I ask him this? Would not my Question and his Answer have been more topical, albeit below the level of urgency of a Private Notice Question, if the Question list had not been congested for the month ahead by those noble Lords who, no longer being newcomers to this House, and therefore immune from opposition, have abused Question Time by making it a platform for their private obsesssions, in my view, habitually and repetitiously?
Lord Elton: My Lords, I share my noble friend's concern with the conventions of this House. Therefore, I have to reply to him that, if he has a question about Questions, that is another question about which he ought to put down a Question.
Viscount St. Davids: My Lords, will the noble Lord reassure my noble friend that if he carries his parliamentary pass in his spectacle case, as I do, and wishes to approach this House at one of these difficult moments, if he waves the pass out of the window of his car he will be let through, as I was?
Lord Elton: My Lords, I imagine that it all depends on whether at the time you wave the pass you are at the front or the back of the queue.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that on the date in question the Mall, Constitution Hill and Marlborough Gate were all closed, in order presumably to assist this essay in political pedestrianism? Is he also aware of the fact that unless, as he has indicated, you were at the front of the queue, you could wave as many bits of paper about as you wanted and it would have no effect? In those circumstances was there not in fact a failure by the commissioner to carry out the sessional orders which are explicit that access to this Palace must be permitted?
Lord Elton: My Lords, under the sessional orders of both Houses, the commissioner is required to facilitate the passage of Members to and from Parliament during the Sittings. The commissioner in turn directs his officers to disperse all assemblies or processions of persons causing or likely to cause disruption or disorder on any Sitting day within a specified area around Parliament. The area is bounded by a long list of streets with which I shall not trouble your Lordships by reading them out, but in effect what the route of the march did was to go round the edge of that area. Had the area been enlarged, as I think my noble friend would have wished it to be, I suspect the result would have been merely to increase the area of congestion within its limits. There is a difficulty here, but I think that it is right that citizens should have the ability to voice their opposition to Government, which is—
Noble Lords: Hear, hear!
Lord Elton: Those supporting noises would have come perhaps from another place had I been sitting in another place when I voiced that sentiment.
Lord Mishcon: My Lords, would the noble Lord the Minister convey to the Metropolitan Police congratulations for all the care that they took with notices in order to give warning of this procession? Can the noble Lord, Lord Boyd-Carpenter, be thanked by this House for advertising the width and strength of the feeling that must have been behind the procession which filled so many parts of London on that day?
Noble Lords: Hear, hear!
Lord Elton: My Lords, I did in fact witness the efficiency with which the police dealt with this event. I am glad to endorse what the noble Lord says. Judging by the noises that followed the resumption by the noble Lord, Lord Mishcon, of his seat, the House wishes to thank my noble friend Lord Boyd-Carpenter.
Lord Boyd-Carpenter: My Lords, while most gratefully acknowledging the thanks of my noble friend and the noble Lord, Lord Mishcon, may I ask whether it is not also possible to infer that if 15,000 people from local government offices could leave their desks without leave during the day without any apparent reduction in the efficiency of local

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government, it would suggest that local government is grossly overstaffed?
Lord Monson: My Lords, would the Minister not agree that if the average person's time is valued at a modest £5 an hour, and if 100,000 people were delayed for up to an hour and a half (which may be an underestimate), the cost to the general public of this demonstration is in the order of £¾ million in lost time alone, to say nothing of the cost of air pollution from exhaust fumes and of petrol wasted by engines ticking over?
Lord Elton: My Lords, there is no doubt that it was a very annoying occasion for a lot of people, but I should not wish to hearten those who participated by suggesting that it was any more annoying than it really was.
Lord Mishcon: My Lords, I intervene, I hope for the very last time, to ask the House to note that, while an estimate has been given of the cost of the procession, the Government unfortunately have been unable to put forward any estimate at all of the cost that is supposed to be saved by this abandonment of local government.
Lord Elton: My Lords, the noble Lord tempts me very sorely to depart from the Order Paper and debate the merits of the measure, but I shall resist the temptation.

Business
Lord Denham: My Lords, it may be for the convenience of your Lorships to know that the Committee stage of the Telecommunications Bill will be adjourned for dinner at approximatley 7 p.m. for approximately three-quarters of an hour. During that adjournment the Report stage of the Town and Country Planning Bill, the Third Reading of the Inshore Fishing (Scotland) Bill and the consideration on Report of the Orkney Islands Council Order Confirmation Bill will be taken.

Kingston upon Hull Bill [H.L.]
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, that those provisions in the Bill against which no petition has been presented, or if presented has been withdrawn in whole or in part, or which become unopposed by reason of any of the provisions of Standing Order 113, be committed to a Select Committee and that the quorum of the Select Committee be two.—(Lord Aberdare.)
On Question, Motion agreed to.

Telecommunications Bill
3.1 p.m.
The Chancellor of the Duchy of Lancaster (Lord Cockfield): My Lords, I beg to move that the House do once again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Cockfield.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE LORD ABERDARE in the Chair.]
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 62:
After Clause 4, insert the following new clause:
("Telecommunications Council.
.—(1) The Secretary of State shall appoint a Council known as the Telecommunications Council (in this Act referred to as "the Council").
(2) The Director shall refer to the Council for decision in any matters in which disputes have arisen or appear likely to arise relating to the administration and performance of the functions assigned or transferred to him under this Act.
(3) In addition to the Director, who shall he the Chairman of the Council, the Council shall consist of not more than six persons of which two shall be members of Trade Unions recognised as closely associated with the telecommunications industry.
(4) The appointment of a person to the Council shall be for a term not exceeding four years.
(5) In relation to any matter which is referred to the Council, the Council shall consider whether any licence or agreement concerning any United Kingdom consumer or United Kingdom operator or foreign user or associations of such consumers, operators or users may effect the prevention, restriction or distortion of competition between United Kingdom operators in the United Kingdom or in markets outside the United Kingdom.").
The noble Lord said: Your Lordships' Committee will recall that an earlier amendment which was introduced by the noble Lord, Lord Lloyd of Kilgerran, sought to establish a council or an authority which would have the responsibility of appointing the Director General of Telecommunications. The debate went very wide, and ultimately the Committee rejected the amendment.
The amendment now before the Committee seeks to do something a little different. It seeks to create a council, within the terms that are set out in detail in the amendment itself and upon which I shall not elaborate, which shall be appointed by the Secretary of State himself. The council's main purpose will be to resolve disputes between licensed telecommunications operators and the director of Oftel. If the machinery were established, disputes referred to the council would be settled openly and in an accountable way. As I say, that is the main purpose.
From lengthy discussion of earlier clauses of the Bill it became quite clear that an enormous responsibility will rest upon the director himself. The very length of the debates on the individual duties and guidelines to be laid down for the director, in particular under Clause 3 of the Bill, made it quite clear that the responsibility will be a very onerous one for him to discharge alone. Therefore, the amendment seeks to establish other functions for the council. First, the proposed council would be a body with which the director himself could discuss matters of any kind of dubiety; and if we go through all the clauses of and

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schedules to the Bill, it must I think be generally conceded that there are quite a number of grey areas. At the same time the council would provide a valuable forum in which those within the industry and those affected by it could discuss recent developments in the telecommunications field. In this respect the council could take over from the rather ad hoc Department of Trade and Industry consultative committee on telecommunications a number of the functions that it has performed.
The council would also be an ideal organisation to co-ordinate the activities of the advisory bodies that are to be set up under Clause 52(2) of the Bill. So in this respect the council itself, which it is to be hoped would be widely representative, would absorb some of the activities of the Post Office Users' National Council, which, as the Committee knows, under Clause 51(4) it is proposed to abolish.
Bearing in mind the whole nature of this public utility—a public monopoly that is in effect to become a private monopoly—I should have thought that there is an overwhelming case for the appointment of a council of this kind. At present the Secretary of State is not an entirely uncontroversial person. He has many decided views on the future of most matters with which he comes into contact. I consider that it would not be wise for there to be nothing in between the Secretary of State and the director. There ought to be a body that can provide some degree of balance and possibly on occasions give reassurance to the director of Oftel himself.
I do not propose to enlarge on this matter very much further because I believe that the advantages of such a body are self-evident. In their way the Government can, if they wish, exert their power and reject the amendment, preferring matters to remain firmly in the hands of the Secretary of State because they cannot brook anything which approaches a body of the type of, say, the Independent Broadcasting Authority, and cannot brook any interference with whatever instructions are passed on by the Secretary of State to the director.
I believe that, during the next few years, resolving the lobby pressures of the various interests involved (whose influence has not been wholly absent from some of the amendments that have been proposed and some of the arguments that have been preferred) will possibly take up a good deal of the director general's time. It would I think be reassuring for the public at large, as well as in the interests of good, ordinary administration within a democracy, that that should occur. Government by democracy is very often defined as government by discussion, and indeed that it ought to be. There ought to be the widest possible ventilation of the differences that arise from time to time and of the injustices or unfairness that are alleged to be committed by one side against another, and I cannot help but feel that this very moderate amendment is worthy of the general support of your Lordships' Committee. I beg to move.
Lord Lloyd of Kilgerran: I strongly recommend this amendment to the committee. The creation of a consultative body of this kind would protect—I
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emphasise this—Oftel's impartiality and credibility. There is a second minor but personal reason why I recommend and support the amendment. The noble Lord, Lord Bruce of Donington, has phrased the amendment in exactly the same words that I used in an amendment that I put down to the 1983 Telecommunications Bill. That ran very well. I hope that this amendment also runs very well in the Committee today. This kind of council would surely be helpful as a watch dog. In fulfilling that role, it would surely increase the confidence of public operators and potential foreign investors who will be affected by the decisions of the director. As he would be the chairman of the proposed council, his standing and status would be unaffected.
The director has a tremendously difficult task. He has to deal with complicated procedures as well as fundamental questions of policy. A council of this kind to which he could refer would surely be of some help. In most amendments, and indeed in any matters, the sting is usually in the tail. I should like to draw the attention of the Committee to the fifth part of the amendment. It is similar to an earlier amendment that I moved for the purpose, as I thought, of helping the Government to make clear their policy in regard to competition, particularly as it affects other countries. I do not know whether it is known to the Government but it is known to me informally that a number of foreign companies and institutions are following the debate in the House for a variety of reasons to see what is the actual policy of the Government in regard to competition.
It would therefore be helpful if the Government were to include some general words somewhere in the Bill—I think that this amendment would be most appropriate—to say that they are not taking actions that are deliberately intended to infringe, say, the United States anti-trust laws or the EC competition laws under Articles 85 and 86 of the Rome Treaty. When I raised this matter earlier in Committee on another amendment, the noble Lord, Lord Glenarthur, was good enough to say, in replying to the words that the noble Lord, Lord Bruce of Donington, has included in subsection (5) of this amendment, namely, that the action of British Telecom, when it is privatised, should not distort competition or prevent competition to this wide extent:
"Therefore, while I appreciate the noble Lord's concern, I can assure him that the Government are doing a great deal both to introduce more competition and to take steps under the Bill, and under existing competition legislation, to ensure that there is fair competition in the telecommunications market. Clearly the Secretary of State and the director would note the effect on other countries of the market and competition generally". [Official Report, 16/2/84: cols. 358–359.]
I should therefore like to ask whether the Government can be more explicit as to the steps that they are taking to introduce under this Bill and under existing competition legislation matters to ensure that there is fair competition, particularly abroad. Your Lordships will know that when it comes to litigation in this country on the interpretation of an Act of Parliament, it is not appropriate to cite Hansard in order to understand the kind of argument that may or may not have affected the Government. But, when it comes to foreign territories, Hansard will be widely examined and possibly widely quoted. My purpose

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therefore in strongly supporting the amendment, particularly the last part of it, is to provide an opportunity for the Government to give some clearer view as to the width of competition, particularly in the export trade.
3.15 p.m.
Lord Taylor of Gryfe: The Committee will recall that the first amendment to this Bill some days ago was one proposed by the noble Lord, Lord Lloyd of Kilgerran, suggesting that an authority be set up to perform some of the functions outlined in the proposals before us today to set up a council. That amendment was defeated by four votes. It contained certain proposals that Members of the Committee may have found difficult to support. One proposal was that the new authority would appoint the chairman of Oftel. It was a proposal about which I had some doubts myself. In the amendment now proposed, your Lordships will see that there is a different relationship between the council suggested by the noble Lord. Lord Bruce of Donington, and the proposal of the noble Lord, Lord Lloyd of Kilgerran, that was so narrowly defeated. In this case, there would be a perfect liaison between the chairman of Oftel and the new body since he would be the chairman of the council.
I should like to say from these Benches that amendments proposed to the Bill are not designed to frustrate or impede the new organisation in discharging its responsibilities. We argued on Second Reading that this is a bad and unnecessary Bill. We still believe that to be true. However, since the principle is approved, it is not our intention to frustrate or impede. The amendment now being discussed is not designed to make life difficult for the new board of BT. It is designed to help the new board and to help the smooth operation of these proposals.
First, the suggestion is that there should be two trade unionists on the council. In the debates last week, great anxieties were expressed on the part of trade unionists with regard to the future operation of British Telecom. I believe that the presence of two trade unionists on the council would help the whole industrial relations picture of the new organisation. It is not an unusual suggestion. The involvement of employees in consultative bodies in industry is fairly well accepted in modern and progressive industrial organisations. We are therefore suggesting that there should be two trade unionists.
When you read the clauses it is clearly a complex Bill. On top of that, there are 44 separate clauses in the licence itself governing the operations of this business. Here you have a very complex organisation responsible for a service that enters the homes of millions of people in this country. Yet that important economic and social responsibility is discharged by a very cosy arrangement between the Secretary of State and the chairman of BT.
Those members of the public who are getting this service want to feel that there is some body which is responsible. On the last occasion I quoted the example—which appealed to the noble Baroness, Lady Macleod of Borve—of the experience of the IBA. That is another service that enters the homes of millions of people, just like the telephone service. But
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the people who enjoy the services of independent television feel that there is somebody that keeps an eye on whether the conditions of the licence and the responsibility assumed by the television companies are fully and adequately discharged.
I suggest that the telephone is no less important to the consumers, and that the council would add to the credibility of the organisation. After all, it is a new organisation. People have been accustomed to the Post Office, as such, for their telephone services. This is a new organisation and it would add to its credibility and acceptability if there was some body of this kind rather than some remote civil servant or a Minister a long way away. If there were a group of people, in which trade unionists and other people were represented, to help to air the difficulties and to consult as regards the application of a very complex business that affects millions of people, it would add to its credibility and acceptability. For that reason, we very much support the amendment and hope that the Government will find it acceptable.
Lord Morris: Despite the fact that I found the advocacy of the noble Lord. Lord Lloyd of Kilgerran, positively seductive, this amendment, if it becomes a law, would cause a number of problems. It would, among other things, create yet another tier of Government in the planning and administration of the telecommunications future of this country. The noble Lord, Lord Lloyd, argued by way of analogy that the council would act as a type of watchdog. One of the problems with watchdogs of course is that they take a lot of kennelling and a lot of feeding, and that again would create a considerable amount of expense.
Indeed, the noble Lord, Lord Lloyd, reiterated the vitally important fact that the role of the director general will be an extremely difficult one. The noble Lord referred to the director general's task as being a terribly difficult task. I believe that this amendment would make his task even more difficult. In addition to that, the provisions of Clauses 27 and 52 give the director general the powers to seek whatever advice and assistance he will need—and he will undoubtedly need it—to do his job in an effective way. To impose this amendment upon the Secretary of State will make life more difficult rather than easier in the future.
Lord Ezra: I should like to say in answer to the points just raised by the noble Lord, Lord Morris, that we are here talking not about a tier of Government or a tier of an executive nature; but about a regulatory body. If this regulatory body is to have the credibility which I believe will be very necessary in this major change in the running of a big organisation like the telecommunications industry, then it must be seen to be credible. One of the weaknesses in the organisation of this regulatory body is that so much is concentrated in one man—everything centres on the director. If there were a council of the sort so ably recommended by the noble Lord, Lord Bruce of Donington, I cannot personally see how it would do otherwise than strengthen the nature of this body.
We are aiming here to ensure that we shall continue to have—as we have had in the past—an effective service from the telecommunications industry of this country. It has hitherto been a public corporation and

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any complaints of individuals or of organisations have been channelled through the public system. It is now moving into the private system; but it will retain its existing size with a very limited measure of competition—at any rate in the initial years. We must be convinced not only in this Committee but in the country that the regulatory system will be an effective one. I believe that it could be very strongly reinforced by the council which has been recommended.
Lord Shaughnessy: With some misgivings about the specifics of the amendment proposed by the noble Lord. Lord Lloyd of Kilgerran, I think that the intention of the proposal to establish a council would have two beneficial results. One of the problems that the director general of Oftel is bound to encounter is that he will be so involved in administrative and monitoring duties that he will not be accessible by the public—and by that I mean the consumer, the subscriber or the supplier to British Telecom or any other company operating where complaints can be brought forward. Therefore, a mechanism such as the council proposed in this amendment would provide that access and be a support to the director general in dealing with the mass of administrative and consultative problems that will inevitably be brought before him.
Lord Fraser of Kilmorack: I had no intention of intervening. However, the word "watchdog" brought me to my feet because every time I hear the word "watchdog" I feel the same as I do in economic debates when people say, "There is light at the end of the tunnel". Although I would be the first to admit that there have been some notable and good exceptions to the rule, in my experience when the word "watchdog" is applied to committees, councils and other bodies of that kind, they have usually either been asleep on the job or biting the hand that fed them. One way and another I do not think that this is quite the right answer. There may he a need for something, but I would not support the amendment.
3.28 p.m.
Lord Cockfield: I am in some difficulty in dealing with the arguments that have been advanced in favour of this amendment because the noble Lord, Lord Bruce of Donington, went to great lengths to explain that his amendment was different from Amendment No. 1 which had been moved by the noble Lord, Lord Lloyd of Kilgerran, and which was rejected by your Lordships last week. But the noble Lord, Lord Lloyd of Kilgerran, went to great lengths to explain that the amendment of the noble Lord, Lord Bruce of Donington, was precisely the same as the one that he himself had moved.
Lord Lloyd of Kilgerran: Will the noble Lord the Minister allow me to intervene?
Lord Cockfield: Yes, of course.
Lord Lloyd of Kilgerran: The noble Lord the Minister has a complete misunderstanding of this situation—as he has, if I may say so, of many others. The amendment to which this is identical was the one
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that I moved in the 1983 Telecommunications Bill. I then moved in this Bill—in fact, I batted first—another quite different amendment. So the noble Lord the Minister is wrong in referring to the fact that the amendment moved by the noble Lord, Lord Bruce of Donington, is the same as the amendment that I moved in this Bill.
Lord Cockfield: In substance the two amendments are the same. They endeavour to set up a council or a body above the director general to whom the director general stands in some sort of relationship—let me put it like that—and the arguments for or against the creation of a body of that nature are very much the same in both instances. There are differences in the detail of the two proposals, but so far as the substance of the two proposals is concerned, it is essentially the same. In fact, the drafting of subsection (5) of the proposed new clause of the noble Lord, Lord Bruce, is almost identical to that of Amendment No. 33, which was moved by the noble Lord, Lord Lloyd of Kilgerran. Let me put it like this. There is, therefore, a degree of similarity between the two. I was making my point, not as a controversial one—I do not know why both noble Lords are so sensitive about the parentage of their amendments—
Lord Bruce of Donington: We are not sensitive at all.
Lord Cockfield: The noble Lord supports me in his interruption. I was merely drawing attention to what I thought was a fairly obvious point, that both amendments were intended to cover much the same ground. With that restatement, and not wishing in any way to drive a wedge between the noble Lord, Lord Lloyd of Kilgerran, and the noble Lord, Lord Bruce of Donington, perhaps we might agree that both amendments were designed to set up a new body which would stand in a position of adviser, assistant or helper to the director general.
The first point of substance that I wish to make is as follows. The noble Lord, Lord Bruce of Donington, said that it was the Government's policy that matters should remain firmly in the hands of the Secretary of State. That is not the basis on which the Bill is constructed; in fact, the contrary is true: that the director general is put in as an independent person and most of the powers are vested in him. He is not answerable for his decisions to the Secretary of State. Therefore, from that point of view the argument that what one is doing is protecting the director general from the Secretary of State is not in any sense a valid argument.
The basis on which the regulatory system has been constructed is that in Clause 3 and elsewhere—for example, in Clause 7—the Bill sets out very clearly what are the duties which bind the director general in the performance of his functions. If the director general fails to carry out his duties, he can be challenged in the courts. Indeed, one of the reasons why the Bill specifies matters in detail instead of conferring general and ill-defined powers is to ensure that the director cannot act arbitrarily. It would, of course, be quite exceptional for anyone to challenge the director in the courts, but the fact that he can be so challenged is a very effective sanction and, if I may say

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so, a more effective sanction than the appointment of a council which is given powers to consider disputes but no power to do anything about them.
There are other provisions of the Bill which are relevant to the present discussion. Thus the Monopolies and Mergers Commission will deal with disputes as to whether or not a licence should be amended, and the advisory bodies to be established under Clause 52 of the Bill will help and advise the director, particularly in relation to disputes between British Telecom and consumers.
Perhaps I may now turn to the detail of the proposed new clause. One of the criticisms of the telcommunications authority—that is, the body to which Amendment No. 1 related—was that the amendment gave the authority no guidance as to how it was to consider disputes referred to it. In the case of the council proposed by the present new clause, it is given guidance in subsection (5) of the clause, but subsection (5) relates only to the promotion of competition. This is obviously important but, as your Lordships will appreciate from our discussions on Clause 3, there are other factors to be considered when determining telecommunications policy, and it would be wrong to ignore them. For example, there is the universal service, the 999 service, services to rural areas and so on, and nowhere are these mentioned in the proposed new clause.
If the noble Lord, Lord Lloyd of Kilgerran, would forgive me, I wonder whether at this stage I might divert to deal with a specific and very technical point that he raised on subsection (5) of the proposed new clause. The Bill itself lays down very clearly indeed in Clause 3(2)(b) that one of the duties of the director is:
"to maintain and promote effective competition".
Then later on, in paragraph (h) of the same subsection to the same clause, another duty is:
"to maintain and promote outside the United Kingdom competitive acivity",
and so on. One of the main purposes of the Bill is to promote competition. I entirely understand the specific point which the noble Lord, Lord Lloyd of Kilgerran, has in mind—namely, the question of conflict of laws and extra-territoriality—and that is why I describe this as being a highly technical area.
As he knows, the position here is that we do not accept that other people are entitled to interfere in the domestic affairs of the United Kingdom. Nevertheless, conflicts do arise and have arisen because the laws of one country differ from those of another. While the director general would obviously pay regard, and would need to pay regard, primarily to the law of the United Kingdom, the question of the impact of foreign law is something that he would need to have in his mind. Indeed, later in the Bill at Clause 47(1) there are provisions which state:
"It shall be the duty of the Director, so far as it apppears to him practicable from time to time, to keep under review the carrying on both within and outside the United Kingdom of activities connected with telecommunications".
The object of that clause is to ensure that the director general recognises that one of his functions is to know what is going on overseas. Therefore, the answer on this technical point is that we are fully aware of the implications of extra-territoriality. The purpose of the
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Bill is to promote competition, and that is stated in a number of places in the Bill.
Having said that, perhaps I might now return more generally to the proposed new clause. There are further defects in the clause, in addition to those to which I have referred. If the council is to act, in effect, as an appeal body, sitting in judgment on the performance or administration of the director's functions, it would be quite wrong for him to he chairman. This would make him judge and jury as well as defendant.
Secondly, the amendment enables the director to refer disputes to the council for decision, but an aggrieved party has no such power. The clause as drafted, therefore, fails to meet the objectives which have been put forward in the debate which has taken place in your Lordships' Committee.
Having said that, I appreciate the general feeling which exists on all sides of the Committee, a feeling expressed both today and in the debate on the amendment moved last Monday by the noble Lord, Lord Lloyd of Kilgerran, that a body should be appointed by the Secretary of State which should in effect be as guide, philosopher and friend—if I may use the words of Pope—to the director general. I would suggest that the right course is to build on Clause 52 and get that right rather than introduce a new concept into the Bill.
If it is acceptable to the Committee, I propose two things. First, that the advisory bodies should be appointed not by the director but by the Secretary of State. This would give them greater status. It would emphasise their independence from the director, and this was a point on which I understood the noble Lord, Lord Bruce of Donington, to place great weight. It emphasised their independence from the director, and underlined the fact that they are there to help and advise the director from an independent standpoint.
Secondly, I would propose that the terms of reference of the advisory bodies should be amended—or perhaps a better term would be extended—to underline the fact that the advisory bodies will be concerned with the interests of consumers as well as of users generally. There are amendments relating to Clause 52 on the Marshalled List and what I am saying to some extent anticipates those amendments; but I felt that your Lordships would like to know the full extent of the proposals of the Government at this stage in our proceedings.
I believe that the suggestions I have made fully meet the point of substance in the amendment of the noble Lord, Lord Bruce, and also the point of substance in the original amendment, Amendment No. 1, of the noble Lord, Lord Lloyd of Kilgerran. It is a real attempt on the part of the Government to meet what we feel are genuine arguments, even though we believe they could be met perhaps in a more elegant and effective way than do these particular amendments. I very much hope that on the basis of the offer I have made, the noble Lord, Lord Bruce, would feel it possible to withdraw his amendment.
Lord Bruce of Donington: I am most grateful to the noble Lord, Lord Cockfield, for the very substantial concession he has offered the Committee in relation to this particular aspect of the matter. It rather seems to

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me that after having made a very gallant effort to shoot down the arguments put forward by the noble Lord, Lord Lloyd of Kilgerran, and myself, he then proceeded to support them and admit their validity by the very extent of the concession that he had granted. This does not in any way diminish our appreciation that the noble Lord should see fit to take account of what he must know is a very widespread feeling in the Committee, and possibly also in the country. We shall of course take a very close look indeed at the proposals when they materialise at a later stage in the Bill to see whether they meet substantially the points made by this amendment, including one specific point which is referred to in the amendment itself and to which the noble Lord. Lord Taylor of Gryffe, addressed himself, about the desirability of trade union representation at some point or other.
Subject to that, and in the hope that the noble Lord will be able to produce—and will in fact produce—something that is generally acceptable on the lines of the amendment at present before your Lordships, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6—[Exceptions to section 5]:
3.45 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 63:
Page 7, line 14, leave out from ("system") to end of line 16.
The noble Lord said: My noble friend Lord Orr-Ewing has asked me to move this amendment on his behalf. Clause 6 of this Bill repeats a lot of the trends in Clause 13 of the 1981 Act and in effect places various sorts of limitations. Basically, the liberalisation of telecommunications as a whole, which we see as being the main point of the Bill, is seriously undermined without the right to use apparatus or to rent its transmission capacity without restriction. We see these paragraphs in subsection (4) to be such restrictions. Accordingly, we believe that the principles of the Bill would be better realised if the paragraphs were struck from it. I beg to move the amendment.
The Countess of Mar: I wish to speak very strongly against this amendment, because if these provisions were struck out of the Bill it would provide what is called a "by-passer's charter". People could have unlicensed point-to-point circuits, which means a company in Glasgow could have a circuit operating from its head office in Glasgow to somewhere in London. Someone could make a local call in Glasgow, be connected to the London Office and then be reconnected into the network. British Telecommunications at present relies for one-third of its revenue from 300 big customers which are likely to have point-to-point circuits. It would be disastrous for the revenue base of British Telecommunications if this was carried through; and not only disastrous for them, but also for all the other customers in the country.
The Lord Advocate (Lord Mackay of Clashfern): This amendment is intended to introduce wider
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freedom from licensing into telecommunications, to release from licensing controls those businesses which run their own telecommunications system, and to give them freedom to provide telecommunications service to others. My noble friend has referred to the desirability of businesses being free to resell capacity on the circuits they lease. The Government share many of the noble Lord's objectives. We want a liberalised telecommunications market. We want businesses to be as free as possible to run their own systems and to provide services to others. We are moving quickly—some might suggest too quickly—towards that end. We intend to make a statement to the House at a later stage of the Bill outlining the steps that we propose to take to permit wider resale of circuits leased from BT.
The Government cannot however accept the approach that my noble friend is suggesting in his amendments, since they would undermine the foundations of the Government's telecommunications policy. The basic result of the amendment is to produce an exemption so that any system can be run by a business without a licence if it is run for the purpose of the business and if it is not connected with another system. These two simple tests could largely be met by a company which set up a complete national network in competition with BT and Mercury. It would be in the business of providing services to others so it would meet the first test, and provided it was not connected to the BT or Mercury systems it would meet the second test. There would therefore be almost free market entry for those wanting to supply telecommunication services, and the Government's policy in relation to Mercury would be destroyed.
The amendments would also destroy our prospects of moving towards arrangements where BT was compelled to permit the resale of private leased circuits. At present a large number of British Telecom's leased circuits fall within the first two tests that I have described; they and the apparatus at each end are run by BT for the purpose of its business and they are not connected to another system. So the leased circuits would, if my noble friend's amendment is accepted, be exempted from licensing.
If they were exempted, the Secretary of State would not have the power to impose licence conditions on the running of such circuits, for example, to require British Telecom to connect such lines to other systems and to permit other persons to resell capacity over the leased circuits. It is only Clause 6(4), which my noble friend wishes deleted, which subjects the provision of telecommunication services to licensing controls and thereby ensures that British Telecom's private leased circuits are subject to licensing controls. I hope, therefore, that the noble Lord will feel that, while we share his objectives, the method that he has adopted for seeking to promote them is not appropriate, and that he will be able to withdraw the amendment.
Lord McIntosh of Haringey: The noble and learned Lord has made it clear that the amendment is technically defective and would not meet the requirements of the movers, but in doing so he has made what at first sight seems to be an alarming concession, or has anticipated an alarming concession. He said, if I understood him rightly, that at a later stage in the Bill

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he is going to make a statement about the resale of leased circuits. That presumably presages some sort of liberalisation of the resale of leased circuits, some sort of release from licensing. It is going to affect not only amendments of this sort but also the whole question of access charges, the whole question of the profitability of British Telecommunications, and indeed it is going to affect the purchase price for British Telecom on flotation.
If the noble and learned Lord is to make an important statement in the future he ought to make it as soon as possible because it is going to affect a large number of parts of the Bill, and those who are considering the Bill now ought to be able to see what it is that the Government are proposing. As the position stands it looks as though it could be a severe threat to the profitability and independence and even the viability of British Telecom, and I would urge the Government to make the statement they are anticipating as soon as possible.
Lord Somers: I must confess to being an ignoramus about such things, but take for instance the circuit within your Lordships' House, within the Houses of Parliament. Presumably that is a private circuit, but with one important exception and that is that by keying nine you can connect yourself to the main circuit outside. It would lose a great deal of its usefulness if one could not do that. Surely the element of competition would also be reduced a great deal.
Lord Boyd-Carpenter: I found myself, rather embarrassingly, in a measure of agreement with the noble Lord, Lord McIntosh of Haringey. I was interested in what my noble and learned friend said about an important statement being made. I should like to press him a little as to when we are to have the advantage of hearing this. It is a little unsatisfactory to discuss amendment after amendment of a detailed character to a Bill of this character when it may well be that the statement which my noble and learned friend is going to make would make a good deal of that discussion unnecessary.
If, as I hope, the statement is going to indicate a greater degree of liberalisation than is to be deduced from the Bill itself as it stands, I should have thought that that would undoubtedly cause some of my noble friends not to feel it necessary to move some of their amendments further on in the Marshalled List. However that may be, I am sure that my noble and learned friend will agree that it is difficult to go on discussing in detail a Bill when it may be that that Bill is in some respects going to be quite substantially altered as a result of a statement.
I hope that my noble and learned friend will be able to be a little more precise. Will this statement be made during the Committee stage? Is it anticipated holding it up until Report? Is he indeed going to hold it up till Third Reading? My noble and learned friend is normally so helpful. Perhaps he would show his helpfulness by being a trifle more precise.
Lord Mackay of Clashfern: First, I should say that, as I have sought to explain, the provisions of the Bill relating to licensing which are affected by this
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amendment would not, as I have suggested, be removed from the Bill. What I am suggesting is that, as soon as we are in a position to make it, a statement will be made which I would anticipate at a later stage in the Bill—that is to say, not on Committee stage, at Report or Third Reading—upon the way in which this policy will apply. The need for the licensing appears to us, on the basis of these amendments, to be required, and I certainly undertake that we shall make the statement as soon as we are in a position to do so.
Lord Alport: May I follow my noble friend Lord Boyd-Carpenter by saying that I find it extraordinary that we should be going through day after day of telecommunications Committee stage under the threat that a statement on the way in which it is going to be carried out is going to be made at Third Reading. Surely if there is an explanation of the Government's policy in relation to this, it should be made as early as possible in the Committee stage so that we know exactly where we are.
Lord Bruce of Donington: Your Lordships will be aware that this Bill was under considerable discussion in another place, and so far it has gone through Second Reading and part of its Committee stage here. The Committee well knows that the amendments so far made, or proposed, in Committee by the Government and their supporters vastly exceed those put up by Her Majesty's Opposition and by the Liberal and Social Democratic Parties in this House.
This Bill seems to be under a state of perpetual amendment by the Government themselves and their supporters. We do not object to that when it comes to constructive amendments, to amendments which take account of the views of the Committee, or amendments required for drafting or correcting purposes, or which express the intentions of the Bill more accurately. All these are permissible and indeed it is part of the functions of this House to consider them. But here we are considering something that was not in anticipation when the Bill entered the Committee stage.
It seems unreasonable that the Government now say that they are going to make a statement of importance at some later stage of the Bill which may well have a considerable influence on the amendments still to be considered by your Lordships and might, if it had been made before, have had a significant effect on the Committee's attitude towards amendments which have already been discussed in this Committee. This is not satisfactory. I must, on behalf of Her Majesty's Opposition, protest strongly against this kind of treatment of the Committee.
Earl De La Warr: I wonder whether my noble and learned friend can help us? I hope he will be able to tell me that I was wrong, but it seemed to me that the statement he made about what is to come later was used to some extent in rebuttal of my noble friend's amendment. If it was, then that is serious because he has used an unknown as an argument. Perhaps he could help the Committee to the advantage of us all by telling me that that was not so, and that nor will he be using the fact of his coming statement in rebuttal of any further amendments.
Lord McIntosh of Haringey: Before the noble and learned Lord replies, may I particularly draw his attention to the words he used about a statement being made on Report or Third Reading. If a statement is made at the time of Third Reading that leaves no opportunity whatsoever for the House to consider what consequential amendments may be required from the Government's own amendments. That surely would be a serious abuse of the purpose of this House as a revising Chamber. If amendments come from the Government at such a time that the House does not have a chance to consider them, or to consider what to do about them, or what its attitude should be to them, what are we revising?
Lord Mackay of Clashfern: I am sure it must be my fault that your Lordships may have a somewhat different impression of what I am seeking to say from what I intend. What I seek to do is to maintain the position that licensing should be required to cover the areas covered by this amendment. My noble friend has indicated that he would like to see the area covered by this amendment liberalised. What I say is that to achieve that to any extent it is proper that this area should continue to be covered by licensing. That is my answer to the amendment. What I said is that we shall take account of what my noble friend is saying in considering what we can say in amplification of the policy which will determine how these licence powers shall be used in relation to the area with which he is concerned.
This is not a question of amending the Bill or anything of that kind. It is an endeavour to amplify and to respond more fully that I can today to what my noble friend has put forward. All I am seeking to anticipate is a somewhat more detailed statement than has yet been made upon the way in which the Government see this power in its application being developed. In my submission there is nothing improper about that. It is a continuing consideration of these matters, taking into account what we hear from all sides. We shall make a statement about this as soon as we are in a position to do so. It is not in the nature of a statement which would propose amendments or bring amendments from the Government. It is in the nature of explaining how we propose, in a little more detail than we have been able to say so far, what the policy will be in relation to this matter.
Lord Bruce of Donington: The noble and learned Lord cannot have it both ways. Either the matter is, as the noble Lord stated, of some significance—and this was the way the noble and learned Lord conveyed it to the Committee; "an important statement"—or it is not important. If it is important it does not defy either the great departments of state or their parliamentary counsel to be able to incorporate the appropriate qualifications and clarity into the Bill. The noble and learned Lord only has himself to blame, or his department, if the Bill is so ambiguous or it leaves so much grey area that it has to be clarified at a later stage by an important statement. This is not a very courteous way to treat your Lordships' Committee.
Lord Ezra: Is the noble and learned Lord indicating that this future statement will deal with the whole issue
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of licensing? In that event, would it not make our work on a number of amendments now coming up on the subject of licensing somewhat unproductive?
Lord Mackay of Clashfern: What I indicated was that we would hope to amplify what has already been said in relation to the policy that will apply to the use of circuits leased from British Telecom. It is only the use of leased circuits that is in question. What we hope to be able to do is to be a little more detailed than has yet been possible in relation to the policy that will apply in exercising the powers which the Bill gives us in this connection.
That is a perfectly reasonable response to the amendment which my noble friend has put forward; saying that we are considering how far in the nature of things the policy which we adopt in this matter will meet his requirements.
Lord McIntosh of Haringey: I am afraid that this matter is going from bad to worse. As I understand from the noble and learned Lord's most recent words, this proposed statement is intended to affect his noble friend. It is seeking to get Lord Mottistone to withdraw the amendment. In other words it is seeking to change the course of the Committee procedures on the Bill. We are now told that the statement to be made is not itself to be incorporated into the Bill. That makes me wonder whether the Government really understand the financial importance of the resale of leased circuits. The basis on which leased circuits can be resold is absolutely critical to the financial viability of British Telecom. If British Telecom is to be forced to sell circuits in bulk and to allow other people to cream off the profits by selling them at a higher price broken up, the whole basis on which the prospectus is to be made to the public at the time of flotation is changed. I suggest to the noble and learned Lord and to the Government that the problem that the Government have about flotation will be immeasurably worse if any real change is proposed in this statement.
As my noble friend Lord Bruce of Donington said, in his characteristically moderate way, either this is an important statement, in which case it should be made now and it certainly ought to be made before Third Reading, or it is of no significance, in which case the noble Lord, Lord Mottistone, ought to ignore it.
The Countess of Mar: I find myself increasingly amazed as we go on through this Bill, particulary at the financing of the new set-up which is airy-fairy. Would it not have been better for the Government to have put their policies on a solid basis before they presented the Bill to the House?
Lord Mottistone: Perhaps I should now come in. My thoughts when I heard my noble and learned friend were that I welcomed his support for the general approach of encouraging liberalisation and on the whole I thought what he had to say was encouraging. I was going to say to him that I would read with great care what he had to say. The statement is of interest to us all, whatever view we may take about the Bill and whatever effect it may have. Though I shall withdraw the amendment, I think the Government must take note of the fact that we require to have this policy

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statement as soon as is practicable. It could, as the noble Lord, Lord Ezra, said, affect the amendments we are about to come to about the licence, and I suspect that the policy will be deeply related to the licence. One of the things that we shall all be saying when we come to debate the licence is that we want to see the final licence good and early and the policy which goes with it. But, having said that, I beg leave to withdraw Amendment No. 63.
Lord Bruce of Donington: The noble Lord, Lord Cockfield, must have heard the exchanges across the Committee on this matter over the last 20 minutes. In view of the fact that there is a possibility that the attitude taken by his noble and learned friend to the amendment moved by the noble Lord, Lord Mottistone, may affect other amendments that are down in the name of the noble Lord, may I ask the noble Lord, Lord Cockfield, whether he would consider the advisability of asking the Committee to adjourn for an hour while the Government make up their mind about what they propose to do with the Bill? They are evidently in some confusion. I think the noble Lord owes it to the Committee to say, after due consideration with his officials and colleagues, how they propose to proceed. I suggest that he considers asking for the adjournment of the Committee for an hour and then comes back to make the statement, so that noble Lords on all sides of the Committee know exactly how we shall proceed hereafter.
Lord Boyd-Carpenter: I put to my noble friend Lord Cockfield a suggestion rather less drastic than that of the noble Lord, Lord Bruce of Donington, despite the habitual moderation which his noble friend rather startlingly attributed to him. I feel that it would not be treating the Committee fairly or properly to defer this statement—which was obviously referred to here by the noble and learned Lord the Lord Advocate as having some relevance to the amendment we are discussing—to Third Reading. Will my noble friends seriously consider before we go over this course again on Report—no doubt the Report stage, judging from experience at the Committee stage, will not be unduly brief—getting the statement here either before or at the beginning of the Report stage? Otherwise, I am bound to say that the position of your Lordships' House as a revising Chamber has not been properly respected.
Lord Mackay of Clashfern: The situation certainly is that we shall give the further detail as soon as we are able to do so. I should certainly hope that we shall be in a position to do that in time for the Report stage. The situation is that further detail has been under consideration for some time, and that what we are intending by the statement to which I have referred is simply to fill in some further details on the aspects of licensing of private systems. I certainly undertake —and I am grateful to my noble friend Lord Boyd-Carpenter for his intervention—that we shall do it at the earliest possible moment, and I hope that we shall be in a position to do it for the Report stage.
So far as concerns the conundrum of classifying statements as of relative importance, the situation is that what I am saying is that we hope to be in a
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position here—as on many other matters that are from time to time considered—where the thinking will develop between one stage and another. As far as this particular matter is concerned, what I indicated was that we hope to be in a position to give further details on the policy raised by this amendment, and I hope that we shall be in a position to do so by the Report stage of the Bill.
Lord Ezra: May I ask the noble and learned Lord whether the proposed statement is likely to refer to other amendments which we have already discussed, or might be likely to discuss, or is it solely related to the amendment that we have just been discussing?
Lord Mackay of Clashfern: The matter that I have in mind is that of giving further details in relation to the policy that we expect to be pursued in relation to the use of leased circuits. It does not directly affect the terms of any of these amendments. All it does is to indicate, in a little more detail than we have yet been able to state it in relation to that particular matter, the policy that would be pursued.
Lord Bruce of Donington: This Bill has been in gestation for well over a year. There has been plenty of opportunity to consider these matters. If the noble and learned Lord's Government had made up their minds what they were going to do, the statement could be made now. I still think that the needs of your Lordships should be considered. I beg to move that the House do now resume.
Moved, That the House do now resume.—(Lord Bruce of Donington.)
4.13 p.m.
On Question, Whether the Motion shall be agreed to?
Their Lordships divided: Contents, 93; Not-Contents. 109.

DIVISION NO. 1

CONTENTS

Ailesbury, M

Delacourt-Smith of Alteryn, B

Airedale, L

Amherst, E

Denington, B.

Ampthill, L

Diamond, L

Ardwick, L

Donaldson of Kingsbridge, L

Attlee, E

Donnet of Balgay, L

Aylestone, L

Elwyn-Jones, L

Banks, L

Ennals, L

Beswick, L

Ewart-Biggs, B

Birk, B

Ezra, L

Bishopston, L

Fisher of Rednal, B

Blyton, L

Gaitskell, B

Boston of Faversham, L

Gallacher, L

Bottomley, L

George-Brown, L

Briginshaw, L

Graham of Edmonton, L. [Teller.]

Brockway, L

Brooks of Tremorfa, L

Grimond, L

Bruce of Donington, L

Hampton, L

Burton of Coventry, B

Hanworth, V

Caradon, L

Henderson of Brompton, L

Carmichael of Kelvingrove, L.

Hunt, L

Cledwyn of Penrhos, L

Jacques, L

Collison, L

Jenkins of Putney, L

Cooper of Stockton Heath, L

John-Mackie, L

Dacre of Glanton, L

Kearton, L

David, B

Kilmarnock, L

Dean of Beswick, L

Lawrence, L

477

Leatherland, L.

Ross of Marnock, L.

Listowel, E.

Seear, B.

Llewelyn-Davies of Hastoe, B.

Sefton of Garston, L.

Lloyd of Hampstead, L.

Simon, V.

Lloyd of Kilgerran, L.

Stallard, L.

Longford, E.

Stewart of Alvechurch, B.

McIntosh of Haringey, L.

Stewart of Fulham, L.

MacLeod of Fuinary, L.

Stoddart of Swindon, L.

McNair, L.

Stone, L.

Mar, C.

Strabolgi, L.

Mayhew, L.

Strauss, L.

Milverton, L.

Taylor of Gryfe, L.

Molloy, L.

Taylor of Mansfield, L.

Mulley, L.

Tordoff, L.

Nicol, B.

Underhill, L.

Oram, L.

Wallace of Coslany, L.

Paget of Northampton, L.

Wedderburn of Charlton, L

Peart, L.

White, B.

Ponsonby of Shulbrede, L. [Teller.]

Wigoder, L.

Wootton of Abinger, B.

Rathcreedan, L.

Young of Dartington, L.

NOT-CONTENTS

Abercorn, D.

McAlpine of Moffat, L.

Adeane, L.

McAlpine of West Green, L

Airey of Abingdon, B.

Mackay of Clashfern, L.

Alexander of Tunis, E.

Macpherson of Drumochter, L.

Auckland, L.

Avon, E.

Mancroft, L.

Belhaven and Stenton, L.

Mansfield, E.

Bellwin, L.

Margadale, L.

Belstead, L.

Marley, L.

Blake, L.

Maude of Stratford-upon-Avon, L.

Boyd-Carpenter, L.

Bruce-Gardyne, L.

Merrivale, L.

Caithness, E.

Mersey, V.

Campbell of Croy, L.

Middleton, L.

Carver, L.

Molson, L.

Clitheroe, L.

Morris, L.

Cockfield, L.

Mottistone, L.

Cottesloe, L.

Mowbray and Stourton, L.

Craigavon, V.

Munster, E.

Daventry, V.

Murton of Lindisfarne, L.

De Freyne, L.

Northchurch, B.

De La Warr, E.

Nugent of Guildford, L.

Denham, L. [Teller.]

Onslow, E.

Drumalbyn, L.

Orkney, E.

Duncan-Sandys, L.

Pender, L.

Effingham, E.

Plummer of St. Marylebone, L.

Ellenborough, L.

Elliot of Harwood, B.

Porritt, L.

Elphinstone, L.

Portland, D.

Elton, L.

Rankeillour, L.

Faithfull, B.

Rodney, L.

Fraser of Kilmorack, L.

St. Davids, V.

Glanusk, L.

Saltoun, Ly.

Glasgow, E.

Sempill, Ly.

Glenarthur, L.

Shaughnessy, L.

Glenkinglas, L.

Skelmersdale, L.

Gormanston, V.

Soames, L.

Gray of Contin, L.

Somers, L.

Gridley, L.

Spens, L.

Hailsham of Saint Marylebone, L.

Strathspey, L.

Sudeley, L.

Halsbury, E.

Suffield, L.

Harvey of Prestbury, L.

Swansea, L.

Hawke, L.

Swinton, E. [Teller.]

Henley, L.

Terrington, L.

Home of the Hirsel, L.

Teynham, L.

Hornsby-Smith, B.

Thorneycroft, L.

Howard of Henderskelfe, L.

Torphichen, L.

Hylton-Foster, B.

Trefgarne, L.

Ilchester, E.

Trenchard, V.

Killearn, L.

Trumpington, B.

Kinloss, Ly.

Vaux of Harrowden, L.

Kinnaird, L.

Vickers, B.

Lane-Fox, B.

Vivian, L.

Lauderdale, E.

Waldegrave, E.

Long, V.

Wise, L.

Lyell, L.

Resolved in the negative, and Motion disagreed to accordingly.
4.23 p.m.
Lord Mottistone: I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 64 not moved.]
Clause 6 agreed to.
Clause 7 [Power to license systems]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 65:
Page 8, line 10, after ("Director") insert ("and subject to approval by a resolution of each House of Parliament")
The noble Lord said: I beg leave to move the amendment standing in my name and in those of my noble friends. It may be for the convenience of your Lordships if Amendments Nos. 65 and 66 are discussed together.
Amendment No. 66: Page 8, line 13, after ("Director") insert ("and subject to approval by a resolution of each House of Parliament")
The events of the last half-hour or so, if they have done nothing else, have certainly demonstrated the need for a rather firmer accountability to Parliament on these very crucial matters under discussion. Your Lordships will be aware that under Clause 7 licences may be granted by the Secretary of State after consultation with the director and, with the consent of or in accordance with a general authorisation given by the Secretary of State, by the director himself.
What this amendment seeks to do is to subject both these options to the final approval of both Houses of Parliament. As I say, I think the events of the last half-hour have shown how very necessary this is. At the moment, we have only one licence, and that is not a licence. We have one licence which was issued on 25th October 1983, is labelled "draft", and is headed:
"Licence granted by the Secretary of State for Trade and Industry to British Telecommunications".
It is admitted by the Government that this is not yet finalised.
One thing is perfectly clear: the contents of this licence governing the relationship between the Secretary of State for Trade and Industry and British Telecom and also the director himself are of the utmost importance, because even though the outlines and decisions in principle are made by the Bill the detail, of course, is in the licence. Efforts to bring matters that are in the licence into the Bill have so far been very fiercely resisted by the Government, and therefore we wish that when the final licence has been determined—and let us hope that it will not take very much longer—and before it is finally made, Parliament shall have an opportunity to consider it. What is wrong with that?
Noble Lords opposite, when they are talking on party platforms—and I would not wish to deny them the pleasure: we all do it in one way or another—preach the virtues of open government. They are in effect saying to the public, "Look, we have nothing up our sleeves at all". Then why is it that at one stage during the passage of this Bill through another place, depending as it did to a very large extent on the contents of the licence, even copies of the draft

479
licence were not available? It was only with some difficulty that one obtained it here, thanks to the courtesy of your Lordships' Library and the copying facilities that are so fortunately made available in the Palace of Westminster.
I do not want to go through the contents of the licence, and the noble Lord, Lord Mottistone, can be relieved that I am not going to make another Second Reading speech. However, for the edification of your Lordships, in regard to last Thursday's proceedings may I point out that 57·8 per cent. of the time on that day was occupied by the Government and their supporters; 11·8 per cent. by the Alliance; 7·1 per cent. by the Cross-Benches; and 27·3 per cent. by Labour. So I hope that the noble Lord, before he starts reflecting on the evils of Second Reading speeches, will bear in mind that, so far, on a Government Bill the Government have done about twice as much talking as everybody else. Therefore, in this particular case perhaps I may be forgiven for insisting, even though it may not be palatable, even though some may call it a Second Reading point, and particularly in the light of the confusion the Government have apparently got into in regard to their own Bill, that Parliament ought to have an opportunity of approving the licence.
Major licences will not be granted, so it is no good the noble Lord coming back and saying that there will be scores of important licences granted over the next few years, which would impose too much demand on parliamentary time and would become boring to another place or to your Lordships' House. That is not the case at all. We have an undertaking by the Prime Minister, no less—and those undertakings are presumably important—that, in any event, there will be only one major licence. In a letter to Mr. Richard Shepherd, the Conservative MP for Aldridge-Brownhills, the Prime Minister said:
"An open and unregulated market would inevitably lead to a concentration on the lucrative business market at the expense of the less profitable domestic rural services, public call boxes and the emergency services which run at a loss. I am determined to protect these services, which is why we took the decision that Mercury should be the only national network provider to compete with British Telecom."
So the noble Lord cannot get up and say that there will be lots of licences granted and that there would he an undue imposition on parliamentary time.
Ultimate parliamentary approval by affirmative resolution of this vital licence, when it is finalised, is essential to secure any kind of parliamentary control. I shall say no more upon the subject, save to commend the amendment with confidence to all your Lordships who believe in the proper exercise of parliamentary democracy, free from the diktat of an Executive which apparently cannot make up its mind on a whole series of matters in regard to this Bill. I beg to move.
Lord Mottistone: I do not know how the Government would like to play this. My Amendment No. 71 could be said to be vaguely connected with this amendment, but I would rather move it separately. Do the Government wish to take these amendments together in one monster debate, or would it be better to deal with this as a separate issue?
Lord Cockfield: As the point of principle raised in Amendment No. 71, in the name of my noble friend
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Lord Mottistone, is the same as the point of principle raised in this amendment, it would certainly be, in my opinion, for the convenience of your Lordships to talk about both of them.
Lord Bruce of Donington: I should like to be of as much assistance to the noble Lord as possible. But in view of the remarks that have fallen from the noble Lord, I am bound to say that the principles are not the same, since the amendment proposed by the noble Lord, Lord Mottistone, seems to enshrine a principle of 25 per cent., which has nothing to do with the amendment which we are now discussing. We on this side do not wish to be a party to the passing of an amendment which, on the face of it, gives consent to the 25 per cent. principle.
Lord Cockfield: Perhaps I did not make myself clear. There can be no question of the amendments being voted on or moved together. It is simply that I think it would be for the convenience of the Committee, because I should like to make certain suggestions in this field which I hope will be helpful. It would be more convenient if I could make them in response to the views of your Lordships on the whole of the field. I am simply trying to be helpful in this instance—not to make any specific point.
Lord Mottistone: With that in mind—and I trust that the noble Lord, Lord Bruce, does not object too much—perhaps I may comment on both his amendment and my Amendment No. 71, which I shall naturally move separately when the time comes, depending on how the debate has gone.
The difference between these two amendments, as the noble Lord made clear, is that we seek to have the licence laid before Parliament only for those companies in the telecommunications field which are themselves monopolies, and the figure of 25 per cent. is one that is derived from the guidance notes on the Competition Act 1980. To mention the proposal of the noble Lord, Lord Bruce, I think that it would be unreasonable to have all licences laid before Parliament, because in the passage of time there would be a very great number of them and, quite apart from the fact that, in the nature of things, parliamentary time would be wasted, they would probably get a cursory glance and it would therefore be a waste of time. Therefore, I would strongly resist the amendments of the noble Lord, Lord Bruce.
However, the licences of monopolies need to be debated before ratification, and I shall be very interested to hear if my noble friend has another way of doing it. But just to have a licence placed before us—and we are a little worried as to when we will see the licence; whether we will see it in time for parliamentary comment or whether it will suddenly appear in its final form just after we have gone into the Summer Recess, or something of that nature—would be a great worry.
I am concerned only about the licence of vast monopolies and, currently, British Telecom is the only one in this field before us. I suggest that the views of customers—that is, the users—and of competitors are crucial to ensure a reasonable and cost-effective service to customers and fair competition to

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competitors, particularly the smaller ones. This is absolutely essential. The whole worry on my part, and on the part of others of your Lordships who have the same view, is that there is a risk that the large monopolist will exercise powers, possibly even unwittingly, which he should not.
I suggest that the large monopolist and the naturally uncommercial Oftel cannot be sure of arriving at a fair balance in deciding on the licence. Of course, the same would apply in the interim, before Oftel gets going, to the department concerned, because, once again, it is not in the business of being commercial, and people who are not in the business of being commercial will not necessarily be able to arrive at a fair conclusion when the other person debating the licence is the vast monopolist.
Apart from the many concerns on the part of business about many of the conditions in the current draft licence that we have before us, to which I shall return, it is also a fact that the POUNC, as representing the ordinary user, has comments—and very valid comments, in many respects—on a vast number of the conditions. So there is not only concern among the users as to whether they will get value for money and be fairly treated from their end, but there are also the strong views of business, which not only fears anticompetitive practices in the future, but has many examples of anti-competitive practices at this very moment. I shall not weary your Lordships with details of those, but there are many right across the board.
Therefore, it is important that the licences of large monopolies should be debated. I am not altogether happy about my amendment in this respect, because it refers to a statutory instrument—as, indeed, did one of the amendments of the noble Lords opposite. A statutory instrument cannot be amended by both Houses of Parliament. I suspect that in the case of a licence Parliament needs both to examine and amend the licence, if that is what Parliament believes would be a good plan. If, therefore, my noble friend could indicate to the Committee how he visualises this problem being met and could let us know the views of the Government, I should be grateful. I have it in mind to press my amendment if the Government cannot give me a satisfactory reply, but that is for the future as there are other amendments to be dealt with first.
4.41 p.m.
Lord Cockfield: This is a matter of great importance because it touches upon the proper role of Parliament. I hope, therefore, that I shall be forgiven if I speak at considerable length upon it. It would only be right for me to analyse the background situation in order to indicate why we have come to certain conclusions.
In this country, as opposed to the United States, there is no formal separation of powers between Legislature and Executive, between Ministers and Parliament. The division of responsibility and of power rests upon practice and precedent. Indeed, the balance of power is shifted from time to time. Sometimes one is in the ascendant, sometimes the other. But wherever lies the balance of power, the two are bound together in an indissoluble partnership. In recent years, Parliament has sought to increase its powers over the Executive, to expand the area of
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scrutiny and examination. But no Parliament has sought, still less succeeded, in extending its powers to the extent that noble Lords opposite have sought to do in the amendments they have tabled to the Bill. The noble Lord, Lord Stoddart of Swindon, has argued that there must be a first time for everything. That is a nice philosophical point—as, no doubt, the chicken would have said to the egg. But be that as it may, there is nothing worse than adopting a bad proposition on the argument that it will enable you to create a bad precedent for the future.
The broad dividing line which has always been drawn is that Parliament lays down the rules, and within those rules the administration deals with individual cases. That is precisely what the present Bill does. It defines the duties of the Secretary of State and of the director general in Clauses 3 and 7 of the Bill and elsewhere, and within the ambit of those duties it is for the Secretary of State and the director general to issue the licences and determine the terms of' the licences. That is entirely right and proper. The regulatory system established by the Bill is designed to be free from political interference so that those responsible for the management and direction of firms in the telecommunications industry can plan ahead on the basis of a stable environment. This is why the Bill creates the office of Director General of Telecommunications at the head of his own non-ministerial department and why the role given to the Secretary of State is limited in the way that I shall describe.
Once the Secretary of State has issued a licence, the monitoring, the enforcement and, where necessary, the modification of licences becomes the responsibility of the director. Enforcement is entirely a matter for the director. He has powers to make orders requiring compliance with licence conditions, and he has powers, if necessary, to enforce such orders through the courts. Licence modifications are also a matter for the director. He may, after public consultation, agree, licence modifications with the licensee or, in the event of a failure to agree, refer the matter for independent assessment by the Monopolies and Mergers Commission.
The Secretary of State's only general powers in relation to licence modifications are that he may insist on a Monopolies and Mergers Commission investigation before the director makes a particular change. In the very special circumstances where he judges that it will be against the interests of national security or our relations with the government of another country, the Secretary of State may also veto a licence modification. The director general's independence is central to the structure of the Bill and to the Government's proposals for the regulation of telecommunications. The amendments, as drafted, would strike at the heart of his independence.
The amendment in the name of the noble Lord, Lord Bruce of Donington, would require every licence to be approved by both Houses of Parliament. The later amendment, in the names of my noble friend Lord Mottistone and other noble Lords, would require "the particulars of the … licence" to be embodied in an order or statutory instrument where the licensee controlled more than 25 per cent. of the market. Perhaps I might comment first on this amendment. A

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statutory instrument of the kind contemplated could be modified only by another statutory instrument made by Parliament. This would end the director's independence, would render a great part of the director's activities subject to direct parliamentary control, and would strike down the carefully prepared arrangements for the modification of licence conditions set out in Clauses 12 to 15. The procedure would also reintroduce short-term political considerations into telecommunications when it is one of the prime aims of privatisation and of the Bill to insulate from such considerations those who undertake the long-term work of planning and building telecommunications networks.
At the practical level and leaving political considerations on one side altogether, all in telecommunications have told us that we need swift-acting procedures to deal with any problems that may emerge, particularly when British Telecom itself, or another licensee, engages in anti-competitive practices. In contrast, the preparation of statutory instruments is necessarily slow and cumbersome. This consideration is important, not just to enable prompt action to be taken on anti-competitive practices but also because telecommunications are developing rapidly and licences may need to be amended to take account of changing circumstances. If amendment could be made only by statutory order it would introduce great rigidity into the system and inhibit changes which ought to be made.
There is the further objection that Parliament cannot amend a statutory instrument. It can only approve or reject. This would be a further element of inflexibility. Clearly Amendment No. 71 could not be accepted in the form in which it has been proposed. I suspect that it will come as no great surprise to the noble Lord, Lord Bruce of Donington, if I say that I cannot accept his amendment, either, in the form in which it has been proposed. Apart from the considerations I have already mentioned, it would, require every single licence issued to be approved by Parliament. Thousands of licences have been issued by British Telecom for private telecommunications systems under the existing legislation. All of these will require to be re-cast and re-issued to accord with the new legislation. I do not believe that Parliament would seriously he interested in these documents. But I ask the noble Lord, Lord Bruce of Donington, not to abandon hope. I think that his interest, as well as mine, really rests in the much smaller number of licences which, if I may use the phrase, set the tone. Indeed there was one phrase that he used in the course of his own speech which led me to believe that.
It is with this group of key licences that Amendment No. 71, in the names of my noble friend Lord Mottistone and the noble Lords, Lord Taylor of Gryfe, Lord Lloyd of Kilgerran and Lord Spens, to which I have already referred, is also concerned. I have explained in some detail why I do not think that actually incorporating the licence in a statutory order is the right approach. Nevertheless, I recognise, and indeed share, the view that Parliament should have the opportunity of scrutinising the British Telecom licence and certain other key licences. I acknowledge, too, the fear which is held in some quarters that the Secretary
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of State might issue a licence substantially different from the draft which is now the subject of public consultation. While, as I have explained, I could not accept the amendments as drafted, there is an alternative and more effective route to solving the problem. The key lies in Clauses 8 and 9.
Clause 9 provides that the Secretary of State may by order designate as a public telecommunications system any system the running of which is authorised by a licence to which Clause 8 applies. By virtue of Clause 92, the Secretary of State's order has to be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament. By building on Clauses 8, 9 and 92 we can devise a procedure which will involve Parliament in a way which will meet the points which have been raised while avoiding the objections. Designation of a system as a public telecommunications system is not a formality. It makes the operator a public telecommunications operator and is essential for the running of a public system. Without public telecommunications operator status an operator cannot enjoy most of the privileges and protections afforded by Clauses 31 to 46 of the Bill.
The grant of a public telecommunications operator licence—that is, a licence to which Clause 8 applies—is necessary before the provisions of the telecommunications code contained in Schedule 2 to the Bill can be applied to an operator. British Telecom could not operate without a public telecommunications operator licence, and the Government intend to confer similar licences on Hull, Mercury and the two cellular radio companies. This point is important because it illustrates the ambit of the proposals that I am making. They will apply to all operators licensed under Clause 8.
Clause 9 therefore provides a way for Parliament to consider, and if it wishes to vote against, the designation of an operator like British Telecom as a public telecommunications operator. What I now propose is that I should table an amendment on Report providing that before any order made under Clause 9 enters into force, the text of the licence authorising the running of the system to which the order relates shall have been laid before both Houses of Parliament for not less than 28 days. This means that order and licence would he laid together at the same time. If Parliament was not satisfied with the licence in the form it was made, Parliament could pray and vote against the order designating British Telecom, or the other licensee concerned—because these proposals apply to all Clause 8 licensees; we are not singling British Telecom out specially—as a public telecommunications system. If this happened, the licensee would not be able to run its business. The Government would then have to come back to the House with a new order and a new licence meeting the objections which had been raised. If however Parliament was satisfied with the licence as granted, it need take no action and the Clause 9 order would stand unannulled.
I am very conscious of the strong view held on all sides of the Committee that Parliament should not stand completely aside: indeed, I share those views. The arrangements that I have suggested combine parliamentary scrutiny with arrangements to preserve

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the independence of the director and the swift and flexible licence amendment procedures which are central to the regulatory process. They avoid the serious difficulties which would arise if the licence were actually itself incorporated in a statutory order. This is a genuine attempt to meet what I accept is a genuine concern. I hope that on the basis of the offer I have made that the noble Lord, Lord Bruce of Donington, will feel able to withdraw his amendment, and that my noble friend Lord Mottistone will take the same view.
Lord Bruce of Donington: I am greatly obliged to the noble Lord for his very constructive responses to the amendments that we have ventured to put down. They show a willingness; I am glad to have it confirmed that the Government are sensible of the very widespread view that Parliament should be more intimately involved. We should of course like to take a look at the amendment that the noble Lord proposes to introduce on Report. May I tell him how much we would appreciate it if he were constrained to adopt the affirmative procedure rather than the negative; that would sweeten it for us. But in general, and certainly without in any way committing ourselves to the principle enshrined in Amendment No. 71, in the name of the noble Lord, Lord Mottistone, we appreciate the concession, and I ask the leave of the Committee to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 66 to 68 not moved.]
Lord Somers Lord Somers moved Amendment No. 69:
Page 8, line 33, leave out ("may") and insert ("shall").
The noble Lord said: This amendment and the one following, Amendment No. 70, hang together, since one of course affects the other. It was only I think a fortnight or so ago that we had a considerable discussion on the relative merits of "shall" as compared with "may". These licences, which I think we have all agreed are going to be very important, are to be issued by the Secretary of State. But I must point out that in our present political system Secretaries of State come and Secretaries of State go. One Secretary of State may have very satisfactory and certain opinions on the matter. Another may have entirely different ones. I do not think that in that case one can just leave it to his decision. We must have compulsion and that, of course, will be provided by Amendment No. 70, which I shall leave to my noble friends to discuss. Their knowledge on this subject is rather more extensive than mine. I certainly think that a compulsory licence which must—not "may"—contain certain features is essential. I beg to move.
Lord Ezra: I should like to support the noble Lord, Lord Somers, in this proposition. It seems to me that, if one of the objectives is to ensure that the director and the Secretary of State conform, and to make sure that there is conformity with the important Clause 3, the word "shall" is much more appropriate than "may". For that reason alone, the amendment is worthy of support.
5 p.m.
Lord Mackay of Clashfern: I understand perfectly from what has been said the objective of the noble Lord, Lord Somers, in moving this amendment and the noble Lord, Lord Ezra, in supporting it. As Clause 7(5) is drafted, the Secretary of State has discretion as to whether or not he includes in a licence that he is granting conditions of the sort described in Clause 7(5)(a), (b) or (c). It is important to notice that this change would affect not only (a) but also (b) and (c).
I believe it is important that the Secretary of State should retain such discretion. There has already been mentioned the vast number of licences that are likely to he issued under the Bill. We tend to concentrate on the major ones—those to British Telecom, Mercury, Hull, the cellular radio companies and the cable companies. But there are very many others besides. Indeed, we expect that there may be some 3,000 licences to be granted. Obviously the vast majority of these will not be of any great public interest and there may well be cases where it would not be appropriate to impose all the conditions listed in Clause 7(5).
I should perhaps point out in this context that a licence is essentially a permission to do something that would otherwise be unlawful, and does not as a matter of course have to include conditions. An example may help. Entry phone systems for blocks of flats are telecommunication systems and as such will require a licence under the Bill. The most sensible way to do this is by a general licence but I doubt whether the Secretary of State necessarily wishes to charge for such a licence. But if he were obliged to, as he would be if this amendment were accepted, then the director could he in the nonsensical position of having to chase up the owner of every entry phone system in the country to ensure that he had paid the fee. I am sure that this is not what the noble Lord had in mind.
It seems to me that the concern is that the Secretary of State may not include conditions of the sort described in Clause 7(5)(a); namely, conditions to ensure that his Clause 3 duties are fulfilled. But this represents a misunderstanding of the nature of the duty in Clause 3. Whenever the Secretary of State, or the director, exercises any of his functions under the Bill which includes the issue of licences then he is bound by his Clause 3 duties. In other words, Clause 3 imposes a duty when he is exercising any of these functions. If, in the light of these duties, conditions should be included in a licence when he is granting it—and in the great majority of cases I accept that this is likely to be so—then they will have to be in the licence by virtue of the duty which flows from Clause 3. I hope I have satisfied the noble Lord's concern and that he will accept that, in the circumstances we are dealing with here, the power is appropriate in Clause 7(5), with the underlying duty coming from Clause 3.
Lord Ezra: Would the noble and learned Lord perhaps consider separating Clause 7(5)(a) and (b) and (c)? From what he said, he fully accepts that the Secretary of State and the director are bound to ensure that the duties imposed on them by Clause 3 are carried out. This does seem to weaken that responsibility as the clause is at present worded.
Lord Mackay of Clashfern: With great respect, I do not feel able to accept that last contention because the fundamental duty is in Clause 3 and it pervades all the Bill. To seek to make apparent strengthenings in some places might well weaken its full effect. Clause 3 imposes that duty and it is for the Secretary of State or the director to see whether conditions are necessary under Clause 7(5)(a) to implement that duty. I certainly appreciate, as I sought to point out, that (b) and (c) are in a somewhat different situation from (a). But the fundamental point remains that the underlying duty—the compulsitor, as it were—to put in such conditions as are necessary comes from Clause 3 and is clearly set out. It would damage the structure of the Bill to interfere with the way in which this is expressed. The clause gives the Secretary of State and the director all the necessary powers to ensure that they can properly comply with their duties in this direction.
Lord Molloy: Following the noble and learned Lord's submissions, can he explain this to me and to the Committee? It seems to me that if Clause 3 is the fundamental clause and everything laid down must be adhered to, then there is a slight deviation if the word "may" remains, because in law, as I understand it, above "will" a powerful word is "shall". Therefore, what the amendment submits is that there shall be total adherence to the initial clause which the noble and learned Lord quoted and that there shall be no deviation. Therefore, the amendment appears to assist the Government in maintaining regularity in the presentation of the Bill.
Lord Somers: I am most grateful to the noble and learned Lord hut, before withdrawing my amendment, may I point out that he referred several times to the Secretary of State. I think we can all have perfect confidence in the present Secretary of State, but what about in 20 years' time? We do not know who the Secretary of State will be and what he will be like. However, let us hope for the best. Meanwhile I beg leave to withdraw the amendment.
Lord Bruce of Donington: May I offer the noble Lord a way out of the difficulty, if he is so disposed? I suggest that he retains "shall" in subsection (5)(a) and tables a further amendment inserting "may" in (b) and (c). That would appear to overcome the objection of the noble Lord, Lord Ezra, with which I entirely agree. If the noble Lord will give an undertaking that on Report he will reproduce his evident agreement with the noble Lord, Lord Ezra, in amendment form he will make the Committee much happier. The Committee will not then resist any withdrawal of the amendment.
Lord Milverton: I support my noble and learned friend the Minister and the Government. I think the clause is satisfactory as it is now. If the amendment were pushed to a Division, I should support Her Majesty's Government.
Lord Mackay of Clashfern: I am extremely grateful for that support. I certainly wish to do what I can to please the Committee, as I was perhaps not particularly successful earlier. I feel that the correct structure is to have Clause 3 as imposing the duties and then
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confer in this clause the powers which are necessary to enable that duty to be carried out. To put the sort of distinction which the noble Lord, Lord Bruce of Donington, suggested between (a) on the one hand and (b) and (c) on the other is an unnecessary complication. I believe that the noble Lord, Lord Somers, has taken that point and appreciates that the duty in Clause 3 would apply to the Secretary of State and the director whoever they were.
Amendment, by leave, withdrawn.
5.10 p.m.
Lord Taylor of Gryfe Lord Taylor of Gryfe moved Amendment No. 70:
Page 8, line 34, leave out paragraph (a) and insert—
("(a) conditions requiring any person who is authorised by the licence to run a telecommunications system to agree to submit to arbitration any dispute relating to such systems and arising between such systems and a user of such systems if the user so chooses, the rules and procedure of such arbitration being those as may he approved by the Chartered Institute of Arbitration and the Director General;")
The noble Lord said: I am moving the amendment following representations from the Post Office Users' National Council which points out that in the event of a dispute all telecommunications users should have access to arbitration as an inexpensive alternative to taking action through the courts. It also points out that, while there is provision for arbitration in the licence—and, as one noble Lord pointed out last week, the licence has not yet been approved—there is no clause in the Bill which would enable users of services provided by any telecommunication operator to have access to arbitration. It is for that very good reason that the amendment is moved.
Lord Mackay of Clashfern: As your Lordships have just heard, the first part of the amendment is to leave out paragraph (a). I did not really understand the noble Lord, Lord Taylor of Gryfe, to explain that. I do not know whether that is necessary at all. I suspect that perhaps it is some kind of clerical inadvertence. I therefore go to the second part of the amendment, to which the noble Lord has spoken, which is the insertion.
That is designed to impose an obligation on the Secretary of State to include in licences conditions of the sort described in this amendment—that is, conditions which allow users to take disputes they have with the operator to arbitration. I fully appreciate the value of such conditions and will say a little more about them in a moment. However, I believe that it would be quite wrong to impose a requirement that all licences should contain these conditions. As I explained on the earlier amendments there will be a vast number of licences to be granted under the Bill—perhaps 3,000 or so—ranging from large licences such as British Telecom's, which are of great public importance, to many minor licences such as those for entry phones. I think it would be wholly inappropriate for all these licences to have to include conditions of the sort described in this amendment, and I do not think that this is what noble Lords have in mind.
Nevertheless, the Government fully appreciate the importance to consumers of having access to arbitration to settle minor disputes. This is why, as the noble Lord said, a condition to this effect has been included in the draft British Telecom licence in

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Condition 28. There is no need to have a specific provision in the Bill to enable such conditions to be included, since the combined effect of the duty in Clause 3(2)(a) to promote the interests of consumers and the power in Clause 7(5)(a) as the Bill stands already achieve this. In other words, if the Secretary of State and the director are satisfied that this is an appropriate thing to put in in the interests of consumers, these two clauses together achieve this.
The effect of the duty in Clause 3(2)(a) to promote the interests of consumers is that, where the Secretary of State in issuing licences believes such a condition is necessary, then it will be included. As I have said, such a condition will certainly he included in the British Telecom licence and it is the intention that a similar condition should also he included in the new licence to be issued to Mercury under the Bill.
Having regard to the vast range of possible licences, I would suggest to your Lordships that this is an appropriate way to proceed rather than by attempting to do it in the primary legislation itself. I hope that with that explanation the noble Lord will feel able to withdraw the amendment.
Lord Bruce of Donington: I hope that the noble and learned Lord will think again. As he says, a large number of licences may be granted. As he well knows, I do not mean what he would term the key or very important licences. But the fact that an individual licence includes an arbitration clause on the lines set out here does not mean that arbitration will arise in every case. We have numerous forms of contract; for example, the RIBA contract in the building and construction industry. The number of cases that go to arbitration is very small indeed. In some agreements the Institute of Chartered Accountants is very often designated as the arbitrator. The amendment would not expose anybody to considerable trouble. I think that the condition should go in the Bill in order to ensure that this is accomplished.
The noble and learned Lord says that the provision could go into the principal licence. The difficulty is that in later stages in the Bill the director general has powers, with the Secretary of State, to amend the terms of licences. We do not know how far licences will be amended. The Secretary of State might find certain sections of the licence inconvenient to him. He might therefore decide to ask for amendment to the licence. Indeed, there are powers later in the Bill to amend licences. Is it not far better to have a moderate and innocuous clause carrying no political overtones whatsoever? I suggest that it is far more satisfactory to have the provision in the Bill for the avoidance of doubt. I do not think that it will cause any extra disputes or arbitrations. On the rare occasions when they take place, the Bill will make the position unambiguous. I should have thought that that was in everybody's interests.
Lord Campbell of Alloway: I wonder whether my noble and learned friend could possibly think again. As has been pointed out, and as indeed is quite apparent, the option to arbitrate is exercisable only at the choice of the user. This is a useful provision which could do no mischief and could conceivably do good to the consumer. I have not heard the reasons for the
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objections of my noble and learned friend the Minister. I have an open mind until I hear them; but it seems a reasonable proposal.
Lord Morris: I am concerned about the necessity for the amendment. The Government's intention is made quite clear in Condition 28 of the draft licence, if the draft licence is anything to go by, whereby:
"The licensee shall include in the standard terms and conditions an inexpensive arbitration procedure".
This is extremely important. The noble Lord, Lord Bruce of Donington, and indeed the noble Lord, Lord Lloyd of Kilgerran, will recall the sandwich board man who used to parade outside the Law Courts. He was obviously a disgruntled litigant. The instruction read: "Arbitrate; don't litigate". Rumour had it that the Law Society and the Inns of Court paid his wages. They knew very well that in an arbitration there are no rules of procedure whatsoever and to the delight of all lawyers it becomes an extremely expensive operation. A great deal of care must be taken in putting a provision of this kind into statute. I am not really surprised that the noble Lord, Lord Lloyd of Kilgerran, did not speak to the amendment.
Lord Ezra: I should like to support those in favour of the amendment. If it is thought desirable to introduce it into the licence, if it is conditional and if it provides on the face of it an additional safeguard for users, it seems to me to be wholly in the spirit of the Bill and it is desirable to introduce it.
The noble Lord, Lord Morris, spoke of the possibility of arbitration being a very expensive process. If there is an argument against arbitration as such, arbitration should not figure in the licence at all. The fact that it is in the British Telecom licence, and in all probability it will be in all other major licences, seems to me to justify giving the provision the force of law as something which is desirable at any rate in these major licences.
Lord Mackay of Clashfern: In my submission to your Lordships, the way to have the provision in the major licences is that it be in the licences. The idea of putting it into the general provisions of the primary legislation would make it appear that it was appropriate for all licences. In view of what I have said about the great variety of types of licence, it would be inconceivable that one would have arbitration clauses of this kind in a good number of them. I hope that in the light of that the noble Lord, Lord Taylor of Gryfe, will feel able not to press the amendment.
Lord Taylor of Gryfe: I know that the noble and learned Lord is a very persuasive Minister and I am inclined to accept his argument. Considering the fact that already this afternoon the Government have made substantial concessions in the Bill, I do not feel like pressing the amendment to a Division, though to be honest I am not fully persuaded of the logic of the Minister's statement. If the point applies to 3,000 licences, it is unlikely that there will be 3,000 cases, but this provision is necessary in contracts and is frequently used in commerce. Quite frankly, I cannot see the undesirability of having that overall provision in the law just as a contingency. As the noble Lord,

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Lord Ezra, has said, if it is logical to have the provision in the licence, it seems logical to have it in the law. However, as I say, I have made my point and I do not feel like pressing it to a Division. I must consult other noble Lords who are interested in the amendment, but I should be prepared to withdraw it.
Amendment, by leave, withdrawn.
5.21 p.m.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 72ZA:
Page 9, line 9, leave out from ("of") to first ("a") in line 10 and insert ("paragraph (a) of subsection (5) above, conditions included by virtue of that paragraph in")
The noble and learned Lord said: In moving Amendment No. 70ZA, perhaps I may speak also to Amendment 70ZB:
Amendment No. 70ZB: Page 9, line 11, leave out ("include conditions requiring") and insert ("require")
These are technical amendments. Clause 7(5)(a) limits the content of licence conditions to matters which appear to the Secretary of State or the director to be requisite or expedient having regard to the duties under Clause 3. Clause 7(6) describes the form that conditions must take. However, it is intended that the limitation on the content of Clause 7(6) conditions should not be any different from that of conditions imposed under Clause 7(5)(a). As the Bill is drafted, that is not the case, and these amendments put the matter correctly. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 70ZB:
[Printed above.]
On Question, amendment agreed to.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 70A:
Page 9, line 26, leave out subsection (8).
The noble and learned Lord said: In moving Amendment No. 70A, perhaps I may speak also to Amendment No. 150B:
Amendment No. 150B: Clause 94, page 83, line 30, at end insert—
("( ) For the purposes of any licence granted, approval given or order made under this Act any description or class may be framed by reference to any circumstances whatsoever.")
These are tidying up amendments and I believe that it would be useful to introduce them. Amendment No. 150B introduces into Clause 94 a new subsection to bring together in a single place all references to descriptions or classes being framed by reference to any circumstances whatsoever and therefore enables the earlier clauses to be reduced in size. I beg to move.
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 71:
Page 9, line 30, at end insert—
("( ) Before granting a licence under this section to any telecommunication company with more than 25 per cent. of a particular market, the Secretary of State shall lay an order embodying the particulars of the proposed licence for the approval of both Houses of Parliament.").
The noble Lord said: I am very grateful to my noble friend for the remarks that he made on this amendment when we debated it earlier and I greatly appreciate the distance he moved to accommodate the principle behind my amendment. I should like to put two questions to my noble friend. First of all the noble Lord. Lord Bruce, made the point that affirmative procedure would be welcome. I think that I would support that view because there could be an occasion when the provisions of Clause 9 were about to be put into effect just as a Recess was starting and we should then find ourselves unable to handle the statutory instrument because the negative procedure would be involved. So I hope that my noble friend will give special thought to that question.
I turn to the other point which occurs to me. Elsewhere in the Bill there is provision for modifying licences. As I understand it, when the Clause 9 procedure is instigated, the order relating to the licence will be placed before both Houses of Parliament. What happens thereafter to amendments and modifications to the licence? I ask that because presumably the order under Clause 9 will not be retabled each time there is a modification. Some of the modifications might be rather important. Would there be a system to take account of that? If my noble friend does not have an immediate answer, it would be helpful to know that he is giving thought to the matter with a view possibly to returning to the Chamber with a statement at some future date. I beg to move.
Lord Cockfield: With regard to the first question raised by my noble friend, we have of course met this point on almost every single occasion upon which either this or any other Bill provides for a statutory instrument to be made, and invariably the Government have proposed the negative procedure and invariably the Opposition have proposed the affirmative procedure. The time may come when we have to fight this one out. We ourselves believe that the negative procedure is the correct procedure in a case of this kind. So far as the 28 days are concerned, perhaps I may write to my noble friend to elucidate the particular point that he raises.
On the question of the modification of licences, I would suggest that my noble friend reads very carefully the statement that I have made because the point that he now raises was in fact covered in that statement. A very careful regime is set out in Clauses 12 to 15 of the Bill, which deal with the procedure to be adopted in the case of modifications. It is important to make the point that the Secretary of State does not come into that procedure. The modifications may be made by the director by agreement with the licensee, but, if there is no agreement, they must be referred to the Monopolies Commission, and the Bill then goes on to provide that a recommendation by the Monopolies Commission must be carried out by the director. So we believe that we have that point properly tied up. However, if after he has read what I have said my noble friend wishes to come back on any other point, I shall be only too pleased to try to clarify it.
Lord Bruce of Donington: The noble Lord has shown a most constructive attitude towards this amendment and the earlier one which I had the

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honour of moving on behalf of myself and my noble friends. The noble Lord touched on the question of modifications and it would be most helpful to the Committee if he could deal with a situation where the licence modifies itself in the passage of time.
I have in mind, for example, Condition 24, which refers to the most important RPI minus X formula, which has been sold to the general public very largely as being one of the reassurances that the Government have no evil intention in regard to the consumer. It will be observed that in Condition 24.1 the RPI minus X percentage is due to expire on 31st July 1989. That has nowhere been explained in the political observations made not only by noble Lords opposite, but also by Members in another place. If any fortification of that point is required, I would say that the noble Lord will doubtless be well aware of the letter which Mr. Baker contributed in October last to the Economist, in which he made no mention of this limitation. Even though the public may to some extent have severe misgivings, which I am sure is the case, they have been partially reassured by the RPI minus X percentage factor by which charges are prevented from rising by more than a certain percentage in relation to the retail price index. What the public have not been told, and what they must be told, is that this undertaking applies for five years only.
I wish to ask the noble Lord how this situation is dealt with vis-à-vis parliamentary control. Here, in Condition 24.1, is a licence that modifies itself by excluding the provisions of its own clause after a period of time. How will Parliament take control of that? Perhaps the noble Lord will be able to reassure the House, and I am sure the country, by saying that, as this is only a draft licence and not yet in its final form, the time limitation, when it comes to the final form, will he eliminated. If the noble Lord can say that, we shall all be reassured and even happier than we have been made by the noble Lord on a number of other matters on which he has been most constructive this afternoon.
Lord Cockfield: The noble Lord is entirely correct in so far as he says that the RPI minus X formula is written in for a period of five years. This, I understood, was fully known. We would hope that, at the end of that period, competition would have developed in such a way that the formula was no longer necessary. But the Bill contains provisions to deal with such a contingency. The director is put in with a duty—it is important to stress this—to protect, inter alia, the interests of consumers. If, therefore, he felt, in pursuance of his duty, there should be some continuation of the RPI minus X formula, then it would be his duty to suggest a modification of the licence procedure accordingly. If the licensee refuses to agree, the next provision comes into effect; namely, Clause 13 of the Bill which we shall be discussing in due course. If the licensee refuses to agree, the director may then refer the matter to the Monopolies and Mergers Commission. If the commission comes to the conclusion that some such provision should be continued or inserted in the licence and recommends to that effect, then, under Clause 15, the director shall make such modifications as appear to him requisite for the purpose of remedying the adverse effects specified
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in the report. I think, therefore, that we have dealt with this contingency very fully.
Lord Mottistone: Once again, I thank my noble friend for his great concession. I beg leave to withdraw the amendment.
Lord Weinstock: In view of the earlier tenor of discussion in Committee, I have been agreeably surprised by the atmosphere of light and constructiveness that has pervaded the Committee's deliberations today. I hope that your Lordships will grant me indulgence in that my lack of experience in parliamentary affairs does not leave me entirely clear whether the assurance given by the noble Lord, Lord Cockfield, means that the licence will be laid before Parliament and will be discussed and approved by Parliament before it becomes effective and that the terms of the licence will not be settled between BT and the Secretary of State in any way that will affect the placing of shares in British Telecommunications plc until that has happened.
Amendment, by leave, withdrawn.
[Amendment No. 72 not moved.]
On Question, Whether Clause 7, as amended, shall be agreed to?
Lord Bruce of Donington: I speak on clause stand part if only to give the noble Lord an opportunity of replying to the point put by the noble Lord, Lord Weinstock. The noble Lord, Lord Weinstock, may not have been aware of the precise terms of the debate in which the point of the earlier amendment in the name of myself and my noble friends was concluded.
There is another point that I should like the noble Lord to explain. If the licence of British Telecom was incorporated in the Bill, it is the position, according to my understanding, that the Bill, being in favour of a specific institution, would automatically be made into a hybrid. I should like confirmation formally on that point. Otherwise, there are reasons why the licence, before it is granted, should be subject to Parliamentary debate. I believe that the assurance so far given by the noble Lord amounts to the fact that on Report stage an amendment will be introduced that will result in the licence to BT being debated when it is finalised and put formally to the House for confirmation. So there will be some debate on it even though, by its particular structure, the House will not be able to amend it. Perhaps the noble Lord will confirm that.
Lord Cockfield: May I first reply to the noble Lord, Lord Weinstock. I would ask the noble Lord to read the statement that I made. This is a very complex and difficult matter. The statement was very carefully considered. The short answer to his point is that the licence, which will be made at the same time as the order, is, in its final form, a signed licence. That is essential if we are to meet a criticism that the Secretary of State might alter the terms of the licence between the time that Parliament saw it and the time that it was granted. If Parliament does not like the licence in the form that it has been granted, it then votes against the statutory order. If it strikes down the statutory order, then de facto, not de jure, it strikes down the licence as

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well. You have therefore this complete flexibility which means that all the points that have been raised are met. It is because the legal position is such an intricate one that I would ask the noble Lord to read the statement that I have made. If there is any point on which he feels that further elucidation is required I would be glad to give it.
On the point of hybridity, this matter, as the noble Lord, Lord Bruce, will be well aware, is one of great complexity. I think that I am not wrong in saying that a ruling on this point is more a matter for the House authorities than for me. Nevertheless, we were acutely aware of the risks of hybridity. That is why we proceeded by taking Clause 9 as the basis. Clause 9 relates to a class or group. I endeavoured in my statement to indicate the people who were likely to be within that class or group. All of us know who the important ones are going to be. However, because it is a class or group covered by a clause in the Bill, it does not get into difficulties on the hybridity point.
Lord Morris: Before we leave Clause 7, I wish only to draw attention to the penultimate word on page 8 in subsection (5)(b). I feel sure that officials have picked up this mis-spelling although I will be rather sad to see it go as it conjures up a delightful picture of the Secretary of State considering fees in a most exotic and aromatic atmosphere.
Lord Cockfield: I am sure that the point has been noted and will he dealt with in the appropriate fashion.
Clause 7, as amended, agreed to.
[Amendment No. 73 not moved.]
5.40 p.m.
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 73A:
Alter Clause 7, insert the following new clause:
("Procedural measures of safeguard.
.—(1) A decision to grant, vary, or refuse a licence under the provisions of this Act or of the Cable and Broadcasting Act 1984 shall not be made unless and until—

(a) consultation shall have ensued between the Director and the Cable Authority;

(b) written observations as to terms and conditions of grant, variation, or grounds of proposed refusal shall have been exchanged between the Director and the Cable Authority;

(c) a copy of such written observations shall have been supplied to the applicant; and

(d) the applicant shall have been afforded an opportunity of making written and oral representations on such observations in support of his application.

(2) The decision mentioned in subsection (1) above shall be a reasoned decision in writing.").
The noble Lord said: I beg to move the new clause, Amendment No. 73A, which stands in the name of the noble Lady, Lady Saltoun, my noble friend Lord Mottistone, the noble Lord, Lord Spens, and myself. This amendment is not concerned in any way with designation under Clause 8 to which, as I understand it, my noble friend the Minister intends to introduce an amendment on Report. This amendment is concerned with something quite different.
The origin of the clause was in Amendment No. 108B of the Cable and Broadcasting Bill, and its sister amendment—Amendment No. 73—to this Bill.
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During the Committee stage the amendment, in its original form, was found by the noble Lord, Lord Mishcon, in particular, to be open to three objections. The first was that the drafting was too detailed. The second was that the drafting could involve possible disclosures of confidential documents and legal arguments. The third objection was that the full review procedure of such a decision was not appropriate.
I took full note of those objections and I am indebted to the noble Lord for his reasoned analysis which appears at cols. 838 and 839 of the Official Report for 2nd February. I have sought to defer to the reasoning of his analysis in drafting Amendment No. 73A which I move before your Lordships at this time, it being in the same terms—and this is important—as the sister amendment already tabled for Report on the Cable and Broadcasting Bill.
To use the words and the concept (if I may borrow them) of the noble Lord, Lord Misheon, I have tried to secure that all applicants for licences have a fair deal; to secure a minimum requirement within the basic principles of natural justice; and to provide a safeguard against abuse of administrative discretion. There must surely be consultation between these two bodies before the grant, the variation or the refusal of a licence by either. Of course, I take on board the fact that variation is expressly covered by Clauses 12 to 15.
However, that, on an analysis in depth—in which I shall certainly not seek to indulge in opening this amendment—is hardly sufficient. It is hardly sufficient because in any event an applicant should be entitled to know the provisional objections which he has to face after consultation between these two bodies has ensued. The applicant must be entitled to make representations in support of his application and he must be entitled to a reasoned decision which must be handed down. It is suggested that such are the minimum procedural measures of safeguard and that is precisely what this and its sister amendment seek to achieve—minimum procedural measures of safeguard requisite to reflect the requirements of natural justice and to secure a fair deal for all applicants. On the previous occasion at the Committee stage of the Cable and Broadcasting Bill, the noble Lord, Lord Harris of Greenwich, strongly supported this concept and again I acknowledge my indebtedness to him for his support.
In conclusion, were this amendment to be adopted it will only be possible for the courts to interfere with the licensing decision on grounds of want of due administration in the exercise of the general supervisory jurisdiction which the High Court exercises over all inferior tribunals. There can be no question under this amendment of the court substituting its own decision for that of the licensing authority. There is to be no full review; there is to be no appeal, and there is to be no hearing de novo. But the absolute discretion of the Executive will be mitigated by the provisions of this amendment which require compliance with natural justice and the handing down of a reasoned decision. If this is done, then the courts will have no jurisdiction, indeed no reason to interfere. This is put forward as a minimum safeguard. On behalf of the other noble Lords and the noble Lady whose names are associated with this amendment. I beg to move.
Lady Saltoun: The object of this amendment is to bridge the gap which yawns between Oftel and the Cable Authority. In view of the fact that different Government departments are not noted for cooperating with one another—to put it mildly—and that with both present and future developments such as Prestel, telebanking and teleshopping, cable and telecommunications are inextricably entwined, it is essential, whether the Government like it or not, that the duty of Oftel and the Cable Authority to cooperate should be clearly written into both this Bill and the Cable and Broadcasting Bill, because ministerial assurances, however sincere, have no legal force. Moreover, I believe that the bridging of the gap between Oftel and the Cable Authority will be welcomed by British Telecom who, because of the interplay between the two technologies, are not at all happy with the proposed dichotomy.
Earl De La Warr: I am extremely grateful to my noble friend Lord Campbell of Alloway for moving this amendment. Before I talk to it, I must declare my interest as a director of one of the new cable companies. I drew attention to the question of dichotomy of control as long ago as the debate on the cable White Paper in July, and I have talked to it whenever appropriate ever since.
The cable operators—both the present ones and those to come—are extremely concerned about the fact that this new, high-risk industry is to be controlled under two separate Acts of Parliament and administered by two separate authorities which will be under the aegis of two separate departments of state. I believe, with them, that, not only at the granting of the licence but right throughout the length of the cable operators' tenure, there is a danger of muddle.
The noble Lady, Lady Saltoun, referred to the fact that there was not always agreement between the two departments concerned. I do not want to go into the history of the matter, but when it became clear that this new industry was to be thus controlled, it immediately became as clear that there must be a statutory linkage between the two departments. Let me give your Lordships an example. Both Bills require that before licences are issued—the one by the Cable Authority and the other by Oftel—there shall be consultation and the receipt of representations from local authorities and from the public. Will these two authorities, which are quite distinct from each other, consult together? Will they go to the public together and present the case, and together receive representations? Of course, in all good sense they must.
However, like my noble friend and the noble Lady, I am deeply concerned to make sure that the two authorities work together, and I shall remain concerned until something is included in both Bills which links them together by statute. I do not ask my noble friend to take exactly the wording which appears in this amendment and which will, as he says, appear in exactly the same form in an amendment to the cable Bill. I do not want to hear detailed comments about exactly how we have dealt with it, although I believe that my noble friend has it exactly right.
I want an assurance from the Government that they have taken the point of the statutory need for
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consultation—one between the other, as equals—and that they will accept an amendment of this type, embodying all these principles, so that, when we come to the other Bill, we may see the two running alongside each other. That will go a very long way to mitigate the inherent difficulties that the industry must face in having to deal with two departments. Anything less than that will leave us very worried and will leave our supporters in this high-risk industry much less willing than they would otherwise have been to support this brave new experiment.
Lord Milverton: I should like to support my noble friend's amendment and I hope that Her Majesty's Government will be able to accept it or, as my noble friend Lord De La Warr has just said, give us an assurance that the principles behind it will be included in the Bill. I hope that the Government will either accept my noble friend's amendment or give an assurance that the principles behind it will be brought into the Bill.
Lord Howard of Henderskelfe: Like the noble Earl, I do not trust assurances. Governments change, different parties come to power, and the assurances of one Government are as nothing to the next. We are already in a thorough organisational muddle over cable. This has recently been enhanced by the transfer of the radio regulatory department—which one might think has nothing to do with cable whatever but which, in fact, does—from the Home Office to the department. At times one is tempted to ask: is this a private fight or can anyone else join in?
I believe that the various forms of consultation which are to be pursued in the future must be laid down very strictly in the Bill, because if they are not, there will be the muddle at the edges which some people erroneously think is the genius of British democracy, and I believe that we shall he asking for trouble in the future. This is not an easy Bill to understand; nor is the Cable and Broadcasting Bill. Let us do our best to ensure that with identical words in both Bills relating to consultation, there is no room for doubt whatever.
5.55 p.m.
Lord Mackay of Clashfern: Perhaps I may deal with the first aspect of the amendment—that is to say, consultation between the director and the Cable Authority—and then come to the more detailed aspects of it later. First, may I start with what is perhaps a truism, but nevertheless an important one. Cable systems are telecommunication systems in just the same way as is the telephone network. They are no different from other broad-band systems and the only reason that they have become generally known as cable systems is that it is proposed to send over them cable programme services, defined in both Clause 54 of the Bill and Clause 2 of the cable Bill.
In fact local cable telecom systems have an importance greater than simply the entertainment services that they will provide. They are expected to develop into major local telecom systems which in due course could come to rival the British Telecom local network. The Government have made it clear that they also wish them to offer services quite different

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from what we have defined as cable programme services. For example, the applicants for the pilot cable licences will be required to indicate what interactive services they would provide—services such as telebanking, teleshopping, and so on. Some applicants have also outlined their plans for two-way telecommunication services, including the provision of voice telephony services.
I hope that I have explained that the licensing of a cable telecommunication system involves much wider considerations than simply what I shall term, for the sake of brevity, "broadcasting considerations". Nor are the considerations simply those of setting the technical standards. There are vital economic and commercial considerations to be taken into account as well as the need to protect the physical requirement. These matters are not the concern of the Cable Authority. This is why the two licensing functions—that under this Bill and that under the cable Bill—are distinct.
Quite simply, there are different factors which are relevant to the issue of each licence which grants permission for different activities. These different factors and considerations are clearly set out in the two Bills. Under this Bill, in deciding whether or not to grant a licence, the Secretary of State will be bound by the duties set out in Clause 3. These we have already discussed and they represent the national telecommunications objectives. Similarly, in deciding whether to grant a cable programme licence, the Cable Authority must also have regard to statutory criteria set out in Clause 6 of the cable Bill.
As far as the running of a telecommunications system is concerned, the primary licensing authority is the Secretary of State. This is because the Government consider that telecommunications is too important for licensing to he given to an authority not directly responsible to Parliament. Of course, the Secretary of State may delegate this licensing function to Oftel, but he does not intend to do so in respect of important licences, and this includes those for wide-band cable telecommunications systems.
So far as cable programme services are concerned, the primary concern is the content of the messages that are sent, and the Government believe it right that judgments on such matters should not be taken by the Secretary of State but by an independent authority. This aspect of the amendment which we are considering has two aims. The first is to require the Secretary of State to consult with the Cable Authority before he issues a licence; and the second is to require him to take into account the Cable Authority's views on both the terms of the licence and how he is to interpret his Clause 3 duties. It may be more convenient if I take the second aim first because I think it is more easily dealt with.
I hope that I have shown your Lordships that there are different criteria and considerations which are relevant to the grant of each licence. Quite simply, matters such as the content of cable programmes, their quality and their origin are not relevant to the consideration of whether or not a telecommunications licence is to be granted. What is important in this connection is the duties in Clause 3. To require the
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Secretary of State to take account of the opinions of the Cable Authority would, in effect, mean that the appointed Cable Authority would be in a position to suggest to the Secretary of State, who is responsible to Parliament, how he should exercise his powers in relation to peforming the duties that Parliament has set upon him under Clause 3. In our view, it is for the Secretary of State and the director to make judgments in this area, guided by Clause 3, just as it is for the Cable Authority alone to make judgments in its area of responsibility.
However, this is not to say that both licensing authorities will operate without any regard for the other. This would not be a sensible way to proceed, and I am sure there will be close co-ordination. It is this close co-ordination that I think my noble friends and others who have supported this amendment are seeking to achieve by imposing a statutory requirement on the Secretary of State. As my noble friend Lord Elton explained in the earlier debate on the Cable Bill, such a requirement is unnecessary because there is already a requirement on the Cable Authority to consult. Noble Lords may well ask, "Even if it is unnecessary, what is the harm?" I shall try to explain why a requirement in this form would be inappropriate.
First of all, many telecommunication systems are capable of conveying cable programmes, not just those being run solely for the purpose of providing programme services: but the Cable Authority will have no interest in these systems, so it would be quite wrong for the authority to be consulted when these systems are licensed under the Telecommunications Bill.
Secondly, precisely because telecommunication systems can be run otherwise than for the provision of cable programmes, it is quite possible that when the runner of this system applies for a licence to the Secretary of State he does not intend that cable programmes requiring a Cable Authority licence shall be provided over it. This may come much later. Therefore, a requirement to consult at the initial licensing stage would be inappropriate. The only cases where a requirement to consult is sensible are those where a system has to be installed and operated for the primary purpose of providing cable programmes, but in this case there is already a requirement to consult through the obligation on the Cable Authority. I hope that I have said enough to convince your Lordships that a blanket requirement of the Secretary of State to consult in relation to each telecommunication licence would he unworkable and inappropriate.
Nevertheless, I am aware of the views of noble Lords and I accept that there will be merit in the Secretary of State, the director and the Cable Authority keeping in close touch about developments within each other's sphere of responsibility. Therefore, I undertake to consider further with my right honourable friends this aspect of the amendment to see whether we can devise an appropriate requirement which should be placed on the Secretary of State and the director for consultation.
I now turn to the other aspect of this amendment: the requirement to send written representation to the applicant and to enable him to make representations on them. I do not believe this is either necessary or desirable. First, in the case of variation of a licence, this Bill already provides for notice to be given by the

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director of any variations he proposes to make, and for representations to be made which the director must consider. These are in Clauses 12 and 15, and my noble friend Lord Campbell of Alloway has already referred to that aspect.
As regards the issue of licences, I do not think that giving written observations to the applicant and allowing him to make representations is an appropriate way to proceed. First of all, it would be quite impracticable in view of the large numbers of licences—perhaps 3,000—to be granted under the Bill. The licensing process would probably grind to a halt under the weight of the bureaucracy created. This would be a long way from the streamlined and efficient licensing procedures that the Government are trying to achieve under both this Bill and the cable Bill. It is not in the interests of either the telecom or the cable industry to have a highly bureaucratic licensing regime, but there are also objections in principle.
Where there are competing applications for a particular area, it will generally be the case that only one will be selected. Applicants therefore may be rejected for no reason other than that there was another application considered to be superior in the particular circumstances that I figured. To give each applicant access to written observations and associated correspondence would result in the licensing authorities having no alternative but to supply details of the commercial arrangements of the competitors. This is the point that the noble Lord, Lord Mishcon, made in relation to the same consideration when it was being discussed in connection with the cable Bill. The applicants would then be at liberty to make representations not just on their own case, but on those of the competing applicants; but in each case the duty which lies upon the Secretary of State and the director will be the duty imposed on him under Clause 3. If the Secretary of State and the director do not perform that duty of course they can be challenged in the courts in the normal way. In cases of maladministration it can be taken up with the ombudsman, whose ambit is extended to include the director by Schedule 1 of this Bill.
I hope in the light of the undertaking I have been able to give to your Lordships, my noble friend will feel able to withdraw this amendment, which we have certainly considered very carefully.
6.6 p.m.
Earl De La Warr: Before the debate comes to an end, may I say that I find myself very confused by much that the noble and learned Lord has said, because for about nine-tenths of his speech he did not appear even to have taken the point about what it is we were asking for. He referred constantly to the Secretary of State. We are asking for it to be written into statute that Oftel and the Cable Authority consult each other on the granting or modification of any licence. From hearing the noble and learned Lord, it seems that between us we have failed to make our point.
Here is a cable consortium which is able to lay the wire, it is able to put down, if you like, television programmes; it is able to produce the interactive service that he referred to. It is all one body. I must make the point quite clear that what is splitting this
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into two is the fact that the two great departments of state found themselves unable to come to any accommodation. The reason they found themselves unable to come to any accommodation—and I hope I am not teaching my grandmother to suck eggs because I must tell my noble friend a little history—is because for the past five years an argument has been raging between the Home Office and what we call the Ministry of Technology as to who should control broadcasting. There have been some very weighty arguments by senior statesmen of great weight. They have fought each other along with their civil servants and they have used—perhaps I should not refer to knives in this Committee. Right in the middle of this argument, which was nearly lost by the Home Office some 3J, years ago, and to my certain knowledge was nearly lost by them last year, cable comes in to complicate this argument still further.
They have therefore arrived at a political compromise and they have done so by the most extraordinary means. My noble friend would need to refer to the wording on the notes to the cable Bill in order to see how they have done it. They have said:
"For the purposes of this clause it must be accepted that the act of sending and the act of conveying are conceptually distinct".
That is how the two departments have got out of their dilemma.
Now, for my noble friend to take the line he has and pretend everything is perfect, and that it can be assumed by cable operators—whether they be operating already or whether they be applicants—that the way will be made easy because automatically these two authorities, bossed by these two warring departments, will consult with each other, is simply to take an attitude which I can only describe as living in cloud cuckooland. It is for this reason that we are pretty well convinced that the cable industry is unlikely to get off the ground as the Government as a whole intended —not just one department—if we do not get the assurance from the Government that these two authorities will have to consult with each other.
My noble and learned friend referred to the fact that in the Cable and Broadcasting Bill, I think under Clause 5(4), the Cable Authority was required to consult with Oftel along with local authorities. It was put in as almost a throwaway in one line. There is nothing in the Telecommunications Bill which says the same thing; nothing at all. It is what I called in another debate a universal blank. My noble and learned friend has talked as though he did not appreciate any of these things about which we are so anxious on behalf of a brand new industry.
At the end he has given what he regards as some sort of an undertaking to take a point which, by his speech, he clearly had not taken. He seems to expect us now to be satisfied. Of course we are not satisfied. We shall no doubt study what he has said, and I must leave the matter there to my noble friend, who will doubtless give the Committee the benefit of his views on what has been said.
Lord Ardwick: I have a good deal of sympathy with the words that the noble Earl has just uttered, and a good deal of sympathy too with the first part of the amendment. It seems to me obvious that there have to he legislative arrangements for collaboration. In the

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Cable and Broadcasting Bill these arrangements are most perfunctory. They have to be made specific. I hope that when the noble and learned Lord and his colleagues are looking at this—if they look at this question again—they will refer back to the White Paper because they have gone away from it in their answers this afternoon.
Lord Campbell of Alloway: I should like to thank all noble Lords, who have spoken from all sides of this Committee, who have shared my concern. I have absolutely no interest whatever to declare other than that of an ordinary lawyer who wants to see fair play done, and reasonable protection for the Queen's subjects in a statute. In that vein, I should like to say in particular to my noble and learned friend, speaking only for myself, that I am terrified not only at what I see in this Bill but at what I understand his attitude, with his ministerial hat on, appears to be.
On the first issue, the issue of consultation, my noble and learned friend produces a most interesting and most erudite deployment of the many considerations involved, entirely missing what I understood to be my main point. Why? With respect, I think it is because—and this shows this curious defect, this perishable thread, which the Ministry do not appreciate—the noble Lord, Lord Elton, on 2nd February at column 817, expressly recognised that it was requisite to have a degree of commercial compatibility between the two sets of licences. But my noble and learned friend today does not recognise that necessity. Hence the first aspect of genuine concern, without seeking to make too much of it or to repeat myself, but just to say that I am sure that from the Front Bench there will be close co-ordination, but what on earth does that mean? What safeguard does that give the subject? What is its value? None.
On the second point, which is that it is neither necessary nor desirable in any way to seek to curb the absolute exercise of discretion by the ministry, I for one will have none of it. I do not believe in absolute administrative discretion. Anyone who has been subjected to it either personally (which fortunately is not my case) or professionally (which often is) would have none of it, either. I once more ask my noble and learned friend to think again. This is not a tease of the Front Bench; this is not a political stance; it is an expression of genuine and real concern.
To talk about the ombudsman is wholly inappropriate, but time prevents me from saying why on this occasion. It is essential that the applicant should have a fair deal, and these are the minimum requirements by which he can be provided with a fair deal. In the battle of the civil servants to which my noble friend Lord De La Warr referred, what does it matter who are the Roundheads and who are the Cavaliers? We have now the conceptual distinction of the indivisible, which satisfies both sides.
This distinction is the distinction between the desire or facility to send a message and its actual conveyance by cable, and in that way everybody appears to be satisfied. But I hope not. This gap to which the noble Lady, Lady Saltoun, has spoken is real. It ought to be faced; it ought to be bridged; it ought to be dealt with sensibly. There should be, as the noble Lord, Lord
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Ardwick, has just observed, some form of mandatory statutory consultation between these two bodies. Those were not his terms, but I hope I do justice to his thought. Indeed, there must be this other aspect of natural justice.
I find myself in a difficulty. I would really wish, my concern being such, to divide your Lordships' Committee, but I do not think that would be prudent because it gives my noble and learned friend no fair opportunity to consider whether the concern expressed by your Lordships from all sides of the Committee is reasonable, is fair, and whether it ought to be met. It is in that vein that I would wish to give the Front Bench, my noble and learned friend the Minister, a further opportunity. But if that opportunity is not taken I reserve the right, with the other noble Lords who supported this amendment by tabling their names to it and who have spoken tonight in support, to bring this matter again before your Lordships on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 [Special provisions applicable to certain licences]:
The Deputy Chairman of Committees (Baroness Wootton of Abinger): I have to point out to your Lordships that if Amendment No. 74 is agreed to I shall not be able to call Amendments No. 74A, No. 75 or No. 75ZA.
[Amendment No. 74 not moved.]
6.20 p.m.
Lord Morris Lord Morris moved Amendment No. 74A:
Page 10, line 8, after ("system") insert ("of any other systems licensed under section 7 above and").
The noble Lord said: On behalf of my noble friends Lord Trenchard and Lord Mottistone I move this amendment, which stands in my name as well. The purpose of the amendment is solely probing. In so moving, I wish to point out at the outset that it is not so much that I ask for a detailed statement on policy from my noble friends on the Front Bench, for I believe that would be quite wrong. However, if they determine that they would prefer to let me and my noble friends know in writing that we may have some grain of comfort in this regard, that would be of great help.
As your Lordships are well aware, Clause 8 places a duty on the director to publish, in certain instances, the fact that he proposes to grant a licence by virtue of Clause 7, the reasons why he proposes to grant the licence and, in so doing, he shall give enough time on the granting of this licence for consideration of any representations or objections to that licence.
To put it in the vernacular, this will only apply to those licences which, for want of a better term, may be called the big licences. That is my understanding of the clause. That Her Majesty's Government, in tabling the Bill, are determined to grant licences to legal persons to connect to any system is quite clear as we know from the powers to licence systems under Clause 7. As to the application of Clause 8, it is clear from Clause 8(1)(b) that Her Majesty's Government will, in

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due course, be licensing corporations to connect systems and such apparatus in the future. Still further, if one looks to that draft licence, which does not exist, at Condition 13.1 it is even clearer; namely,
"the Licensee"—
the major licensee which we all know is the major operator of the public switched telephone network—
"shall … connect and keep connected to any Applicable System … any other Connectable System whenever the person running that system so requires".
Indeed, he must,
"provide other such telecommunications services as the Operator may reasonably require to secure that such connection is effected and maintained".
My reason for tabling the amendment is my concern that, by virtue of those same condition, there are considerable—to use the vernacular term—"copouts", by virtue of Conditions 13.3, 13.4 and 13.5. There will he no duty to connect any other system if that system were seen by the licensee—not by Her Majesty's Government—to impair the quality of any telecommunications service provided by the licensee.
The licensee shall have no obligation to do anything under that duty, to which I earlier referred in Condition 13.1,
"unless the relevant conditions and terms have been complied with".
The licence goes on to spell out in detail a whole series of conditions, terms and matters that have to be complied with. In other words—I may be quite wrong about this—the old system, whereby the tempo of change lies with the major operators of the public switched telephone network, and may be controlled by them rather than by Government or an independent body, seems to have been paid service to within the conditions of a licence, although if one looks at the Bill without considering the licence, as we have heard today, that is not the case.
Lord Somers: I am sorry to interrupt the noble Lord, but surely it is in the interests of any small system to provide an interconnection because that will greatly increase its use.
Lord Morris: One would certainly have thought so, but practice in the past has not necessarily proved that. Because of the timing, a person wishing to provide a value added service to the existing network may he prepared so to do and ready to do it, but the partner who is needed to supply this service may not he ready, willing or able to provide that service.
With those remarks, I beg to move the amendment standing in my name and in the name of my noble friends.
Lord Mackay of Clashfern: This amendment raises quite an important matter in the way that my noble friend has moved it. Perhaps I could concentrate on one aspect of the matter. As I understand it and the way he has explained it, this amendment would require British Telecom to connect each and every system which was licensed under Clause 7, to take British Telecom as an example. If we were to do this the Secretary of State or the director would have to do one of two things. The first would be to write into all
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the licences for telecommunications systems granted under Clause 7 the rules that would have to be met, if they were to be connected to carry traffic to and from any of the public networks. This would not be right because there is an increasing number of systems which are licensed under Clause 7 but which are not connected to the public network or which serve specialist functions where connection is not wanted. There is no point in having in such telecommunications licences conditions which would make them compatible with connection to the public system. The operators of these systems clearly do not have to meet, and do not want to have to meet, unnecessary and expensive rules.
The second course would he to abandon all standards so that anyone could connect any system to the British Telecom and Mercury networks. I am sure your Lordships appreciate that that would rapidly bring about a reduction in the quality of the public telecommunications service. As a recent Which? report shows, there is wide criticism of the quality of the service which British Telecom provides and the technical advice I have been given is that the connection of systems which do not comply with standards would increase the noise on some circuits, would make many calls inaudible, would cause increasing numbers of calls to fail to get through and would cause many lines and even whole exchanges to appear to be engaged when they were not.
I feel sure that the Government share the same aims as my noble friend in connection with this amendment. We have thought about the issues carefully and we think the best course is to say to British Telecom and to public telecommunications systems' operators that the Government require them to connect other systems but that this requirement should apply only when the other systems are constructed, maintained and operated according to the rules laid down in their licences. The amendment would prevent us from writing the rules into the licences or will require us to apply the rules to all systems licensed under Clause 7; and for the reasons which I have explained this does not appear to be appropriate to achieve the aims which the amendment sets out. I hope that in the light of this explanation my noble friend will feel able to withdraw the amendment.
Lord Morris: I am grateful to my noble and learned friend the Lord Advocate for his explanation. I accept entirely from what he has said that the amendment is highly defective, not only in its position in the Bill but no doubt in its wording as well; but I made it clear at the outset that it was a probing amendment. If, between the two stages of the Bill, he could give me some assurance as to the fears of many with regard to the intent of Her Majesty's Government over encouraging as hard as possible the connection to any licensee's network of value added services and encouraging this position, I would he very much obliged to my noble and learned friend. I beg leave to withdraw—
Lord Torphichen: Before the amendment is withdrawn, may I ask my noble and learned friend the Lord Advocate whether the advice that he has had concerning attachments choking up the system and leaving extensions apparently engaged referred to

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illegal connection and apparatus? Or was the reference to the connection of some legally allowed apparatus and its misuse?
Lord Mackay of Clashfern: I was referring to the technical incompatibility of the one system with the other. The point that I am making is that if you allowed a complete free-for-all you would have a situation where people might attempt to interconnect incompatible systems. On the other hand, if you wanted to permit interconnection you would have to lay down the correct technical standards; but you would not wish to impose these technical standards on systems which do not want to interconnect. The imposition of the standards and the desire to interconnect require themselves to be properly related (I was about to say "connected"). You must relate them properly. That is the point I was seeking to make.
Lord Bruce of Donington: I sincerely hope that the noble and learned Lord will not be in a position to give his noble friend Lord Morris the assurance that he requires. Otherwise, we on this side of the Committee will feel constrained to oppose the amendment.
Lord Morris: I do not think it matters. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.34 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 75:
Page 10, line 20, leave out ("and") and insert—
("( ) to provide the connections in paragraph (b) above at an interconnection level that is appropriate to the needs of the person or persons in paragraph (d) above and fully automatic where requested and under fair and reasonable contract conditions: and").
The noble Lord said: I have been asked to move this amendment on behalf of the noble Earl, Lord Halsbury. The terms "preference- and "discrimination" in Clause 8(1)(d) are relative to the service provided to others and therefore may not apply in all cases. It has not been unknown (and can easily be imagined) that a monopoly carrier forced by statute to connect a competing system to its own system, might find it more convenient to provide that connection at a lower standard or at a lower grade of service than the competing network requires; or to make the terms and conditions of the connection very unfavourable. In this connection it must be understood that the systems to be connected will range from Mercury at the big end, so to speak, to a small private exchange with only two exchange lines which might not be purchased from British Telecom. The purpose of this amendment is to provide positive protection for the applicant system against a reluctant monopoly if this becomes necessary. I beg to move.
Lord Bruce of Donington: I trust that, when the noble Lord replies to this amendment, he will bear in mind his observations about needs which are incorporated in the amendment and his reaction to needs when it came to consider early amendments to Clause 3 which referred to the needs of people as distinct from the demand.
Lord Mackay of Clashfern: Obviously, I should have regard to what was said before about needs in what I am now going to say. So far as this amendment is concerned, and as my noble friend has explained the amendment, the Government share my noble friend's objectives. I would wish to explain briefly how we intend to achieve them. The Government have already set out their policy on high-level interconnect. Condition 13 of the draft British Telecommunications licence lays down the principles on which the Government intend interconnect to take place. Our aims were underlined on 17th November 1983, when my right honourable friend the Minister of State for Industry and Information Technology said in another place:
"We intend any person connected to any public telecommunications system to be able to call any person connected to any other public telecommunications system. That is our firm aim."
I should like your Lordships to be in no doubt that we intend not only to achieve this but also to achieve it as soon as this Bill is enacted and gives us the necessary powers.
I should also say that much has already been achieved on the road to interconnection. Your Lordships will know that there is a full automatic dialled connection between British Telecom and the Hull system and between British Telecom and the host of private branch systems in offices and factories throughout the country. There is also a low level of interconnection between British Telecom and the Mercury system: but I would ask your Lordships to excuse me from dealing with the detail of this subject because of the present pending litigation. Air Call has also secured arrangements for the automatic connection of its radio paging system to British Telecom. Arrangements for the automatic interconnection of its radio message handling system with British Telecom are being delayed by the lack of agreed technical arrangements for such interconnect and by lack of agreement on charging protocols et cetera. But the principle of automatic dialled interconnect between private mobile radios and the British Telecom systems is, I understand, accepted by all concerned.
We have drafted this Bill not only to ensure that dialled high-level interconnect does take place but also to ensure that the Secretary of State and the director have no alternative but to use their licensing enforcement powers to achieve this objective. This is achieved, we believe, by Clauses 3, 4 and 7 as drafted. Clause 3(1)(a) lays down that it is the duty of the Secretary of State and the director to exercise their functions in the manner they think best calculated to secure that there are provided such telecommunication services as satisfy all reasonable demands. There can be no doubt that there is a demand for the type of interconnection I have just described, which means that the Secretary of State and the director will be obliged to exercise their functions to secure the provision of that interconnection, subject only to the limitation of what is practicable and whether their actions may damage the viability of those who provide telecommunication services generally. The Secretary of State proposes to use the powers conferred on him under Clause 7 to include

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what is now draft Condition 13 in the British Telecom licence.
I should like to say in conclusion that the Government do not feel it appropriate to refer to interconnection levels in the Bill. These concepts are apt to be ill-defined and relate to the existing analogue technology. I am advised that digital technology will radically alter the position and will probably render obsolete the existing concept of levels. Having said this and sought to explain the Government's commitment in the matter, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Mottistone: I thank my noble friend for that very full reply. I shall read it carefully, and in the meantime I beg leave to withdraw the amendment.
Lord McIntosh of Haringey: Before your Lordships give leave for the amendment to be withdrawn, apologise for intervening at this stage but I had not realised that it would be withdrawn so rapidly. When I come to read the reply of the noble and learned Lord, I hope it will not be as favourable to the noble Lord, Lord Mottistone, as the noble Lord seems to think. This is a much more serious matter than would appear from the technicalities of levels of communication. This is not the case of one telecommunications operator dealing with another on equal terms. It is a question of the way in which British Telecom deals with other licence holders, and they are by no means on equal terms.
In one sense it might he thought that the power of BT is very great under the provisions of this Bill, and I agree that is the case; but if the Government go too far along the roads being so seductively proposed by the noble Lord, Lord Mottistone, and his noble friends, the possibility is that BT will land up with all the obligations and the other operators will land up with all the advantages. That is a serious possibility if we go too far towards this amendment. There is a possibility that if British Telecom no longer has the power to control the method by which other operators connect with its own system it will be left providing the basic and not necessarily profitable system, which includes the obligation to supply residential households, for example, and the other operators will simply come in at whatever level they choose and skim offall the cream. That, as I say, is a serious possibility, as I am sure the noble Lord, Lord Mottistone, knows. Indeed, I am sure it is in his mind in moving the amendment, but it is one which will have to be resisted by the Government, and if there is any move in that direction we shall have to take a part in resisting it.
Lord Mottistone: The whole point is to get this fair. You have one vast company and a lot of little ones. Our amendment is intended to try to tip the balance not all the way but part of the way towards the smaller companies so that they have a fair and equal chance. I quite understand what the noble Lord, Lord McIntosh, has to say: he has said it many times before on other amendments. Of course this is serious, and no doubt he will say the same thing again. But the fact is that British Telecom does not really need to be cossetted: it needs to be controlled. That is where the difference lies between us: but do not let us go on and
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on with that argument. I again beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
6.44 p.m.
Viscount Trenchard Viscount Trenchard moved Amendment No. 75ZA:
Page 10, line 28, at end insert—
(";and
to maintain accounting records in such a form, that the activities of the licensee which are of a similar nature to activities of other licensees, whether particular person or class of persons, to whom licences have been granted under section 7 above, are separately identifiable or separately attributable in the books of the licensee. Provided that this condition shall only apply if the licensee is in a monopoly situation; and for the purposes of this paragraph, a monopoly situation shall he as defined by sections 6 and 7 of the Fair Trading Act 1973.").
The noble Viscount said: I tabled this amendment of course before I heard the helpful statement from my noble friend in relation to Parliament's at least getting a look at the licence. I realised that to require in a Bill a form of accounting in an individual company, albeit in the accounts of a company in a very monopolistic position, was a rather exceptional thing to do. I had also taken note of Condition No. 20 in the draft licence, which requires a degree of separation of British Telecom's accounts and, indeed, businesses. But what I felt was that it did not cover the number and kind of separations that certainly a director of Oftel, I believe, would wish to see if he is to discharge his duties in ensuring fair competition. I therefore put down this amendment in the terms of maintaining accounts in a form which are of a similar nature to activities of other licensees. I had in mind not only the various parts of the networks, national and regional, and not only apparatus (which is covered in Condition 20) and the manufacture of apparatus, but the international area and, even more particularly, the value added services, which are not mentioned.
I am aware that the value of splitting accounts, when a number of overheads are arbitrarily allocated to the distinct trading operations, remains an arbitrary judgment. It is one that has to be made in the management of many large private and public enterprises. It cannot be done perfectly but it can be a big help to British Telecom itself in the management of its enterprise, and I think that is important. During Second Reading we heard certain reports on the state of accounting in British Telecom at the moment. I have already said that I think it would be a great help to the director and to Oftel. I feel that it could even be a help in relation to the flotation of British Telecom, because would-be investors are bound to want to be able to see an estimate at least of the results of each section of this huge business.
So, for all those reasons, I tabled this amendment. I have been reflecting since my noble friend made his very helpful statement in relation to the licence as a whole whether it would he adequate, and whether my noble friends would regard it as adequate, simply to request that he asks the Secretary of State, before the licence is finalised, to consider whether we have enough separation in the conditions in the licence and in particular in Condition 20, and whether it would not be appropriate to push for substantially more.
I am also aware that there are later amendments which bear on this question in relation to some parts

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of the industry, but it is particularly the value added services that I feel British Telecom should be required to show a trading account for, even though it is on an arbitrary basis. I beg to move.
Lord Bruce of Donington: I read through this amendment with some amazement. Your Lordships will observe that in the last four lines of the amendment it says:
"Provided that this condition shall only apply if the licensee is in a monopoly situation: and for the purposes of this paragraph, a monopoly situation shall he as defined by sections 6 and 7 of the Fair Trading Act 1973".
The noble Viscount knows perfectly well that British Telecom will be in a private monopoly situation more or less indefinitely, unless of course the noble Viscount repudiates the undertaking given by the Prime Minister, to which I referred earlier on in the Committee stage when he may not have been there. If the noble Viscount will allow me to complete the point I am making I shall be happy to give way to him, The only competitor, according to the Prime Minister, who impinges in any way on the position of British Telecom for the foreseeable future—and I am relying upon the Prime Minister and not upon the noble Viscount—will he Mercury. That means, for all practical purposes, that this amendment is designed to ensure that the accounting records of British Telecom—I will quote the amendment and then I will give way to the noble Viscount—will be in such a form,
"that the activities of the licensee"—
and they are the only effective licensee—
"which are of a similar nature to activities of other licensees,"
which in this case is Mercury,
"whether particular person or class of persons, to whom licences have been granted under section 7 above, are separately indentifiable or separately attributable in the books of the licensee."
What does that really mean? The noble Viscount knows perfectly well that the accounts of British Telecom are presented by one of the most reputable firms of chartered accountants in the United Kingdom. The accounts are very easily understood. Why does the noble Viscount want further information of a character comparable to that of Mercury to he supplied by British Telecom? Why can he not put it the other way and require the accounts of Mercury to conform to the standards of British Telecom?
Viscount Trenchard: I thank the noble Lord for giving way. The competition in the basic network is, as he described it, Mercury only. The competition in apparatus, in value added services and probably in international services is quite different. The problem is as the noble Lord stated it—and I am only amazed at his amazement—namely, that British Telecom will be in an enormously strong monopolistic position for a long while to come in the basic network. It is also involved in the other areas where large numbers of firms, big and small, are also involved. Unless it separates its accounts for its businesses properly, it will be extremely hard for the director of Oftel to ensure what is and what is not a fair or unfair competitive position outside the basic network operation. It is in the interests of British Telecom itself that it should be
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able to justify before Oftel its pricing in these other areas. It is therefore to its advantage to be able to separate these accounts. I hope that I have satisfied the noble Lord's mind.
Lord Bruce of Donington: Yes, the noble Viscount does, in part, satisfy my mind. All I can say, as one who has had some experience in the preparation and presentation of accounts, is that I sincerely hope that the accounts of the other licensees to whom he referred are of the same high standard as those published by British Telecom.
Viscount Trenchard: The reason why I would not concern Parliament with that point is that it is not in a very strong monopolistic position. In many cases, it will have extreme difficulty in being able to get fair competition.
Lord Bruce of Donington: But is the noble Viscount aware that the auditors of British Telecom are entrusted with a very considerable responsibility? Is the noble Viscount suggesting that the accounts as audited by an extremely renowned firm of auditors, whoever they may be—I think that the present ones are probably likely to continue—will do anything other than present a true and fair view of the affairs of British Telecom as required by the Companies Act?
6.54 p.m.
Viscount Trenchard: So far as I can remember, it is not a condition of any Companies Act that accounts be kept for certain separated parts of the business. So I am not impugning any auditor about anything. I am merely pointing out that this very large public monopoly in one area of the telecommunications world will continue, as the noble Lord himself said, to be a near monopoly in a private sense, and that in that situation it is very difficult, even by accident, not to price unfairly a small section of your business which is completely lost in the total acounts of this huge enterprise. It is also extremely hard, even if you try not to do so, to avoid conditional selling.
We are speaking to an amendment on the Bill and the last thing I want to do is encourage the noble Lord to go a back to a Second Reading speech criticising the Bill as a whole. For his information, I have some sympathy with some of his criticisms, but in the Bill as written I believe that it would be an improvement, and a help to a lot of companies whom we want to see expand in this area, if the British Telecom accounts were split in the way I have mentioned, particularly in areas which are not of the main network.
Lord Bruce of Donington: I am most grateful. Would the noble Viscount, being a very fair-minded person—as I am sure from my own personal experience of him he is—support an equal insistence that Mercury, which will also be one of the licensees for a long time, shall show the precise advantage that it obtains in financial terms, so far as that is ascertainable, in battening like a leech on the whole system as established by British Telecom?
Viscount Trenchard: I must not detain the Committee but I would not suggest making that a

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statutory provision unless and until it had reached the strength of a monopoly position in any important part of this field. There would be the question of good management and advice, which I think the noble Lord may wish to give Mercury on how to run its accounts. But, in terms of possible abuse, I do not see the necessity for legislation until such time as a monopoly has been reached.
Lord Taylor of Gryfe: I wonder whether it is necessary to build this into the Bill. We are talking about the procedures to be carried out by a public limited company which will have a board of directors who will represent the interests of shareholders. The point that is being made, which relates to some subsequent amendments, is that there is a great danger of this company exercising that monopoly purchasing power by supporting its own additional production capacity—be it telephone instruments or whatever —and because it has a monopoly power it will be able to concentrate on purchasing within its own business, to the exclusion of other competitors.
But I should imagine that, in any company which has a subsidiary undertaking within its business and which is tempted to do some cross-subsidation, as suggested by the noble Viscount, it is not in the interests of the company, nor of the shareholders, to maintain a production unit, even if it is exercising its monopoly power, that is not producing as efficiently or as attractively as a competitor. I should have not have thought it was necessary to put this into the statute. With the protections that we have from the Office of Fair Trading against the abuse of a monopoly, I think that we have adequate protection against the kind of abuse that the noble Viscount has in mind.
Lord Mackay of Clashfern: From my noble friend's introduction, I took it that he was finding the situation a little different from what it was when the amendment was put down, in respect of what my noble friend Lord Cockfield said earlier about the chance to look at the licence before the public telecommunications system was licensed—
Viscount Trenchard: If it helps my noble and learned friend, perhaps I can speed things up and make up for a little of the time that the noble Lord, Lord Bruce, and I have used. If he were able to assure me that he would draw to the Secretary of State's attention this exchange today, and ask whether there is a possibility of the conditions in the licence—Condition No. 20 in particular—being drawn slightly differently to include the value added services, I should be prepared to withdraw the amendment today and wait upon his reply as to whether it is possible.
Lord Mackay of Clashfern: I am greatly obliged to my noble friend. I shall be very happy to draw to the attention of my right honourable friend the Secretary of State all that has been said in this exchange. There are a number of conditions in the draft licence which bear on this problem, apart from Condition 20.
Viscount Trenchard: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 75A:
Page 10, line 36, leave out from ("shall") to ("notice") in line 37 and insert ("give").
The noble and learned Lord said: I beg to move Amendment No. 75A, and with leave I shall speak to Amendments Nos. 78A, 81A, 96C, 98A, 99A, 99D, 99K and 99M.
Amendment No. 78A: Page 10, line 47, at end insert—
("( ) A notice under subsection (3) above shall be given by publication in such mariner as the Secretary of State or the Director considers appropriate for bringing the matters to which the notice relates to the attention of persons likely to be affected by them.").
Amendment No. 81A: Clause 10, page 13, line 7, leave out from ("matters") to end of line 17 and insert ("to which the notice relates to the attention of persons likely to he affected by them").
Amendment No. 96C: Clause 12, page 14, line 33, after ("appropriate") insert ("for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them").
Amendment No. 98A: Clause 13, page 16, line 6, after ("appropriate") insert ("for the purpose of bringing the reference or variation to the attention of persons likely to be affected by it").
Amendment No. 99A: Clause 15, page 19, line 17, after ("appropriate") insert ("for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them").
Amendment No. 99D: page 20, line 18, after ("appropriate") insert ("for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them").
Amendment No. 99K: page 21, line 40, after ("appropriate") insert ("for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them").
Amendment No. 99M: page 22, line 5, leave out from ("or") to ("and") in line 7 and insert ("persons likely to be affected by it").
These amendments are intended to introduce a minor improvement into the various requirements for the publication of notices under Part II of the Bill and, in so doing, to introduce consistency between the different provisions. It has always been the intention that, when licences are issued which contain conditions of the kind envisaged in Clause 8(1), when the Secretary of State is considering whether or not to apply the powers of the telecommunications code to a particular operator and when the Director General of Telecommunications proposes either licence modifications or the enforcement of particular licence conditions, there should be an opportunity for those likely to be affected by the outcome to be able to make representations.
It has been pointed out that, as drafted, some of the requirements to publish do not make it absolutely clear that publication will be in a manner appropriate for the purpose of bringing the relevant matters to the attention of those likely to be affected. We think it right therefore to bring forward these amendments. They introduce consistency between the various notification provisions; and, more important, they remove any doubt about the manner in which notices will be published. I hope that your Lordships will agree to support these modest improvements. I beg to move.
Lord McIntosh of Haringey: We entirely support the amendments.
On Question, amendment agreed to.
Lord Denham: This is probably the moment when we should have the adjournment. I am not sure how long the intervening business will take, but for the sake of those noble Lords who are interested in the Committee stage of the Telecommunications Bill may I say that we shall not resume the Committee stage before a quarter to eight. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Town and Country Planning Bill
7.4 p.m.
Report received.
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 1:
After Clause 1, insert the following clause:
("Tree preservation orders in antiopation of disposal of Crown land.
.—(1) A local planning authority or, in Scotland, a planning authority may make a tree preservation order in respect of Crown land in which no interest is for the time being held otherwise than by or on behalf of the Crown if they consider it expedient to do so for the purpose of preserving trees or woodlands on the land in the event of its ceasing to be Crown land or becoming subject to a private interest.
(2) No tree preservation order shall be made by virtue of this section except with the consent of the appropriate authority.
(3) A tree preservation order made by virtue of this section shall not take effect until the land in question ceases to he Crown land or becomes subject to a private interest, whichever first occurs.
(4) A tree preservation order made by virtue of this section shall not require confirmation under section 60 of the Act of 1971 or section 58 of the Act of 1972 until after the occurrence of the event by virtue of which it takes effect in accordance with subsection (3) above; and any such order shall by virtue of this subsection continue in force until—

(a) the expiration of the period of six months beginning with the occurrence of that event; or

(b) the date on which the order is confirmed, whichever first Occurs.

(5) On the occurrence of any event by virtue of which a tree preservation order takes effect in accordance with subsection (3) above the appropriate authority shall as soon as practicable give to the authority that made the order a notice in writing of the name and address of the person who has become entitled to the land in question or to a private interest in it; and the procedure prescribed under the provisions mentioned in subsection (4) above in connection with the confirmation of the order shall apply as if the order had been made on the date on which that notice is received by the authority.
(6) In section 58(4) of the Act of 1972 after the words "section 59 of this Act" there shall he inserted the words "and section (Tree preservation orders in anticipation of disposal of Crown land) of the Town and Country Planning Act 1984".
(7) Any order made before the date on which this section comes into force which would have been a valid tree preservation order but for the fact that—

(a) the land in respect of which it was made was Crown land; and

(b) no interest in the land was for the time being held otherwise than by or on behalf of the Crown,

shall be deemed to have been a valid tree preservation order: but any order validated by this subsection shall have effect (and be deemed always to have had effect) as provided in subsection (3) above.").
The noble Lord said: My Lords, this new clause arises from a suggestion made in another place that the provisions of the Bill should be extended to tree preservation orders. It was recognised from the outset
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that this was a valuable and sensible suggestion for improving the Bill. However, its implementation has not been easy and that is why I must apologise for bringing this new clause before your Lordships at such short notice.
At present, tree preservation orders cannot be made in respect of Crown land in which there is no subsisting private interest. We have heard quite a lot about "subsisting private interest" during the course of our discussions on the Bill. However, the need for the clause arises from what happens when Crown land upon which trees are growing is sold or let. If the local planning authority concerned considers that the trees ought to be preserved, it can make a tree preservation order as soon as the land ceases to be Crown land or a private interest in it is created. But even the speedy procedure for making a provisional tree preservation order which the 1971 Act contains takes a few days. A tree, though, can be cut down in a few minutes, so there is inevitably a period when the trees are at risk.
The new clause would enable a planning authority to make a tree preservation order in respect of Crown land in which there is no subsisting private interest. However, the order will not take effect until the land has been sold or a private interest in it, such as a lease, has been created. Even then, it will take effect only provisionally and it will require to he confirmed within six months of the sale or creation of the private interest that brings it into effect. In this way, the short-term protection of the trees is ensured, but the new owner of the land will have the normal opportunity to have his views properly considered before the order takes permanent effect.
The clause covers two other points. First, we recognise that the provisions of Section 266 of the 1971 Act may sometimes have been misunderstood. We believe that some tree preservation orders may erroneously have been made in respect of Crown land in which there is no subsisting private interest, just as we know that planning permissions have erroneously been granted in these circumstances. Subsection (7) would therefore validate such orders so that they take effect as if they were orders made under this new clause. Secondly, it should be noted that subsection (6) of the clause applies only to Scotland, where the statutory powers relating to tree preservation orders differ from those in England and Wales. The purpose of subsection (6) is to ensure that a tree preservation order made under the clause is recorded in the Register of Sasines after it is confirmed. I hope that your Lordships will share my view that these are useful new powers. I beg to move.
Lord Graham of Edmonton: My Lords, on behalf of the Opposition I arise with alacrity to express our appreciation of the terms of the new clause and of the spirit in which the Minister in another place. Mr. Neil Macfarlane, was quick to recognise the point that was made to him by the Member for Chipping Barnet, Mr. Sydney Chapman. Mr. Sydney Chapman, to my knowledge, has always been very diligent, fair, robust and independent in his point of view. He is certainly a very knowledgeable Member of another place on these matters. He made his point not merely because he is knowledgeable about town and country planning matters but because he has assumed the responsibility

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of president of a certain body. However, it surprises me that it was left to a Back-Bencher to point out this deficiency in the Bill.
The history of this matter is not a happy one. Indeed, it is somewhat sad. We on this side of the House acknowledge the Government's immediate recognition of the deficiency and the way in which they have put it right by means of this new clause. There can be few matters in planning legislation which arouse more anger and apprehension in the country generally than the protection of trees. As was pointed out in another place, we are talking in terms of 50,000 acres of land owned by these bodies. The Member for Chipping Barnet may well have had in mind interests which both he and I share. As his constituency includes the Friern Barnet mental hospital, he must know, as I do, that it is intended that by 1993 this very large area of land, upon which there are many hundreds of trees, should pass from Crown to private ownership. Therefore, he has every right to be concerned.
The Government must recognise that the protection and preservation of trees can have enormous financial consequences if there is any possibility of land passing into private ownership without the tree preservation order being watertight. I was interested to hear the Minister point out that even under the emergency powers which are contained in the 1971 Act it is possible for these matters to take a few days. We are well aware of the situation where a tree which is crucial to the amenity of an area and which has a preservation order attached to it is suddenly lopped or cut down. People are very good at saying that they are sorry—that the notice had not arrived. I want the Minister—and it is purely a point across the Table—to take fully on board that it would be an absolute travesty if, when land was passing from Crown ownership to private ownership, there was a timescale which allowed the protection and conservation of the amenity to be put at risk.
I recognise of course that the best people to understand the need for protection are the local authority. If the local authority cannot act until the ownership has changed—and I note the words "until the land in question ceases to be Crown land or becomes subject to a private interest, whichever first occurs" (I may be wrong, and I can certainly take advice, but surely they happen simultaneously)—well, therefore there is an interregnum, there is a no man's land. There is a time in which mischief can be done.
If there is a time when it is neither one nor the other, and that is, by virtue of bureaucracy or administration, a period in which some damage can be done, then the House ought to ask the Government to look very closely at the situation. If it means that a local planning authority, the council, cannot act—and I appreciate they can only make the order with the agreement of the regional health authority, or the Post Office or whatever it is—I would have thought that one ought to look very closely at what might be called an overlap period. If there is a desire on the part of the Crown landowner to protect the trees, if the local authority, on behalf of the community, is expressing a desire that the trees be protected, and there is a period in which some damage can be done, can the Minister and his advisers look at the possibility of the tree
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preservation order either being made in advance or with a date of operation which applies immediately the ownership changes from one to the other? I certainly am very concerned about that point.
Then we come to subsection (4). That is, "(a) the expiration of the period of six months beginning with the occurrence of that event"; or "(b) the date on which the order is confirmed". Can we take it that this in effect is the stopgap period while the ownership is changing? If the order is capable of becoming permanent—in other words, the order once made and subsequently confirmed is as permanent as one can have in planning legislation—then I am satisfied. But if it means that the local authority is simply going to ask for the holding period of six months and then has to go through the process again, then I fear for the possibilities. The Minister is well aware of some unhappy experiences that he and I know where Crown land changes into private ownership. We are talking about considerable sums of money that can be made; we are talking about land which is worth a lot more money with no trees on it than land upon which there are trees which are preserved.
So with those few words of welcome—and I ask the Minister to understand them as words of welcome, and of appreciation to him—we on this side of the House feel that the Government have been wise in recognising the anxieties expressed in another place and fully shared in this place too.
Lord Skelmersdale: My Lords, it is obviously not my night; I have obviously made such a hash of explaining this amendment that the noble Lord, Lord Graham, did not really get the drift of what I was trying to say. The purpose of the clause is that it enables a tree preservation order to be made when the land is still Crown land. It is a sort of subliminal interest, if you like. It only takes effect as soon as the land is sold or the private interest is created. The new owner or lessor may, very naturally, want to object, and he has this six months which the noble Lord asked about in which to do that. After that time the order would be confirmed or not, depending upon whether his objection is upheld. I hope that now explains the position to the noble Lord.
Lord Graham of Edmonton: My Lords, I am grateful to the noble Lord. In order that I may be quite clear as to the timescale, suppose a Crown owning authority decides to dispose of land in a way which enables it to seek from the local planning authority the kind of planning permission that that local authority would give, on the basis that at the present time the land is hospital land and the intention is to maximise the value of the land to the public—as opposed to the private developer, speculator, owner; nothing derogatory is intended—and in order to make sure that the land changes hands not at £2,000 or £3,000 pounds an acre but at £70,000 or £80,000 an acre, if it is for housing in order to protect some of the trees one needs to give to the local authority the discretion not to make a blanket order. If we are talking in terms of the land changing ownership—shall we say?—on 1st July, am I right in thinking that the Minister is saying that the tree preservation order shall be applied for and shall come into effect on 1st July but shall be in

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existence before 1st July, so that it is as watertight as possible, and so that when the ownership changes the chopper comes down and the order shall be in existence?
Lord Skelmersdale: Yes, my Lords. In fact the chopper comes down even more quickly than that. The moment the transfer is signed between the Crown and the purchaser, at that very moment, the tree preservation order comes into effect. So there is absolutely no gap at all.
On Question, amendment agreed to.
Clause 3 [Persons in occupation of land by virtue of a licence or contract]:
Lord Skelmersdale Lord Skelmersdale moved Amendments Nos. 2 and 3:
Page 5, line 3, leave out ("and 2") and insert (", (Tree preservation orders in anticipation of disposal of Crown land) and 2").
Page 5, line 6, leave out ("section 2") and insert ("sections (Tree preservation orders in anticipation of disposal of Crown land) and 2").
The noble Lord said: My Lords, Amendments Nos. 2 and 3 are consequential upon the amendment which your Lordships have just agreed. I beg to move the two amendments en bloc.
On Question, amendments agreed to.
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 4:
Page 5, line 14, leave out ("granted by an instrument").
The noble Lord said: My Lords, this is a drafting amendment to secure consistency with subsection (1) of Clause 3. I beg to move.
On Question, amendment agreed to.

Inshore Fishing (Scotland) Bill [H.L.]
7.19 p.m.
Read a third time.
Clause 1 [General power to prohibit sea fishing in specified areas]:
Lord Ross of Marnock Lord Ross of Marnock moved the following amendment:
Page 2, line 8, at end insert—
("( ) Before making any orders under this section the Secretary of State shall consult such bodies representing inshore fishing interests as appear to him to be appropriate.").
The noble Lord said: My Lords, I move this amendment hoping to meet the wishes of the Government. As I remember, at the last stage an amendment creating some form of consultative committee was put forward by myself, and it was only turned down very reluctantly. I felt, by the Minister of State, because he thought that it went fairly wide and was not exactly in the right words. He said he almost wished there was some power in respect of an advisory committee. He later went on to say that he did not quite mean that, that it was something else, but he was going to have an advisory committee.
The point is that here we are giving the Secretary of State very considerable blanket powers over the industry, both in respect of what may be local problems and in respect of what may be national problems. All the Secretary of State has to do is make an order to prohibit or ban fishing in areas which are wide, or not so wide, or to except certain kinds of fishing, Indeed, he has a general power of exception from any power that he seeks to exercise. All this he can do without consulting anyone. He is unfettered and untrammelled. He can just act on whatever strange advice he gets, perhaps from his officials, or he may even have had a nightmare, and can proceed to a regulation. That is as the statute stands. He is under no obligation to consult anyone.
It is no good the Minister saying that the Secretary of State will consult. According to the statute the Secretary of State does not need to consult. I remember legislation that we have had in the past week about tourism. The Secretary of State has to consult, not people in Scotland but people in England. I noticed that recently there was a Bill about education concerning, I think, grants and awards. Lo and behold there was a whole paragraph about consultation! Surely, when one is dealing with what may be the livelihood of very worthy people round the coast of Scotland—people who are very touchy indeed about central government interfering with things that they could settle themselves, and certainly on which they have a point of view—we really ought to include a paragraph saying that before any of these regulations are laid or come into force the Secretary of State should consult the appropriate fishing interests.
I cannot answer for the impeccability of the draftsmanship, but the Minister might like to know that I lifted the clause completely from a Government Bill that was going through the House last week. I think it will meet the needs of the industry and the innermost wishes of the Minister of State that we should put in this power that:
"Before making any orders under this section the Secretary of State shall consult such bodies representing inshore fishing interests as appear to him to be appropriate".
That gives him full legal coverage, and he need only consult those interests that he thinks are important. I could not have done better myself in drawing up a way to protect the Secretary of State from the legal consequences of what he might do. I beg to move.
Lord Grimond: My Lords, I hope that the Government will consider this amendment favourably. As the noble Lord, Lord Ross of Marnock, said, it may not be perfectly drafted. I would have drafted it a little wider and extended the scope of consultation to other bodies besides the inshore fishing industry, if there are bodies representing other elements of the fishing industry. I think they could be consulted, too. But that is a minor matter.
The point is that from the very beginning I have felt that the necessity for this Bill is doubtful. I believe agreement could have been reached between the various fishing interests. They have shown no great enthusiasm for the Bill, but it is absolutely essential that the Government should carry them along with it. It could well be disastrous if the Government begin making orders which set the static fishermen against

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the inshore fishermen. The Government may say, "Of course we shall not do that. We are eminently sensible men", and so on. But they have been known to rush prematurely into such things. I cannot see that they will lose anything by accepting a clause of this nature. After all, if consultation is with only such interests as appear to the Secretary of State to be appropriate it gives him extremely wide tolerance on what bodies he is likely to consult.
It may be said that the whole thing is subject to statutory procedure in Parliament. But we all know what that means. Candidly, it may receive extremely little consideration. Local fishing industries may suddenly find that an order has been made before they wake up to what is happening. As I understand it, no time is laid down. It is simply the time that the procedure takes to go through Parliament. We are talking about small groups of men round the coast who are not in daily touch with the Scottish Office and who may well find that they are faced with an order before they understand what is happening.
Therefore, I hope that the Government will accept the amendment. It is a reasonable amendment. Everything put forward by the noble Lord, Lord Ross of Marnock, is always reasonable. He is notorious for his goodwill and for his anxiety to please. In this case he has gone out of his way to make this an amendment which the Government can accept.
In all seriousness, I cannot see what the Government will lose by accepting the amendment. It will reassure the industry, which is worried in case it is forced into a position which it does not want, if the Government are not going to move without consultation. I do not believe it is enough for the Government to say, "Of course we shall consult". If that is the case, there is no reason for not writing it into the Bill.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, the noble Lord, Lord Ross of Marnock, is to be congratulated on his efforts to protect the interests of the fishing industry. Indeed, I am just afraid that if we accept the amendment the fishermen will not in every case benefit to the extent that he intends. I also note the support given to the amendment by the noble Lord, Lord Grimond. I know that it is his intention also that the industry should be protected and assisted in every possible way. However, I can assure the noble Lord that we have the interests of the industry equally at heart.
The Secretary of State has amply demonstrated his good faith in the consultation process in the legislation which has already been enacted and in the dealings which he has had with the fishing industry. In Committee I gave a number of examples of the close relationship which has built up between the Government and the fishing industry—a relationship which has developed over the years and as a result of which extremely difficult and sensitive negotiations with the European Community reached a successful conclusion. These were not negotiations and consultations with the industry which were achieved by means of statute: they were consultations which took place on a totally voluntary basis, to which both parties gave a great deal and listened a great deal, and then acted upon the result of their deliberations.
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Noble Lords may say, "If negotiation is so easy and if the Government are in favour of advisory committees, why should it not be necessary for the Secretary of State to consult them, and why not write this into the legislation?" There are perfectly good reasons why it is better that it should not be written into the legislation. For example, as far as the fishing industry is concerned the question of the spirit of this amendment is not one to which I take exception. I accept the spirit; but we are arguing about whether it is better to try to achieve the best means of consultation by means of trust between advisory groups of people, advisory committees, and the Government, or whether we want to write it into statute.
I believe that one of the difficulties is that sometimes time is of very great importance. It could be that there is a dispute, for example, between two fishing interests; let us say between the mobile gear fishermen and the static gear fishermen. It might be necessary for the Secretary of State, in the best interests of everybody concerned, to close a particular area. If by statute he is required to consult, that cannot be done immediately. I think that at Committee stage the noble Lord, Lord Ross of Marnock, suggested that there could be consultation by telephone, but that is not always possible. More people than might be available on the telephone may need to be consulted; some might not be available by telephone. It might be necessary to convene a meeting. All this takes time. In the meantime, the Secretary of State would be unable to act because it had been written into statute that he has first to consult.
I think that there is little between us as to what we aim to achieve. The difference is that we believe that it is better to achieve the result by means of consultation with advisory committees on a purely voluntary basis, whereas the noble Lord, Lord Ross of Marnock, is suggesting that the requirement should be written into statute. For that reason, I cannot accept his amendment and I hope that he might consider withdrawing it.
7.31 p.m.
Lord Ross of Marnock: My Lords, I like the spirit of the Minister of State. He says that all governments have been good over consultation. I could tell him quite a lot of things about the failure of governments to consult, or to consult the right people. The amendment suggests no formalisation. It just says that the Secretary of State has to consult. It does not say that there will be a standing or advisory committee on any particular problem. It may require a different set of people. It just says the people who are appropriate in respect of the particular regulation.
The Minister cannot have it both ways. He cannot say that there is no time for consultation and at the same time that the Secretary of State might prefer to consult in a particular way. If there is no time for consultation, nobody will be consulted and the Secretary of State will act without advice—which is a very foolish thing for a Secretary of State to do. How many times does that arise? The last time the Minister covered himself by talking about an emergency. Quite frankly, emergencies do not arise. An emergency to the Scottish Office is something that has been hanging

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fire for at least five years. I can rememnber that I was sent a paper by officials and they wanted a decision within two days, but they had been sitting on it for five months. Probably the emergency exists only in the minds of the officials. If the business is carried on properly, there is plenty of time to consult. I am not satisfied that that is a very good excuse.
I think that if the Minister asked the industry he would be told that it would prefer to have this provision. The Minister talks about matters in relation to negotiations with the EEC. The Secretary of State would have been a foolish man if he had not been in touch with the fishing industry, because it was watching every single move not just by this Government but by other governments; and it is still watching. It is not yet entirely satisfied in relation to quotas.
The provision is written into the Bill that the Secretary of State has to consult the British Tourist authority. Again, we know that he would do that anyway. Last week we dealt with legislation on education which said that the Secretary of State must consult in respect of something or other. That is where the words came from.
I took note of the point made by the noble Lord. Lord Grimond. I think that he is right. I hesitated over whether to use the term "fishing industry". I thought that I had better narrow it as it is an inshore fishing Bill. But if there is consultation going on outside, the Secretary of State can consult any other interests without a mandatory requirement.
I think that this is an amendment that the Government cannot afford to pass up. They will probably hear about it elsewhere. I hope that they will. There is so much timidity about the Government at the present time that I begin to despair. I know that the Minister of State is new to the Scottish Office. He was a private secretary or a Whip there at one time, I believe. He should know a little more about it than to talk about failing to exercise the power that he has. He does not need a regulation before he can exercise his power. All he has to do is to get up and say "Yes", and to tell the Secretary of State that a whole crowded House insisted that this amendment be accepted.
Lord Grimond: My Lords, I do not know whether I am in order in saying one word in view of what the Minister has said.
Lord Ross of Marnock: My Lords, the noble Lord is in order as long as I have not sat down.
Lord Grimond: My Lords, the noble Lord has not sat down and I am very glad to hear it. I am much obliged to the noble Lord for not sitting down. May I then put this point to him? Not only is he quite right, of course, about the emergency, but does he not think it a little alarming that the Minister particularly referred to a dispute and said that the Secretary of State might have to act very quickly because of a dispute? I accept the noble Lord's view that it is very unlikely that he would have to act very quickly in any degree; but I thought that the Minister's argument was
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going to be that certain of the orders were so obvious and so widely accepted that it was unnecessary to consult. But a dispute is exactly the time when he should consult. If he is going to override a genuine dispute between two sections of the industry without consulting either, then I really think that they have some reason to be nervous about this Bill.
Lord Ross of Marnock: I am grateful to the noble Lord for that intervention. It was a point that I had thought of but I did not feel that I should prolong what I was saying. I have only one thing more I want to ask about. I have asked the question more than once. What is the nature of the statutory instrument by which the Secretary of State is to exercise these powers? Will Parliament see it at all? Will it have a chance to debate it either on an affirmative or a negative Motion? We should have had an answer to this a long time ago. I suggest that Parliament will not see the orders again. If Parliament is not to see them again, it is all the more important, surely, that the fishermen should see them and give the proper advice at the right time. Everything builds up to the importance of the Government doing this kind of thing.
Lord Gray of Contin: My Lords, I am grateful to the noble Lord, Lord Ross of Marnock, for keeping going long enough for me to get the little message that comes on these occasions. The order is seen by the joint committee. I apologise: before I began to speak again, I should have said, "By leave of the House".
The consultation takes place considerably before that. Indeed, as I explained, considerable consultation has already taken place about the location of static gear and nursery areas. The proposal which the Government have put forward is by no means final. It can he changed in accordance with the wishes of those who are involved locally. It is the desire of the Government that there be consultation if changes are to be made at any future time. That is the answer to the noble Lord's question.
I am afraid that I still do not accept the arguments which the noble Lord has put forward. I believe that what we are doing is better for the industry than what the noble Lords. Lord Ross of Marnock and Lord Grimond, wish us to do. For that reason, with regret, I am unable to accept the amendment.
Lord Ross of Marnock: My Lords, despite the fact that in this whole crowded House nobody has supported the noble Lord, and the fact that he now tells us that Parliament will not see the orders again, I shall withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Gray of Contin: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Lord Gray of Contin.)
On Question, Bill passed, and sent to the Commons.

Orkney Islands Council Order Confirmation Bill
Considered on Report.
Lord Skelmersdale: My Lords, I beg to move that the House do now adjourn during pleasure until a quarter to eight.
Moved accordingly, and, on Question, motion agreed to.
[The Silting was suspended from 7.41 until 7.45 p.m.]

Telecommunications Bill
House again in Committee on Clause 8.
Lord Somers Lord Somers moved Amendment No. 76:
Page 10, line 47, at end insert—
("( ) The Secretary of State or the Director may also require any person applying for a licence under this section to publish his application in such manner as is appropriate for bringing it to the attention of the persons for whom the system will be provided in the area in which the service will he provided.").
The noble Lord said: This is a very simple amendment and is entirely non-controversial. It is simply to do with publicising the fact that services have become available. This is the age of advertising and so I do not think that this amendment will make any great change. The only point is that people who live in remote districts probably may not know of the fact that they are perfectly able to have a telephone. The publicity could be carried out in various ways. It could he done in a local newspaper, or by circulars sent to each house. However, the amendment does not lay down how it is to be done, but simply that it shall be done. I am sure that nobody could grumble with that in the slightest. I beg to move.
Lord Mottistone: I should like to support the amendment. In amplification of what the noble Lord, Lord Somers, has said, I would say that as I see the amendment it is concerned with a need for local consumers and perhaps consumer bodies to know in advance where an applicant is seeking to operate, so that they can take a view and make the necessary representations if they so wish.
Lord Mackay of Clashfern: The Government sympathise with what I believe to be the main purpose of the amendment; namely, to ensure that all those with an interest including consumers, and possibly competitors, are fully consulted and their comments taken into account before a licence which could affect their interests is granted. Indeed, that is also the Government's intention. Where we differ is just on the detail of how it should be achieved. The amendment seeks to enable the Secretary of State or the director to require applications for licences to be published. I presume that the intention is that the Secretary of State and the director should receive from interested parties comments and representations on such applications, though the amendment does not say so.
However, for the following reasons I do not think that publication of applications, as the amendment
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proposes, is the best way to proceed. First, the amendment relates only to applications for a licence under this clause. This is not in fact how applications for licences will work. A person will not apply for a particular licence or for one containing particular conditions. What he will do, instead, is to apply for a licence to run his system. It is then up to the Secretary of State to decide what kind of conditions he will impose, including conditions of the type described in Clause 8(1).
In short, the proposal to require publication of applications for licences containing Clause 8(1) conditions would not work because at the time of application it would not be known whether or not the licence, if granted, will contain such conditions. It therefore seems to me much better to have consultation after the Secretary of State or the director has considered an application and intends to include Clause 8(1) conditions, but before the licence is issued. This is what the Bill as drafted provides for in Clause 8(3). The subsection requires the Secretary of State to give notice of his intention to issue a licence and the reasons for this, and to allow at least 28 days for representations to be made, which he must consider.
I should also like to draw the attention of your Lordships in this connection to Amendment No. 75A, which we have already dealt with, and Amendment No. 78A, to which I have spoken. These strengthen the consultation procedure by requiring the notice to be published in a manner appropriate for bringing the matters to which the notice relates to the attention of persons likely to be affected by them. This will ensure that organisations such as consumer bodies, appropriate local authorities, manufacturers and other operators will be aware of a potential licence that could affect their interests and offers them a chance to make representations and objections. I believe that this is the best way to ensure that consultation takes place. I believe that, amended by the amendments to which I have referred, subsection (3) ensures that all those with an interest will he afforded an opportunity to make comments that must be considered by the Secretary of State or the director. Accordingly, the purpose that the noble Lords who support the amendment have sought to achieve is, I think substantially achieved at a slightly different time but again before the licence is granted, by virtue of the provisions of the Bill as strengthened by the amendments that I have described. I hope that, in the light of that, the noble Lord will feel able to withdraw the amendment.
Lord Taylor of Gryfe: I am thankful for the description of the protection in the Bill given by the noble and learned Lord, Lord Mackay of Clashfern. In view of all that he has said, I would counsel my colleagues to withdraw this amendment. I am delighted to have the assurances that have just been given.
Lord Somers: That is exactly what I was intending to do. I should like to thank the noble and learned Lord very much for the points he has put forward, which I found most convincing. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Spens Lord Spens had given notice of his intention to move Amendment No. 77:
Page 10, line 47, at end insert—
("(3A) Without prejudice to any of the provisions of section 7 or of subsections (1), (2) and (3) above, any prospective licence containing conditions applying to commercial activities connected with telecommunications the provision of all of which when taken together would satisfy 25 per cent. or more of the demand in the United Kingdom for such commercial activities shall only be granted in pursuance of a resolution of both Houses of Parliament specifically relating to each such licence.").
Lord Mottistone: This amendment is another way of attacking the problem that my Amendment No. 71 attacked earlier. I rise to my feet only to say that consequential upon it are Amendments Nos. 97 and 99. It is not proposed to move Amendment No. 77.
[Amendment No. 77 not moved.]
[Amendment No. 78 not moved.]
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 78A:
[Printed earlier: col. 514.]
The noble and learned Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 8, as amended, agreed to.
Clause 9 agreed to.
7.55 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 79:
After Clause 9 insert the following new clause:
("Limitations on the manufacturing business of public telecommunications operators
.—(1) Any public telecommunications operator whose commercial activities connected with telecommunications the provision of all of which when taken together would satisfy 25 per cent. or more of the demand in the United Kingdom for such commercial activities and who has a manufacturing capacity for telecommunication apparatus used by or in connection with the public telecommunication system operated by it shall not until such time as it has established a separately managed and accounting subsidiary for the manufacture of such telecommunication apparatus increase the scale of the manufacturing capacity it has at the date of the grant of its licence nor shall it produce in more than prototype quantities such telecommunication apparatus which it does not make at that date nor shall it at any time make such telecommunication apparatus or cause such subsidiary to make such telecommunication apparatus except to the extent and until—

(a) it has issued an open invitation to tender for the manufacture and supply of such telecommunications apparatus specified in the invitation and has allowed a fair and reasonable period within which bids can be submitted, and

(b) no offer to supply such telecommunications apparatus has been received which in the opinion of the Director would be acceptable, and

(c) it has satisfied the Director that manufacture of such telecommunication apparatus by it or its subsidiary will be on a fair and reasonable basis and will satisfy the requirements of section 3(2).

(2) A public telecommunications operator shall not acquire after the date of the grant of its licence, either directly or through any other company, more than 15 per cent. of the shares in a company engaged in the business of production of telecommunication apparatus for use by or in connection with the public telecommunication system operated by it.")
The noble Lord said: With the leave of the Committee, I should like to associate with this Amendments Nos. 80, 80A and 80B.
Amendment No. 80: After Clause 9, insert the following new clause—
("Limitations on the supply business of public telecommunications operators.
.—(1) Any public telecommunications operator whose commercial activities connected with telecommunications the provision of all of which when taken together would satisfy 25 per cent. or more of the demand in the United Kingdom for such commercial activities and who carries out the supply of apparatus which is to be connected to a telecommunication system and activities related thereto including export, installation, maintenance, adjustments, repair, alteration, moving, removal or replacement or any of such activities shall establish a separately managed and accounting subsidiary within twelve months of the date of the grant of its licence.
(2) The public telecommunications operator shall, prior to the establishment of such subsidiary, satisfy the Director that such activities will be conducted on a fair and reasonable basis and will satisfy the requirements of section 3(2).
(3) After the establishment of such a subsidiary the public telecommunications operator shall only conduct such activities through such subsidiary and shall satisfy the Director that such activites will be conducted on a fair and reasonable basis and will satisfy the requirements of section 3(2).")
Amendment No. 80.4: After clause 9, insert the following new clause:
("Meaning of "accounting".
.—For the purposes of sections (Limitations on the manufacturing business of public telecommunications operators) and (Limitations on the supply business of public telecommunications operators) the meaning of "accounting" shall include the demonstration to the satisfaction of the Director that each subsidiary shall be responsible for all expenses directly incurred by it together with a fair proportion of those expenses incurred by the public telecommunications operator in respect of work done or services performed wholly or partly for the benefit of its subsidiaries.").
Amendment No. 80B: After clause 9, insert the following new clause:
("Expenses of subsidiaries.
.—Without prejudice to the provisions of section (Limitations on the supply business of public telecommunications operators (6) each subsidiary' shall satisfy' the Director that it has ensured that the proportion of expenses incurred by others on its behalf to those directly incurred by the subsidiary is as small as is reasonably' practicable and in any event shall not exceed five per cent. by and after twelve months from the establishment of the subsidiary for each financial year of each such subsidiary.").
These amendments come about because of the proposal in Condition 21 of the draft licence to allow British Telecom to manufacture. The terms of the amendment do not seek protection from competition in product manufacture or in supply but seek to obtain safeguards that are essential to prevent unfair competition in these areas from competitors who have been granted privileges as licensed public telecommunications operators. It is pertinent to note that no network operator in the European Economic Community currently engages in manufacture and that the United States Government have, in recent years, gone to considerable lengths to separate network operations from telecommunication equipment manufacture. While the draft British Telecom licence includes conditions requiring separation of the systems business from that of supply and manufacture, total separation will be difficult to achieve and the date proposed in the draft licence for separation is several years ahead. This leads us to propose the amendment. It is perhaps also worth noting that Section 7 of the 1981 Act currently provides some protection of the

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sort that this amendment seeks to give, but the Bill proposes to repeal that section in Part II of Schedule 7.The proposed new clauses are to redress this repeal and to strengthen the current Condition 21. I beg to move.
Lord Mackay of Clashfern: The Government agree with the general aims underlying this amendment but we disagree with the attempt to achieve these aims through the Bill itself. Our view, first, is that if the Bill were to contain any special rules intended for British Telecom, these rules should apply also and fairly to all public telecommunications operators. The Government endorse the first specific proposal in the amendment, which is to require certain operators to set up separately managed and separately accounting subsidiaries for any telecommunications apparatus manufacture that they undertake.
The Government think that limitations of this general kind should apply to all public telecommunications operators regardless of their market share. Some discussion of the difficulties of the market share concept has taken place already.
It seems to us that public telecommunications operator status involves such privileges, particularly at a time when economic and environmental considerations cause us to limit the number of licences that may be granted, that it would be right to draw a clear line between the running of public telecommunications systems and the manufacture of telecommunications apparatus. The Government therefore believe that apparatus manufacture by any public telecommunications operator should be in a different company from that which runs the network with a different management and different accounts. The Government intend to put this policy into practice through Condition 21 of the draft British Telecom licence.
The Government believe that separation alone is not enough. Your Lordships know how funds can be transferred from one subsidiary to another through mechanisms like favourable transfer pricing. The Government believe that there should be a clear prohibition on cross subsidies between the two activities. The amendment makes no particular provision for this. Nor do the later amendments 80A and 80B deal with this matter. The Government believe that assistance can take forms other than money. There are various forms of preferential treatment, and we believe that these should also be prohibited. The Government intend to put this policy into effect through Condition 18 of the draft BT licence read in conjunction with Condition 21.
The second aim of the amendment is to limit the scale of a public telecommunications operator's manufacturing activities to the capacity at the date of the licence until it has established a separate subsidiary company. This idea may reflect the fact that in the draft licence British Telecom was given a two-year period of grace before it is required to have completed setting up its apparatus manufacturing company. We are well aware of the universal criticism of the two-year period of grace and we understand the concern about what could happen during this interim period. My right honourable friends in the Department of Trade and Industry are considering this aspect of the
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matter. The proposal that there should be some limitation on the scale of British Telecom's apparatus manufacturing activities during the period of grace is an idea that has not been suggested in any of the other representations that we have received on the licence. We are grateful to my noble friend for pointing out the problem.
Thirdly, the amendment deals with the production of prototype apparatus. As drafted, the amendment would stop British Telecom producing any new apparatus in prototype quantities after the appointed day. I am not sure that that is the effect that the noble Lord intended, but I should explain our view.
We wish to encourage British Telecom to engage in research and development work in telecommunications. I emphasised that earlier when dealing with an amendment from the noble Lord, Lord Lloyd of Kilgerran. British Telecom has aready achieved significant results, particularly in fibre optic cables and view data. We want British Telecom to do even better in future. But research and development necessarily involve the production of small quantities of prototype apparatus. British Telecom must be allowed to do this if it is to continue its research. However, as soon as production rises above prototype quantities, it should be transferred to the manufacturing subsidiary. Moreover, the subsidiary should pay the market price for the intellectual property—know-how, et cetera—involved in the apparatus. The amendment does not seem to deal with that aspect of the necessary arrangements.
Fourthly, the amendment states that British Telecom or the manufacturing subsidiary should not manufacture at all unless there has been an open tender arrangement and the director is satisfied that the arrangements are fair and reasonable. This arrangement, as drafted, appears to us to be impracticable. At present British Telecom is marketing to consumers a new telephone handset which it has manufactured itself, and the marketing is on the usual commercial terms. If the amendment were adopted, British Telecom's apparatus subsidiary would have to go through open tender arrangements before it even made, let alone sold, a single telephone to a consumer. This, as I have said, seems to us to be impracticable.
What the Government intend instead is that when British Telecom itself purchases 25 per cent. or more of any description of telecommunications apparatus, it will not be allowed to purchase such apparatus from its manufacturing subsidiary, whether for sale to members of the public or for use within its network, unless it has gone through an open tender procedure agreed with the director. I believe that this arrangement is practicable and will deal with a mischief which causes my noble friend, and those who support this amendment, concern.
Finally, the amendment seeks to prevent any public telecommunications operator—not just British Telecom—from acquiring more than 15 per cent. of any company producing apparatus used by that operator or for connection to its network. This is the only aim of those who have put forward this amendment with which the Government essentially disagree. One of the aims of liberalisation and

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privatisation is to ensure that the British information technology industry is able to respond to the rapid technological developments which are now occurring, and to convert these into British technology, British manufacturing, British jobs and British exports.
Recent and current developments in technology have broken down old distinctions between telecommunications, data processing and even entertainment. There is a convergence of technologies and regrettably many of the prizes are being carried off by others. It is increasingly apparent that firms do better in the market place if they combine expertise gathered from the different branches of the converging technologies. We welcome the participation of manufacturing firms like GEC, Thorn, EMI and local cable systems, some of which will we hope become public telecommunication operators. We would not want to stop them.
Overall, we wish British companies to play a full role in the development of information technology and we would not want to see a situation in which an innovative British firm, which needed to develop an idea in association with a large information technology company, could not enter into a joint venture with British Telecom because of a general prohibition like the one in the amendment. We think that joint ventures must be allowed, but I agree with my noble friend that this aspect has to be kept under careful review. That we intend to do. I hope that, in the light of this explanation, my noble friend may feel able to withdraw the amendment.
The Countess of Mar: I wonder whether the noble and learned Lord could possibly clear up one small point? At present, British Telecom manufactures small quantities of aids for the disabled. Obviously if these were put out to tender, they would just fall flat because nobody would want to know about them. Will British Telecom still be allowed to go on manufacturing these aids?
Lord Mackay of Clashfern: With respect, I think that that question is answered by what I said earlier; namely, that the Government intend that when British Telecom itself purchases 25 per cent. or more of any description of telecommunications apparatus, it would have to go through the open tender procedure. I would foresee no difficulty from the point of view of the apparatus that the noble Countess, Lady Mar, mentioned.
Lord Bruce of Donington: We on this side of the Committee would sustain the noble and learned Lord in his opposition to the amendment moved by his noble friend; but we find the noble and learned Lord's remarks far more menacing than the amendment itself. So far as we can see at the moment—and we shall have to study what he said in Hansard tomorrow—it would seem that, even assuming that manufactures are made on almost identical terms and on a fair competitive basis, British Telecom will be denied the economies of scale which of course have a very great impact upon price.
British Telecom over many years, first of all at Dollis Hill and later on at Martlesham, have
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developed a very formidable R and D department, and have been responsible, as has already been pointed out, for many discoveries in which private enterprise is only too happy to back them. Indeed, one of the purposes of the Bill is that the supporters of the party opposite shall be able to batten like leeches on the achievements of this public utility. I repeat: is it to be the case that, owing to the machinations of the noble Lord's mind—in so far as these are discernible from the draft licence which we are considering—every time British Telecom brings things to a new point of production (after the employment of the appropriate production engineers in drawing up the schedules, and so on) that, if they do it better than anybody else as soon as their demand for certain assemblies or subassemblies reaches a certain point, they are to be denied it? That does not seem to me to be very consistent with the maintenance of a public service, to which the party opposite seems to be formally committed.
Lord Taylor of Gryfe: I should like to make some comments before the noble Lord, Lord Mottistone, withdraws his amendment—and I should imagine, in the light of the statement made by the Minister, that withdrawal is inevitable because the Minister has conceded the case for the amendment and has even been more generous than is provided for in the amendment. I said on an earlier amendment that we on these Benches would do nothing to impede or frustrate British Telecom. I must say that the fewer constraints that are put on this company, the better for the efficient operation of the company. But from the statement just made by the Minister, there are a whole series of constraints that he wishes to build around British Telecom, and they are very serious.
I was for some years a member of the Board of British Rail. We had British Rail workshops manufacturing engines and rolling stock, and so on, in order to run the railway system. If the same constraints were to he put on British Rail, they would be prevented from manufacturing the apparatus which carries railway passengers. What noble Lords are saying is that British Telecom should simply run the system and should not be permitted to manufacture the apparatus. By the same token, we could apply the same provisions to British Rail, and say that they would not be permitted to have their own workshops manufacturing their own equipment; that their purpose is simply to carry passengers.
An interesting point—and I see that the noble Lord, Lord Howard, is in his seat—is that as a spin-off, the British Broadcasting Corporation has developed a highly efficient computer. If we were to apply the same constraints to the BBC and say that its job is to run the television programmes, it would not have been possible for it to manufacture the computer and to put it on the market. I believe that it is for the board of the new company to decide whether or not a vertical operation would be in the best interests of the shareholders and the company. They will look at the market for apparatus; they will look at their research capability; and in their wisdom they will decide whether it is better for them to manufacture on their own behalf or whether it is wise to buy-in the equipment.

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From time to time they may even test the market. But it is surely not in the interests of British Telecom to manufacture something they that they could buy outside. They are entitled to test the market, but they are also entitled to the freedom to test the market, and in the statement that the Minister has made that freedom is being denied. They will he prevented from manufacturing apparatus on their own behalf; therefore, they must go to the market. They will not be able to test their own capacity against that of outside manufacturers. I am sure that the amendment is about to he withdrawn, but at the same time I am somewhat alarmed at the constraints which the Minister has mentioned will be placed on this company.
Lord Mottistone: I thank my noble and learned friend very much for his remarks. In any case I did not think that the wording of the amendment would be perfect. I was amused at the number of things which we had not thought of and which my noble and learned friend had thought of in order to strengthen the amendment, which were very good to hear.
To deal with the remarks of the noble Lord, Lord Taylor of Gryfe, the whole thing would be easy if the company did not have a monster monopoly. That is the problem. Otherwise, one would go right down the road with all that he said. If it only had half the monopoly it has now, it would be manageable; but to go into the market place with 90 per cent. of the market means that it needs some restraint. I particularly liked the remarks of my noble and learned friend about the prevention of cross-subsidisation. However, as was foreseen, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 80, 80A and 80B not moved.]
Clause 10 [The telecommunications code]
8.13 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 81:
Page 12, line 2, after ("be") insert ("especially").
The noble Lord said: It may be for the convenience of the Committee if I say that this is the first of a long series of amendments concerned with the protection of the physical environment, and that I propose to speak on this relatively unimportant and formal amendment by referring to most, if not all, of the subsequent amendments. It will not shorten the debate on this amendment, but it may make it easier to shorten the debates on the subsequent amendments.
It is only in this subsection that there is reference to the physical environment. It is left to the telecommunications code, which comprises Schedule 2 to the Bill, to go into detail about the protection which is to be afforded to the physical environment and to individuals who are affected by telecommunications operators' systems and apparatus.
It is necessary to write in extra protection for the physical environment where no extra protection has existed in the past because of the legal and practical changes which will take place as a result of this Bill.
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For example, it is proposed that British Telecom will lose the planning exemptions which it has had up until now under general development orders and special development orders. That is an example of a legal obstacle which has now changed. An example of a practical change is that if we take the object of the legislation seriously and we have a large number of telecommunications operators, we are faced with the possibility of many cables, including the possibility of many overhead cables, affecting our streets, our cities, our farmland and our areas of natural beauty.
The object of the amendments which are proposed here is that the responsibility for the protection of the physical environment should be taken out of individual licences and put explicitly into the telecommunications code, which comprises Schedule 2 to the Bill. This is not merely a matter of convenience; it is certainly not particularly a matter of profound political principle or political decision; but it is a matter which is important to those who wish to understand their rights and the rights of those who wish to protect the physical environment.
Imagine the position of someone who learns of the threat of overhead wires in an area of outstanding natural beauty. In order to understand the nature of the threat which he apprehends, he has to look in the licences of all the potential operators who might be posing the threat to the area of outstanding natural beauty. He has to look in all the different codes of practices which might be relevant to the operations of these telecommunications operators. Practically, it would be impossible for any individual objector—and the objectors to the despoliation of the physical environment tend to he scattered, weak, ill-informed and ill-served by bodies of lawyers and civil servants—to mount an effective opposition to threats to the physical environment. Therefore, the intention of these amendments is that the telecommunications code should he as explicit as possible so that no special protection is needed in the individual licences.
Perhaps I may refer briefly to the individual amendments so that your Lordships can gain an idea of the kind of protection which we believe should be incorporated in the telecommunications code. I come first to Amendment No. 83:
Amendment No. 83: Page 89, line 4, at end insert—
(" "the physical environment" includes—

(a) the architectural, archaeological or historic character of any building, structure, feature or area,

(b) the natural beauty and amenity of the countryside or an open space or garden, and

(c) the conservation of wildlife or any physiographic feature").

Amendment No. 83 defines the physical environment. There is no definition elsewhere in the legislation. If we are to talk about its protection, it is desirable that it should he defined, and defined as explicitly as possible, as including, for example, archaeological sites as well as areas of natural beauty.
Then we come to Amendment No. 85, followed by Amendments Nos. 90 and 91:
Amendment No 85: Page 89, line 38, at end insert—
("Protection of the physical environment
1A. All telecommuncation apparatus under this code shall be planned, installed, maintained or altered having regard to the need for protecting the physical environment and this shall not be avoided solely by the payment of compensation to any person claiming to be affected.").

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Amendment No. 90: Page 97, line 33, leave out ("paragraph") and insert ("paragraphs 1A (Protection of the physical environment) and").
Amendment No. 91: Page 98, line 18, leave out ("paragraph") and insert ("paragraphs 1A (Protection of the physical environment) and").
Amendment No. 85 refers to the need for actual protection which cannot be bought off by compensation. Compensation is short-lasting. It benefits those who have some claim to compensation; it does not benefit those who come afterwards and who are the users and enjoyers of the physical environment. Compensation is no substitute for prevention of despoliation of the physical environment, and the intention of these amendments is to ensure that we have prevention, not compensation.
Then there is Amendment No. 87:
Amendment No. 87: Page 96, line 23, at end insert ("or on the ground that the works necessary to afford the potential subscriber access to the operator's system would cause undue damage to the physical environment.").
This amendment refers to the possibility that a telecommunications operator may, by virtue of his obligations to a subscriber or potential subscriber, be obliged to seek powers to damage the physical environment. The intention of this amendment is to say that damage to the physical environment is a valid reason for objection to the proposed despoliation.
The next amendment is Amendment No. 88:
Amendment No. 88: Page 97, line 13, at end insert—
("( ) Sub-paragraph (1) of this paragraph shall not apply to an agreement or covenant imposed by or for the benefit of the National Trust, the National Trust for Scotland, a local authority or any other body for the protection of the physical environment.").
This amendment is a very important amendment indeed, and refers to the status of covenants with the National Trust, the National Trust for Scotland, local authorities and all other bodies concerned with the protection of the physical environment which at the moment have covenants with landowners, tenants and others to ensure the continued use and protection of the physical environment. As the legislation stands at the moment, the telecommunications code allows for the possibility that these covenants could be overridden by agreement between a telecommunications operator and subscribers, and that such an overriding of covenants could be permitted by the Office of Telecommunications and the director general. Our amendment is designed to close that loophole.
I come now to Amendment No. 89:
Amendment No. 89: page 97, line 31, at end insert—
("( ) The operator shall be responsible for restoring as far as practicable the surface of the street, highway or land to its condition before any of the things referred to in this paragraph had been done.")
Amendment No. 89 refers to a matter which, again, is of very great importance indeed; namely, the restoration to its original condition of land which could be farmland, common land or whatever kind of land, and also streets and highways, after the completion of the work of making a telecommunications installation. This is a matter which has been threshed out over many years in environmental circles. For example, the protection of farmland in which gravel working has taken place has largely been in the form of the requirement that the land should be restored to its original
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beauty, to its original condition, or to its original agricultural value after the work has been completed. That is the intention of this amendment—to ensure that those rights and those powers to ensure adequate restoration are included in the legislation.
I now come to Amendments Nos. 92 and 93:
Amendment No. 92: page 104, line 11, at end insert ("or altered")
Amendment No. 93: page 104, line 16, after ("completion") insert ("or alteration")
Amendments Nos. 92 and 93 refer to the conditions in the telecommunications code about the completion of works, and the amendments seek to ensure that there is no weakness in the definition of "completion", that works of alteration to telecommunications apparatus, alterations to overhead lines, for example, also fall within the restrictions of the code.
Amendment No. 94: page 104, line 17. at end insert ("or has a legal right of access to")
Amendment no. 94 refers to the legal right of access. At the moment, the legislation in the code would provide that there has to be consultation and agreement with the owner or occupier. We are proposing to add that there should be agreement with those who have legal right of access, who may well be the general public, or the general public as represented by different environmental bodies.
Amendment No. 95: page 110, line 48, at end insert—
("(2) A local authority shall have the power—

(a) to require the removal of any telecommunication apparatus that appears to be abandoned.

(b) to remove abandoned telecommunication apparatus where the operator has failed so to remove after reasonable notice, and

(c) to recover from the operator all expenses incurred under paragraph 22(10)(b) above.")

Amendment No. 95 deals with the problem of the removal of disused apparatus. I am sure your Lordships will have seen around the streets of our cities the large number of dead cars which have to be removed by local authorities from the highway, and the powers to remove them have been achieved with some difficulty by local authorities over the years. This is an essential part of the protection of our urban environment, and I wish it were so for our rural environment as well: there should be powers to remove disused cars. The same should apply to disused telecommunications apparatus, and the amendment seeks to provide that local authorities have the same powers as they have for the removal of cars.
I come now to Amendment No. 96.
Amendment No. 96: page 115, line 9, at end insert—
("Development Orders under Town and Country Planning Acts
27A.—(1) A development order made under section 24 of the Town and Country Planning Act 1971 granting permission for the installation of telecommunication apparatus under this code shall not have effect unless approved by a resolution of each House of Parliament.
(2) A development order made in accordance with subparagraph (1) above shall contain provisions enabling the local planning authority to require to be consulted on proposals for telecommunication apparatus in national parks, areas of outstanding natural beauty, conservation areas and other areas of high amenity or historic value or special scientific interest and to have the right to require the operator to apply to the court under any of the provisions of this code where objection could be raised by an occupier or owner affected by the apparatus".)
This amendment refers to general development orders involving telecommunication apparatus, and requires that orders of this kind should be submitted to Parliament for approval before they are finally confirmed.
I apologise for having spoken for 10 minutes on what may seem a trivial amendment, but I think your Lordships will agree that it is necessary to make a general introduction to all these amendments so that the discussion on those amendments will be better directed if the purpose behind them—which is a single purpose—is adequately understood from the outset, rather than being pieced together bit by bit as we proceed through the amendments. They are easily recognisable. They have straightforward numbers without the accretions of ZAs, ZBs, QSs and whatever else there may be. That simply means that I got in first before anyone else!
I do believe that we have here a series of noncontroversial amendments. I shall listen with attention and sympathy if the Government find there are defects in the wording of the amendments and suggest ways of putting those defects right. But I do believe the object behind the amendments is one which will be agreed by the whole Committee and I feel sure that at the end of the debate, given goodwill by the Government, we shall see significant improvements in the quality of the legislation as well as the quality of the physical environment. I beg to move.
Lord Mottistone: Strangely though it comes from me to say so, I have great sympathy with the general theme of what the noble Lord, Lord McIntosh of Haringey, has just put across, and I shall be most interested to hear what my noble friend has to say from the Front Bench.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): I am most grateful to the noble Lord, Lord McIntosh of Haringey, for his explanation of how his various amendments link up and their importance. However, I am bound to say that, while he mentioned a great many other amendments, he did not express in detail the intention behind Amendment No. 81. As I see it—and I strictly limit myself to Amendment No. 81 because the others are of considerable importance and I will mention them at the end—Amendment No. 81 is intended to provide for the Secretary of State to include exceptions and conditions in the licence of an operator to whom code powers are applied which appear to him to be especially "requisite or expedient" for the purpose of securing that the physical environment is protected and that the other matters in Clause 10(4) are dealt with. I have to tell the noble Lord that, so far as drafting is concerned, this amendment is quite superfluous. The phrase "requisite and expedient" covers all eventualities and allows the Secretary of State to include any conditions and exceptions necessary to secure the particular objectives mentioned.
The phrase "requisite and expedient" is a well tested legal formula and I see no reason to qualify it as this amendment suggests. What is more, the addition of
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the word "especially" before the words "requisite or expedient" would have the opposite effect to what I imagine the noble Lord is seeking to achieve, for it would enable the Secretary of State to include in licences only those exceptions and conditions which were especially requisite or expedient for the purpose of securing that the physical environment is protected.
Nonetheless, as I think I indicated earlier, we realise that there are important issues to be debated on Schedule 2 and I think that it would be best if we dealt with the substantive matters of concern in that context—for example, in relation to the protection of the physical environment to which the noble Lord has referred. So I hope that, with that explanation of this particular amendment, he will not press the amendment.
Lord McIntosh of Haringey: With the slight qualification that I find it difficult to understand how the addition of a word can be both superfluous and damaging, I can see the thrust of the arguments of the noble Lord, Lord Glenarthur, and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Cockfield Lord Cockfield moved Amendment No. 81A:
[Printed earlier: col. 514.]
The noble Lord said: This is purely a drafting amendment. My noble friend the Lord Advocate, Lord Mackay of Clashfern, in fact spoke to this on Amendment No. 75A. I beg to move.
On Question, amendment agreed to.
Clause 10, as amended, agreed to.
8.29 p.m.
Baroness Lane-Fox Baroness Lane-Fox moved Amendment No. 82:
After Clause 10, insert the following new clause:
("Compatibility with hearing aids.
. All telephones fitted to public telecommunications systems shall be compatible by internal means with hearing aids designed for use with the telephone by 1st January 1990.").
The noble Baroness said: I know from reading Hansard that my noble friend the Minister mentions very sympathetically the subject of my amendment in Amendment No. 37, and I am hoping to keep up that spirit to further this cause.
To lay people like myself, it appears that relatively slow progress has been made through medicine to ease the problems of those whose hearing is impaired. This emphasises the need for technology in electronics to come to their rescue, and telephones which can be used by people wearing hearing aids are obviously very important. It is ironic that the new electronic telephones can threaten the facility enjoyed through inductive couplers which work within the fast-disappearing Type 700 telephone. This is a blow technology can strike against the attempt made by those who are deaf to be useful, integrated people. To be unable to use the telephone seriously disrupts their social and business lives, their enjoyment and promotional prospects.
Do not let me suggest for one moment that someone is purposely slapping down the chance of deaf people to use the telephone. The fact is that the shapes of electronic telephones are not immediately suitable to

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house inductive couplers, but they are cheaper to manufacture and to purchase, and they have other advantages to offer over the Type 700. One bit of good news is that British Telecom has already put out on trial some models of their electronic telephone named the Statesman, and that model has already been adapted for use with inductive couplers. Reports are encouraging and British Telecom is being helpful over this trial. However, the shape of their Viceroy telephone and others made elsewhere but of similar oblong design makes the question of adaptation of these a difficult manufacturing problem.
Nevertheless, I hear from a spokesman of the British Association of the Hard of Hearing, Mr. Hart, who is expert in these matters, that there really is no technical reason why these models cannot be made compatible. The actual cost of an inductive coupler, I understand, is about 30p. It is estimated that approximately 6 million people would benefit if all telephones were made compatible with hearing aids. In my family I happen to have three members who use hearing aids, so I can vouch that the question affects the whole household.
In the past four years things have improved. During that time BT agreed to make the necessary adaptations to 77,000 public telephones, and they now say that this work will be completed by April. The fears of people with their hearing impaired now lie not only in what I have already described but also with electronic telephones waiting to enter the market and which use, I am told, piezoelectric crystals. The tiny amount of current having to be used within them makes it hard for the telephones to operate properly with inductive couplers, or for amplifying handsets to be fitted to them.
To look at the economic aspect, it is important to remember that 6 million people can benefit from having all telephones compatible with hearing aids. As it is now many already have telephones in their homes which are mainly used by other people. It is estimated that those people whose hearing is impaired, with telephones that they cannot now easily use, number about 2 million, and that armed with compatible telephones they will make at least two additional telephone calls per week and will receive per week at least two additional incoming local calls. That amounts to £18,304,000 a year extra revenue for BT even at that low estimate.
It would be wrong to miss this opportunity to try to improve the technological potential of help for hearing-impaired people; help to prevent their position from falling back—that is what it would do—if their need is forgotten at this important time in the present effort for general progress. Sir Francis Bacon, I believe, spoke of the importance of science as, "the endowment of human life with new inventions and riches". Would not your Lordships agree that this is a time when we should at least stifle any threat of man's inhumanity to man being exercised against a group of people growing, alas, particularly among the young? The amendment modestly requests that by 1st January 1990 all telephones fitted to public telecommunication systems shall be compatible by internal means with hearing aids for use with the telephone. It is my pleasure to move this amendment.
Lord Lyell: The whole Committee will have been fascinated and thrilled to hear the main purpose of this amendment so admirably moved by my noble friend Lady Lane-Fox. She mentioned quite correctly that I had touched on this problem and this particular amendment when I was speaking on Amendment No. 37 last week, when we covered the problems of new technology and the blind or those whose sight is impaired. I recall the noble Lord, Lord Stoddart of Swindon, mentioning his interest. He went so far as to use the term that he awaited with bated breath. I hope he has not been holding his breath all weekend, and I hope that when he comes to hear what I am afraid is a rather lengthy explanation of this complicated subject, that he may be interested, as I was when I studied the entire background not just to inductive couplers, but to the new frontiers of technology.
I am sure from the explanation given by my noble friend that your Lordships will appreciate that this amendment reflects the great concern about the future availability and supply of telephones which are adapted for use by the hard of hearing. I should like to consider this as two separate problems. First, we want to ensure that the hard of hearing and the hearing impaired can continue to obtain telephones which are adapted to their needs; and, secondly, to ensure that the new telephones, with the new technology which is with us now and certainly will be improving before 1990—and not just this admirable Statesman model described so well by my noble friend Lady LaneFox—and coming onto the market in the future will also be adaptable for use by the hard of hearing.
I hope that my noble friend and those of your Lordships who are interested in this problem will not take me to task too much if I say that we believe that this amendment does not quite separate out the two problems which have different though related solutions. I stress at the outset that the Government are taking action to resolve both these problems.
May I explain as briefly as possible—and I shall keep an eye on the Clock—what we are doing and why we are doing it. On the first question of ensuring the continued availability of telephones which are adapted for the hard of hearing, the Bill and the British Telecom licence together contain a firm guarantee that such telephones will continue to be available. I spent some time on the Bill in our earlier discussions on Clause, 3, and that would have covered Amendment No. 37, so may I concentrate now on the draft BT licence.
Conditions 32 and 33 in that licence are specially concerned with the hearing impaired and the hard of hearing. Condition 32 obliges BT to continue to make available telephones which incorporate the inductive coupler. I understand that this enables people with hearing aids under present technology to use the telephone—again I stress under present technology—and Condition 32 also obliges BT to continue to make available telephones with amplifiers—and this is a separate part of this problem—enabling people with impaired hearing to use the telephone without hearing aids.
What this will mean is that the familiar Type 700 series telephone, which can be fitted with the inductive coupler, will continue to be available. I believe that

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licence conditions, as I have tried to set them out, are a stronger safeguard than the position at present.
Baroness Lane-Fox: May I ask my noble friend the minister whether he feels happy about the Type 700 telephones? I am told that they are becoming more and more difficult to obtain. This is what I hear from the British Association of the Hard of Hearing.
Lord Lyell: I am familiar with the telephone that we use at the moment, but I was not aware that it was called the 700. The noble Baroness referred to the percentage of telephones in callboxes which were fitted with inductive couplers. Perhaps I mght ask my noble friend to come with me to some of the telephone boxes in my rural area. If they are fitted with the familiar 700 series, I would not know whether the telephones were fitted with inductive couplers. They did not seem to me to have them, but they have the technology of the 700 series telephone. I am afraid I cannot answer my noble friend's question at this point. If I have not answered it satisfactorily by the time I come to my conclusion perhaps she will take it up with me. If I receive any information I shall give it to her, otherwise, I shall be in touch very swiftly.
I stress to your Lordships that the licence conditions will be enforced by the director. I give one brief example. If the director finds out, through a complaint or otherwise, that BT is not complying with the licence conditions—I take the example further—and is not supplying a telephone fitted with an inductive coupler to someone who wishes to use it, the director will be obliged (I stress that to my noble friends) to take enforcement action, and he can order BT to supply such a telephone.
I will not definitely say that it is the type 700, for reasons that I shall enlarge on briefly. My noble friend has enabled me to expand briefly on Condition 32. I understand that Condition 32 will ensure that the 700 telephone model continues to be available. If anyone has difficulty in obtaining a telephone with an inductive coupler, under Condition 32 the director will be able to issue the order forcing BT to provide it.
I shall now consider public callboxes. Your Lordships will see that Condition 33 of the draft licence requires BT to work towards installing apparatus in all public callboxes. For example, if we take the inductive coupler, that apparatus will enable the hearing-impaired to use that telephone. I know that there is concern that this is being done too slowly. My noble friend mentioned the gap. I believe she mentioned April this year as the target date by which BT hope to have all telephones in public callboxes fitted with inductive couplers. I am pleased to be able to say that BT have already fitted 97 per cent. of all telephones in public call offices with inductive couplers, and it hopes to have all public telephones in callboxes fitted with inductive couplers before the licence enters into force. Whether those last remarks tie up with the month of April, I do not know. Indeed, my noble friend may be ahead of me, both in technology and information, but this is the information that I have.
We are considering the possibility of strengthening Condition 33 to reflect this last point. Before I leave the matter of the licence the Department of Trade and
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Industry has received detailed comments from the British Association of the Hard of Hearing, and the department is considering these comments actively and very carefully. I hope that the Committee has been reassured so far on what I have said about ensuring that the needs of the hearing impaired continue to be met.
At the outset of my remarks I mentioned the second half of the problem, which is considering the future. As I am sure your Lordships are aware, I mentioned the coming technology. I am sure Your Lordships are also aware that coming onto the market are telephones which, because of their design, cannot be fitted with the inductive coupler, which is the device we have at the moment. I very much hope that a way will be found to overcome this problem, and I know that British Telecom has a study group which is at present working on this.
However, the main problem will come further on in the future with the new generation telephones, which, not because of their design but, far worse, because of their advanced technology, will not be able to be fitted with the present type of inductive coupler. It is to this problem, which is one of technology and not necessarily privatisation, that the amendment is primarily addressed. What we understand and believe that the amendment seeks to do is to ensure that by 1st January 1990 all telephones attached to public telecommunications systems shall be "compatible by internal means" with hearing aids. We sympathise with the intention, but I fear that this amendment does not achieve what it sets out to do, simply because it will be unworkable. I shall explain this and then go on to explain the steps we are taking to ensure that a solution is found.
The main reason why the amendment would not work is that nobody yet knows how to make the new generation of telephones compatible with hearing aids. It is not just the Statesman, which my noble friend mentioned, because by 1990, the target date mentioned in my noble friend's amendment, there could easily be new technology which would make the current type of inductive coupler, if not obsolete then certainly obsolescent. At present we think that inductive coupling may be the answer, but we do not know. We may take another alternative in this field. The answer may lie in adapting not the telephone but the hearing aid. I stress that we are taking steps to find out, but I do not think that we should legislate for something that we do not know how to implement.
Secondly, we want to consider the other side of the coin—the manufacturers of inductive couplers, hearing aids and telephones. This amendment would mean that the manufacturers could not bring onto the market telephones which would not be internally compatible with hearing aids. This would certainly constrain technology, and we think it would prevent developments which would not only be of benefit to a large number of consumers but would also provide export opportunities for United Kingdom manufacturers. In short, we think that the amendment will inhibit technological progress.
This is not desirable, but once more I want to repeat and stress to your Lordships that the hearing impaired will still be able to have telephones fitted with

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inductive couplers, regardless of technological advances, since this is assured by Condition 32 of the draft licence.
The Earl of Cork and Orrery: I wonder whether my noble friend would be kind enough to explain what an inductive coupler is.
Lord Lyell: I regret to say that I have not used one, nor seen one, but if I am able I shall try to find a brief explanation. I know exactly where I shall go to obtain a brief explanation. If I cannot obtain something in printed form from my regular advisers, I know precisely where I shall go. It is to a Member of your Lordships' House, but I had better not call him my noble friend. I shall inquire for my noble friend where I can find a diagram of an inductive coupler. I stress that I have not yet used one: I am able only to explain what the inductive coupler does at present, and what we hope it will continue to do, as far as is possible. I take my noble friend's point, and if I can help him I shall.
Baroness Lane-Fox: May I interrupt my noble friend for one moment to say that it was described to me by somebody fairly expert as being little more than two bent pieces of wire which happen to alert the particular point at the right time.
Lord Lyell: My noble friend is absolutely correct. I have a fascinating heading, which I am sure my noble friend will appreciate. Perhaps even your Lordships will appreciate it. The heading is, "Unfair". But we are used to unfairness and unfair questions being thrown at us with such charm by my noble friend—indeed, by both my noble friends. An inductive coupler is, in general, a small coil which amplifies the stray magnetism in the telephone; that is, in the hearing piece. With enough stray comment, perhaps I may continue to try to satisfy your Lordships' curiosity in the hard-of-hearing and the hearing-impaired about what we want to do and how we hope that new technology may bring differing solutions. All the time, we continue to bear in mind the problems of the hearing-impaired and the hard-of-hearing and of how we hope that this will be achieved through the conditions of the licence and in the Bill.
If I may conclude the discussion of the amendment, we believe that it is impracticable because, as we understand it, it is addressed to all telephones—that is, the 700 and any older models, and not just new ones. I understand that at present there are nearly 29 million telephones attached to BT's network alone. Very many of these telephones will not be replaced before 1990. Thus, the amendment is going to mean that, on 1st January 1990, someone, somewhere, is going to have to fit inductive couplers to all these telephones and, indeed, to all those attached to other public telephone communication systems—which I think my noble friend and your Lordships will admit would be an enormously expensive task.
I hope that I have explained why we believe the amendment to be impracticable. I stress that the Government recognise that there is a problem with the hearing-impaired and hard-of-hearing and are already taking steps to find a solution. The DTI has set up a
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working group of experts. This group includes representatives of the hard-of-hearing, of the British Association of the Hard of Hearing and the Royal National Institution for the Deaf. It includes the manufacturers, British Telecom and the Department of Health and Social Security. I stress to my noble friend and to the Committee that there is no question of the hard-of-hearing or the hearing-impaired, as my noble friend said, falling back.
May I conclude by stressing what this working group is doing? They have clear terms of reference. They are looking at the problems: both at the present problems which have been so admirably set out by my noble friend and at the future of adaptations of telephones of all types for the hard-of-hearing. In particular, this group is going to be looking at the new technology. No doubt one of the things that they will be looking at is the possibility of a requirement that all telephones must be adaptable. I do not want to prejudge their findings, especially in view of my own knowledge of technology, which has been shown to be somewhat lacking this evening.
As I stressed earlier, it may be that adaptations to hearing aids also offer a way forward. It is a complex area but I hope that the working group in due course will advise the Government on the next steps. I stress that this is a longer-term problem. The old familiar telephone, be it the Series 700 or the even older ones, will not disappear overnight. The future availability of the Type 700 and the current telephone is assured by Condition 32; but there is no doubt of the Government's determination to find a solution to the long-term problem. I have spent a long time, and I apologise for this; hut, judging by the fan mail and the encouragement that I got on Amendment No. 37, I hope your Lordships will forgive me for spending time on this subject. I hope that I have reassured the Committee and I would ask my noble friend whether she is able to accept my comments and possibly to withdraw her amendment.
Baroness Lane-Fox: I am grateful to my noble friend the Minister for a very full reply. I feel very responsible in speaking for so many who are waiting on the answer to this question. I feel that the answers that my noble friend has given are quite enough for us to wait and be vigilant and to make sure that we keep everybody up to the mark on this. I am sure that the last thing that hearing-impaired people would want would be to hold back technology. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.55 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 83:
[Printed earlier: col. 534.]
The noble Lord said: This is where I hope the benefits of my encroaching on your Lordships' time on the preceding amendment will become apparent. The intention of this amendment seems to me so self-evident that I cannot think that there will be difficulty on it other than with its wording. Clause 10 refers to the protection of the physical environment and the preservation of the natural beauty and amenity of the countryside, both of which are admirable objectives.

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The intention here is to spell it out and to be more precise about what is meant by the physical environment, to ensure that we are talking about architectural, archeological and historical characteristics and that we are talking about the conservation of wildlife as well as the physiographical features. I shall await the friendly comments of the Minister.
I would say only that it would be helpful if the Government could indicate in their reply on this amendment whether the basic objective behind the series of amendments—which is to make the telecommunications code as explicit as possible and to avoid further definitions and conditions in individual licences—is acceptable to the Government; and whether the Government are in sympathy with that objective. It would help in understanding the Government's reactions to later amendments. I beg to move.
Lord Howard of Henderskelfe: I rise for one minute to say that my definitions in the amendment to which we are coming shortly are much more specific and specialised than are the definitions of the noble Lord, Lord McIntosh of Haringey. This does not mean that we are not in many respects trying to cover the same ground: it merely means, I think, that he is a generalist and, in this. I am a specialist. I think that we are both trying to achieve the same kind of object and therefore I would commend his amendment to the Government in saying that it may be that the one or the other, the more specialised or the more generalised description, may be appropriate in this case. I do not presume at this stage to judge.
Lord Glenarthur: The noble Lord explained at some length the purpose that lay behind his series of amendments when he spoke to an earlier amendment. Does the noble Lord wish to intervene?
Lord Bruce of Donington: I query the phrase "at some length".
Lord Glenarthur: Not at greater length than has been the case with other amendments, no; but it is a question of comparison. What I want to put across, without wishing in any way to pre-empt the amendments which are going to come in later on, is that this amendment rather than the earlier ones to which he spoke is probably in a way setting the tone for the others.
I begin by assuring the Committee that the Government regard the matter of the physical environment as of importance and that we have already taken steps to guard against the possibility that the powers in the telecommunications code could be used in a way which could have unfortunate consequences for the environment. At present, the basic legislative safeguards for the environment are to be found in the Town and Country Planning Acts, which establish controls designed to ensure that a whole range of activities can be controlled in such a way as to protect the physical environment.
In the context of this amendment, your Lordships may be aware that the Department of the Environment has recently issued a consultative document on the revision of the general development order under
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the Town and Country Planning legislation. The consultative document deals, among other things, with the planning aspects of telecommunications. It makes the point that the planning system will have to reflect the changes that this Bill will bring about and also accommodate the growth of telecommunications without either imposing unnecessary restrictions or allowing what is described as serious damage to physical amenities and telecommunications development. It proposes therefore that all telecommunications operators to whom the powers of a telecommunications code are granted should be given permission under a revised general development order to install minor telecommunictions apparatus such as wires, poles, small antennas and similar things, without the need to seek specific planning permission in each case.
Some arrangement of this kind is essential in order to avoid overburdening the planning system. However, the proposals put forward in the consultative document envisage that they would be put into effect against the background of firm licence conditions framed under the powers of Clause 10(3) and (4) of the Bill, qualifying the use that a particular operator may make of code powers.
Part 5 of the draft licence indicates what kind of conditions we envisage imposing. I think that they go a very long way towards meeting the concerns expressed by the noble Lord in his amendment. For example, there are specific conditions which require all new telecommunication lines to be placed underground in conservation areas, subject to very minor exceptions. In saying that these concerns have been met, I do not at all wish to appear too categorical. We have deliberately made available the licence in draft form, as the Committee knows, so that we might benefit from informed public comment upon it. Regarding Part 5, we have so far had very little reaction, and this and related amendments have given us the first real opportunity to consider whether what we are proposing is adequate.
Turning to this particular amendment, it would be unfortunate, given the framework of the general development order and the licence conditions which I have just outlined, to embark on a third avenue, what amounts to a planning control for the telecommunications code itself. We already have a provision in Clause 10 which deals with the protection of the physical environment through licence conditions; and it may be that before concluding that the code should be modified, your Lordships would wish to consider whether the description in subsection (4) should he further particularised in order to cover some of the categories of the environment covered in this amendment. I have to say that the Government's initial reaction is that that would not be a particularly satisfactory course to adopt since the more detailed the definition, the more likely it is to appear to exclude those areas not specifically mentioned.
May I also add in this context that the movers of this series of amendments are not perhaps fully aware of' the way in which the licence conditions will be formulated in order to protect the environment. The BT licence is in a special category because it needs to be in effect on the appointed day when the Act comes into force. Other licences which grant code powers, for

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example to the new cable system, will be the subject of public consultation with those who will be affected by the exercise of code powers. Thus the relevant local planning authority will be consulted in each case before code powers are applied and it will have the opportunity to suggest what particular restrictions or requirements should be introduced into its own area to meet the particular needs of the locality. I firmly believe that this offers a far more flexible and acceptable approach to dealing with these sensitive matters than laying down rigid general rules in either the code or the general development order.
In summary, I hope that what I have said has been sufficient to indicate the Government's receptiveness to suggestions for improvements of the licence conditions related to the telecommunications code. I hope it has given the noble Lord the flavour of the comments that apply to the amendments which follow. I hope that he will find the explanation reassuring and that he will see fit not to press his amendment.
Lord McIntosh of Haringey: I fear that I find that reply deeply disappointing. Of course, I was well aware of the amendments proposed by the Department of the Environment concerning the general development order, just as I referred in my speech on Amendment No. 81 to the prospect that BT itself, when privatised, will lose certain planning exemptions. But the noble Lord has shown no understanding of the necessity to have conditions under which the physical environment is to be protected in one single place which can easily be found—which I suggest must be in the telecommunications code. If we follow the Government's proposals we shall find that there are individual elements in each licence which will be concerned with the protection of the environment, as the noble Lord, Lord Glenarthur, has said, with reference to the only licence of which we know anything, which is the draft BT licence.
I suggest that it is not satisfactory' to have it in the licence: it is not satisfactory for those of us who are concerned with the physical environment to have to look at the licence, to look at the general development orders or special development orders to see whether Article 4 directions have been given which remove concessions in the development order. It is not satisfactory to require those who seek to protect our physical environment to embark on "a treasure hunt" in order to find the legal obstacles which they are seeking to overcome. They should he in one place, and that place should be here in this legislation.
I accept that there is more than one possible way of wording this amendment and I shall listen with interest to the noble Lord, Lord Howard, with his specialist knowledge. Only because of the possibility of improved wording at a later stage do I now seek leave to withdraw this amendment.
Amendment, by leave, withdrawn.
9.7 p.m.
Lord Glanusk Lord Glanusk moved Amendment No. 84:
Page 89, line 14, after ("running") insert ("or testing").
The noble Lord said: I expressed an interest on Second Reading which I do not intend to repeat now,
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unless your Lordships wish me to do so. This amendment is by way of being a probing amendment. Throughout the Bill there appears to be no mention of test equipment. which is essential to the maintenance of telecommunication systems. In Clause 4 there is a definition for telecommunications apparatus, which is designed to cover such items as are connected to the line and involved with transmission of signals, such as modems and switches. It does not appear to include test equipment which does not transmit signals.
In Schedule 2 there is an expanded definition of telecommunications apparatus; but, as drafted, this appears only to refer to such items as wires, cables, tubes, pipes and poles from which apparatus can be slung, hung or submerged. The amendment that I suggest would include the word "testing", and would therefore include test equipment. If I am right in saying that nowhere else is test equipment covered, it means that this class of equipment need not be approved by any central authority before being introduced into the system.
Most modern test systems are tested in a monitoring mode; that is to say, the equipment is permanently attached to the line and it measures and records the live traffic going over the system. But if that test equipment is of a poor quality or poor manufacture, or develops faults within itself, it can introduce serious errors into the system and even cause a complete breakdown. If these two words in the amendment are inserted, I hope that that will cure that problem and will require that all test equipment must be approved before being introduced into a system.
While I believe that this amendment is important to the safety of telecommunications systems, I should mention that there are some 300 or 400 types of test equipment produced by four or five manufacturers and, therefore, the job of inspecting and testing these is by no means inconsiderable. Clause 24 mentions meters, but from my reading of it this appears to cover only customer-charging meters or—the noble Countess, Lady Mar, will correct me if I am wrong—what are called "tollmeters" by the Post Office, and I do not think that the question of test equipment will fit into this clause. I therefore recommend this amendment to your Lordships. I beg to move.
Lord Bruce of Donington: It occurs to us that this may be a matter of interpretation of the word "running", and I think that the word "running" is nowhere defined in the Bill. But I do not see how you could run a telecommunications system without at some point making use of test equipment, and therefore I think that the existing wording covers the point. That is the only observation that we have to offer.
Lord Lyell: We are very grateful to my noble friend Lord Glanusk for filling us in on some very interesting technical problems and details, and he moved his amendment succinctly and with great clarity. My noble friend mentioed the term "telecommunications apparatus." I assure him and your Lordships that telecommunications apparatus is covered by the definition in paragraph 1 not only when a system is being run to provide a service to customers but also

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when it is undergoing testing and when the apparatus is being installed and the system itself cannot be either run or tested.
Under Clause 10 of the Bill the provisions of the telecommunications code contained in Schedule 2 to the Bill have effect when they are applied to a particular person by a licence authorising that person to run a telecommunications system. When a person, like the prospective operator of a local cable telecommunications system, is granted a licence he will not actually be running any system: he can do this only after he gets his licence and he will have to do several things before he can actually run a system. For example, he will have to install apparatus in his studio and in the streets: then he will have to connect it to individual customers' premises, and then he will have to test it satisfactorily before he provides a service.
The code is drafted to assist all these processes of installation, testing and running. Paragraph 9, for example, authorises a person to whom the code is applied to execute street works so that he can install telecommunications apparatus like ducts and cables under the highway, which he will have to do well before he actually provides a service. Because the code is applied to a person, the definition of "telecommunications apparatus" in paragraph 1 applies to such ducts and cables during the installation phase when the system is not being run at all.
The actual process of testing is embraced within the words "running of a telecommunications system". Testing involves the sending of sounds, visual images or signals over the system to check that they are received correctly and that the apparatus functions correctly. This sending and receiving must involve the conveyance of messages, and hence the operation or running of the system. I stress to my noble friend that the system cannot be tested without, under the definition that is provided in paragraph 1, being actually run.
I would go a little further and stress that apparatus which is specially designed for test purposes is covered by the definition of "telecommunications apparatus", which was referred to by my noble friend, in clause 4(2) of the Bill. It is also included in the definitions to be found in paragraph 1 which we are discussing now, since it is apparatus constructed or adapted for use in transmitting or receiving signals sent by means of this telecommunications system. I hope that explanation has been sufficient to set my noble friend's fears at rest.
Lord Glanusk: I am not convinced by what my noble friend has said, but in view of the fact that it is in the interests of my company that test equipment should not have to obtain approval I shall gladly withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 85:
Page 89, line 38, at end insert—
("Protection of the physical environment
1A. All telecommunication apparatus under this code shall be planned, installed, maintained or altered having regard to the need for protecting the physical environment and this shall not be avoided solely by the payment of compensation to any person claiming to be affected.").
The noble Lord said: There are two elements in this amendment. The first part attempts to write into the telecommunications code the need to protect the physical environment which I tried, by means of an earlier amendment, to define more precisely—and to define not in totally new words but in words which, as in Clause 10(4)(a), come from the Countryside Act 1968. The second part of the amendment is designed to ensure that it is not possible for a deal to be done between an operator and an owner or occupier under which the owner or occupier, or both, are bought out, leaving the damage to the environment for successive generations. It would he a valuable addition to the protection of the physical environment if that kind of buy-out of what, over the years and centuries, have been public rights were to be prohibited. I beg to move.
Lord Glenarthur: Certainly there must be clear and adequate safeguards to protect the environment in the context of telecommunications development; but we believe that those safeguards are best provided by means of licence conditions constructed under the general powers of Clause 10 rather than by limitations in the code itself. The code is designed to replace the Telegraph Acts. We do not think that the case has been made for a change of approach of the kind which the amendment proposes.
What the amendment tries to do is to introduce a statutory duty which would require all telecommunication apparatus installed under the code to be installed having regard to the need for protecting the physical environment. This is certainly not a precisely worded duty. Even as it is worded, it would open up the possibility of a considerable amount of vexatious litigation by those with, perhaps, questionable motives who might wish to frustrate the activities of telecommunications operators. It also introduces the possibility of a clash of objectives when, for example, the court, under paragraph 5 of the code, has to consider whether, at the operator's request, the agreement of a particular person to the installation of apparatus should be dispensed with. The amendment makes no attempt, as far as I can see, to reconcile the proposed new statutory duty with the principle upon which the code is based and to which the court is required to have regard; namely, that no person should unreasonaby be denied access to a telecommunications system.
Our view is that while this amendment is undoubtedly well intentioned, its consequences perhaps have not been fully thought through. I hope that the noble Lord will therefore agree to withdraw it. Having said that, I can give an undertaking that we are receptive to proposals for safeguarding the environment through the mechanisms which I previously described.
Lord McIntosh of Haringey: It would be helpful if the Government were to go slightly further and say that they are sympathetic towards the objective of securing that damage to the environment is not occasioned by a deal between an operator and an owner or occupier to buy out the rights. That is the second part of the amendment. It would be helpful if the Government were to say that they would look at

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whether this could be incorporated in licences, as appropriate—if that is the way the Government wish to deal with the matter.
Lord Glenarthur: I think that this point is already met. I should like to study what the noble Lord has
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said and to comment upon it at a later date, perhaps in writing. As far as I am aware, the point is covered. If it is not, I shall come back to the noble Lord.
Lord McIntosh of Haringey: I am grateful to the noble Lord. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.20 p.m.
Lord Howard of Henderskelfe Lord Howard of Henderskelfe moved Amendment No. 85A:
Page 90, line 14, leave out ("sub-paragraph (4)") and insert ("sub-paragraphs (4), (4A) and (4B) ").
The noble Lord said: I beg to move Amendment No. 85A, and, at the same time, Amendment No. 85B. Amendment No. 85A is purely a paving amendment for No. 85B.
Amendment No. 85B: Page 90, line 40, at end insert—
("(4A) A right falling within sub-paragraph (1) above shall not have effect so as to authorise an telecommunications apparatus to be installed, or kept installed, in, on or over any land in one or more of the under-mentioned classes unless the owner of the freehold estate in that land and every person who is (otherwise than as mortgagee) a lessee of the land is bound by his agreement that his interest in the land should be bound by the right except where the right is required to provide a telecommunications service to and only to the occupier of that land—

(a) agricultural land;

(b) land which is part of the countryside within the meaning of the Countryside Act 1968 and the Wildlife and Countryside Act 1981;

(c) land in a National Park as defined in section 114 of the National Parks and Access to the Countryside Act 1949;

(d) land in an area of outstanding natural beauty designated under section 87 of the National Parks and Access to the Countryside Act 1949;

(e) land which is the subject of a management agreement under sections 4(5), 7(3) and 45 of the Countryside Act 1968;

(f) land which is the subject of a mangement agreement under section 39 of the Wildlife and Countryside Act 1981;

(g) land held by the National Trust inalienably under section 21 of the National Trust Act 1907 or section 8 of the National Trust Act 1939;

(h) land the subject of agreements or covenants with the National Trust enforceable under section 8 of the National Trust Act 1937;

(i) green belt land as defined in section 2 of the Green Belt (London and Home Counties) Act 1938.

(4B) The agreement of the occupier of any land not falling within one or more of the classes specified in sub-paragraph (4A) above shall not have effect under sub-paragraph (2) above unless the operator has not less than four weeks prior to the entering into of such agreement given notice in writing to the owner of the freehold estate in, and to every person who is (other than as mortgagee) a lessee of, that land of what is proposed, has afforded such owner and every such other person not less than three weeks from receipt of such notice to make representations to the operator and has taken such representations into consideration or unless the right is required to provide a telecommunication service to and only to the occupier of that land.").
In moving these amendments I make no apology for the fact that I suspect it may take a little time. This is such a departure from the practice which has grown up over the years in relation to wayleaves and the compulsory acquisition of wayleaves of all kinds that I would be absolutely staggered at its introduction by a Conservative Government had I not long since ceased to be astonished at any action of any Government.
The main amendment which I am putting forward for your Lordships' attention is in two parts; I will come to the reason for that later. Noble Lords will also notice that it is written in extremely obscure language. There is a perfectly good reason for that. It follows the amendment which was introduced by the Government themselves in another place to Schedule 2, paragraph 2(4). It tries to follow exactly the same wording. If in endeavouring to follow this somewhat obscure wording we have somehow not quite got it right, I shall be only too delighted, with Government help, to get it exactly right.
There are many lawyers in your Lordships' Committee, and I would not presume to try to teach them the law about wayleaves, but I do not think it is possible to understand the background to my amendment and the indignation that I and many others feel at what this Bill is attempting to do unless I say something about that background. I tend normally to live in the present and the future rather than the past, and I do not therefore intend to go as far back as Magna Carta or the Bill of Rights. Suffice it to say that the true needs for compulsory purchase tended to start in the middle of the 19th century, with the growth of public utilities generally, and they culminated, I think, in the Compulsory Purchase Act 1965. This was made to apply in most cases of compulsory acquisition of land or rights over land, and these included wayleaves, the laying of cables, the putting up of poles and all the rest of it. The procedures involved service of a compulsory purchase order on every owner and occupier, the advertisement of it, the right to object, the hearing of objections, the hearing or public inquiry, and the confirmation or otherwise of that order by the Minister, with or without conditions. This applied to new roads, sewage works, power stations and a thousand and one other public works.
If I may be more specific as to the various kinds of public utilities which can avail themselves of compulsory powers, there are electricity wayleaves, for example—and electricity is essential to all of us nowadays. The landowners' consent must be sought, and if it is refused the board must apply to the Minister for a compulsory wayleave. Again, it involves the usual service of notices, the right of objection and so on, and the right to be granted the wayleave conditionally or unconditionally, or indeed, on occasion, refused. Exploring for oil, gas, et cetera, is not, generally speaking, a public utility but a private utility. There, entry had to be negotiated and compulsory rights could be obtained only by application to the High Court under the Mines (Working Facilities and Support) Act, which was indeed a formidable obstacle to those seeking such entry.
Water mains and sewers, on the other hand, had a somewhat easier path which they could follow. When they wanted to enter to construct a water main or sewer, they had to give reasonable notice to every owner and occupier of the land. Even this procedure, which is extremely favourable to those particular undertakers, requires notice to the landlord. In reality of course the various terms have been negotiated with the water authorities who are responsible for sewerage services as well, so that trunk wayleaves are obtained by agreement and not under the powers which they have under the Public Health Act. British Gas has to go through the ordinary procedures that I have already described under the compulsory purchase orders if they cannot obtain their wayleaves by agreement. If the Government wish to do oil pipeline work under the Land Powers (Defence) Act 1958 they are required to serve a draft order on every landowner and occupier, giving them an opportunity for objection and a hearing by the inspector, and so on, before making the order. Under the pipelines Act negotiations, again, have to proceed before the undertakers can apply to the Minister for these acts.
Your Lordships will see that in every case, except water and sewerage, the consent of the owner has to be obtained. In many cases this leads to a long drawn-out procedure. Therefore, just as with water mains and sewers, there is an agreed procedure which, I make no apology for saying, was negotiated by the CLA, of which I was at that time chairman of the legal and planning committee. Negotiations were undertaken with all these authorities and undertakers so that they all agreed standard practices and standard payments whereby they could go onto the land. They could get quick possession and do the work quickly without going through any of the rigmarole which had hitherto possibly obstructed them.
What is happening now? What is to happen under this Bill? Those procedures are to be entirely forgotten. The consent of the landowner is no longer necessary, with the usual safeguards which I have already described. The Bill allows private operators, not public undertakers, to by-pass landowners entirely if they do not happen to be in occupation of the land in question and obtain the necessary rights from the occupier, for the time being, without even consultation or any notice to the landowner. In fact, it is putting telecommunication operators and cable operators in a unique position which is more favourable and which seems to say that telephones and cables of whatever kind, whether for inter-active use, entertainment, or whatever, are more important than electricity, gas, water or sewerage services. Can this really be so? Can the Government truly say that they believe in the interests of those who own property and then proceed in this way?
I turn to the amendment itself. I have tried to deal with the different difficulties which occur in the countryside and in towns by separating rural land and urban land. This I have done with sub-paragraph (4A) dealing with rural land, while sub-paragraph (4B) deals, generally speaking, with urban land. There is no evidence of any kind that rural landowners have been obstructive or oppressive or prevented the undertaker, the cable operator—the Post Office as it used to be known, but now British Telecom—from obtaining lines over or under their land. There is some evidence —largely hearsay—in relation to so-called harassment of tenants in towns, in blocks of flats, by Rachman-like landlords who have prevented the tenants from getting the telephones which they wanted. Therefore, I have endeavoured to deal with this in a slightly different manner, whereby I provide for an accelerated process under sub-paragraph (4B). The essential difference between the safeguards which I provide and those which are referred to in other areas of the Bill are that I talk about "his agreement" rather than "an agreement". It is a very important difference in words.
If I seem to be darting slightly from one point to another that is because this is a very complicated matter. When I was speaking to an earlier amendment rather briefly, I said that I had tried to define rural land in a particular kind of way. We have talked first of all about agricultural land; but not all land in the countryside is agricultural land. There are other uses for land in the countryside. There are various kinds of
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ownership of land and of covenants over it. There are various categories of land—land in national parks, areas of outstanding natural beauty, and so on; land which is the subject of the management agreements which I think have been endorsed by all sides of this and the other House as being the best way to cope with some of the worst problems that arise in the countryside and in the protection of the environment.
May I say here that the noble Lord, Lord Gibson, has authorised me to say that my amendment has the full support of the National Trust. Unfortunately, he is not able to be here this evening. He was here last Thursday but of course we spent rather a long time on some of the earlier amendments and did not reach this one.
In this case the wording of the amendment means—although noble Lords may have some difficulty in finding that out—that the laying of lines or the erecting of poles have to he agreed by the owner. The only exception to this is where the line is for the benefit of the occupier alone and is not to serve others. Noble Lords will see that exception provided for:
"unless the right is required to provide a telecommunication service to and only to the occupier of that land".
I think that this is exactly in accordance with the present provisions of all the other forms of wayleave. I see no reason whatsoever why private undertakers should be able to possess draconian powers which far exceed those of the public undertakers. It will not delay the undertakers because, as I have said already, codes of practice have been agreed which will enable speedy resolution of all difficulties.
The greater difficulties which are said to have arisen in towns and which arise from the maze of sub- and head-lessees and other people who operate with town property are dealt with under sub-paragraph (4B). This provides that notice in writing be given to the owners. That ties in with paragraph 24(4) of Schedule 2, where it is not practicable to trace the owner of the land. You therefore, as it were, hammer up a notice and say, "Look, we are going to come in unless you tell us who you are". Of course, this is paraphrasing slightly what it actually says in the Bill. However, I think that it conveys my meaning.
I consider that it is of immense importance that a matter which was not discussed at all in the House of Commons and which was subjected to the fall of the guillotine—I do not know at what hour of the night that happened—should now be put right in your Lordships' Committee. Perhaps I shall be given some reason—though I cannot think that there can be any—why this extra power should be introduced at this time. The noble and learned Lord the Lord Chancellor, who sits with such distinction on the Woolsack, not so long ago gave on television a lecture which was addressed to the whole nation, in which he talked about an elective dictatorship. If we go on in this kind of way, whichever side of the Chamber this kind of draconian power comes from, we shall be well on our way to an elective dictatorship and to proving once more that we have very nearly reached it.
I beseech the Government to think again and to come back with some better protection, some better

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code which incorporates also all the thoughts about the environment which have been put before us by the noble Lord, Lord McIntosh of Haringey, and which I have tried to cover in my particularised definition of land of this character. If I have spoken passionately, it has been because I do not feel that there can be many people on either side of the Committee who really believe that this is a good new provision, a good way to start off what could be one of the most exciting technological developments of what remains of my lifetime. I beg to move.
9.36 p.m.
The Deputy Chairman of Committees (Earl Carthcart): It is not permissible for the noble Lord to move Amendments Nos. 85A and 85B en bloc, as there is an amendment, in the name of the noble Lord, Lord Airedale, to Amendment No. 85B, but of course the noble Lord can speak to both Amendments Nos. 85A and 85B. I must therefore say that the amendment proposed is Amendment No. 85A.
Lord Middleton: The reason which until now the Government have given for presenting to private operators new, and as the noble Lord, Lord Howard, has said, quite exceptional rights over land is that they want to simplify and speed up the procedures for obtaining telecommunications services. That is an intention that we would all applaud, but—and I agree with the noble Lord, Lord Howard—the method proposed in the Bill is heavy-handed and I am rather surprised that the present Government should be advocating it. I therefore support the noble Lord, Lord Howard, in what he is seeking to achieve by his amendment.
Like the noble Lord, I am not aware of any evidence that the normal procedures for utility undertakings in the countryside lead to either obstruction or delay. These procedures are well understood by both public undertakers and private companies, and wayleaves and other agreements are arrived at in reasonable time. So far as rural land is concerned, where, as a rule, ownership is easily determined, I see no reason why there should not be adopted by private telecommunications operators procedures similar to those laid down under the Telegraph Acts. As the noble Lord has reminded us, they would be similar to those now used by public bodies and private companies, virtually all of which must obtain the owner's consent in order to do works.
In regard to urban land, it seems to me perfectly reasonable, and only right, that owners should he given the chance to make representations, and then all the operator need do, under the proposed new subparagraph (4B), would be to take such representations into consideration.
If an owner could not be traced either out in the country or in the town, the answer is already provided by paragraph 24(4) of Schedule 2 to the Bill as it now stands. That procedure would be applied and no undue delay need take place. The Government want (who would disagree with them?) to cut out the delays
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experienced by individual occupiers when they wish to be connected. Such applicants are catered for by these amendments. In their case, as I read it, consultation or consent by an owner would not be required.
The noble Lord, Lord Howard, has raised an important point of principle. As he said, it is a point that could not be argued in another place. I hope very much that the Government will give further thought to it in the same spirit with which they have already improved the compensation provisions.
Lady Saltoun: While accepting that difficulties have sometimes arisen in urban areas as regards obtaining permission from absentee owners, this is rarely a problem in the country. Merely notifying the owner or the proprietor so that he has a chance to object or possibly make constructive representations is quite another matter. Indeed, in the country, telecommunications operators have often something to gain from consulting the proprietor, who can often draw their attention to facts unknown to many town dwellers—for example, that small trees grow into big trees and that fields contain drains that you cannot see.
But this is by the way. The real point is that it is horrifying—at least it is to me—to find a Government, who, with one hand, are committed to supporting and encouraging private ownership of property (urban property, too), with the other hand writing into the Bill a provision that cuts at the heart of the law protecting the rights of the owners of property. It is totally contrary to the established law of the land. I shall go further. To try to sneak such a revoluntary alteration in the law into a schedule to the Telecommunications Bill is nothing less than a constitutional outrage. I hope that your Lordships will not tolerate it.
I hope that the noble Lord, Lord Glenarthur, will say that at least the Government will reconsider the question and will amend the schedule at Report stage. If he does not do so and if my noble colleague Lord Howard of Henderskelfe decides to press his amendment, I shall most certainly support him.
Viscount Massereene and Ferrard: I should like to strongly support the amendment. There is a difference, as all of us know, between the occupier and the landowner. There might be an occupier—say, a sheep farmer—in a beautiful part of the country, who might not have the same appreciation of the beauty of the countryside as the landowner. The occupier is the only one to be consulted. He would presumably give his consent perfectly easily, whereas the landowner might not. I am surprised that, as the noble Lord, Lord Howard, has said, a Conservative Government have brought in a measure in this Bill to deprive the landowner of an almost sacred right that he has always had.
The procedure that exists at the moment has always been fair. I have dealt with only one or two cases involving public bodies and public utilities. I have always found them extremely fair. I remember one case quite a long time ago when the electricity board was bringing electricity to the Isle of Mull. Its civil engineer was going to bring the pylons up a very

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beautiful loch to a very beautiful glen. I told him that I thought that this was a great pity, quite apart from the fact that, if he took the pylons up to the top of the glen, half of them would be blown down. The board was very reasonable and did not do that. It took the pylons by quite a different route where, as it turned out, there were more consumers. But if that had happened today I would not have had any say at all because some of the land is let and presumably the occupier would not have taken my point of view in the matter.
It is very odd for a Conservative Government not to have the private undertaker (and I do not mean the man who buries people) consult the landowner. After all, the landowners, especially the landowners whose families have owned land for a long time, are extremely concerned about preserving the beauty and wildlife of the countryside.
As the noble Lord, Lord Howard, has given such an excellent explanation of his amendment, I shall not waste your Lordships' time any more. However, I reiterate that I hope that the Government will bring the matter back at Report. In fact, it is not for me to say, but for the noble Lord who moved the amendment. But if the matter does not go to a Division, I hope the Government will take it away and alter it at the Report stage.
Lord Grimond: As this is a matter of some complexity—in fact, complexity worthy of the parliamentary draftsmen—I am not certain that I understand it all even after the lucid explanation from the noble Lord, Lord Howard. But in so far as I do understand it, I strongly recommend that part of it which emphasises that in rural areas landlords still have some rights. They have a long-term interest in the land, and it is only right that they should be consulted. So I merely adopt what has been said by several noble Lords already and support that part of the amendment.
I then pass on with some diffidence to ask one or two rather esoteric questions which I suspect are actually answered in the Bill, but the answers to which I cannot find. I am emboldened to do this by the return of the noble and learned Lord the Lord Advocate to the Government Front Bench. He will be aware that in Shetland and Orkney there is a form of tenure known as "udal", and that an important right of udallers is their ownership of the bottom of the sea between the high and low water marks. Under Schedule 2, paragraph 11, the tide lands are dealt with, but I am not certain that their position is safeguarded, and at some point I should like reassurance from the noble and learned Lord the Lord Advocate.
Secondly, what is the position of feus and feuars? Are those who grant feus to have any rights under the Bill? Thirdly, what about crofters? I imagine that crofters simply count as tenants. But does a crofting landlord have any rights? Has he any right to be consulted, or at least to be notified? I also ask what is the position about the common grazings or the "scattald", as they are known in Shetland, as the noble
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and learned Lord will be well aware. Is there an obligation to notify either the grazing constable or the grazing committee before there is any interference with the land? That is an important matter. There is also the question of peat roads, and so forth, which are of considerable importance in many parts of Scotland.
Finally, if there are disputes under this Act, why do they go to the sheriff court? There may be a good reason, but I should have thought that in many cases they would more appropriately go to the land court. I follow that not all these questions arise directly out of the amendment, but I understand that your Lordships' rules of order are pretty wide and I have no doubt that the noble and learned Lord the Lord Advocate will he able to deal with these questions extremely quickly. I hope he will give me some answers to them.
9.50 p.m.
Lord Home of the Hirsel: I probably should declare an interest. For countless years I was either a landowner or the chairman of a private land-owning company. In those years I have seen all sorts of dealings with all sorts of public corporations—electricity, gas, coal, oil, trunk roads—many of them seeking wayleaves or facilities for development. As the noble Lord, Lord Howard, has said, until now in every case the landowner was notified and the landowner had the rights which the noble Lord described. Quite often, as was natural, the original proposals made by one of these corporations cut across the development plans for the estate. However, as a matter of practice, over all those years I cannot recall a single case out of dozens in which a settlement was not reached to the satisfaction of the corporation, the landowner and the tenant.
That was a perfectly sensible procedure. Unless the Government can give some very good reasons, I do not see why it should be changed, particularly as it is proposed that a private operator should now he able to by-pass the landowner. The civilized, sensible way in which we proceed in the countryside is really for the corporation—or in this case Telecom—to consult the landowner, for the landowner to consult the tenant, and then for the three to consult together and arrive at a sensible solution. I am bound to say that I shall need a good deal of convincing that the Government's plan is better than what we have already. On the whole, I prefer solid experience to an uncertain future.
Lord Campbell of Alloway: Perhaps I may detain your Lordships for a few brief moments. I rise to support this amendment which enables the occupier to grant rights which bind those with a legal interest in land. It is a novel, substantial departure from existing law and it envisages that an occupier who puts his signature on a printed form presented by the operator will give a right to enter land and execute works.
An occupier may be a mere squatter: he could even be a bare licensee at the will of a lessee, a sub-lessee or a freeholder. One only has to start contemplating the actual circumstances on the ground of what quality an occupier may be to consider how unacceptable it would be for someone in that position to be able to bind anyone with a legal interest. It is wholly essential that before entry those with a legal interest in the

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land—whether leasehold or freehold—should have some opportunity to make representations. An attempt should be made—and this is all that I submit should happen—to serve those with the legal interest. Some suitable machinery should be devised; and only if such an attempt fails should there be resort to this peremptory procedure. Those with a legal interest must he given notice and an opportunity to make representations. I agree with the noble Lord who has already said that an important legal interest is at stake. Is this not another aspect of the Bill where the Executive presumes overmuch?
Baroness Elliot of Harwood: I should like to support this amendment very strongly indeed. I agree with everything that has been said by the noble Lord, Lord Howard, and by the noble Lady, Lady Saltoun. I have had the same kind of experience as my noble friend Lord Home, only on a much smaller scale. I have lived in an area which is very large and wild and in which from time to time electricity, drainage and other services have been proposed. Unless one has had the opportunity of giving advice (let alone anything else) as to the best way in which to do something, it will all have been done extremely badly.
I think that is the safeguard this Bill will have if you put in these amendments. I hope that the Government will realise we are not speaking in any sense of selfishness or of wanting to lord it over anyone. We are speaking in the sense that this is the best way to do it This will be the best way to do it; it will bring the best advice, and the best results. It is nothing short of madness not to incorporate these amendments in the Bill. To me, what is there now is extremely unfortunate, and I never dreamt that a Conservative Government would put forward something so dictatorial and something so out of tune with what we normally feel in the countryside and elsewhere. I support this amendment very strongly indeed.
Lord Northfield: We are all indebted to the noble Lord, Lord Howard of Henderskelfe, for spotting this point in the Bill. I must confess that anyone who follows these matters must be very puzzled by the present drafting of sub-paragraphs (3) and (4) on page 90 of the Bill. I hope that the noble Lord will address himself to this point when he replies, because what the sub-paragraphs seem to say is that the occupier whose consent is needed for these works will not have sufficient authority to give his consent unless he has had an agreement in writing from the landowner that he shall have this authority to give such consents. I have rather convoluted it, but what it seems to say—
Lord Howard of Henderskelfe: With all respect, this is telecommunications apparatus exceeding 15 metres in height—and if I am right, that is about 45 feet. That is a great pylon, in other words. That is what that refers to. There are the words "an agreement" which can be an agreement of the occupier; it is not necessarily an agreement of the owner.
Lord Northfield: I am much obliged. I am with the noble Lord, Lord Howard of Henderskelfe, all the way. All I want to say is that the right of the occupier to give these consents seems to be limited to cases where he has an authorisation of some kind from the
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landlord to possess these powers. What I do not understand is what happens if landlords in general begin to say, "We will now include a clause in all the leases specifically withdrawing such powers from the occupier". In that case the utility concerned, I presume, will have to go to the landowner for his consent if the occupier by his lease is deliberately not allowed to have such powers.
If I am right in my interpretation, this leaves a great hole in this part of the Bill, because it means in cases where landlords begin to safeguard their position—as I very much hope, with the noble Lord, Lord Howard, that they will—the Government will have to do something about the position of the landlord. I find the whole matter extremely confusing, so I think that the amendment of the noble Lord in some form, whether as presently drafted but certainly the spirit of his amendment, must be included in the Bill to get the position as complete as possible right from the beginning.
10 p.m.
Lord Glenarthur: We have certainly heard a powerful defence of the rights of property owners from the noble Lord who moved this amendment, and those who supported him, but no government could be more concerned than this one to defend these rights. But before your Lordships leap to the conclusion that the telecommunications code overlooks or ignores the rights of landowners I ought to explain the background to our proposals. The code is intended to replace and update the Telegraph Acts. I think that it is generally agreed that these are archaic and highly unsatisfactory as the statutory framework for modern telecommunications development, dating as they do hack to 1863. In updating them, the Government had to decide what general principles should govern the installation of telecommunication apparatus at a time when telecommunication services are of increasing importance to all aspects of life.
The conclusion that we reached was that there were two important general principles. One of them was that no person should unreasonably he denied access to a telecommunication system. This is explicitly referred to in the code. The other was that operators should be enabled to provide telecommunication services on request with the minimum of delay. This is implicit in the code and in particular in paragraph 2, which sets out the agreements which are required before an operator can install wire, poles, et cetera, on private land.
Paragraph 2 requires what has become known as occupier only consent. Under its provision the agreement of the occupier is sufficient to give the operator the necessary permission to install his apparatus unless the occupier is merely a short-term tenant with a lease of less than a year. This contrasts with the range of consents required under the Telegraph Acts which extended to the landlord, any superior lessee of the occupier, as well as the occupier himself. Over the years these arrangements have been shown to have a number of serious drawbacks. They failed to recognise the impracticability in many cases of obtaining such a wide range of consents. Perhaps the landlord is abroad, for example. This has served to bring the law into disrepute.

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They also failed to recognise that landlords might use the withholding of their consent as a means of harassing their tenants. They might. But, above all, they have led to unnecessary delay in the provision of services: and with the growing significance of telecommunications in everyday life that has become less and less acceptable. The noble Lord's amendment more than acknowledges the validity of these arguments, for it is only in relation, broadly speaking, to agricultural and rural land that it proposes that the operator should have to seek a wider range of agreement. Even here it acknowledges that where apparatus is placed on land to provide a service only to the occupier of that land, the occupier's consent should be sufficient to confer a right on the operator to install his apparatus.
The telecommunications code itself deals, as the noble Lord made clear in moving his amendment, with the granting of wayleaves. In this context it is true that the principle of occupier-only consent is new; but I suggest that it must be looked at in the context of the telecommunication works which are likely to be carried out using its powers. Comparisons with other legislation can be rather misleading. As far as electricity is concerned this is partly because the relevant legislation dates back almost as far as the Telegraph Acts; but it is also because the physical consequences of installing much electricity transmission equipment—and, for example, pipelines, to which the noble Lord, Lord Howard of Henderskelfe, refers—are far more substantial than in the case of telecommunication equipment. That is why more extensive arrangements are needed to protect those with interests in land. Very little telecommunication apparatus, unlike the gas and electricity apparatus that I mentioned, is longer than a telegraph pole.
Against that background, we have to ask why special arrangements are necessary for the categories of land covered by this amendment. Despite what has been said in support of the amendment, to some extent the noble Lord's case is not that the code fails to safeguard property rights of landlords whose consent is not sought, at least in so far as such rights have a financial aspect. The Government have already admitted that this aspect of the code was not fully worked out in the beginning; but thanks to the assistance in particular of the Royal Institution of Chartered Surveyors, we think that the compensation provisions are now satisfactory.
They will ensure that the landowner whose consent is not sought because he is not in occupation of his land will, when he reoccupies it, be able to require the operator to remove his apparatus, if necessary by going to the court. and be able to have the land restored to its former condition. This means that if, for some reason, the land cannot he restored, the operator will be bound to pay compensation for any loss or damage suffered. If the market value of the landlord's interest diminishes because of the uncertain outcome of and the troubled association with the court procedure to get the apparatus removed, the operator will be required to pay compensation to the amount of the depreciation in value.
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Against this background, it seems that perhaps the real concern behind the amendment—emphasising as it does parts of the country which are national parks or designated as areas of outstanding natural beauty—is the need to ensure that landlords can play their part in protecting the rural environment, both in relation to its visual amenity and in connection with other aspects of the physical environment, by giving operators the benefit of the their long-term knowledge of a particular locality in the way that my noble friend Lord Massereene and Ferrard said.
As I said, the protection of the environment is a matter which we regard as of the highest importance. Indeed, it was one of the considerations that we had in mind when we amended the code so that the full range of consents would be required in relation to large apparatus. But in the light of the noble Lord's remarks and the concern which has been expressed by other members of the Committee, it seems to me that this is something to which we need to give further consideration. I should like briefly to give the Committee some idea of the direction that further consideration might take.
It will be clear from what I have already said that we attach considerable importance to the principle of "occupier only" consent. We are not attracted by the amendment which would substantially undermine one of the foundations upon which the code is based. However, as the noble Lord may be aware, we have begun to explore, with one of the organisations which has made representations on this subject, whether conditions could be devised for inclusion in the licence of code operators which would achieve the key objectives of the amendment. Perhaps I should emphasise that there can be no question of licence conditions introducing additional consent procedures, as it were by the back door. That is a matter for the code itself, but it seems possible that some kind of prior notification procedure could be devised, perhaps along the lines of the prior notification procedure for planning authorities in Part 5 of the draft BT licence. That would enable landlords in certain defined areas to make representations to operators about how apparatus should be installed.
I should emphasise that such a prior notification procedure would not extend to all categories of land as the second part of the amendment proposes. We believe that the objection procedures in paragraph 17 of the code, which provides complainants with recourse to the courts if they wish to have apparatus removed or relocated, already provides a better safeguard for the majority of installations. But as I have indicated in areas where special environmental considerations apply, we think that additional safeguards could be introduced by way of licence conditions. In this connection, I should like to make particular mention of the National Trust and the National Trust for Scotland in connection with whom we now recognise that special safeguards are needed. I shall be returning to this subject again in connection with Amendments Nos. 88 and 88B. But I say now that we think that a combination of licence conditions of the kind I described, coupled with an amended paragraph 8 of the code, will meet the very justifiable concerns.

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I am the first to understand and accept the force of the arguments which have been put to me this evening. But I would not wish to give any more precise undertakings at this stage other than the way I have described, since the whole matter would need to be discussed further with interested parties. But on the basis that the Government were willing to adopt an approach of the kind that I have described, and with the explanations that I have given in describing the way the system will work under Schedule 2, I hope that the noble Lord will see tit not to press his amendment.
Lord Northfield: Before the noble Lord sits down, can he answer my question about what happens under sub-paragraph (3) if landlords begin to say in leases that they specifically withdraw from the occupier the right to give these consents?
Lord Glenarthur: I am afraid that I cannot answer that particular point at the moment. I shall certainly find out and let the noble Lord know.
Lord Howard of Henderskelfe: May I be of some assistance to the noble Lord? I think that he will find that the majority of leases already include a prohibition against the occupier granting a wayleave without the landlord's consent. Often it says after that, "which shall not be unreasonably withheld". It is very nearly standard in most leases. I see a lot of noble Lords nodding at what I have said. I hope that that in some measure answers the question. I have to try to deal with it when we come to a later amendment.
Meanwhile, the Minister has held out hope of some amendment. His speech was certainly very much more conciliatory in its tone than the speech that was made in another place on Second Reading. I should like to read very carefully indeed what he has said before I decide to return to this matter later. I cannot accept that we can move on to a new era of occupiers-only consent. If that is to be the new role, then I feel that at a later stage we still must march into the Lobbies. But, because I do not feel that I would wish to do so tonight until I have first had an opportunity of reading what the noble Lord has said tonight and, secondly, of seeing what the Government propose in the future,. I would wish to seek leave to withdraw the amendment.
Lord Airedale: Before the noble Lord withdraws his amendment, although we have been discussing Amendments Nos. 85A and 85B together, we are technically still only on No. 85A. When Amendment No. 85B is called, if the noble Lord, Lord Howard, will be so kind as to move it formally, that will let in my following amendment. Otherwise, I shall be frustrated.
Amendment No. 85A, by leave, withdrawn.
Lord Howard of Henderskelfe Lord Howard of Henderskelfe moved Amendment No. 85B:
[Printed earlier: col. 553.]
The noble Lord said: I beg formally to move Amendment No. 85B, which stands in my name. I do not propose to speak to it.
10.13 p.m.
Lord Airedale Lord Airedale moved, as an amendment to Amendment No. 85B, Amendment No. 85BA:
At end insert—
(" (4C The agreement of the occupier of any land falling within headings (b),(c),(d),(e)and (f) of sub-paragraph (4A) above shall not have effect under sub-paragraph (2) above unless the operator has not less than four weeks prior to the entering into of such agreement given notice in writing to the Countryside Commission or the Countryside Commission for Scotland, as the case may be, of what is proposed, has afforded such Commission not less than three weeks from receipt of such notice to make representations to the operator and has taken such representations into consideration or unless the right is required to provide a telecommunication service to and only to the occupier of that land.")
The noble Lord said: I am happy to say that my amendment does not in any way interfere with the previous amendment. It raises a different point. It is only associated with the previous amendment because I have taken the opportunity to adopt some of the happy wording of the previous amendment. The Countryside Commission is charged with looking after the physical environment of the land under its control. That land is the land comprised in paragraphs (b) to (f) of the previous amendment.
I should have thought that it almost went without saying that if something is going to be erected affecting the physical environment of Countryside Commission land, the Countryside Commission should at least be told what it is proposed to do. I listened with great interest to the Minister's reply to the first amendment to Schedule 2, in which he said, for instance, that there would be permission for the erection of certain poles and wires so as not to overload the planning controls system.
There is a great difference between putting a line of poles and wires upon the horizon and siting them out of sight below the skyline. I should have thought the Countryside Commission would be more sensitive to and aware of a problem of this kind than would British Telecom. Then the Minister said that in most cases, of course, it is compulsory to put telephone cables underground; but there are exceptions, and I suppose that one would he open moorland, where it would probably be far too expensive to put the cables underground.
Then the Minister relied very much upon the planning control legislation. My observation on that is that planning control is local, and inevitably one will get situations where the same problem is dealt with in one way by one local authority and in another way by another local authority. But if you have the Countryside Commission having their say in the matter, you will tend to get uniformity in dealing with similar problems nationwide.
My only fear is that I have perhaps not drafted this amendment strongly enough. It says only that the Countryside Commission must be given notice, and it enables them to make representations; and it says that the representations must he taken into consideration. But that is all. It may well be that your Lordships will think that something stronger is required and that the Countryside Commission's permission ought to be required, with possibly an appeal to the Secretary of State in the event of a deadlock between British Telecom and the Countryside Commission. However,

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I should have thought that this amendment, so far as it goes, was desirable. I would most gladly support a stronger amendment at the next stage of the Bill, but in the meantime I would hope that your Lordships might think that this amendment is at least desirable, and I beg to move.
Lord Glenarthur: The Government have made it clear that the conditions in the BT licence represent a minimum standard to which other licences applying powers under the telecommunications code will conform. There has to be full public consultation before other licences are granted, and it will be possible to deal with matters of the kind covered by this amendment in that context.
Turning to the BT draft licence, the Government do not think it is necessary to extend the notification procedure in Condition 2 of Part 5 so widely as to cover all the areas dealt with in this amendment, or that the Countryside Commission itself should be notified as well as the local planning authority in the case of countryside consisting of a national park or an area of outstanding natural beauty. Furthermore, the Countryside Commission have indicated that in any case they would not have the resources to vet proposals for the installation of apparatus.
I therefore hope that the noble Lord will accept that BT's draft licence and, by extension, all licences in future providing for consultation with local planning authorities on the installation of overhead apparatus in national parks and areas of outstanding natural beauty go as far as it is practicable to go in requiring operators to consult the relevant authority before installing apparatus in the countryside in general. I hope that the noble Lord will see fit to withdraw his amendment.
Lord Airedale: I am sorry to hear that the Countryside Commission do not have the financial resources. That seems to be a sad state of affairs. In that event, I suppose it is not much good pressing this amendment, and I have not had what one might call overwhelming support for it. So I beg leave to withdraw the amendment.
Amendment to the amendment, by leave, withdrawn.
The Deputy Chairman of Committees: May I have the wishes of the noble Lord, Lord Howard, on Amendment No. 85B?
Lord Howard of Henderskelfe: Having withdrawn my paving Amendment No. 85A, I think it would be impossible for me to divide on No. 85B. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lyell Lord Lyell moved Amendment No. 85C:
Page 92, line 47, leave out ("paragraph 8(b)") and insert ("subparagraph (8A)")
The noble Lord said: With the permission of the Committee, I should like to speak also to Amendments Nos. 85D, 85E. 85F, 85G, 85H, 85J, 85K and 85L, which are all in the name of my noble
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friend Lord Cockfield. They are all interconnected and are all concerned with paragraph 4 of Schedule 2.
Amendment No. 85D:
Page 93, line 16, at end insert (": and sections 2 and 4 of the Land Compensation Act 1961 (procedure and costs before Lands Tribunal) shall apply, with the necessary modifications, in relation to any such determination.")
Amendment No. 85E:
Page 93, line 18, leave out from ("be") to ("becomes") in line 19 and insert ("made by giving the operator notice of the claim and specifying in that notice particulars of—

(a) the land in respect of which the claim is made:

(b) the claimant's interest in the land and, so far as known to the claimant, any other interests in the land:

(c) the right or variation in respect of which the claim is made: and

(d) the amount of the compensation claimed:

and such a claim shall be capable of being made at any time before the claimant")
Amendment No. 85F:
Page 93, line 26, at end insert—
("( ) Without prejudice to the powers of the Lands Tribunal in respect of the costs of any proceedings before the Tribunal by virtue of this paragraph, where compensation is payable under subparagraph (4) above there shall also be payable, by the operator to the claimant, any reasonable valuation or legal expenses incurred by the claimant for the purposes of the preparation and prosecution of his claim for that compensation.")
Amendment No. 85G:
Page 93, line 31, at end insert—
("( ) In the application of this paragraph to Scotland—

(a) for any reference to the Lands Tribunal there is substituted a reference to the Lands Tribunal for Scotland and for any reference to costs there is substituted a reference to expenses:

(b) for the reference in sub-paragraph (6) above to sections 2 and 4 of the Land Compensation Act 1961 there is substituted a reference to sections 9 and 11 of the Land Compensation (Scotland) Act 1963:

(c) for the reference in sub-paragraph (8) above to section 5 of the Land Compensation Act 1961 there is substituted a reference to section 12 of the Land Compensation (Scotland) Act 1963;

(d) for the reference in sub-paragraph (9) above to sub-sections (1) to (3) of section 10 of the Land Compensation Act 1973 there is substituted a reference to subsections (1) and (2) of section 10 of the Land Compensation (Scotland) Act 1973")

Amendment No. 85H:
Page 93, line 33, leave out from ("for") to ("to") and insert ("any reference")
Amendment No. 85J:
Page 93, line 36, leave out from ("the") to ("5") and insert ("references in sub-paragraphs (6) and (8) above to sections2, 4 and")
Amendment No. 85K:
Page 93, line 37, leave out from ("there") to ("6") in line 38 and insert ("are substituted references to Articles 4, 5 and")
Amendment No. 85L:
Page 93, line 39, after ("1982") insert (". respectively")
All these amendments arise from paragraph 4(4), which was one of the improvements in the compensation provisions of the code which were made at Report stage in another place. The basic objective of paragraph 4(4) is to enable landlords whose agreement is not sought to the installation of apparatus to telecommunications obtain compensation for any diminution in the value of their interest in the land which may occur because, in order to get such apparatus removed when they come back into occupation, they may have to take the telecommunications operator to court.
Three of the amendments to which I am speaking—Nos. 85C, 85D and 85E—are designed to introduce the necessary procedures for making claims

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under paragraph 4(4), and to ensure that the existing arrangements by which the Lands Tribunal hears cases are carried over into the telecommunications code. These amendments are based on the corresponding provisions in the Land Compensation Acts of 1961 and 1973, which present the same situation.
Amendment No. 85F is related to the other three to which I have spoken. It ensures that, when the Lands Tribunal is assessing compensation in relation to paragraph 4(4), account is taken of any valuation or legal expenses which are paid by the operator to the claimant. The rest of the amendments—Nos. 85G, 85H, 85K, 85J and 85L—are consequential and are to achieve the same objectives. They are amendments to Scottish and Northern Irish enactments. These amendments involve no real issue of policy. I hope that, with that brief explanation, the Committee may see fit to accept them. I beg to move.
On Question, amendment agreed to.
10.23 p.m.
The Earl of Kinnoull The Earl of Kinnoull moved Amendment No. 85CA:
Page 93, line 12, at end insert—
("(5A) Where—

(a) a person would as the owner of a relevant interest in land subject to which a right is conferred or varied be entitled under sub-paragraph (4) above to compensation for depreciation in the value of that relevant interest if there were any such depreciation,

(b) that person is the owner of any interest in other land, and

(c) the value of his interest in that other land is depreciated by reason of the conferment or variation of the right or of anything otherwise injuriously affecting that other land by the exercise of the right.

then, whether or not any compensation is payable under subparagraph (4), the operator shall pay to that person compensation equal to the amount of the depreciation in the value of his interest in the other land.")
The noble Earl said: I beg to move this amendment, and with it I should like to speak to Amendments Nos. 85CB, 85EA, 85FA and 86CB, all of which are consequential.
Amendment No. 85CB: Page 93, line 14, leave out ("subparagraph (4)") and insert ("sub-paragraphs (4) and (5A)")
Amenthnent No. 85EA: Page 93, line 22, leave out ("subparagraph (4)") and insert ("sub-paragraphs (4) and (5A)")
Amendment No. 85FA: Page 93, line 29, leave out ("subparagraph (4)") and insert ("sub-paragraphs (4) and (5A)")
Amendment No. 86CB: Page 95, line 31, at end insert—
("( ) In determining what amount shall be specified in a term of an order under paragraph 5 above the court shall take into account any compensation paid under paragraph 4(5A) above.")
My noble friend praised the Royal Institution of Chartered Surveyors earlier, when he said that helpful discussions and consultations over this complicated code are taking place between the Government and the institution. But I should say at once to my noble friend that I do not think the institution is completely happy with the code as it at present stands. Indeed, this complicated little amendment has been drafted by the institution.
It is a complicated subject which we are taking at a late hour, and the position is made more complicated because I have lost the brief. But, as I understand it, the amendment seeks to provide compensation for injurious affection. This is a case where land has been
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affected but not actually acquired by the body which has built apparatus on the land. A typical example is a house with a meadow in one ownership, and along comes this body and builds a large apparatus on the meadow in front of the house. The question is whether there should be a claim for injurious affection or depreciation of the value of the house which has not been acquired. This is a common claim under the rules of compensation. It is a common claim under the other statutory bodies which the noble Lord, Lord Howard of Henderskelfe, listed some time ago, and I hope that it will be included, if it is not already included, in this code. I beg to move.
Lord Lyell: In reply to my noble friend's excellent and succinct summing up of the purpose of his amendments, the Government see the purpose of the amendments as being to confer on the owner of an interest in land—perhaps the meadow to which my noble friend referred—upon which telecommunication apparatus is installed under the code a right to compensation which will extend any injurious affection to any interest which he happens to have in any neighbouring land. If your Lordships were to look at the code they would find "injurious affection" mentioned. I am told that in legal terms it means loss or damage suffered by the owner of an interest in land as a direct consequence of the exercise of powers of compulsory acquisition for the execution and use of duly authorised works.
The amendment would give to the owner of an interest in the land on which the apparatus is installed an extended right to compensation—a right extended in this way: to cover the damage to his interest in the neighbouring land. This would be a right closely akin to that which is conferred by Section 7 of the Compulsory Purchase Act 1965 upon owners whose land or interest is taken away from them. By these provisions they can claim under that section for injurious affection to their interest in the neighbouring land as well as for the loss of the land which is taken away.
I have to say to my noble friend and to the Committee that the Government have given careful and, I stress, sympathetic consideration to the suggestion that a principle similar to that in Section 7 should be applied in the circumstances of the code, but we are convinced that it would not be right to do so for these reasons. Primarily, the circumstances in the code which we have before us differ from those in Section 7 of the 1965 Act, in that nothing is taken away from the owner of any interest in the land on which the apparatus is installed who is not in occupation. He is entitled to have the land restored to the condition it was in before the installation was made, once he resumes occupation. We find that in paragraph 4(2) (ii). We believe that there is no justification for seeking to give compensation along the lines of that afforded by Section 7 where there has been expropriation.
As regards his interest in the neighbouring land which is injuriously affected, the owner is in the same position under the code as the holder of an interest in that land and he is entitled to compensation under Clause 16(2) which Amendment No. 91KA seeks to restrict. I hope I have not pre-empted my noble friend,

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who mentioned a list of amendments. We believe that Amendment No. 91KA comes into the list which was introduced by my noble friend, so perhaps he will permit me to refer to it.
Clause 16(2), which Amendment No. 91KA seeks to restrict, expressly provides for the compensation under that paragraph to be determined irrespective of his ownership or interest in the land on which the apparatus is installed. This puts him in just as good a position as would be any neighbouring landowner under the 1965 Act whose interest in that land was not held with the land taken.
I am afraid this has been somewhat convoluted. I hope it has gone some way to assuage the worries expressed by my noble friend. I leave it to the Committee and say our case rests, and I hope my noble friend will not insist on his amendment.
The Earl of Kinnoull: I do not intend to insist on it, but I must pick up the points my noble friend makes. He said the case differs from that under Section 17 of the Land Compensation Act, which applies to the statutory authorities. He said it differs because the owner can remove the apparatus as and when he takes possession of the land. I think that could be misleading, for this reason. In practice what would happen is that if the tenant, having given permission for the apparatus, which would cost quite a considerable sum, to be put on that land, then retires and hands over to the owner two years later, say, I cannot believe that any court, when the company applies to it under this Bill, will say to the owner, "It is reasonable for you to take away that apparatus". I think it would say, "It is reasonable for that apparatus to stay".
So we have the strange situation, which in a funny way was covered by the noble Lord, Lord Howard, that the land is blighted and the owner may not receive compensation until he takes possession, which may be one year or may be fifty years. He may die after three years: and his executors will receive no compensation. I think it is a fundamental injustice in what is a very complicated code, particularly when one remembers that one is dealing with a private company and private interest. I do not see any case at all for giving a special advantage, a draconian power, to a private body over a statutory body. There is a sense of panic that this private body should be given these draconian powers where there is no necessity. I withdraw this amendment under protest because of the time of night and the complication of the matter.
Lord Lyell: Before my noble friend withdraws his amendment, could I stress to him and the Committee that, in the scenario he presented, if the court says that the apparatus must stay when the owner re-occupies his land, then compensation must be paid. My noble friend referred to Section 17 (in fact, it is Section 7) of the 1965 Act. I did not stress that if an owner reoccupies his land he is entitled to have the land restored to the condition it was in before the installation was made. My noble friend will find that in the code on page 92, about halfway down. It is in subparagraph (2) of paragraph 4. He will see the words:
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"the operator shall restore the land to its condition before that thing was done."
I think that goes, if not all the way then a good deal of the way to assuage the justified fears expressed by my noble friend. He sought to abbreviate the proceedings, and perhaps I may also.
The Earl of Kinnoull: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 85CB not moved.]
Lord Lyell Lord Lyell moved Amendments Nos. 85D and 85E:
[Printed earlier: col. 568.]
On Question, amendments agreed to.
[Amendment No. 85EA not moved.]
Lord Lyell Lord Lyell moved Amendment No. 85F:
[Printed earlier: col. 568.]
On Question, amendment agreed to.
[Amendment No. 85FA not moved.]
Lord Lyell Lord Lyell moved Amendments Nos. 85G, 85H, 85J. 85K and 85L:
[Printed earlier: col. 568.]
The noble Lord said: I have already spoken to these amendments. They are all formal. I beg to move them en bloc.
On Question, amendments agreed to.
10.35 p.m.
Lord Spens Lord Spens moved Amendment No. 85LA:
Page 94, line 17, after ("circumstances") insert ("(including, where the land concerned is operational land of statutory undertakers, as defined in section 222 of the Town and Country Planning Act 1971, the needs of those statutory undertakers for the purpose of carrying on their undertaking)")
The noble Lord said: I shall be brief. This amendment has been submitted to us by the water authorities. All water authorities are apparently worried about the Bill because they have their own private telecommunications systems and they are afraid that Schedule 2 may put them in a slightly difficult situation. Schedule 2 gives the operator powers to execute works in relation to the installation of telecommunication systems; and, generally speaking, when an operator wishes to execute works on land the agreement of the occupier for the time being of that land is required. However, paragraph 5 contains provisions whereby the need for obtaining such agreement of the occupiers of the land can be dispensed with.
Under the provisions of paragraph 5 the operator may apply to the county court for an order enabling him to execute works and carry out other operations on land without the usual agreements. Paragraph 5(3) provides that:

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"The court shall make an order under this paragraph if, but only if, it is satisfied that any prejudice caused by the order—

(a) is capable of being adequately compensated for by money; or

(b) is outweighed by the benefit accruing from the order to the person whose access to a telecommunication system will he secured by the order."

It is that situation which the water authorities are worried about. They feel that the court should have regard to all the circumstances and to the principle that no person shall unreasonably be denied access to the telecommunication system. They feel that gives a little bias towards the telecommunications people and against the water authorities. Therefore they suggest that on page 94, at line 17, the following be inserted:
"(including, where the land concerned is operational land of statutory undertakers, as defined in section 222 of the Town and Country Planning Act 1971, the needs of those statutory undertakers liar the purpose of carrying on their undertaking)"
That is all that the water authorities require. I beg to move.
Lord Glenarthur: I hope that I can reassure the noble Lord that there is no danger of the powers of the telecommunications code being used in a way which would damage the interests of statutory undertakers such as water authorities by interfering with their activities on their operational land.
I think it will be unusual for telecommunications operators to want to install their apparatus on the operational land of statutory undertakers except in two sets of circumstances: first, where they are, by agreement, providing a service to that undertaking and, second, where they are acting under the power in paragraph 12 of the code to install apparatus across, and for a short distance along, linear obstacles of railways, tramways and canals. In the first case there is no difficulty because the installation takes place on agreed terms. In the second case paragraph 12, subsection (3), specifically provides that the installation must not interfere with the activity being carried out on the land.
The only other possibility, as this amendment recognises, is that an operator might seek to install apparatus across the operational land of a statutory undertaker under a court order, dispensing with the undertaker's agreement. But as the code is currently drafted, the court is required to take into account all of the circumstances of the case.The fact that the land in question is the operational land of a statutory undertaker is clearly one of the circumstances of the case and the court will he bound to consider it.
I suggest therefore that the amendment is unnecessary. But in addition to that, if we were to treat the operational land of statutory undertakers differently from land in general, for the purposes of paragraph 5 of the code, when there is already an adequate safeguard in paragraph 5 for statutory undertakers it would tend to devalue the safeguards that exist for land in general. I hope therefore that the noble Lord will withdraw his amendment.
Lord Spens: I thank the noble Lord the Minister for that reply. I think that I am satisfied by it. Anyway, I shall take it away, look at it and discuss it with the water authorities to see what they think about it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Kinnoull The Earl of Kinnoull moved Amendment No. 85LB:
Page 94, line 30, at end insert—
("( ) Before making an order under this paragraph the court shall afford to any person whose agreement will be dispensed with by the order or whose interest will be bound by the provisions of the order an opportunity to apply to the court for the terms of the order which may be specified under paragraph 6 below to be determined by the Lands Tribunal and if any such person so applies—

(a) the order may be made by the court and shall take effect on such day as the court may appoint for the purpose of conferring the right or providing that it shall hind an interest in the land whether or not such terms under paragraph 6 have then been determined;

(b) the terms and conditions of the order which may be specified under paragraph 6 below shall be referred to and determined by the Lands Tribunal;

(c) the Lands Tribunal shall have all the powers and duties conferred on the court by paragraph 6 below: and

(d) the terms and conditions determined by the Lands Tribunal shall be deemed to form part of the order made by the court under this paragraph as if they had been determined by the court and shall be enforceable accordingly.")

The noble Earl said: This amendment is fundamentally very important to the Royal Institution of Chartered Surveyors. I know that the institution has had a good deal of correspondence with my noble friend and his department. Under the new code the Lands Tribunal will deal with compensation matters in the final appeal under paragraphs 4 and 16: and yet under paragraph 5, with which we are now dealing and which concerns the court fixing the financial terms where there have been disputes, the county court will in fact be the fixing body.
The institution is concerned because, first of all, the Lands Tribunal is an expert and recognised body in this field, and I do not think that anyone disagrees with that. Secondly, its decisions are given a good deal of publicity in the professional journals and the decisions are given in writing, which I understand would not necessarily be so in the county court. Thirdly, its rulings are made by a a single body. In the view of the professions, that gives a stable sense of judgment. There was a recent case of Clouds Estates v. Southern Electricity Board, where the Lands Tribunal had to fix an award in a case similar to one which might need to be dealt with under this code. If my noble friend does not accept the precise wording of the amendment, I hope that he will give consideration and sympathy to the purpose behind it. I beg to move.
Lord Lyell: My noble friend was correct to point out the relevance of paragraphs 4 and 16 of the code, as well as the relevance of paragraphs 5 and 6. As we are on paragraph 5 now, my noble friend was right in bringing us hack to that particular section of the code. It may appear to be odd in some ways that the Lands Tribunal is given a role in assessing compensation under paragraphs 4 and 16 but not under paragraphs 5 and 6.
I would stress to my noble friend that the relevant parts of paragraphs 4 and 16—and indeed it was paragraph 16 for which I was seeking in my earlier oration about injurious affection to land—are entirely concerned with the question of compensation. In the one case it is compensation that a telecommunications operator is under a duty to pay to a landlord whose

575
agreement to the installation of apparatus has not been sought for any depreciation in the value of his interest—that is, the landlord's interest—in certain circumstances. In the other case—that will be paragraph 16—it is compensation for injurious affection to neighbouring land which once again the operator is under a duty to pay. The issue in these two particular cases is quite simply what is the appropriate level of compensation for the injury suffered.
Far wider issues arise in the context of paragraphs 5 and 6 in the code under which the primary decision is whether or not a right to install apparatus on private land should be conferred on the operator despite the opposition of the person with the relevant interest in the land. This must, in the Government's view, be a matter to be decided by a judge in court and not by a tribunal.
The second matter to be determined in such circumstances is the terms and conditions (including terms as to compensation) on which the right is to be exercised. We believe that it is difficult to separate out these issues, and in particular to divorce the question of compensation from the other terms and conditions that will have to be incorporated in a court order. We also believe that it makes for a much more efficient and economical legal process if these matters are dealt with together in one package. It seems to me that this amendment acknowledges the force of those arguments, for it does not seek to split the jurisdiction in all cases, but rather to leave open the option of a reference to the Lands Tribunal where the complainant asks for such a reference.
I think that the essence of my noble friend's argument is that if difficult cases arise, it may be desirable to draw on valuation expertise, and I would acknowledge that there is some force in that. Having considered the matter the Government have concluded that it would be appropriate for the court to have access to relevant valuation expertise so as to assist it (the court) in coming to a conclusion on the terms that are to be included in the order. Therefore I am happy to give my noble friend an undertaking that at Report stage we shall come forward with the necessary amendment to ensure that a county court judge will he able to summon an expert assessor and authorise him to inspect the relevant land and report hack to the court as to the terms that should be included in any order. I think that that would be a significant improvement in the jurisdiction under the code as it stands at present and, moreover, an improvement which would not involve any of the procedural inefficiency associated with a reference in any particular case to the Lands Tribunal. I hope that. in the light of the assurance that I have given my noble friend, he will feel able to withdraw the amendment which he has moved so succinctly.
The Earl of Kinnoull: I am most grateful to my noble friend for his courteous and uplifting reply. I noticed a glow going around the Committee and I saw, too, even a smile on the face of the Chief Whip. On the basis of the assurance that my noble friend has given, I am very happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Glenarthur Lord Glenarthur moved Amendment No. 85M:
Page 94, line 43, after ("on") insert (". under or over")
The noble Lord said: In moving Amendment No. 85M I wish at the same time to speak also to Amendments Nos. 86B, 91D, 91K, 94A and 95A.
Amendment No. 86B: Page 95, line 18, leave out ("suffered") and insert ("sustained").
Amendment No. 91D: Page 101, line 40, leave out ("suffered") and insert ("sustained").
Amendownt No. 91K: Page 103, line 23, leave out ("a puhlic") and insert ("that").
Amendment No. 94A: Page 107, line 24, leave out ("suffered") and insert ("sustained").
Amendment No. 95A: Page 113, line 18, after second ("or) insert ("the application in relation to this code of").
These are all formal drafting amendments, and I need not detain the Committee with them. I beg to move.
On Question, amendment agreed to.
[Amendment No. 86 had been withdrawn frotn the Marshalled List.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 86A:
Page 95, line 16, leave out ("persons from time to time bound by the order") and insert ("that person and persons from time to time bound by virtue of paragraph 3(2) above by the rights to which the agreement relates")
The noble Lord said: In moving this amendment I wish to speak also to Amendment No. 86C:
Amendment No. 86C: Page 95, line 19, leave out ("the rights to which the agreement relates") and insert ("those rights")
These two amendments correct a drafting error in paragraph 6(1)(b) of the telecommunications code. I could explain them at length, but I think that at this time of night I shall merely move them formally. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 86B:
[Printed above.]
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 86C:
[Printed above.]
On Question, amendment agreed to.
10.49 p.m.
The Earl of Kinnoull The Earl of Kinnoull moved Amendment No. 86CA:
Page 95, line 20, at end insert ("and persons to be so compensated shall include all persons from time to time being on or using the land with lawful authority.")
The noble Earl said: We are moving along at a good pace here. This is a simple amendment which I know my noble friend will grasp very quickly. As I understand it, basically there is a difference under the code involving on the one hand the rights of an occupier if, for example, he is injured or any of his stock on the land is injured, against the contractor or

577
the company putting in the apparatus. There is a sharp difference between the occupier, who does not have to seek negligence and has an automatic claim, and anyone who might be invited onto his land. For instance, a farmer might invite a fellow farmer to place in a field for a week a valuable herd of Jerseys. During that time they might become entangled in the apparatus and the wires and two might be killed. There is no automatic claim to compensation for that person or his interests.
Equally, if someone invited on to the land by the owner while the work with the apparatus is being carried out is injured, he does not receive an automatic right of compensation. This is a simple point. I hope that my noble friend may be able to accept the principle of the amendment. I beg to move.
Lord Glenarthur: Paragraph 6(1) (b) of the code provides for the court to include, in an order dispensing with the agreement of someone to the installation of apparatus on private land, terms relating to compensation for any loss or damage. As I would have made clear if I had elaborated on Amendment No. 86A, which I have just moved, we intend that persons who are from time to time bound by such an order by virtue of paragraph 2(3) should also be within the scope of this provision. That includes anyone who is the successor in title to the interest of the person or persons whose agreement was dispensed with by the court.
The amendment seeks to go very wide indeed, and includes within the scope of a court order all persons from time to time being on or using the land in question with lawful authority in respect of any loss or damage suffered by them in consequence of the exercise of the rights of the operator. The Government's view is that it is wholly impracticable. How can the court possibly deal with a range of circumstances which might include, let alone Jersey hulls to which my noble friend referred, accidental damage to ramblers using a right of way across the land in question and people playing football on the land with the permission of the landowner?
We must hear in mind that the court may grant a right to an operator to install and maintain his apparatus on a particular piece of land for as long as 25 years or more. I suggest that it would be quite impracticable for a court order to be able to provide for compensation to be paid to all persons who may lawfully be on or use the land over this period of time for any loss or damage they may suffer as a result of the exercise of the right of the operator. The only damage such people will suffer will be as a result of negligence on the part of the operator—for example, failure to properly fill in a trench. If this happens, they can sue the operator, or the operator's contractor, for his negligence under common law. That seems to me to be the appropriate remedy.
I hope therefore that my noble friend will withdraw the amendment.
The Earl of Kinnoull: My noble friend says that the amendment is slightly impracticable and refers to ramblers going over the land being injured. That misses the point. If an owner invites someone on to his
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land and while that person is on the land he is injured, he would not be covered. Yet the owner would be covered if he suffered a similar accident. That is more restricting than the suggestion of my noble friend concerning ramblers. To be honest, I consider that it is very late to be discussing this matter. Perhaps we may look at it together. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 86CB not moved.]
The Deputy Chairman of Committees (Lord Murton of Lindisfarne): I understand that Amendment No. 87 falls and is not moved.
Lord McIntosh of Haringey: No. I do not wish to detain the Committee. I did say at the time that I was speaking to this amendment but not necessarily that I should not be moving it.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 87:
[Printed earlier: col. 535.]
The noble Lord said: The noble Lord, Lord Glenarthur, in response to a previous amendment of mine, talked about the potential conflict between the courts and the conditions that we propose should be put into the telecommunications code. I do not think that that objection can apply to this amendment. It simply adds to the conditions that can be taken into account by the court the condition that an operator can apply to the court for a notice to be set aside on the ground that he is put in an intolerable position: that to afford a potential subscriber access to an operator's system would cause undue damage to the physical environment. This is a just recognition of the kind of conflict of interest that will inevitably be encountered by an operator. It seems to us to be a reasonable addition to those matters that fall to be considered by the court under the conditions of the telecommunications code. I beg to move.
Lord Glenarthur: Paragraph 7 of the code enables a potential subscriber to give notice to an operator requiring him to take certain steps to afford the potential subscriber access to his system. The paragraph also enables the operator to apply to the court to have such a notice set aside on certain specified grounds. This amendment tries to add to those specified grounds that the works necessary to afford the potential subscriber access to the operator's system would cause undue damage to the physical environment.
I have already explained how we see licence conditions operating to protect the physical environment. I have no difficulty with the general proposition that undue damage to the physical environment should, if' possible, he avoided. The difficulty is in providing a meaningful description of what undue damage is. The Government's suggested approach overcomes this kind of problem to a very large extent because it begins by asking questions, such as: in what circumstances is damage likely to be done, or what specific aspects of the environment need special

579
protection? Even that does not solve all the problems, but it avoids the difficulty of very vague statutory tests of the kind suggested here. And in view of the licence conditions we propose to include in the licences of BT and other operators, I would further argue that this amendment is unnecessary.
But I am also concerned about another aspect of this amendment, in that it would appear to provide a very wide subjective test on the basis of which an operator might try to escape obligations in his licence to provide particular services, for example, to rural areas, unless it is impracticable or not reasonably practicable. In view of the assurances the Government have given on this point, I hope that the noble Lord will see fit to withdraw this amendment, which could have potentially harmful effects.
Lord McIntosh of Haringey: I think that the Minister is greatly exaggerating the potentially harmful effects. This is only one possible way in which the operator may apply to the court to have a notice set aside. It is no more than that. It is simply widening the area of possible consideration by the court. But I do realise that the Government have rejected the basic argument, which is that the telecommunications code is the place for this type of environmental protection, and in the light of the necessity to come back to that at the Report stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lyell Lord Lyell moved Amendments Nos. 87A and 87B:
Page 96, line 46, after ("8") insert ("(1)").
Page 97, line 5, leave out paragraph (b).
The noble Lord said: I beg to move Amendments Nos. 87A and 87B, and I am sure it will be for the convenience of the Committee if I also speak to Amendment No. 88A.
Amendment No. 88.A: Page 97, line 13, at end insert—
("(2) Where any obligation is to any extent unenforceable by virtue of sub-paragraph (1) above, that obligation shall, to that extent, be disregarded for the purposes of assessing the amount of any compensation payable under any provision of this code.")
All three amendments are concerned with paragraph 8 of the code, which your Lordships will find is entitled rather grandly:
"Prohibition on restrictions on giving required agreement".
I should add that Amendment Nos. 87A and 87B are paving amendments for Amendment No. 88A, which is the main amendment about which I should like to speak.
Amendment No. 88A replaces the old paragraph 8(b) with a new sub-paragraph (2) and is designed to remove an obscurity in the drafting. I could go on about the breaching of a covenant in a tenancy agreement, but possibly at this late hour your Lordships might allow me to beg to move Amendments Nos. 87A and 87B together. If any noble Lord wishes a more detailed explanation, I shall willingly give one.
On Question, amendments agreed to.
11 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 88:
[Printed earlier: col. 535.]
The noble Lord said: In view of what I said on a previous amendment. I think that I can content myself by asking the Government to give me some indication of how covenants with the National Trust, the National Trust for Scotland, local authorities or other bodies for the protection of the physical environment are to be protected under the proposed legislation. I beg to move.
Lord Glenarthur: Amendment No. 88, which the noble Lord, Lord McIntosh, has proposed, is related to Amendment No. 88B in the name of the noble Lord, Lord Howard. Both are concerned with the same point; namely, the disapplication of paragraph 8 of the code in circumstances where it is thought that special environmental factors have to be taken into account in the context of the installation of telecommunications apparatus. With the Committee's permission, I should like to relate my remarks to both of those amendments. I do not know whether the noble Lord, Lord Howard, is happy with that, but they are substantially the same points.
Lord Howard of Henderskelfe: Yes.
Lord Glenarthur: I see that he is. In connection with an earlier amendment, I have explained why the Government believe that the principle of occupier-only consent is necessary in order to enable telecommunications' operators to provide services without delay when they are requested to do so. It is not possible to look at paragraph 8 of the telecommunications code, which both amendments seek to amend, without looking at paragraph 2 which establishes that principle.
There would be no point in enabling telecommunications' operators to install their wires and poles on the basis of the consent of occupiers alone if those occupiers thought that, by virtue of having given their agreement, they would be liable to their landlords for breaching a provision in their tenancy agreements. Clearly the principle of occupier-only consent would not be acceptable if it was possible for a landlord whose agreement was not sought to suffer loss or damage as a result of an operator installing his apparatus. But this will not be the case.
At the risk of repeating myself, the code provides a procedure whereby, if necessary, a landlord who reoccupies his land can seek the agreement of a court to the removal of the apparatus. Furthermore, the operator is under a statutory duty to restore the land to the condition it was in before.
Perhaps I can paraphrase the theme that runs behind the noble Lord's amendment. It is that financial compensation is not enough in relation to apparatus, the installation of which might damage the physical environment and in particular visual amenity. The ultimate removal of apparatus and

581
compensation for the landlord at the end of the day if the land cannot be restored to its former condition cannot make up for the environmental loss in the interim. It is precisely because we recognise the strength of these arguments that we have included in the telecommunications code an objection procedure in relation to overhead apparatus so that those with an interest in land on which apparatus is installed, or neighbouring land, if their enjoyment of it is prejudiced, can seek to have offending apparatus removed immediately.
I regard it as inconceivable that operators would put their own interests at risk by ignoring the strong possibility that they could be required to remove their apparatus if they had ignored the environmental aspects of the installation. However, as I have already indicated, the Government are prepared to consider including conditions in the licences of operators to whom the powers of the telecommunications code are applied, conditions which would have the effect of introducing a prior notification procedure in relation to certain categories of land. The aim would be to enable landlords to influence the way in which apparatus was installed, using their knowledge of the locality to minimise any disruption to the environment.
In proposing this amendment, the noble Lord, Lord McIntosh, could argue that even this does not go far enough and that there are certain types of agreements or covenants—and he specifically referred to covenants—which are of such special significance in environmental terms as to merit special treatment in the telecommunications code. The Government accept this view and I hope that an offer to consider the issue further and to come back with proposals for amending paragraph 8 of the code in the direction of his concern will persuade him to withdraw his amendment.
However, in making that offer, I would emphasise that, apart from pure drafting points which make the amendments unacceptable and on which I shall not detain the Committee, we regard the scope of both this amendment and the amendment of the noble Lord, Lord Howard, as going too wide. Amendment No. 88 would enable a local authority or any body to impose agreement or covenants on the grounds—genuine or otherwise—that the physical environment required special protection. Such a formula could be widely abused in many different circumstances to frustrate perfectly acceptable activities of telecommunications operators.
As far as Amendment 88B in the name of the noble Lord, Lord Howard of Henderskelfe, is concerned, the Government's view is that disapplying the basic principles of the code in relation to the whole of the Green Belt also goes too far, but there is a common core in these amendments; namely, the National Trust, which has clearly distinguishable interests and objectives, which makes it a sensible starting point for the disapplication of paragraph 8. At this stage I would not rule out the possibility that our own proposals would also include the categories covered by the references to the Wildlife and Countryside Act. I hope however that your Lordships will accept that it is reasonable for us to want to give further consideration
582
to all the details before making firm commitments. On that basis, I hope that the noble Lord will not press his amendment.
Lord McIntosh of Haringey: I must say that I am grateful to the noble Lord for these offers. I hasten to say I have no intention of intervening in the family quarrel as between landlords and occupiers. I do not think that in moving this amendment I was in any way putting myself at risk on that score. But certainly the offer of further consideration on Report of genuine convenants—and I accept they have to be genuine convenants and not covenants produced for the purposes of obstruction—is very valuable and if I and my advisers from the Civic Trust can play any part in that consideration, we will be happy to do so. On that basis, I am happy to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lyell Lord Lyell moved Amendment No. 88A:
[Printed earlier: col. 579.]
The Earl of Kinnoull: May I ask a question? Is the noble Lord suggesting in this amendment that the question of compensation payable refers to the occupier, or the owner, or both?
Lord Lyell: I am sorry, I took a risk and quite rightly my noble friend has asked me to elucidate. We are replacing the old sub-paragraph 8(b) with new subparagraph (2) designed to remove this obscurity in drafting. The intention of paragraph 8(b) in the Bill and above all of the new sub-paragraph (2) in the amendment—I hasten to assure the Committee and my noble friend that there is no policy change—is to ensure that compensation is not payable to a landlord simply in recognition of the fact that his tenant has breached a covenant in his tenancy agreement by allowing a telecommunications operator to install apparatus on the landlord's land.
As the Committee will be aware, the code permits the installation of telecommunication apparatus on private land on the basis of the agreement of only the occupier of the land, and of course, that is providing the occupier is not a short-term tenant: it is referred to as being a term of one year or more.
In support of the principle of occupier-only consent, paragraph 8 of the code is designed to ensure that a tenant who gives his agreement in breach of a clause in his tenancy agreement does not thereby become liable to his landlord. In this context it is also necessary to ensure that the tenant's liability is not transferred indirectly to the operator through the specific compensation provisions in the code. I stress that the code already provides adequate protection for landlords whose agreement is not sought by an operator before apparatus is placed on the land in which they have an interest. Your Lordships will see paragraph 4 sub-paragraph (2); indeed, I have referred those paragraphs to my noble friend in the course of my earlier remarks on earlier amendments. Against the background that I mentioned, Amendments Nos. 87A, 87B and 88A seek to make clear the Government's policy intention; namely, where a provision in a tenancy agreement is unenforceable by virtue of paragraph 8 that fact will be disregarded for

583
the purpose of assessing the amount of any compensation payable under the code.
On Question, amendment agreed to.
11.10 p.m.
Lord Howard of Henderskelfe Lord Howard of Henderskelfe moved Amendment No. 88B:
Page 97, line 13, at end insert—
("( ) This paragraph shall not apply where the land to which the agreement given for the purpose of paragraphs 2 or 3 above falls within one or more of the under-mentioned classes:

(a) land which is the subject of a management agreement under sections 4(5), 7(3) and 45 of the Countryside Act 1968;

(b) land which is the subject of a management agreement under section 39 of the Wildlife and Countryside Act 1981;

(c) land the subject of agreements or covenants with the National Trust enforceable under section 8 of the National Trust Act 1937;

(d) green belt land as defined in section 2 of the Green Belt (London and Home Counties) Act 1938.".)

The noble Lord said: I beg to move Amendment No. 88B. The answer which was given before I moved this amendment had no relevance to the amendment. Noble Lords will no doubt remember that I reminded the noble Lord, Lord Northfield, that practically every tenancy agreement included a prohibition against occupiers granting wayleaves of this kind, and this schedule quite properly provides for the indemnification of the occupier against his landlord for the granting of such wayleaves.
What the Government do not seem to appreciate is that the sort of land which is the subject of a manpower agreement and the subject of a management agreement, and so on, is not land which has a separate landowner and tenant. These are agreements usually directly between the landowner and the various people responsible here. The indemnifications will not apply there because they are not made with the same people.
This is really the same kind of attempt that others have been making as well as myself to get certain protection for land on environmental grounds. I would be the first to admit that my amendment is defective in that it does not refer to the National Trust for Scotland; it refers only to the National Trust for England and Wales. I beg to move.
Lord Glenarthur: When I spoke to Lord McIntosh's amendment I gave a special commitment to consider (a), (b) and (c) of Amendment 88B. I hope that with that assurance, and after the noble Lord has studied in Hansard what I said specifically in relation to it, he will see fit not to press this amendment.
The Earl of Kinnoull: Besides the fact that the operators can go beyond an agreement between a landlord and tenant, as we now understand—they can just wipe out an agreement between landlord and tenant—may I ask whether they can also wipe out any normal restraints on planning other than this 50 ft. pylon?
Lord Howard of Henderskelfe: It would appear to me from what has been said so far that they are going to be able to wipe out practically everything—planning agreements, management agreements, planning consents, and all sorts of other things. I would not put it past them to obliterate all our beautiful landscape. I beg leave to withdraw the amendment in view of the assurances that have been given to me by the Minister.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 89:
[Printed earlier: col. 535.]
The noble Lord said: Again, this deals with the minimum demands. I do not expect this amendment to be accepted, or this condition to be included in the telecommunications code, but I should like some indication from the Government that the obligation for restoration of the land will be included in the licences. I beg to move.
Lord Lyell: The noble Lord wants an assurance or some explanation from the Government. The Government recognise that it is vitally important that telecommunications operators should be required to make good the streets which are disturbed by the work that they carry out. But I assure the noble Lord and the Committee that this is already provided for, and that the amendment is superfluous. All those operators who are authorised by the Secretary of State to use the powers in the code, and also to undertake works in the street, classified under paragraph 9, will automatically be subject to this splendid measure, the Public Utilities Street Works Act 1950, as the tailpiece to paragraph 9(1) of the code makes clear. Your Lordships will see that.
Section 7(2) of the 1950 Act places this fascinating breed called "statutory undertakers"—the operators under the code will fall into this classification—under an obligation to reinstate and to make good the street after they have completed their works. Failure to do this attracts criminal penalty. But the 1950 Act provides for some flexibility, so that the street authorities may elect to reinstate and to make good the street themselves after the execution of all but what I am informed are minor works. If the street authority chooses this course, the undertaker, by, the measures in paragraph 9(1), is required to make interim restoration. He has to reimburse the authority for the costs of any permanent reinstatement of the street which may be undertaken by that street authority.
Furthermore, the undertaker is required to reimburse the street authority for the costs of remedying any subsequent subsidence of his work. In other words, if he does not do it well, if it is carried out and the undertaker or the operator causes grave structural damage to the street and further repairs are necessary, the operator will be required to make good the street to the condition in which it was before he carried out his works.
I hope that against this background and at this late hour I have been able to give a satisfactory explanation to the noble Lord in his justified question.
Lord McIntosh of Haringey: Only up to a point. The amendment refers to "street, highway or land", and the noble Lord has referred only to legislation in 1950 which refers to streets. I wonder whether he can tell me what assurance there is for the restoration of land to its previous condition?
Lord Lyell: I can give a brief answer, but not tonight. I will study what the noble Lord has said and will write to him. If he wishes to raise this at a later stage I can answer him, but I understand that "street" and the provisions of paragraph 9 go very wide.
The Earl of Kinnoull: Before the noble Lord withdraws the amendment, my noble friend talks about the operator being forced to reinstate or, if there has been a depression in the land, to build it up again. Who will have the right to force the operator to do this? Will it he the tenant of the land or the court? Who will have the right to see that this work is done?
Lord Lyell: I can reply swiftly to my noble friend. I hope I have read out correctly at this late hour that the statutory undertaker—that is, the operator—is under an obligation to reinstate and to make good the street after the completion of his works. I imagine that it is the people we call "the street authority" who would be the relevant authority under the local council. I am pleased that the noble Lord, Lord McIntosh of Haringey, is able to nod assent, since he has served, and I have not, in local government. It would be the street authority who would enforce the obligation under Section 7(2) of this splendid PUSWA, the Public Utilities Street Works Act 1950.
I am able to give an answer this evening to the noble Lord, Lord McIntosh. I am advised that repairs to land and bringing land back into the state in which it was before the operator started work is covered under paragraph 4(2). He will find that in the code.
Lord McIntosh of Haringey: I am grateful to the noble Lord for those explanations and assurances. On that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 90 and 91 not moved]
Lord Lyell Lord Lyell moved Amendment No. 91A:
Page 101, line 4, at end insert—
(" ( ) If within the period of 28 days beginning with the giving of a notice under sub-paragraph (7) above the person to whom that notice was given gives a notice to the operator requiring him to pay compensation, the operator shall he liable to pay that person compensation in respect of loss or damage sustained in consequence of the carrying out of the emergency works in question; and any question as to the amount of that compensation shall, in default of agreement, be referred to arbitration under paragraph 13 below.")
The noble Lord said: I shall speak also to Amendments Nos. 91B, 91C, 91E, 91F, 91G, 91H and 91J, which stand in the name of my noble friend.
Amendment No. 91B:
Page 101, line 16, leave out ("under paragraph 12 above which") and insert ("or question which, in accordance with paragraph 12 above.")
Amendment No. 91C:
Page 101, line 21, leave out ("On a reference") and insert ("Where an objection under paragraph 12 above is referred")
Amendment No. 91E:
Page 101, line 43, at end insert—
(" (2A) Where a question as to compensation in respect of emergency works is referred to arbitration under this paragraph the arbitrator—

(a) shall have the power to direct the operator or the person who requires the payment of compensation to furnish him with such information and to comply with such other requirements as the arbitrator may think requisite for the purposes of the arbitration; and

(b) shall award to the person requiring the payment of compensation such sum (if any) as the arbitrator may determine in respect of the loss or damage sustained by that person in consequence of the carrying out of the emergency works in question.")

Amendment No. 91F:
Page 101, line 45, after ("(2)(a) to (c)") insert ("or (2A)(a)")
Amendment No. 91G:
Page 102, line 3, leave out from ("or) to ("to") in line 4 and insert ("the making of an award under this paragraph—
(a) the references in sub-paragraphs (2)(e) and (2A)(b) above")
Amendment No. 91H:
Page 102, line 6, leave out ("a reference") and insert ("references")
Amendment No. 91J:
Page 102, line 8, leave out ("that sub-paragraph") and insert ("sub-paragraph (2)(e) above")
All these amendments are contained in Schedule 2, but the code allows operators to whom it is applied to install any apparatus by agreement on private land. It also gives them certain powers to enable them to install that apparatus, for example, in the streets. Paragraph 12 enables the code operators to place telecommunications apparatus across railways, canals and tramways, provided that it does not interfere with traffic on the relevant railway, canal or tramway. This power is equivalent to similar powers in the Telegraph Acts, to which we were referring in an earlier amendment, which, of course, Schedule 2 replaces. Schedule 2 also provides that the controller of what is termed the linear obstacle can object to the operator's proposal and any objection which cannot be resolved between the parties is referred to an arbitrator.
Under paragraph 13 of the code (which your Lordships will find on page 101) the arbitrator has power to modify the operator's proposals and, quite properly, to award the controller compensation for any loss or damage that he may sustain in consequence of the carrying out of these works. But, as drafted, Paragraphs 12 and 13 do not provide a mechanism for the controller of the linear obstacle—and, for these purposes. I am given to understand that this is the relevant railway, canal or tramway—to obtain compensation for any loss or damage sustained as a consequence of any works which are carried out by the operator in an emergency.
This is the particularly relevant part. The amendments that I am speaking to seek to remedy that defect. The new sub-paragraph 7(a) of paragraph 12—and that is Amendment No. 91A—is the main amendment, and it sets out the procedure whereby the operator notifies the controller of any emergency work which he, the operator, has carried out. The controller will be able to claim compensation for loss or damge just as he would if the works had been carried out normally. The subsequent amendments to paragraph 13 are, essentially, a restructuring of the existing paragraphs consequential on the main amendment to

587
paragraph 12, which is Amendment No. 91A. With that somewhat lengthy explanation, I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendments Nos. 91B and 91C:
[Printed earlier: col. 585.]
On Question, amendments agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 91D:
[Printed earlier: col. 576.]
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendments Nos. 91E to 91J:
[Printed earlier: col. 586.]
On Question, amendments agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 91K:
[Printed earlier: col. 576.]
On Question, amendment agreed to.
[Amendment No. 91KA not moved.]
11.24 p.m.
Lord Lyell Lord Lyell moved Amendment No. 91KB:
Page 103, line 48, at end insert—
("( ) In the application of this paragraph to Scotland—

(a) for any reference in sub-paragraph (1) to section 10 of the Compulsory Purchase Act 1965 there is substituted a reference to section 6 of the Railway Clauses Consolidation (Scotland) Act 1845;

(b) for the reference in that sub-paragraph to land that has been compulsorily purchased there is substituted a reference to land that has been taken or used for the purpose of a railway;

(c) any question as to a person's entitlement to compensation by virute of that sub-paragraph, or as to the amount of that compensation, shall, in default of agreement, he determined by the Lands Tribunal for Scotland.")

The noble Lord said: Your Lordships will see that paragraph 16 of the code, which covers injurious affection, also provides for compensation which is caused by operators' works in certain circumstances. When these paragraphs were introduced in another place, we were not able to move the necessary adaptations so that the provisions might apply in Scotland. This amendment fills that gap. As paragraph 16 is drafted in relation to England and Wales it refers to the Compulsory Purchase Act 1965. I recall speaking to that on earlier amendments moved by my noble friend Lord Kinnoull. The Compulsory Purchase Act 1965 does not extend to Scotland so that the effect has to be reproduced by reference to equivalent Scottish legislation. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey had given notice of his intention to move Amendment No. 92:
[Printed earlier: col. 536.]
The noble Lord said: On the basis that I shall have a number of different and more extensive amendments to paragraph 17 of Schedule 2 at Report stage, I shall not move this amendment at this time.
[Amendment No. 92 not moved.]
[Amendments Nos. 93 and 94 not moved.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 94A:
[Printed earlier: col. 576.]
The noble Lord said: This amendment was spoken to earlier. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 95:
[Printed earlier: col. 536.]
The noble Lord said: I am not quite so co-operative on this amendment. As I indicated when speaking to Amendment No. 81, this is a matter of considerable practical importance even though it may seem minor to some people. There is, and is bound to be, an increasing problem of abandoned equipment of various kinds and it seems necessary for local authorities to have the power to remove abandoned telecommunications apparatus. I do not see how the power can be exercised in the context of a licence, since presumably the licensee is not capable either of being contacted or being held to the conditions of his licence. It therefore needs direct action to give local authorities the powers required, and I beg to move.
Lord Glenarthur: This amendment raises an important issue in relation to the responsibility of local authorities for ensuring in particular that the highways for which they are responsible are free from obstruction and abandoned apparatus that may be undesirable in environmental terms.
I think, however, that the code already goes a very long way towards meeting the noble Lord's concerns. Paragraph 22 of the code provides that an operator is not entitled to keep his apparatus installed on land if it is not used for the purposes of the operator's system and there is no reasonable likelihood that it will be so used. Paragraph 21 of the code lays down the procedure to be followed in order to enforce a right to have apparatus removed from land—for example, in a case where the apparatus ceases to be used for the statutory purposes of running the relevant telecommunication system.
Thus, there is no doubt that a local authority could, under these provisions, enforce a right to remove apparatus abandoned on land which it owns. If necessary, the authority could seek an order of the court, enabling it to remove the apparatus itself and seek reimbursement of the cost of doing so from the operator. A highway authority would, under these provisions, also be entitled to require the removal of any apparatus abandoned in any section of the highway for which it is responsible. The telecommunications code apart, highway authorities also have power to remove abandoned apparatus when it causes a nuisance, or otherwise interferes with the highway.
I hope the noble Lord will agree, therefore, that we have provided local authorities with very adequate powers to deal with the problem of abandoned apparatus. Highway authorities are already enabled to require the removal of abandoned apparatus in certain circumstances in the street. Although the noble Lord's amendment does not specifically provide such a power, it is clear that a local authority would need to he given a power to enter on to private land in order to

589
remove abandoned apparatus. I do not think it would he proper to give local authorities power to enter on to land for this purpose, particularly when the occupier of that land is already enabled to require the removal of any apparatus abandoned on his land. I would therefore hope that the noble Lord will see fit to withdraw the amendment.
Lord McIntosh of Haringey: I am afraid that that answer is unsatisfactory in a number of ways. First, the noble Lord has referred almost entirely to highway authorities and to the removal of telecommunications apparatus from the highway, whereas, as he recognised in his closing remarks, the purport of the amendment goes much further than that. It includes land other than the highway, which may be private land and may be land owned by the authority or accessible in other ways. The noble Lord also appears to have failed to realise the importance of paragraph (b) of my amendment, which refers to the case of abandoned telecommunication apparatus which the operator has failed to remove after reasonable notice. The kind of occasion that I am thinking about, and which the Government must think about, is the occasion when an operator is unable to remove it, when an operator is no longer solvent or, for example, when an operator simply does not have the power or the finance to do what is environmentally necessary.
The Government will have to look at this again, extending the powers beyond those of highway authorities. The alternative which the Minister suggested, of going to the courts has been found, in the case of abandoned cars, to be quite excessively slow and expensive and led, until greater powers were given to highway authorities, to abandoned cars being very difficult to get rid of. I suggest that the changes in the law, which have enabled local authorities more efficiently to get rid of dead cars from the highway, ought to be applied to telecommunication apparatus, and that there should be no difficulty for the Government in finding ways of doing so. But on the basis that there is need for further thought about the right of access to private land, I am prepared to withdraw the amendment at this stage. I take enough comfort from what the Minister has said to think that he will be willing to answer the specific points which I have made in moving this amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Glenarthur Lord Glenarthur moved Amendment No. 95A:
[Printed earlier: col. 576.]
On Question, amendment agreed to.
[Amendment No. 96 not moved.]
Schedule 2, as amended, agreed to.
Clause 11 [Provisions supplementary to section 10]:
Lord Lyell Lord Lyell moved Amendment No. 96A:
Page 13, line 24, leave out ("made by statutory instrument")
The noble Lord said: This is a drafting amendment. As a result of amendments made at an earlier stage, Clause 92 now draws together references in the Bill to the Secretary of State's power to make orders or schemes by statutory instrument. Thus the reference
590
in Clause 11(1) to an order applying parts of the Electricity Supply (Northern Ireland) Order being "made by statutory instrument" is no longer necessary. This amendment seeks simply to remove the superfluous words. I beg to move.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 96B:
Page 13, line 34, at end insert—
("( ) The Secretary of State may from time to time by order provide that the telecommunications code shall have effect for all purposes as if an amount specified in the order were substituted for the amount specified, or for the time being having effect as if specified, in sub-paragraph (3) of paragraph 16 of the code as the minimum amount of compensation payable under that paragraph: and an order under this subsection may contain such transitional provisions as the Secretary of State considers appropriate.")
The noble Lord said: Paragraph 16 of the telecommunications code in Schedule 2 makes provision for compensation to be paid by an operator in respect of injurious affection to neighbouring land caused by the exercise of a right to install apparatus. This amendment to Clause 11 is related to the provision in paragraph 16(3) of the code that compensation for injurious affection should not be payable, unless the amount of compensation exceeds £50. This is designed to exclude nuisance and frivolous claims and follows the precedent in the existing land compensation legislation. It is thought however that there should be a power for the Secretary of State to amend by order this de minimis figure in the light of inflation. This amendment would give the Secretary of State such a power which he would be able to exercise, subject to parliamentary control, by the negative resolution procedure. I beg to move.
On Question, amendment agreed to.
Clause 11, as amended, agreed to.
Clause 12 [Modification of licence conditions by agreement]:
11.35 p.m.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 96C:
[Printed earlier: col. 514.]
The noble and learned Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 97 not moved.]
Clause 12, as amended, agreed to.
Clause 13 [Licence modification references to Commission]:
Lord Morris Lord Morris moved Amendment No. 98:
Page 15, line 32, at end insert—
("(1A) Subject to subsection (1B) and (1C) below where the Director makes a reference to the Commission under subsection (1) above, he may if he sees fit modify the conditions of any licence to which the reference relates.
(1B) Any modification of a licence under subsection (1A) above shall cease to have effect upon the making of any modifications to the licence under section 15 below in consequence of the reference to the Commission or at such earlier time as the Director may declare.
(1C) Subsections (3) to (6) of section 15 below shall apply to the making of modifications to any licence under this section.")
The noble Lord said: Despite the fact that I understand that the argument underlying this amendment is well-known to Her Majesty's Government, it is critically important that Parliament should consider the argument. Although it is known to the Government it is for Parliament to ratify, at least, the Government's view. The amendment is designed to assist the vital role of Her Majesty's Government and, indeed, the Director General of Telecommunications, and to provide industry with a means of avoiding the cost of having eternally to look to their backs.
At Second Reading I suggested that more emphasis should have been placed in the Bill upon deterring a wrong rather than upon emphasising remedies to a wrong already committed and that there should be more incentive for self-regulation rather than encouraging complainants to the department and to the Office of Telecommunications. The Director General of Telecommunications and the Department of Trade and Industry will be for ever reviewing the performance of individual licensees and considering the conditions of licensees' licences against the performance of those conditions—in other words, for ever being regulatory and administering rather than performing their more important role of concentrating their endeavours upon gearing the tempo of change and encouraging the commercial and industrial initiative best suited to the national interest.
As the Bill is drafted, the only expectations of dealing with new forms of anti-competitive behaviour lie in the provisions of Clause 3(2)(b) and (h), the provisions of Clause 13 and the duties of direction under Clause 49, whereby the director general can exercise the functions of the Director General of Fair Trading and the provisions of the Competition Act 1980.
The manner in which the Secretary of State's duties under Clause 3 are perceived in the exercise of the licensing-granting function under Clauses 7 and 8 may be anticipated in the form of a draft licence which has recently been published. This contains various restrictions upon what could be anti-competitive practices but at the same time does not plug every possible loophole, an ideal which I fully admit would be quite impossible to achieve. However, the problem that this amendment is intended to highlight is the inventiveness of the major suppliers of goods and services in thinking up new means of preventing effective competition.
The United States experience indicates that many methods could be used: for example, competing operators denied the same quality of connection: free telephones and other apparatus could be offered, the charge being included in line rentals; excessive charges for installing sockets for jacks for prime instruments; loyalty discounts; "bundling" of equipment and service prices; leasing arrangements to tie in customers; varieties of cross-subsidisation, predatory pricing and transfer pricing; and the use of "migration strategy"—in other words, raising the price of use of existing installed equipment to encourage the purchase of new offerings, particularly in advance of competitive offerings. Some of these practices could include artificial restriction in permitting
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interconnection of one licensee's system and another's, the showing of undue preference to itself, cross-subsidisation of services, and alteration—this is an important one—without adequate notice of licensees' systems, of their stored commands or protocols, in such a way as to cause confusion to their competitors. However, no claim could be made for the exhaustiveness of this list.
Against this background of opportunity for an ingenious and knowledgeable licensee, the lengthy procedures of Clause 13 onwards, whereby a licence condition may be amended against the wishes of the licensee, pursuant to a reference to the Monopolies and Mergers Commission, must be examined. They are indeed extremely lengthy. This amendment is designed to allow the director to take prompt action—by analogy it could be described as an injunction—to suppress anti-competitive practice in this way.
Since the suppression of anti-competitive behaviour is an acknowledged aim of the Bill, it would be unfortunate if the procedures laid down were too slow-footed to keep up with the tactics likely to be employed. By the proposed amendment, it is intended that the necessary licence amendments may be made promptly. While the amendment stands on its own, it would be immeasurably reinforced by other amendments put forward to secure a licensee's prompt compliance with the conditions of his licence. I beg to move.
Lord McIntosh of Haringey: I do not think any of us would wish to see delay for its own sake, or to weaken the powers of the director general, but what is proposed in this amendment does seem quite a remarkable instance of the latter being judge and jury in his own case. It is suggested that, when the Director General of Telecommunications makes a reference to the Monopolies and Mergers Commission, he shall, without waiting for any response from the commission and without hearing any of the evidence the commission will have to consider, at the same time modify, without consent, the conditions of the licence. If that is not prejudging the decision of the commission, I do not know what is.
Lord Morris: The noble Lord has totally missed the point. The director general must, before he makes a reference to the commission, come to the conclusion that there is a prima facie case. If there is, there is absolutely no reason why he should not make an injunction. This practice is not unknown to the courts in an analogous civil action, where speed is of the essence.
Lord McIntosh of Haringey: That is no analogy at all. A prima facie case is for reference to the commission. It goes no further than that. The noble Lord suggests the director should act on this prima facie case rather than wait for the judgment. I am very happy to leave it to the noble and learned Lord to explain to the noble Lord, Lord Morris.
Lord Morris: I am sure the noble Lord has some experience of how long it would take for the Monopolies and Mergers Commission to come to a conclusion. Has he any idea?
Lord Mackay of Clashfern: Perhaps I may be allowed to intervene. I am not in favour of delay for its own sake either. The concern that my noble friend has evinced I perfectly understand. The procedures for modifying licence conditions do envisage some delay in those circumstances where a licensee does not agree that an amendment should be made. However, that delay is for as short a period as possible consistent with a thorough investigation of the matters referred to the Monopolies and Mergers Commission. The requirement for the director to specify a period of up to six months within which the commission must report is the same as the period allowed for merger references under the Fair Trading Act. In framing this provision in the Bill, the Government saw the need to balance different considerations. On the one hand is the clear desire to minimise the period of uncertainty for the licensee concerned, and the need for speedy remedies to matters which affect the public interest. On the other is the need for the commission to have a sufficient period of time to investigate matters which may critically affect the licensee's business and also the wider interests of other operators, manufacturers of telecommunications equipment, consumers and users of services and apparatus, and so on.
Your Lordships will note that this amendment does not seek to challenge that balance of considerations. It accepts that the modification of licence conditions where there is no agreement between the director and the licensee should be a matter over which the commission acts as an independent arbiter. But I have to say that whilst apparently accepting the basis of our present policy, it would undermine it in a very significant way.
The regulatory arrangements set out in the Bill strike a fair balance between all the interested parties. That balance could be quite unfairly tilted in unpredictable directions if the director had power to modify licence conditions on an interim basis while waiting for the Monopolies and Mergers Commission to report, even allowing for the public notification procedures in Clause 15 which the amendment envisages would apply.
My noble friend referred to the court situation and an interim injunction—or, as I prefer to call it, an interim interdict. The situation very often is that these are granted to preserve the position at the time litigation starts; in other words, to prevent the position being innovated upon. In a sense that is the way in which this Bill proceeds; it is on the view that matters should not be altered until the Monopolies and Mergers Commission reports.
There is one other matter. A good number of the practices to which my noble friend referred are already prevented in the terms of the licence, and to a certain extent the imagination which goes into the preparation of the licence terms will play a significant part in reducing the problem to which my noble friend draws attention. I hope that against that background my
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noble friend will feel that, although I see the point that he makes, perhaps on balance the Bill is better as it stands.
Lord Morris: I am most grateful to my noble and learned friend the Lord Advocate for the carefully considered argument that he has given to this amendment. I will of course have the opportunity to consider what he said in greater detail at a more reasonable hour. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mackay of Clashfern: moved Amendment No. 98A:
[Printed earlier: col. 514.]
The noble and learned Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 13, as amended, agreed to.
Clause 14 [Reports on licence modification references]:
Lord Morris Lord Morris moved Amendment No. 98B:
Page 18, line 18, after second ("person ") insert ("and to the attention of persons likely to be affected by the report ")
The noble Lord said: On mature reflection this amendment has been tabled somewhat clumsily. The intention is very clear. It is to bring into another part of the Bill the very good intentions of Her Majesty's Government in drawing to the attention of persons likely to be affected by the report, in this instance in Clause 14; namely, in particular the complainant affected by that. I am as certain as I can be that I have tabled the amendment in the wrong part of the clause. Notwithstanding that technical point, I beg to move.
Lord Mackay of Clashfern: As I understand the amendment it is pretty much in line with the amendments that I have proposed to other clauses. On that assumption, if my noble friend is prepared to withdraw this amendment, I will undertake to bring forward an amendment on Report which I believe will be appropriate to deal with the point he makes.
Lord Morris: I am most grateful to my noble and learned friend. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
Clause 15 [Modification of licence conditions following report]:
[Amendment No. 99 not moved.]
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 99A:
[Printed earlier: col. 514.]
The noble and learned Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 15, as amended, agreed to.
Clause 16 [Securing compliance with licence conditions]:
11.49 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 99B:
Page 19, line 31, leave out ("an operator") and insert ("a person who is authorised by a licence granted under section 7 above to run a telecommunication system (in this Act referred to as a "telecommunications operator")")
The noble Lord said: It might be for the convenience of the Committee if we considered with this amendment Amendments Nos. 99C, 99E, 99F, 99G, 99H, 99J, 99L, 99N, 99P, 99Q and 150A.
Amendment No. 99C: Page 19, line 40, leave out ("an") and insert ("a telecommunications")
Amendment No. 99E: Page 20, line 19, after second ("the") insert ("telecommunications")
Amendment No. 99F: Page 20, line 21, after first ("the") insert ("telecommunications")
Amendment No. 99G: Page 20, leave out lines 31 to 33.
Amendment No. 99H: Clause 17, page 21, line 16, after first ("the") insert ("telecommunications")
Amendment No. 99J: Clause 17, page 21, line 19, after ("the") insert ("telecommunications")
Amendment No. 99L: Clause 17, page 21, line 40, after second ("the") insert ("telecommunications")
Amendment No. 99N: Clause 17, page 22, line 8, after second ("the") insert ("telecommunications")
Amendment No. 99P: Clause 18, page 22, line 9, after ("the") insert ("telecommunications")
Amendment No. 99Q: Clause 18, page 22, line 18, after second ("the") insert ("telecommunications")
Amendment No. 150A: Clause 94, page 82, line 30, at end insert—(""telecommunications operator" has the meaning given by section 16(1) above:")
These are technical amendments and I shall only take a moment of the Committee's time. Clauses 16, 17 and 18 as they stand refer to "an operator" which is defined at the end of Clause 16 as a person who is authorised by a licence granted under Clause 7 to run a telecommunications system. As your Lordships may have noticed, there are amendments on the Marshalled List to Clauses 31, 32 and 33. These result in a reference to "a telecommunications operator". However, this person so described is the same as the person described as "an operator" in Clauses 16 to 18. It is obviously sensible to have the two descriptions the same and these amendments are designed to change "an operator" to "a telecommunications operator". It is necessary to do it this way round rather than change Clauses 31, 32 and 33 because in those clauses the word "telecommunications" is necessary to make the provision readily understandable. Amendment No. 150A simply adds the definition of a telecommunications operator to the list of definitions in Clause 94. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 99C:
[Printed above.]
On Question, amendment agreed to.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 99CA:
Page 20, line 5, leave out ("where he is satisfied that") and insert ("if")
The noble and learned Lord said: The amendment seeks simply to introduce consistency between final orders and orders confirming provisional orders by deleting the words in subsection (4),
"where he is satisfied that".
so that the director will be obliged to confirm a provisional order if, at the time the order was made, its provisions were requisite. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 99D:
[Printed earlier: col. 514.]
The noble and learned Lord said: I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 99E, 99F and 99G:
[Printed above.]
On Question, amendments agreed to.
Clause 16, as amended, agreed to.
Clause 17 [Procedural requirements]:
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 99H and 99J:
[Printed above.]
On Question, amendments agreed to.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 99K:
[Printed earlier: col. 514.]
The noble and learned Lord said: I have spoken to this amendment earlier. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 99L:
[Printed above.]
The noble Lord said: This amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 99M:
[Printed earlier: col. 514.]
The noble and learned Lord said: I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 99N:
[Printed above.]
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 17, as amended, agreed to.
Clause 18 [Validity and effect of orders]:
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 99P and 99Q:
[Printed above.]
The noble Lord said: I have already spoken to these. I beg to move.
On Question, amendments agreed to.
The Deputy Chairman of Committees: If Amendment No. 99R is agreed to, it will not be possible to call Amendment No. 100.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 99R:
Page 22, line 33, leave out from ("it") to end of line 35 and insert ("; and the obligation to comply with a provisional order which is subsequently confirmed with modifications shall be regarded for the purposes of this subsection as an obligation to comply with the order with such of the modifications (if any) as relax the requirements of the order.
(5A) Where a duty is owed by virtue of subsection (5) above to any person—

(a) any breach of the duty; and

(b) any act which induces a breach of the duty or interferes with its performance and which is done wholly or partly for the purpose of achieving that result,

shall be actionable at the suit or instance of that person.
(5B) In any proceedings brought against any person in pursuance of subsection (5A)(a) above, it shall be a defence for him to prove that he took all such steps as were reasonably practicable to comply with the order.")
The noble and learned Lord said: This amendment is part of a fairly important package of amendments which has the effect, among other things, of getting rid of an important criminal provision in Clause 45. It is against that background that I present the matter.
The main effect of the amendments to Clause 18, which I move now, is to ensure that customers of public telecommunication operators who suffer loss or damage as a result of certain kinds of industrial action are able to sue those concerned. They may also obtain injunctions or interdicts against those responsible. This provides members of the public with a civil remedy against selective industrial action by trades unions and in the circumstances the Government were able to review the provisions of Clause 45 of the Bill which make it a criminal offence for employees of public telecommunications operators to take certain kinds of action there described.
I should explain that Clause 45 reproduces with modifications the provisions in the existing Telegraph Acts which make it a criminal offence for anyone engaged in the running of a public telecommunication system intentionally and contrary to his duty to prevent, delay or interrupt the transmission or reception of a message sent by means of the system. It is clear that some forms of industrial action, such as deliberate blacking of a particular customer's premises, so that he could not use the telephone to
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send messages, could constitute a criminal offence. Other forms of industrial action, such as an all-out withdrawal of labour which had only the incidental effect of preventing some customers using the telephone to send messages, might well be in a different position.
The Government have decided that, in view of the availability of civil remedies as a result of the amendments that I now propose to Clause 18, it would be right to delete Clause 45(1)(a). That means that, from the appointed day, no form of industrial action by employees of public telecommunications operators which prevented, delayed or interrupted the transmission or reception of messages will be a criminal offence. Any such action would, however, be a breach of the employee's contract of employment and would render him liable to disciplinary action by his employer, and any member of the public who suffered loss because an employee of a public telecommunications operator prevented the transmission or reception of a message would have a remedy against the operator under his contract for the supply of telecommunication services, assuming that the contract covered that situation.
The Government's ability to amend Clause 45 has arisen because these amendments to Clause 18 of the Bill clarify the right to claim damages or to seek injunctions or interdicts of those who suffer loss as a result of a deliberate action by an employee of a telecommunications operator to prevent them sending telephone messages. At present Clauses 7 and 8 of the Bill provide that a public telecommunications operator will have obligations under his licence to provide telecommunication services, for example to rural areas. If the operator fails to honour those obligations, he can be subject to orders made by the Director General of Telecommunications under Clause 16, requiring him to do specific things in order to fulfil his licence obligations. It is a statutory duty for the operator to obey such enforcement orders, and they are enforceable in the courts. Anyone who is adversely affected by a breach of the duty to obey an order made by the director can obtain damages from the operator.
It is probably the law that any action to induce a breach of a statutory duty constitutes a tort or a wrong, and the person committing the tort may be liable to actions for damages, or to injunctions, or to both. Therefore an employee of a public telecommunications operator who took action, (including industrial action) to prevent the operator complying with his statutory duty to obey the director's enforcement order would be liable to civil action for damages, or an injunction or interdict, or both. The legal position is not free of doubt, and it may be that inducement to breach a statutory duty is not in fact a wrong and that an employee or his trade union could not be sued for damages, or for an injunction or interdict, in the circumstances that I have described.
The Government have therefore decided to clarify the law but only so far as concerns acts which induce a breach of the statutory duty to obey enforcement orders under this Bill, or which interfere with the performance of such a duty. The amendments to Clause 18 of the Telecommunications Bill will make it clear that any act which induces a breach of the duty

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to obey a Clause 16 enforcement order, or which interferes with the performance of such a duty, shall be actionable by any person affected by the breach of the duty. The new provision will apply only to acts which are done wholly or partly for the purpose of achieving the result of inducing a breach of the duty or of interfering with the performance of the duty.
This limitation is particularly important for those concerned in industrial relations in, for example, British Telecom, and I should explain the effect of the words,
"wholly or partly for the purpose of achieving the result".
of inducing a breach of the statutory duty. For example, an electricity undertaking might cut off the electricity supply to a public telecommunications operator who had not paid his electricity bill. That could cause the operator to breach his duty to obey an enforcement order, but the electricity undertaking would not be liable to action in the courts because its action was not taken with a view to the result, even in part, of causing the operator to breach the enforcement order.
Similarly, a trade union which called an all-out strike of employees of a public telecommunications operator over a pay dispute which resulted in a breach by the operator of his duty to comply with a Clause 16 enforcement order would not, in our view, be liable because the action was not taken with a view to achieving the result of causing the operator to breach his duty. The breach would be an incidental and an unintended result of the industrial action.
On the other hand, if a manufacturer deliberately withheld normal supplies of a special kind of apparatus which he knew the operator needed in order to provide a service which the operator was required to provide under an enforcement order, and if the manufacturer sought this result, he might well be liable. Similarly, if an employee or a group of employees of the operator deliberately blacked or continued to black a customer with a view to the result of causing the operator to breach his duty to obey an enforcement order, they might well be liable to pay the customer damages and would be liable to an action for an injunction or interdict.
Clause 18 is also being amended to ensure that an operator will not be liable for damages when he breaches an order if he can prove that he did all that was reasonably practicable to obey the order. This will provide the operator with a defence against claims for damages in circumstances where the breach of a duty was wholly beyond remedy by him. These amendments have been brought forward to deal with concern expressed in relation to the provisions of Clause 45. They deal with a complex area. The Government stand ready to consider any representation about the amendments and any matters of drafting that anyone seeks to raise. I beg to move.
Lord McIntosh of Haringey: This is a complex and dense amendment. It has been moved in an unavoidably complex and dense way, and also at breakneck speed, which makes it somewhat difficult for us. I think that it would be wise for us to concentrate on criticism of the right to strike section of
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the Bill to our own amendment on Clause 45. I appreciate the attempt in this amendment to modify the conditions continued from the Telegraph Acts, but I think that it would be necessary for us to consider them all together.
I simply ask for one concession from the Government. In view of the hour, we shall not have the opportunity to study the noble and learned Lord's speech in time for the debate on the amendment tomorrow. I wonder whether it would be possible to have a copy of the speech in time for us to consider it, as we normally would, on the later amendment.
Lord Mackay of Clashfern: I think that that should he possible. I would hope to facilitate it later tonight, or possibly tomorrow morning.
Lord Morris: I think that the noble Lord, Lord McIntosh of Haringey, will have no problem with regard to my noble and learned friend's speech. It will be available in the Library first thing tomorrow. The amendment places me in a difficult position. As your Lordships will be aware, the amendment is new despite the fact that there is no star to it. It was tabled on Friday, and was seen only today. It has the effect not only of shooting but also of hanging, drawing and quartering my fox with regard to Amendment No. 100. I am not suggesting in any way that this was done deliberately. I believe, however, that I am duty bound to speak to Amendment No. 100 at this stage. I understand that this is my right.
I support the amendment in its entirety. However, it does not go quite as far as I should like. Amendment No. 100 is significant in respect of the new text contained in paragraph (a). This has the effect of making actionable not just the breach of an order made by the director but also the breach of a licence condition about which the order is made. This is intended to give rise to a liability on the part of any licensee in breach to pay compensation with effect from the date the breach first caused loss.
The purpose of the amendment is to secure promptly a licensee's compliance with his licence conditions in circumstances where delay in compliance would cause other users of telecommunications services considerable personal loss. Where these users are also licensees in their own right and potential competitors with a public telecommunications operator, the requirement to secure the public telecommunications operator's compliance with his licence is even more desirable and urgent.
There is, indeed, scope and incentive for a licensee effectively to delay the enforcement of his licence against him and there is no adequate remedy available to others for losses suffered by them during the period when enforcement is delayed, even if the licensee is found by due process to have been acting entirely contrary to his licence terms.
The Government were aware that this amendment was tabled by me the day after the Second Reading. It was tabled a very long time ago. I am absolutely certain that argument was developed either to agree with or to counter this amendment. I believe that it

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would be only fair in the circumstances for me to have some sort of answer to the argument devolved upon this amendment.
12.6 a.m.
Lord Mackay of Clashfern: I think that it is possible to regard the amendment to which my noble friend has just spoken as a kind of criticism of the amendment which I have just moved. In that light may I say that the arrangements which we have proposed in the Bill, as amended by the amendments that I have just made, are designed to avoid the excessive litigation which has been a feature of regulatory activity in other parts of the world, and to give protection to individuals who cannot afford to go to law. Such an approach is however incompatible with a free-for-all where individuals can take licensees to court for breaches of licence conditions, as my noble friend is proposing. To allow that would ensure that the director's key role as the kind of policeman of the condition was undermined, and by allowing all aggrieved persons recourse to the courts, would create a certain recipe for a good deal of confusion and delay. It could also open the door to a flood of contentious litigation and take us some way down the road of experience in other parts of the world.
We do not believe that such a procedure would benefit complainants. Both they and licensees would be involved in time-consuming court actions which, for complainants, would also be unnecessary since there is a much shorter, cheaper and effective route through the director. In a sense the amendment itself acknowledges that because it indicates that the proceedings should only be brought with the prior written consent of the director. In that situation it appears to me to acknowledge the correctness of the principle that we have embodied in the arrangements that we have proposed.
Lord Morris: In the circumstances of the tabling of this particular amendment, I feel sure that my noble and learned friend will understand that I must of course reserve the right to return to this very important point at another stage. However, as a most eminent lawyer, he will understand that the multiplicity of litigation argument born of experience in other countries, really does not hold water in any way whatever. My noble and learned friend will know better than anybody the hideous cost of litigation in this country and anybody who goes to law in this country does so with the greatest care and at their greatest peril. As he knows, in the United States—which I believe is the experience which he is praying in aid—the costs procedures, which are geared to the amount of damages won in court, are an incentive to a multiplicity of litigation. There is no incentive whatever to a multiplicity of litigation in this country. I believe that for a Bill in any way to deprive the individual from recourse to the courts, is a very worrying precedent. However, I shall return to this point at a later stage.
Lord Stoddart of Swindon: This is a very complicated and a very important amendment. I must confess that I think that the Committee has not been done a service by having the amendment brought forward only this morning on today's Marshalled List.
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Nor is the Committee being done a service by discussing this very complicated and important amendment at this time of night. I believe that we should have a fuller Committee and a much refreshed Committee—refreshed after having had a good night's sleep—to contemplate and think about what the noble and learned Lord the Lord Advocate said.
This matter was raised on Standing Committee A in another place on 24th November, when there was quite a long debate about the position of workers and trade unions in the telecommunications industry. Quite frankly, I am still not clear as to just exactly what their position will be after this amendment and the amendment to Clause 45—Amendment No. 108F—have been agreed to, if they are agreed to, by this Committee. Will workers in the telecommunications industry have the same rights as those in other industries? Will they be protected from criminal liability under circumstances, or under certain circumstances? Will they be able to take selective action—for example, as selective action can be taken in the Civil Service, in the electricity industry and in the gas industry—without being liable to criminal prosecution and criminal penalties?
Those matters were not made clear by the noble and learned Lord the Lord Advocate when he spoke to this particular amendment, Amendment No. 99R. On Standing Committee A at col. 896 of Hansard the Solicitor-General said:
"It means"—
and he was referring here to the question of the right to strike and the right to take action—
"no infringement and no derogation from the right to strike".
That is fair enough and those are my own words. Then he went on:
"But in the case of industrial action falling short of a strike, a withdrawal of labour, the clause may, according to the circumstances, make such action a criminal act. The same answer has to he given with respect to the 1863 and 1953 Acts."
We want further assurances and a further clarification of what the Government have in mind with regard to this amendment and the amendment to Clause 45. I hope that the noble and learned Lord the Lord Advocate can give those assurances tonight and, if he cannot, then I hope that the Committee can adjourn and that the noble and learned Lord can come forward tomorrow and give us the explanations then.
Lord Mackay of Clashfern: As I sought to explain, the amendment which I hope to move in just a little while will delete the provisions from Clause 45, which had the effect of making a criminal offence arise in relation to interfering with the sending on of a message, and I shall explain that a little more fully in relation to Amendment No. 108R.
On the other aspect of this matter, in effect we are deleting the portion of Clause 45 which was the subject of the debate to which the noble Lord, Lord Stoddart of Swindon, referred. Therefore, that as a basis for criminal liability disappears. That really is the point of this. As I have sought to explain, in order to try to meet the concerns expressed in that direction we have deleted that and taken the matter into the civil area.
On Question, amendment agreed to.
[Amendment No. 100 not moved.]
12.15 a.m.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 100A:
Page 22, line 37, leave out (" (5) ") and insert (5A)(a) ")
The noble and learned Lord said: This is part of the package of amendments to which I have just referred, and I beg to move.
On Question, amendment agreed to.
The Deputy Chairman of Committees: Amendment No. 101 should be in the name of the noble Lord, Lord Morris.
Lord Morris Lord Morris moved Amendment No. 101:
Page 22, line 41, at end insert—
("(6A) Subject to subsection (6B) below, any person who suffers damage by reason of the failure by a public telecommunications operator to comply with any condition to which section 8(1) above refers in that operator's licence shall be entitled to compensation for that damage from that operator.
(6B) No proceedings shall he brought by virtue of subsection (6A) of this section without the prior consent in writing of the Director.
(6C) In proceedings brought against a public telecommunications operator by virtue of subsection (6A) of this section it shall be a defence to prove that he had taken such care as in all the circumstances was reasonably required to ensure compliance with the condition of the licence in question.")
The noble Lord said: For one glorious moment I thought the Government had taken up this amendment, but I was quite wrong. I will not take long. This amendment does nothing other than place another arrow in the quiver of Her Majesty's Government and, indeed, the director general of Oftel. I spoke briefly on the effect of this amendment on the previous one, Amendment No. 99R, in that I believe it is very important that the director general of Oftel has the power to grant his fiat for a private prosecution to any person who suffers damage by reason of failure by a public telecommunications operator to comply with any condition in the operator's licence which is referred to in Clause 8(1). I believe that if there is any restriction on an individual's recourse to the courts, it is something which has to be looked at with the very greatest care. It would be quite wrong to argue this case in detail at this time of night, but I would be interested to hear what the Government have to say with regard to this amendment. I hope they do not repeat the multiplicity of litigation argument, because I never have enjoyed it.
Lord Mackay of Clashfern: When I explained the answer that we had to Amendment No. 100, as a criticism of the amendment which I had then moved, I of course took account of Amendment No. 101 at the same time. This makes it unnecessary for me to repeat the multiplicity of litigation argument. All I need to do is to refer to it.
Lord Morris: My noble and learned friend the Lord Advocate, who is a value-added network service in himself in that he can repeat an argument at the speed and clarity of the most modern telex machines, has done it yet again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 101ZA:
Page 22, line 42, after ("section") insert—
(" "act", in relation to any person, includes any failure to do an act which he is under a duty to do and "done" shall be construed accordingly;
(" "contravention", in relation to a final or provisional order, includes any failure to comply with it;")
The noble and learned Lord said: This is the completion of the amendment to Clause 18 which I sought to explain earlier, making necessary definitions for the purpose of that provision. I beg to move.
On Question, amendment agreed to.
Clause 18, as amended, agreed to.
Clause 19 agreed to.
Clause 20 [Approval of contractors]:
Lord Cockfield Lord Cockfield moved Amendment No. 101A:
Page 24, line 30, leave out subsection (9).
The noble Lord said: My noble friend spoke to this amendment during consideration of Amendment No. 70A. I beg to move.
On Question, amendment agreed to.
Clause 20, as amended, agreed to.
Clause 21 agreed to.
Clause 22 [Approval etc. of apparatus]:
Lord McIntosh of Haringey Lord McIntosh of Haringey had given notice of his intention to move Amendments Nos. 102 and 103:
Page 25, line 42, leave Out ("or")
Page 26, line 18, at end insert—
("or.
(c) the apparatus, if it has been imported or is assembled predominantly from imported components, has been (or the relevant components have been) imported from a country or countries which permit the import into them of apparatus made in the United Kingdom.")
The noble Lord said: These two amendments, Nos. 102 and 103, follow Amendments Nos. 36 and 50, which we moved earlier on in the Committee stage and neither of which found favour with your Lordships. I became convinced in the course of the discussion that other noble Lords—notably the noble Lord, Lord Weinstock—had better wording than we had in protecting the rights of British manufacturers, which certainly have to be protected in some way. On the basis that we shall have to take account of comments earlier on and come back to this matter on Report. I shall not seek to move these two amendments.
[Amendments Nos. 102 and 103 not moved.]
The Deputy Chairman of Committees: Perhaps I should inform the Committee that, if Amendment No. 104 is agreed to, I shall not be able to call Amendments Nos. 105 or 106.
Lord Mottistone Lord Mottistone moved Amendment No. 104:
Page 26, line 17, leave out subparagraph (ii).
The noble Lord said: In view of the lateness of time I propose to speak to Amendments Nos. 105 and 106

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at the same time, because they are alternates on the assumption that 104 might not be agreed to.
Amendment No. 105: Page 26, line 17, after ("impair") insert ("significantly")
Amendment No. 106: Page 26, line 18, at end insert ("other than the services provided by or through the connected apparatus.")
The point at issue is the question of standards of apparatus, and the particular sub-paragraph that I propose to strike out is (8)(b)(ii) on page 26, which talks about impairing the quality of any telecommunication service. The point at issue is not one of standards. They should certainly be maintained but they should be restricted to essentials, particularly in order to encourage innovation and, through innovation, to encourage exports.
What is suggested is that there is no reason for this to be in the Bill. British industry could with advantage be given the right to authorise self-certification on the home market, and then this particular sub-paragraph would not be necessary. If that sensible argument is not accepted, then it would still be necessary to qualify (8)(b)(ii) first in relation to Amendment No. 105 because one must have a practical limitation on the impairing of quality, and so I seek to add significantly to it. But, in addition, one needs to qualify it to make sure that the apparatus does not necessarily include the service provided through connected apparatus.
For example, the user might be satisfied with the transmission or reception at a different standard at his terminal from that which the operator would himself have applied. Therefore, it does not seem reasonable that the third party would control the quality referred to in the particular sub-paragraph. It is really a question of either having Amendment Nos. 104, or 105 and 106 together. At this stage, I beg to move.
Lord Cockfield: I appreciate the point that my noble friend Lord Mottistone is making. The Government's view is that the mandatory standards against which the terminal apparatus must be approved should be what is necessary, but no more than is necessary, to safeguard the staff and property of network operators and to protect the interests of the whole community of subscribers. The noble Lord's amendment rests on the view that in this respect subscribers can look after their own interests without the help of regulation. That is not a view that we could entirely accept.
As my noble friend will know, there has been complaint about the quality of telephone service. British Telecom, through improvements in its trunk networks and elsewhere, is making a major investment to improve its service. These improvements could be lost if the Government were to allow unsuitable terminal apparatus to gain approval and become widespread. Noisy lines and faint speech are important among the causes of unsatisfactory calls.
For good reasons, telephones designed for the United States' market, for example, transmit more faintly than telephones for use here, and if connected here would increase the number of occasions when a call cannot he heard. Problems would not arise on all the calls and users could be unaware of them at the time of purchase, but the effect would be a progressive worsening of service.
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There is also a problem of what is technically known as "network pollution". I am sure that this term is familiar to all your Lordships. Market forces cannot control such network pollution any more than they can control environmental pollution. We believe that a measure of regulation is required. There are, however, defects in Clause 22(8) as drafted. We plan to move amendments on Report. In considering what needs to be done to Clause 22(8)—the defects in it are tenchnical—we shall, of course, give consideration to the points that my noble friend has made. On that basis, I hope he will not press his amendment.
Lord McIntosh of Haringey: I had not intended to intervene. It was only because the noble Lord, Lord Cockfield, referred to amendments which the Government propose to put to this clause and subsection on Report that I think it is necessary to say that, although we agree entirely with his answers to the noble Lord, Lord Mottistone, he has given only half the story. It is not just a matter of the voice lines, but the quality of transmission is particularly important for data transmission. It will be necessary to see in any amendments that are made that the quality of data transmission, on which many millions of pounds may depend, will be fully protected.
Lord Cockfield: I entirely appreciate the point that the noble Lord has raised. I was merely endeavouring to confine the examples I had given to the minimum necessary to make the argument that I was putting forward.
Lord Mottistone: I am grateful to my noble friend for giving consideration to one or more of these amendments in any amendment that he may be putting forward at Report. I beg leave to withdraw Amendment No. 104.
Amendment, by leave, withdrawn.
[Amendments Nos. 105 and 106 not moved.]
Lord Cockfield Lord Cockfield moved Amendment No. 106A:
Page 27, line 11, leave out subsection (14).
The noble Lord said: My noble friend has already spoken to this amendment during consideration of Amendment No. 70A. I beg to move.
On Question, amendment agreed to.
Clause 22, as amended, agreed to.
Clause 23 agreed to.
Clause 24 [Approval etc. of meters]:
12.28 a.m.
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 107:
Page 29, line 8, leave ("sufficiently")
The noble Lord said: I can move this amendment very briefly. I must confess that when I saw this wording, that the meter would be: "sufficiently accurate and reliable", I was concerned that if one has a meter it has to be accurate and reliable. I am concerned to know exactly what will be construed by the Secretary of State as "sufficiently accurate and reliable". If, for example, it is a meter measuring my bill, I would not mind it underscoring 10 per cent.; but

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if it overscored 10 per cent. I should be very annoyed indeed. We have to be absolutely clear that where meters are in operation, whatever those meters may be, "sufficiently accurate" or "sufficiently reliable" just is not good enough. The consumer, whoever he might be, is entitled to believe that if something is being metered and that he is to be charged on the basis of what that meter records, it has to be accurate and it has to be reliable. I shall look forward to hearing what the noble Lord, Lord Cockfield, has to say about "sufficiently".
Lord Glanusk: I tried to speak earlier on this clause in connection with meters. Can we possibly have the definition of this clause improved? "Meters" is a generic term for a large range of measuring equipment, including Avos, voltmeters, ammeters, selective-level meters, some of which cost tens of thousands of pounds. I do not think that this clause is meant to refer to them. If we mean customer-charging meters, can we please say so in the clause and call them toll meters or charging meters?
Lord Cockfield: I should be very happy to look at the question of whether or not further definition of the word "meter" is required. So far as the point raised by the noble Lord, Lord Stoddart of Swindon, is concerned, there is no such thing as absolute accuracy when you are measuring physical quantities. Those of your Lordships who are engineers will remember that variations are always quoted at the same time as a measurement is quoted; that is, the figure is given as "plus or minus" a certain accepted degree of variation about the absolute figure. So that the word "sufficiently" is really intended to reflect the practicalities of life.
There are difficult issues to be considered both in relation to the meters already in use and those which are being developed in connection with the digitalisation of the telecommunications network. Ministers have decided therefore that consultants should be appointed to advise the department on how an approvals regime could be established under Clause 24. The object will be to ensure that practical and cost-effective arrangements are made which will significantly improve consumer protection in this area. The consultants who have been appointed are the Metra Consulting Group. They have been asked to advise on the form an approvals scheme should take and the resources required to put it into effect. In that connection, it may be of interest to know that the department's initial thinking, subject to the consultancy report, is that the main approvals work should be added to the functions of the British Approvals Board for Telecommunications. This is an established and well-known body. Perhaps I might also add that although it was concern about telephone meters which led to the inclusion of Clause 24, one of the questions the consultants will be asked to advise on will be the practicability in due course of extending whatever arrangements they recommend to cover other telecommunication services.
I hope that your Lordships will understand that I cannot at this stage offer further comment on the detailed arrangements which will be made. But we are pursuing this point. We realise the importance of
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having the meters as accurate as it is possible to get them within reason. I think that the right thing to do, if I may say so, is to wait for the consultants' report and to take the decision in the light of that. On the point raised by my noble friend Lord Glanusk, I am now assured that a meter is, in fact, defined in Clause 24 (16) which reads:
"In this section "meter" means any system or apparatus constructed or adapted for use in ascertaining the extent of telecommunication services provided by means of a telecommunication system."
But, as I have said, I will be only too happy to look at the specific comments that my noble friend has made.
Lord Glanusk: May I say that I think that that definition is a little bit woolly, to put it mildly?
Lord Stoddart of Swindon: I must confess that I am still not very satisfied with the reply which was given by the noble Lord, Lord Cockfield; because if I consume 10 units of telephonic time, then I expect to be charged for those 10 units and not 10.5 or 14 or what-have-you. I must say that the word "sufficiently" still worries me. It is a qualification which I think will probably worry many other people as well—particularly bearing in mind that many people have expressed doubts about the present metering policies of British Telecom. However, it is late and I may wish to come back to the matter on Report; but for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Cockfield Lord Cockfield moved Amendment No. 107A:
Page 30, line 1, leave out subsection (14).
The noble Lord said: Amendment No. 107A is a simple amendment to which my noble friend spoke again on Amendment 70A. I beg to move.
On Question, amendment agreed to.
Clause 24, as amended, agreed to.
Clauses 25 to 27 agreed to.
Clause 28 [Information etc. to be marked on or to accompany telecommunication apparatus]:
Lord Cockfield Lord Cockfield moved Amendments Nos. 107B to 107D:
Page 31, line 21, after ("that") insert ("any description of")
Page 31, line 24, leave out ("the apparatus") and insert ("apparatus of that description")
Page 31, line 26, after ("of") insert ("any")
The noble Lord said: May I move these amendments together? The main amendment, No. 107B, reflects the drafting in earlier clauses where it is recognised that it is desirable to have flexibility when it comes to describing telecommunications apparatus for the purposes of a standard or approval or, in this case, in the context of an order requiring the marking of such apparatus with particular information. The amendment seeks to achieve that flexibility by introducing the words "any description of" before "telecommunication apparatus". Amendments Nos. 107C and 107D are consequential on that change. I beg to move.
On Question, amendments agreed to.
Clause 28, as amended, agreed to.
Clause 29 [Information etc. to he given in advertisements]:
Lord Cockfield Lord Cockfield moved Amendment No. 107E:
Page 32, line 16, leave out from ("in") to end of line 17 and insert ("advertisements of that description")
The noble Lord said: This is a minor amendment designed to improve the drafting. It has no policy significance. I beg to move.
On Question, amendment agreed to.
Clause 29, as amended, agreed to.
Clause 30 agreed to.
Clause 31 [Rating in England and Wales]:
Lord Lyell Lord Lyell moved Amendments Nos. 107F, 107G and 107H:
Page 33, line 28, leave out ("public")
Page 33, line 29, leave out ("Part II of")
Page 33, line 36, leave out ("public")
The noble Lord said: I hope that the Committee will forgive me if I speak to Amendments Nos. 107J, 107K, 107L, 107M, 107N and 107P, as well as Nos. 153A, I 53B and 153C, which are right at the end of the Marshalled List.
Amendment No. 107J: Clause 32, page 34, line 7, leave out ("public")
Amendment No. 107K: page 34, line 8, leave out ("part II of")
Amendment No. 107L: Clause 33, page 34, line 19, leave out ("public")
Amendment No. 107M: page 34, line 23, leave out from ("with") to ("associations") in the line 24 and insert ("such telecommunications operators.")
Amendment No. 107N: page 34, line 25, leave out("such")
Amendment No. 107P: page 34, line 12, leave out("an") and insert ("the")
Amendment No. 153A: schedule 7, page 198, line 16 at end insert—

("1974 c. 7.

The Local Government Act 1974.

In Schedule 3, paragraph 9.";

Amendment No. 153B: Page 198, line 18, at end insert—

1975 c. 30.

The Local Government (Scotland) Act 1975.

In Schedule 1, paragraph 9."

Amendment No. 153C: Page 199, line 54, at end insert—

("S.I. 1977/2157 (N.I. 28).

The Rates (Northern Ireland) Order 1977.

In Schedule 12 Part XII.")

These amendments are all concerned with the same subject; namely, the assessment for rates of telecommunication systems.
This is a complicated matter so I will be very brief. The network of British Telecom consists of posts, wires, cables and ducts, call-boxes and other associated equipment which is at present assessed for rates by a method known as formula-rating. This is a method of last resort and is used only when more conventional methods of assessment are not appropriate. It is particularly used for national networks and, apart from BT's network, the gas and electricity national distribution networks are also assessed in this way. The essential feature of formula-rating is that a formula is used to arrive at an overall rateable value for the hereditament and this is apportioned between the different rating districts. Clauses 31, 32 and 33 of the Bill as it stands enable formula-rating in England and Wales, Scotland and Northern Ireland
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respectively, to be extended to the systems of public telecommunication operators. These are defined in Clause 9 which we have already discussed.
However, on reflection it has been decided that the power to formula rate should be widened to cover the systems of all telecommunication operators licensed under the Bill, not just those designated as public telecommunication operators. These amendments achieve this change and enable formula-rating to be extended, by order, to hereditaments of the description specified occupied by "a telecommunication operator". As your Lordships will recall, we have earlier agreed to amend Clauses 16, 17 and 18 to define a telecommunications operator as a person who is authorised by a licence granted under Section 7 to run a telecommunication system. These amendments do not mean that formula-rating will be used very widely; it is still intended to be a method of last resort where more conventional methods are not appropriate. At present, we intend that only Mercury's system should be rated by formula, but it may be that the conventional methods will not be appropriate for some of the systems that will be constructed in future but will not necessarily be designated as public telecommunication systems. Therefore, it is only prudent to take the power to be able to assess such systems by the formula method.
Amendments Nos. 153A, 153B and 153C are consequential on this change. I hope that that brief explanation has given some indication of our wishes in this matter of formula-rating. Unless any of your Lordships wishes me to go further, I beg to move.
On Question, amendments agreed to.
Clause 31, as amended, agreed to.
Clause 32 [Rating in Scotland]:
12.45 a.m.
Lord Lyell Lord Lyell moved Amendments Nos. 107J and 107K:
[Printed above.]
The noble Lord said: I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Clause 32, as amended, agreed to.
Clause 33 [Rating in Northern Ireland]:
Lord Lyell Lord Lyell moved Amendments Nos. 107L, 107M, 107N and 107P:
[Printed above.]
The noble Lord said: I beg to move formally Amendments Nos. 107L, 107M, 107N and 107P. I spoke to these amendments in connection with Amendment No. 107F.
On Question, amendments agreed to.
Clause 33, as amended, agreed to.
Clauses 34 to 41 agreed to.
Earl De La Warr Earl De La Warr moved Amendment No. 108:
Before Clause 42, insert the following new clause:
("Prohibition on fixing of placards, etc. on public call boxes.
.—(1) A person who, without due authority, affixes or attempts to affix any placard, advertisement, notice, list, document, board or thing in or on any public call box shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 2 on the standard scale.
(2) In this section "public call box" means any structure in a public place in or on which telecommunication apparatus is installed by a public telecommunications operator for the provision of public call box services to members of the public at that place.")
The noble Earl said: The object of this amendment is to put back into the Bill what is now in the 1981 Act as Section 46, but to put it back in slightly narrower terms so that it does not cover a wide range of BT property but only call boxes. It was included in the Bill which fell in the last Parliament for a reason which escapes me, because I have carefully read Hansard. My honourable friend Mr Kenneth Baker dropped it on the insistence of the redoubtable Member for Newcastle-under-Lyme, Mr Golding, perhaps lest he should speak for another 10 hours on the subject. It did not find its way back.
The reasons for this are that placards and advertisements in call boxes can be a nuisance to the public who use them. They can, and do, hide dialing instructions. More importantly, they can, and do, hide emergency instructions; and they can, and will, as they go up, hide the instructions for use by the deaf of the inductive couplers which are being put into call boxes by British Telecom.
I understand that the main users of these advertisements are taxis, but I have to add that there are one or two less seemly uses—for instance, telephone numbers which are to be found there, which no doubt cause offence to a number of worthy citizens. It has been said that this can be dealt with by regulations under the Town and Country Planning Act 1971, but my information is that it is difficult to do so. You have to prove that the object is an advertisement. You can prove that only if you can show that it can be seen from outside the box. In nine cases out of 10 it cannot. Furthermore, I believe that the police are reluctant to use the planning Acts but that they are prepared to co-operate much more under the existing offence as it stands in the 1981 Act. Therefore my suggestion is that it would be good procedure for the Government to consider reinstating this clause. I beg to move.
Lord Mackay of Clashfern: My noble friend has clearly and succinctly mentioned the history of this provision and explained the arguments in favour of the clause. What is not so clear to us is why call boxes of public telecommunications operators should be singled out for this special treatment over and above the provisions of the general law. I am sure all your Lordships recognise the desirability of adopting very strict criteria in deciding whether to have statutory criminal offences. I find it a little difficult to be convinced that this proposal satisfies these criteria. My noble friend has adverted to the proceedings in Standing Committee on the previous Bill and described his impression of them, and I would not wish to go into that. But the result of their deliberations was to drop a somewhat similar provision from that Bill, and the Government thought it best in this Bill to abide by the decision of that Standing Committee. It may be that the noble Lord will
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consider withdrawing his amendment in that situation.
Earl De La Warr: I would not want to press this. I think it was dropped because there was developing an ugly political argument with the Member for Newcastle-under-Lyme suggesting that telephone poles were being used for political purposes. The only other thing I would say is that one of the reasons for including this is that it is there now in the Bill which exists. But I do not want to press it. Having drawn it to the Government's attention, if they do not feel it worth putting in I am happy to withdraw it.
Amendment, by leave, withdrawn.
Clause 42 [Assaults etc. on persons engaged in the business of public telecommunications operator]:
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 108A:
Transpose Clause 42 to after Clause 46.
The noble and learned Lord said: This amendment is designed to improve the presentation of the Bill by demoting Clause 42 to come after Clause 46. I beg to move.
On Question, amendment agreed to.
Clause 42, as amended, agreed to.
Clause 43 [Improper use of public telecommunication system]:
Earl De La Warr Earl De La Warr moved Amendment No. 108AA:
Page 41, line 35, at end insert ("to imprisonment for a term not exceeding six months or")
The noble Earl said: This is an amendment about which I feel rather more strongly, as your Lordships may appreciate. It seeks to increase the maximum penalty in Clause 43, which now stands at £200. This deals with the extremely unpleasant offence of making calls that are offensive, indecent, obscene or menacing. I do not propose to harrow your Lordships by giving examples, but, believe me, in this dossier I have things which make one's hair stand on end. I think it will be sufficient to say this: there are—I find this an unbelievable figure, but I am assured it is true—no less than an average of 500 reported cases a day, and the number of cases is going up.
The people who do this horrible thing terrify, literally, a very large number of women, most of whom are alone; and it has to be said, too, that on occasions, arising from hanging around schools, they terrify and verbally debauch young children of a very tender age. I am sure your Lordships will agree this is a very horrible thing, unpleasant even to talk about. I gather that frequently when the offence is very bad a technique is adopted which is known as stretching, where you look for and use another offence which carries a greater penalty. I would only add that in the Post Office legislation of 1953 there is a provision which makes letters of the same kind subject to an even greater penalty.
I am very ill-acquainted with the law and I have never been a magistrate, but all my instincts tell me that there is a lot in this and that we should consider

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a maximum penalty which is much higher than the present one. I seek the advice of your Lordships on whether I am on firm ground and whether I have perhaps by chance struck the right level. I hope that the Government will take an interest. I beg to move.
Lord Donaldson of Kingsbridge: I should like to give the noble Earl the advice that he has asked for. There is absolutely no case for extending the causes on which people can be imprisoned. At the moment far too many people are in prison for far too little. Although the offence to which the noble Earl referred is particularly nasty and despicable imprisonment, which involves £7,000 or £8,000 a year expenditure, produces not good but total and absolute harm, as is agreed by everyone. It is ridiculous to bring in imprisonment at this stage for an offence of this nature. I hope that the noble Earl's suggestion will be rejected.
Lord Morris: I hold a totally opposite view. If the sanction is within the Bill it will have an effect on potential offenders. When my noble and learned friend the Lord Advocate answered a previous amendment of my noble friend Lord De La Warr I thought at the time that he had not been in a public telephone box for a very long time indeed. I doubt very much whether he has had any experience in this respect. But one must consider that there are 500 complaints each day, and one would take a multiple of at least 10 times that for the number of offences committed and not reported. As this is the only public general Bill that I have experienced where penalties are not considered by Parliament—remember, this clause was not considered by another place—I consider it important that the Government give this fact some thought. It is a point of considerable worry to British Telecom and I hope that my noble and learned friend will consider this—as I am sure he will—with great care.
Lord Donaldson of Kingsbridge: I do not understand the point which the noble Lord makes. My point is that one should not send people to prison when one knows that it will do no good. Generally speaking, it is agreed that that kind of offence is not influenced by the sanction of prison. I am not clear as to what the noble Lord said in opposition to that. He talked for a while-but I could not understand the direction of his argument.
Lord Morris: I am not in the least surprised that the noble Lord did not understand me because I am not very good at making myself absolutely clear. However, I draw immense comfort from the fact that my noble friends had no difficulty whatever in understanding me. I was particularly getting at the malicious telephone call rather than the obscene telephone call. I wanted to avoid that because it is generally considered rather jokey.
My other point is that the mere presence of the power to imprison undoubtedly will have a deterrent effect on certain people who are inclined to indulge in this particular proclivity. Even though my noble friend believes that it would not have any deterrent effect, I have my doubts.
Lord Donaldson of Kingsbridge: I think that that undoubtedly is quite a wrong description. There is every possible doubt that the kind of person who in a malicious way rings up to damage somebody because he has offended him is affected by the fact that he might be sent to prison. That proposition is extremely hard to justify and is almost certainly untrue.
1 a.m.
Lord Mackay of Clashfern: The Government of course very much appreciate the matter which my noble friend has raised. We entirely appreciate the reason why he has put this matter forward. However, we have a particular responsibility to ensure that before we increase penalties it is the appropriate action. I question whether the type of case that my noble friend has particularly referred to ought to be lumped along with the rather petty cases which can also come under this provision.
There is also the point that the noble Lord, Lord Donaldson of Kingsbridge, made, that my right honourable friend the Home Secretary has made clear his desire to reduce the number of petty offenders in custody. It would not be consistent with that approach to make this an offence which is subject to imprisonment in the petty case.
My noble friend is concerned with the more serious type of case. As he will be aware, the Law Commission is at present considering this whole area and has put forward a proposal to create a new offence which would extend to,
"any person who causes any other person to receive a communication, written or otherwise, which is grossly offensive, or of an indecent, shocking or menacing character, for the purpose of causing needless anxiety or distress to that other person"
Having sought comments from interested parties the Law Commission is now considering whether, and in what form, to make firm proposals. It seems to me that it is in that wider context that we should examine the problems raised by my noble friend, rather than by trying to deal with them in the context of Clause 43 of this Bill which is not really very well suited to the purpose.
I hope therefore that my noble friend will feel able to withdraw the amendment, not because the problem that it deals with is not an important and serious one but rather because the best manner of dealing with it is along the lines which the Law Commission has proposed, which makes a very important distinction between the petty kind of case which Clause 43 is designed to deal with and the much more serious type of case that he has in mind.
Earl De La Warr: I am extremely grateful to my noble and learned friend for the information that he has given mc. I said that I was no expert in the law, and I have to admit that I did not know that the Law Commission was going into this. Of course, he must be right. Although I would object mildly to the description of ridiculous by the noble Lord, Lord Donaldson of Kingsbridge, that is not the point that I want to make. I am most grateful to my noble and learned

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friend for giving the Committee this information. I have pleasure in withdrawing the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 108AB not moved.]
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 108B:
Transpose Clause 43 to after Clause 44.
The noble and learned Lord said: Amendments Nos. 108C and 108E are the principal amendments. Amendment No. 108A, which I have mentioned already, and Amendments Nos. 108B, 108C and 108E all really go together.
Amendment No. 108C: Clause 44, Page 41, line 40, leave out from ("dishonestly") to ("shall") in line 41 and insert ("obtains a service provided by means of a licensed telecommunication system with intent to avoid payment of any charge applicable to the provision of that service")
Amendment No. 108E: Page 42, line 2, at end insert—
("(2) In this section "licensed telecommunication system" means a telecommunication system the running of which is authorised by a licence granted under section 7 above.")
The principal amendments are Nos. 108C and 108E. The amendments seek to amend Clause 44 of the Bill so that the offence of dishonestly using a public telecommunication system with intent to avoid payment will have a somewhat wider implication.
The Deputy Chairman of Committees (Earl Cathcart): We are considering Amendment No. 108B which is the proposal to transpose Clause 43 to after Clause 44.
Lord Mackay of Clashfern: The purpose of this is to facilitate the changes which I am proposing. Amendment No. 108B is the second of these. Amendment No. 108A is the first transposition and Amendment No. 108B is the second. I am saying that Amendments Nos. 108C and 108E are the main amendments. I think it is right to try to explain why we are doing all this, using Amendments Nos. 108C and 108E as the principal amendments, which I shall of course seek to explain. As I say, they are the main amendments and they seek to amend Clause 44 of the Bill, so that the offence of dishonestly using a public telecommunication system with intent to avoid payment will have a somewhat wider application. Amendments Nos. 108A and 108B are purely consequential and seek to transpose the order of the clauses dealing with the offences, so that, if the amendments to Clause 44 are accepted, the Bill will continue to group together the offences connected with public telecommunication systems. I beg to move.
On Question, amendment agreed to.
Clause 43, as amended, agreed to.
Clause 44 [Fraudulent use of public telecommunication system]:
The Deputy Chairman of Committees: In calling Amendment No. 108C, I should inform your Lordships' Committee that, if it is agreed to, I cannot call Amendment No. 108D.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No 108C:
[Printed above.]
The noble and learned Lord said: I have already sought briefly to explain this amendment. I beg to move.
Earl De La Warr: Perhaps I may ask my noble friend whether, as I understand it to be, it is a fact that this amendment meets the point that he will probably have presumed I was trying to make, which was to get the offence extended so that dishonest use of systems applies to cable systems as well as to public telecommunication systems.
Lord Mackay of Clashfern: The answer is, yes. The first objective of the amendments to Clause 44 is to extend the ambit of the offence from public telecommunication systems to all telecommunication systems licensed under Clause 7 of the Bill.
On Question, amendment agreed to.
The Deputy Chairman of Committees: I cannot call Amendment No. 108D. Amendment No. 108E.
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 108E:
[Printed above.]
The noble and learned Lord said: This amendment is part of the same package. I beg to move.
On Question, amendment agreed to.
Clause 44, as amended, agreed to.
Clause 45 [Interruption or interference with public telecommunication system]:
Lord Mackay of Clashfern Lord Mackay of Clashfern moved Amendment No. 108F:
Page 42, leave out lines 6 to 10 and insert ("intentionally modifies or interferes with the contents of a message sent by means of that system")
The noble and learned Lord said: I sought to explain the amendment to Clause 45 when I dealt with the earlier amendments to Clause 18. Perhaps since we are now at this particular point, I should say that, as drafted, Clause 45(1)(a) relates to two criminal offences which were contained in Section 45 of the Telegraph Act 1863. Clause 45(1)(a) deals with the actions of an employee of a public telecommunication operator who intentionally prevents, delays or interferes with the transmission or reception of a message sent by means of his employer's system. That is what this amendment is deleting.
We leave in Clause 45(1)(b), which deals with the situation where such an employee intentionally modifies or interferes with the contents of a message sent by means of his employer's system. The amendment deletes the first offence but retains the second, contained in subsection (1)(b), and of course it has to make some minor adjustments to accommodate that. I beg to move.
Lord McIntosh of Haringey: Our response has to be the same as that on Amendment No. 99R. Although there seems to be considerable improvement in the drafting of Clause 45, the complex argument has only just been made available to us. I am grateful to the noble and learned Lord for allowing me to see his speech on Amendment No. 99R. It is safest if we reserve our position so that we can raise any points when we come to consider Amendment No. 109.
On Question, amendment agreed to.
Lord Denham: I think that we have probably reached a stage beyond which it would be counter-productive to go tonight. I should like to thank all noble Lords who have stayed this long. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Derwent Valley Railway Bill [H.L.]
The Examiner's Certificate that the further Standing Order had been complied with was ordered to lie on the Table, and the Bill was committed to an Unopposed Bill Committee.
House adjourned at eleven minutes past one o'clock.

  FOOTBALL HOOLIGANS: JUDICIAL DISCRETION
  FOOTBALL HOOLIGANS: JUDICIAL DISCRETION
  VEHICLE RECTIFICATION SCHEMES
  VEHICLE RECTIFICATION SCHEMES
  SPAIN: CRUELTY TO ANIMALS AND EC MEMBERSHIP
  SPAIN: CRUELTY TO ANIMALS AND EC MEMBERSHIP
  CORMORANTS KILLED UNDER LICENCE
  CORMORANTS KILLED UNDER LICENCE
  GOOSANDERS KILLED UNDER LICENCE
  GOOSANDERS KILLED UNDER LICENCE
  ENDANGERED SPECIES: ASSURANCE
  ENDANGERED SPECIES: ASSURANCE
  "HOME DEFENCE AND THE FARMER"
  "HOME DEFENCE AND THE FARMER"
  USSR: NUCLEAR EXPLOSIONS, SEPTEMBER 1983
  USSR: NUCLEAR EXPLOSIONS, SEPTEMBER 1983
  NAVAL WEAPONS TESTS AT SEA
  NAVAL WEAPONS TESTS AT SEA
  NAVAL EXERCISES IN THE ARCTIC CIRCLE
  NAVAL EXERCISES IN THE ARCTIC CIRCLE
  PRISONERS: LEGAL AID FOR ADJUDICATIONS
  PRISONERS: LEGAL AID FOR ADJUDICATIONS