Sitting of 6 June 1984

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

    Inmos
    Mr. Mark Robin sonasked the Secretary of State for Trade and Industry if he will make a statement on the future of Inmos.
    The Minister for Information Technology (Mr. Kenneth Baker): Inmos began to trade profitability in the last quarter of 1983 and this trend has strengthened in 1984. A group of investors had proposed to make a placement of £30 million in new shares in the company, but in the light of Inmos's current performance and its improved prospects the Government have withheld the signature of the British Technology Group to this proposal. The BTG is actively exploring other options for the transfer of the company to the private sector, bearing in mind the taxpayer's past investment and the future development of Inmos technology.
    Mr. Robinson: I am sure that my right hon. Friend will agree that it is extremely good news that Inmos should have achieved such excellent results and performed so well in such a relatively short time. However, will he give an assurance that if Inmos is transferred from the BTG to the private sector the taxpayer's investment will be protected, together, with the long-term future of the Inmos plant at Newport?
    Mr. Baker: I can give my hon. Friend that assurance, and I appreciate that the plant is in his constituency. Indeed, the plant at Newport is a major factor, as is the design team at Bristol, in considering the future development of Inmos. More than 800 people work at Newport and about 70 at Bristol. There has obviously been a substantial transfer of technology to Newport and we shall want such transfers to continue.
    Mr. Roy Hughes: Does the Minister appreciate that there will be considerable concern about any proposal to privatise the company, particularly as it is involved in new technology that is vital to this country? The Government should keep a grip on it, particularly in view of all the public money that has been poured into the organisation.
    Mr. Baker: I do not agree with the hon. Gentleman. High technology does not have to be developed solely and exclusively in the public sector. Indeed, most high technology is developed in Britain in the private sector.
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    The Government invested in Inmos with the intention of getting it established. It is now established and will require further substantial capital investment. We believe that that should come from the private sector.
    Mr. Hayward: Is my right hon. Friend in a position to say whether any of the options involved in privatization—which many of us would welcome—have been ruled out?
    Mr. Baker: As I said in my original reply, at present we have ruled out only a placement of £30 million of shares, as the terms were not attractive enough. However, the boards of the BTG and Inmos are looking at other proposals. Several companies in the United Kingdom and overseas are interested in investing in Inmos, and at present no option is excluded.
    Mr. Wrigglesworth: Does not the success of Inmos demonstrate that the Government can play a most useful role in ensuring that very important high technology industries have a presence in this country? Will the right hon. Gentleman therefore give an assurance that the company will not be allowed to fall into foreign hands?
    Mr. Baker: I accept that the success of Inmos demonstrates that catalytically Government investment can produce an activity. Indeed, I have often said that from this Dispatch Box. We shall look carefully at all the proposals from both overseas and British companies as well as American Telephone and Telegraph, bearing in mind not only the price that is offered but three important criteria: continuing access to the technology by British industry, the need for a continuing transfer of technology to Britain, and a commitment to the development and expansion of activity in the United Kingdom.
    Mr. Heathcoat-Amory: Does my right hon. Friend agree that although Inmos should not be in the public sector it should remain under British control and ownership? As integrated circuits are now a vital raw material, is it not important that this large indigenous supplier should not, if possible, be dependent on decisions taken elsewhere?
    Mr. Baker: I fully appreciate what my hon. Friend has said. If he will study the criteria that I have announced, I think he will be satisfied that any proposal for the development of Inmos will fully take account of his point.
    I am glad to say that there is considerable interest in Inmos from several countries. Perhaps it is appropriate on this day to say that there is more than one horse in the race.
    Mr. Shore: Does the Minister accept that this remarkably successful and highly innovative enterprise would not have existed if it had not been pioneered as a public enterprise? Therefore, is it not ludicrous to be contemplating the privatisation of one of the most successful public enterprise firms in the country?
    Will the Minister give a categorical assurance that there is no truth in the story published in The Times that the Government are seriously thinking of selling Inmos to AT and T? Would not such a sale be wholly contrary to the British national interest and to the efforts to deal with American extra-territoriality, upon which the Secretary of State sets a great deal of store?
    Mr. Baker: As I made clear earlier, we believe that private sector investment should now take on the continuing and very substantial requirements of capital

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    investment in the company. I am glad to recognise that the company has reached a stage where it has become profitable.
    There is no proposal of which I am aware for the outright purchase of Inmos by an overseas firm. If the right hon. Gentleman will carefully study what I said about the requirements that must be satisfied for the future of Inmos — the continuing access of British industry, the continuing transfer of technology and the commitment to the development and expansion of activity in Britain—he will realise that we have the interests of our country at heart.

    British Shipbuilders
    Mr. Dixonasked the Secretary of State for Trade and Industry what meetings he has had with the chairman of British Shipbuilders to discuss the corporate plan.
    The Secretary of State for Trade and Industry (Mr. Norman Tebbit): The corporate plan has just been received by my Department and I have not yet had the opportunity to discuss it with the chairman.
    Mr. Dixon: Is it not true that British Shipbuilders submitted the corporate plan in May last year, and also submitted an interim strategy policy document in October? Have not the Government told British Shipbuilders that it must dispose of the warship yards within two years and that there must be a further cut in the mercant shipbuilding industry? Has not British Shipbuilders told the Minister that a further reduction in merchant shipbuilding capacity is unacceptable? Is it not time that the Minister came to the aid of the shipbuilding industry—as have the French Government to their industry—to give some future to the thousands of men who work in it?
    Mr. Tebbit: The hon. Gentleman has a rather high threshold for some aid to the industry. That industry has had more than £1 billion of taxpayers' money during the past five years. I am not sure whether the hon. Gentleman thinks that that is petty cash or a substantial amount of taxpayers' money.
    On my discussions with the chairman of British Shipbuilders, I have nothing to add to the clear and full answer that I have already given him.
    Mr. Thurnham: When does my right hon. Friend expect to decide whether the warship division will be sold as a whole or in parts?
    Mr. Tebbit: Not yet, because we have not yet begun seeking purchasers for the warship building industry. We are waiting to see what proposals will come forward.
    Mr. Clay: Is the Secretary of State aware that last year alone the French Government gave £300 million to their industry? Therefore, is not this Government's record pretty pathetic compared with that of the French and many other European nations?
    As this Government advocate staying in Europe for ever and a day, is it not about time that they tried to persuade the European Community to do something more in Europe for shipbuilding? Is the right hon. Gentleman aware that the last launch on the present orders of Austin and Pickersgill, which is in my constituency, will be on 17 November? That massive yard, which two years ago the Prime Minister described as an inspiration to the remainder of Europe, is likely to close unless the Government get off their backsides and do something.
    Mr. Tebbit: The hon. Gentleman has caused considerable concern to workers and management at Austin and Pickersgill as well as to a number of his trade unionist friends by claiming that the company is about to be closed down. That is the surest way of making certain that customers do not come forward with orders. He should try to act in the interests of his constituents instead of taking a class attitude and acting in a narrow, biased, bigoted and partisan way. What is more, had he spent a little more time thinking and a little less talking he would have discovered that last year the taxpayer put £350 million of extra support into British shipbuilding, which is what he praises the French Government for doing.
    Dr. Godman: Does the Department have any plans to publish the Touche Ross report on marine engineering plants and capability in Britain? Does he agree that that report is now out of date, particularly in relation to John G. Kincaid of Greenock?
    Mr. Tebbit: If the report is out of date, it would not be particularly useful to publish it.
    Mr. Ewing: As British Shipbuilders say that it submitted its corporate plan in May 1983 and the Secretary of State says that he has just received it, where on earth has it been for the last 13 months? Before the right hon. Gentleman reaches any decision on the future of British shipbuilders—bearing in mind his record of failing to discuss such important issues with the people who work in the industry — will he now give an unqualified guarantee that he will discuss the corporate plan with the trade unions representing the employees in the industry?
    Mr. Tebbit: What I say is absolutely correct; the corporate plan has just been received by my Department. There have been occasions when there have been discussions about what should be happening to the corporation in the interim, but if the hon. Gentleman writes to Graham Day and asks for confirmation of what I have said today, he will get it. The corporate plan will be discussed in the traditional manner in which such plans have been discussed in the past.

    Microcomputers in Schools
    Mr. Greenwayasked the Secretary of State for Trade and Industry if he will make a further statement on his Department's programme for microcomputers in schools.
    Mr. Kenneth Baker: The existing micros in schools schemes come to an end in December, by which time every school in the country should have received a microcomputer. We have yet to decide whether further schemes of support from my Department are necessary.
    Mr. Greenway: I congratulate my right hon. Friend on the success of the scheme. May I urge him to renew it after December and ensure that schools have updated equipment in this fast-changing sphere?
    Mr. Baker: The scheme has undoubtedly been a success and we can rightly boast that we are, in terms of education, the most advanced in the use of computers. More than 30 countries have sent teams to the United Kingdom to see what we are doing, and the companies that are involved in the scheme are selling their computers in substantial quantities to other countries. That is particularly true of India, where the Acorn computer could

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    become the basic computer for the Indian education system. I am satisfied that our schools have had a good start in this area, though the principal expenditure for equipment in schools must, of course, lie with the Department of Education and Science.

    Pulp, Paper and Board Industry
    Mr. Proctorasked the Secretary of State for Trade and Industry if he will make a statement on the prospects for the pulp, paper and board industry.
    Mr. Kenneth Baker: I do not differ from the industry's opinion that 1984 should be a reasonably good year for papermakers.
    Mr. Proctor: Is my right hon. Friend aware of a recent energy survey in the pulp, paper and board industry, which shows that in 1983 the industry used 8 per cent. less energy per tonne of paper produced? Will my right hon. Friend take this opportunity to congratulate the United Kingdom industry on this achievement in industrial efficiency?
    Mr. Baker: Yes. The industry's energy costs are very high. I congratulate it on taking steps to save about 8 per cent. of its energy costs through a scheme operated by the Department of Energy. I pay tribute to the industry's success and to the work of the Federation of the Paper Trade in promoting the scheme more widely.
    Mr. Litherland: Does the Minister agree that the recent dramatic escalation in the price of wood pulp will lead to further redundancies and closures? Does he agree that the Government's policy towards the industry will mean a very dim future with no chance of recovery?
    Mr. Baker: The hon. Gentleman is far too gloomy. Changes in international prices have effects right across the world. The remarkable factor about the industry in the past two years has been the substantial investment from overseas sources in the Liverpool area and in north Wales. When those pulp mills are operating, the United Kingdom will be the second largest newsprint producer in the EEC.
    Mr. Sumberg: Is my right hon. Friend aware of the great importance of the paper industry to my constituency in Bury? Is he further aware that the industry faces very stiff foreign competition which is often subsidised by Government money and cheap energy? Will my right hon. Friend give me an assurance that if that continues the Government will take positive action to ensure that the industry can compete on fair terms?
    Mr. Baker: The answer to all of my hon. Friend's questions is yes.
    Mr. Williams: We join hon. Gentlemen in congratulating the paper industry on its 8 per cent. gain in energy efficiency, but does the Minister realise that despite that gain in efficiency the industry's competitiveness is being undermined by high energy costs, especially when compared with the costs in France, Italy and Germany?
    Does the Minister agree that competitiveness is further undermined by artificially high rates of sterling in relation to the Euro currencies, and that future investment in such a capital-intensive industry has been severely prejudiced by the Chancellor's Budget decision to phase out capital allowances?
    Mr. Baker: The right hon. Gentleman says that energy costs are high. Why are electricity and other energy costs so high in the United Kingdom?
    Mr. Williams: The right hon. Gentleman put them up.
    Mr. Baker: On the contrary, in the past two years the price of electricity to industry has been maintained. The reason why electricity costs are so high in this country is that the cost of coal is so high.

    Microprocessors
    Mr. Hayesasked the Secretary of State for Trade and Industry how many factories in the United Kingdom are now manufacturing microprocessors; and how this compares with 1982 and 1980, respectively.
    Mr. Kenneth Baker: Companies manufacturing integrated circuits, including microprocessors, in the United Kingdom rose from nine in 1980 and 1982 to 10 in 1984. We are aware of investment proposals in that sector which total about £700 million. There is a prospect of three more companies going into manufacture in the near future.
    Mr. Hayes: Is my right hon. Friend aware that I welcome that encouraging news, and I take this opportunity to congratulate him on an imaginative initiative? This concerns the hon. Member for Bolsover (Mr. Skinner), so if he keeps quiet it might help him. My hon. Friend has taken an imaginative initiative in providing computers to an organisation called DIAL, whose headquarters happen to be in Bolsover. That organisation, particularly in Harlow and Bolsover, will be able to help disabled people claim their benefits, and the officers of the DIAL branch in Harlow have asked me to thank my right hon. Friend.
    Mr. Baker: I doubt whether any initiative that I can take will help the hon. Member for Bolsover (Mr. Skinner). In this case, we supported a group giving advice to handicapped people. I am glad that we were able to make that contribution, because communicating technologies can significantly improve the lot of all handicapped people.
    Dr. David Clark: Is Plessey involved in any microcircuit jobs? Is the right hon. Gentleman aware that Plessey is closing a factory in my constituency, with 600 redundancies, yet only a few hours ago it announced that a new factory would be opened in Plymouth, creating 600 new jobs? Will the right hon. Gentleman ensure that not a penny of regional grant goes to Plessey, in view of its deceitful and underhand manner in my constituency?
    Mr. Baker: The hon. Gentleman knows that I have been dealing with that matter in his constituency. I would not associate myself with the language that he used about Plessey. It is a major developer of microintegrated circuits. Recently it announced an investment of about £50 million. However, even in the advanced industries there are adjustments in the range of microelectronics. I would not knock Plessey in the way that the hon. Gentleman did. It is a progressive company, of which Britain should be proud.
    Mr. Henderson: Does my right hon. Friend agree that microprocessors help most with job creation when they are incorporated in products rather than production processes? Does he feel that British manufacturers should give more attention to the way in which their products could be enhanced by the use of microprocessors?
    Mr. Baker: I agree entirely with my hon. Friend. It is no good just having companies making silicon chips and integrated circuits; they have to be applied. I believe that they must be applied by the traditional, older industries in Britain, because if they do not use the new technologies they will not be in business over the next five years.
    Mr. Skinner: Is the Minister aware that although the Tory Government, over the past few years, have closed nine pits in my constituency——
    Mr. Speaker: Order. Is the hon. Gentleman's question about microprocessors?
    Mr. Skinner: Yes, I am coming to that. During that period, despite all the assurances given about alternative industry, the Tory Government have not managed to get one single microprocessor plant into the whole constituency.
    Mr. Baker: Perhaps the hon. Gentleman should try to sell the advantages of his constituency in a more positive way.
    Mr. Philip Oppenheim: Is my right hon. Friend aware that the Public Accounts Committee report on the Nexos company, which was set up by the Labour Government to develop the British office equipment industry, proves convincingly that the NEB and the BTG ran that company with an abandon that verged on the fraudulent? Is my right hon. Friend further aware that that report proves something which the NEB has denied for over two years—that 800 Japanese facsimile machines costing more than £1 million were sold back to the middle man importers for no more than £1? Does my right hon. Friend agree that that is a just cause for a ministerial investigation?
    Mr. Baker: The PAC has reported on that case, and we are examining it. The lesson which the Government can learn from that investment is that they should not dabble in things in which they are not expert.
    Mr. Shore: Do the Minister's figures in his original reply take into account the reported closure last week of three microcomputer firms — Dragon Data, Tycom, about which I am sure the right hon. Gentleman is aware and concerned as it serves the Conservative party, its headquarters and offices, and, thirdly, Camputers? What is the outlook for the microcomputer industry in Britain this year? Is there any evidence that the big boys, including IBM, are using unfair pricing as a means of securing a market share?
    Mr. Baker: The answer to the latter question is, not as far as we know, but we are making a survey of it. With regard to the question of microcomputer activity—the question was about microprocessors and silicon chips—I accept that they must be put into equipment. During the past few years there has been a tremendous boom in the manufacturing of electronic equipment. In 1983, for example, we in Britain consumed 29 per cent. of all microcircuits in Europe, which was the largest rate of any European country. Therefore, we have the fastest growing electronics industry in Europe.

    Small Firms Service
    Mr. Sackvilleasked the Secretary of State for Trade and Industry what steps he is taking to ensure co-operation between the small firms service and other sources of advice for small firms.
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. David Trippier): The small firms service works closely with local enterprise agencies and other organisations to provide a full service to small firms.
    Mr. Sackville: Given my hon. Friend's special interest in local enterprise agencies, how does he see their relationship with the small firms service?
    Mr. Trippier: I see the local enterprise agencies as being at the sharp end and actively involved in the local community, and the small firms service as providing backup. To use a medical analogy, the directors of the local enterprise agencies are the general practitioners, and the small firms the counsellors, the specialists or consultants. That is the relationship enjoyed in my hon. Friend's constituency. There is an excellent local enterprise agency called the Bolton Business Venture, which has the support of the small firms centre in Manchester.
    Mr. Grylls: What advice would my hon. Friend give to the small firms advisory service in reply to small businesses which say that the recent changes in the loan guarantee scheme, introduced by the Government two weeks ago, make it the least attractive and most expensive scheme of any developed country?
    Mr. Trippier: The local enterprise agencies' directors should draw the attention of their potential clients to the second Robson Rhodes review, which made it clear that there was a lack of appraisal and monitoring procedures in the loan guarantee scheme. Too many companies were going under because they had not been correctly appraised and monitored. The Government's changes have led to a continuation of the scheme, and increases have not been horrific.
    Mr. Williams: Is the hon. Gentleman aware that that advice is of no help to the 1,200 firms a year which he forecast would be deterred from using the loan guarantee scheme as a result of the changes? Is he aware that there has been not only a 50 per cent. increase in the premium that the Government charge over and above the banks' interest, but, more important, that the reduction in the proportion of the loan now to be covered by guarantee means that the banks will increase the rate of interest they charge? Is he aware that the small firms will face a double increase in interest rates?
    Mr. Trippier: The hon. Gentleman should remember that the Department of Trade and Industry is receiving on average 400 applications a month. I predicted that they would fall to 300 a month—that was my guesstimate. The 100 applications a month that fall away may be from the companies which should not have been covered by the loan guarantee scheme in the first place. The Labour party's policy cannot be to support indiscriminate lending to small businesses. If some of those businesses go down, they may drag other small firms down with them. That would not be our policy. My advice to local enterprise agencies' directors, which I gave in reply to the former

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    question, is sensible. We have increased the exposure for banks, which means that they will increase their appraisal procedures.

    Leyland Vehicles Ltd.
    Mr. Strangasked the Secretary of State for Trade and Industry what consideration he has given to the corporate plan prepared by Leyland Vehicles Ltd; and if he will make a statement on future Government support for the company.
    Mr. Holtasked the Secretary of State for Trade and Industry whether he has received the British Leyland corporate plan: and if he will make a statement.
    Mr. Tebbit: I announced our decisions on BL's corporate plan to the House on 22 May, and they were further debated on 24 May.
    Mr. Strang: Does the right hon. Gentleman accept that unemployment in Bathgate is such that workers who lose their jobs have virtually no hope of finding alternative work? Will he recognise that that is why the social costs of closure are utterly unacceptable? That is also why the finacial costs of closure to the Government are greater than keeping the factory open. If the Secretary of State does nothing else this afternoon, will he tell the House whether the Government have estimated the financial costs of closure of the Leyland plant at Bathgate, and if so will he make the estimates available to the House?
    Mr. Tebbit: Of course we make estimates of such things, but to a large extent they include commercially confidential information. If the hon. Gentleman wishes to examine the costs, I commend to him the evidence taken from Lord Stokes by the Trade and Industry Sub-Committee of the Public Expenditure Committee on 16 June 1971. Lord Stokes said that the cost of having the factory in Scotland was equivalent to a 7·5 per cent. tariff. The hon. Gentleman must consider what that cost means in terms of jobs to other workers in other parts of the economy.
    Mr. Beaumont-Dark: Does my right hon. Friend agree that, just as BL is coming out of the period when it was known as a music-hall joke, it is depressing, now that its business is improving, to find an increase in disputes such as the present one? Would not this be the time to warn BL workers that the patience of the taxpayers who wish to support the company is not inexhaustable and that the time has come to work, not to strike?
    Mr. Tebbit: It would not be right for me to comment on any particular dispute, but it is certain—as has been proved time and time again—that strikes do not save jobs, they destroy them. A long strike purporting to save the job of one individual would no doubt cost the jobs of many others.
    Mr. Dalyell: For heavens sake, why are the social costs of any closure at Bathgate commercially confidential? I wish to ask a question of which I gave notice to the Minister of State's office. Can Charles Nickerson be assured that if. his bid is viable he will receive terms as favourable as are being offered to Nissan? Why should an indigenous motor industry employer receive less favourable terms than those on offer to the Japanese?
    Mr. Tebbit: First, I said that some of the information was commercially confidential. That includes some of the
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    savings or the costs which would otherwise be caused within BL, according to which option one took up as to which of the factories in the Leyland Vehicles group should be closed. The social costs would be almost infinitely variable according to the assumptions which right hon. and hon. Gentlemen like to make about the future of the Scottish economy and many other things. With regard to the hon. Gentleman's question about the help given to Nissan, he will be aware that different regimes of assistance are available for those projects which are internationally mobile and those which are not. The scale of help or assistance for domestic United Kingdom projects——
    Mr. Williams: It is not true.
    Mr. Tebbit: I am sorry, the right hon. Gentleman cannot say that. Well, he can say it, but it does not happen to be true. The scale of help within the United Kingdom is, of course—[Interruption.] I wish that the right hon. Gentleman would shut up for a moment. Mr. Speaker? It is impossible, when one is trying to treat the question of the hon. Member for Linlithgow (Mr. Dalyell) seriously, to be subjected to perpetual barracking from a former Minister who ought to know a damned sight better. I am afraid that I shall have to start again. That will cut out a number of hon. Gentlemens' questions.
    In the event of Mr. Marshall or anyone else coming forward with a proposition to take over all or any part of Bathgate, it would be studied to see to what extent we could financially assist, taking into account its prospects of commercial success, and I should be happy to do that.
    Mr. Kenneth Carlisle: If the taxpayer is to subsidise BL, is it not right that it should purchase a substantial proportion of its components in this country? There are increasing signs that it is not doing that as much as it did in the past. Will the Government ask for a review of the matter?
    Mr. Tebbit: I hope that British Leyland will continue to buy the great majority of components within the United Kingdom. If my hon. Friend's concern is for the taxpayer, he will assuredly want BL to buy in the most competitive market, because if it does not it will not sell its motor cars.
    Mr. Meadowcroft: Will the Secretary of State accept that necessary Government support for British Leyland has to extend beyond his Department, and that the loss of 440 jobs at Charles H. Roe at Leeds is a direct result of the reduction in the transport supplementary grant and the phasing out of bus grants? Will he therefore speak to his right hon. Friend the Secretary of State for the Environment to see that rate levels and rate-capping do not prevent orders being given for at least 100 buses a year, which are all that are required to save that plant?
    Mr. Tebbit: The hon. Gentleman is completely wrong. It is not the level of transport supplementary grant that has caused the decline in orders for buses. The hon. Gentleman must try to examine the matter in a rational light. One thing that has caused the fall-away is that after a burst of ordering in pursuit of introducing one-man buses the demand is now at a lower level. Another cause is that people in some cases prefer to travel by a means of transport other than buses. A third cause is that sometimes bus companies are not run effectively. I am sure the hon. Gentleman takes great heart from the number of bus

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    companies that are now competing successfully with British Rail. No doubt he will give no help at all to those who want subsidies for British Rail as well.
    Mr. Bill Walker: Can one take it from my right hon. Friend's earlier reply about Bathgate, that the Government are pursuing actively the search for alternative owners for that factory? Can he confirm that in the past in Scotland organisations and companies which were in public ownership and were not able to compete effectively were subsequently taken over by the private sector and that the 7·5 per cent. penalty did not seem to deter them from being successful?
    Mr. Tebbit: My hon. Friend is right. In many cases it depends upon where the market for the product is. Perhaps he had most in mind the remarkable case of Scott Lithgow where, despite the jeers and derision of right hon. and hon. Members of the Opposition, the private sector came in and rescued a company which had been bankrupted by nationalisation.
    Mr. Fatchett: I am delighted to have the opportunity of following the hon. Member for Leeds, West (Mr. Meadowcroft) who, like all the Liberals, after taking no interest in this issue, suddenly appears to have an interest in it. In reply to his question the Secretary of State said that there was no relationship between the cut in transport subsidy and the loss of orders for the bus industry. Is the Secretary of State not aware that British Leyland management attributes the loss of jobs in Leeds directly to Government policy and that all those who know the bus and coach industry realise that Government policy in cutting transport subsidies and also in relation to the 3·5 million unemployed put jobs in jeopardy not just in Leeds, but in the coach and bus industry elsewhere? In those circumstances, will the Secretary of State give a commitment to meet his colleague the Secretary of State for Transport—I realise that for both of them this will be a challenging prospect—to discuss the subsidy for the industry and measures to save the jobs in Leeds, which are crucial to our city, and which receive so little interest from the Secretary of State?
    Mr. Tebbit: I hope the hon. Gentleman will forgive me if I do not indulge in the Punch and Judy, ding-dong, two-party game that goes on. I am very glad to hear that he believes everything that the BL management says. I hope he will be able to convince some of his right hon. and hon. Friends that they, too, should believe BL management. The level of subsidy is entirely adequate in the view of my right hon. Friend the Secretary of State for Transport and myself. Therefore, there is no cause for us to discuss the matter.
    Mr. Leigh: Has my right hon. Friend noticed that Track Marshall of Gainsborough is interested in buying the engine plant at Bathgate? Will he look at that application with favour and reject the intemperate remark of the hon. Member for Linlithgow (Mr. Dalyell) last week, when he said that the original tractor line was "bloody well stolen"?
    Mr. Tebbit: The application by Marshall's is not to my Department or to me, but to British Leyland. It is a commercial matter between the two parties. However, requests for regional aid or anything of that kind will be examined by my Department with every sympathy. We should like employment to continue at Bathgate at the highest possible levels.
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    My hon. Friend mentioned the hon. Member for Linlithgow (Mr. Dalyell) and the original tractor line. The best thing that we can do is to cease to throw bricks at each other and see how best we can help the factory to survive under new ownership, if that is possible.
    Mr. Geoffrey Robinson: May I refer to the sale of Jaguar Cars? Bearing in mind the Secretary of State's sincere commitment to the maximum participation by employees in the businesses in which they work—and without disrespect to the chairman of Jaguar Cars—will the Secretary of State consider making financial advice available to the management and employees on the form, extent and terms of the equity participation that they might have in that company?
    Mr. Tebbit: I am sure that the management and work force are capable of taking their own advice.
    Mr. Henderson: Is my right hon. Friend aware that, despite the long list of companies which have moved to Livingston in recent years, and which are likely to deliver more than 4,000 jobs, there is great anxiety about unemployment in central Scotland? Is he aware that that is combined with a nagging anxiety that British Leyland's top management, located as it is south of the border, may not have given fair dos to the Bathgate plant when comparing facilities? Can he reassure the Scottish people that rational decisions have been taken and that parochial prejudice is not involved?
    Mr. Tebbit: I can assure my hon. Friend that the question of the border is utterly and completely irrelevant to the matters discussed. Indeed, I have to remind some Opposition Members that the plant is within the United Kingdom, as are other BL plants.
    Mr. Shore: The Secretary of State did not answer the relevant questions about the future of Bathgate posed by my hon. Friend the Member for Linlithgow (Mr. Dalyell), nor did he answer the interjections by my right hon. Friend the Member for Swansea, West (Mr. Williams) from the Opposition Front Bench. For the record, may we have answers to some specific questions? Is there, or is there not, a differential between companies from overseas investing in British development areas and British companies investing in the same areas? If there is such a difference in incentive, what is it and what is the justification for treating Japanese and other foreign companies more favourably than British firms?
    Mr. Tebbit: I hope that the right hon. Gentleman will not allow his xenophobia to get in the way of the national interest. Of course there is a justification for offering particularly attractive terms to bring to the country internationally mobile projects which otherwise might go to another part of the European Community and have free access to our markets, but would not provide any jobs in this kingdom.
    Later—
    Mr. Dalyell: On a point of order, Mr. Speaker. It arises from question No. 7 asked by my hon. Friend the Member for Edinburgh, East (Mr. Strang). A slip of the tongue was made by the Secretary of State, but I make no complaint about that. For the sake of clarity, it is important to make this point in a delicate situation. The right hon. Gentleman referred to Mr. Charles Marshall. In fact, it is Mr. Charles Nickerson of Track Marshall who has made the serious bid for an interest in the Bathgate factory.

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    The hon. Member for Gainsborough and Horncastle (Mr. Leigh) referred to an infelicitous phrase that I used. Perhaps it was infelicitous, and for that I apologise to the House. My expression referred not to Mr. Nickerson, but to a different man. Over the years, Lothian ratepayers have paid a great deal of money from their resources into the tractor line that had to leave Bathgate. I was simply reacting on behalf of my constituents to the use money which they paid as ratepayers.
    While the Leader of the House is here——
    Mr. Speaker: Order. The hon. Gentleman has corrected the record. He must now raise his point of order with me.
    Mr. Dalyell: The Secretary of State for Trade and Industry put forward a new doctrine in relation to the differential between British companies and "internationally mobile" companies. As it is such a new doctrine, may I ask the Leader of the House, through you, Mr. Speaker, for a statement clarifying the new doctrine for grants to Japanese and other foreign firms?
    Mr. Speaker: I am sure that the Leader of the House heard that.

    British Steel Corporation
    Mr. Hirstasked the Secretary of State for Trade and Industry whether he has received the British Steel Corporation's corporate plan; and if he will make a statement.
    Mr. Tebbit: I expect BSC to complete its corporate plan shortly and to submit it to the Government for approval.
    Mr. Hirst: When my right hon. Friend receives the corporate plan, will he bear in mind that the United Kingdom has reduced its steel-making capacity very much more than have our partners in the European Community? Will he make the most vigorous representations to his counterparts in the Community in order to ensure greater equality of sacrifice? Will he bear in mind that my constituents in the west of Scotland warmly endorse the conclusion of the Select Committee on Trade and Industry, which suggested that in view of the market position there was no valid case for the closure of Ravenscraig steelworks?
    Mr. Tebbit: When we consider BSC's corporate plan we shall, of course, look at the position of the market and the various parts of the BSC, and how all the plants may be fitted into the plan. On the question of the amount by which capacity has been cut, Commissioner Andriessen said recently that he expected about 30 million tonnes of capacity to be taken out between 1980 and 1985. Our contribution will be about 4·5 million tonnes, of which we have already taken out four million. The other countries will catch up on what we had to do in cutting capacity, which should, in many cases, have been closed down many years before—and would have been but for the disgraceful delays caused by the Beswick review.
    Mr. Crowther: Has the Secretary of State read the Select Committee report to which his hon. Friend referred? Is he aware that the Select Committee strongly urged that there should be no further closures in strip mill capacity, strongly criticised the Government's privatisation policy and drew attention to the amazingly high
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    current level of productivity in this publicly owned industry? Will the right hon. Gentleman ask the Leader of the House to ensure that we have a full debate on this matter in Government time before any irrevocable decision is made on further closures?
    Mr. Tebbit: I shall make sure that the Leader of the House is aware of the hon. Gentleman's views about the need for a debate.
    I am sure that the hon. Gentleman will join me in paying tribute to the way in which the work force as a result of the inspired leadership of Mr. MacGregor has now achieved a remarkably high output per man. The United Kingdom figure is 223 tonnes per man year as compared with 212 tonnes in Germany and 190 in France. I have read the Select Committee report with great interest, but the Select Committee is not responsible for the financing of BSC.
    Mr. Hickmet: In as much as BSC's corporate plan is designed to set BSC on course for profitability and thereby secure future job security for our steel workers, may I ask how much has that aim been undermined by the activities of Mr. Scargill—activities which are supported by every Member of the Labour party? Has not the future of the five integrated steel plants been thrown into question far more by the actions of Mr. Scargill than by any other cause? If Mr. Scargill was successful at Orgreave, and if the blast furnaces and coke ovens at Scunthorpe were damaged, what would be the future for the 5,000 or 6,000 steel workers in my constituency? Would it not be nil?
    Mr. Tebbit: Assuredly, the future of jobs in BSC can be secured only by rendering that corporation profitable. My hon. Friend refers to the damage done by the current miners' dispute. I understand that some three quarters of the miners are not currently working, although about a quarter, happily, are still producing coal, which is being transported to the steelworks by many other responsible trade unionists. There is little doubt that the objective at times of some extremists has been to damage the British steel industry. A few years ago some extremists in the steelworks had the same objective, but they learnt their lesson.
    Mr. Ewing: The Secretary of State is considering more corporate plans than Bobby Robson, and is making almost as bad a job of them all. Will he guarantee that he will not accept any proposal that will further reduce the capacity of BSC or lead to the closure of any one of the five integrated steel plants, and that he will not fuel any arguments between the various parts of the industry such as Port Talbot, Ravenscraig and Llanwern?
    Mr. Tebbit: It would be rather unwise of me to make decisions on the corporate plan before I have had the opportunity to see it. I have to stand very firm on the words of the Under-Secretary of State for Industry, when he said:
    "The Government have said that there can be no question of accepting a situation where the taxpayer is required to foot the bill for continual and avoidable loss-making." — [Official Report, 24 March 1975; Vol. 889, c. 226.]
    That was said by the Under-Secretary of State for Industry about British Leyland, but it is equally applicable to BSC, and it is equally applicable although the then Under-Secretary of State for Industry, the hon. Member for Oldham, West (Mr. Meacher), would no doubt wish to recant those views.

    Regional Industrial Development
    Mr. Wardasked the Secretary of State for Trade and Industry if he will make a statement on the submissions he has received in response to the White Paper on regional industrial development.
    Mr. Trippier: I am pleased with the constructive and helpful comments contained in most of the submissions received, which totalled 467 by 31 May.
    All submissions received by that deadline, or dated and post-marked prior to it, will be taken into account when we make our decisions on those issues on which views were invited. A statement will be made in due course. In addition, I shall make available to the House a list of all the submissions received in response to the invitation in the White Paper.
    Mr. Ward: I thank my hon. Friend for that reply. However, he will be aware that some of us are sceptical about the beneficial effects, if any, of regional aid. When he comes to make his final decision on the form of regional aid, will my hon. Friend bear in mind that all that aid comes from the already hard-pressed taxpayers?
    Mr. Trippier: I am aware of my hon. Friend's cynicism, which I have heard from time to time, both on the Floor of the House and in the debates in Committee on the Co-operative Development Agency and Industrial Development Bill, which received its Third Reading on Monday. The Government accept that regional industrial policy costs a lot of public money and that the balance of economic benefits and costs is not clear-cut. We are increasing the cost-effectiveness of the policy, and I am sure that my hon. Friend will welcome that.
    Mr. Wrigglesworth: Will the Minister reject the sentiments expressed by his hon. Friend the Member for Poole (Mr. Ward), which were also expressed by some other Conservative Members in the debate on Monday evening on the Co-operative Development Agency and Industrial Development Bill debate? Will he ensure that the interests of the regions are taken fully into account in the development of new policy? Is he aware that most of the criticisms that we hear come from those areas of the country that have never suffered from the levels of unemployment endured in Scotland, Wales, the north-west and other parts of the country?
    Mr. Trippier: The hon. Gentleman would expect me to reply in the affirmative, and I am anxious to do so. We made it clear in the White Paper that we support an effective regional policy and are determined to ensure that we reduce regional disparities in employment opportuities on a stable, long-term basis.
    Mr. Yeo: Does my hon. Friend agree that there is no net economic gain to the country from any incentive that just asks a firm to locate its business in one part of the country rather than another? Will not the interests of all regions, whether prosperous or depressed, benefit from the promotion of free market forces, in particular Suffolk, which is ready to stand on its own feet in free competition?
    Mr. Trippier: I agree with my hon. Friend's latter point, but the White Paper made it clear that we can no
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    longer try to justify regional policy on economic grounds. We try to justify it on social grounds, because of the inequalities between the regions.
    Mr. Campbell-Savours: Is the Minister aware that the Government's proposals will effectively end any opportunity or chance for west Cumberland to attract any capital-intensive industry until there is a change of Government? Is that a reasonable and fair way to treat my part of the country, particularly when over the past 15 years the only industry that has come to provide jobs in great number is capital-intensive and has come as a result of regional policy?
    Mr. Trippier: The hon. Gentleman is talking absolute nonsense. He cannot pre-judge the outcome of the review which we shall be conducting shortly as a result of the representations that we have received on the White Paper, or what we shall do with the assisted areas map.

    Manufacturing Industry
    Mr. Knoxasked the Secretary of State for Trade and Industry what is the figure for output in manufacturing industry in the most recent quarter for which figures are available.
    The Minister for Trade (Mr. Paul Channon): For the first quarter of 1984 the provisional figure for the index of production for manufacturing industries is 97, based on 1980 being 100.
    Mr. Knox: Will my right hon. Friend confirm that that represents a fall of 10 per cent. compared with the first quarter five years ago? When did manufacturing output last fall by that amount over five years?
    Mr. Channon: It is certainly a fall, as my hon. Friend says, but I am sure he is pleased that manufacturing output is now increasing, that manufacturing exports are increasing, that trends are good and that manufacturing output is 3·5 per cent. higher than in the same quarters of 1983.
    Mr. Gould: Despite the complacency with which the Minister has presided over this record fall in manufacturing output — which has been matched by a corresponding decline in investment, employment and the balance of trade—does he recognise that when North sea oil runs out we shall yet again have to rely on the output of our factories to pay our way in the world? If he recognises that, what does he and his Government propose to do about it?
    Mr. Channon: I would take that lecture from the hon. Gentleman rather more easily if manufacturing output had not fallen from 1974 to 1979 when a Labour Government were in power. All the evidence is that the trend is now upwards. Confidence in industry is good, investment intentions are good, inflation is low and productivity is increasing. The economy is doing better and the Opposition can do nothing but whinge and whine as good news comes along.

Unparliamentary Expressions
Mr. Willie W. Hamilton: On a point of order, Mr. Speaker. You will recall yesterday, Mr. Speaker, the exchanges on the use of the word Fascist by Opposition Members to describe certain Government supporters. It would be improper for me and out of order to challenge your ruling or rulings on that issue, but I think that there was an element of confusion in the rulings which you gave. In column 166 you said:
"we all know that the word Fascist has a connotation here which is not pleasing."
The presumption of that remark is that there might be another connotation where it would be pleasing.
Later, in column 167, Mr. Speaker, you said:
"I hope that we shall not hear this phrase"—
I presume that you meant "this word"—
"used in this House."
There was an air of finality about that. That suggested that in no connotation would we be able to use the word.
In column 168, in response to a representation from my hon. Friend the Member for Birmingham, Ladywood (Ms. Short), you conceded
"that there are Fascist parties that contest elections but they have not been elected to this House."
It is true that they have not been elected under that name.
It seems that in the three exchanges to which I have referred there was an element of confusion. At one stage there was an element of rigidity and at another an element of flexibility. There was the concession that Fascist
"is a serious political term." —[Official Report, 5 June 1984; Vol. 61, c.166–68.]—
that was the expression used by my hon. Friend the Member for Ladywood—and that Fascists stand for Parliament. I have looked up the word "Fascist" in the Oxford English Dictionary. It describes a Fascist as a person of
"right-wing authoritarian views."
That seems to be an accurate description of a large majority of Conservative Members. I looked up further the definition in Webster's Third New International Dictionary. It describes Fascism, which I presume is the philosophy that is supported by Fascists, as
"any program for setting up a centralized autocratic national regime".
That fits this Government's programme like a glove.
I have been in this place for a fairly long time, and in my view the House is in danger of becoming far too sensitive in its use of the English language. Compared with earlier days we are like a namby-pamby church tea party. It is time that we stopped that. There should be, as my right hon. Friend the Leader of the Opposition said yesterday, a degree of flexibility and much greater liberality in the use of our rich language in the House.
Mr. Dennis Skinner rose——
Mr. Dave Nellist rose——
Mr. Speaker: Order. Are hon. Members rising on the same point of order?
Mr. Skinner: No.
Mr. Speaker: I shall deal with this matter first. I would not wish there to be any misunderstanding in the House about my ruling yesterday. The basic guidance on which the House relies in considering unparliamentary expressions is set out in "Erskine May" on page 432, which states:
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"Good temper and moderation are the characteristics of parliamentary language. Parliamentary language is never more desirable than when a Member is canvassing the opinions and conduct of his opponents in debate."
Whether a word should be regarded as unparliamentary depends on the context in which it is used. Context is all-important. "Context" means how the word is said, the circumstances in which it is said and when it is said.
In the context yesterday I am satisfied that the use of the word Fascist was intended to give offence to a Member and amounted to a reflection on his honour.
I am not, of course, ruling that the word Fascist can never be used in debate. On this day, of all days, the anniversary of the day on which many of our fellow countrymen died to ensure that this country remained free from Fascism, we should refrain from using that word to attack each other. I remind the House that we are all honourable Members, and we should debate with each other in that spirit.
Mr. Peter Shore: Further to that point of order, Mr. Speaker. I am sure that the House is grateful to you for that amplification of yesterday's ruling in response to the question put by my hon. Friend the Member for Fife, Central (Mr. Hamilton). A distinction has been drawn about context. Although the whole House accepts that you have the ultimate and proper authority for deciding whether the context rules out the use of a particular word, other hon. Members have the right to disagree with you. Nevertheless, hon. Members accept your authority on that matter.
Yesterday, hon. Members, especially Labour Members, were greatly and genuinely disturbed by the apparent, though now amended, statement from the Chair that the use of the word Fascist was initially unparliamentary. We were concerned because, in the whole of the 40 years since we found ourselves at war with the Fascist states, during which time unparliamentary words were listed in "Erskine May", the word Fascist was never ruled unparliamentary.
There are occasions—this is an important point—when the use of the word Fascist is not an attack on the honour of a Member of Parliament. There may be occasions when it is a reasonable description of an hon. Member's beliefs and values. I am sure that, although we fully understand that the context is all, you have drawn a distinction that will go a long way towards satisfying the doubts that were expressed yesterday.
Later——
Mr. Tony Banks: On a point of order, Mr. Speaker. I wish to refer back to your earlier ruling on the use of the word "Fascist". I am not 100 per cent. sure whether you intend to permit the continued use of the word, or whether it will depend on the context in which it is employed. I should point out that the Prime Minister used the word during Prime Minister's Question Time on 8 December 1983. In column 467 of the Official Report she referred to the nature of "the Fascist Left." One of the problems is that the Official Report uses a capital "F" for Fascist, whereas if it used the lower case for it, and treated it as an adjective, it would fit in with the correct readings given by my hon. Friend the Member for Fife, Central (Mr. Hamilton) of the interpretations used in both Chambers and the Oxford dictionary.
For some reason, the 20th edition of "Erskine May" omits the appendix of unparliamentary expressions.

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Perhaps it might be in order at some stage, Mr. Speaker, for you to look through the list in the 19th edition to see whether some of the words still considered unparliamentary could be loosened for more regular usage. For example, I was referred to as a "hooligan" by a Conservative Member. Frankly, knowing the hon. Gentleman who used the expression, I felt that it was something of a compliment. Nevertheless, it appears in the 19th edition of "Erskine May" as being unparliamentary, as do "humbug" and "Pharisee". I would cheerfully call Conservative Members Pharisees if I thought that they would be in any way insulted. But perhaps, Mr. Speaker, you will look at the 19th edition of "Erskine May".
Dr. Norman A. Godman: Further to that point of order, Mr. Speaker. I readily accept the good sense behind your ruling on the label "Fascist". However, is it in order to refer to Conservative Members as the lumpen bourgeoisie?
Mr. Speaker: If the hon. Members for Newham, North-West (Mr. Banks) and for Greenock and Port Glasgow (Dr. Godman) study carefully what I have said in the Official Report tomorrow morning, they will find the answer to their questions.
However, let me make it doubly clear that I did not intend to rule yesterday that the word Fascist may never be used in debate. My ruling applied to the use of the word when addressed to an hon. Member — as it was yesterday—in a way that is intended to give offence and to be a reflection on that hon. Member's honour.
Mr. Robert N. Wareing: Further to that point of order, Mr. Speaker. I seek your clarification. Would I be in order to use the word "Tory" when it impugned the honour and character of a Member of Parliament, who objected to that word being used against him? For example, I often use the word "Tory" when referring to the right hon. Member for Plymouth, Devonport (Dr. Owen), and I wish to continue using it when I refer to him.
Mr. Speaker: I was dealing seriously with these matters and I do not think that we want to reduce them to a farce.

Coal Industry Dispute
Mr. Dave Nellist: On a point of order, Mr. Speaker. Although you were not in the Chair at the time, you will be aware that, during the Adjournment debate on the coal strike yesterday evening, I made an accusation to the Minister of State, Department of Energy regarding Government pressure and instructions to British Rail to settle the pay dispute with the rail unions so that those unions would not be involved with the miners. That was greeted with extreme derision and laughter by the Minister and his colleagues. Today's events may have changed that, but I leave that matter there.
I wish to raise with you, Sir, the fact that a similar position now arises in relation to British Steel and instructions from the Secretary of State for Trade and Industry. On 23 May, when the non-union coke lorries moved from Orgreave to Scunthorpe it was with the understanding and explicit knowledge of British Steel and right to the top of the Government that on 24 May there would be a meeting of the mining, transport and rail unions to give a dispensation for that coke to be moved by rail. The instruction by the Secretary of State for Trade and Industry in that context is exactly the same as the Prime Minister's instruction to the chairman of British Rail.
Mr. Speaker: That has absolutely nothing to do with me.
Mr. Dennis Skinner: On a point of order, Mr. Speaker. It is well known that even a fairly thin House on Derby day—we all know where the Conservatives are—has the duty to ensure that hon. Members do not treat the House with contempt. As the Daily Mirror today has made it abundantly clear that the Prime Minister has constantly misled the House and treated it with gross contempt by saying that there has been no intervention in the miners' strike, may I ask what steps you, Mr. Speaker, intend to take to ensure that the Prime Minister comes to the Dispatch Box today to explain why she said one thing in the House of Commons and the exact opposite in talks at No. 10 with leaders of the National Coal Board, British Rail and the rest? If she is not prepared to do that, will you refer the matter to the proper parliamentary Committee so that the Prime Minister is brought to book for that gross contempt?
Mr. Speaker: As the hon. Gentleman knows, I am not responsible for leaks in newspapers. Nor can I force the Prime Minister to come and answer questions. On the last part of the question, as the hon. Gentleman knows, there is a formula for dealing with that matter.
Mr. Max Madden: Further to that point of order, Mr. Speaker. Can you help us by ensuring that the inquiry to be instigated by No. 10 into the disclosures in the Daily Mirror is properly carried out? Should not the Leader of the House have told us the terms of reference of the inquiry, whether it is to be conducted by the police, which Government Departments and public sector industries will be required to give evidence, when the findings will be published and whether they will be publicly available? Reservations were expressed earlier about the acceptability of some of the language used in the House, but whatever our disagreements about that, I am sure that there is a general desire that the House should be

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given information about the Government's intentions in these very serious matters, since it is clear that the Prime Minister and other Ministers have deceived the public and the House of Commons. Surely the House is entitled to know from the Prime Minister or the Leader of the House what the Executive are doing to inquire into these very serious allegations.
Mr. Speaker: I say again that it is not for me to advise on parliamentary tactics.

British Rail (Wage Negotiations)
3.50 pm
Mr. John Prescott: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the Government's role in the recent British Rail wage negotiations."
The matter is specific because of the publication in today's Daily Mirror of correspondence which we can assume is authentic, in view of the statement today that the Prime Minister has announced an inquiry into the leak of such correspondence. That correspondence clearly involves the Prime Minister, the Secretary of State for Transport and other Ministers in direct Government intervention in British Rail wage negotiations.
The issue is important because the House was informed in a parliamentary reply by the Secretary of State for Transport to my hon. Friends the Members for Tyne Bridge (Mr. Cowans) and for Sunderland, South (Mr. Bagier), inquiring into his involvement in such discussions:
"Wage levels in British Rail are for negotiation between the British Railways Board and the unions. The chairman of British Rail naturally keeps me informed."—[Official Report, 9 April 1984; Vol. 58 c. 27.]
Today's published correspondence, dated from 2 April, makes it clear that the Secretary of State and his Department, together with other Ministers, were, both before and after the parliamentary reply, involved in delaying the settlement of the wage negotiations and increasing the final offer. The Secretary of State misled the House about his involvement and the House should be given an opportunity to debate the issue and pass judgment upon his actions.
The issue is of great urgency in view of the clearly exposed Government strategy to instruct settlements in the rail industry and other public sector industries in order to prevent further industrial disputes while they continue their vendetta against the miners and their families, despite repeated denials by the Prime Minister that she does not want to see any further role for Government intervention.
This House has a right to pass judgment upon the Government's pretence of no intervention in public sector wage negotiations, while directing nationalised industry chairmen to carry out the Government's vindictive and arbitrary public sector wage policy.
Mr. Speaker: The hon. Gentleman asked leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"The Government's role in the recent British Rail wage negotiations."
I listened with great care to what the hon. Gentleman said, but I regret that I do not consider the matter that he has raised to be appropriate for discussion under Standing Order No. 10, and, therefore, I cannot submit his application to the House.
The hon. Gentleman will know that there are other ways to raise these matters.

Rural Development
3.52 pm
Mr. Archy Kirkwood: I beg to move,
That leave be given to bring in a Bill to establish a Rural Development Agency with appropriate powers to sustain rural population by encouraging small scale agriculture in less favoured areas; by co-ordinating an integrated public rural transport system by land, sea and air; by sponsorship and development of small craft and other enterprise including retail outlets and post offices; by providing housing in rural areas for lease or sale by direct build or joint venture providing appropriate housing stock for all age groups; by sponsoring tourism; by promoting village venture schemes; and by providing support measures for rural schools; and for connected purposes.
In introducing the Bill, I start from the position that the Government have a responsibility to maintain basic standards in the fabric of social and economic life throughout the whole country. Of course, resources are finite, and I accept that. Of course, urban decay and economic decline should be given due priority when committing scarce resources to alleviating the grinding poverty and distress that are evident in some of our major and great cities.
There are signs, which are clear for all to see, that rural parts of Britain require co-ordinated and concentrated attention if future problems of rural deprivation are to be avoided. The needs of rural areas may differ in scale and in their nature; they may not always require only hard cash, as often advice and support are as important as grants and loans. However, the needs of the country areas are as great as those identified in the urban and industrial centres.
The need for action now is great, and it has been made greater by a series of fairly recent changes. The European Community is in the process of reforming elements of the common agricultural policy. Whatever our view about the merits of the changes and the method of their introduction, they will bring in their train acute problems for some sectors of the agricultural and related industries. The structural changes in the CAP, if they continue, will make economic life for the smallholder and small-time farmer on marginal land almost impossible.
Also in the European context, we have seen the way in which the British Government's restrictive monetary policies inhibit the full potential of the regional and social funds that are available from the EEC. Much more support for rural areas could have been provided.
In the United Kingdom, the Government are undertaking a review of regional development assistance. Interpreting the signs—they are evident for all to see—there is reason to believe that the areas covered by development status will be curtailed and the amount of money available reduced. In the past, local authorities have been able to allow a measure of direct or indirect support—for example, by maintaining village halls and supporting community and parish councils—but they are being obliged to withdraw that support because the Government have reduced their financial ability to give it.
The same applies to other aspects of country life, including transport. Operators such as Eastern Scottish, in my constituency in the Borders of Scotland, are demanding ever-higher subsidies to maintain fare stage trunk route services. The Post Office is attempting to rationalise its services and is thereby putting its smaller retail outlets under increasing financial pressure. Tourist
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authorities which see the potential of developing the industry in remote areas do not have enough capital to assist appropriate tourist schemes.
For all those reasons, the need for development in rural areas should be faced squarely and urgently. The evidence of decline is there for all to see. The results of the 1981 census show, across the board, a continuing drift from the landward areas into the towns. As the population falls, services are withdrawn. It is an endless spiral which we ignore at our peril.
I noticed with interest the announcement two days ago by the Development Commission for Rural England to set up a number of rural development areas in England. I warmly welcome that development and will watch with close interest the five to 10 year programmes to be implemented in selected areas.
The Government will no doubt say that that announcement, affecting England, fits the bill and that there is no need for a United Kingdom policy on development in rural areas. They will argue, for example, that the Council for Small Industries in Rural Areas, the Development Commission for England, the Scottish Development Agency and the Highland and Islands Development Board already have the necessary powers to achieve the ends set out in the long title of my Bill.
I beg to differ, and so do at least two of my local authorities, the regional authority in the Borders and Berwickshire district council. We take the view that large gaps still exist. Indeed, the work done by the boards, councils and development agencies to which I have referred is commendable, but anyone who pays heed to the powerful and constructive case argued by such influential bodies as Rural Voice in England and Rural Forum in Scotland recognises that major gaps still exist in the provision tnat could, and should, be made in rural areas.
Any meaningful attempt to tackle the problem must be adequately backed by the Department of Trade and Industry via a properly constituted and funded development agency. My Bill seeks to set up such an United Kingdom agency to bridge the gaps that I have identified. It need not require vast sums of money. Indeed, it need not make a significant impact on the volume of public expenditure. It could even be phased in by setting up the agency and charging it with the responsibility of undertaking a series of pilot schemes in different villages and localities to see what could be achieved before the decision to scale up the amount of funds required was eventually taken.
Imaginative and practical steps are necessary now if we are to preserve the best of our rural way of life and stem the slide towards depopulation and deprivation. The Bill offers an opportunity to take a positive step in that direction, and on that basis I commend it to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Archy Kirkwood, Mr. Paddy Ashdown, Mr. A. J. Beith, Mr. Malcolm Bruce, Mr. Geraint Howells, Mr. Simon Hughes, Mr. David Penhaligon and Mr. James Wallace.

Rural Development
  RURAL DEVELOPMENT
  Mr. Archy Kirkwood accordingly presented a Bill to establish a Rural -Development Agency with appropriate powers to sustain rural population by encouraging small scale agriculture in less favoured areas; by co-ordinating an integrated public rural transport system by land, sea and air; by sponsorship and development of small craft and other enterprise including retail outlets and post offices; by providing housing in rural areas for lease or sale by direct build or joint venture providing appropriate housing stock for all age groups; by sponsoring tourism; by promoting village venture schemes; and by providing support measures for rural schools; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 6 July and to be printed. [Bill 188.]
Orders of the Day
  Agricultural Holdings Bill [Lords]
  As amended (in the Standing Committee), considered.
  Agricultural Holdings Bill [Lords]
    New Clause 1

      SALE OF SMALLHOLDINGS (MINISTER'S POWER OF VETO)
      'After section 49(4) of the Agriculture Act 1970 add—
      "(5) A smallholdings authority shall exercise the power under section 165 of the Local Government Act 1933 (section 123 (disposal of land by principal councils) of the Local Government Act 1972) subject to an absolute power of veto by the Minister".'.—[Mr. Geraint Howells.]
      Brought up, and read the First time.
      4.1 pm
      Mr. Geraint Howells: I beg to move, That the clause be read a Second time.
      Mr. Speaker: With this it will be convenient to discuss new clause 3—Sale of smallholdings—
      'No land held by a smallholding authority for the purpose of smallholdings shall be sold by the authority unless the Minister of Agriculture, Fisheries and Food, (or the Secretary of State for Wales in the case of Wales) is satisfied after affording opportunity to all persons interested to make representations and objections in relation thereto that the land is not required for the purpose of smallholdings and lays an order to that effect, such order to be subject to approval by resolution of both Houses of Parliament.'.
      Mr. Howells: The main and avowed aim of the Bill is to ease the strictures on the agriculture industry, which have been caused by the long-term effects of the three-generation succession rules.
      Paying major attention to the nature of the agricultural base will mean more farms to let being on the market. All interested groups believe that young, aspiring farmers should have the opportunity to set up on a farm, even if they cannot afford to buy it.
      County council smallholdings were set up by statute to provide moderate parcels of land for letting to new entrants to the industry. The opportunity to acquire such a letting is still regarded as significant by interested bodies. Smallholdings were only ever intended to be the first rung on the ladder, leading in time to a larger tenancy so that another tenant could take over the holding.
      A Liberal Government originally introduced this form of holding by the Small Holdings and Allotments Act 1907. At that time, the President of the Board of Agriculture and Fisheries was Earl Carrington, who said, in opening the debate, that there was nothing new in the Bill, and nothing radical or revolutionary. The Liberal party was merely trying to restore to the agricultural labourer some of the conditions under which he lived in the earlier part of the last century.
      I hope that I shall not be accused of wanting to see our modern industry stuck in the furrows of the previous century, but the farming community well appreciates how important it is to preserve something of traditional rural life.
      There are approximately 7,000 county council smallholdings in Britain. These have frequently been occupied by a tenant for his entire life, which defeats their purpose. Some statutory smallholdings have formulated a

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      policy of selling off, making no provisions for the purchasers to hold or let the land in the same way as before. Thus, the national stock of smallholdings has been reduced, which is deplored by everyone who has at heart the interests of young farmers.
      It is possible that the Bill will encourage more lettings and, therefore, the young entrants will have somewhere to move on to after a few years on a smallholding. As policy decisions abound, sales have varied from one area to another. There is general concern among the tenants of such holdings about their security. Whenever a holding is sold and is not let in the same way, another viable space for a family goes and the balance of country life is affected.
      Decreasing numbers in the countryside are reflected in local communities, as jobs and local services are lost. The new clause is needed to restore to the Minister the power of veto over such sales. I hope he will accept that encouragement is necessary to county councils so that they will appreciate how important the lettings are.
      Two authorities, to my knowledge, have decided to dispose of all smallholdings—Derbyshire and Somerset. Derbyshire made the decision long ago and Somerset will sell to sitting tenants before disposing of the holding on the open market. However, many county councils which retain land and manage it in a responsible manner get a proper economic return for their investment. For example, Essex county council tries to match sales with purchases, but it also consolidates holdings to make larger and more viable units. The danger of consolidation is that if the holdings decrease, so do the opportunities for new entrants. I urge every county council not to merge holdings. It is better to have two part-time farmers, as such a policy will stem depopulation.
      The purpose of providing the Minister with the power to veto sales is to ensure that councils dispose of smallholdings only if it is essential and the purchasers manage the land in such a way that the same number of tenants are able to rent and farm the land. For that reason, I also support new clause 3.
      To sum up, there are 7,000 smallholders in this country. If all the county councils took the same attitude as Derbyshire and Somerset, it would be a very sad day. By allocating these smallholdings we must also remember that they must make a living. That is the purpose of the exercise. We shall later be debating milk quotas, which affect smallholders. I hope that the Minister, in his wisdom, will make sure that they are compensated for their loss of business.
      I have mentioned that Derbyshire and Somerset are selling their smallholdings. I am sure that other councils are selling. Coming to my own county council of Dyfed, it has perhaps shown a unique example in the lead given in Wales. I received a letter from the council, which said:
      "I understand that you require some information regarding county farms within Dyfed and I list below some facts and figures which may be of use to you."
      For information, the letter continued:
      "Acreage of land held within Dyfed as county farms: 9,200 Number of tenants: 144."
      The following part is important:
      "Number of farms sold within the past 10 years: Nil
      Number of farms acquired within the past 10 years:4
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      Operating surplus for the year 1983–84: £63,900
      Repairs and maintenance 1983–84: £65,000
      Capital maintenance: £50,000.
      Our present policy is that as larger farms within the county become vacant, either by death or retirement, they are offered to our tenants on the smaller start units—these are usually in the region of 10 to 20 acres—and then these starter units are advertised externally.
      Within the past year we have also acquired 300 acres made up of 28 blocks of bare land from the Welsh Church Estate with a long-term aim of putting some of the blocks of land together to form new starter units.
      I am not aware that any other County in Wales has had a definite policy to sell their County Farm Estate but here in Dyfed we have a very definite policy to acquire more farms as and when finance becomes available."
      That, I am pleased to say, is the progressive attitude taken by Dyfed county council towards acquiring more land. We owe a great deal to the county council for its lead in Wales. If only young farmers in other parts of the country had such a future! Dyfed county council is looking after the interests of its tenant farmers much better than are some of its counterparts in England.
      Therefore, it gives me great pleasure to propose new clause 1.
      Mr. Ken Weetch: I should like to speak to new clause 3.
      One of the central purposes of the Bill is to find ways to halt the decline of tenant farming in Britain. That it is in decline is not disputed on any side, although the causes of the deterioration will be in dispute before the debate has run its course. For the tenant farmer in Britain, decline there has been and decline there will continue to be unless steps are taken to alter the serious situation.
      In principle, the Minister and his Department should step right into the middle of the problem and do something to halt the decline. I am arguing the case for new clause 3 in that context. It centres around one of the areas of farming tenancy which, over the years, has been in decline — the numbers of and acreage of land held as smallholdings. In simple terms, the new clause reflects the fact that unless something is done quickly the deterioration in numbers and in the extent of smallholding will continue, and make tenant farming more parlous than it is now.
      It is well that I remind the House of the background to the smallholdings problem. Although the major piece of current legislation governing smallholdings is the Agriculture Act 1970, with particular reference to part III, smallholding legislation has a long history. It dates back to the Small Holdings Act 1892, which empowered county councils to create smallholdings where land existed and could be acquired for that purpose. That legislation was given impetus after the first world war and also during the inter-war period, when county councils were urged to acquire land to combat social depression.
      In the post-war period, the White Paper of 1946 set out the objectives for advance. I come now to an important point. The Agriculture Act 1947, which followed the White Paper, stated that for many people, including agricultural workers, smallholdings could provide the first rung of the ladder into farming. That is an extremely important statement of principle. Many people still see it in that way.
      For smallholdings, the emphasis was altered by the inquiry of the Wise committee in 1966 to the effect that smallholdings were to provide a gateway into farming. Those considerations remain of critical importance. At a

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      time when tenant farming is under pressure from all sorts of directions, smallholding, as a start into farming, is as fundamentaly important as ever.
      4.15 pm
      We now come to the crux of new clause 3. It does not take long to realise that official policy and what is happening in practice diverge considerably. While most people in high places pay tribute to smallholdings as a prop of tenant farming, no one is doing very much to prevent its decline.
      I wish to present enough statistics to make a case. I am always hesitant about using statistical argument because if one uses too much one is accused of deluging people with figures, but if one uses too little one is accused of being partial, so I wish to be critically selective. First, I shall give a definition. I am talking chiefly about local authority smallholdings, but I am aware that other smallholdings come directly under the Minister and are part of the Land Settlement Association estates. I shall take the local authority figures as the most significant for outlining the main problems. I take my statistics from Government sources—the annual return of statistics for smallholdings — and from statistics presented by the Society of County Treasurers.
      I wish to draw these conclusions from that body of statistical knowledge. First, from 1966 until the present day, the total number of smallholdings has declined from 12,882 to 6,959, a reduction of 46 per cent. Those figures are for England alone, but I assure the House that the trend is representative. To be fair, the figures cover the disposal of smallholdings and amalgamation, so one has to discern the strict cause of the reduction. However, the net result is still the same—the number of smallholdings is in decline.
      Secondly, if the Minister examines the statistical evidence over that period, both in terms of actual area of smallholdings and the number of smallholds, he will find a continual decline. That, to say the least, is worrying and needs to be halted. Let me bring the Minister up to date. The latest figures of which I have had sight are those for 1982–83. During that year, 1,300 hectares were disposed of in English counties, and only 126 acquired for smallholding development. That represents a very considerable haemorrhage in smallholding acreage.
      I am sorry to say that East Anglia was the worst culprit in that respect. I make a direct appeal to the Minister of State, who is an East Anglian Member of Parliament. Indeed, he represents Norfolk, South. Norfolk is the worst culprit in the whole country. I wonder what the council is doing up there. I shall stop wondering, and tell the House what it has been doing. In 1982–83, of the 1,300 units disposed of, nearly 800 came from Cambridgeshire, Norfolk and Suffolk. Their disposal amounted to 60 per cent. of the total.
      Norfolk county council, which has not been backward in coming forward with disposals, is in the area where the Minister of State does a lot of his rounds. I wonder whether the Minister has been to Norfolk to ask the council what it is doing, and whether it realises that it is striking a body blow to East Anglia and the smallholding industry. I appeal to the Minister again. Formerly, he was responsible for small businesses. Smallholdings on the land are one of the most valuable areas of small business. Will he respond to that when he winds up?
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      I should like to make two comments about the figures. First, the disposal has occurred despite official warnings and clear expressions of the danger by distinguished witnesses. The Northfield report stated, among other things, that there was no case for dismantling smallholding estates on cost grounds, and that local authorities should pursue energetic management plans for their smallholding estates. Local authorities have been energetic in coming forward, selling and disposing of smallholding estates without any thought of the serious consequences for smallholding development. The activities of some of them, especially those I mentioned in East Anglia, have been deplorable.
      The Northfield report said in unmistakable terms:
      "The national smallholdings estate is a large and valuable asset … it is an important part of the let sector."
      The report made it clear that smallholdings should not be disposed of, especially not in response to immediate financial pressures.
      The leading article in The Times of 28 February pointed out that statutory smallholdings of county councils form less than 1 per cent. of all farmland, but account for 15 per cent. of all new tenancies. It said:
      "The present financial pressures on county councils are now making these estimates for the first time subject to serious erosion … So, while the Government professes to be seriously concerned to reinforce the agricultural tenancy system, it is happy to stand by and watch the breakup of publicly owned estates of smallholdings wherever this generation of councillors prefers to convert those assets into higher-yielding investments."
      That brings me back to the Norfolk county council.
      New clause 3 aims to halt the decline. In principle it provides that the Minister and his Department must become actively involved if the rot is to be stopped. It states that no land held by a smallholding authority shall be sold unless it can clearly be demonstrated that it is not required for smallholdings. As part of that, there must be opportunities for representations and objections to be made. Even when the Minister is satisfied after the procedure has taken place, he must bring the proposals before the House to be debated.
      If the Minister has a better idea about how to stop the precipitous decline in smallholdings, we shall be pleased to listen to it. However, he must take on board the fact that things cannot continue as they are. The House and the entire farming community are anxious to hear his proposals to remedy what everyone agrees is a serious and deteriorating position.
      Sir Peter Mills: I welcome this chance to speak to the new clause. I understand the spirit and sentiment behind it. All hon.. Members wish to see young farmers have the chance to start a farm—to put their feet on the first rung of the ladder. About 40 years ago I started with 29 acres, and I know the thrill and pleasure of beginning to farm a small acreage. It is tough and hard going, but I seized the opportunity, as most people would, even today, despite the troubles and difficulties in agriculture.
      Some aspects, however, worry me. First, I doubt whether in practice smallholdings provide a stepping stone and a way upwards. Although I had such an opportunity 40 years ago, I doubt whether that is possible today. In practice it has not provided a stepping stone, but produced many small farmers who have stayed put. They have had to purchase further land and amalgamate it with their smallholding to make it a viable proposition. The hon.

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      Member for Ceredigion and Pembroke, North (Mr. Howells) moved the new clause well, but he knows how difficult it is to make a small acreage viable.
      I do not have the figures for this, but it would be interesting to know how many small farmers leave these smallholdings. Perhaps the Minister could tell us the turnover rate. I would have thought that it was small. There is a complete blockage of vacancies for smallholdings.
      I do not agree with hon. Members who say that the reduction in smallholdings is due to a deliberate policy. The economic position forces out smallholders and enforces amalgamations.
      Other ways must be found to allow new entrants into the fanning communities. The Government seek to provide them through this legislation. We want fixed terms of tenancies so that a young person can start and after 10 or 15 years become established. That would be one way forward. However, we must look still further. The Government have done much work regarding taxation and the easing of the landlord's position in the interests of the tenant, but further measures must be taken and changes in taxation made so that landlords feel more able and freer to allow more young people to enter the industry.
      The Opposition will do nothing to help the small fanner if they seek to upturn this legislation. If they talk about land nationalisation and wealth taxes, they will nail down the coffin of the small farmer more firmly.
      Mr. Weetch indicated dissent.
      Sir Peter Mills: The hon. Member need not shake his head, because he knows that what I say is true. Land nationalisation, wealth tax and the rating of agricultural land will do nothing to help smallholders and farmers. I hope that the Opposition will make it clear that they do not intend to do that.
      Finally, democratically elected local councils or authorities should decide on these matters. Most of them will take the matter seriously, and they should decide what to do. The Minister should not deal with the matter. He may give guidance, but the local people—they are the ratepayers—should have the final say.[Interruption.] The hon. Member for Ipswich (Mr. Weetch) must contain himself. I thought that he might express that view. In this instance, Whitehall does not know best. The local people should decide whether or not to continue with smallholdings.
      For those reasons I cannot support the hon. Member for Ipswich and new clause 3. I hope that the House and farmers, particularly the smaller ones, will be aware that Socialist policy is to put the whole matter firmly into reverse.
      4.30 pm
      Mr. Gerald Bermingham: I listened—if I may put it gently—with some amusement to the speech of the hon. Member for Torridge and Devon, West (Sir. P. Mills). If one were to take away the party political broadcast, the kernel showed some positive ideas about land and landholding.
      Mr. Deputy Speaker, you are aware that new clause 2 is not to be moved. It dealt with other issues and the way in which agricultural lettings could be made. While not seeking to challenge your ruling, Mr. Deputy Speaker, on
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      the provisional selection of amendments or seeking to trespass on matters outside the debate, it is all part of the same question as to what form future lettings will take if we are to encourage lettings of land to enable people to start in the industry.
      Smallholdings form an essential part of the lettings ladder. One would like to see more encouragement given. It will not be good enough for the Minister to say, "Well, of course, it is up to each local authority to do its own thing." We must be definitive in our policy. We are not talking about land nationalisation. We are talking about how to create tenancies, because the House seeks to encourage tenancies. There has been a continuing decrease in the number of tenancies over the past 10 to 20 years.
      If we are to help agriculture to progress, we must encourage the creation of tenancies, and smallholdings form a part. I said that I would not trespass beyond the scope of the debate on smallholdings into fixed-term tenancies and other such matters, but I believe that my views are well known and I do not depart from them one inch.
      Unless the sale of smallholdings is stopped, and unless active steps are taken to encourage local authorities, and other bodies that hold vast areas of land, to create smallholdings which can be let to young tenant farmers as a stepping stone to a farming career, the tenanted sector must, of course, suffer. There is no dispute that the number of tenanted farms becoming available has decreased, and there is great competition for the tenancy of those which become available.
      If a person has had the education and experience of a smallholding it will give the landlord added security when letting to him. In other words, the chain is there. It starts with a smallholding. Unless the Government take active steps, the chain is about to wither and die. The Government's approach is ostrich-like and in Norfolk the approach is even more ostrich-like. The county councils say, "We will get shot of these things. They are money in hand. We can use the money elsewhere." During the past five years local authorities have been subject to reductions in rate support grant and various other pressures, and there has been a philosophy in favour of knocking down local government spending. Money is therefore sought, from the sale of land, smallholdings or other sources. Consequently, the number of smallholdings has decreased.
      I applaud the positive and forward-looking policy of Dyfed. That is worth saying, although it is not my part of the world.
      I hope that the Minister will admit that the Government, his Department and even he himself have had their heads in the sand and that the time has come to take their heads out of the sand. If we are to maintain the tenanted sector, we must maintain smallholdings. Unless the Government actively encourage and help us in that respect, I fear that by the end of the decade there will be few smallholdings left and the country and farming will be that much poorer.
      Sir Paul Hawkins: I support new clauses 1 and 3, despite the unkind and somewhat rude remarks about Norfolk by the hon. Member for Ipswich (Mr. Weech). I was on the smallholdings committee of Norfolk county council for 20 years, when I believe that we looked after smallholdings extremely

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      well. I do not believe that Norfolk county council cares about smallholdings in the country at present. I am sad about that.
      The Bill is all about having more tenants on the land. I say to my hon. Friend for Torridge and Devon, West (Sir P. Mills) that if we are to have more tenants on the land and create a ladder, for heaven's sake do not cut away the bottom rungs. That sounds idiotic. I say to the Ministers, for heaven's sake look at this. What is the point of them and the Treasury trying to create more smallholdings if they stop people starting and stop fresh blood coming into the industry?
      Many agricultural areas are becoming incestuous. Some 30 or 40 years ago, the situation was such that families could purchase land, but new people cannot now come into agriculture by means of purchasing land. We know that the area of let land is declining and therefore we must try to maintain the smallholders on the land, because in my area they are viable. They make a reasonably good living. Admittedly one must put together two or three smallholdings to make a viable unit, which is why we are losing many tenants. We must keep those who are there if we intend to have more tenants and create a ladder.
      Everyone thinks of Norfolk farms as huge, but they are not. There are hundreds of smallholdings. Norfolk had the most county council smallholdings until Cambridgeshire and the Isle of Ely were amalgamated. I am proud of the smallholders. Many of them live within half a mile of my home. I know them and they are fine men. They bring up good families and they are a credit to the nation and to the district. They are people whom we should encourage. We must keep them on where they are viable, and we want the new blood to be part of the ladder.
      Sir Peter Mills: I am not saying that one should do away with county council smallholdings. The new clause lays down who should decide on their sale, and that is where we disagree. I do not believe that Ministers should decide. County councils should decide. I am not against smallholdings. Hon. Members have it wrong.
      Sir Paul Hawkins: If my hon. Friend lived in my county, where the county council has decided to sell all the smallholdings that can be sold, what would he do? I feel strongly about this. It is a totally wrong decision of the county council. If my hon. Friend the Minister cannot reconsider some of these cases, where will the decline in smallholdings be stopped? That is my main point.
      Mr. Geraint Howells: If, in years past, the Minister of Agriculture, Fisheries and Food had had the right of veto, does the hon. Gentleman agree that there would be many more small holdings in his area today?
      Sir Paul Hawkins: The Minister had that right, and it was given up. He should still have that right, and that is what I want. With due respect to the hon. Gentleman, I like new clause 3 better than new clause 1, because it is stronger.
      It is very short sighted of county councils to sell smallholding estates which can never be replaced at today's prices. Those smallholdings were bought through thrift, enterprise and courage, and estates were built up. Now they are to be sold, but what for? It may be for a bypass or a school. Such things are very important. There are many bypasses in my constituency and we will want new schools. The money for the schools and the bypasses will come, but that land will never be available again.
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      I urge my right hon. and hon. Friends on the Front Bench to reconsider the matter. It is of great importance to hundreds of families, who feel that their livelihood and the livelihood of their sons is endangered by the policy of county councils. In Norfolk, county councillors are no longer rural-minded; they do not care about these tenants. Naturally they have to remember the other services which they provide in the county but they are being shortsighted, because this land, once it is sold, will never be regained.
      Mr. Robert Maclennan: I want to address just one point that was raised by the hon. Member for Torridge and Devon, West (Sir P. Mills) as to where the decision should lie with regard to the policy of abandoning county council smallholdings. His argument that it should be decided by local option might have been appropriate even five years ago when local authorities had an option as to how to spend their resources and when central Government were not putting upon local authorities the kind of pressures that have resulted in county councils looking for ways of easing financial burdens not of their own making.
      In the current climate, for which the Minister's Government are responsible, local authorities will sacrifice the interests of minority groups. They will sacrifice the interests of smallholders who, even when holdings were quite extensive, still constituted in many areas a minority of those engaged in agriculture and a still smaller minority of ratepayers. The voice of these people is not strong enough to resist the pressures that are being put upon them. The hon. Member for Norfolk, South-West (Sir P. Hawkins), who speaks with long experience of agriculture and of local government, is right to recognise the reality that these local authority holdings will disappear.
      Mr. Jim Spicer: Can the hon. Member give specific instances in the west country—in Devon and Dorset, for example—where the county councils have exercised their right and are keeping their smallholdings because they know what is right for the county? Those councils are not getting rid of them. County councils speak for the ratepayers in the county. They have exercised their right in Devon and Dorset. Why should the county council in Norfolk not do so as well?
      Mr. Maclennan: My hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells) drew attention to what has happened in Somerset, where councils have succumbed to pressure from central Government and are disposing of county council holdings. No doubt that practice will be followed by others unless it is made clear by central Government that this is regarded as an undesirable development and that the smallholders must be protected from these pressures. Once the pressures have been succumbed to, it will be very difficult to reestablish the holdings.
      I hope Conservative Members will listen to the wise words of the hon. Member for Norfolk, South-West, who has more direct experience of this aspect of agriculture than, I venture to suggest, any of his hon. Friends who are in the Chamber.
      4.45 pm
      Mr. Robert Hughes: The hon. Member for Torridge and Devon, West (Sir P. Mills) is an assiduous and very loyal Back Bencher who takes part

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      in nearly all agriculture debates. I have come to recognise when he has a very weak case because he almost always proceeds at least to attempt to pour scorn on the policies of Her Majesty's loyal Opposition. I shall deal in later debates with some of his remarks. I am not in the least abashed by his strictures on me. Every time he draws the attention of the House to the policies of the Opposition he greatly heartens me and gives me confidence because by his constant reiteration he shows supreme confidence that we will be the next Government. I am more than grateful to him.
      I welcome the support of the hon. Member for Norfolk, South-West (Sir P. Hawkins) for the proposition that smallholdings should not be sold by county councils. We can discuss whether new clause 3 is better than new clause 1 when the Minister replies. The hon. Member got it absolutely right: the ostensible purpose of the Bill is to increase the size of the tenanted sector. There is not very much that the Government can do directly about the privately owned sector. Influences can be brought to bear indirectly on the private sector to do much more to let land. We can act directly in regard to county council smallholdings. We can take measures to protect and possibly to increase the size of the tenanted sector.
      My hon. Friend the Member for Ipswich (Mr. Weetch) pointed out, when speaking to new clause 3, that the number of county council smallholdings is not increasing. In the main, the trend is in the opposite direction. It is no use flying in the face of facts. Certain local authorities, because they are suffering from pressures of finance, but also because they share the Government's ideological passion for privatisation, are disposing of smallholdings. For them to do so is extemely shortsighted and damaging to farming in general and to the tenanted sector in particular.
      I do not want to be diverted down the road of a long discussion about local democracy, but it is the height of impudence for Government Back Benchers to plead that the Minister should have nothing to do with controlling the affairs of county councils and that local ratepayers should decide. They say that local ratepayers know best and that how the smallholdings should be dealt with is a matter for local autonomy, yet recently they were helping to push through legislation under which the Secretary of State for the Environment will determine rates and which will abolish the GLC and the metropolitan counties. Where is the consistency of the argument about local autonomy and democracy? I shall certainly not accept strictures from the Government Benches about the rights of local people to determine policy in the light of their circumstances, although I passionately believe in the argument.
      The hon. Members for Norfolk, South-West and for Torridge and Devon, West talked about the importance of smallholdings as being the bottom rung of the ladder from which people progress. I accept that things probably have changed in the 40 years since the hon. Member for Torridge and Devon, West began his career.
      On Second Reading I expressed my doubts about whether people who began with a smallholding moved to bigger and better things, but there is some validity in the argument. Lord Belstead said that few people moved up the ladder and that probably only about 14 tenants a year moved on. The fault lies not with the county councils, but with those responsible for the upper rungs of the ladder.
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      Land is not being made available for tenants. It is daft to argue about the difficulties of climbing up the rungs of the ladder and then to cut off the bottom rungs and do nothing about the gaps in the middle. County council smallholdings provide a start. The Minister should encourage their provision.
      The amount of land available could be increased. For example, the Durham county council took a decision in 1978 to enlarge the size of its estates. In 1974 it owned 4,678 acres. Today it owns 6,070 acres. They are not large parcels of land but the council's ownership of such land has increased by 50 per cent. Mr. John Cook of the County Land Agent and Valuer said that that had been achieved not by an open cheque policy, but by careful financial management. It can be done.
      The case for county council smallholdings is overwhelming. It is supported in many areas. It is a cross-party issue. I hope that the Minister will take on board our case and the powerful argument by his hon. Friends. I hope that he will accept either new clause 1 or new clause 3. I believe that our new clause 3 is the better. If the Minister is not prepared even to accept that, I hope that he will give a clear undertaking that he will have discussions with the Secretary of State for the Environment and decide to stop the pressure on county councils and other local authorities which are being compelled for reasons of mistaken financial judgment to dispose of smallholdings.
      The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor): The issue was discussed at length in another place. It causes emotion and involves genuine differences of view on all sides. I can say to the hon. Member for Ipswich (Mr. Weetch) that I have been much involved in discussions in Norfolk. I am not a member of the county council, but I take a great interest in agriculture and in my local community. My hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) and I have had many debates on the issue in the years that I have been in the House.
      The new clauses suggest that central Government in general, and the Minister of Agriculture, Fisheries and Food in particular, should intervene in the management of land by local authorities in their capacity as smallholding authorities. The suggestion is that Government should approve of sales before they occur.
      Freedom to retain or dispose of interests in land was granted to local authorities by the Secretary of State for the Environment in May 1979. I believe that it is right that local authorities should have as much freedom as possible in this matter. I shall try to explain why. To limit that freedom in the ways suggested in the new clauses would be retrograde and I shall urge the House to oppose them should they be put to the vote.
      I understand the spirit of the new clause suggested by the hon. Member for Ceredigion and Pembroke, North (Mr. Howells), but it could create many complexities. The hon. Gentleman will not be surprised to learn that the new clause is defective. I shall, therefore, concentrate upon new clause 3 because that is clearer in its intention.
      Leaving aside the questions of principle, on a purely practical note the latter part of the new clause creates a problem. It requires the Minister to bring before both Houses of Parliament every proposed sale of smallholding land. That would encumber proceedings in this and the other place in a way that I doubt has a parallel. We should

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      be burdened with unnecessary administration just when we are attempting to relieve the general public and the House of excessive interference by Government. I cannot believe that any of us wish the House to have to consider, for example, whether a smallholdings authority should be allowed to sell an acre or two of inconveniently situated land in order to rationalise the layout of its estates. The practical aspect is worth bringing to the attention of the House.
      I shall deal now with the more important questions of principle. Decisions about entire holdings or estates should be taken by those best placed to judge the situation—the local authorities. I am sure that in reaching decisions they will take full account of the interests of tenants and of agriculture as well as the public expenditure involved in the retention or disposal of smallholdings estates.
      When the hon. Member for Ceredigion and Pembroke, North described what was happening in Dyfed and elsewhere he demonstrated the variety of needs. The local authority should decide its local needs and take action accordingly. The hon. Gentleman explained his council's views, which I am sure are much the same as his own. The hon. Member for Aberdeen, North (Mr. Hughes) explained what has happened recently in Durham. I share the view expressed by my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) that it is right for the county councils to decide in the light of local circumstances.
      Mr. Geraint Howells: Perhaps the Minister will clarify the position. The hon. Member for Norfolk, South-West (Sir P. Hawkins) said that up to 20 years ago things were going well but that once elected councillors who had no interest in agriculture became involved things started to go the other way. I am worried because perhaps in years to come we may face the same problems in Wales and half our smallholdings will be sold.
      Mr. MacGregor: I disagree with that view about councillors in Norfolk and their attitude to agriculture. I shall explain why I think that it is appropriate for Norfolk county council to do what it is doing. Conditions throughout the country vary. Different councils have different views. They are entitled to those views and there is no reason why Dyfed should not proceed as it is.
      Mr. Thomas Torney: How can the Minister reconcile what he has just said about county councils knowing more than the Government about what should be done when his Government are about to abolish the county councils and put bureaucratic organisations in charge?
      Mr. MacGregor: We have debated that issue at length. The county councils who have responsibility for smallholdings are not to be abolished. I believe that decisions should be taken locally. If county council smallholdings were providing the first step on the farming ladder, we might be considering the matter differently in many counties. As several hon. Members have said, the original object of county council smallholdings was to provide the first rung on the ladder. That is what the hon. Member for Ceredigion and Pembroke, North called them, and the hon. Member for Ipswich described them as a gateway into farming. But I suggest that the tenant of a statutory smallholding is on the first rung of a very short ladder indeed.
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      5 pm
      My hon. Friend the Member for Torridge and Devon, West asked what the statistics were. Information provided by the smallholdings authorities suggests that very few tenants move to farms in the private sector. According to the statistics for the 10 years to 1981—during half of which time the Labour party was in power—only 14 tenants per year on average made such a move, out of approximately 7,000. Such smallholdings are not providing a gateway or a rung on the ladder.
      Mr. Bermingham: Does the Minister agree that the ability to move up the ladder depends upon the availability of tenanted farms for letting?
      Mr. MacGregor: I was going to deal with that point, which was also made by the lion. Member for Aberdeen, North (Mr. Hughes). The Bill that we are considering will help with the availability of tenanted farms for letting. However, the real difficulty is often the cost of capital—working capital in the case of tenanted farming, or general capital in the case of owner-occupied farms—because of the current heavy costs of farming viable farms. We must recognise the existence of that problem, which makes it extremely difficult to enable people to move up the ladder.
      The county council smallholdings are not achieving their original objective.
      Sir Paul Hawkins: My hon. Friend is ignoring what I have been saying. A Bill is now under consideration which is intended to create more tenants. If there are to be more tenants on the middle and upper rungs, one must retain the botton rungs so that there will be people to move up. It is no use giving the statistics for the past 10 years. We must look forward. With the farming community and the National Farmers Union, we must look to the future. The Bill is intended to provide for the future, not for the past 10 years. There will now be rungs for people to step on to. I hope that my hon. Friend will bear that in mind.
      Mr. MacGregor: I had intended to refer to my hon. Friend's speech. My next notes cover his point about fresh blood.
      In terms of people moving into tenancies in the private sector—and by that I do not mean smallholdings which have moved over into the private sector—the problem that we have to identify is different. Among many other factors, there is the problem of the costs of moving in. We discussed that problem at some length in Committee and to some extent on Second Reading. My hon. Friend the Member for Norfolk, South-West made a valuable Second Reading speech on that point. He referred to the problems of bringing fresh blood into farming. That is an important problem and it is not easy to solve. Simply denying to county councils which wish to make changes in their county council smallholdings arrangements the right to do so will not make the broad situation in relation to new tenancies any easier. The two matters are not as closely linked as my hon. Friend believes. My hon. Friend and I have discussed these issues on many occasions. I do not wish to provoke him further. However, as I have moved about the country during the past 10 years I have noted that the new patterns of farming which are being developed are bringing in much fresh blood. I am thinking not least of the institutions. I have met a number of good farm

      329
      managers who do not have a family background in farming and who have come into farming by that route. The problem is much wider than my hon. Friend suggests.
      With regard to the county council smallholdings, the hon. Member for Ceredigion and Pembroke, North asked me about security of tenure. That is another important point, especially in relation to what has recently been happening with the Norfolk county council. The sale of smallholdings has no detrimental effect on the position of the tenants. Until the Bill is passed, we are talking about tenants who are currently in county council smallholdings. They remain protected by the agricultural smallholdings legislation, irrespective of who the landlord is. Indeed, sitting tenants would be significantly better off after sale, because they would stand to gain security of tenure for three generations, which is not generally the case for smallholding tenants. In the case of the big changes that have taken place in respect of the Norfolk county council and the sale to the institution to which the hon. Member for Ipswich referred, the proceeds will of course pass to Norfolk county council but the position of the tenants will not be affected. The tenants will continue to operate their smallholdings, with greater security of tenure. They have, indeed, ceased to oppose the sale.
      The local authorities have various choices.
      Mr. Robert Hughes: Is the Minister of State saying that if a smallholding is sold to someone else and the tenant remains on it that tenant will now have succession, which he did not have before?
      Mr. MacGregor: Yes, because it will be an existing tenancy which will be passed on. Those people will have protection.
      The county councils must consider the alternatives. We have already learnt that many of them will continue to hold on to their smallholdings or even to try to expand the size of their holdings, but there are other possibilities, which are all legitimate. First, it is sometimes necessary to amalgamate smallholdings in order to make them viable. My hon. Friends the Members for Torridge and Devon, West and for Norfolk, South-West made that point. Nowadays, a number of smallholders have other jobs and regard their smallholdings as providing supplementary part-time earnings.
      Secondly, in many cases, a smallholdings authority, exercising its own commercial judgment, may decide to rationalise its management by selling some of its land and using the proceeds from that sale to maintain and improve buildings and equipment on remaining holdings in order to promote greater efficiency. That is a legitimate choice available to some counties.
      Thirdly, a county council's priorities for the use of its resources may change. Norfolk county council provides a good illustration. Currently, it is disposing of about 1,000 acres out of a smallholding estate of 27,000 acres. The problem facing that county council is that the county is now quite different from what it was when smallholdings were first introduced. The population is now growing fast.
      As the hon. Member for Ipswich said, I have an interest in small businesses. There are thousands of viable non-agricultural small businesses in Norfolk. Many of them are very new. They contribute substantially to employment prospects and to the county's resources. I agree with my hon. Friend the Member for Norfolk, South-West that the
      330
      smallholders are fine people, but the people in other small businesses share the same qualities. Employment in the county is now being provided in a variety of ways, and county council activity has many new channels.
      In the earlier years of the century, when the county council smallholding proposals were put forward, Norfolk was very much a rural area. Taxpayers' and ratepayers' money at that time could legitimately be used to improve the economic viability of the county by improving employment prospects in agriculture. The position is different now, and the question that county councils have to ask themselves—they will come to different views about it—is whether the substantial capital assets that have been built up in county council smallholdings for a small proportion of their populations should continue precisely in that way or whether, if they can do such a deal as they have done with the institution, preserving the position of the tenants, it is better to release those assets to be made available on a much wider scale for many more people. That is a legitimate question for the county councils to ask themselves, and I back them in what they have done.
      Mr. Maclennan: For the sake of clarification of what the hon. Gentleman is saying, will he confirm that he, as the Minister of State, Ministry of Agriculture, Fisheries and Food, is saying that it is appropriate for a county council to foster the disposal of agricultural land for other forms of development? That trend away from agricultural land to other forms of activity is becoming increasingly large scale, and it comes ill from the Minister to seem to be encouraging it.
      Mr. MacGregor: I am saying that county councils, quite rightly in terms of their overall responsibility, must look at the current needs and deployment of capital assets and the way that they can best be used for the community. In this case, those smallholdings remain as smallholdings. However, the county council now has other assets that it can deploy for the benefit of the wider community and many more people. The important point is that it comes back to the fact that there is a wide variety of circumstances, and therefore it must be right to leave it to the local authorities to decide. That is why I disagree with the new clauses.
      I agreed with my hon. Friends the Members for Devon, West and for Norfolk, South-West about the importance of finding other ways to help new entrants into the industry. I have been looking sympathetically at all our discussions on the Bill. There are difficulties in a number of proposals before us, as those hon. Members who were on the Committee will know. I hope that it will be possible to overcome some of the difficulties in consultation with all parts of the industry. However, I can give no commitment. I hope that if agreement can be reached and the snags can be overcome, we can return to this subject in Parliament at the appropriate time.
      These smallholdings have not been dealing with the problems of new entrants and the availability of a first rung on the ladder. I recognise that there are legitimate differences of view on this subject, but it is local authorities that can best and most accurately assess, after taking due account of all the implications, what the right decisions are. It is not part of central Government functions to attempt to second-guess the decisions of local

      331
      authorities in this respect. That is why I oppose the new clauses and I urge the House to oppose them as well if they are pressed to a vote.
      Mr. Geraint Howells: The Minister has tried his hardest to convince me that I am wrong in pressing for what these new clauses would provide, but he has failed. I am sure that he will agree that where there is a will there is a way. Therefore, I shall press new clause 1 to a vote, and I hope that hon. Members will support it.
      Question put,That the clause be read a Second time:—
      The House divided: Ayes 127, Noes 204.

      Division No. 348]

      [5.13 pm

      AYES

      Adams, Allen (Paisley N)

      John, Brynmor

      Anderson, Donald

      Jones, Barry (Alyn & Deeside)

      Archer, Rt Hon Peter

      Kaufman, Rt Hon Gerald

      Atkinson, N. (Tottenham)

      Kennedy, Charles

      Barnett, Guy

      Kinnock, Rt Hon Neil

      Beckett, Mrs Margaret

      Kirkwood, Archibald

      Beith, A. J.

      Lambie, David

      Bermingham, Gerald

      Lamond, James

      Blair, Anthony

      Leighton, Ronald

      Brown, Hugh D. (Provan)

      Lewis, Ron (Carlisle)

      Callaghan, Rt Hon J.

      Lewis, Terence (Worsley)

      Callaghan, Jim (Heyw'd & M)

      Litherland, Robert

      Campbell-Savours, Dale

      Loyden, Edward

      Clark, Dr David (S Shields)

      McKay, Allen (Penistone)

      Clay, Robert

      McKelvey, William

      Cocks, Rt Hon M. (Bristol S.)

      McTaggart, Robert

      Coleman, Donald

      McWilliam, John

      Concannon, Rt Hon J. D.

      Madden, Max

      Conlan, Bernard

      Maxton, John

      Cook, Robin F. (Livingston)

      Maynard, Miss Joan

      Corbett, Robin

      Meadowcroft, Michael

      Corbyn, Jeremy

      Michie, William

      Cowans, Harry

      Millan, Rt Hon Bruce

      Craigen, J. M.

      Miller, DrM. S. (E Kilbride)

      Crowther, Stan

      Mitchell, Austin (G't Grimsby)

      Cunliffe, Lawrence

      Morris, Rt Hon J. (Aberavon)

      Dalyell, Tarn

      Nellist, David

      Davis, Terry (B'ham, H'ge H'l)

      Orme, Rt Hon Stanley

      Deakins, Eric

      Parry, Robert

      Dixon, Donald

      Powell, Raymond (Ogmore)

      Dormand, Jack

      Prescott, John

      Douglas, Dick

      Radice, Giles

      Dubs, Alfred

      Randall, Stuart

      Dunwoody, Hon Mrs G.

      Richardson, Ms Jo

      Eadie, Alex

      Roberts, Ernest (Hackney N)

      Eastham, Ken

      Robertson, George

      Edwards, Bob (W'h'mpt'n SE)

      Robinson, G. (Coventry NW)

      Evans, John (St. Helens N)

      Ross, Ernest (Dundee W)

      Ewing, Harry

      Ross, Stephen (Isle of Wight)

      Field, Frank (Birkenhead)

      Rowlands, Ted

      Fields, T. (L'pool Broad Gn)

      Sheerman, Barry

      Fisher, Mark

      Sheldon, Rt Hon R.

      Flannery, Martin

      Shore, Rt Hon Peter

      Forrester, John

      Short, Ms Clare (Ladywood)

      Foulkes, George

      Short, Mrs R.(w'hampt'n NE)

      Freeson, Rt Hon Reginald

      Silkin, Rt Hon J.

      Freud, Clement

      Skinner, Dennis

      Godman, Dr Norman

      Smith, Cyril (Rochdale)

      Gould, Bryan

      Smith, Rt Hon J. (M'kl'ds E)

      Hamilton, W. W. (Central Fife)

      Spearing, Nigel

      Harman, Ms Harriet

      Strang, Gavin

      Harrison, Rt Hon Walter

      Thomas, Dafydd (Merioneth)

      Hattersley, Rt Hon Roy

      Thomas, Dr R. (Carmarthen)

      Hawkins, Sir Paul (SW N'folk)

      Thompson, J. (Wansbeck)

      Haynes, Frank

      Thorne, Stan (Preston)

      Hogg, N. (C'nauld & Kilsyth)

      Tinn, James

      Home Robertson, John

      Torney, Tom

      Howells, Geraint

      Wainwright, R.

      Hoyle, Douglas

      Wallace, James

      Hughes, Dr. Mark (Durham)

      Wareing, Robert

      Hughes, Robert (Aberdeen N)

      Weetch, Ken

      Hughes, Roy (Newport East)

      Welsh, Michael

      Hughes, Sean (Knowsley S)

      Williams, Rt Hon A.

      332

      Winnick, David

      Mr. Robert Maclennan and Mr. Dafydd Wigley.

      Tellers for the Ayes:

      NOES

      Alison, Rt Hon Michael

      Hind, Kenneth

      Ancram, Michael

      Hirst, Michael

      Ashby, David

      Hogg, Hon Douglas (Gr'th'm)

      Aspinwall, Jack

      Hooson, Tom

      Atkinson, David (B'm'th E)

      Howarth, Alan (Stratf'd-on-A)

      Baker, Rt Hon K. (Mole Vall'y)

      Howarth, Gerald (Cannock)

      Baldry, Anthony

      Hunt, David (Wirral)

      Batiste, Spencer

      Hunt, John (Ravensbourne)

      Beaumont-Dark, Anthony

      Hunter, Andrew

      Bellingham, Henry

      Jackson, Robert

      Benyon, William

      Jessel, Toby

      Berry, Sir Anthony

      Johnson-Smith, Sir Geoffrey

      Bevan, David Gilroy

      Jones, Gwilym (Cardiff N)

      Biffen, Rt Hon John

      Jopling, Rt Hon Michael

      Biggs-Davison, Sir John

      Knight, Gregory (Derby N)

      Blaker, Rt Hon Sir Peter

      Knox, David

      Bottomley, Peter

      Latham, Michael

      Bottomley, Mrs Virginia

      Lawrence, Ivan

      Bowden, A. (Brighton K'to'n)

      Lee, John (Pendle)

      Bright, Graham

      Leigh, Edward (Gainsbor'gh)

      Brinton, Tim

      Lester, Jim

      Brown, M. (Brigg & Cl'thpes)

      Lightbown, David

      Bruinvels, Peter

      Lilley, Peter

      Budgen, Nick

      Lloyd, Peter, (Fareham)

      Burt, Alistair

      Luce, Richard

      Carlisle, John (N Luton)

      Lyell, Nicholas

      Carlisle, Kenneth (Lincoln)

      McCrindle, Robert

      Carttiss, Michael

      McCurley, Mrs Anna

      Cash, William

      McCusker, Harold

      Channon, Rt Hon Paul

      Macfarlane, Neil

      Chope, Christopher

      MacGregor, John

      Clark, Dr Michael (Rochford)

      Maclean, David John

      Clark, Sir W. (Croydon S)

      McQuarrie, Albert

      Clarke, Rt Hon K. (Rushcliffe)

      Major, John

      Coombs, Simon

      Malins, Humfrey

      Cope, John

      Malone, Gerald

      Couchman, James

      Marlow, Antony

      Currie, Mrs Edwina

      Maude, Hon Francis

      Dickens, Geoffrey

      Mawhinney, Dr Brian

      Dicks, Terry

      Maxwell-Hyslop, Robin

      Douglas-Hamilton, Lord J.

      Mayhew, Sir Patrick

      Durant, Tony

      Mellor, David

      Emery, Sir Peter

      Meyer, Sir Anthony

      Evennett, David

      Mills, lain (Meriden)

      Eyre, Sir Reginald

      Mills, Sir Peter (West Devon)

      Fairbairn, Nicholas

      Moate, Roger

      Fallon, Michael

      Moore, John

      Farr, John

      Moynihan, Hon C.

      Favell, Anthony

      Mudd, David

      Fenner, Mrs Peggy

      Neale, Gerrard

      Forman, Nigel

      Needham, Richard

      Forth, Eric

      Nelson, Anthony

      Fowler, Rt Hon Norman

      Nicholls, Patrick

      Fox, Marcus

      Norris, Steven

      Franks, Cecil

      Onslow, Cranley

      Freeman, Roger

      Oppenheim, Philip

      Fry, Peter

      Osborn, Sir John

      Gale, Roger

      Parris, Matthew

      Galley, Roy

      Peacock, Mrs Elizabeth

      Gardner, Sir Edward (Fylde)

      Porter, Barry

      Garel-Jones, Tristan

      Powell, William (Corby)

      Goodlad, Alastair

      Powley, John

      Gorst, John

      Prentice, Rt Hon Reg

      Gower, Sir Raymond

      Price, Sir David

      Greenway, Harry

      Proctor, K. Harvey

      Hanley, Jeremy

      Pym, Rt Hon Francis

      Hargreaves, Kenneth

      Renton, Tim

      Harris, David

      Rhodes James, Robert

      Hawkins, C. (High Peak)

      Rhys Williams, Sir Brandon

      Hayes, J.

      Ridley, Rt Hon Nicholas

      Hayward, Robert

      Ridsdale, Sir Julian

      Heathcoat-Amory, David

      Robinson, Mark (N'port W)

      Heddle, John

      Roe, Mrs Marion

      Henderson, Barry

      Rowe, Andrew

      Higgins, Rt Hon Terence L.

      Ryder, Richard

      333

      Sainsbury, Hon Timothy

      Thornton, Malcolm

      St. John-Stevas, Rt Hon N.

      Thurnham, Peter

      Sayeed, Jonathan

      Townend, John (Bridlington)

      Shaw, Sir Michael (Scarb')

      Tracey, Richard

      Shelton, William (Streatham)

      Twinn, Dr Ian

      Shepherd, Colin (Hereford)

      van Straubenzee, Sir W.

      Shepherd, Richard (Aldridge)

      Viggers, Peter

      Sims, Roger

      Waddington, David

      Skeet, T. H. H.

      Wakeham, Rt Hon John

      Smith, Sir Dudley (Warwick)

      Waldegrave, Hon William

      Smyth, Rev W. M. (Belfast S)

      Walden, George

      Soames, Hon Nicholas

      Walker, Bill (T'side N)

      Spencer, Derek

      Waller, Gary

      Spicer, Jim (W Dorset)

      Ward, John

      Spicer, Michael (S Worcs)

      Wardle, C. (Bexhill)

      Stanbrook, Ivor

      Warren, Kenneth

      Steen, Anthony

      Watson, John

      Stern, Michael

      Watts, John

      Stevens, Lewis (Nuneaton)

      Wells, Bowen (Hertford)

      Stevens, Martin (Fulham)

      Wheeler, John

      Stewart, Allan (Eastwood)

      Winterton, Mrs Ann

      Stewart, Andrew (Sherwood)

      Wolfson, Mark

      Sumberg, David

      Wood, Timothy

      Taylor, Teddy (S'end E)

      Woodcock, Michael

      Temple-Morris, Peter

      Young, Sir George (Acton)

      Terlezki, Stefan

      Thomas, Rt Hon Peter

      Tellers for the Noes:

      Thompson, Donald (Calder V)

      Mr. Michael Neubert and Mr. Ian Lang.

      Thompson, Patrick (N'ich N)

      Question accordingly negatived.

      New Clause 4
      New lettings
      'Incorporated or unincorporated institutional landowners whose principal business is other than agriculture shall make all agricultural land in their ownership available for letting to a tenant.'. —[Mr. Robert Hughes.]
      Brought up, and read the First time.
      Mr. Robert Hughes: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Harold Walker): With this is it will be convenient to discuss new clause 5—
      Annual report to Parliament on tenancies and land ownership—
      `The Minister of Agriculture, Fisheries and Food and, in the case of Wales, the Secretary of State for Wales, shall make annual reports to Parliament on the amount and type of agricultural land available for tenure and changes in the ownership of agricultural land, with particular reference to financial institutions; and shall make such recommendations as he deems necessary to increase the amount of land available for tenure and the number of tenancies.'.
      Mr. Hughes: All of us who are concerned with tenanted land are seriously worried about the continuing drift of that land to institutional ownership. The Bill does not begin to deal with the central problem of tenanted land. The objective of the new clause is to ensure that land which is in institutional ownership is made available for rent. The clause is drawn widely and it includes all institutional landowners but we wish to centre our attention on the new institutional owners, which are the financial institutions.
      Since the 1960s the financial institutions have acquired a growing interest in agricultural land. During the second half of the 1970s, they were buying between 8 per cent. and 12 per cent. of all the farm land sold in Great Britain, which was equivalent to more than 50,000 acres annually. In December 1981, the current value of the funds' investment in agricultural land was
      334
      estimated in a report produced by Savills-RTP to he about £900 million, of which let land represented about £700 million.
      The analysis produced by Savills-RTP suggests:
      "Purchasing on a regular basis only commenced in 1968 and the first half of the 1970s was a period of irregular buying and volatile market conditions. Since 1975, purchasing has been at a consistent and substantial level with a tendency for the annual rate of acquisition to increase. Over half the land owned at the end of 1981 has been bought since 1976."
      The largest part of that land was acquired in the east midlands, East Anglia and the south-east. Acquisition in the north was only 1·1 per cent. and in the north-west it was only 2·2 per cent.
      It is clear that the concentration of acquisition has been in cereal and cropping areas. A more recent report by Reading university's department of land management estimates that in 1982 a further 59,000 acres were acquired. The proportion of all agricultural land owned by the institutions is small. In a debate in another place, Lord Northfield estimated that the percentage of land owned by the institutions is about 1·2 per cent. of all agricultural land. However, the financial institutions are a new factor and a fast-growing one, and its importance in certain areas is far greater than the national figures suggest. The financial institutions own 2·5 per cent. of grassland and cropping areas.
      It is reasonable that we should be concerned with the behaviour of this newest and fastest-growing type of landowner. The House will recall that the Northfield committee produced a substantial report. The committee was appointed by my right hon. Friend the Member for Lewisham, Dept ford (Mr. Silkin). Its report was published once the right hon. Member for Worcester (Mr. Walker) became the Minister of Agriculture, Fisheries and Food.
      It is true that the Northfield committee did not propose that restraints should be put upon the financial institutions involved in land owning but it thought — this was mentioned in paragraph 350 — that the acquisitions should be closely monitored. In paragraph 347, it stated:
      "It is our opinion that the primary role of the financial institutions in agriculture ought to be as long term investors in let land and not as farmers."
      The purpose of the clause is to put that sentiment into practice.
      In a debate in another place Lord Belstead claimed that 70 per cent. of the land owned by financial institutions is let. What about the other 30 per cent., which must be fairly substantial? The issue goes deeper than that, because the 70 per cent. of let land is a figure that hides more than it reveals.
      According to the Savills-RTP survey, 39·8 per cent. of the land owned by the financial institutions is let as traditional tenancies, 45 per cent. on a sale-and-lease-back arrangement and 15·2 per cent. on other full repairing and insuring tenancies. We are all concerned about full repairing and insuring tenancies. Frankly, they are totally bad. We cannot assume, as might be assumed from the bare facts, that the institutions are only taking over the role of the traditional landlords.
      5.30 pm
      Mr. Robert Jackson: I am glad that I was able to catch the hon. Gentleman's eye. Does the hon. Gentleman recognise that the effect of new clause 4 is to discourage the institutions that invest in land, reduce the

      335
      availability of capital for agricultural development and reduce the type of innovations to which my hon. Friend the Minister referred?
      Mr. Hughes: I certainly do not believe that the sale-and-lease-back arrangements and full repairing and insuring tenancies are innovations that we wish to support. I am opposed to them. If we decide to tell the financial institutions that they must let their land, they may decide not to buy the land. I am not aware of evidence that, because the institutions are buying the land, they are necessarily putting in capital for development. In discussing new clause 5 I shall say something about how we might make more land available for tenancy. The hon. Gentleman will find that new clauses 4 and 5 dovetail neatly.
      The fact that a large proportion of the land owned by the institutions is being let does not necessarily mean that the number of tenancies remains the same. Land may be tenanted, but the number of tenancies may differ because of amalgamations and the working of larger units.
      The remarks on this subject made by Lord John-Mackie can be seen at columns 206 and 207 of the House of Lords Hansard for 13 December 1983. I cannot quote all his remarks. He cited a number of cases in which the number of tenants was severely cut by the acquisition of land by financial institutions. It is important, in considering agricultural tenancies, to look closely at the role of the institutions. New clause 4 will assist the central objective, which appears to be shared by both sides of the House. The tenanted sector is important, and the decline in the number of tenancies should be arrested, if not reversed.
      New clause 5 calls for an annual report to Parliament on rented land and on the changes needed to increase the amount of land available for tenancies and the number of tenancies. The Northfield committee thought that the subject was of such importance that it devoted a section of its report to the subject. The committee took eight pages to discuss the need for more and better information about what is happening.
      Paragraph 259 of the report states:
      "Throughout our work we were hampered by the lack of detailed information on many of the topics we studied. It is disturbing that so little is known about the pattern of acquisition, ownership and occupancy of agricultural land and that Governments should have to take decisions, which may have far-reaching effects on agricultural structure, on the basis of incomplete or non-existent data."
      That is precisely what we are doing in the Bill. Paragraph 280 states:
      "in the long term, a full system of land registration with land use identified and beneficial interests visible would be desirable for the agricultural reasons outlined."
      The reasons given by the committee for having better information on proper land registration were threefold: first, to monitor the industry's performance and judge, for example, the relative efficiency of different types of owners and occupiers and farm sizes; secondly, to know how those who saw themselves as stewards of one of the nation's most important resources were carrying out their function; and, thirdly, to monitor important trends, such as land purchase by financial institutions or overseas buyers.
      In the meantime, the Northfield committee recommended that the agriculture Departments should put in train action to fill in the most important omissions from the currently available statistics. The committee recommended that the Ministry of Agriculture, Fisheries
      336
      and Food should identify and monitor trends in acquisition. The committee identified an urgent need for data to be collected on acquisition by financial institutions and overseas buyers.
      The committee argued that we need to provide a better background to the pattern of ownership. With better data, estimates about the future structure of land because of policy changes could be more rationally based. We need to improve the understanding of the complexities of tenurial structure in agriculture.
      It is now five years since the Northfield report was published, and we are still handicapped by a paucity of information about what is happening. It is astonishing that Ministers come forward—I admire their honesty—to say, "In many cases, we do not know what is happening.'' Ministers refer to an aim, which we all share—to encourage greater tenancies to be made available and encourage tenant farming—yet do little to achieve it.
      The best gloss one could put on the Bill—some of the Minister's colleagues in the other place tried to put the best gloss on the legislation—is that it would have the most marginal effect on increasing the amount of tenanted land.
      Sir Paul Hawkins: Does the hon. Gentleman agree that any information should be broken down into regions? I am sure that I am correct in saying that in East Anglia the largest number of purchases are made from pension and other funds. It would be helpful if the regions were mentioned in any information. Will the hon. Gentleman explain his objections to full repairing leases or sale and lease-back? I cannot understand his point.
      Mr. Hughes: My basic objection to the full repairing and insuring leases is that the landowners who are supplying the tenancies are not putting money into the industry. There are tax advantages to them for doing that. I have some figures, although I do not know whether they will help the hon. Gentleman. I understand that in East Anglia 17·2 per cent. of land acquisitions were made by the financial institutions. I entirely agree with the hon. Gentleman that we ought to observe the pattern in different parts of the country. Although figures for, say, England or Wales would advance the discussion to some extent, they would not take us much further forward.
      The Bill will not meet its stated objectives. The Labour party has solutions to the problem. It believes that the best methods of ensuring, first, stability of tenant farming and, secondly, the expansion of the amount of tenanted land and the number of tenanted farms would be to establish a rural land authority to administer land already publicly owned, to extend public ownership in the tenanted sector and to go further and acquire more land for tenancy. If radical action is not taken, those who, in their evidence to the Northfield committee, predicted the end of tenant farming by the end of the century will be proved right.
      There can be no doubt that tenant farming has been a success. Farming practices have changed for a variety of reasons, but they have not been the fault of the tenants, many of whom have invested their lives as well as their money in farming. The way in which landlords have moved into in-hand farming has nothing to do with tenant farming. It has to do with tax changes, the common agricultural policy, modern technology, and so on.
      The figures show clearly that the landlords have failed the tenanted sector. We owe it to tenants who have

      337
      invested their lives in farming to do all that we can to sustain the system. New clauses 4 and 5 will do a great deal towards that. If the Minister has to give a detailed report each year on the situation and how he believes it should be changed, the work of Parliament and agriculture will be greatly asisted. I commend the new clauses to the House.
      Mr. Weetch: It is a sad state of affairs that on the state of institutional investment in the land in this country there is no Government source comparable with the Savills' agricultural performance analysis, produced by commercial valuers. That is where I had to look to discover the trends in institutional investment in land in this country. It is sad indeed that there is no comprehensive register showing the ownership of agricultural land and the trends in such ownership. I should have thought that on a prima facie analysis an accurate idea of land ownership would be an extremely useful basis for any kind of policy. Whatever political line one wishes to pursue, it should be based on an accurate set of statistics and related information about the current situation. I am open to correction from the Minister on this, but to the best of my knowledge one looks in vain for any comprehensive body of information about land holding and the trend in institutional investment in this country.
      5.45 pm
      My purpose is to ask the Minister, as a repository of information, to assist our lack of information by answering a few brief questions. First, does the Ministry regard institutional investment in the countryside as a good thing? Is investment by financial institutions in agriculture to be welcomed? I do not ask for a precise answer today, but perhaps he will give us the broad lines of the Ministry view.
      I have read the section of the Northfield report dealing with institutional investment and I have taken opinions on the matter in East Anglia, which is naturally the area that I know best. I am no specialist or expert on this, but I gather that investment in the land by financial institutions is a complicated affair with complex arguments on both sides. I discern, however, the following consensus. First, financial institutions buy agricultural land not through any intrinsic interest in farming but as part of a long-term investment portfolio. In other words, they consider the land not from the point of view of farming but as part of a financial investment bottom line, if I may so put it. Does the Minister regard that as a good thing? I confess that I do not know. Can he give the Ministry view?
      Savills' agricultural performance analysis openly states that when such investment takes place,
      "Almost all the farms bought meet the narrowest investment criteria".
      In other words, a very particular — not to say idiosyncratic—influence is being brought to bear on the land market and agricultural investment. I suspect that we are considering part of the institutional property market and not anything specifically to do with farming.
      I am advised that the extent of institutional ownership of farmland is about 3 per cent. Can the Minister tell us whether that is anywhere near correct? Can he give the Ministry's figure and enlighten us as to the exact extent of the problem? I am further advised that, although only about 3 per cent. of the total acreage of crops and grass
      338
      is under such ownership, the purchase by institutional investors of land coming on to the market each year is higher in the let land market than in any other part of the market and thus has a more marked impact than anything else on tenancy.
      As a layman making innocent inquiries, I am told on one side of the case that institutional investors have been responsible in part for the rise in rents and land prices in the countryside, that they have brought instability to the land market and that they are partly responsible for the deterioration of the tenants' situation. As a layman, one is further confused when one hears the other side of the case. I have also been told that institutional investors are responsible for more money coming into farming, bringing a new business approach and a breath of fresh air to agricultural investment and that by and large they are good landlords. Which side of that equation is true? What is the Minister's assessment of the effect of institutional investment?
      I gather from the Northfield report that in 1977–78, or thereabouts, 81 per cent. of the land owned by institutional investors was in the form of tenanted in-hand farming or partnerships. The performance analysis from the commercial surveyors Savills estimates that in-hand farming or farming related to partnership now stands at about 86 per cent. Does that mean that prospects for tenant farmers are improving under financial institutions? Before we can assess institutional investors or anyone else, we need some sort of land register so that we can understand who owns what, and what the trends are.
      I return to my initial point. If we are to have any policy that makes coherent sense for landholdings and tenancies and for all things related to that, there must be some form of monitoring. We need a register and a repository of information, because without that we shall be just as much in the dark in future as we are now.
      Sir Paul Hawkins: I wish to concentrate initially on what the hon. Member for Aberdeen, North (Mr. Hughes) said about full repairing leases or sale and lease-back. I do not see anything wrong with transferring responsibility for maintaining the buildings and houses to the tenant. An adjustment in the rent is then made, because obviously a bigger burden has been placed on the tenant. The only disadvantage, perhaps, is that the landlord may not take so much interest in the matter, although that is not necessarily so, because he will need to see whether his tenants are maintaining the buildings, and so on. I see nothing wrong with the change that has taken place in many tenancies during the past 10 years.
      Sale and lease-back means selling to an investor who wants an income while still retaining the tenancy for the agricultural holding. One can make what conditions one likes. However, the more onerous the conditions in a sale and lease-back, the lower the price for the land. Thus, I cannot see what is wrong with sale and lease-back. It is very advantageous to certain families to sell their land, while retaining the tenancy, so that they can go on farming it. They then know that they have some cash in the bank to give, perhaps, to a daughter who marries or with which to readjust the family's finances. Thus, on those two points I disagree with the hon. Member for Aberdeen, North.
      I do not believe that pension funds should farm. I am very much against that. Pension funds do a first-class job and since the middle ages City money has always gone into agriculture. Indeed, we want that constant stream.

      339
      However, I do not like what is happening in East Anglia at present. I shall not mention all the pension funds because my hon. Friend the Minister no doubt knows some of them better than I do——
      Mr. Robert Hughes: Has the Minister got shares in them?
      Sir Paul Hawkins: I do not think so.
      For example, the coal board farms 10,000 acres in Norfolk. It does not only own it but farms it. I could cite companies such as Vauxhall and Guardian Royal Exchange. I reckon that another 300 or 400 farmers could be earning a living, with 500 acres apiece, from the amount of land that pension funds not only own but farm. I hope that my hon. Friend the Minister will make a public appeal before too long, asking those pension funds—with all the advantages that we have given them through fiscal changes in Budgets, and through the Bill—to let their land.
      Pension funds as both landlords and tenants are operated from London, Manchester or one of the big cities, and so do not take as much interest in village life and in the social aspect as farmers have traditionally done. I know of an exceptionally good firm that farms extremely well. There is a first-class manager, but he has to operate across three of four counties. Unlike the farmer who has traditionally been a part of village life, he has no opportunity, for example, to support the church. Farmers' wives have traditionally helped in leadership of the village, yet in many villages in Norfolk that has gone, because of the pension funds' influence. The Minister should make an appeal. At this stage, he could not and should not take any legal measures to control that influence, but he should point out that it can lead to great dissatisfaction among those who want to farm.
      Information is badly needed. I have discussed that point with Lord Northfield in the Agriculture Committee of the Council of Europe. I am very sorry that various Governments have not yet been able to bring themselves to get that information together. As a quid pro quo for letting the Royal Institution of Chartered Surveyors instead of the Minister appoint arbitrators, perhaps he will suggest that it does a free basic survey and produces a new Domesday Book to be presented to the Ministry.
      Mr. Eric Deakins: I thoroughly endorse what the hon. Member for Norfolk, South-West (Sir P. Hawkins) has said about the role of institutional pension funds in agriculture. He made some important points, which were not always put as clearly as that in Committee. It is nice to hear from a Conservative Member who has great experience of the subject and who represents one of the best farming areas in the country. He can see at first hand what is happening. I sincerely hope that the Minister will consider the hon. Gentleman's very good points and, in particular, the fact that pension funds do not behave like traditional farmers when they engage directly in agricultural production.
      Farmers have had, and I hope will always continue to have, an important social role that is not always connected—as the hon. Gentleman rightly pointed out—with their farming activities. Many traditional farmers, although sadly not all, are very good at looking after the countryside. However, I regret to say that, from what I have seen of East Anglia and the south and east midlands in the past 20 or 30 years, it would seem that the
      340
      institutions which have been at least in part responsible for the deterioration in farming practices have much to learn from the traditional farmers whom they have replaced. It has been a retrograde step that so much institutional money has come into agriculture directly through buying farms and then engaging in farming activities. The Minister must address his mind to what is the appropriate role of financial institutions in agriculture.
      6 pm
      Pension funds invest not only in agriculture but in industry and services, both in the United Kingdom and overseas. I cannot think of a single example of where the pension funds invest in industry—for example, in the manufacturing industry — and then seek to run that industry themselves. The behaviour of pension funds in agriculture is almost at odds with their behaviour in all the other areas in which they invest. Surely the appropriate role for institutional investors in agriculture, as in other areas of economic and commercial life, is to supply funds with appropriate guarantees—for example, mortgages—but not directly to engage in agriculture themselves. I wonder why they are doing so. Perhaps there is something in the tax concessions available or in other aspects of agricultural activity that leads the institutions to take a greater interest in agriculture than other areas, to the detriment of the traditional tenant farmers.
      It is the policy of both the Labour party and the Government to encourage an increase in the amount of land available for tenants and an increase in the number of tenant farmers. The activities of the institutions in East Anglia and elsewhere are leading us in the opposite direction. The Bill gives us an opportunity to express the concern felt by hon. Members on both sides of the House about what is happening and what is likely to happen if present trends continue.
      I hope that the Government will accept new clause 5. There can be no objection in principle to the idea of an annual report to Parliament, and therefore to the nation, about what is happening in agriculture. As my hon. Friend the Member for Ipswich (Mr. Weetch) said, figures are difficult to obtain. As the Government's stated objective is to increase the supply of tenanted land, they should have the means at their disposal to show the trends from year to year. Parliament should be the judge, year by year, of whether the Government are achieving their stated objective. If they are not, it should be a matter of concern to both sides of the House.
      Mr. MacGregor: This has been a short but interesting debate. As we have a great deal ahead of us today, I shall be brief in my reply.
      I shall deal first with new clause 4. A number of hon. Members have referred to the recent Savills survey, and I shall do the same. What is important about that survey, apart from the fact that its information is up to date, is that it has concentrated on the financial institutions' total holding and not on all institutions as they are traditionally defined.
      The survey shows that the total holding of the financial institutions is only about 3 per cent. of the area of crops and grass in Great Britain, although I readily concede the point made by my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) and by the hon. Member for Aberdeen, North (Mr. Hughes) that there are regional variations.

      341
      In terms of the most up-to-date information, it is interesting to note that 86 per cent. of land owned by financial institutions is let. When compared with the estimates made by the Northfield committee at the end of 1978, the figures show a movement towards a higher proportion of land being let as against being farmed in hand either directly or through partnerships. The Northfield estimate was 81 per cent., whereas the survey gave a figure of 86 per cent.
      There is evidence that the purchases by the financial institutions are falling off. It is worth quoting one paragraph in the conclusion of the survey:
      "The year to the end of December 1983 has been one in which the Institutions have been particularly inactive."
      That point could have been made more clearly, but it means that the institutions have not greatly been involved in investing in agricultural land. The survey continues:
      "Net purchasing by the Funds in the Analysis was 4,100 acres—the lowest since the mid-sixties. Contrary to the impression that it is the Institutions which have made the market in land in recent years, in 1983 the price of good vacant possession land has hardened in spite of the inactivity of the Institutions."
      We could for ever analyse the position. I agree that we should have better information, and I shall deal with that point later.
      One of the interesting points about what happened in 1983—I have my views about why the institutions have not been active in the market—is that the price of land has been held up largely by the activities of existing farmers, who have been adding to their holdings. That showed that the position is nothing like as simple as some people previously thought it would be in terms of the impact of the institutions, and the belief that it was the institutions that were pushing up the prices of agricultural land. It is important to have that piece of information.
      I shall now deal with the general principle of the Bill, having established that the farming in hand by the institutions is nothing like as serious as some people would have us believe. It is important to give landowners flexibility. If we remove the flexibility, we shall run the risk of frightening the institutions away from investing in agricultural land as a whole. Some people may think that that would be a good thing, but I do not share that view. If we impose the restriction suggested, we should run considerable danger of discouraging investment in agriculture and of diminishing a useful source of capital for farming, and institutions undoubtedly bring in capital. It could also cause the further problem of more farms for sale on vacant possession being split into parcels. There is evidence of that in some sales. It is done to enable the existing units of agriculture that are large viable farms to be sold to existing owner-occupiers. Hence, that farm goes out of the prospect of being in the tenanted sector.
      The position is not as simple as some would have us believe. There are threats to the tenanted sector other than from the institutions. There is danger in discouraging institutions from investing in agricultural land and then letting it.
      Sir Paul Hawkins: There is a great deal in what my hon. Friend says. I dislike the recent trend with land agents and others in splitting a large acreage—perhaps 1,000 acres—into three, four or five blocks and then selling the house. That good farm can never be put together again. I do not know whether my hon. Friend has a solution to the problem, but I would like him to find one if possible.
      342
      My hon. Friend should think about the position in East Anglia. Although there was a downward trend in institutional farming in 1983—I am no more certain than he is of why that happened—previously there was an upward trend, and I believe that currently there is an upward trend. I think that 1983 was a one-off. There is a growth of institutional farming in East Anglia. Has my hon. Friend any solutions to that problem?
      Mr. MacGregor: I can think of some solutions, but they would be unacceptable in a free country, and unacceptable to the House and to me.
      I was trying to make it clear that there is not a simple black and white case that the institutions are making it more difficult to have tenanted land. Indeed, there is a case for saying that by continuing to invest in land, keeping farms together and continuing with the high proportion of let land, the institutions are actually maintaining the process of having a large number of tenanted farms.
      It would be invidious to differentiate between different classes of landowner, even if it were practicable to do so, which I strongly doubt. The Northfield committee has been quoted a great deal in the debate. That committee recommended no restraints on the involvement of the institutions in landowning. It was interesting to note that Lord Northfield himself said in debates in another place that the financial institutions should not be subject to special rules which did not apply to all landowners, which is precisely what the new clause would do.
      The country has always benefited from a diversity of people being prepared to invest their time and money in land ownership. There is no reason to suppose, on the whole, that the new institutions are less good landowners than the traditional ones. Indeed, as has been pointed out, in some ways—for example, by their sale and lease-back arrangements—the financial institutions can create new tenancies.
      The hon. Member for Walthamstow (Mr. Deakins) made an interesting speech in Standing Committee—he spoke about the opportunities for new entrants into farming which the financial institutions could offer—which was somewhat at variance with his comments today. He made some good points in his Committee speech, which I will not repeat now, to demonstrate the contribution that the institutions make.
      I remind the hon. Member for Ipswich (Mr. Weetch) that we must consider who are the beneficiaries of the institutions' investments in these cases. By and large, they are trade unionists, the members of pension funds, and I have heard some interesting cases in that respect from an institution in which I should declare an interest in that it is one in which I used to be employed, though not on the agricultural side of the company. I refer to the Hill Samuel agricultural property unit trust, which is showing trade union members where their investments lie in agricultural land — this is a feature of its annual reports — and demonstrating how they are doing a great deal by way of encouraging conservation, planting trees, making financial contributions to village life and the communities in which the farms lie. The institutions are explaining the wider benefits of investment in agricultural land.
      At best, therefore, the new clause is largely unnecessary, as the overwhelming proportion of land owned by the financial institutions is already let, and, from the current signs, that proportion is increasing. At worst, by arbitrarily and unnecessarily restricting the institutions'

      343
      freedom of management, it would act as a disincentive to investment in agriculture, and that could only be to the detriment of the industry as a whole. My answer to the hon. Member for Ipswich, therefore, is that the contribution of the institutions has been beneficial to agriculture and agricultural efficiency as a whole.
      My hon. Friend the Member for Norfolk, South-West, who knows the feeling in the countryside better than anyone in the House, made some fair points. Not least because of the efforts that he has been making, more of the institutions are responding along the lines that he desires, and I commend that. I share his view, however, that taking clear-cut legislative steps of the sort proposed and trying to make these changes by legislation is not the way to deal with the problem. The case has not been made for the change proposed, either in terms of the harm to farming that the institutions are said to be doing or for the benefits to be achieved by such a change.
      6.15 pm
      I accept the point that the hon. Member for Aberdeen, North made about information, in that part of new clause 5 flows from the recommendations of the Northfield committee. As he knows, as a result of section 2 of the Agriculture (Amendment) Act 1984, a private Member's Bill which has just completed all its stages through the House — it was introduced by my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh), who is present today—agriculture Ministers now have additional power to obtain information on types of land occupancy. That explains to a large extent why that information has not existed until now. Until my hon. Friend's measure became an Act, the powers were limited to asking for the names and addresses of owners and occupiers, whether the land was let and, if so, at what rent.
      The new powers cover the collection of information about the terms on which, or the arrangements under which, any land or any part of it was owned, occupied, managed or farmed by any person. This will allow Ministers to ask questions about the family relationship between occupiers and to ask whether the land is held under a partnership or occupied by a private company, trust, charity and so on. As I say, this legislation has been enacted in the light of the Northfield recommendations and will ensure that the necessary statutory powers are available to identify important trends in the pattern of land ownership and occupancy. I am sure that the hon. Member for Aberdeen, North will welcome that, although it means that to a large extent the new clause is not necessary.
      I could not follow the hon. Member for Aberdeen, North in asking for a separate report to Parliament each year. To do so would be unnecessary, and therefore we need not burden the Bill with such a provision. The results will, in due course, be published in the normal way. We have not taken precise decisions on how the information will be published—because the necessary powers for its collection have only just been obtained — but it is reasonable to assume that it will be widely available in much the same way as the results of the Department's annual rent surveys are published, in booklets, or it could be made available in the annual review. Either way, that information will be available to Parliament and a separate report, as suggested in the new clause, is not necessary.
      The second part of the new clause—the requirement that Ministers should make recommendations on ways of increasing the amount of land available for letting—is
      344
      equally unnecessary. I do not believe that by asking for an annual report we shall change matters. We need to take action, and that is precisely what we are doing by the Bill and by the changes that we have made, in successive Finance Bills, to capital taxation which has been a great disincentive to landlords. I have pressed the hon. Member for Aberdeen, North on many occasions to give his support to the changes that we have made in taxation, but so far without success.
      The hon. Gentleman could do something that would help a great deal more than asking for annual reports. He could go further than he went in Committee by saying that, if there is general agreement in the industry that clause 2 is a desirable part of the legislation, he will make it clear that the Labour party, should it ever return to power, would not repeal that clause.
      Mr. Robert Hughes: I begin by answering the Minister's final question, although I thought that in Committee I gave a more than adequate answer. The Labour party's position is clear, We believe strongly in the principle of succession of tenancy, as laid down in the 1976 Act. We have made it clear that, on being returned to government, we shall restore the succession of tenancy to new tenants.
      What I said in Committee was not exactly what the Minister said I said. I said that if, after the next election, the circumstances presented to the then Labour Government showed that the enactment of this measure has meant a great difference to the amount of land being made available for tenancy—in other words, if the drift away from farming tenancies has been arrested—that Labour Government will have to take account of that at the time. That is as clear as I can put it, and I hope that my remarks stand the test of time.
      I am very grateful for all the support from my hon. Friend the Member for Ipswich (Mr. Weetch), my hon. Friend the Member for Walthamstow (Mr. Deakins) and the hon. Member for Norfolk, South-West (Sir P. Hawkins), especially in relation to financial institutions. They should not fund directly. We should, as Parliament and Government, be taking decisions on the basis of the best knowledge that is available.
      May I tell the hon. Member for Norfolk, South-West what the Savills-RTP performance analysts said about the pattern of financial institution ownership?
      As might be expected, ownership is concentrated mostly in the east midlands, with 21·8 per cent. of institutionally held land. East Anglia has 17·2 per cent. and the south-east of England has 16·4 per cent. Scotland contributes 16·5 per cent. to the total. That shows the position at the end of 1981. The analysis goes on to say that there has been a move away from the eastern counties towards parts of Yorkshire. However, I do not want to spend all my time reading this excellent analysis into the record.
      I strongly support my hon. Friend the Member for Ipswich. I hope that all hon. Members will do so. He paid tribute—if he did not, I shall do so now—to Savills-RTP for its analysis. We should not be dependent upon private sources for information in our debates.
      The Minister of State made the case, perhaps more strongly than anyone, for the need, especially, for new clause 5 and the annual report to Parliament, when he referred to land prices and the amount of land purchased

      345
      by financial institutions based on anecdotal evidence. It is not good enough for a Minister to speak on the basis of anecdotal evidence. That is no way to run a country.
      I am very grateful to the hon. Member for Gainsborough and Horncastle (Mr. Leigh). I was going to say, tongue in cheek, that I was aware of the detailed provisions of the hon. Member's Act, but I had not really appreciated its importance, and I am glad to know of the provisions. I pay tribute to the hon. Member for putting them through.
      I draw a different conclusion from the Minister. I do not think that that Act invalidates new claue 5. If anything, it reinforces it, boosts it and shows all the more reason why an annual report to Parliament is feasible. The Minister has no excuse to say that it is difficult to get the information because he does not have the power to do so. He has the powers and he should produce the information. He let the cat out of the bag when he said that the Government had not decided exactly how to make the information available, whether it would be in annual report, or as information in booklets.
      By far the best way of making information available is in an annual report to Parliament. After all, new clause 5 simply says that the Secretary of State shall
      "make such recommendations as he deems necessary."
      Once he has that information, perhaps he will say that there is no need to change things or make representations to change matters because they all follow as night follows day, after the passing of the sun.
      I hope that new clause 5 will be written into the Bill. With the leave of the House, I should like to withdraw new clause 4 and formally move new clause 5.
      Motion and clause, by leave, withdrawn.

    New clause 5

      ANNUAL REPORT TO PARLIAMENT ON TENANCIES AND LAND OWNERSHIP
      `The Minister of Agriculture, Fisheries and Food and, in the case of Wales, the Secretary of State for Wales, shall make annual reports to Parliament on the amount and type of agricultual land available for tenure and changes in the ownership of agricultural land, with particular reference to financial institutions; and shall make such recommendations as he deems necessary to increase the amount of land available for tenure and the number of tenancies.—[Mr.Robert Hughes.]
      Brought up, and read the First time.
      Motion made, and Question put, That the clause be read a Second time:—
      The Committee divided: Ayes 120, Noes 208.

      Division No. 349]

      [6.24 pm

      AYES

      Anderson, Donald

      Coleman, Donald

      Archer, Rt Hon Peter

      Concannon, Rt Hon J. D.

      Ashton, Joe

      Conlan, Bernard

      Banks, Tony (Newham NW)

      Cook, Robin F. (Livingston)

      Beckett, Mrs Margaret

      Corbett, Robin

      Beith, A. J.

      Corbyn, Jeremy

      Blair, Anthony

      Cowans, Harry

      Brown, Hugh D. (Provan)

      Craigen, J. M.

      Callaghan, Rt Hon J.

      Crowther, Stan

      Callaghan, Jim (Heyw'd & M)

      Cunliffe, Lawrence

      Campbell-Savours, Dale

      Dalyell, Tarn

      Clark, Dr David (S Shields)

      Davis, Terry (B'ham, H'ge H'l)

      Clay, Robert

      Deakins, Eric

      Cocks, Rt Hon M. (Bristol S.)

      Dixon, Donald

      346

      Dormand, Jack

      Mitchell, Austin (G't Grimsby)

      Dubs, Alfred

      Morris, Rt Hon J. (Aberavon)

      Dunwoody, Hon Mrs G.

      Nellist, David

      Eadie, Alex

      O'Brien, William

      Eastham, Ken

      O'Neill, Martin

      Edwards, Bob (W'h'mpt'n SE)

      Orme, Rt Hon Stanley

      Ewing, Harry

      Parry, Robert

      Fields, T. (L'pool Broad Gn)

      Powell, Raymond (Ogmore)

      Fisher, Mark

      Prescott, John

      Flannery, Martin

      Radice, Giles

      Forrester, John

      Randall, Stuart

      Foulkes, George

      Redmond, M.

      Freeson, Rt Hon Reginald

      Richardson, Ms Jo

      Freud, Clement

      Roberts, Ernest (Hackney N)

      Hamilton, W. W. (Central Fife)

      Robertson, George

      Harman, Ms Harriet

      Robinson, G. (Coventry NW)

      Harrison, Rt Hon Walter

      Rooker, J. W.

      Hattersley, Rt Hon Roy

      Ross, Ernest (Dundee W)

      Haynes, Frank

      Ross, Stephen (Isle of Wight)

      Hogg, N. (C'nauld & Kilsyth)

      Rowlands, Ted

      Holland, Stuart (Vauxhall)

      Sheerman, Barry

      Home Robertson, John

      Sheldon, Rt Hon R.

      Howells, Geraint

      Shore, Rt Hon Peter

      Hoyle, Douglas

      Short, Ms Clare (Ladywood)

      Hughes, Dr. Mark (Durham)

      Short, Mrs H.(W'hampt'n NE)

      Hughes, Robert (Aberdeen N)

      Silkin, Rt Hon J.

      Hughes, Roy (Newport East)

      Skinner, Dennis

      Hughes, Sean (Knowsley S)

      Smith, Cyril (Rochdale)

      Hughes, Simon (Southwark)

      Smith, Rt Hon J. (M'kl'ds E)

      Jones, Barry (Alyn & Deeside)

      Spearing, Nigel

      Kaufman, Rt Hon Gerald

      Strang, Gavin

      Kirkwood, Archibald

      Thomas, Dafydd (Merioneth)

      Lambie, David

      Thomas, Dr R. (Carmarthen)

      Lamond, James

      Thompson, J. (Wansbeck)

      Lewis, Ron (Carlisle)

      Thorne, Stan (Preston)

      Lewis, Terence (Worsley)

      Tinn, James

      Litherland, Robert

      Torney, Tom

      Loyden, Edward

      Wainwright, R.

      McKelvey, William

      Wallace, James

      McTaggart, Robert

      Wareing, Robert

      McWilliam, John

      Weetch, Ken

      Madden, Max

      Welsh, Michael

      Maxton, John

      Wigley, Dafydd

      Maynard, Miss Joan

      Winnick, David

      Meadowcroft, Michael

      Michie, William

      Tellers for the Ayes;

      Millan, Rt Hon Bruce

      Mr. Allen McKay and Mr. Gerald Bermingham.

      Miller, Dr M. S. (E Kilbride)

      NOES

      Aitken, Jonathan

      Carttiss, Michael

      Alison, Rt Hon Michael

      Cash, William

      Ancram, Michael

      Channon, Rt Hon Paul

      Ashby, David

      Chope, Christopher

      Aspinwall, Jack

      Clark, Dr Michael (Rochford)

      Atkinson, David (B'm'th E)

      Clark, Sir W. (Croydon S)

      Baldry, Anthony

      Clarke, Rt Hon K. (Rushcliffe)

      Batiste, Spencer

      Conway, Derek

      Beaumont-Dark, Anthony

      Coombs, Simon

      Bellingham, Henry

      Cope, John

      Benyon, William

      Couchman, James

      Berry, Sir Anthony

      Currie, Mrs Edwina

      Bevan, David Gilroy

      Dicks, Terry

      Biffen, Rt Hon John

      Douglas-Hamilton, Lord J,

      Biggs-Davison, Sir John

      Dunn, Robert

      Blaker, Rt Hon Sir Peter

      Durant, Tony

      Bottomley, Peter

      Emery, Sir Peter

      Bottomley, Mrs Virginia

      Evennett, David

      Bowden, A. (Brighton K'to'n)

      Eyre, Sir Reginald

      Braine, Sir Bernard

      Fairbairn, Nicholas

      Bright, Graham

      Fallon, Michael

      Brinton, Tim

      Farr, John

      Brooke, Hon Peter

      Favell, Anthony

      Brown, M. (Brigg & Cl'thpes)

      Fenner, Mrs Peggy

      Bruinvels, Peter

      Forman, Nigel

      Budgen, Nick

      Forth, Eric

      Bulmer, Esmond

      Fowler, Rt Hon Norman

      Burt, Alistair

      Franks, Cecil

      Carlisle, John (N Luton)

      Fry, Peter

      Carlisle, Kenneth (Lincoln)

      Gale, Roger

      347

      Galley, Roy

      Porter, Barry

      Gardner, Sir Edward (Fylde)

      Powell, William (Corby)

      Garel-Jones, Tristan

      Powley, John

      Goodhart, Sir Philip

      Prentice, Rt Hon Reg

      Goodlad, Alastair

      Price, Sir David

      Gorst, John

      Proctor, K. Harvey

      Gower, Sir Raymond

      Pym, Rt Hon Francis

      Greenway, Harry

      Rathbone, Tim

      Hanley, Jeremy

      Renton, Tim

      Hargreaves, Kenneth

      Rhodes James, Robert

      Harris, David

      Rhys Williams, Sir Brandon

      Harvey, Robert

      Ridley, Rt Hon Nicholas

      Hawkins, C. (High Peak)

      Ridsdale, Sir Julian

      Hawkins, Sir Paul (SW N'folk)

      Robinson, Mark (N'port W)

      Hayward, Robert

      Roe, Mrs Marion

      Heathcoat-Amory, David

      Rowe, Andrew

      Heddle, John

      Ryder, Richard

      Henderson, Barry

      St. John-Stevas, Rt Hon N.

      Hind, Kenneth

      Sayeed, Jonathan

      Hirst, Michael

      Shaw, Sir Michael (Scarb')

      Hogg, Hon Douglas (Gr'th'm)

      Shelton, William (Streatham)

      Howard, Michael

      Shepherd, Colin (Hereford)

      Howarth, Alan (Stratf'd-on-A)

      Shepherd, Richard (Aldridge)

      Howarth, Gerald (Cannock)

      Sims, Roger

      Howe, Rt Hon Sir Geoffrey

      Skeet, T. H. H.

      Hunt, David (Wirral)

      Smith, Sir Dudley (Warwick)

      Hunt, John (Ravensbourne)

      Smyth, Rev W. M. (Belfast S)

      Hunter, Andrew

      Soames, Hon Nicholas

      Jackson, Robert

      Spencer, Derek

      Jessel, Toby

      Spicer, Jim (W Dorset)

      Johnson-Smith, Sir Geoffrey

      Spicer, Michael (S Worcs)

      Jones, Gwilym (Cardiff N)

      Stanbrook, Ivor

      Jopling, Rt Hon Michael

      Stern, Michael

      Knight, Gregory (Derby N)

      Stevens, Lewis (Nuneaton)

      Knox, David

      Stevens, Martin (Fulham)

      Latham, Michael

      Stewart, Allan (Eastwood)

      Lawrence, Ivan

      Stewart, Andrew (Sherwood)

      Leigh, Edward (Gainsbor'gh)

      Sumberg, David

      Lester, Jim

      Taylor, Teddy (S'end E)

      Lightbown, David

      Terlezki, Stefan

      Lilley, Peter

      Thomas, Rt Hon Peter

      Lloyd, Peter, (Fareham)

      Thompson, Donald (Calder V)

      Luce, Richard

      Thompson, Patrick (N'ich N)

      Lyell, Nicholas

      Thornton, Malcolm

      McCrindle, Robert

      Thurnham, Peter

      McCurley, Mrs Anna

      Townend, John (Bridlington)

      Macfarlane, Neil

      Tracey, Richard

      MacGregor, John

      Twinn, Dr Ian

      Maclean, David John

      van Straubenzee, Sir W.

      McQuarrie, Albert

      Viggers, Peter

      Major, John

      Waddington, David

      Malins, Humfrey

      Wakeham, Rt Hon John

      Malone, Gerald

      Waldegrave, Hon William

      Marlow, Antony

      Walden, George

      Maude, Hon Francis

      Walker, Bill (T'side N)

      Mawhinney, Dr Brian

      Waller, Gary

      Maxwell-Hyslop, Robin

      Ward, John

      Mayhew, Sir Patrick

      Wardle, C. (Bexhill)

      Mellor, David

      Warren, Kenneth

      Meyer, Sir Anthony

      Watson, John

      Mills, lain (Meriden)

      Watts, John

      Mills, Sir Peter (West Devon)

      Wells, Bowen (Hertford)

      Moate, Roger

      Wells, John (Maidstone)

      Moore, John

      Wheeler, John

      Moynihan, Hon C.

      Whitfield, John

      Mudd, David

      Winterton, Mrs Ann

      Murphy, Christopher

      Winterton, Nicholas

      Neale, Gerrard

      Wolfson, Mark

      Needham, Richard

      Wood, Timothy

      Nelson, Anthony

      Woodcock, Michael

      Nicholls, Patrick

      Yeo, Tim

      Onslow, Cranley

      Young, Sir George (Acton)

      Oppenheim, Philip

      Osborn, Sir John

      Tellers for the Noes:

      Parris, Matthew

      Mr. Tim Sainsbury and Mr. Ian Lang.

      Peacock, Mrs Elizabeth

      Question accordingly negatived.

    New Clause 6

      WAIVER OF CONTRACT
      'Notwithstanding the provisions of any contract, agreement, covenant, lease or tenancy, a registered milk producer may apply to cease milk production and give up his milk quota, and if approved by the Minister cease milk production and give up his milk quota, pursuant to the compensation scheme announced by the Minister of Agriculture, Fisheries and Food on Friday 25th May 1984, without incurring any liability for damages in consequence of so doing, or being subject to any court action by way of injunction to restrain him from so doing.'. — [Mr. Maxwell-Hyslop.]
      Brought up, and read the First time.
      Mr. Robin Maxwell-Hyslop: I beg to move, That the clause be read a Second time.
      The purpose of the clause is both simple and clear. II is to enable tenant farmers to benefit directly from the compensation scheme announced by my right hon. Friend the Minister of Agriculture, Fisheries and Food on Friday 25 May for those who wish to give up milk production and surrender their quota for reallocation.
      It goes without saying that a farm that gives up its quota is likely to be less valuable on the market after it has given up its quota than it was before. Therefore, it is not to be expected that landlords will welcome tenants exercising their right to apply to participate in the Minister's compensation scheme. The compensation will go to the person who gives up the quota—the milk-producing tenant—and the landlord will be left with an asset of reduced value. That is why so many tenancy agreements have in them a condition that the tenant will not take any action that will harm the value of the farm. That can be enforced by injuncion in the courts.
      I do not doubt that the courts would hold that giving up a quota under the scheme so that the farm would not in the predictable future be used for milk production would be an action in breach of the tenancy, and would grant an injunction. If the owner of the farm did not go for an injuction, I would expect him to be able to recover damages—the damages being related to the reduction in the value of the farm as a result of the tenant surrendering his quota and his registration as a milk producer.
      How, therefore, do we get out of the conundrum so that milk farmers who are tenants and wish to avail themselves of the compensation scheme can do so? It can be done only by a clause of this nature, which relieves them of
      "any contract, agreement, convenant, lease or tenancy".
      I thought that those words probably covered the contingencies that were likely to be relevant. The new clause relieves the farmers statutorily of the legal consequences of that action in terms of injuction or damages.
      If it be objected that that leaves the owner of the farm exposed to a diminution in the value of the farm without compensation, I must agree. However, it is wholly open to the Minister to bring in a compensation scheme which recognises that reality, and compensates the owner of the farm for the reduced value as well as compensating the milk producer who goes out of production and surrenders his quota, as the Minister is anxious that a certain proportion should do.
      I am not suggesting for a moment that the majority of tenant milk producers will want to cease production. Clearly they will not, because it is not only their livelihood, but the roof over their heads. A large proportion of tenanted farms in my part of the world—

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      and possibly in others that produce milk—are not suited to any other livelihood. They are used either for the production of milk, or for no viable agricultural purpose. This will not apply to the majority of milk-producing tenants, but only to those who wish to benefit fron the compensation scheme.
      By the same token, the cost of a scheme to compensate the tenants' landlords for the corresponding loss in value of the farms would be a comparatively small financial burden on the Treasury. The two figures must of necessity correspond. I hope thereby to establish that the objective of the new clause is limited.
      The House must ask whether it should be done, and, if the answer is yes, whether it should be done by a Bill or by statutory instrument. The compensation scheme is likely to be brought in by statutory instrument. There are reasons why the use of secondary legislation for a waiver of contract would be oppressive and an abuse of delegated legislation. Statutory instruments cannot be amended by either House. They may only be passed or rejected in the form in which they are presented or, under the negative resolution procedure, if a prayer negating them is passed in either House. That makes a statutory instrument an unsuitable way of legislating.
      If there are shortcomings in my drafting of new clause 6—I accept responsibility for its drafting because I did it myself—it can be rectified when the Bill goes to another place.
      Mr. Mark Hughes: It does not go there.
      Mr. Maxwell-Hyslop: Amendments and new clauses go to the other place. If no such clause is inserted, the Bill cannot be altered in another place. The Bill passes into law as it leaves the House except for any amendment that we make or new clauses that we add. Therefore, imperfections in drafting are not a reason to vote against the new clause. They can be rectified in another place. We are dealing with the principle.
      Mr. Ivan Lawrence: There are unlikely to be any imperfections in my hon. Friend's drafting.
      Mr. Maxwell-Hyslop: I am grateful to my hon. and learned Friend for saying that. With his eagle eye he would spot imperfections, and with his generosity of spirit he would tell me of them, having spotted them. That gives me even greater confidence in recommending the new clause to the House.
      There is no need to labour the argument. The manner in which my right hon. Friend announced the scheme on Friday 25 May did not suggest that he intended it to be taken by fanners as a scheme irapplicable to tenants, nor did milk producers receive it in that way, but without this provision the Bill will have that effect. I hope that I have satisfied the House that it would be inappropriate to include this provision in a statutory instrument.
      6.45 pm
      It is no argument against the new clause to say that most tenants who are milk producers will fall into the category that will benefit from the reallocation of quota. Many of them will be in the under-200,000 litres-a-year band and will have first priority in receiving the reallocation of quota to bring them up to calendar 1983 production.
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      Calendar 1983 in Devon was a miserable year, and in many cases it was well below calendar 1981, which is why many milk producers wish that calendar 1981 had been our base year for quota, not calendar 1983. However, I understand the reasons why calendar 1983 was taken. That is an indirect benefit from the reallocation of quota, and other tenants, especially of institutions with larger holdings, such as the National Trust or the Church Commissioners, will not fall within the 200,000 litres-a-year cut-off point for priority in the reallocation of quota.
      We must remember that many tenant milk producers have their bank loans secured on their herd because there is nothing else on which to secure them. In so far as some bank managers say — as they are doing — that the collateral has lost one third of its value, although the loan has lost none of its quantum, and that with that loan capital facilities have been purchased which now cannot be fully and economically used, there will be some tenants who will wish to leave milk production but will be able to do so only if they benefit from the compensation scheme. They cannot do that however, if their landlords refuse, in the representative case for tenancies and leases today. That is the case for giving new clause 6 a Second Reading and adding it to the Bill.
      Mr. Mark Hughes: I have much sympathy with new clause 6. The House is faced with a technical difficulty. I accept what the hon. Member for Tiverton (Mr. Maxwell-Hyslop) said, that to introduce such a procedure under the regulations when they introduce the quota may have severe restrictions and may not do the job properly. It is clear that many farmers who entered into a tenancy agreement on the expectation of an expanding dairy industry and expanding dairy production now find themselves under pressure to quit dairy farming and may be at risk of breaking their contracts for their tenancies if they take up the scheme announced on 25 May.
      I hope that the Government will give us an absolute assurance that the regulations, when they are laid, will go beyond the normal terms of such regulations in order to obviate the difficulty which the hon. Gentleman has shown the regulations will not do. If, however, the Government cannot give that absolute assurance, we must ask the House to divide on the new clause. It is unacceptable that dairy farmers who have undertaken contracts, tenancies and other agreements should be called upon to go to court because they have had to renege on those agreements for reasons outside their possible control.
      Many of these problems were unexpected when the Bill was drafted and came before the House on Second Reading and in Committee. I hope that the Minister will now accept that what has happened since 31 March has completely changed certain parts of the Bill. It may well be necessary to change, not just the regulations for the implementation of the milk quota but the Bill itself.
      The Opposition support the hon. Member for Tiverton in saying that the waiver of contracts forced upon farmers because of changes beyond their control and beyond anything for which they could have planned must be catered for in the Bill if it is not completely covered within the regulations. I am happy to support the hon. Gentleman's new clause.
      Sir Peter Mills: I have listened to my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) with sympathy and studied his new clause. It stems from

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      anxiety for those farmers who have a desperate problem. Surely tenant farmers should have the right to leave milk production and take advantage of the scheme. If they are denied that right——
      Mr. Mark Hughes: It will be appalling.
      Sir Peter Mills: It is appalling, yet the landlord's position is completely impossible. If one proceeds along the lines of the new clause it could set a precedent, and where would it end? The position is dreadful. There could be further quotas, but heaven forbid. The effect on the landlord would be serious if there were any further schemes to help tenants get out of certain types of production. What about cereals? I am worried for the tenant farmer and the landlord. It is not often that the hon. Member for Torridge and Devon, West is in a dilemma. I usually know my own mind, but in this case I do not.
      There is another point. One must think of the landlord who has spent a great deal of money setting up a dairy outfit—perhaps £100,000 or more—to assist in having a viable dairy unit. He is suddenly told that his tenant is accepting the scheme and is getting out. The landlord is left with the baby on his hands and a sterilised farm for milk production. It shows the utter nonsense of the quota system.
      Mr. Torney: At last the hon. Gentleman has been converted.
      Sir Peter Mills: How stupid some people can get. It confirms my right hon. Friend's view when he fought so hard for an end-price reduction rather than a quota system. That is why, with respect, the hon. Member for Bradford, South (Mr. Torney) is talking a great deal of nonsense. This is a terrible dilemma. It highlights the need to ensure that we never return to a quota system if we have to reduce production of any other commodity. I do not know the way forward here. I hope that my hon. Friend the Minister will help and give some comfort and assistance to the tenant dairy farmer who wishes to take advantage of the scheme.
      There are two sides to the problem, and one cannot leave out the landlord and the expense that could occur to him, or what might happen in the future if we deal with other products. The landlord may in the end be left with a farm which is not allowed to produce anything.
      Mr. Edward Leigh: Does my hon. Friend agree that the dilemma shows the ludicrous position we would be in if quotas were to be introduced for cereals?
      Sir Peter Mills: Absolutely. That is what I was trying to say and not saying very well. My hon. Friend is right. We look to the Minister to help us out of this dilemma and to see what can be done. There must be some way of getting together with the Country Landowners Association and the National Farmers Union to find some way to sort out the problem and to assist the tenant dairy farmer to get out, while not penalising the landlord.
      Mr. Jackson: We all know how serious are the problems being faced by some dairy producers as a result of the introduction of quotas. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) has done the House a service by drawing attention to the problem, but our appreciation of the difficulties should not precipitate us into passing bad legislation. I consider my hon. Friend's new clause to be thoroughly bad legislation.
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      The new clause is bad for two reasons. The first lies in the technical inadequacy of the proposal. The new clause can relate only to England and Wales, because the Bill relates only to England and Wales. I stand to be corrected, but I have the gravest doubt about whether that is a deficiency that can be corrected in another place. If my hon. Friend's new clause were to be accepted it would introduce serious discrimination between dairy farmers in England and Wales and those in Scotland and Northern Ireland. It would be a serious distortion, and I cannot believe that my hon. Friend intends that. It could have come about only by way of a technical oversight.
      Mr. Maxwell-Hyslop: Is my hon. Friend aware that the Minister has introduced the kind of distortion about which my hon. Friend is talking? There is a different percentage aimed at to be purchased in Northern Ireland from that in England and Wales. The whole system of law on tenure is different in Scotland from that in England, which is why the Bill is confined to England and Wales. The only decision that we can make today is on the Bill that is before the House, which is confined to England and Wales for that reason. It does not stop anyone from legislating separately for Scotland, as the Government would have to do anyway because the system of tenure is different in Scotland.
      Mr. Jackson: I well understand that there are differences between different parts of the United Kingdom, but I do not believe that they justify the different legislative treatment that my hon. Friend is proposing in the new clause.
      My objection goes deeper than technical deficiency. I believe that my hon. Friend's proposal is bad legislation for a more fundamental reason. It introduces the dangerous principle of expropriation without compensation. A quota for the production of milk is a form of property right which is attached to a piece of land. My hon. Friend's proposal amounts to an uncompensated transfer of the landlord's interest in the property to the tenant. It is ironic that that should be proposed in the context of a Bill whose prime purpose is to put right precisely an earlier such interference in established contractual arrangements in the matter of succession.
      Mr. Mark Hughes: Will the hon. Gentleman accept that milk quotas are not a transferable asset at the moment? They revert without compensation to the Ministry of Agriculture, Fisheries and Food or the dairy, in this case the Milk Marketing Board, within the terms of the legislation. Therefore, the hon. Gentleman's argument is wrong.
      7 pm
      Mr. Jackson: The hon. Gentleman must accept that it has been admitted by my hon. Friend the hon. Member for Tiverton that a right which would be in the possession of the landlord is to be taken away. That is the difficulty that I am emphasising. I cannot see that there can be any justification for this dangerous and unprincipled step. I cannot see any argument for expropriation without compensation in this case, any more than I could see an argument for expropriation with inadequate compensation with regard to the shipbuilding industry on an earlier occasion, when my hon. Friend scored a great parliamentary triumph. At that time he followed a clear and well-justified line. He would do well to return to that line today by withdrawing the new clause.
      Mr. W. Benyon: I, too, appreciate very much the motives that have caused my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) to move the new clause. At this stage it introduces a new set of factors, some of which have been touched on in the debate. I do not want to deal with the other partner in the partnership, the landlord, as opposed to the tenant. Fixing the quota on the tenant would create an injustice, particularly where there had been substantial capital expenditure.
      We have to consider the new clause as it stands. It is no good saying that compensation should be produced in some other way by the Government. Much more important is the fact that it would be an enormous disincentive to letting in the future. I can think of nothing more calculated to dissuade a landlord from letting than arbitrary legislation of this kind. People will say that what has been done in one case could be done elsewhere. Already there have been hints about cereals. We have spent much time on Second Reading, in Committee and now on Report discussing the legislation, the motive of which is to increase the number of farms for letting. If we accept the new clause, we will reverse the process.
      I accept that there is a problem, but as the new clause stands it is arbitrarily taking away a right. Therefore, it should be resisted. Obviously the matter has to be considered, as my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) said, in conjunction with the various parties in the industry to see whether a solution can be reached.
      Mr. Nicholas Budgen: Like the bulk of the Conservative party, I represent an urban constituency. My constituents are concerned most of all to have cheaper food and to keep monetary support to the farming industry within proper bounds. [Interruption.] I am a very small farmer. As a result of agricultural support, the land that I wish to buy is much more expensive than it would otherwise have been. As has been pointed out already, the principal beneficiaries of a high level of agricultural support have been the agricultural land owners, although they have had to obtain a good deal of tax relief, which they have been very fortunate to get, so as to be able to pass on assets of a high nominal value but a low yield.
      The debate illustrates that my right hon. Friend was right in wanting a reduction in price. If we are not careful, I suspect that there will be a ready answer to my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills): extra compensation for landlords. There will be a grave injustice to landlords if tenants give up what is equivalent to a grant of planning permission. Then the land could not be used for Cairying. One can see that land without the benefit of that equivalent of planning permission might drop in value from £2,000 per acre to perhaps £1,000 per acre. One can see the injustice that would be done.
      What are the Government likely to do? Will we have something similar to what happened in regard to the draining of marshy land of great amenity value? Will there be first an over-high price for corn, then subsidies for peope to take out hedges and then, if they do not respond to those price mechanisms, will the Government say, "We have a splendid Act under which we will compensate you
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      for not doing that which the market encourages you to do."? I suppose that we may do the same thing for agricultural landlords.
      Let us not go down that path. Let us recognise that the price mechanism signalling to people how they should act in their enlightened self-interest is the proper way to deal with farm surpluses. The surpluses must be dealt with quickly. We know already that the Commission expects that the budget of the EC will be overspent this year by £1·4 billion. That is after what are described as harsh reductions in the agricultural surpluses. We know the row that will occur if any serious attempt is made to reduce further agricultural production next year.
      My constituents do not wish to see more money spent in the EC. They are not yet convinced that the agriculture industry is in dire penury. I hope that there will not be further demands from my hon. Friends for compensation for landlords, who, I agree, would be treated badly if my hon. Friend's new clause were accepted. It is far better for the problem to be dealt with by the price mechanism.
      I leave my right hon. Friend with this thought. In this country it is always possible to give national aid to increase the receipts of farmers for their produce. Why can we not have a national policy which lowers the price of agricultural products? Why can we not say to the EC, "Thank you very much indeed. We will give our farmers 20 per cent. less for their milk. We would prefer to do that rather than introduce quotas."? The Government could say to people like myself who have suckler cows, "We think you are terribly hard up. We want to give you more and we will give you national aid." Why can there not be national reductions in price?
      Mr. David Maclean: I can add nothing of greater wisdom to the debate than we have heard from my hon. Friends the Members for Tiverton (Mr. Maxwell-Hyslop) and for Torridge and Devon, West (Sir P. Mills). I completely agree with the principle of the new clause and I have great sympathy with the "Catch-22" situation in which tenant dairy farmers and landlords are being placed. It is an awful dilemma to which the Government will have to address themselves in the coming weeks and months.
      However, I do not believe that the Bill is the right vehicle for a clause such as has been proposed. It is five years since the National Farmers Union approached us to do something about the landlord and tenant system. The Bill has been five years in the gestation process. My right hon. Friend the Minister has been criticised for apparently rushing in the quota system. We should not add to the problem that might be encountered in dairy farming by accepting the new clause that many of us have had a chance to study only during the last few days. The solution is to have exhaustive but rapid discussions with the NFU and the CLA on how the problem should be approached. Let us all also consult the Tenant Farmers Association and come up with some solution to the problem. Perhaps we need a new Bill or perhaps the regulations will solve the problem. I am not a constitutional lawyer so I cannot comment on that. Having spent so long putting together a Bill that has been agreed by the NFU and the CLA, we should not hurriedly accept a new clause which, as my hon. Friend the Member for Torridge and Devon, West said, could have repercussions for the cereal, beef and sheep sectors. I urge the Government rapidly to have discussions with the NFU and the CLA.
      Mr Torney: Something must be done about the Bill. Whether we agree with it or not, the Bill is aimed at helping the tenant farmer. Since the Bill was introduced circumstances have changed. The new EEC quotas, approved by the Minister, create a new factor.
      One could argue that the new system creates dangers for many tenant farmers. The new clause deals with liability for damages if a tenant farmer gives up milk production. The tenant farmer does not get out of milk production because he is fed up with it or does not like doing it any more, but because the EEC, with the agreement of the Minister, has decided that he cannot produce as much milk as he used to produce. To say that the Bill does much for tenant farmers is nonsense.
      The Opposition support the new clause. Even if its wording is not perfect, its sentiments are right. If it is pressed to a vote we shall vote for it unless the Minister gives cast iron assurances that legislation will be introduced to give the tenant farmer protection.
      Mr. Gerrard Neale: I agree with my hon. Friends the Members for Tiverton (Mr. Maxwell-Hyslop) and for Torridge and Devon, West (Sir P. Mills). I see the dilemma particularly in relation to the landlords. Considerable discontent will be caused in my area if the large number of farmers who could be affected think that there is one law for owner-occupiers and another for tenant farmers. That could give rise to great anger.
      In addition, since the announcement of the scheme fundamental doubts have arisen about how the scheme will affect a particular farm and what the hardship grounds will be. I am grateful to my hon. Friend the Member for Tiverton for bringing the problem to the attention of the House. Unless my right hon. Friend is able to give some assurance that discrimination between tenant farmers and owner-occupiers can be dealt with suitably, a barrage of major criticism will be levelled at him.
      Mr. Budgen: Is my hon. Friend in favour of a system of compensation for landlords on the capital that they will lose?
      Mr. Neale: I remind my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) of what my hon. Friend the Member for Torridge and Devon, West said. Many of us would not have gone down this road, any more than the Minister would, but we are set on a course that we cannot change. I worry about where we shall stop, but some people will want to avail themselves of the scheme. They will be justified in doing that, but they will be pre-empted. I do not know how we can justify that.
      I urge my right hon. Friend to consider the arguments carefully and to give a sign that he is willing to look at the problems seriously. Many of us will be in the gravest difficulty if we have to justify the fairness of the proposal to those who are adversely affected.
      7.15 pm
      Mr. Ivan Lawrence: I came into the Chamber shortly before the start of the debate having just written many letters—goodness knows how many—to the milk producers in my constituency saying that for some of them salvation was at hand because of my right hon. Friend's scheme to encourage those who wish to leave milk production by providing adequate compensation. Thanks to my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) highlighting the scheme, it now appears
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      that that is not so for a large proportion of small milk producers in my constituency. I refer to tenant farmers who are bound by contract to their landlords and will not be able to avail themselves of the relief without breaking their contract.
      Something, of course, must be done about it. I could be wrong, but I do not believe that it is financially possible to provide compensation for landlords for what amounts to a breach of contract along the lines suggested by my hon. Friend the Member for Tiverton. The sums involved would be substantial and beyond likely implementation.
      Before the Council of Ministers agreed to the form of compensation, it must have considered the consequences to the different legal systems in Europe of breaking the contracts which bind landlords and tenants. Landlord and tenant law doubtless applies in different forms, but in substance is the same across the civilised countries of Europe.
      I concede that the Minister is caught on the horns of a remarkable dilemma which is not of his making. Nobody could have tried harder to stop this happening. The Minister must have had some assurance during discussions with colleagues in the Community about how they proposed to deal with the same problem.
      But it is no use pretending that we shall help the small milk producer in the way that my right hon. Friend promulgated on 25 May if the reality is different. My right hon. Friend must either devise some other way of helping the small milk producer, or find some way round this particular contractual dilemma, no doubt with the assistance of his colleagues in the Community.
      As there is an element of doubt, I shall find it difficult to support my hon. Friend's well-timed and important new clause. However, the plight of the small milk producers in my constituency is very serious, and I am most anxious, as their representative, to see that they are treated with justice and fairness. I look to my right hon. Friend to achieve that justice and fairness in one way or another.
      Sir Paul Hawkins: I entirely sympathise with the cases that my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) has brought to our notice. It is good that he has done so. Personally, however, I do not think that we should adopt the new clause. The Bill has been long in coming, and I have been longing for it to appear. Together with the Budget changes to capital transfer tax and other matters, the Bill will go some way towards creating more tenant farmers, and that is the only way in which a young man can enter farming today. No young man today can buy 200 acres at £2,000 or £2,500 an acre. The new clause would do serious damage to relations between landlord and tenant. The matter can best be dealt with by regulations, when the regulations are made.
      As my hon. Friend the Member for Tiverton rightly said, only a small number of farmers would be affected. We are somewhat inclined to exaggerate the importance of this issue. I am sure that my hon. and learned Friend the Member for Burton (Mr. Lawrence) did not wish to exaggerate, but if he had been present for the whole of the debate he might have realised that the number of people who have such a clause in their agreements is not enormous, and nor is the number who will stop farming.
      Finally, I do not agree with my hon. Friend the Member for Penrith and the Border (Mr. Maclean) that we should go back to the NFU and the CLA, and negotiate with them again. The NFU cannot make up its mind about anything

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      at present. I have good friends in the NFU, and I am a member of that union, but I believe that the Minister must make up his own mind. I know the Minister, and I am convinced that he will do what is fair.
      Mr. Nicholas Winterton: I apologise for being absent for part of the debate. I was detained by other duties in the House.
      I remind my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) that the aim of the House is to see that justice is done and seen to be done. The fact that the new clause may apply only to a few cases is not important. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) and other hon. Members have done a great service to the farmers, who in recent times have been dealt a devastating blow.
      I believe that my view is shared by the NFU. I do not share the opinion of the NFU and held by my hon. Friend the Member for Norfolk, South-West. The NFU is, to use the words of my hon. and learned Friend the Member for Burton (Mr. Lawrence), faced with a dilemma. There have been different views within the NFU as to how the milk package should be handled. However, to say that the NFU is at sixes and sevens and does not know where it stands on any issue is to do a grave disservice to one of the finest organisations representing one of the most efficient industries in the country — [Interruption.] If my hon. Friends wish to laugh, they should keep an eye on their farmers at the next election. To the farmers, this is no laughing matter.
      The new clause merits our support. It deals with a small number of farmers who will be adversely affected——
      Mr. Budgen: Will my hon. Friend give way?
      Mr. Winterton: No. I know precisely what my hon. Friend wants to say. I grew up with him.
      Sir Peter Mills: Will my hon. Friend give way?
      Mr. Winterton: I am happy to give way to my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills).
      Sir Peter Mills: My hon. Friend rightly says that he wishes justice to be done in the House. However, there must be justice for the landlord as well as the tenant.
      Mr. Winterton: I believe that if my hon. Friends analyse the problems facing farming at the moment they will probably be more concerned about the tenant farmer and the decrease in the number of tenant farmers which has occurred than about anything else. If my hon. Friend wishes to know about which group I am most concerned at present, I must say that, in the main, it is the tenant farmer and—allied with him—the small and medium-sized dairy farmer.
      My hon. Friend the Member for Tiverton has taken a deep interest in this matter and has done much research. He has been consistent in his views, which is more than I can say for many of my hon. Friends. I say that with great sadness——
      Mr. Budgen: No, he does not. My hon. Friend says it with great enjoyment.
      Mr. Winterton: If my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) wishes to
      358
      intervene now, I shall be happy to give way, but perhaps he wishes only to make glib remarks from a sedentary position.
      Mr. Budgen: Is my hon. Friend in favour of a compensation scheme for landlords? How much would it cost, and how would he justify it to the taxpayers?
      Mr. Winterton: I would justify a compensation scheme by reference to all that has happened to agriculture recently. Successive Governments have urged farmers to produce more. The farmers have reacted more efficiently and effectively than any other industry in the country. The Government then, almost retrospectively, expect them to change direction. Adequate compensation should be given to the appropriate farmer, whether he is a landlord or a tenant.
      No doubt the drafting of the new clause can be criticised. That is what the Front Bench always says when such a new clause is introduced. Ministers make reassuring sounds in the hope that opposition on the Government side will evaporate because of lack of time. The Front Bench has the knowledge and the wherewithal to provide the answers, but its answers will not produce the result that my hon. Friend the Member for Tiverton wishes to achieve.
      Not just in relation to this matter but on the wider question of milk quotas, the Government have bitten off more than they bargained for when they made the agreement in Brussels some weeks ago. We saw the result at the by-elections in Surrey, South-West and Stafford, and in the local government elections, and we shall see it in the European elections next week. People who traditionally, because of their jobs, have instinctively and inevitably voted Conservative will abstain on a massive scale.
      Sir Paul Hawkins: Rubbish.
      Mr. Winterton: My hon. Friend says "Rubbish". We shall await the result of the poll. What I have said will be proved to be right.
      Sir Peter Mills: My hon. Friend is not helping our candidates.
      Mr. Winterton: Should we be trying to help our candidates in an election, or should we be seeking to serve the best interests of this country?
      I am supporting my hon. Friend the Member for Tiverton because he and a number of my hon. Friends have had the courage to put down a new clause that is directed towards helping a number of people who would be adversely affected as a result of the milk package. I have said much in the House and outside on this subject and shall continue to do so. I want to see injustices righted, and even if I am criticised almost unanimously by my hon. Friends I shall still say what I believe to be right.
      7.30 pm
      The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): We are all grateful to my hon. Friend the Member for Tiverton (Mr. Maxwell-Hislop) for tabling this new clause. A number of my hon. Friends have expressed a similar view. My hon. Friend the Member for Wantage (Mr. Jackson) said that my hon. Friend the Member for Tiverton had done the House a service, and he has.
      I am grateful for the expressions of support from many hon. Friends, who have said how much better it would

      359
      have been if we could have dealt with the massive over-production of milk throughout the EEC by the discipline of price. That would have been a good deal neater and simpler, and it is something, as the House knows, that I have always wanted. However, we found ourselves in a minority of one in Brussels, and I regret that we were not able to have our way on that. I hope that a lesson will be learnt and that if discussions take place on other commodities we shall find ourselves in a majority.
      I understand and share the concern expressed by my hon. Friend the Member for Tiverton that the outgoers scheme for milk producers should be as fair as possible to all concerned and should achieve its essential objective of providing a reserve quota for allocation to other producers, particularly the small ones, to whom, as the House will know, I think it is right to give a first priority in the reallocation of quotas.
      Mr. Robert Hughes: Will the right hon. Gentleman tell the House why he made the announcement about the £50 million outgoers scheme to a Conservative press conference for the European elections, and did not come to the House and explain what he has now explained?
      Mr. Jopling: I am sorry, but the hon. Gentleman is uncharacteristically wrong in that. We answered a written question on the scheme before we ever embarked on a press conference outside.
      The House will perhaps recall that some voices have urged me, with regard to the redistribution of quotas, to create a market for them and to say, "Let the people purchase them, if they can, at the highest price; let them be bought and sold." Apart from the fact that regulations for the milk scheme do not make provision for that, that would have been the wrong way. It was right to take a positive decision to handle these quotas ourselves, so that we could give first priority on redistribution to the smaller producer.
      The scheme is for a minority of producers who want to give up to be encouraged to do so. The principal aim of the scheme is to restore to a far greater number of small producrs their 1983 production patterns. That is what we are about. The purpose of the scheme is not necessarily to encourage people to get out of milk production.
      The outgoers scheme will encompass owner-occupiers and tenants. My hon. Friend the Member for Tiverton was right when he said that those who want to get out will be in a minority. The majority of milk producers will wish to stay in milk production, and it is that that we want to encourage, particularly at the smaller end. We hope that by making available something rather less than 1·5 per cent. of all the milk produced in the country we can bring 40 per cent. of producers who have fewer than 40 cows back to their 1983 position of production.
      Owner-occupiers account for the majority of all milk producers. I have been looking at some figures—which may interest the House—of how many milk producers are owner-occupiers and how many rent the farms. Some farms are on a mixed tenure, and sometimes it is not possible to assess how many of these there are. However, in England and Wales, according to the latest figures that I have been able to get, there are 20,500 milk producers who own their farms, compared with 12,200 who rent their farms. There is a minority of milk producers who are tenants.
      Mr. Budgen: When the owner-occupier comes to sell his farm, will he not find that its capital value is much diminished if it does not have any quota attached to it?
      Mr. Jopling: That is so, but we have seen that before with quotas for other crops, which have had an effect on the value of farms. Owner-occupiers account for the majority of milk producers, and the decision whether or not to give up milk production and apply for compensation under the outgoers scheme will be a matter for the producer. With the tenant there is a need—which the House understands if one is to judge from the tenor of the speeches — to take into account the interest of the landlord as well. Who can argue but that both the landlord and the tenant have a clear and legitimate interest in the farming activities that are carried on on the holding?
      My hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) drew attention to the unfair impact which the clause could have on landlords. As he said, in the case of a dairy holding the landlord may have invested substantial capital in the provision of specialist dairy buildings which would be of a much reduced value if, because of quota restrictions, continued milk production on the holding were no longer possible.
      Another aspect to which no hon. Member has yet referred is where the tenant has provided the buildings himself, with the landlord's consent. I can see that my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins), who has dealt with many arrangements of compensation, knows exactly what I am going to say. Where such a tenant has decided, as a result of the outgoers scheme, that he wishes to give up milk production and quit the holding, the landlord could find himself facing a substantial bill for compensation to the tenant for the tenant's investment in those buildings. That would be even worse than the situation to which my hon. Friend the Member for Torridge and Devon, West referred.
      It is because of the shared interest in the holding that we intend to provide in the outgoers scheme that the agreement of the landlord will be necessary before compensation is paid to a tenant who wishes to cease milk production. That is an entirely fair approach, which will ensure that an important decision affecting the future of farming activities on the holding can be arrived at with the agreement of the parties who have a legitimate interest in the holding.
      Mr. Geraint Howells: Let us say that a small dairy farmer is keen to leave the dairy industry. If his landlord says, "No, you are not allowed to leave the dairy sector," what plans has the right hon. Gentleman to help the producer?
      Mr. Jopling: That is one of the matters which the House will want to consider carefully. However, it is not relevant to the new clause.
      The outgoers scheme will be non-statutory as a result of the way in which it will be brought in under Community regulations. The clause would cut right across current procedures and override any quota provisions which might already be incorporated in a tenancy agreement. The House will have taken careful note of the remarks of my hon. Friend the Member for Wantage (Mr. Jackson) on expropriation without compensation. The House should

      361
      consider carefully and seriously the implications of adopting the approach that my hon. Friend the Member for Tiverton has placed before it.
      My hon. Friend the Member for Milton Keynes (Mr. Benyon) brought a crucial issue to our attention when he said that one of the main purposes of the Bill was to encourage landlords to let more land. The Bill will do that in a number of ways. One factor which has undoubtedly contributed to the problems of the tenanted sector over the years is the fear among landlords that any provision which they have included in a tenancy agreement will subsequently be overridden by statute. That happened in 1976 when the then Labour Government introduced their succession provisions. It would be most unfortunate if something similar happened with the milk quota arrangements. The result would be a further damaging blow to the confidence of landlords and to their willingness to create more tenancies. That is a matter which was taken up by my hon. Friend the Member for Norfolk, South-West.
      For those reasons I ask my hon. Friend the Member for Tiverton not to press the new clause to a Division. I understand fully the motives that lie behind it, and I am concerned about the dilemma in which we find ourselves. I am sure that we all want to ensure that the objectives of the outgoers scheme are achieved. As I have stressed, one of them is to bring the smaller producers back to their 1983 production patterns. However, the clause has far-reaching implications which, if it were to be adopted, could prove to be a further major disincentive to the letting of land.
      I have been asked by a number of my hon. Friends to think carefully about the dilemma that faces us. I shall do that, of course. My hon. Friend the Member for Norfolk, South-West asked me not to consult the Country Landowners Association, the National Farmers Union and other organisations. Notwithstanding his request, I shall ask those bodies whether they can help the Government and the House in finding ways whereby, with consent, we can overcome the problem. I do not believe that the House should accept the new clause and I hope that my hon. Friend the Member for Tiverton will withdraw it. If he feels that he is not able to do so, I must ask my right hon. and hon. Friends to oppose it, but I hope that that will not be necessary.
      7.45 pm
      Mr. Neale: How soon does my right hon. Friend think he will be able to give this matter serious consideration and produce a solution? Any farmer who entered my right hon. Friend's Department would soon become aware of the grave complexities which he has to resolve. However, individual farmers are being swamped with the most hideous uncertainty. My right hon. Friend and the House have a grave responsibility to resolve the issue quickly on behalf of farmers.
      Mr. Jopling: We are moving as fast as we can to clear our minds over special cases, direct sales and wholesale sellers who are still uncertain about their quota. We hope to provide the necessary information very soon. We shall move as fast as we can and I hope that my hon. Friend will not press me to announce a time. As I have said, I hope that my hon. Friend the Member for Tiverton will not press the clause to a Division. However, if he feels that he must do so, I must ask the House to oppose it.
      Mr. Robert Hughes: I have no wish to prolong the debate. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) has given the House an opportunity to discuss some serious issues which have arisen as a result of the implementation of quotas.
      I said earlier that the Minister had failed to make a statement in the House and that as a result proper questioning has not been possible. A proper debate should take place and it is unsatisfactory that we should discuss such an important issue under the terms of a new clause to a Bill which has wide implications.
      The Minister accused me of being uncharacteristically wrong about the making of a statement to the House and the timing of a press conference. I seek to be a fair man and I understand that I may have been wrong in that an announcement was made to the House by means of a written answer about five minutes before a press conference took places. The Conservative press conference began at 9.35 am and 9.30 am is the earliest that a written answer can be given to the House. It seems that I was not so very wrong.
      The outgoers scheme will provide £50 million over five years. That pales into insignificance when set against the provision that is being made by the Federal Republic of Germany. The problem of small farmers would have been dealt with in a much better way if the Minister had adopted a scheme akin to the one that I put to him when I met him about a fortnight ago. The smaller producer should have been allowed to produce his 1983 quota and only that, and where necessary the quota should have been adjusted upwards on a sliding scale towards the level of the larger producers. Such a scheme is to be implemented by the West Germans, so there is nothing impracticable about it. Indeed, it is a much better way of tackling the problem.
      There are clear signs that the Minister has not followed through in detail all the ramifications of what is happening to milk producers as a result of the quota applications. The Minister tells us that the outgoers scheme is non-statutory because it is to be introduced under the EC agreements. None the less, I am concerned that we shall not have a proper opportunity fully to debate the scheme in Government time to ensure that we arrive at the best possible solution. I hope that the Minister will take this opportunity to give an assurance that he will consult his right hon. Friend the Leader of the House and that arrangements will be made for a proper debate. Some guarantees have been given, and I should like them to be reinforced. We must discuss this matter properly. I hope that no Minister will duck the issue.
      7.50 pm
      Mr. Maxwell-Hyslop: I seek leave of the House to respond briefly.
      Mr. Deputy Speaker (Mr. Paul Dean): The hon. Member does not need to seek leave, because he moved the motion.
      Mr. Maxwell-Hyslop: The issue will not go away, because it is real rather than theoretical. Ministers and every other hon. Member agree that the quantum of the problem is small, for two reasons: first, my right hon. Friend the Minister is prepared to buy up only 2·25 per cent. of the quota; secondly, a large proportion of the milk producers involved will be owner-occupiers rather than tenants. The quantum is small; the principle is not.

      363
      The only possible resolution of the principle lies in the Minister's hands. He rightly said that two interests are involved — the interests of the tenant and of the landlord. It follows that in equity there is a compensation liability to both parties. A huge sum is not involved, and I hope that I have accurately and convincingly given the reasons for that.
      We all know that the time span to legislate on this matter is relevant. Without the new clause, the tenant farmer will not be able to avail himself of the scheme's benefits. It is entirely in the hands of my right hon. Friend and the rest of Cabinet to remove any injustice which the new clause might involved by recognizing that there should, in equity, be compensation for the diminution in value which this measure brings to the landlord. The only way to give equity, if tenants compared with owner-occupiers are not to be penalised, is to include the new clause in the Bill. No further opportunity is available to include this measure later in the Bill.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 111, Noes 207.

      Division No. 350]

      [7.53 pm

      AYES

      Anderson, Donald

      Hughes, Roy (Newport East)

      Archer, Rt Hon Peter

      Hughes, Sean (Knowsley S)

      Ashton, Joe

      Janner, Hon Greville

      Banks, Tony (Newham NW)

      Kaufman, Rt Hon Gerald

      Barnett, Guy

      Kirkwood, Archibald

      Beckett, Mrs Margaret

      Lambie, David

      Beith, A. J.

      Lamond, James

      Bermingham, Gerald

      Leighton, Ronald

      Blair, Anthony

      Lewis, Ron (Carlisle)

      Brown, Hugh D. (Provan)

      Lewis, Terence (Worsley)

      Callaghan, Jim (Heyw'd & M)

      Litherland, Robert

      Campbell-Savours, Dale

      Loyden, Edward

      Clark, Dr David (S Shields)

      McDonald, Dr Oonagh

      Clay, Robert

      McKay, Allen (Penistone)

      Cocks, Rt Hon M. (Bristol S.)

      McKelvey, William

      Coleman, Donald

      Maclennan, Robert

      Concannon, Rt Hon J. D.

      McWilliam, John

      Cook, Robin F. (Livingston)

      Madden, Max

      Craigen, J. M.

      Maxton, John

      Crowther, Stan

      Maynard, Miss Joan

      Cunliffe, Lawrence

      Meadowcroft, Michael

      Dalyell, Tarn

      Michie, William

      Davis, Terry (B'ham, H'ge H'l)

      Millan, Rt Hon Bruce

      Deakins, Eric

      Miller, Dr M. S. (E Kilbride)

      Dixon, Donald

      Morris, Rt Hon J. (Aberavon)

      Dormand, Jack

      Mudd, David

      Douglas, Dick

      O'Neill, Martin

      Dubs, Alfred

      Oppenheim, Philip

      Dunwoody, Hon Mrs G.

      Parry, Robert

      Eadie, Alex

      Pike, Peter

      Eastham, Ken

      Powell, Raymond (Ogmore)

      Ewing, Harry

      Prescott, John

      Field, Frank (Birkenhead)

      Radice, Giles

      Fisher, Mark

      Randall, Stuart

      Flannery, Martin

      Redmond, M.

      Forrester, John

      Richardson, Ms Jo

      Foster, Derek

      Robertson, George

      Foulkes, George

      Robinson, G. (Coventry NW)

      Freud, Clement

      Ross, Ernest (Dundee W)

      Godman, Dr Norman

      Ross, Stephen (Isle of Wight)

      Gourlay, Harry

      Rowlands, Ted

      Hamilton, W. W. (Central Fife)

      Sheerman, Barry

      Harrison, Rt Hon Walter

      Short, Ms Clare (Ladywood)

      Haynes, Frank

      Short, Mrs H.(W'hampt'n NE)

      Hogg, N. (C'nauld & Kilsyth)

      Skinner, Dennis

      Holland, Stuart (Vauxhall)

      Smith, Cyril (Rochdale)

      Home Robertson, John

      Spearing, Nigel

      Howells, Geraint

      Strang, Gavin

      Hoyle, Douglas

      Thomas, Dafydd (Merioneth)

      Hughes, Dr. Mark (Durham)

      Thompson, J. (Wansbeck)

      Hughes, Robert (Aberdeen N)

      Thome, Stan (Preston)

      364

      Tinn, James

      Winterton, Mrs Ann

      Wallace, James

      Winterton, Nicholas

      Wareing, Robert

      Weetch, Ken

      Tellers for the Ayes:

      Welsh, Michael

      Mr. Robin Maxwell-Hyslop and Mr. Thomas Tomey.

      Wigley, Dafydd

      Winnick, David

      NOES

      Aitken, Jonathan

      Greenway, Harry

      Amess, David

      Ground, Patrick

      Ancram, Michael

      Hampson, Dr Keith

      Arnold, Tom

      Hanley, Jeremy

      Ashby, David

      Hargreaves, Kenneth

      Aspinwall, Jack

      Harvey, Robert

      Atkins, Robert (South Ribble)

      Hawkins, C. (High Peak)

      Atkinson, David (B'm'th E)

      Hawkins, Sir Paul (SW N'folk)

      Baker, Nicholas (N Dorset)

      Hayhoe, Barney

      Baldry, Anthony

      Hayward, Robert

      Batiste, Spencer

      Heddle, John

      Beaumont-Dark, Anthony

      Henderson, Barry

      Bellingham, Henry

      Hind, Kenneth

      Benyon, William

      Hirst, Michael

      Berry, Sir Anthony

      Hogg, Hon Douglas (Gr'th'm)

      Bevan, David Gilroy

      Howard, Michael

      Biffen, Rt Hon John

      Howarth, Gerald (Cannock)

      Biggs-Davison, Sir John

      Hunt, John (Ravensbourne)

      Bottomley, Peter

      Hunter, Andrew

      Bottomley, Mrs Virginia

      Jackson, Robert

      Bowden, A. (Brighton K'to'n)

      Johnson-Smith, Sir Geoffrey

      Bowden, Gerald (Dulwich)

      Jones, Gwilym (Cardiff N)

      Braine, Sir Bernard

      Jopling, Rt Hon Michael

      Brinton, Tim

      Knight, Gregory (Derby N)

      Brooke, Hon Peter

      Knox, David

      Brown, M. (Brigg & Cl'thpes)

      Latham, Michael

      Bruinvels, Peter

      Lawrence, Ivan

      Buchanan-Smith, Rt Hon A.

      Lawson, Rt Hon Nigel

      Budgen, Nick

      Lee, John (Pendle)

      Bulmer, Esmond

      Leigh, Edward (Gainsbor'gh)

      Burt, Alistair

      Lester, Jim

      Carlisle, John (N Luton)

      Lightbown, David

      Carlisle, Kenneth (Lincoln)

      Lilley, Peter

      Carttiss, Michael

      Lloyd, Peter, (Fareham)

      Cash, William

      Luce, Richard

      Channon, Rt Hon Paul

      Lyell, Nicholas

      Chope, Christopher

      McCrindle, Robert

      Clark, Dr Michael (Rochford)

      McCurley, Mrs Anna

      Clark, Sir W. (Croydon S)

      Macfarlane, Neil

      Clarke, Rt Hon K. (Rushcliffe)

      MacGregor, John

      Conway, Derek

      Maclean, David John

      Coombs, Simon

      McQuarrie, Albert

      Cope, John

      Major, John

      Couchman, James

      Malins, Humfrey

      Currie, Mrs Edwina

      Maione, Gerald

      Dicks, Terry

      Marlow, Antony

      Douglas-Hamilton, Lord J.

      Mates, Michael

      Dunn, Robert

      Maude, Hon Francis

      Durant, Tony

      Mawhinney, Dr Brian

      Eggar, Tim

      Mayhew, Sir Patrick

      Emery, Sir Peter

      Mellor, David

      Evennett, David

      Meyer, Sir Anthony

      Eyre, Sir Reginald

      Mills, Iain (Meriden)

      Fallon, Michael

      Mills, Sir Peter (West Devon)

      Farr, John

      Moate, Roger

      Favell, Anthony

      Moore, John

      Fenner, Mrs Peggy

      Moynihan, Hon C.

      Forman, Nigel

      Murphy, Christopher

      Forth, Eric

      Needham, Richard

      Fowler, Rt Hon Norman

      Nelson, Anthony

      Franks, Cecil

      Nicholls, Patrick

      Freeman, Roger

      Onslow, Cranley

      Gale, Roger

      Page, Richard (Herts SW)

      Galley, Roy

      Parris, Matthew

      Garel-Jones, Tristan

      Peacock, Mrs Elizabeth

      Glyn, Dr Alan

      Porter, Barry

      Goodhart, Sir Philip

      Powell, William (Corby)

      Goodlad, Alastair

      Powley, John

      Gorst, John

      Prentice, Rt Hon Reg

      Gow, Ian

      Price, Sir David

      Gower, Sir Raymond

      Proctor, K. Harvey

      365

      Pym, Rt Hon Francis

      Temple-Morris, Peter

      Raison, Rt Hon Timothy

      Terlezki, Stefan

      Rathbone, Tim

      Thomas, Rt Hon Peter

      Renton, Tim

      Thompson, Donald (Calder V)

      Rhodes James, Robert

      Thompson, Patrick (N'ich N)

      Rhys Williams, Sir Brandon

      Thornton, Malcolm

      Ridley, Rt Hon Nicholas

      Thurnham, Peter

      Ridsdale, Sir Julian

      Townend, John (Bridlington)

      Robinson, Mark (N'port W)

      Tracey, Richard

      Roe, Mrs Marion

      Twinn, Dr Ian

      Rowe, Andrew

      van Straubenzee, Sir W.

      Ryder, Richard

      Viggers, Peter

      Sainsbury, Hon Timothy

      Waddington, David

      Sayeed, Jonathan

      Wakeham, Rt Hon John

      Shaw, Sir Michael (Scarb')

      Waldegrave, Hon William

      Shelton, William (Streatham)

      Walden, George

      Shepherd, Colin (Hereford)

      Walker, Bill (T'side N)

      Shepherd, Richard (Aldridge)

      Waller, Gary

      Sims, Roger

      Ward, John

      Skeet, T. H. H.

      Wardle, C. (Bexhill)

      Smith, Sir Dudley (Warwick)

      Watson, John

      Soames, Hon Nicholas

      Watts, John

      Spencer, Derek

      Wells, Bowen (Hertford)

      Spicer, Jim (W Dorset)

      Wells, John (Maidstone)

      Spicer, Michael (S Worcs)

      Wheeler, John

      Stanbrook, Ivor

      Whitfield, John

      Stern, Michael

      Wolfson, Mark

      Stevens, Lewis (Nuneaton)

      Wood, Timothy

      Stevens, Martin (Fulham)

      Woodcock, Michael

      Stewart, Allan (Eastwood)

      Young, Sir George (Acton)

      Stewart, Andrew (Sherwood)

      Stradling Thomas, J.

      Tellers for the Noes:

      Sumberg, David

      Mr. Michael Neubert and Mr. Ian Lang.

      Taylor, Teddy (S'end E)

      Tebbit, Rt Hon Norman

      Question accordingly negatived.

    New Clause 7

      RETIREMENT OF TENANT FARMERS FROM AGE 65
      `The following shall be added at the end of subsection (3) of section 2 of the Agricultural Holdings (Notices to Quit) Act 1977—
      "Case J

      `(a) at the date of the operation of the Notice to Quit, the tenant uner a tenancy agreement which had been entered into after enactment of this Act, had passed the age of 65;

      (b) the tenenacy agreement had provided that this 'Case' shall apply to the tenancy;

      (c) for the purposes of this 'Case', a Notice of Retirement shall not take effect for two years from the next term date following the service of the Notice;

      (d) the tenant, who is a party to a tenancy agreement to which this 'Case' applies, shall on retirement be paid compensation based on two years' rent, irrespective of whether the tenant serves a Notice to Quit after receiving a Notice to quit under this 'Case'.".'.—[Mr. Hunter.]

      Brought up, and read the First time.
      Mr. Andrew Hunter: I beg to move, That the clause be read a Second time.
      After the drama generated by the debate on new clause 6, I feel that matters can now only go into something of a decline.
      The few hon. Members who laboured through the heat of the day in Standing Committee may recall that I moved an amendment in Committee which differed greatly in wording from the new clause now before the House, although the basic motives and objectives were the same. My hon. Friend the Minister listened sympathetically and replied at great length to the amendment which I moved in Committee, stating that there were circumstances in
      366
      which he "would be happy to table a suitable amendment on Report." It was, therefore, with great regret that I noted his failure to do so. Even at this late stage I hope and plead that he will take on board the sentiments, motives and principles underlying this new clause.
      During the consideration of the Bill in another place, and on Second Reading and in Committee here, it was stated ad nauseam that the purpose of the Bill was to restore health to the tenanted sector of the farming industry. That can be achieved only by inducing landlords to release farms which hitherto they would have taken, or might take, in hand, or farm in partnership themselves. I contend that by introducing the concept of retirement the new clause will speed up the turnover of tenanted farms and bring fresh tenancies on to the market to as great an extent as the abolition of future three-generation successions.
      The purpose of the new clause can be summarised very simply. It is to provide the landowner and the prospective tenant with an option—I stress that word—to include a retirement clause in a new tenancy agreement. It will enable the landlord, at his discretion, to serve a notice of retirement on a tenant, after that tenant has passed the age of 63, by means of an incontestable notice to quit under section 2 of the Agricultural Holdings (Notices to Quit) Act 1977. The relevant age is 63 because the new clause provides that two years' notice must be given.
      I stress again that there is no question of one-sided compulsion. There must be prior agreement between the parties that the tenancy will include such a retirement provision, so that both parties would enter into the agreement with a clear understanding of that provision and the tenant would thus not be subject to any element of compulsion. The tenant would have two years' notice of retirement in recognition of the need for adequate planning and timely liquidation of assets, having regard to national and fanning economic circumstances. In other words, it will safeguard the retiring tenant farmer from being compelled to retire in circumstances such as those currently—one hopes temporarily—prevailing in which the liquidation of certain fanning assets would bring depreciated returns. Furthermore, under the new clause the tenant would receive outgoing compensation based on two years' rent.
      I shall briefly outline the arguments in favour of introducing the option—again I stress the word "option"—of a system of retirement. First and foremost, it would be an added inducement to landowners to let, rather than taking vacant farms in hand, and would thus represent a real move towards making more farms available for letting in accordance with the Bill's aim, which both sides of the House willingly accept. On the other hand, if we did not introduce any system of retirement, landlords might continue to let vacant land to neighbouring established farmers or to amalgamate it with other land, simply to avoid the creation of other long-term tenancies.
      Obviously the effect of the system of retirement would be to limit the lengths of tenancies. That, in itself, would give more people the chance of farming, and tenancies would become available years earlier than occurs under present legislation, which of course provides for succession only on the death of the tenant.
      There are also other advantages to a retirement system. It has most of the benefits of a term tenancy for the landlord, yet it is acceptable to tenants—witness the championing of the new clause by the Tenant Farmers

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      Association. Incidentally, I hope that my hon. Friend the Minister will pay heed to my suggestion that every effort should be made to enable the Tenant Farmers Association to contribute to our national debates on farming matters. I have very much valued the assistance and briefing that I and other Committee Members received from that association.
      A system of retirement would also take much of the uncertainty out of tenancy arrangements, both for the landlord and for the tenant. The landlord would know for how long, at the most, his land would be tenanted. If he wished, he could hold out the option of taking the land back and could offer the tenancy to an older man. On the other hand, the tenant would know exactly where he stood and he could plan for retirement, which sadly many tenant farmers cannot do at present.
      A retirement system would remove the problem of an elderly tenant finding it increasingly difficult to cope, running up heavy dilapidations, and getting bitter about a rent which he cannot afford even though, in all probability, it is artificially low. For the landlord, it would overcome the problem of seeing a tenanted farm deteriorate. Clearly the well-wishing and well-meaning landlord would not want to appear to be too hard on an aging tenant.
      It is relevant to recall that new clause 6 has already been added to the Bill. It enables county councils, in respect of new tenancies, to retire their smallholding tenants at the age of 65. For the life of me I cannot understand why what should be acceptable for county council smallholding tenants is not likewise acceptable for the broader spectrum of tenants. The new clause is, therefore, entirely consistent with the retirement policy for county council tenants. Its application to tenants generally would be more flexible, as landlords would have discretion to operate retirement from the age of 65, and tenants would not be subjected to compulsion. The tenants would enter into an agreement with the prior knowledge that the tenancy could, at two years' notice, be terminated after he had passed the minimum age of 65.
      In the wider discussion and debate generated by the Bill, some concern has been expressed about the effects of a retirement system on small tenanted farmers, particularly in the west country and Wales. I stress once again that this system of retirement would not apply to existing tenants and tenancy agreements. The liquidation of assets and compensation based on two years' rent would amount to a very appreciable topping up of any individual pension arrangements into which a tenant farmer had been able to enter. In particular, the next generation of tenant farmers to whom a retirement policy would apply are likely to be young, well-qualified, trained and highly-educated agriculturists, and there is every reason to believe that they would expect to carry the responsibility of meeting their own pension requirements.
      I rest my case on these observations. I argue that a retirement system is just and equitable. If we are serious in our desire to give fresh life to the tenanted sector of the farming industry, a retirement system is essential.
      8.15 pm
      Mr. Deakins: The hon. Member for Basingstoke (Mr. Hunter) is to be congratulated on bringing this issue before the House during the Report stage of such an important Bill. I have some sympathy with what he seeks to achieve, but, despite his meticulous explanation, I still have some
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      doubts about the advantage to the tenant of his proposal. He spelled out very clearly the advantages to the landowner, but the advantages to the tenant are not so clear. The hon. Gentleman made great play of the fact that the landlord and tenant, meeting as free and equal people in the sphere of commercial activity, would have the option whether to include such a provision in a tenancy agreement. However, if a would-be tenant did not like such a provision, the landlord would not necessarily say, "I give up my right to have this provision in the tenancy agreement." In this rather harsh commercial world, he is much more likely to say, "Fair enough; I'm afraid that, if you don't accept the tenancy term, I will not have you as my tenant. I'll wait until someone else comes along who will accept the tenancy term." That is most likely to happen.
      The hon. Gentleman may have been a little unfair on the older generation of farmers. I thought that farming was one of those occupations where experience counted for a great deal, even though, with modern technical knowledge, younger people are likely to be more up to date in their approach. Nevertheless, one should not entirely discount the value of experience. If the new clause was accepted, we might be on our way towards setting up a new system of tied housing. I am worried about the housing implications of the hon. Gentleman's proposal. At the age of 63 or 65, the tenant farmer would obviously have to quit the tenancy, which would mean leaving the farm so that someone else could take over. But would he not be in the same position as the farmworker was in under the tied cottage system? I hope that the hon. Gentleman will elucidate that point, as I am worried that we might be getting into the very situation that we managed to get out of after 20 or 30 years of hard work, particularly on this side of the House.
      Mr. Maclean rose——
      Mr. Deputy Speaker (Mr. Harold Walker): Order. The hon. Member for Walthamstow (Mr. Deakins) has concluded his speech.
      Mr. Leigh: I support the new clause proposed by my hon. Friend the Member for Basingstoke (Mr. Hunter). It is a useful new clause, and I can well understand the sentiments that prompted him to move it. The 1977 Bill was a disaster for new tenancies, and what is called for is a lion of a Bill to create new opportunities, especially for young farmers. In fact, it is a mouse of a Bill that will do little to create the opportunities needed.
      However, I understand the Government's difficult dilemma, hoist as they are between the Country Landowners Association and the National Farmers Union. It is not wise to have government by pressure groups, even those as distinguished as the CLA and the NFU. However, I can understand the difficulties in which the Government would find themselves if the new clause was accepted.
      The spirit behind the clause is worthy, and I hope that my hon. Friend the Minister will take the opportunity to make positive noises about retirement provision. Of course term tenancies have disadvantages — a man in his twenties taking on a term tenancy would have to give it up 20 years later, in his mid-40s. and would be left without livelihood, security or a home. But that argument does not apply to retirement tenancies. I take the point made by the hon. Member for Walthamstow (Mr. Deakins) that it might be a weapon for the landlord who might turn to

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      another tenant. Surely it is as likely that he will take the land in hand. We are trying to create new opportunities and tenancies. The new clause would help to achieve that aim.
      If the new clause is accepted, farmers would probably be the only self-employed people who would be required to retire at 65. Farmers occupy a unique position in any event. It is logical and sensible that people should plan for their retirement. Their sons or the people who might follow them as holders of the tenancies should be able to plan for that day also. For the life of me, I cannot understand why farmers, like other people, should not plan for the future and for their 65th birthday.
      Sir Peter Mills: I congratulate my hon. Friend the Member for Basingstoke (Mr. Hunter) on proposing the new clause. It is right and proper that he should do so. In principle, I am in favour of retirement at 65. I also congratulate the Tenant Farmers Association on its brief and on the way in which it has handled the case. I agree with my hon. Friend that we must listen carefully to what it says. It has shown clearly how responsible it is in these matters.
      It is not unusual for people to have to retire at a certain age. Looking at some hon. Members, it might be better if Members of Parliament had to do so. I do not know why such a rule should not apply to agriculture. I do not understand the NFU's objection and, quite frankly, I do not understand the attitude of some of my farmers in the south-west. I believe that the new clause would be helpful.
      The brief from the Tenant Farmers Association puts forward an option—there is nothing compulsory about it. It mentions added inducements to landowners to let vacant farms rather than take them in hand. That is what the Bill is about—it is an inducement to allow more tenant farming. The new clause could help that aim.
      The Tenant Farmers Association brief suggests a limit to the length of tenancies, which would give more people the chance to farm and would create more mobility. I agree with that. One of the parts of the brief that I liked best was where the suggestion that the son or the person expected to take over the tenancy could plan his future in the knowledge of the term of the tenancy, rather than having to gamble on whether the existing tenant would continue to a very old age. In the south-west of England I have often come across an elderly looking gentleman who, when I have asked whether he is the farmer, has replied, "Oh no, I am the farmer's son"—yet he is 50 or 55. The aged tenant goes on and on. I confess that a relative of mine did exactly that. When it came to the time of his retirement, his son was almost of retirement age himself. There is a real case for the new clause.
      My hon. Friend is absolutely right to say that it is important that farmers should think in a businesslike manner about their retirement. The new clause highlights the importance of taking steps towards that. I declare an interest because I am connected with insurance. It is important that, at the end of their days, tenant farmers have a lump sum through endowment or whatever means to provide for their future so that they do not have to hang on to their tenancies. Both landlord and tenant should contribute to some pension scheme so that the tenant is not turned out of the farm with no house because he cannot afford to buy one. Under a proper scheme, he would have provision for his future.
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      I hope that the Minister will consider the new clause carefully. He should not take too much notice of the NFU. It is not often that I speak against the NFU, but in this case it would be wise for my hon. Friend the Minister to think seriously about the new clause. It may not be correctly drafted, but I hope that my hon. Friend will consider it carefully because it is a reasonable proposition.
      Mr. Jackson: I support the new clause moved by my hon. Friend the Member for Basingstoke (Mr. Hunter). It is a pity that we all feel constrained to be brief about this important subject. If the new clause were to be included in the Bill, it would do more than almost anything else to achieve the Government's objectives.
      I do not want to repeat the arguments that have been so well put about the way in which the new clause would promote mobility and make more land available for tenancy. I want to address the question of its effects on small tenant farmers. The simple answer to the objection raised on this score by the NFU and others is that the new clause would affect only new tenancies. All existing tenants would be unaffected. They could pass on their tenancies to their successors, and if they did not have successors they could retain the tenancy until they died. All tenants and landlords would be able to enter into contracts providing for retirement, if they so chose, with their eyes open. If the holding was too small to support the setting aside of a proportion of the income towards provision for retirement, the landlord could not in practice then insist on a retirement clause, for he would not be able to find a tenant to take on the land on that basis.
      The new clause may look like the imposition of a measure of compulsion — admittedly it sounds like compulsion to say "retirement at 65"—but in reality it is a blow for liberty, a blow for the principle of freedom of contract. I do not understand why we should continue to deny the freedom of tenants to enter an arrangement, with their eyes open, through which they could retire at 65. The new clause accords that freedom of contract to tenants and to landlords, and I hope that the House will support it. If it does not, I hope that the Government will take the opportunity to think again in the future, because the new clause, more than any other measure, would advance the purposes which the Government claim for the Bill.
      8.30 pm
      Sir Paul Hawkins: Virtually everything that needs to be said on the subject has been said, and said well, and there is little for me to do in addition to congratulating my hon. Friend the Member for Basingstoke (Mr. Hunter) on moving the new clause. I agree with others that its inclusion in the Bill would have a profound effect.
      I have corresponded with the Tenant Farmers Association since its birth, I have met its members on several occasions and I have concluded that it is a forward-looking organisation which has organised first-class meetings and prepared excellent briefs for hon. Members.
      The whole of agriculture must begin to look forward and stop considering only the troubles of the past and how they affect the immediate future. There is more to farming than next year's price review. We must look 10 to 15 years ahead and lay foundations for the young farmers who will be the tenants and owner-occupiers of the future. The Tenant Farmers Association and my hon. Friend the Member for Basingstoke have performed a service in putting the spotlight on this issue. I feel sure that the

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      Minister would like something to be done on the lines of the new clause. I hope that he will find ways of introducing the principle of it.
      The question of housing worries the hon. Member for Walthamstow (Mr. Deakins). People in many trades and professions make arrangements to buy homes, especially as they look forward to their retirement. Policemen, teachers, bank managers and many others, well before retirement, arrange to buy their own homes. I see no reason why the farming community should not do the same. Bearing in mind the pension and other arrangements that the self-employed can make, the lump sums that can be received and the way in which mortgages, at least at present, are readily available, any problems that exist could be overcome. I hope that the Minister's reply will be encouraging.
      Mr. Maclean: I, too, support my hon. Friend the Member for Basingstoke (Mr. Hunter) and congratulate him on the splendid way in which he moved the new clause.
      I regret that the Government have rejected term tenancies, although I appreciate their reason for doing so. As my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) said when we debated an earlier amendment, having found unanimity between the NFU and the CLA, the Government were right to seize that unique opportunity and bring an NFU-CLA package before the House. However, I hope that once the Bill becomes law we shall not wait another eight years before looking at some other aspects of landlord and tenant law.
      I also hope that the Government will soon come up with some answers to the problems of term tenancies and will give further thought to the whole question of retirement, the subject having been raised by my hon. Friend the Member for Basingstoke. After all, the new clause would offer the next best thing to a term tenancy. It is acceptable to landlords, and it is clear that tenants want such a provision. It would provide a degree of certainty; landlord and tenant would know when the tenancy would come to an end and could plan accordingly.
      The hon. Member for Walthamstow (Mr. Deakins) wondered what advantages there would be for the tenant. Perhaps it is not up to us to elucidate all the advantages. If a freely consenting landlord and tenant want to enter into a scheme of this type, let us allow them that freedom of contract. It is clear that this system would not be imposed over the whole of landlord and tenant law. Perhaps only a limited number would wish to apply it. Is it our duty in Parliament to prevent people from doing what they freely want to do?
      My hon. Friend the Member for Basingstoke has proposed a completely optional scheme. It does not refer to tenancies created under the 1976 Act or to tenancies that will have been created under this Bill. It would be for landlord and tenant to enter into. Perhaps it has not been sufficiently stressed in this debate that agreement between both parties would be essential.
      Hon. Members have pointed out that prior to the Bill there were years of discussion and consultation with the CLA and NFU. When we next come to look at the reforms that are necessary in landlord and tenant legislation, I hope with other hon. Members that we shall spread the net more widely and take into account the views of the young farmers' associations. Whenever we debate these issues, much is said about the first rung on the ladder—the
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      need to get young people into farming—so we have a duty to consult those young people, for they have a wise view to put forward. I echo the comment of my hon. Friend the Member for Norfolk, South-West that we must consult the Tenant Farmers Association. It and the young farmers have a valid view and we should not disregard it.
      Mr. Mark Hughes: I do not wish to introduce a note of sadness—because I welcome the new clause—but I fear that I could not ask my hon. Friends to support the hon. Member for Basingstoke (Mr. Hunter) should he press the matter to a Division. At this stage in the Bill, after the discussion that we had in Committee, major problems arise concerning quitting farming to retire. They need more careful consideration in the context of new tenancies which, as the hon. Member for Basingstoke said, are entered into freely by landlords and tenants.
      My hon. Friend the Member for Walthamstow (Mr. Deakins) spoke of problems over housing. There are others. There is the whole question of how free such agreements would be for new tenants. Would it not be difficult for a prospective tenant to turn down such an arrangement and still expect to obtain the tenancy? We all accept that one way of making tenant farms available is to ensure that there is an exit at retirement, rather than only at death. However admirable the principle, I am not satisfied that what the new clause proposes is the proper exit mechanism.
      The hon. Member for Torridge and Devon, West (Sir P. Mills) said that it might be necessary to concentrate in the future on a landlord contribution to a retirement scheme. There is a whole range of possibilities as to how one gets rid of antique tenant farmers. I echo what he said about the age of some farmers. It is possible to meet a septuagenarian and imagine that he is the tenant, only to have him say, "You want my old dad, who is 97."
      I echo the plaudits that have been given to the Tenant Farmers Association for the aid that it gave to members of the Standing Committee. It has been a great relief to have had advice from that association as well as from the NFU when dealing with a Bill such as this. I must very reluctantly advise my hon. Friends to abstain from voting in favour of the new clause, if the hon. Gentleman forces it to a Division. We accept deeply the need for completely adequate retirement provisions at 65, whether for housing, pension arrangements or pension funding. We accept that if more tenancies are created there must be a proper exit arrangement prior to death.
      With the greatest deference to the hon. Member for Basingstoke, I do not believe that the new clause effects adequately the desire that we have in common: to provide adequate retirement provision for tenants, whether of new or existing tenancies. I do not want to see two classes of tenants, one with adequate retirement provision and the other without it. Therefore, I must advise my hon. Friends not to vote on the new clause.
      Mr. MacGregor: Having disagreed about small-holdings with my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) earlier in the debate—we have disagreed on the issue for some years—I must say that I very much agree with the need to look ahead in agriculture in the next 10 to 15 years and provide for the new entrants with vision, based on realism. That is right. It is something to which my right hon. Friend and I are

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      devoting much of our time. I hope that we are doing something about it. I entirely agree with my hon. Friend the Member for Norfolk, South-West on that point.
      I recall, as my hon. Friend the Member for Basingstoke (Mr. Hunter) said, that we had a lengthy debate in Committee on his new clause, which was similar in intent, but not in detail, to new clause 7. We have had a good and useful, although inevitably short, debate. It does not matter too much that it has been short, because we had such a long debate in Committee. To some extent, this debate has moved the arguments along.
      As my hon. Friend knows, I was attracted by the proposal because I am keen to do anything to increase the flow of tenancies. I was impressed by the arguments put forward. I entirely agree with my hon. Friends and with the hon. Member for the City of Durham (Mr. Hughes) about the way in which the Tenant Farmers Association has put forward the idea. It has done so constructively and sensibly, and argued the case coherently. I know that it has support in principle among many farmers and clearly among some of my colleagues in the House.
      At the end of the debate in Committee I gave an undertaking to discuss further the important issue with the industry to find out whether it would be possible to reach agreement on a form of retirement provision which had broad industry support. I stressed then that I saw drawbacks, although I entered into the discussions in a constructive spirit. I have as a result had further discussions with the NFU and the Tenant Fanners Association, which are the main organisations representing tenants' interests. As has been made clear by some of my hon. Friends, the NFU has given much consideration to the problem, but in the end has come out firmly against the proposal.
      I share the view of my hon. Friends that it is up to the Government and to the House to put forward proposals for legislation. Although the NFU does not seem to me to be representing the views of all farmers, we must take account of the fact that many farmers—some of whom have expressed the view to me personally as I have travelled around the country—are very strongly against the proposal and deeply worried by it.

      8.45 pm
      One reason why we must reconsider the proposal is that it has emerged and developed fairly late in the discussions; indeed, even as late as in the parliamentary debate on the Bill. Secondly, we all recognise that the agriculture industry is going through a period of considerable uncertainty, especially with the need to check the costs of disposing of the surpluses produced by the CAP. If the proposal has not been fully thought through and is therefore likely to create further uncertainty and worry in the farming industry in general, and if there are still real divisions in the farming industry, we must think carefully before deciding to impose further problems and uncertainties on the industry.
      Mr. Jackson: If my hon. Friend thinks that this is a good idea but that the problem lies in the relatively late stage at which the matter has come to the surface in the debate, will he tell the House what steps he could take to bring the issue back to the House for consideration so that we could make a positive decision on the matter?
      Mr. MacGregor: I shall deal with that point at the end of my remarks.
      I have been undertaking discussions, and I recognise the efforts of my hon. Friend the Member for Basingstoke to meet some of the drawbacks that were spoken of in Committee, but problems remain, although I congratulate my hon. Friend on what he has done. There is much force in many of the arguments that have been put forward. It is very helpful to have such a debate tonight.
      Some formidable problems remain. Let me address my mind to some of them. First, I refer to the point made by my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh), although he did not regard the problem as insuperable. Tenant farmers would be the group of self-employed people required to retire at a specified age. I cannot think of any others off hand but, as the Minister who formerly dealt with the self-employed, I can think of a great many self-employed people who do not have to retire at a specified age.
      My hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) is quite right to say that these days it is not unusual for people to retire at the age of 60 or 65. That is happening increasingly throughout the community, particularly for company employees, including those in the public sector. However, it is not yet generally the case among the self-employed. We would be introducing a largely new principle for the self-employed if we introduced the principle now.
      Some problems are involved. We all know that one feature that is important to the self-employed is their independence and ability to decide their own destiny. It is also worrying that there is a difficulty about pension provisions. I recognise that the new clause refers only to new tenancies, so all people entering into such contracts will have plenty of time in which to plan. The worry about such provision comes through most strongly from farmers in areas where they are more likely to have low incomes, and where, although they have not fully taken on board the fact that it will apply only to new tenancies, they feel nevertheless that the same problem of providing for pensions would apply to their sons or daughters, as they embark upon new tenancies.
      One way of protecting themselves from that and of ensuring that they have an adequate income in old age is to be able to go on in their job after the age of 65. The final difference is that, on the whole, provisions are made in companies for retirement at 60 and 65, where the employer and the employee contribute to the company pension scheme. That would not be so in this case.
      I know that one of my hon. Friends has suggested that we should think about full tenancies, with contributions from landlords to pension schemes. That radical proposal will perhaps need to be considered in the light of proposals such as those before us. However, the argument is not sufficiently well developed to enable us to take that on board now.
      The second general problem is that my hon. Friend the Member for Basingstoke, who proposed the new clause, laid considerable emphasis on the fact that this retirement would be an option. He used that word several times. I know exactly why he did so. He was afraid that because of the supply and demand in tenancies it would turn out not to be an option, but would be an almost automatic clause in future tenancy contracts. It would amount to compulsory retirement.

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      There are arguments on both sides, but I believe that there are good arguments for saying that it would not be as easy an option as he has made out. We need to explore that point further.
      It has been suggested that it would be wrong to require a tenant farmer who has a major business investment in his farm effectively compulsorily to liquidate his assets on reaching the age of 65. My hon. Friend has tried to meet that problem with the two-year notice provision.
      Nevertheless, farming would probably still be the only industry involving such major investment where the investor would not be able to make his own decision about when to cease trading, even if he had two years to plan for it. There is the worry that he may have to liquidate his assets at a time that is not of his choosing. It might not be possible for him to realise them at an advantageous price, for reasons outside his control. For example, the immediate reaction after the imposition of quotas could not have been foreseen two years previously, when he was given notice. Therefore, there is a lack of freedom for him to be able to realise his own lifetime investment at the most advantageous time.
      Several other points were made by the NFU and others. I did not share all the fears that were expressed; for example, the fear that landlords would let to older tenants in their 50s so that they could ensure a tenancy for a relatively short fixed term. I do not think that that is how it would work out in practice, in most cases. Another difficulty is that there would be no obligation on the landlord to give an undertaking to a tenant whether, and if so when, he would serve a notice to quit based on retirement. The tenant would thus be in considerable uncertainty over when he would have to move to his retirement position. That is not dealt with in the new clause.
      Some of my hon. Friends and the hon. Member for Walthamstow (Mr. Deakins) referred to provision for alternative accommodation. Many farmers wish such provision to be made. It is in the clause on smallholdings. It is easier, in the case of smallholdings, to defend and justify that provision, because smallholdings belong to a local authority, even if housing is provided by a different local authority. There is no provision in the new clause for that alternative accommodation. It might be extremely difficult to achieve in practice. Nevertheless, many people are concerned about that.
      I could list a few more problems, but I think that I have touched on some of the major difficulties about the proposal. It is therefore with reluctance and regret that I cannot recommend my hon. Friends to allow the new clause to be included in the Bill. As I have said, there is much force in many of the arguments. Anything that will increase the flow of new tenancies is attractive, but even on that point there is the problem whether the flow of new tenancies would be increased by the measure. I have discussed the point with the Tenant Farmers Association. Neither it nor I have yet been able to find a satisfactory way around the difficulties of ensuring that there are new tenancies if there is a compulsory retirement on the farm. The new clause does not solve the problem.
      Obviously the subject will be debated much more. The way in which the debate and thinking are shifting is interesting, as we have seen today. However, it is a pity, in a way, that the debate has only just started to move in that direction, and it is difficult to try to deal with some of the objections at such a late stage in the passage of the
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      Bill. Therefore, I must reluctantly conclude that I cannot recommend the inclusion of the new clause, because it is our duty to put on the statute book clauses which are thought through and as free as possible of practical snags.
      I shall answer the point made by my hon. Friend the Member for Wantage (Mr. Jackson). I cannot give arty parliamentary commitments, but the fact that so many of my hon. Friends are thinking along these lines shows that the debate will not go away. I hope that the subject will continue to be discussed, and. if it is possible to overcome all the problems to which I have referred, it is likely that there will be greater uninimity and, who knows—I do not know when action could be taken, but I would not rule it out—we might reconsider the matter.
      Mr. Hunter: This has been an extremely profitable debate. I thank my hon. Friends for supporting the new clause. I shall withdraw it on the assurance and understanding that the debate has only just started, and will continue on another occasion.
      I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    Clause 1

      DETERMINATION OF RENT OF AGRICULTURAL HOLDING
      Mr. Mark Hughes: I beg to move amendment No. 1, in page 2, line 10, at end insert 'and the earning capacity'.
      Mr. Deputy Speaker: With this it will be convenient to take the following amendments: Government amendments Nos. 2 and 3.
      Amendment No. 4, in page 2, line 18, after 'holding', insert
      'and "earning capacity" in relation to the holding, means the net annual income which the holding is capable of generating (taking account of current economic factors and marketing and production constraints outside the control of the tenant)'.
      Government amendment No. 5.
      Mr. Hughes: I thank the Minister of State for the. amendments that he has tabled, which are grouped with my amendment. We had a long debate in Committee on the need to insert the words "and the earning capacity" into the rent formula. Everything that has happened in the dairy industry since the Bill went into Committee shows why it was essential to do so. The Opposition pressed the Government — with assistance, to be fair, from Conservative Members—to reintroduce earning capacity as part of the rent formula, when it had been removed for no good reason in another place. Therefore, we are grateful that in amendments Nos. 2, 3 and 5 the Government are reintroducing those words.
      Even at this 11th hour and 59th minute, the Minister should recognise that the wording of amendment No. 4 regarding the meaning of "earning capacity" is better and more applicable than the wording of Government amendment No. 5. Amendment No. 5 states:
      "'related earning capacity' means the extent to which, in the light of that productive capacity, a competent tenant practising such a system of farming could reasonably be expected to profit from farming the holding."
      I am sorry, but I am not satisfied that the sudden imposition of dairy quotas is covered by that definition in as satisfactory a way as under amendment No. 4.
      Therefore, while we must welcome the Government's sudden flush of reasonableness in accepting "earning capacity" in clause 1, I ask the Minister just to make

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      certain that his definition is the right one. We are satisfied beyond doubt that amendment No. 4 makes better sense than amendment No. 5. We do not wish to press amendment No. 1 to a vote, but I seek your advice, Mr. Deputy Speaker, about whether, were the Minister to reject amendment No. 4, we would be able to press it. I am satisfied that it would make better law if we chose amendment No. 4 rather than amendment No. 5.
      Mr. Henry Bellingham: The removal from the first draft of the Bill of the words
      "profit from farming the holding"
      provoked much criticism on Second Reading and in Committee. Therefore, I am grateful that the Government have kept their word and participated in this group of amendments. The uproar in the industry on all sides led to a lengthy debate, and at the time I did not see the reason for removing those words. I support the amendments. I agree with the hon. Member for City of Durham (Mr. Hughes) that the wording in amendment No. 4 is clearer than that in amendment No. 5. I would not go to the stake about it, but it is clearer in a number of important aspects, and I urge my hon. Friend the Minister to consider that.
      I applaud my hon. Friend for getting this part of the rent formula right. It is a package which depends on the rent formula and the succession clause. He has the rent clause formula right, but it is sad that he has not got the succession clause completely right. He could have done so by accepting new clause 2, but I shall not talk about that as it would be out of order.
      The debate on new clause 7 will not go away, nor will the debate on fixed-term tenancies. It will increase the flow of let land on to the market. I urge my hon. Friend to listen to the National Federation of Young Farmers Clubs, the Country Landowners Association and the many people in the industry who are talking more and more about the advantages of fixed-term tenancies. That debate will not disappear, and I urge him to consider it at a later stage.
      9 pm
      Mr. Maclean: I am delighted to support the Government on this group of amendments. It is essential that the term "related earning capacity" or something similar is put back into the Bill. Like my hon. Friend the Member for Norfolk, North-West (Mr. Bellingham), when I first saw the amendments I instinctively thought that the wording of amendment No. 4 was much clearer in meaning and concept than the Government's amendment No. 5—it worries me when I am in complete agreement with the Opposition. Will the Minister assure the House that, in the final analysis, after legal verbiage is cut away, amendment No. 5 means exactly the same as amendment No. 4? If that is the case, I heartily congratulate the Government. I hope that my hon. Friend will address himself to that point.
      Mr. MacGregor: We had long debates in Committee about these words and I gave a clear commitment in response to the debate, which I did willingly.
      The three Government amendments introduce a specific reference to earning capacity in relation to the productive capacity of the holding, without preventing an arbitrator from taking into account earnings from non-farming activities as a relevant factor. I shall explain the
      378
      amendments in more detail to make clear beyond doubt the Government's interpretation of the change and how the problems have been overcome.
      In determining the rent properly payable in respect of a holding, one especially relevant factor which the arbitrator must take into account under clause 1(3) will be the productive capacity of the holding and its related earning capacity. Amendments Nos. 3 and 5 define these terms. The earning capacity specifically relates to the holder's productive capacity. Under its terms it will include potential farm earnings within the limit of these definitions. That is fair.
      The related earning capacity does not include earnings from non-farming activities such as tourism. Where such earnings exist they would be one of the unspecified relevant factors which the arbitrator would be bound to take into account. We cannot start listing in the clause possible relevant factors because that would immediately raise doubts about which other factors might or might not be regarded as relevant for determining rent. The rent clause, therefore, spells out only specific relevant factors which apply in every case. The effect of the amended formula enables actual earnings from non-farming activities to be taken into account as relevant factors.
      I can give my hon. Friend the Member for Penrith and the Border (Mr. Maclean) the assurance he seeks. I sought guidance and advice from experts on these matters. I am advised that amendment No. 4 does not add anything to the amendments I propose. Both the National Farmers Union and the Country Landowners Association declared themselves content with the wording we have adopted. The points referred to in brackets in the Opposition's amendments are integrated in our amendments. For example, quotas affect earning capacity, and therefore where quotes exist, as they do in the dairy sector, they would be taken into account as a factor of earning capacity.
      I am advised that there is no need to be specific. If one starts to specify particular factors, others are left out. The hon. Gentleman probably thinks that he has thought of everything relevant, and perhaps he has. However, five years from now, there could be a problem when another factor becomes relevant. There is always a risk when one specifies particular factors and leaves others out. There is an inclination to think that the others are less important and less material, and that they should perhaps be disregarded.
      On that basis, I hope that the hon. Member for City of Durham (Mr. Hughes) will be content that my amendments match the commitments I gave in Committee and meet his points.
      Mr. Mark Hughes: I beg to ask leave to withdraw my amendment, and I support the Government's amendments.
      Amendment, by leave, withdrawn
      Amendments made: No. 2, in page 2, line 11, after 'holding', insert
      'and its related earning capacity'.
      No. 3, in page 2, line 14, leave out
      '"productive capacity", in relation to the holding'
      and insert
      ', in relation to the holding—
      (a)"productive capacity"'.
      No. 5, in page 2, line 20, at end insert
      ';and
      (b) "related earning capacity" means the extent to which, in the light of that productive capacity, a competent tenant practising such a system of farming could reasonably be expected to. profit from farming the holding.'.—[Mr. MacGregor.]
      Mr. MacGregor: I beg to move amendment No. 9, in page 4, line 23, at end insert—
      '(10A) Where under an agreement between the landlord and the tenant of the holding (not being an agreement expressed to take effect as a new contract of tenancy between the parties) provision is made for adjustment of the boundaries of the holding or for any other variation of the terms of the tenancy, exclusive of those relating to rent, then, unless the agreement otherwise provides—

      (a) that provision shall for the purposes of subsection (8) of this section be treated as not operating to terminate the tenancy, and accordingly as not resulting in the commencement of a new contract of tenancy between the parties; and

      (b) any increase or reduction of rent solely attributable to any such adjustment or variation as aforesaid shall be disregarded for the purposes of paragraph (b) of that subsection.'.

      Mr. Deputy Speaker: With this it will be convenient also to consider Government amendment No. 10.
      Mr. MacGregor: I am pleased to be able to bring these amendments before the House in fulfilment of my undertaking in Committee to my hon. Friend the Member for Milton Keynes (Mr. Benyon). These amendments go beyond the specific point raised by him, which was about the effect of the boundary changes on the triennial rent review, and cover other variations in the terms of the tenancy which could pose a similar trap. It could be, for example, the introduction of a conservation covenant with a consequential reduction in rent. I am sure that we would wish to encourage the introduction of conservation convenants and, therefore, it is right to remove a possible obstacle such as the one I have just described.
      Amendment No. 9 provides that adjustment of boundaries or any other variation in the terms of the tenancy, except those relating to rent, will not for the purpose of section 8(8) of the Agricultural Holdings Act 1948 constitute a new contract of tenancy, and a variation of rent on those grounds will not trigger the start of a new three-year rent cycle.
      Amendment No. 10 removes new section 8(11)(d) which becomes superfluous. I am grateful to my hon. Friend for raising the point.
      Mr. W. Benyon: I should like to say how grateful I am to my hon. Friend the Minister for fulfilling his pledge. I firmly believe that the amendment covers the point that I made in Committee.
      Amendment agreed to.
      Amendment made: No. 10, in page 4, line 37, leave out from '1977' to end of line 43.—[Mr. MacGregor.]

    Clause 3

      AMENDMENT OF PROVISIONS RELATING TO STATUTORY SUCCESSION IN CASES NOT EXCLUDED BY SECTION 2
      Mr. MacGregor: I beg to move amendment No. 12, in page 7, line 28, leave out
      'within the meaning of Part II of the Agriculture Act 1967'
      and insert
      'from "within" to the end of the paragraph'.
      Mr. Deputy Speaker: With this it will be convenient to consider Government amendments Nos. 13 to 16, 29, 35, 40, 44, 69 and 77.
      Mr. MacGregor: It looks a formidable list of amendments but in fact they are in response to debates in both Houses on amendments from the Agricultural Law
      380
      Association, and fulfil the undertaking that I gave in Committee on 10 April. I am grateful for the association's help in tackling this complex problem.
      We are dealing with the operation of the commercial unit occupancy test. The purpose of the test is to ensure that a would-be successor, who already farmed a commercial unit, should not be eligible to succeed to a tenancy under part II of the Agriculture Act 1967.
      The existing provisions in relation to the test are imprecise and have given rise to various anomalies as well as providing scope for evasion. Having looked into the matter, I feel that it is now right to clarify the law. To do so will be in step with other provisions which were added to the Bill much earlier, which are now incorporated in the group of amendments being considered. It will ensure that in the case of a multiple holding a would-be successor may succeed to no more than one holding of commercial unit size. It is designed to make more tenancies available, but it must be done with equity. The new group of amendments is designed to achieve that.
      The matter is rather complex, and I could, if required, go over the various paragraphs, but as the amendments probably have the support of the House I shall not do so unless anyone wishes to raise them with me.
      Mr. Bellingham: I proposed a number of these amendments in Committee on behalf of the Agricultural Law Association, and it is extremely pleased with what the Government have come up with. One point has been made to the Minister which I should like to repeat. It is the association's fear about paragraph (2) of the proposed new schedule 3A because it does not deal with the case where a survivor is granted an unprotected interest in a commercial unit by a member of his family, other than a spouse, such as the parent, brother or sister, nor does it deal with the case of a family farming company controlled by brothers or sisters. The legal advisers of a farming family could arrange affairs so that the succession could be assured. I know that the point has been made to the Minister, but it is the only point about which the ALA remains worried.
      Mr. MacGregor: I recognise that this is a very complex area of the law. I think we have made it better than it was. It may not be possible to make it perfect. I think that this is the first time that this point has been put to me, and I have not had an opportunity to study it. If it is legitimate and if we can incorporate it in the Bill there will be a last opportunity to do so. I hope that my hon. Friend will support the amendments as they stand.
      Amendment agreed to.
      Amendments made: No. 13, in page 8, leave out lines 24 to 33 and insert—
      '(3C) Schedule 3A to this Act, which specifies—

      (a) kinds of occupation that are to be disregarded for the purposes of paragraph (c) of the definition of "eligible person" in subsection (2) above; and

      (b) circumstances in which a person is deemed to be in occupation of land for those purposes;

      shall have effect.'.
      No. 14, in page 8, line 44 leave out from 'any' to end of line 2 on page 9 and insert 'relevant land'.
      No. 15, in page 9, line 8 at end insert—
      'In this subsection "relevant land" means agricultural land which is—

      (a) occupied by any person falling within the said paragraphs (a) to (d) (whether he is, where the request is made by a person so falling, the person making the

      381
      request or not); or

      (b) the subject of an application made under section 20 of this Act by any such person.'.

      No. 16 in page 9 leave out lines 9 to 12. —[Mr. MacGregor.]

    Clause 6

      AMENDMENTS WITH RESPECT TO CASES EXCEPTED FROM RESTRICTION ON OPERATION OF NOTICES TO QUIT
      Mr. MacGregor: I beg to move amendment No. 18, in page 11, line 28 leave out 'was' and insert 'is'.
      This is a small amendment but it covers a significant point. The new case I inserted by clause 6(6) provides, subject to certain conditions, for compulsory retirement at age 65 for tenants of statutory smallholdings in relation to new tenancies granted after commencement.
      The amendment makes clear that the right to serve an incontestible notice to quit under case I belongs only to a smallholdings authority. If the authority sells the land the new landlord, if he is not a smallholdings authority, does not acquire with the holding the right to impose retirement on the tenant. That right ceases when the ownership changes hands.
      I repeat that this is in relation to new tenancies granted after commencement. It will ensure equity amongst tenants of non-statutory smallholdings in relation to retirement.
      Amendment agreed to.
      Mr. Weetch: I beg to move amendment No. 19 in page 11, line 38 at end insert—
      '(bb) the smallholdings authority or the Minister intends to re-let the holding as a smallholding in pursuance of Part III of the Agriculture Act 1970 and has entered into a contract of tenancy with a prospective tenant contingent only upon the notice to quit taking effect; and'.
      Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 20, in page 11, line 38 at end insert—
      `(bb) the smallholdings authority or the Minister intends to re-let the holding as a smallholding in pursuance of Part III of the Agriculture Act 1970 within six months of the notice taking effect; and'.
      Mr. Weetch: I intend to be brief, so as to keep up the speed which we seem to have acquired of late. Both amendments are concerned with restrictions on the operation of notices to quit. In effect, the amendments would add conditions to the illustrations in subsection (6). A council should be restrained from requiring a tenant to quit if it is not prepared to re-let the land to another tenant. The amendments are alternative ways of preventing councils from operating the retirement provision unless they intend to re-let the smallholding. I do not think that it is incumbent upon me to explain this further, because it is abundantly clear what the amendments are about.
      The only point that I would make is that the amendments have been thoroughly considered by the NFU, which has given both approaches a great deal of scrutiny and study. I put it to the Minister that he could accept either of these conditions, or else suggest an alternative.
      Mr. MacGregor: I can understand the hon. Gentleman's objectives in moving these amendments,
      382
      which, as he indicated briefly, stem from a desire to ensure that where a smallholdings authority takes advantage of the retirement provisions for its tenants it does so to enable a new tenant to take over the holding, rather than to obtain vacant possession for subsequent sale or whatever. It brings us back, however, to a point of principle which we have sought to defend many times during debate on the provisions of the Bill, as well as during our discussion on new clauses 1 and 3, that management decisions on the efficient organisation of a smallholdings estate should be taken by the smallholdings authority concerned without undue interference from central Government. In reaching their decisions I am sure that local authorities will take full account of the interests of their tenants, current and prospective, and the need to provide some degree of movement within their estates.
      It is, however, perfectly possible that, on the retirement of certain tenants, the good of the estate as a whole is best served by the sale of the land comprising that holding, and the use of the proceeds to maintain and improve buildings and equipment on remaining holdings. The smallholdings authority should be able to pursue that option.
      In line with the general belief that discretion about smallholdings should be left to the local authority, if the amendment is pressed to a Division I shall urge my hon. Friends to vote against it.
      9.15 pm
      Mr. Robert Hughes: I listened to the Minister with disappointment. I agree that local authorities should be allowed the greatest possible autonomy, but the possibility of retirement at 65 is a new provision for new tenancies. The Government are making that change.
      The Bill's intention is to make more tenancies available and the purpose of retirement at 65 is to accelerate the turnover of tenancies, if only by a couple of years. The Government should provide protection to ensure that a tenancy which becomes vacant as a result of retirement at 65 should be available for relet. I hope that the Minister will think afresh.
      It is for my hon. Friend the Member for Ipswich (Mr. Weetch) to decide whether to force the amendment to a Division, but if he does he can count upon my support. I think that we should force the matter to a Division. The Minister should accept the amendment. It was urged upon us by the NFU, which feels strongly about it.
      Mr. Weetch: I was disappointed at the Minister's reply. He could have been more flexible on the issue of principle. I have no alternative but to press the amendment to a Division.
      Question put, That the amendment be made:—
      The House divided: Ayes 97, Noes 180.

      Division No. 351]

      [9.17 pm

      AYES

      Anderson, Donald

      Cocks, Rt Hon M. (Bristol S.)

      Archer, Rt Hon Peter

      Concannon, Rt Hon J. D.

      Ashton, Joe

      Cook, Robin F. (Livingston)

      Banks, Tony (Newham NW)

      Craigen, J. M.

      Beckett, Mrs Margaret

      Crowther, Stan

      Beith, A. J.

      Cunliffe, Lawrence

      Bermingham, Gerald

      Dalyell, Tarn

      Blair, Anthony

      Davies, Ronald (Caerphilly)

      Brown, Hugh D. (Provan)

      Davis, Terry (B'ham, H'ge H'l)

      Callaghan, Jim (Heyw'd & M)

      Deakins, Eric

      Campbell-Savours, Dale

      Dixon, Donald

      Clark, Dr David (S Shields)

      Dormand, Jack

      Clay, Robert

      Douglas, Dick

      383

      Dubs, Alfred

      Maxton, John

      Dunwoody, Hon Mrs G.

      Maynard, Miss Joan

      Eadie, Alex

      Meadowcroft, Michael

      Eastham, Ken

      Michie, William

      Ewing, Harry

      Millan, Rt Hon Bruce

      Field, Frank (Birkenhead)

      Miller, Dr M. S. (E Kilbride)

      Fields, T. (L'pool Broad Gn)

      Morris, Rt Hon J. (Aberavon)

      Fisher, Mark

      Parry, Robert

      Flannery, Martin

      Penhaligon, David

      Forrester, John

      Pike, Peter

      Foster, Derek

      Powell, Raymond (Ogmore)

      Freud, Clement

      Prescott, John

      Godman, Dr Norman

      Radice, Giles

      Harman, Ms Harriet

      Randall, Stuart

      Haynes, Frank

      Redmond, M.

      Hogg, N. (C'nauld & Kilsyth)

      Richardson, Ms Jo

      Holland, Stuart (Vauxhall)

      Robinson, G. (Coventry NW)

      Home Robertson, John

      Ross, Ernest (Dundee W)

      Howells, Geraint

      Ross, Stephen (Isle of Wight)

      Hoyle, Douglas

      Rowlands, Ted

      Hughes, Dr. Mark (Durham)

      Sheerman, Barry

      Hughes, Robert (Aberdeen N)

      Smith, Cyril (Rochdale)

      Hughes, Sean (Knowsley S)

      Spearing, Nigel

      Kirkwood, Archibald

      Strang, Gavin

      Lamond, James

      Thomas, Dafydd (Merioneth)

      Leighton, Ronald

      Thompson, J. (Wansbeck)

      Lewis, Ron (Carlisle)

      Thorne, Stan (Preston)

      Lewis, Terence (Worsley)

      Tinn, James

      Litherland, Robert

      Torney, Tom

      Loyden, Edward

      Wallace, James

      McDonald, Dr Oonagh

      Wareing, Robert

      McKay, Allen (Penistone)

      Welsh, Michael

      McKelvey, William

      Winnick, David

      Maclennan, Robert

      McTaggart, Robert

      Tellers for the Ayes:

      Madden, Max

      Mr. John McWilliam and Mr. Ken Weetch

      Marek, Dr John

      Mason, Rt Hon Roy

      NOES

      Aitken, Jonathan

      Douglas-Hamilton, Lord J.

      Alison, Rt Hon Michael

      Dover, Den

      Ancram, Michael

      Dunn, Robert

      Arnold, Tom

      Durant, Tony

      Ashby, David

      Emery, Sir Peter

      Aspinwall, Jack

      Evennett, David

      Atkinson, David (B'm'th E)

      Eyre, Sir Reginald

      Baker, Nicholas (N Dorset)

      Fallon, Michael

      Baldry, Anthony

      Farr, John

      Batiste, Spencer

      Favell, Anthony

      Beaumont-Dark, Anthony

      Fenner, Mrs Peggy

      Bellingham, Henry

      Forman, Nigel

      Benyon, William

      Forth, Eric

      Berry, Sir Anthony

      Franks, Cecil

      Biffen, Rt Hon John

      Gale, Roger

      Biggs-Davison, Sir John

      Galley, Roy

      Bottomley, Peter

      Garel-Jones, Tristan

      Bottomley, Mrs Virginia

      Glyn, Dr Alan

      Bowden, A. (Brighton K'to'n)

      Goodhart, Sir Philip

      Bowden, Gerald (Dulwich)

      Gorst, John

      Braine, Sir Bernard

      Gower, Sir Raymond

      Brinton, Tim

      Greenway, Harry

      Brooke, Hon Peter

      Hampson, Dr Keith

      Brown, M. (Brigg & Cl'thpes)

      Hanley, Jeremy

      Bruinvels, Peter

      Hargreaves, Kenneth

      Buchanan-Smith, Rt Hon A.

      Harris, David

      Budgen, Nick

      Hayward, Robert

      Bulmer, Esmond

      Heddle, John

      Carlisle, Kenneth (Lincoln)

      Henderson, Barry

      Carttiss, Michael

      Howard, Michael

      Cash, William

      Howarth, Gerald (Cannock)

      Chope, Christopher

      Hunt, John (Ravensbourne)

      Clark, Dr Michael (Rochford)

      Hunter, Andrew

      Clarke, Rt Hon K. (Rushcliffe)

      Jackson, Robert

      Conway, Derek

      Johnson-Smith, Sir Geoffrey

      Coombs, Simon

      Jopling, Rt Hon Michael

      Cope, John

      Key, Robert

      Couchman, James

      Knight, Gregory (Derby N)

      Currie, Mrs Edwina

      Knox, David

      Dicks, Terry

      Latham, Michael

      384

      Lawrence, Ivan

      Shelton, William (Streatham)

      Lee, John (Pendle)

      Shepherd, Colin (Hereford)

      Lester, Jim

      Shepherd, Richard (Aldridge)

      Lightbown, David

      Sims, Roger

      Lilley, Peter

      Skeet, T. H. H.

      Lloyd, Peter, (Fareham)

      Smith, Sir Dudley (Warwick)

      Lyell, Nicholas

      Soames, Hon Nicholas

      MacGregor, John

      Spencer, Derek

      Maclean, David John

      Spicer, Jim (W Dorset)

      McQuarrie, Albert

      Spicer, Michael (S Worcs)

      Major, John

      Stanbrook, Ivor

      Malins, Humfrey

      Stern, Michael

      Malone, Gerald

      Stevens, Lewis (Nuneaton)

      Maude, Hon Francis

      Stevens, Martin (Fulham)

      Mawhinney, Dr Brian

      Stewart, Allan (Eastwood)

      Mayhew, Sir Patrick

      Stewart, Andrew (Sherwood)

      Mellor, David

      Stradling Thomas, J.

      Meyer, Sir Anthony

      Sumberg, David

      Mills, Iain (Meriden)

      Taylor, Teddy (S'end E)

      Mills, Sir Peter (West Devon)

      Temple-Morris, Peter

      Mitchell, David (NW Hants)

      Terlezki, Stefan

      Moynihan, Hon C.

      Thomas, Rt Hon Peter

      Murphy, Christopher

      Thompson, Donald (Calder V)

      Neale, Gerrard

      Thompson, Patrick (N'ich N)

      Needham, Richard

      Thornton, Malcolm

      Nelson, Anthony

      Thurnham, Peter

      Neubert, Michael

      Townend, John (Bridlington)

      Nicholls, Patrick

      Tracey, Richard

      Oppenheim, Philip

      Twinn, Dr Ian

      Page, Richard (Herts SW)

      van Straubenzee, Sir W.

      Peacock, Mrs Elizabeth

      Waddington, David

      Percival, Rt Hon Sir Ian

      Wakeham, Rt Hon John

      Porter, Barry

      Waldegrave, Hon William

      Powell, William (Corby)

      Walden, George

      Powley, John

      Walker, Bill (T'side N)

      Prentice, Rt Hon Reg

      Waller, Gary

      Price, Sir David

      Ward, John

      Proctor, K. Harvey

      Wardle, C. (Bexhill)

      Pym, Rt Hon Francis

      Watson, John

      Raison, Rt Hon Timothy

      Watts, John

      Rathbone, Tim

      Wells, Bowen (Hertford)

      Renton, Tim

      Wells, John (Maidstone)

      Rhodes James, Robert

      Whitfield, John

      Rhys Williams, Sir Brandon

      Winterton, Mrs Ann

      Ridley, Rt Hon Nicholas

      Winterton, Nicholas

      Ridsdale, Sir Julian

      Wolfson, Mark

      Rippon, Rt Hon Geoffrey

      Wood, Timothy

      Robinson, Mark (N'port W)

      Woodcock, Michael

      Roe, Mrs Marion

      Rowe, Andrew

      Tellers for the Noes:

      Ryder, Richard

      Mr. Ian Lang and Mr. David Hunt.

      Sayeed, Jonathan

      Shaw, Sir Michael (Scarb')

      Question accordingly negatived.
      9.30 pm
      Mr. MacGregor: I beg to move amendment No. 21, in page 12, line 9, at end insert—
      '(aa) was granted on an application made by the National Coal Board; and'.
      Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 22.
      Mr. MacGregor: It might be appropriate to say now, to save time and avoid me having to say the same thing in respect of the majority of the rest of the Government amendments, that most of them are a response to firm commitments or offers which I made in Committee to consider matters. Some Government amendments are technical and have been tabled as a result of further legal or other expert consideration. These amendments have often been tabled following discussions which have taken place in pursuit of the changes that it has been necessary to make to the Bill as a result of the commitments that I gave in Committee.

      385
      Amendments Nos. 21 and 22 are exceptions to the majority of Government amendments and I must apologise to the House for having to introduce them. They are designed to correct a technical flaw in a Government amendment which was accepted in Committee to deal with security of tenure provisons for tenants of land to be worked by the National Coal Board for opencast coal.
      Unfortunately, the earlier amendment related to provisions for the granting of planning permission specifically to the NCB. We now understand that as a general rule planning permission applies for the benefit of the land and any person interested in it. The amendments rectify the flaw by relating the provisions to the granting of planning permission following an application by the NCB for the working of coal by opencast operations. The amendments will achieve our original intention and I commend them to the House.
      Amendment agreed to.
      Amendment made: No. 22, in page 12, line 10, leave out `by the National Coal Board'.—[Mr. MacGregor.]

    Clause 8

      TRANSFER OF CERTAIN FUNCTIONS OF MINISTER TO PRESIDENT OF R.I.C.S.
      Sir Paul Hawkins: I beg to move amendment No. 23 in page 13, line 14, leave out clause 8.
      Mr. Deputy Speaker: With this it will be convenient also to take amendment No. 24 in page 13, line 23, leave out 'Royal Institution of Chartered Surveyors' and insert `Chartered Institute of Arbitrators'.
      Sir Paul Hawkins: It is my belief that the Minister should retain the power to appoint arbitrators from the Lord Chancellor's panel. I must declare an interest—it is not exactly an interest because on this occasion I am rather against the chartered surveyor—for I have been a chartered surveyor for longer than I care to say. My father and grandfather were chartered surveyors and my son is one. I hold the Royal Institution of Chartered Surveyors in great esteem. It is a professional body and I would trust it to appoint an arbitrator anywhere. However, many members of the farming community have the feeling that chartered surveyors act only for landlords. That may be true of some of the larger firms that feature in the headlines, but most firms of chartered surveyors are prepared to act for landlords or tenants.
      The agriculture section of the institution forms a small percentage of the institution's members. I should say that not more than 10 per cent. of the institution's members deal with agriculture matters. If one wanted a body to deal with agriculture matters only, probably the Central Association of Agricultural Valuers would be a better choice.
      It is normally the large firms and not the small country firms that can afford to provide the institution with a president. It is very nearly impossible to take the senior partner of a three or five-man firm from his work for a year to become president.
      What happens when the president is asked to appoint an arbitrator in an issue in which his own firm is involved? I do not think that it would remove the feeling that
      386
      something was slightly wrong if the vice-president were to make the appointment. I believe that the president would make the appointment fairly and without prejudice but the Bill should take its place on the statute book with the confidence of everyone who is to be involved in its implementation.
      Against that background, it would be far better if the Minister retained the power to appoint arbitrators. I cannot believe that the appointment process costs the Ministry a great deal of money. I hope that my hon. Friend will change his mind and retain the power. I understand that the National Farmers Union and the Country Landowners Association have agreed to pay a fee instead of being provided with a free appointment service as in the past. This matter has created much ill feeling in the country and in the farming community. I want the Bill to start off on the right foot and have a fair wind.
      Mr. Weetch: I shall refer to amendment No. 24 which stands in my name. Clause 8, which entails the transfer of certain functions from the Minister and his Department to the president of the Royal Institution of Chartered Surveyors, is one of the most controversial and doubtful parts of the Bill.
      Under the present arrangements, a dispute between a landlord and a tenant may be referred to arbitration by either party. If the parties cannot agree on an appointment, an arbitrator is appointed by the Minister from a panel of arbitrators drawn up by the Lord Chancellor.
      Under clause 8 the panel will still exist, and the Lord Chancellor will continue to draw it up. Instead of the Ministry appointing an arbitrator in a disputed case, the arbitrator will be appointed by the president of the Royal Institution of Chartered Surveyors. That is wrong in principle. There is such a level of disquiet about the proposal and such feeling that it is wrong-headed that there is a serious danger that confidence in the arbitration framework will be undermined.
      The arguments, as the Minister well knows, are against the whole proposal. The new arrangements will not be seen as impartial in the farming community as a whole — quite the contrary. They will have a debilitating effect on the level of confidence in arbitration on disputed matters. I can do no better than to quote from the comments on clause 8 by the Tenant Farmers Association. A brief which was sent to members of the Committee and no doubt to others states:
      "The Royal Institution of Chartered Surveyors is seen by tenants as a predominantly landowner orientated organisation and the necessary degree of confidence does not therefore exist."
      I do not know whether that point is correct or whether the inference is correct. I say only that that is the case as one important organisation sees it.
      The National Farmers Union has expressed considerable suspicion. The brief states:
      "On a point of principle it is not appropriate for the President of a professional body whose members act for the parties to a dispute, to be responsible for the appointment of the Arbitrator."
      That appears to be a sound argument in principle.
      The transfer of responsibility under clause 8 is a clear abdication of responsibility by the Minister and his Department. The present system has worked well for almost 40 years. It depends upon the confidence of all sections of the farming community, especially the tenants. The Ministry, in the cases about which we are talking, has

      387
      long been seen as neutral, fair, impartial and above the disputes. I put it to the Minister that those functions have now been jettisoned. That is a serious matter.
      The saving in money is minimal. On 28 November 1983, Lord Belstead said in another place that there would be a saving of £50,000 from dispensing with the four members of staff involved in appointing arbitrators. Compared with the wrecking of established confidence, that is chickenfeed and could easily be recouped through a fee. After all, a fee is to be paid to the president of the RICS. It is clear that an edict has gone out from the Prime Minister and the Treasury, "Thou shalt privatise." The Minister, looking around his small domain for something to privatise, has hit on this because he could find nothing else. That is dogma gone mad. The practical consequences will be extremely serious and there are no tangible gains.
      I have much sympathy with the case made by the hon. Member for Norfolk, South-West (Sir P. Hawkins) for his amendment No. 23. I am only sorry that the Standing Committee did not have the benefit of his wise advice and counsel. He probably has more practical experience in this matter than all the rest of us put together and his has been the most damning criticism. The House should take careful note of such criticism from a practitioner.
      If it were up to me, I should like clause 8 to disappear altogether, never to be seen again, but if there has to be a transfer it should be to a body other than the Royal Institution of Chartered Surveyors. Under the Government's proposal, justice may in fact be done but the fact that it will not be seen to be done will undermine confidence. I hope that the Minister will accept amendment No. 24 and even at this late stage avoid one of the principal and far-reaching mistakes in the Bill.
      Mr. David Harris: I wish briefly to support all that has been said by my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins). He spoke of the feelings in his part of the world and I can confirm that, rightly or wrongly, similar feelings are held in the opposite corner of the country—the south-west.
      The parliamentary committee of the Cornwall branch of the National Farmers Union has debated the matter and feels very strongly that the responsibility should be retained by the Minister. We are all conscious that Ministers and Government Departments are overloaded, but I agree with my hon. Friend that the Minister should meet the feelings on this point rather than have the entire Bill get off to a bad start through lack of confidence.
      The hon. Member for Ipswich (Mr. Weetch) referred to the cost of administering the existing legislation and the Minister's responsibilities under it. As my hon. Friend the Member for Norfolk, South-West said, the parties to disputes in arbitration are prepared to pay a fee. I respectfully suggest that that is the right way to proceed, and I urge my hon. Friend the Minister to think again on this. For my part, I should like to see clause 8 disappear altogether.
      9.45 pm
      Mr. Hunter: I rise briefly to speak in support of the two amendments, and, in particular, amendment No. 23. I am profoundly concerned about the clause, which bestows the power of appointing arbitrators on the Royal Institution of Chartered Surveyors. I do not mean any disrespect to the hon. Member for Ipswich (Mr. Weetch),
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      but, although his argument that the arbitrator should be appointed by the Chartered Institute of Arbitrators has much merit, I see it as second best.
      I think that I have done my homework on the Bill. I have read and re-read the Official Report of the proceedings in the other place, and of those on Second Reading in this House and in Committee. Perhaps I display my naivety, but I still cannot understand why the Government are taking such a course. The savings in cost and manpower are minimal. I do not know the precise figures, but I suspect that well over 90 per cent. of disputes over rent revision are settled without going to arbitration. In the few cases where the dispute continues, I suspect that for 90 per cent. of the time both parties will agree on the arbitrator. We are talking about a minimal number of cases. Therefore, one should ask whether the provision is worth all the fuss.
      The industry is clearly unhappy about the changes that the Government intend to make. My gut feeling, particularly given the climate that prevails in farming matters at the moment, is that if the industry feels so strongly, we should go along with it and accept that the savings are minimal and let the powers remain with the Minister. On that point I rest my case. I thoroughly support the amendment.
      Mr. Bermingham: May I apologise to the hon. Member for Norfolk, South-West (Sir P. Hawkins) as was not in the Chamber when he moved the amendment. However, I was well aware of the line that he intended to take.
      I wish to reinforce what I said in Committee, which is that justice must always be seen to be done. Someone who is appointed independently and who is completely independent makes a far better arbitrator than someone with whom a person could identify. I do not seek, as I said in Committee, to criticise in any way the Royal Institution of Chartered Surveyors. It is a very honourable body and it has served our society well for a number of years, but the Bill puts it in a very invidious position. If the amendment was accepted and we returned to square one with the Minister retaining his powers, everybody would accept the position, just as they have done for several years.
      Since Second Reading and the Committee stage, I have taken the trouble of speaking to farmers in my region. Believe it or not, although I represent an industrial seat, most of the land is agricultural. I have walked round the farms and have spoken to the Tenant Farmers Association, the NFU and others, not only in my constituency but in Lancashire and Yorkshire, which is my home base. I gained the overwhelming impression that no one is happy with the provision in the Bill. Everybody opposes it. People think that it is unfair and unreasonable. As the hon. Member for Basingstoke (Mr. Hunter) rightly said, the savings are minimal. To lose those savings would be as nothing compared with the respect that would be gained by the arbitration service if there was once again a totally independent system of appointment. Accordingly, I hope that the Government will concede that small point, which is nevertheless important if we are to have harmony in our arbitration system.
      Mr. Geraint Howells: I endorse the sentiments that have been expressed by hon. Members on both sides of the House. We are in full agreement on this issue. I do not

      389
      want to repeat what I said in Committee. I have received many letters, and, like many hon. Members, I believe that the Government should concede this point. The sooner they realise that the farmers and the public at large are against the proposal the better.
      Mr. Robert Hughes: To judge from the speeches so far, it is clear that there is great discontent and unhappiness in the farming community about the change that the Bill will make to the arbitration nomination. The change from the Ministry to the president of the Royal Institution of Chartered Surveyors has caused real offence. Indeed, there has been more controversy about this part of the Bill than about any other part that we have discussed.
      The genesis of the Bill, and I make no complaint about it, was the debate and discussion initiated partly by a previous Minister, partly by the Country Landowners Association and partly by the NFU. The Bill was in gestation for three and a half years. There have been changes to the agreement, but essentially it has been kept.
      Never during the discussions between the CLA and the NFU did the question of arbitration arise. There were complaints in another place, as there were in Committee, about lack of consultation, but even the Minister said in Committee that the present system has been efficient, has worked well and has had the confidence and trust of both sides of the industry — both landowners and tenants. Therefore, we would have expected compelling and powerful reasons from the Minister for the proposed change. I shall never accuse the Minister of lack of vigour in defending his policy, but I must say that the reasons he adumbrated for the change were feeble in the extreme.
      The Minister's defence was fairly simple. He said that it was not a great issue of privatisation or of Government policy—it was merely sensible to transfer to the private sector those tasks which could equally well be provided by non-Government bodies. He said in Committee:
      "We believe that the appointment of arbitrators falls firmly into that category."
      The hon. Gentleman argued that it was a matter of practicality and not principle and that agriculture was unique in having the arbitrator in a landlord and tenant position being appointed by the Government. The truth is that sheer dogma is behind the change. The Minister's noble Friend in another place said clearly that he smelt dogma. This is no way to go about it.
      The RICS appoints arbitrators in many non-agricultural cases and where the Crown is a party to the arbitration. The whole point about the RICS appointing arbitrators where the Crown is a party to the dispute is to achieve impartiality. If a Government Department nominated an arbitrator when the Crown was involved, that would appear not to be impartial. That is why the RICS is satisfactory in other cases.
      The Minister argued in Committee:
      "It is the Government's priority to save manpower in the Civil Service, although we are not arguing the case on cost grounds."—[Official Report, Standing Committee F, 12 April 1984; c. 180.]
      No one disputes that Government manpower should be saved if it is sensible to do so. It is a reasonable proposition, which any reasonable man would be willing to accept. However, there is a contradiction here. The Minister said that, although there would be no saving in manpower, it would be sensible to redeploy the four
      390
      people who were concerned to other tasks. We are talking about only four people. Under the heading "Effects of the Bill on Public Service Manpower", the Bill states
      "There will be a small saving in Departmental manpower arising from the transfer to the President of the Royal Institute of Chartered Surveyors of the responsibility for the appointment of arbitrators."
      The Government are trying to have it both ways.
      The Minister admitted that the functions had been carried out effectively and impartially. There have been no complaints about the system and there is no widespread support—indeed no support at all—for any change. The Minister argues that the new system will be equally impartial, but that is not how the tenants see it.
      I should not attempt to cross swords with the hon. Member for Norfolk, South-West (Sir P. Hawkins) over the question of arbitration and chartered surveyors, for he has great experience of that, but everyone knows—the point has been made to me in extremely strong terms—that the RICS is seen to be comprised of the Government's men. That view appears to be deeply ingrained in the minds of tenant farmers.
      The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): Really!
      Mr. Hughes: The Parliamentary Secretary need not get excited. She knows perfectly well what is being said, and I must go on the advice of those in the industry. A fee must be paid, and there is no reason why we should not leave matters as they are, having the fee charged and paid to the Ministry. That would save money and would, therefore, help the Minister of State should he have any difficulty with the Prime Minister over this. I have received a strong letter of support from the north Wales branch of the Central Association of Agricultural Valuers urging that matters be left as they are.
      This is the only case of the Government being involved in arbitration where the Minister is taking action. On Monday of this week we had an Adjournment debate on the Potato Marketing Board. It was answered by the Minister who is dealing with the Bill. He said, defending the potato marketing scheme:
      "The scheme provides for arbitration if a producer is aggrieved by any act or omission on the part of the board or, failing agreement, to be appointed by Ministers".—[Official Report, 4 June 1984; Vol. 61, c. 135.]
      Under that scheme, therefore, the Minister is retaining the Government's right to appoint an arbitrator, and he accepts that that is a good formula when there are disputes between growers and the Potato Marketing Board. I believe that the milk marketing scheme also provides for the Minister to appoint an arbitrator in the event of a dispute between a producer and the Milk Marketing Board.
      Thus, an arbitration on rent appears to be the only case where a Government arbitration nomination is being taken out of the Ministry's hands and handed over—perhaps one can put it this way—to private enterprise. Does the Minister intend to do away with the Government-nominated arbitrator under the Milk Marketing Board's scheme, or the scheme operated by the Potato Marketing Board? If so, a great deal of damage would result.
      I have always given the Minister credit for being an extremely intelligent man. He must know that the important changes which have been made in the rent formula may produce in the early stages more disputes than are likely to occur later. The more that arbitration is

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      seen to be impartial, the more the judgments handed down clarify the rent formula, the easier it will be in future years to operate the new formula. He must be aware of the resentment that is being caused by clause 8.
      I am sure that the Minister recognises that the best way to make sure that, despite its failings and any criticisms that we may have of it, the Bill gets a fair wind is to accept amendment No. 23, to take out clause 8, leaving the existing system undisturbed. I hope that he will go that far. If he cannot and does not accept amendment No. 23, we shall force the House to a Division, even if the hon. Gentleman does not wish to do that. If amendment No. 23 is defeated, I urge my right hon. and hon. Friends to support us in the Lobby on amendment No. 24.
      The hon. Member for St. Ives (Mr. Harris) said that he regarded amendment No. 24 as second best. I should not put it quite as second best——
      It being Ten o'clock, the debate stood adjourned.
      Ordered,
      That, at this day's sitting, the Agricultural Holdings Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Garel-Jones.]
      Question again proposed, That the amendment be made.
      Mr. Hughes: I should not quite describe amendment No. 24 as second best, but it is a good fallback. If we cannot have amendment No. 23, let us have amendment No. 24. I hope that the Minister will make a name for himself on this occasion and concede the amendment.
      Mr. MacGregor: The hon. Member for Aberdeen, North (Mr. Hughes) is doing his best to be extremely enticing. This matter has been much debated and it is difficult to say anything new about it. I apologise for reiterating points that I made in Committee. My defence is that I am responding to points already made in Committee.
      There has been much misunderstanding about what the amendment entails. Members of the Committee will understand that well, as will my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins). I have found much misunderstanding and exaggeration as I have travelled around the country. I am grateful for yet another opportunity to stress that this is a simple and staightforward proposal.
      We are discussing simply the appointment of arbitrators from a panel appointed by the Lord Chancellor. I know that Opposition Members know, but it must be stressed again in view of their attacks, that we are not altering the arrangements for appointment to the Lord Chancellor's panel. The same people will be conducting arbitrations. Virtually all the members of the panel—202 out of 206 — are already members of the Royal Institution of Chartered Surveyors.
      It is a fundamental part of Government policy to transfer to the private sector those tasks that can be provided equally well by non-Government bodies. I repeat what I said in Committee, referred to a moment ago by the hon. Member for Aberdeen, North—that the appointment of arbitrators falls firmly into that category. The RICS already appoints arbitrators in many non-agricultural cases. I am advised that the number exceeds 2,000 a year. I am told that those arbitrations are running at roughly
      392
      1,000 a year. We are asking the RICS to take on a task that it already does frequently, and of which it has great experience.
      As the hon. Member for Aberdeen, North said, the RICS is designated by statute to appoint arbitrators in agricultural cases where the Crown is a party to the arbitration. Therefore, it is appointing its own members in cases involving tenants. I have no doubt that the RIC'S can carry out that extended function objectively and impartially, as it already does in the appointments for which it is currently responsible.
      I shall deal with the hon. Gentleman's point about the Potato and Milk Marketing Boards. I was trying to think which part of the Adjournment debate, which came very early in the morning, the hon. Gentleman had decided to quote to me. There is a legitimate distinction between the boards and the RICS. I referred to the RICS appointing arbitrators to more than 2,000 agricultural cases a year. In the Potato and Milk Marketing Boards, arbitrators are appointed where there is a dispute between a statutory body and an objector, which does not happen often. Here, we are referring, as in all other cases for which the RICS appoints arbitrators, to disputes between two private individuals, a landlord and a tenant. It is perfectly capable of carrying out that function as impartially as it has done in all the other cases.
      As to the practical arrangements after handing over, the president of the RICS has given assurance that the procedure currently followed for the appointment of arbitrators will be substantially the same and that he undertakes to make the most suitable appointments in all cases, whether or not the arbitrator is a member of the RICS.
      My hon. Friend the Member for Norfolk, South-West asked what would happen if the president's firm had an interest in a case in which he was asked to appoint an arbitrator. I have been corresponding with my hon. Friend about that. As he knows, if the president were asked to appoint an arbitrator in such a case, the application would be directed to a vice-president, who would make the appointment. My hon. Friend said that that was not satisfactory, but that is standard RICS practice in non-agricultural cases, and does not appear to create any difficulties.
      Officials of the agriculture Department will co-operate closely with RICS officers during the handover period to ensure that the new arrangements operate smoothly and effectively from the start. The hon. Member for Aberdeen, North referred to the difficulties resulting from the introduction of the Bill and, therefore, certain changes in the tenancy arrangements, but, as he knows, we are not proposing to implement this part of the Bill until a year has passed, so as to enable the transition to take place and to deal with the point that he made.
      As the House knows, it is the Government's priority to use manpower effectively in the Civil Service. It is therefore essential to make sure that those who are employed in the Civil Service undertake work of value to the farming industry that cannot be done elsewhere. With some of the changes that are taking place in Brussels, I assure the House that we need any manpower that we can relieve from other purposes to deal with some of the new functions that must be undertaken as a result of decisions in Brussels. Therefore, it is straightforward and sensible

      393
      to say that four people should not be employed on a task that could equally well be performed by a non-Government organisation.
      I refer to amendment No. 24. I am sure that the House will agree, as the Committee did when we debated this part of clause 8, that it would be wrong for us today to enter into a debate on the respective merits of the RICS and the Chartered Institute of Arbitrators, both of which are highly respected and capable professional bodies. I am grateful for the comments made in Committee about the professional integrity and standing of both bodies.
      I looked into the matter with great care, both before and after the Committee stage. I concluded that the RICS is the body with the greatest experience in this area. The president of the RICS will be advised in this task by staff of his land agency and agricultural division, all of whom have wide experience of agricultural matters. As I think I made clear in Committee, the activities and experience of those in the Chartered Institute of Arbitrators have tended to be concentrated in the City, trade, industry and other matters, but not agriculture.
      Therefore, I can assure the House that I share the desire that nothing should be done to diminish the efficiency or impartiality of what is widely recognised as a well respected system of arbitration. I remain convinced that the transfer of my right hon. Friend's responsibility for the executive function of the appointment of arbitrators to the president of the RICS will not impair that system in any way, and before too long it will be seen that the fears that have been expressed are not realised. For that reason, I ask the House to resist both amendments.
      Sir Paul Hawkins: I am sorry that my hon. Friend the Minister of State and my right hon. Friend the Minister have not seen fit to act on the considerable disquiet in the farming community over this matter. Not only the farming community but the Central Association of Agricultural Valuers are, in 99 per cent. of the cases, the people who will have to act on behalf of the landlord or the tenant. I did not stress this before. I hope that the House will understand my embarrassment, but I thought that it was right to move the amendment because, as my family has been connected with the RICS for many years, I wanted to explain that it was wrong that people felt that disquiet, and I wanted the Bill to start off with a fair wind.
      Only a small number of cases are involved. Generally, the landlord and tenant agree. If they do not, the valuers agree. Surely in 99 per cent. of the cases the valuers will agree at least on the name of an arbitrator. It is only when something goes wrong that they come to the Minister. I should have thought that one person and half an hour of the Minister's time was all that was necessary for the appointment of an arbitrator.
      I have begged the Minister to give way on this point, but as he has not I must press the amendment to a Division.
      Question put, That the amendment be made: —
      The House divided: Ayes 101, Noes 174.

      Division No. 352]

      [10.10 pm

      AYES

      Anderson, Donald

      Beckett, Mrs Margaret

      Archer, Rt Hon Peter

      Beith, A. J.

      Ashton, Joe

      Blair, Anthony

      Atkinson, N. (Tottenham)

      Brown, Hugh D. (Provan)

      394

      Caborn, Richard

      Maclennan, Robert

      Callaghan, Jim (Heyw'd & M)

      McTaggart, Robert

      Campbell-Savours, Dale

      McWilliam, John

      Clark, Dr David (S Shields)

      Madden, Max

      Clay, Robert

      Marek, Dr John

      Cocks, Rt Hon M. (Bristol S.)

      Mason, Rt Hon Roy

      Cook, Robin F. (Livingston)

      Maxton, John

      Corbett, Robin

      Maynard, Miss Joan

      Craigen, J. M.

      Meadowcroft, Michael

      Crowther, Stan

      Michie, William

      Cunliffe, Lawrence

      Millan, Rt Hon Bruce

      Dalyell, Tarn

      Morris, Rt Hon J. (Aberavon)

      Davies, Ronald (Caerphilly)

      Parry, Robert

      Davis, Terry (B'ham, H'ge Hl)

      Penhaligon, David

      Dixon, Donald

      Pike, Peter

      Dormand, Jack

      Powell, Raymond (Ogmore)

      Dunwoody, Hon Mrs G.

      Prescott, John

      Eadie, Alex

      Radice, Giles

      Eastham, Ken

      Randall, Stuart

      Ewing, Harry

      Richardson, Ms Jo

      Fields, T. (L'pool Broad Gn)

      Robinson, G. (Coventry NW)

      Fisher, Mark

      Ross, Ernest (Dundee W)

      Forrester, John

      Ross, Stephen (Isle of Wight)

      Foster, Derek

      Rowlands, Ted

      Freud, Clement

      Sheerman, Barry

      Godman, Dr Norman

      Shore, Rt Hon Peter

      Gourlay, Harry

      Skinner, Dennis

      Harman, Ms Harriet

      Smith, Cyril (Rochdale)

      Harris, David

      Smith, Rt Hon J. (M'kl'ds E)

      Hawkins, Sir Paul (SW N'folk)

      Snape, Peter

      Haynes, Frank

      Spearing, Nigel

      Hogg, N. (C'nauld & Kilsyth)

      Stott, Roger

      Holland, Stuart (Vauxhall)

      Strang, Gavin

      Howells, Geraint

      Thomas, Dafydd (Merioneth)

      Hoyle, Douglas

      Thompson, J. (Wansbeck)

      Hughes, Dr. Mark (Durham)

      Tinn, James

      Hughes, Robert (Aberdeen N)

      Torney, Tom

      Hughes, Sean (Knowsley S)

      Wallace, James

      Hunter, Andrew

      Wareing, Robert

      Kirkwood, Archibald

      Weetch, Ken

      Lambie, David

      Welsh, Michael

      Leighton, Ronald

      Winnick, David

      Lewis, Ron (Carlisle)

      Winterton, Mrs Ann

      Lewis, Terence (Worsley)

      Winterton, Nicholas

      Litherland, Robert

      Loyden, Edward

      Tellers for the Ayes:

      McDonald, Dr Oonagh

      Mr. John Home Robertson and Mr. Gerald Bermingham.

      McKay, Allen (Penistone)

      McKelvey, William

      NOES

      Aitken, Jonathan

      Carttiss, Michael

      Alison, Rt Hon Michael

      Cash, William

      Ancram, Michael

      Chope, Christopher

      Arnold, Tom

      Clark, Dr Michael (Rochford)

      Ashby, David

      Clarke, Rt Hon K. (Rushcliffe)

      Aspinwall, Jack

      Conway, Derek

      Atkinson, David (B'm'th E)

      Coombs, Simon

      Baker, Nicholas (N Dorset)

      Cope, John

      Baldry, Anthony

      Couchman, James

      Batiste, Spencer

      Currie, Mrs Edwina

      Beaumont-Dark, Anthony

      Dicks, Terry

      Bellingham, Henry

      Douglas-Hamilton, Lord J.

      Benyon, William

      Dover, Den

      Berry, Sir Anthony

      Dunn, Robert

      Bevan, David Gilroy

      Durant, Tony

      Biggs-Davison, Sir John

      Emery, Sir Peter

      Bottom ley, Peter

      Evennett, David

      Bottomley, Mrs Virginia

      Eyre, Sir Reginald

      Bowden, A. (Brighton K'to'n)

      Fallon, Michael

      Bowden, Gerald (Dulwich)

      Farr, John

      Braine, Sir Bernard

      Favell, Anthony

      Brinton, Tim

      Fenner, Mrs Peggy

      Brooke, Hon Peter

      Forman, Nigel

      Brown, M. (Brigg & Cl'thpes)

      Gale, Roger

      Bruinvels, Peter

      Galley, Roy

      Buchanan-Smith, Rt Hon A.

      Garel-Jones, Tristan

      Budgen, Nick

      Glyn, Dr Alan

      Bulmer, Esmond

      Goodhart, Sir Philip

      Carlisle, Kenneth (Lincoln)

      Gorst, John

      395

      Gower, Sir Raymond

      Rhys Williams, Sir Brandon

      Greenway, Harry

      Ridley, Rt Hon Nicholas

      Hampson, Dr Keith

      Ridsdale, Sir Julian

      Hanley, Jeremy

      Rifkind, Malcolm

      Hargreaves, Kenneth

      Rippon, Rt Hon Geoffrey

      Hayward, Robert

      Robinson, Mark (N'port W)

      Heddle, John

      Roe, Mrs Marion

      Henderson, Barry

      Rowe, Andrew

      Howard, Michael

      Ryder, Richard

      Howarth, Gerald (Cannock)

      St. John-Stevas, Rt Hon N.

      Hunt, John (Ravensbourne)

      Sayeed, Jonathan

      Jackson, Robert

      Shaw, Sir Michael (Scarb')

      Johnson-Smith, Sir Geoffrey

      Shelton, William (Streatham)

      Jopling, Rt Hon Michael

      Shepherd, Colin (Hereford)

      Key, Robert

      Sims, Roger

      Knox, David

      Skeet, T. H. H.

      Lang, Ian

      Smith, Sir Dudley (Warwick)

      Latham, Michael

      Soames, Hon Nicholas

      Lawrence, Ivan

      Spencer, Derek

      Lester, Jim

      Spicer, Jim (W Dorset)

      Lightbown, David

      Spicer, Michael (S Worcs)

      Lilley, Peter

      Stanbrook, Ivor

      Lloyd, Peter, (Fareham)

      Stern, Michael

      Lyell, Nicholas

      Stevens, Lewis (Nuneaton)

      McCurley, Mrs Anna

      Stevens, Martin (Fulham)

      MacGregor, John

      Stewart, Allan (Eastwood)

      Maclean, David John

      Stewart, Andrew (Sherwood)

      McQuarrie, Albert

      Stradling Thomas, J.

      Major, John

      Sumberg, David

      Malins, Humfrey

      Taylor, Teddy (S'end E)

      Malone, Gerald

      Temple-Morris, Peter

      Maude, Hon Francis

      Terlezki, Stefan

      Mawhinney, Dr Brian

      Thomas, Rt Hon Peter

      Mayhew, Sir Patrick

      Thompson, Donald (Calder V)

      Mellor, David

      Thompson, Patrick (N'ich N)

      Meyer, Sir Anthony

      Thornton, Malcolm

      Mills, Iain (Meriden)

      Thurnham, Peter

      Mills, Sir Peter (West Devon)

      Townend, John (Bridlington)

      Mitchell, David (NW Hants)

      Tracey, Richard

      Moynihan, Hon C.

      Twinn, Dr Ian

      Murphy, Christopher

      van Straubenzee, Sir W.

      Neale, Gerrard

      Viggers, Peter

      Needham, Richard

      Waddington, David

      Nelson, Anthony

      Wakeham, Rt Hon John

      Nicholls, Patrick

      Walden, George

      Oppenheim, Philip

      Walker, Bill (T'side N)

      Page, Richard (Herts SW)

      Waller, Gary

      Parris, Matthew

      Wardle, C. (Bexhill)

      Peacock, Mrs Elizabeth

      Watson, John

      Percival, Rt Hon Sir Ian

      Watts, John

      Porter, Barry

      Wells, Bowen (Hertford)

      Powell, William (Corby)

      Wells, John (Maidstone)

      Powley, John

      Whitfield, John

      Prentice, Rt Hon Reg

      Wolfson, Mark

      Price, Sir David

      Wood, Timothy

      Proctor, K. Harvey

      Woodcock, Michael

      Pym, Rt Hon Francis

      Raison, Rt Hon Timothy

      Tellers for the Noes:

      Rathbone, Tim

      Mr. David Hunt and Mr. Michael Neubert.

      Renton, Tim

      Question accordingly negatived.
      Amendment proposed: No. 24, in page 13, line 23, leave out
      'Royal Institute of Chartered Surveyors'
      and insert 'Chartered Institute of arbitrators'. — [Mr. Weetch.]
      Question put, That the amendment be made:—
      The House divided: Ayes 95, Noes 177.

      Division No. 353]

      [10.21 pm

      AYES

      Anderson, Donald

      Bermingham, Gerald

      Archer, Rt Hon Peter

      Blair, Anthony

      Ashton, Joe

      Brown, Hugh D. (Provan)

      Atkinson, N. (Tottenham)

      Caborn, Richard

      Beckett, Mrs Margaret

      Callaghan, Jim (Heyw'd & M)

      Beith, A. J.

      Campbell-Savours, Dale

      396

      Clark, Dr David (S Shields)

      Marek, Dr John

      Clay, Robert

      Mason, Rt Hon Roy

      Cocks, Rt Hon M. (Bristol S.)

      Maxton, John

      Cook, Robin F. (Livingston)

      Maynard, Miss Joan

      Corbett, Robin

      Meadowcroft, Michael

      Craigen, J. M.

      Michie, William

      Crowther, Stan

      Iviillan, Rt Hon Bruce

      Dalyell, Tarn

      Morris, Rt Hon J. (Aberavon)

      Davies, Ronald (Caerphilly)

      Parry, Robert

      Davis, Terry (B'ham, H'ge H'l)

      Penhaligon, David

      Dixon, Donald

      Pike, Peter

      Dormand, Jack

      Powell, Raymond (Ogmore)

      Dunwoody, Hon Mrs G.

      Prescott, John

      Eadie, Alex

      Radice, Giles

      Eastham, Ken

      Randall, Stuart

      Ewing, Harry

      Redmond, M.

      Fields, T. (L'pool Broad Gn)

      Richardson, Ms Jo

      Fisher, Mark

      Robertson, George

      Forrester, John

      Robinson, G. (Coventry NW)

      Godman, Dr Norman

      Ross, Ernest (Dundee W)

      Gourlay, Harry

      Rowlands, Ted

      Harman, Ms Harriet

      Sheerman, Barry

      Haynes, Frank

      Shore, Rt Hon Peter

      Hogg, N. (C'nauld & Kilsyth)

      Skinner, Dennis

      Holland, Stuart (Vauxhall)

      Smith, Cyril (Rochdale)

      Home Robertson, John

      Smith, Rt Hon J. (M'kl'ds E)

      Howells, Geraint

      Snape, Peter

      Hoyle, Douglas

      Spearing, Nigel

      Hughes, Dr. Mark (Durham)

      Stott, Roger

      Hughes, Robert (Aberdeen N)

      Strang, Gavin

      Hughes, Sean (Knowsley S)

      Thomas, Dafydd (Merioneth)

      Kirkwood, Archibald

      Thompson, J. (Wansbeck)

      Lambie, David

      Tinn, James

      Leighton, Ronald

      Tcrney, Tom

      Lewis, Ron (Carlisle)

      Wallace, James

      Lewis, Terence (Worsley)

      Wareing, Robert

      Litherland, Robert

      Weetch, Ken

      Loyden, Edward

      Welsh, Michael

      McDonald, Dr Oonagh

      Winnick, David

      McKelvey, William

      Maclennan, Robert

      Tellers for the Ayes:

      McTaggart, Robert

      Mr. Allen McKay and Mr. Lawrence Cunliffe.

      McWilliam, John

      Madden, Max

      NOES

      Aitken, Jonathan

      Conway, Derek

      Alison, Rt Hon Michael

      Coombs, Simon

      Ancram, Michael

      Cope, John

      Arnold, Tom

      Couchman, James

      Ashby, David

      Currie, Mrs Edwina

      Aspinwall, Jack

      Dicks, Terry

      Atkinson, David (B'm'th E)

      Douglas-Hamilton, Lord J.

      Baker, Nicholas (N Dorset)

      Dover, Den

      Baldry, Anthony

      Dunn, Robert

      Batiste, Spencer

      Durant, Tony

      Beaumont-Dark, Anthony

      Emery, Sir Peter

      Bellingham, Henry

      Evennett, David

      Benyon, William

      Eyre, Sir Reginald

      Berry, Sir Anthony

      Fallon, Michael

      Bevan, David Gilroy

      Farr, John

      Biggs-Davison, Sir John

      Favell, Anthony

      Bottomley, Peter

      Fenner, Mrs Peggy

      Bottomley, Mrs Virginia

      Forman, Nigel

      Bowden, A. (Brighton K'to'n)

      Freud, Clement

      Bowden, Gerald (Dulwich)

      Gale, Roger

      Braine, Sir Bernard

      Galley, Roy

      Brinton, Tim

      Garel-Jones, Tristan

      Brooke, Hon Peter

      Glyn, Dr Alan

      Brown, M. (Brigg & Cl'thpes)

      Goodhart, Sir Philip

      Bruinvels, Peter

      Gorst, John

      Buchanan-Smith, Rt Hon A.

      Greenway, Harry

      Budgen, Nick

      Hanley, Jeremy

      Bulmer, Esmond

      Hargreaves, Kenneth

      Carlisle, Kenneth (Lincoln)

      Harris, David

      Carttiss, Michael

      Hayward, Robert

      Cash, William

      Heddle, John

      Chope, Christopher

      Henderson, Barry

      Clark, Dr Michael (Rochford)

      Howard, Michael

      Clarke, Rt Hon K. (Rushcliffe)

      Howarth, Gerald (Cannock)

      397

      Hunt, David (Wirral)

      Robinson, Mark (N'port W)

      Hunt, John (Ravensbourne)

      Roe, Mrs Marion

      Hunter, Andrew

      Ross, Stephen (Isle of Wight)

      Jackson, Robert

      Rowe, Andrew

      Johnson-Smith, Sir Geoffrey

      Ryder, Richard

      Jopling, Rt Hon Michael

      St. John-Stevas, Rt Hon N.

      Key, Robert

      Sayeed, Jonathan

      Knox, David

      Shaw, Sir Michael (Scarb')

      Lang, Ian

      Shelton, William (Streatham)

      Latham, Michael

      Shepherd, Colin (Hereford)

      Lawrence, Ivan

      Sims, Roger

      Lester, Jim

      Skeet, T. H. H.

      Lightbown, David

      Smith, Sir Dudley (Warwick)

      Lilley, Peter

      Soames, Hon Nicholas

      Lloyd, Peter, (Fareham)

      Spencer, Derek

      Lyell, Nicholas

      Spicer, Jim (W Dorset)

      McCurley, Mrs Anna

      Spicer, Michael (S Worcs)

      Macfarlane, Neil

      Stanbrook, Ivor

      MacGregor, John

      Stern, Michael

      Maclean, David John

      Stevens, Lewis (Nuneaton)

      McQuarrie, Albert

      Stevens, Martin (Fulham)

      Malins, Humfrey

      Stewart, Allan (Eastwood)

      Malone, Gerald

      Stewart, Andrew (Sherwood)

      Maude, Hon Francis

      Stradling Thomas, J.

      Mawhinney, Dr Brian

      Sumberg, David

      Mayhew, Sir Patrick

      Taylor, Teddy (S'end E)

      Mellor, David

      Temple-Morris, Peter

      Meyer, Sir Anthony

      Thomas, Rt Hon Peter

      Mills, Iain (Meriden)

      Thompson, Patrick (N'ich N)

      Mills, Sir Peter (West Devon)

      Thornton, Malcolm

      Mitchell, David (NW Hants)

      Thumham, Peter

      Moynihan, Hon C.

      Townend, John (Bridlington)

      Murphy, Christopher

      Tracey, Richard

      Neale, Gerrard

      Twinn, Dr Ian

      Needham, Richard

      van Straubenzee, Sir W.

      Nelson, Anthony

      Viggers, Peter

      Neubert, Michael

      Waddington, David

      Nicholls, Patrick

      Wakeham, Rt Hon John

      Oppenheim, Philip

      Walden, George

      Page, Richard (Herts SW)

      Walker, Bill (T'side N)

      Parris, Matthew

      Waller, Gary

      Peacock, Mrs Elizabeth

      Wardle, C. (Bexhill)

      Percival, Rt Hon Sir Ian

      Watson, John

      Porter, Barry

      Watts, John

      Powell, William (Corby)

      Wells, Bowen (Hertford)

      Powley, John

      Wells, John (Maidstone)

      Prentice, Rt Hon Reg

      Whitfield, John

      Price, Sir David

      Winterton, Mrs Ann

      Proctor, K. Harvey

      Winterton, Nicholas

      Raison, Rt Hon Timothy

      Wolfson, Mark

      Rathbone, Tim

      Wood, Timothy

      Renton, Tim

      Woodcock, Michael

      Rhys Williams, Sir Brandon

      Ridley, Rt Hon Nicholas

      Tellers for the Noes

      Ridsdale, Sir Julian

      Mr. Donald Thompson and Mr. John Major.

      Rifkind, Malcolm

      Rippon, Rt Hon Geoffrey

      Question accordingly negatived.
      10.30 pm

    Schedule 1

      MINOR AMENDMENTS WITH RESPECT TO STATUTORY SUCCESSION
      Mr. MacGregor: I beg to move amendment No. 25, in page 19, line 20, at end insert—
      'Continuing eligibility of applicant
      3A. In section 20(2) of that Act, for the words "that the applicant is an eligible person" there shall be substituted—

      "(a) that the applicant was an eligible person at the date of death, and

      (b) that he has not subsequently ceased to be such a person;".'.

      Earlier today the House passed some amendments concerned with eligibility. While we were dealing with
      398
      those amendments attention was drawn to an example of pure tidying up, in connection with eligibility, which seemed to be worth adding to the Bill. That is what the amendment does. Its purpose is to codify a Court of Appeal ruling in the case of Jackson v. Hall. Under that ruling, to satisfy the tests of eligibility for succession, the applicant must be an eligible person at the time of the death of the tenant and must continue to be so at the time when his application is heard by the Agricultural Land Tribunal. The amendment puts that Court of Appeal ruling into legislative form.
      Mr. Bermingham: The hour is late and I do not want to detain the House. I congratulate the Government on at least trying to make amendments in a very difficult field. There have been enough court cases on this subject over the years to make us all wary of any wording. I had intended to award the Government five out of 10 for their solution to the problem, but that might have been mean. Eight out of 10 might be nearer the mark. However, those who advise me on these matters have given me examples of possible loopholes to which further thought should be given.
      One particular case comes rapidly to mind. I shall not apologise for harking back. I do so because of the way in which the amendments have been grouped. I suppose that I could have raised this matter on a point of order earlier on, but I did not wish to delay the House in that way. I am seeking, not to force a vote on this matter, but to warn the Government. I hope that the Minister will take on board my remarks.
      Amendment No. 25 contains the seeds of future litigation op joint occupancy, particularly with a widow who might have an interest elsewhere which might be considered a commercial interest. There are a number of examples, and I shall not go into them in detail. The amendment relates back to others, which is why I thought it appropriate to raise my fears and those of those who instruct me.
      The classic example of the problems that might arise is that of the tenant for life. Particularly where the land is settled and held under settlement terms, the tenant for life has the right to enter into it for occupation and to farm land. It remains arguable that his occupancy, if not accompanied by a formal contract of tenancy, will not count against him. In the case of settled land, it could mean that succession could be used for tenanted land in this respect. That is the first of the examples to which I draw the attention of the House.
      My second example is one that merits even more consideration from the Government and the Parliamentary draftsmen, as it may open up a number of actions in the near future. It concerns occupiers who divest themselves of occupation. That may seem to be a contradiction in terms, but it is not. It is possible sometimes for a potential applicant, in anticipation of the death of a tenant, particularly when death is imminent—as the Minister is aware, there are a number of diseases where life expectancy is limited—to rid himself of the unwelcome occupancy, which could give rise to a bar on succession, of a commercial unit by granting a short-term unprotected interest for the period designed to outlast the imminent death of the tenant and the proceedings before the tribunal. Such matters should be looked at soon.
      I appreciate the difficulties, as do those from the Agricultural Law Association who have been assisting me.

      399
      We are anxious to cut down on litigation on this subject, and to forewarn the Government to the problems that might arise. Perhaps these matters can be looked at in the next six months before the law gets going. I am sure that everybody will agree to a slight amendment to cope with such problems. This advice is calculated, because tomorrow morning lawyers will look at the Bill, perhaps to see whether there are ways to circumvent Parliament's intentions.
      I ask the Minister to look carefully at those two cases. I seek, not to be unhelpful, but to forewarn rather than to criticise.
      Mr. MacGregor: I am grateful to the hon. Member for St. Helens, South (Mr. Bermingham) for the way in which he made his remarks. As I have said, I recognise that this is an extremely complicated area of law. It is the complexity of it that explains why the amendments have come forward on Report and not earlier. I do not pretend that we shall have everything right. The hon. Gentleman has drawn attention to a number of problems and possible loopholes. I intended to say, if pressed, that I accept that there will inevitably be some loopholes and that it is not possible to put an end to all the difficulties. I believe, however, that we have made a considerable improvement on what existed earlier, and I am grateful to the Agricultural Law Association for its help. The hon. Gentleman said that he hopes I shall carry out a review with a view to making further changes in six months' time, but I am sure he will recognise the difficulties in doing that. I have certainly taken note of the issues that he raised.
      Amendment agreed to.
      Mr. MacGregor: I beg to move amendment No. 26, in page 20, line 24, leave out from `to' to 'and' in line 36 and insert
      'the holding at any time after the beginning of the period of three months ending with the relevant time apart from this subsection ("the original relevant time"), then—

      (a) if the direction is given within that period, the Tribunal may, on the application of the tenant, specify in the direction, as the relevant time for the purposes of this and the next following section, such a time falling within the period of three months immediately following the original relevant time as they think fit;

      (b) if the direction is given at any time after the original relevant time the Tribunal shall specify in the direction, as the relevant time for those purposes, such a time falling within the period of three months immediately following the date of the giving of the direction as they think fit;'.

      Mr. Deputy Speaker: With this it will be convenient to take Government amendments Nos. 27, 28, 38 and 62 to 64.
      Mr. MacGregor: These are last-stage tidying-up amendments. They stem from the secretaries of the Agricultural Land Tribunal when we consulted them on the subordinate legislation which will follow from the Bill. It seemed appropriate to make the change in the primary legislation. The amendments overcome problems which occur when the Agricultural Land Tribunal cannot give a direction until shortly before or, as sometimes happens, after the relevant time when a new tenancy would begin. This usually arises if legal matters have to be settled in court before a tribunal can hold a hearing or if one of the parties is taken ill and the hearing is delayed.
      400
      Schedule 1, paragraph 6, and schedule 2, paragraph 5, as drafted enable the tribunal to specify a new relevant time at the request of the tenant. That will still be the position after the proposed amendments have been incorporated into the Bill if the direction is given three months or less before the relevant time. If the direction is given at any time after the original relevant time, the tribunal will as a result of the amendments automatically specify a new relevant time. The definition of "the prescribed period" in section 24(2) of the 1976 Act and in schedule 2, paragraph 6(2) of the Bill is being amended to ensure that the landlord or tenant will have at least three months from the time of the direction to serve a notice demanding arbitration on the terms of the tenancy or rent.
      Amendment agreed to.
      Amendments made: No 27, in page 20, line 38, after `24(2)' insert—
      '(a)'.
      No. 28, in page 20, line 40., at end insert '; and
      (b) in the definition of "the prescribed period" for the words "and the" onwards there shall be substituted the words "and—
      (a) the end of the three months immediately following the relevant time; or
      (b) the end of the three months immediately following the date of the giving of the direction;
      whichever last occurs.".'.
      No. 29, in page 20, line 40, at end insert—
      '7. The following Schedule shall be inserted after Schedule 3 to that Act—

    SCHEDULE 3A

      OCCUPATION OF LAND FOR PURPOSES OF STATUTORY SUCCESSION
      Preliminary
      1.—(1) In this Schedule "the occupancy condition" means paragraph (c) of the definition of "eligible person" in section 18(2) of this Act.
      (2) For the purposes of this Schedule a body corporate is controlled by a survivor of the deceased if he or his spouse, or he and his spouse together, have the power to secure—

      (a) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate; or

      (b) by virtue of any powers conferred by the articles of association or other documents regulating that or any other body corporate;

      that the affairs of that body corporate are conducted in accordance with his, her or their wishes, respectively.
      (3) Any reference in this Schedule to the spouse of a survivor of the deceased does not apply in relation to any time when the survivor's marriage is the subject of a decree of judicial separation or a decree nisi of divorce or of nullity of marriage.
      Excluded occupation
      2. —(1) Occupation by a survivor of the deceased of any agricultural land shall be disregarded for the purposes of the occupancy condition if he occupies only—

      (a) under a tenancy approved by the Minister under section 2(1) of the 1948 Act or under such a tenancy relating to the use of land for grazing or mowing as is referred to in the proviso to that provision;

      (b) under a tenancy for more than one year but less that two years;

      (c) under a tenancy not falling within paragraph (a) or (b) above and not having effect as a contract of tenancy;

      (d) under a tenancy to which section 3 of the 1948 Act does not apply by virtue of section 3B of that Act;

      (e) as a licensee; or

      (f) as an executor, administrator, trustee in bankruptcy or person otherwise deriving title from another person by operation of law.

      (2) Paragraphs (a) to (e) of sub-paragraph (1) above do not apply in the case of a tenancy or licence granted to a survivor of the deceased by his spouse or by a body corporate controlled by him.
      (3) References in the following provisions of this Schedule to the occupation of land by any person do not include occupation under a tenancy, or in a capacity, falling within paragraphs (a) to (f) of that sub-paragraph.
      Deemed occupation in case of Tribunal direction
      3. Where a survivor of the deceased is, by virtue of a direction of the Tribunal under section 20 of this Act, for the time being entitled (whether or not with any other person) to a tenancy of the whole or part of any agricultural holding held by the deceased at the date of death other than the holding, he shall, for the purposes of the occupancy condition, be deemed to be in occupation of the land comprised in that holding or (as the case may be) in that part of that holding.
      Joint occupation
      4. —(1) Where any agricultural land is jointly occupied by a survivor of the deceased and one or more other persons as

      (a) beneficial joint tenants;

      (b)tenants in common;

      (c)joint tenants under a tenancy; or

      (d)joint licensees;

      the survivor shall be treated for the purposes of the occupancy condition as occupying the whole of that land.
      (2) If, however, the Tribunal in proceedings under section 20 of this Act determine on the survivor's application that his appropriate share of the net income which the land is, or was at any time, capable of producing for the purposes of section 18(3A) of this Act is or was then less than the aggregate of the earnings referred to in that provision, then, for the purpose of determining whether the occupancy condition is or was then
      402
      satisfied in his case, the net annual income which the land is, or (as the case may be) was, capable of so producing shall be treated as limited to his appropriate share.
      (3) For the purposes of sub-paragraph (2) above the appropriate share of the survivor shall be ascertained—

      (a) where he is a beneficial or other joint tenant or a joint licensee, by dividing the net annual income which the land is or was at the time in question capable of producing for the purposes of section 18(3A) by the total number of joint tenants or joint licensees for the time being;

      (b) where he is a tenant in common, by dividing the said net annual income in such a way as to attribute to him and to the other tenant or tenants in common shares of the income proportionate to the extent for the time being of their respective undivided shares in the land.

      Occupation by spouse or controlled company
      5.—(1) For the purposes of the occupancy conditions and of paragraph 4 above, occupation—

      (a) by the spouse of a survivor of the deceased; or

      (b) by a body corporate controlled by a survivor of the deceased;

      shall be treated as occupation by the survivor.
      (2) Where, in accordance with sub-paragraph (1) above, paragraph 4 above applies to a survivor of the deceased in relation to any time by virtue of the joint occupation of land by his spouse or a body corporate and any other person or persons, sub-paragraphs (2) and (3) of that paragraph shall apply to the survivor as if he were the holder of the interest in the land for the time being held by his spouse or the body corporate, as the case may be.
      Ministerial statements as to net annual income from land
      6. The reference in the definition of "relevant land" in section 18(6) of this Act to agricultural land which is occupied by any such person as is mentioned in paragraph (a) of that definition includes a reference to any agricultural land which is deemed to be occupied by him by virtue of this Schedule.".'. — [Mr. MacGregor.]

    Schedule 2

      STATUTORY SUCCESSION BY PERSON NOMINATED BY RETIRING TENANT
      Mr. Geraint Howells: I beg to move amendment No. 30, in page 21, line 5, leave out 'a single eligible person' and insert
      'one or more eligible persons.'.
      Mr. Deputy Speaker: With this it will be convenient to take the following amendments: No. 32, in page 21, line 11, at end insert
      '; or
      (c) a notice is given to the landlord by one or more eligible persons named in the notice indicating (in whatever terms) that one of the conditions contained in (i) or (ii) below applies and that he or they wish to succeed the tenant or tenants of the holding to the tenancy of that holding as from a date specified in the notice, being a date on which the tenancy of the holding could have been determined by notice to quit given at the date of the notice and which falls not less than sixteen months after the date of the notice.

      (i) the tenant (or in the case of a joint tenancy) all of the tenants have become unfit to farm the holding by reason of ill-health or infirmity; or

      (ii) the tenant or all of the tenants consent to the application by the eligible applicant.'.

      No. 39, in page 22, line 12, at end insert
      "'successor's notice" means the notice mentioned in subparagraph (1)(c) above, "eligible appplicant" means the eligible person mentioned in subparagraph (1)(c) above and named in the successor's notice.'.
      No. 41, in page 22, line 33, after 'successor', insert 'or eligible applicant'.
      No. 42, in page 22, line 35, after 'successor', insert 'or eligible applicant'.
      No. 43, in page 22, line 43, after 'successor', insert 'or eligible applicant'.
      No. 46, in page 23, line 8, after 'notice', insert 'or successor's notice '.
      No. 47, in page 23, line 18, after 'notice', insert 'or successor's notice'.
      No. 48, in page 23, line 22, after 'notice', insert 'or successor's notice'.
      No. 58, in page 24, line 41, after 'successor', insert 'or eligible applicant'.
      No. 59, in page 24, line 45, after 'notice', insert 'or successor's notice'.
      Mr. Howells: Schedule 2 introduces the possibility of a nomination by a tenant or a successor to take over the holding when the tenant retires. It applies only to tenancies already in existence. The tenant or tenants may give notice to the landlord nominating their successor. The alliance supports that amendment to the present situation. It feels that if that opportunity is available to the tenant, he need not hold on to the tenancy to death so as to pass it on to the eligible person, who is defined in paragraph 2 as
      "a close relative in whose case the following conditions are satisfied".
      In Committee I tried to secure some assistance for the daughters of tenants who might be at a disadvantage in remaining on the farm to help in the home and who failed to qualify as an eligible person. The concession has been given to the wife of the retiring tenant by paragraph 2, but my amendment was rejected. We feel, however, that a further amendment to allow the tenant to nominate one or
      404
      more eligible persons is the way forward. The alliance is anxious to encourage joint tenancies and partnerships for family farms so that wives or husbands have an interest in the business also. The amendment recognises that more advanced approach.
      10.45 pm
      I shall now discuss amendment No. 32. Given that we accept the possibility that a tenant may wish to retire and pass on the tenancy to a successor before he dies, we feel that a means should be provided also for when he becomes unfit to farm and possibly too ill to notify that fact to the landlord and make the proper nominations to the landlord. In that case, we feel that the close relatives who are eligible should be able to make the application for the tenancy, rather than see the farm deteriorate and go downhill before they take over.
      The "eligible applicant", which is the term we have given to the peron to distinguish him from an ordinary successor, must prove that one of two conditions exist: first, that the tenant is unfit to farm because of mental or physical infirmity or, secondly, that the tenant consents. The close relative cannot just take over at will and without any real basis for doing so. We believe that this measure provides for a realistic approach to succession tenancies and might help to remove some of the anomalies. This is a more humane approach than compulsory retirement, which provision we tried to remove in Committee.
      Mr. MacGregor: I understand the problems that the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) is trying to solve with these amendments. I know of his concern about this matter, because we have discussed it before, but there are certain difficulties about the amendments.
      I shall deal first with amendment No. 30. I certainly understand that, on a large holding, there could be two potential successors who have, over a long period of years, derived their principal source of livelihood from the holding. The basic arrangements. however, for succession contained in the Agriculture (Miscellaneous Provisions) Act 1976 provide for only one eligible person to claim succession. There is a good reason for that. For example, two eligible persons could be the son and the grandson of an elderly tenant. To allow them to succeed jointly to the tenancy would add an extra generation to the statutory succession chain. In view of that, and the fact that we take a view about the number of generations that can succeed, I am sure that the hon. Gentleman will not be surprised to learn that I find his amendment unacceptable.
      Not only is the amendment, for understandable reasons, out of step with the existing arrangements for statutory succession on death; it is also wrong in principle. I draw the hon. Gentleman's attention to paragraph 2(7) of schedule 1 which facilitates inter vivos succession to joint tenants by agreement with the landlord. I believe that that is as far as we can go in that matter.
      I listened carefully to the hon. Gentleman's further explanation of amendment No. 32 and the other amendments. Although I realise that there could be difficulties connected with failing health, I conclude on the whole that those difficulties should not be settled by legislation. The provisions proposed by the hon. Gentleman could give rise to conflicts in farming families that are probably worse than the difficulties that he wishes to solve—for example, difficulties about ousting a sick

      405
      or infirm father against the father's wishes. Those difficulties must be left to be settled within the family, without recourse to legislative pressure.
      The hon. Gentleman will know, following the debate in Committee, during which I undertook to look at certain aspects of the failing health problem, that we propose to provide in a forthcoming amendment to the Bill for inter vivos succession on grounds of ill-health before the age of 65, subject to the tenant's consent. That measure goes some way towards meeting the hon. Gentleman's concern and is as far as I am prepared to go in this sensitive area.
      Mr. Geraint Howells: Once again, the Minister has failed to convince me, although he has tried very hard during the day. We were told earlier that he was a very intelligent person, but he has not acceded to even one of our requests so far today. We shall thus have no alternative but to press amendment No. 32 to a Division at the appropriate time.
      I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn
      Mr. MacGregor: I beg to move amendment No. 31, in page 21, line 10 leave out 'sixteen months' and insert
      `one year, but not more than two years,'.
      The purpose of the amendment is to extend the period for giving notice of retirement from
      "not less than sixteen months",
      as the Bill now provides, to
      "one year, but not more than two years"
      before the date specified in the retirement notice. I am grateful to note that the hon. Member for City of Durham (Mr. Hughes) approves of the change. It follows representations from the NFU when the Bill was in Committee that 16 months was insufficient, but discussions were not quite complete at that stage. It is in line with the time scale for notices to quit, I believe that it makes sense and I commend it to the House.
      Amendment agreed to.
      Amendment proposed: No. 32, in page 21, line 11 at end insert
      ; or
      (c) a notice is give to the landlord by one or more eligible persons named in the notice indicating (in whatever terms) that one of the conditions contained in (i) or (ii) below applies and that he or they wish to succeed the tenant or tenants of the holding to the tenancy of that holding as from a date specified in the notice, being a date on which the tenancy of the holding could have been determined by notice to quit given at the date of the notice and which falls not less than sixteen months after the date of the notice.

      (i) the tenant (or in the case of a joint tenancy) all of the tenants have become unfit to farm the holding by reason of ill-health or infirmity; or

      (ii) the tenant or all of the tenants consent to the application by the eligible applicant.'.—[Mr. Geraint Howells.]

      Question put, That the amendment be made:—
      The House divided: Ayes 89, Noes 168.

      Division No. 354]

      [10.52 pm

      AYES

      Anderson, Donald

      Callaghan, Jim (Heyw'd & M)

      Archer, Rt Hon Peter

      Campbell-Savours, Dale

      Beckett, Mrs Margaret

      Clark, Dr David (S Shields)

      Bermingham, Gerald

      Clay, Robert

      Blair, Anthony

      Cocks, Rt Hon M. (Bristol S.)

      Brown, Hugh D. (Provan)

      Conlan, Bernard

      Caborn, Richard

      Cook, Robin F. (Livingston)

      406

      Corbett, Robin

      McWilliam, John

      Cowans, Harry

      Madden, Max

      Craigen, J. M.

      Marek, Dr John

      Crowther, Stan

      Maxton, John

      Cunliffe, Lawrence

      Maynard, Miss Joan

      Dalyell, Tarn

      Michie, William

      Davies, Ronald (Caerphilly)

      Millan, Rt Hon Bruce

      Davis, Terry (B'ham, H'ge H'l)

      Morris, Rt Hon J. (Aberavon)

      Dixon, Donald

      Parry, Robert

      Dormand, Jack

      Penhaligon, David

      Eadie, Alex

      Pike, Peter

      Eastham, Ken

      Powell, Raymond (Ogmore)

      Ewing, Harry

      Prescott, John

      Fields, T. (L'pool Broad Gn)

      Richardson, Ms Jo

      Fisher, Mark

      Robertson, George

      Forrester, John

      Robinson, G. (Coventry NW)

      Foster, Derek

      Ross, Ernest (Dundee W)

      Freud, Clement

      Ross, Stephen (Isle of Wight)

      Harman, Ms Harriet

      Sheerman, Barry

      Haynes, Frank

      Skinner, Dennis

      Hogg, N. (C'nauld & Kilsyth)

      Smith, Cyril (Rochdale)

      Holland, Stuart (Vauxhall)

      Smith, Rt Hon J. (M'kl'ds E)

      Home Robertson, John

      Snape, Peter

      Howells, Geraint

      Spearing, Nigel

      Hughes, Dr. Mark (Durham)

      Stott, Roger

      Hughes, Robert (Aberdeen N)

      Strang, Gavin

      Hughes, Sean (Knowsley S)

      Thomas, Dafydd (Merioneth)

      Hughes, Simon (Southwark)

      Thompson, J. (Wansbeck)

      Kirkwood, Archibald

      Tinn, James

      Lambie, David

      Torney, Tom

      Leighton, Ronald

      Wallace, James

      Lewis, Ron (Carlisle)

      Wareing, Robert

      Lewis, Terence (Worsley)

      Weetch, Ken

      Litherland, Robert

      Welsh, Michael

      Loyden, Edward

      Winnick, David

      McDonald, Dr Oonagh

      McKay, Allen (Penistone)

      Tellers for the Ayes:

      McKelvey, William

      Mr. A. J. Beith and Mr. Michael Meadowcroft.

      Maclennan, Robert

      McTaggart, Robert

      NOES

      Aitken, Jonathan

      Dicks, Terry

      Alison, Rt Hon Michael

      Douglas-Hamilton, Lord J.

      Ancram, Michael

      Dover, Den

      Arnold, Tom

      Dunn, Robert

      Ashby, David

      Durant, Tony

      Aspinwall, Jack

      Emery, Sir Peter

      Atkinson, David (B'm'th E)

      Evennett, David

      Baker, Nicholas (N Dorset)

      Eyre, Sir Reginald

      Baldry, Anthony

      Fallon, Michael

      Batiste, Spencer

      Farr, John

      Beaumont-Dark, Anthony

      Favell, Anthony

      Bellingham, Henry

      Fenner, Mrs Peggy

      Benyon, William

      Forman, Nigel

      Berry, Sir Anthony

      Gale, Roger

      Bevan, David Gilroy

      Galley, Roy

      Biggs-Davison, Sir John

      Glyn, Dr Alan

      Bottomley, Peter

      Goodhart, Sir Philip

      Bottomley, Mrs Virginia

      Gorst, John

      Bowden, A. (Brighton K'to'n)

      Greenway, Harry

      Bowden, Gerald (Dulwich)

      Hargreaves, Kenneth

      Braine, Sir Bernard

      Harris, David

      Brinton, Tim

      Hawkins, Sir Paul (SW N'folk)

      Brooke, Hon Peter

      Heddle, John

      Brown, M. (Brigg & Cl'thpes)

      Henderson, Barry

      Bruinvels, Peter

      Howard, Michael

      Budgen, Nick

      Howarth, Gerald (Cannock)

      Bulmer, Esmond

      Hunt, David (Wirral)

      Carlisle, Kenneth (Lincoln)

      Hunter, Andrew

      Carttiss, Michael

      Jackson, Robert

      Cash, William

      Jopling, Rt Hon Michael

      Chope, Christopher

      Key, Robert

      Clark, Dr Michael (Rochford)

      Knox, David

      Clarke, Rt Hon K. (Rushcliffe)

      Latham, Michael

      Conway, Derek

      Lawrence, Ivan

      Coombs, Simon

      Lester, Jim

      Cope, John

      Lightbown, David

      Couchman, James

      Lilley, Peter

      Currie, Mrs Edwina

      Lloyd, Peter, (Fareham)

      407

      Lyell, Nicholas

      Shelton, William (Streatham)

      McCurley, Mrs Anna

      Shepherd, Colin (Hereford)

      Macfarlane, Neil

      Sims, Roger

      MacGregor, John

      Skeet, T. H. H.

      Maclean, David John

      Smith, Sir Dudley (Warwick)

      McQuarrie, Albert

      Soames, Hon Nicholas

      Major, John

      Spencer, Derek

      Malins, Humfrey

      Spicer, Michael (S Worcs)

      Malone, Gerald

      Stanbrook, Ivor

      Maude, Hon Francis

      Stern, Michael

      Mawhinney, Dr Brian

      Stevens, Lewis (Nuneaton)

      Mayhew, Sir Patrick

      Stevens, Martin (Fulham)

      Mellor, David

      Stewart, Allan (Eastwood)

      Meyer, Sir Anthony

      Stewart, Andrew (Sherwood)

      Mills, lain (Meriden)

      Stradling Thomas, J.

      Mills, Sir Peter (West Devon)

      Sumberg, David

      Mitchell, David (NW Hants)

      Taylor, Teddy (S'end E)

      Moynihan, Hon C.

      Temple-Morris, Peter

      Murphy, Christopher

      Terlezki, Stefan

      Neale, Gerrard

      Thomas, Rt Hon Peter

      Needham, Richard

      Thompson, Donald (Calder V)

      Nelson, Anthony

      Thompson, Patrick (N'ich N)

      Neubert, Michael

      Thornton, Malcolm

      Nicholls, Patrick

      Thurnham, Peter

      Norris, Steven

      Tracey, Richard

      Oppenheim, Philip

      Twinn, Dr Ian

      Page, Richard (Herts SW)

      van Straubenzee, Sir W.

      Parris, Matthew

      Viggers, Peter

      Peacock, Mrs Elizabeth

      Waddington, David

      Percival, Rt Hon Sir Ian

      Wakeham, Rt Hon John

      Porter, Barry

      Walden, George

      Powell, William (Corby)

      Walker, Bill (T'side N)

      Powley, John

      Waller, Gary

      Prentice, Rt Hon Reg

      Wardle, C. (Bexhill)

      Proctor, K. Harvey

      Watson, John

      Raison, Rt Hon Timothy

      Watts, John

      Rathbone, Tim

      Wells, Bowen (Hertford)

      Renton, Tim

      Wells, John (Maidstone)

      Rhys Williams, Sir Brandon

      Whitfield, John

      Ridsdale, Sir Julian

      Winterton, Mrs Ann

      Rifkind, Malcolm

      Winterton, Nicholas

      Robinson, Mark (N'port W)

      Wolfson, Mark

      Roe, Mrs Marion

      Wood, Timothy

      Rowe, Andrew

      Woodcock, Michael

      Ryder, Richard

      St. John-Stevas, Rt Hon N.

      Tellers for the Noes:

      Sayeed, Jonathan

      Mr. Tristan Garel-Jones and Mr. Ian Lang.

      Shaw, Sir Michael (Scarb')

      Question accordingly negatived.
      11 pm
      Mr. MacGregor: I beg to move amendment No. 33, in page 21, line 12, leave out from beginning to `shall' in line 13 and insert
      'the principal paragraphs of this Schedule'.
      Mr. Deputy Speaker (Mr. Paul Dean): With this we shall discuss Government amendments Nos. 34, 36, 37, 45, 49, 50, 53, 55 to 57 and 66.
      Mr. MacGregor: I am pleased to bring before the House this rather large batch of amendments that improve the procedures in schedule 2 for facilitating statutory succession on the voluntary retirement of the sitting tenant. Most of these amendments are in fulfilment of the undertaking I gave in Standing Committee on 10 April in relation to the suspension of notices to quit when notice of retirement is served. There are also some drafting amendments to clarify the text and to remedy some minor defects. I shall try to explain their purpose as quickly as possible, but there are many of them.
      The first amendment concerns the case where there has been service of a valid notice to quit under case B, D or E—that is, when land is needed for development or
      408
      there has been a breach of the tenancy agreement—before the giving of the retirement notice. If the notice is not one in respect of which the retirement provisions of schedule 2 are entirely excluded under paragraph 2(1)(c) of the schedule because arbitrations and tribunal procedures relating to the notice have already been exhausted, the retirement notice is held in suspense until action on the notice to quit has been settled one way or the other. If the notice to quit is upheld, the retirement notice is of no effect. That is set out in the new paragraph 2(3) and (4) of schedule 2.
      If a valid notice to quit is served on or after a retirement notice is given but before the tribunal has started the hearing of the application by the nominated successor, the amendments provide that if the notice to quit is given under case F—that is, the tenant's backruptcy—or case C when a bad husbandry certificate has already been given, the retirement notice is of no effect. They also provide that if the notice to quit is given under case B or D, the retirement notice is held in suspense until action on the notice to quit has been settled one way or the other. If the notice to quit is upheld, the retirement notice is of no effect. This is set out in the new paragraph 2A.
      In all other situations not already covered by the text of schedule 2, a notice to quit may not impede an application for a tenancy under paragraph 4 of the schedule.
      Amendment agreed to.
      Amendments made: No. 34, in page 21, line 14, at end insert
      `and subject also to paragraph 2A below.'.
      No. 35, in page 21, line 39, leave out from `land' to end of line 40.
      No. 36, in page 21, line 49, at end insert—
      '"the principal paragraphs of this Schedule" means paragraphs 3 to 9 below (except paragraphs 4(9) and 5(6), which are of general application);'.
      No. 37, in page 22, line 1, after `means', insert
      '(subject to paragraphs 2(4) and 2A(3) below)'.
      No. 38, in page 22, line 3, at end insert—
      '"the retirement date" means the date specified in the retirement notice as the date as from which the proposed succession is to take place;'.
      No. 40, in page 22, line 25, leave out `and' and insert—
      '(aa) Schedule 3A to that Act (which provides for the disregarding of certain kinds of occupation as well as specifying circumstances in which a person is deemed to be in occupation of land) shall apply in relation the nominated successor as it applies in relation to a survivor of a deceased tenant, but subject to the following modifications, namely—

      (i) references to the occupancy condition shall be read as references to the said paragraph (b),

      (ii) the reference in paragraph 4(2) to section 20 of that Act shall be read as a reference to paragraph 4 below, and

      (iii) paragraphs 3 and 6 shall be omitted; and'.

      No. 44, in page 22, line 45, after '(4)', insert `(aa) or'.
      No. 45, in page 23, line 7, leave out `following' and insert `principal'.
      No. 49, in page 23, line 45, after `holding', insert 'or a related holding'.
      No. 50, in page 23, line 46, after `holding', insert `or a related holding'. —[Mr. MacGregor.]
      Mr. Jackson: I beg to move amendment No. 41, in page 23, leave out lines 49 to 51.
      Mr. Deputy Speaker: It will be convenient to discuss at the same time the following Government amendments: Nos. 52, 54 and 60.
      Mr. Jackson: In Committee we had a useful discussion of the point raised by the amendment, so I can be brief. I seek to remove the age restriction on the right of a tenant to pass on his tenancy. When I tabled an amendment in these terms in Committee, the Minister was kind enough to say that he would table a Government amendment on Report to lift the restriction in cases of ill health or other incapacity.
      But, perhaps ungratefully, I wish to press my hon. Friend further. I do so for two reasons. The first is concerned with what we have been told is the main objective of the Bill — increasing the number of tenancies and promoting mobility, so making way for new blood to come into the industry. My amendment would help in those respects. The second reason is more fundamental. The restriction that we are discussing is a major restriction on the freedom of the tenant and his would-be successor, and we should put an end to it.
      What considerations have been put forward to justify this restriction on their freedom? In Committee, my hon. Friend advanced two reasons, the first being that this is a package and that because the CLA has struck an agreement with the NFU, this serious restriction on the freedom of some individuals should be maintained. That cannot be regarded as a substantial argument.
      The second reason is even more paternalistic. In Committee, my hon. Friend argued that there was a fear that if the restrictions were removed in the case of some tenants, there would be increasing inter-family pressures on the tenant to retire early in favour of an eligible successor. However, my hon. Friend gave his case away when he went on to say that while he could not gauge the strength of that feeling, it was not the business of Parliament to solve disputes within the family. I thoroughly agree with that sentiment, which is why I ask the Minister to accept the amendment and, with it, to make a small but useful expansion in the area of elementary human freedom.
      Mr. Hunter: I shall speak to amendment No. 51, in support of my hon. Friend the Member for Wantage (Mr. Jackson). My hon. Friend explained clause 4 and schedule 2, which would enable an existing tenant to apply to the Agricultural Land Tribunal for a direction for a tenancy to be passed on to a nominated successor. That can happen in the event of a refusal by the landlord of an application to transfer the tenancy.
      I entirely accept and applaud the intention and objective of clause 4. It will create many tenancy changes and that will be generally welcomed. It is reasonable to argue that a significant number of tenancy changes would not otherwise occur until the tenant's death. However, I must tell the Minister — in a friendly way — that I cannot understand or accept the limiting of its application to tenants of 65 years of age or over. I support my hon. Friend in urging that the age limitation should be removed. I believe that tenancy transfers should meet with Agricultural Land Tribunal approval, regardless of the age of the tenant. There are many personal and health reasons other than age alone that can prevent the continuation of effective farming.
      Mr. Mark Hughes: It is clear, in relation to amendment No. 54 — we pressed this matter in Committee—that transfer because of mental or bodily ill-health should be made easier. Serious practical difficulties arise from the amendment. The Agricultural Land Tribunal would need to be satisfied that, first, the tenant is infirm in body or mind and that such infirmity is likely to be permanent; and, secondly that as a result the tenant is incapable of conducting the farming business in perpetuity.
      Nobody on the Agricultural Land Tribunal is in a position to make such medical judgments. We support and welcome the Minister's intention to make available the ill-health ground, but we are not satisfied that amendment No. 54 achieves that objective. I should be most grateful if the Minister could satisfy us on that matter.
      Mr. MacGregor: Hon. Members are now endeavouring to be brief, so I shall try to do the same. As those Members who were on the Committee know, I undertook to consult outside interests to see whether it was possible to make a provision in the Bill for succession on grounds of ill-health before the age of 65. I was struck by the case before the Committee sat, but I wanted to hear the Committee debates before taking action. I was impressed by the arguments that I heard there and I entered into consultations. As a result, I am pleased to bring forward amendments Nos. 52, 54 and 60.
      The amendments will enable a tenant to retire before the age of 65, in favour of a nominated successor, if he is suffering from ill-health to an extent which permanently prevents him in his personal capacity from fulfilling his responsibilities to farm in accordance with the rules of good husbandry. In the case of joint tenancies, all tenants must meet that condition of ill-health.
      The tribunal must satisfy itself that the grounds of ill-health are established. That is a question of medical judgment in many cases. The problem of medical judgment is always implicit, and probably explicit, in any endeavour to introduce this sort of change in the law. It will be up to the tribunal to decide how it wishes to proceed. I can cite other cases of semi-traditional or traditional processes in which decision-takers do not have medical skills but call upon those who have them for their advice. Perhaps that is the way in which the tribunal would decide to proceed.
      We felt that it was unnecessary to write that approach into the Bill, but that we should leave it to a tribunal to satisfy itself that the grounds of ill-health are established and to decide how it would satisfy itself. I freely confess that that may not be perfect, but the hon. Member for City of Durham (Mr. Hughes) will agree that it is not possible to find a perfect solution to the problem. If, for any reason, the tribunal dismisses an application by the nominated successor under the arrangements, there may be no second bite by the nominated successor. An application by any other would-be successor may be made only on the death of the tenant.
      11.15 pm
      I refer next to the amendment proposed by my hon. Friend the Member for Wantage (Mr. Jackson). I hope he will agree that I have at least gone some way towards meeting the problems which he and others raised, and of which I was aware, by enabling the tenant to have the opportunity to retire on ill-health grounds before the age of 65. My hon. Friend was seductive in the way he moved

      411
      his amendment and in his appeal to the principles of freedom, but at this late stage of the Bill I am reluctant to make this final change. As I emphasised in Committee, the transfer that he seeks can take place at any age where the landlord agrees. Therefore, we are talking only about cases where the landlord does not agree.
      The age of 65 has been agreed by the industry, is in line with the Northfield report recommendations and is a well-recognised retirement age for many groups of people. In the absence of general agreement about going anywhere below the age of 65 within the industry as a whole, and in view of the desirability of ensuring that the Bill, in its final stages, gets through the House with the general agreement of the industry, I feel reluctant to go as far as my hon. Friend wishes, but I hope he will support my amendments and feel that they help quite a bit.
      Amendment negatived.
      Amendments made: No. 52, in page 23, line 49 leave out from '(e)' to end of line 50 and insert
      'subject to sub-paragraph (1B) below, if at the retirement date'.]
      No. 53, in page 24, line 10 at end insert—
      '(1A) In sub-paragraph (1)(d) above "related holding" means, in relation to the holding, any agricultural holding comprising the whole or a substantial part of the land comprised in the holding.'.
      No. 54, in page 24, line 10 at end insert—
      '(1B) The principal paragraphs of this Schedule are not excluded by sub-paragraph (1)(e) above if the retirement notice is given on the grounds that—

      (a) the retiring tenant or (where the notice is given by joint tenants) each of the retiring tenants is or will at the retirement date be incapable, by reason of bodily or mental infirmity, of conducting the farming of the holding in such a way as to secure the fulfilment of the responsibilities of the tenant to farm in accordance with the rules of good husbandry; and

      (b) any such incapacity is likely to be permanent; and that fact is stated in the notice.'.

      No. 55, in page 24, line 11, leave out 'following' and insert 'principal'.
      No. 56, in page 24, line 20, at end insert—
      '(3) If on the date of the giving of the retirement notice the tenancy is the subject of a valid notice to quit given before that date and including a statement that it is given for any such reason as is referred to in Case B, D or E in section 2(3) of the 1977 Act (not being a notice to quit falling within sub-paragraph (1)(c) above), the principal paragraphs of this Schedule shall not apply unless one of the events referred to in sub-paragraph (4) below occurs.
      (4) Those events are as follows—
      (a) it is determined by arbitration under the 1948 Act that the notice to quit is ineffective for the purposes of section 2(3) on account of the invalidity of any such reason as aforesaid; or
      (b) where a counter-notice is duly served under section 4(2) or (3) of the 1977 Act—

      (i) the Tribunal withhold consent to the operation of the notice to quit, or

      (ii) the period for making an application to the Tribunal for such consent expires without such an application having been made;

      and where one of those events occurs the relevant period shall for the purposes of this Schedule be the period of one month beginning with the date on which the arbitrator's award is delivered to the tenant, with the date of the Tribunal's decision to withhold consent, or with the expiry of the said period for making an application (as the case may be).
      Notices to quit restricting operation of Schedule
      2A. —(1) If the tenancy becomes the subject of a valid notice to quit given on or after the date of the giving of the retirement notice (but before the Tribunal have begun to hear any application by the nominated successor under paragraph 4 below in respect of the retirement notice) and the notice to quit—
      412

      (a) falls within Case C in section 2(3) of the 1977 Act and is founded on a certificate granted under section 2(4) of that Act in accordance with an application made before that date; or

      (b) falls within Case F in section 2(3);

      the retirement notice shall be of no effect and no proceedings, or (as the case may be) no further proceedings, shall be taken under this Schedule in respect of it.
      (2) If the tenancy becomes the subject of a valid notice to quit given on or after the date of the giving of the retirement notice (but before the Tribunal have begun to hear any application by the nominated successor under paragraph 4 below in respect of the retirement notice) and the notice to quit—

      (a) includes a statement that is given for any such reason as is referred to in Case B in section 2(3) of the 1977 Act; or

      (b) includes a statement that it is given for any such reason as is referred to in Case D in section 2(3) and is founded on a notice given for the purposes of that Case before that date;

      the retirement notice shall be of no effect and no proceedings, or (as the case may be) no further proceedings, shall be taken under this Schedule in respect of it unless one of the events referred to in sub-paragraph (3) below occurs.
      (3) Those events are as follows—

      (a) it is determined by arbitration under the 1948 Act that the notice to quit is ineffective for the purposes of section 2(3) on account of the invalidity of any such reason as aforesaid; or

      (b) where a counter-notice is duly served under section 4(2) or (3) of the 1977 Act—

      (i) the Tribunal withhold consent to the operation of the notice to quit; or

      (ii) the period for making an application to the Tribunal for such consent expires without such an application having been made;

      and where one of those events occurs, and the notice to quit was given before the time when the relevant period would expire apart from this sub-paragraph, that period shall for the purposes of this Schedule expire at the end of the period of one month beginning with the date on which the arbitrator's award is delivered to the tenant, with the date of the Tribunal's decision to withhold consent, or with the expiry of the said period for making an application (as the case may be).
      (4) For the purposes of this Schedule an application by the nominated successor under paragraph 4 below which is invalidated by sub-paragraph (1) or (2) above shall be treated as if it had never been made'.
      No. 57, in page 24, leave out lines 23 to 28 and insert
      'any notice to quit the holding or part of the holding given to the tenant thereof (whether before or on or after the date of the giving of the retirement notice), not being a notice to quit falling within any provision of paragraph 2 or 2A above.'.
      No. 60, in page 25, line 3, at end insert—
      '(2A) If the retirement notice includes a statement in accordance with paragraph 2(1B) above that is given on the grounds mentioned in that provision, then, before the nominated successor's application is further proceeded with under this paragraph, the Tribunal must be satisfied—

      (a) that the retiring tenant or (as the case may be) each of the retiring tenants either is or will at the the retirement date be incapable, by reason of bodily or mental infirmity, of conducting the farming of the holding in such a way as to secure the fulfilment of the responsibilities of the tenant to farm in accordance with the rules of good husbandry; and

      (b) that any such incapacity is likely to be permanent.'.—[Mr. MacGregor.]

      Mr. Jackson: I beg to move amendment No. 61, in page 25, line 30, at end insert—
      'If the Tribunal dispose of the nominated successor's application otherwise than by the giving of a direction under sub-paragraph (5) above, the nominated successor may not on the death of the tenant, make an application for a direction entitling him to the tenancy unless a period of five years has elapsed from the date on which an application under paragraph 4(1) and (2) above was made.'
      Mr. Deputy Speaker: With this it will be convenient to take amendment No. 68, in page 27, line 41, leave out sub-paragraph (4).
      Mr. Jackson: It has been my good fortune—at least I think it is so—to have these late amendments selected, and I shall be brief, as I know how late it is.
      The purpose of the two amendments is to put right what I consider to be a serious potential injustice to a few individuals. Under the arrangements proposed in the Bill, a tenant can apply only once to the Agricultural Land Tribunal to transfer his tenancy to a successor, and if he fails, he can never do it again.
      We must ask ourselves what that could mean to the individuals concerned. We are considering a moment that is a turning point in their lives, perhaps one of the most important moments in the career of a would-be successor. He has to show that he is both eligible and suitable to succeed to the tenancy, for which he might have been preparing himself all his adult working life. However, under the Government's proposals in the Bill, he has only one chance to demonstrate that eligibility and suitability, and if he fails, he does not have another chance. It is a throw of the dice; all or nothing—in a phrase, "sudden death". It is as if, in the House, we were allowed only one chance to be elected to Parliament, and having failed, we could never stand again. [HON. MEMBERS: "A good idea. "] It may a good idea for some, but we all agree that it could be less satisfactory for ourselves.
      I do not believe that the Government proposal can be justified in the light of natural justice. The criteria of suitability are set out in the 1976 Act — training, practical experience, age, physical health, and adequate financial standing. On all those criteria a man may fail, but he can draw lessons from his failure, and if he is given the chance, he can demonstrate that he has learnt the lessons. But it is precisely that chance that the Government, in their legislation, fail to provide, and which I am seeking to make possible by my amendment. I know that it is a bore and a cost for the landlords, but I hope that the House will look with favour on an amendment moved in the interests of simple natural justice.
      Mr. MacGregor: I gave much thought to the amendment, because I saw the point of the argument advanced by my hon. Friend the Member for Wantage (Mr. Jackson). He will not find my answer satisfactory, but I hope that he will understand the spirit in which it is given.
      I must resist the amendments, for the following reasons. The inter vivos succession provisions in schedule 2 were introduced as part of the mini-package agreement reached between the National Farmers Union and the Country Landowners Association. It was not part of that agreement that an unsuccessful applicant could apply again on the death of the tenant. The CLA contends—it has a point—that the landlord should not be put to the trouble and expense of having to oppose again an applicant whom he has already proven to be ineligible. Under the provisions in schedule 2 the tenant and nominated successor are free to choose the best time to serve a retirement notice in order to optimise the nominated successor's eligibility. If, having done so, the applicant is found to be ineligible, the passage of further time is unlikely to make him so. In those circumstances, there is a problem about putting the landlord to further trouble and expense.
      414
      As there is a compromise agreement on this, and for the reasons that I gave on the previous group of amendments, it is better to leave the Bill as it stands. I hope that my hon. Friend will accept those reasons.
      Question put, That the amendment be made:—
      The House divided: Ayes 19, Noes 170.

      Division No. 355]

      [11.21 pm

      AYES

      Ashdown, Paddy

      Parry, Robert

      Beith, A. J.

      Penhaligon, David

      Campbell-Savours, Dale

      Skinner, Dennis

      Cook, Robin F. (Livingston)

      Smith, Cyril (Rochdale)

      Cunliffe, Lawrence

      Thomas, Dafydd (Merioneth)

      Ewing, Harry

      Wallace, James

      Freud, Clement

      Wareing, Robert

      Howells, Geraint

      Hughes, Simon (Southwark)

      Tellers for the Ayes:

      Jackson, Robert

      Mr. Archy Kirkwood and Mr. Robert Maclennan.

      Loyden, Edward

      Meadowcroft, Michael

      NOES

      Aitken, Jonathan

      Garel-Jones, Tristan

      Alison, Rt Hon Michael

      Glyn, Dr Alan

      Ancram, Michael

      Goodlad, Alastair

      Arnold, Tom

      Gorst, John

      Ashby, David

      Hargreaves, Kenneth

      Aspinwall, Jack

      Harris, David

      Atkinson, David (B'm'th E)

      Hawkins, Sir Paul (SW N'folk)

      Baker, Nicholas (N Dorset)

      Hayes, J.

      Baldry, Anthony

      Heddle, John

      Batiste, Spencer

      Henderson, Barry

      Beaumont-Dark, Anthony

      Howard, Michael

      Bellingham, Henry

      Howarth, Gerald (Cannock)

      Benyon, William

      Hunter, Andrew

      Berry, Sir Anthony

      Jopling, Rt Hon Michael

      Bevan, David Gilroy

      Knox, David

      Biggs-Davison, Sir John

      Lang, Ian

      Bottomley, Peter

      Latham, Michael

      Bottomley, Mrs Virginia

      Lawrence, Ivan

      Bowden, A. (Brighton K'to'n)

      Lester, Jim

      Bowden, Gerald (Dulwich)

      Lightbown, David

      Braine, Sir Bernard

      Lilley, Peter

      Brinton, Tim

      Lloyd, Peter, (Fareham)

      Brooke, Hon Peter

      Lyell, Nicholas

      Brown, M. (Brigg & Cl'thpes)

      McCurley, Mrs Anna

      Bruinvels, Peter

      Macfarlane, Neil

      Buck, Sir Antony

      MacGregor, John

      Budgen, Nick

      Maclean, David John

      Bulmer, Esmond

      McQuarrie, Albert

      Carlisle, John (N Luton)

      Major, John

      Carlisle, Kenneth (Lincoln)

      Malins, Humfrey

      Carttiss, Michael

      Malone, Gerald

      Cash, William

      Maude, Hon Francis

      Chope, Christopher

      Mawhinney, Dr Brian

      Clark, Dr Michael (Rochford)

      Mayhew, Sir Patrick

      Clarke, Rt Hon K. (Rushcliffe)

      Mellor, David

      Conway, Derek

      Meyer, Sir Anthony

      Coombs, Simon

      Mills, Iain (Meriden)

      Cope, John

      Mills, Sir Peter (West Devon)

      Couchman, James

      Mitchell, David (NW Hants)

      Currie, Mrs Edwina

      Moynihan, Hon C.

      Dicks, Terry

      Murphy, Christopher

      Douglas-Hamilton, Lord J.

      Neale, Gerrard

      Dover, Den

      Needham, Richard

      Dunn, Robert

      Nelson, Anthony

      Durant, Tony

      Neubert, Michael

      Emery, Sir Peter

      Nicholls, Patrick

      Evennett, David

      Oppenheim, Philip

      Eyre, Sir Reginald

      Page, Richard (Herts SW)

      Fallon, Michael

      Parris, Matthew

      Farr, John

      Patten, John (Oxford)

      Favell, Anthony

      Peacock, Mrs Elizabeth

      Fenner, Mrs Peggy

      Percival, Rt Hon Sir Ian

      Forman, Nigel

      Porter, Barry

      Gale, Roger

      Powell, William (Corby)

      Galley, Roy

      Powley, John

      415

      Prentice, Rt Hon Reg

      Temple-Morris, Peter

      Proctor, K. Harvey

      Terlezki, Stefan

      Rathbone, Tim

      Thomas, Rt Hon Peter

      Renton, Tim

      Thompson, Donald (Calder V)

      Rhys Williams, Sir Brandon

      Thompson, Patrick (N'ich N)

      Ridsdale, Sir Julian

      Thornton, Malcolm

      Rifkind, Malcolm

      Thurnham, Peter

      Robinson, Mark (N'port W)

      Tracey, Richard

      Roe, Mrs Marion

      Twinn, Dr Ian

      Rowe, Andrew

      van Straubenzee, Sir W.

      Ryder, Richard

      Viggers, Peter

      Sayeed, Jonathan

      Waddington, David

      Shaw, Sir Michael (Scarb')

      Wakeham, Rt Hon John

      Shelton, William (Streatham)

      Walden, George

      Shepherd, Colin (Hereford)

      Walker, Bill (T'side N)

      Sims, Roger

      Waller, Gary

      Skeet, T. H. H.

      Wardle, C. (Bexhill)

      Smith, Sir Dudley (Warwick)

      Warren, Kenneth

      Soames, Hon Nicholas

      Watson, John

      Spencer, Derek

      Watts, John

      Spicer, Jim (W Dorset)

      Wells, Bowen (Hertford)

      Spicer, Michael (S Worcs)

      Wells, John (Maidstone)

      Stanbrook, Ivor

      Whitfield, John

      Steen, Anthony

      Winterton, Mrs Ann

      Stern, Michael

      Winterton, Nicholas

      Stevens, Lewis (Nuneaton)

      Wolfson, Mark

      Stevens, Martin (Fulham)

      Wood, Timothy

      Stewart, Allan (Eastwood)

      Woodcock, Michael

      Stewart, Andrew (Sherwood)

      Stradling Thomas, J.

      Tellers for the Noes:

      Sumberg, David

      Mr. David Hunt and Mr. Tim Sainsbury.

      Taylor, Teddy (S'end E)

      Question accordingly negatived.
      Amendments made: No. 62, in page 26, line 44, leave out from second `the' to end of line 47 and insert `retirement date, except that—

      (a) where such a direction is given within the period of three months ending with the retirement date, the Tribunal may, on the application of the tenant, specify in the direction, as the relevant time for the purposes of this paragraph, such a time falling within the period of three months immediately following the retirement date as they think fit;

      (b) where such a direction is given at any time after the retirement date, the Tribunal shall specify in the direction, as the relevant time for those purposes, such a time falling within the period of three months immediately following the date of the giving of the direction as they think fit;

      and any time so specified shall be the relevant time for those purposes accordingly.'.
      No. 63, in page 27, line 16, leave out 'the end of' and insert—
      (a) the end of the'.
      No. 64, in page 27, line 17, at end insert
      ; or
      (b) the end of three months immediately following the date of the giving of the direction;
      whichever last occurs.'.
      No. 65, in page 27, line 24, leave out from 'after' to end of line 25 and insert 'giving the retirement notice.'.
      No. 66, in page 27, line 29 after 'and', insert
      `no proceedings, or (as the case may be)'.
      No. 67, in page 27, line 36, after `above,', insert
      'but before the relevant time (within the meaning of that paragraph),'.
      No. 69, in page 28, line 20, leave out from beginning to end of line 21 and insert
      the reference in the definition of "relevant land" to agricultural land which is occupied as mentioned in paragraph (a) of that definition included a reference to agricultural land which is deemed to be occupied by the nominated successor by virtue of this paragraph.'.—[Mr. MacGregor.]

    Schedule 3

      MINOR AND CONSEQUENTIAL AMENDMENTS
      Amendments made: No. 71, in page 31, leave out line 40.
      No. 72, in page 31, line 42, leave out 'and' and insert—
      (aa) for the words from "for the supply" to "the Minister" there shall be substituted the words "executed on the holding for the purpose of complying with the requirements of a notice under section 3 of the Agriculture (Safety, Health and Welfare Provisions) Act 1956 (provision of sanitary conveniences and washing facilities)"; and'.
      No. 73, in page 40, line 7, at end insert—
      'The Opencast Coal Act 1958 (c.69)
      28A. In section 24(6) of the Opencast Coal Act 1958 (tenant's right to compensation for improvements etc.), in proviso (b), for each of the words "four" and "five" there shall be substituted the word "eight".'.—[Mr. MacGregor.]

    Schedule 4

      ENACTMENTS REPEALED
      Amendments made: No. 75, in page 44, line 21, column 3, leave out from `it,' to 'and' in line 23.
      No. 76, in page 45, line 4, at end insert—

      '4 & 5 Eliz. 2 c.49.

      The Agriculture (Safety, Section 3(10).'. Health and Welfare Provisions) Act 1956.

      No. 77, in page 45, line 19, column 3 leave out `to "1967"' and insert 'onwards'.—[Mr. MacGregor.]
      Order for Third Reading read.— [Queen's Consent, on behalf of the Crown, and Prince of Wales's Consent, on behalf of the Duchy of Cornwall, signified]
      Question proposed, That the Bill be now read the Third time.—[Mr. Jopling.]
      11.32 pm
      Mr. Robert Hughes: May I take this opportunity to put the record straight on a slip of the tongue I made earlier when I said that the industry described the RICS as the Government's men; it was clear in the context of my speech that I meant the landlord's men. Hansard, however, will not correct this slip. Therefore, I put that correction on the record.
      The Bill makes little or no contribution to the future of the tenanted sector. It is a bad Bill and we shall vote against it tonight.
      11.33 pm
      Mr. Geraint Howells: I do not believe that the necessary amendments have been made to ensure that the Bill fulfils its purpose of promoting healthy tenant-landlord relationships. This issue has been debated by all interested parties for a number of years. Everyone accepted that the present arrangements were no longer satisfactory and that fundamental changes were needed. This should have been our opportunity to put things right, but in the event it has not proved to be so. Unfortunately, the Government did not take our representations into account. As a result the Bill is totally inadequate and does not advance the interests of the agricultural industry.
      The provisions have been discussed at length on the Floor of the House and in Committee, but after all the talking we have not made any significant progress. We in the alliance believe that one essential element in

      417
      agriculture is continuity. This element has been destroyed in the Bill, exposing many a tenant farmer and his family to great insecurity.
      We suggested a two-generation succession as a fair and equitable compromise. We are disappointed that our arguments were not accepted and we shall vote against Third Reading.
      11.35 pm
      Mr. Jopling: I note that the hon. Member for Aberdeen, North (Mr. Hughes) and the Liberal party spokesman, the hon. Member for Ceridigion and Pembroke, North (Mr. Howells), intend to vote against Third Reading. Even they would not dispute the need for legislation to make more farm tenancies available. The problem is how to achieve that. One needs only a brief acquaintance with this complex subject to realise that it is exceedingly difficult to maintain the right balance in the landlord-tenant relationship.
      Radical measures are unlikely to achieve the degree of performance that is essential if the confidence of those landlords and tenants is to be maintained. That is why the Government took the view that any measures must, so far as possible, be on the basis of agreement with the industry. The Bill is workable and acceptable to landlords and tenants. At technical level we have remedied many of the weaknesses in the present legislation which have been uncovered over the years of practical application.
      What is more important, the new rent formula will help to ensure greater confidence in the arbitration process. The changes in the succession arrangement, in conjunction with the fiscal changes introduced by the Chancellor of the Exchequer will help to create the right climate for landlords to let more land and so create more opportunities for new tenants and new farm entrants on their own account.
      We now have a useful Bill which will be widely welcomed by the industry as a whole. I commend it to the House.
      Question put, That the Bill be now read the Third time:—
      The House divided: Ayes 170, Noes 85.

      Division No. 356]

      [11.37 pm

      AYES

      Aitken, Jonathan

      Brown, M. (Brigg & Cl'thpes)

      Alison, Rt Hon Michael

      Bruinvels, Peter

      Ancram, Michael

      Buck, Sir Antony

      Arnold, Tom

      Budgen, Nick

      Ashby, David

      Bulmer, Esmond

      Aspinwall, Jack

      Carlisle, John (N Luton)

      Atkinson, David (B'm'th E)

      Carlisle, Kenneth (Lincoln)

      Baker, Nicholas (N Dorset)

      Carttiss, Michael

      Baldry, Anthony

      Cash, William

      Batiste, Spencer

      Chope, Christopher

      Beaumont-Dark, Anthony

      Clark, Dr Michael (Rochford)

      Bellingham, Henry

      Clarke, Rt Hon K. (Rushcliffe)

      Benyon, William

      Conway, Derek

      Berry, Sir Anthony

      Coombs, Simon

      Bevan, David Gilroy

      Cope, John

      Biggs-Davison, Sir John

      Couchman, James

      Bottomley, Peter

      Currie, Mrs Edwina

      Bottomley, Mrs Virginia

      Dicks, Terry

      Bowden, A. (Brighton K'to'n)

      Douglas-Hamilton, Lord J.

      Bowden, Gerald (Dulwich)

      Dover, Den

      Braine, Sir Bernard

      Dunn, Robert

      Brinton, Tim

      Durant, Tony

      Brooke, Hon Peter

      Emery, Sir Peter

      418

      Evennett, David

      Prentice, Rt Hon Reg

      Eyre, Sir Reginald

      Proctor, K. Harvey

      Fallon, Michael

      Rathbone, Tim

      Favell, Anthony

      Renton, Tim

      Fenner, Mrs Peggy

      Rhys Williams, Sir Brandon

      Forman, Nigel

      Ridsdale, Sir Julian

      Gale, Roger

      Rifkind, Malcolm

      Galley, Roy

      Robinson, Mark (N'port W)

      Garel-Jones, Tristan

      Roe, Mrs Marion

      Glyn, Dr Alan

      Rowe, Andrew

      Goodlad, Alastair

      Ryder, Richard

      Gorst, John

      Sayeed, Jonathan

      Hargreaves, Kenneth

      Shaw, Sir Michael (Scarb')

      Harris, David

      Shelton, William (Streatham)

      Hawkins, Sir Paul (SW N'folk)

      Shepherd, Colin (Hereford)

      Hayes, J.

      Sims, Roger

      Heddle, John

      Skeet, T. H. H.

      Henderson, Barry

      Smith, Sir Dudley (Warwick)

      Howard, Michael

      Soames, Hon Nicholas

      Howarth, Gerald (Cannock)

      Spencer, Derek

      Hunt, David (Wirral)

      Spicer, Jim (W Dorset)

      Hunter, Andrew

      Spicer, Michael (S Worcs)

      Jackson, Robert

      Stanbrook, Ivor

      Jopling, Rt Hon Michael

      Steen, Anthony

      Knox, David

      Stern, Michael

      Lang, Ian

      Stevens, Lewis (Nuneaton)

      Latham, Michael

      Stevens, Martin (Fulham)

      Lawrence, Ivan

      Stewart, Allan (Eastwood)

      Lester, Jim

      Stewart, Andrew (Sherwood)

      Lightbown, David

      Stradling Thomas, J.

      Lilley, Peter

      Sumberg, David

      Lloyd, Peter, (Fareham)

      Taylor, Teddy (S'end E)

      Lyell, Nicholas

      Temple-Morris, Peter

      McCurley, Mrs Anna

      Terlezki, Stefan

      Macfarlane, Neil

      Thomas, Rt Hon Peter

      MacGregor, John

      Thompson, Donald (Calder V)

      Maclean, David John

      Thompson, Patrick (N'ich N)

      McQuarrie, Albert

      Thornton, Malcolm

      Malins, Humfrey

      Thurnham, Peter

      Malone, Gerald

      Tracey, Richard

      Maude, Hon Francis

      Twinn, Dr Ian

      Mawhinney, Dr Brian

      van Straubenzee, Sir W.

      Mayhew, Sir Patrick

      Viggers, Peter

      Mellor, David

      Waddington, David

      Meyer, Sir Anthony

      Wakeham, Rt Hon John

      Mills, lain (Meriden)

      Walden, George

      Mills, Sir Peter (West Devon)

      Walker, Bill (T'side N)

      Mitchell, David (NW Hants)

      Waller, Gary

      Moynihan, Hon C.

      Wardle, C. (Bexhill)

      Murphy, Christopher

      Warren, Kenneth

      Neale, Gerrard

      Watson, John

      Needham, Richard

      Watts, John

      Nelson, Anthony

      Wells, Bowen (Hertford)

      Neubert, Michael

      Wells, John (Maidstone)

      Nicholls, Patrick

      Whitfield, John

      Oppenheim, Philip

      Winterton, Mrs Ann

      Page, Richard (Herts SW)

      Winterton, Nicholas

      Parris, Matthew

      Wolfson, Mark

      Patten, John (Oxford)

      Wood, Timothy

      Peacock, Mrs Elizabeth

      Woodcock, Michael

      Percival, Rt Hon Sir Ian

      Porter, Barry

      Tellers for the Ayes:

      Powell, William (Corby)

      Mr. John Major and Mr. Tim Sainsbury.

      Powley, John

      NOES

      Anderson, Donald

      Conlan, Bernard

      Archer, Rt Hon Peter

      Cook, Robin F. (Livingston)

      Ashdown, Paddy

      Corbett, Robin

      Beckett, Mrs Margaret

      Cowans, Harry

      Beith, A. J.

      Craigen, J. M.

      Bermingham, Gerald

      Crowther, Stan

      Blair, Anthony

      Cunliffe, Lawrence

      Brown, Hugh D. (Provan)

      Dalyell, Tam

      Caborn, Richard

      Davies, Ronald (Caerphilly)

      Callaghan, Jim (Heyw'd & M)

      Davis, Terry (B'ham, H'ge H'l)

      Campbell-Savours, Dale

      Dormand, Jack

      Clark, Dr David (S Shields)

      Eadie, Alex

      Clay, Robert

      Eastham, Ken

      Cocks, Rt Hon M. (Bristol S.)

      Ewing, Harry

      419

      Fields, T. (L'pool Broad Gn)

      Millan, Rt Hon Bruce

      Fisher, Mark

      Morris, Rt Hon J. (Aberavon)

      Forrester, John

      Parry, Robert

      Foster, Derek

      Penhaligon, David

      Freud, Clement

      Pike, Peter

      Haynes, Frank

      Powell, Raymond (Ogmore)

      Hogg, N. (C'nauld & Kilsyth)

      Prescott, John

      Holland, Stuart (Vauxhall)

      Redmond, M.

      Howells, Geraint

      Robertson, George

      Hughes, Dr. Mark (Durham)

      Ross, Ernest (Dundee W)

      Hughes, Robert (Aberdeen N)

      Sheerman, Barry

      Hughes, Sean (Knowsley S)

      Skinner, Dennis

      Hughes, Simon (Southwark)

      Smith, Cyril (Rochdale)

      Kirkwood, Archibald

      Smith, Rt Hon J. (M'kl'ds E)

      Leighton, Ronald

      Spearing, Nigel

      Lewis, Ron (Carlisle)

      Stott, Roger

      Lewis, Terence (Worsley)

      Strang, Gavin

      Litherland, Robert

      Thomas, Dafydd (Merioneth)

      Loyden, Edward

      Thompson, J. (Wansbeck)

      McDonald, Dr Oonagh

      Tinn, James

      McKay, Allen (Penistone)

      Torney, Tom

      McKelvey, William

      Wallace, James

      Maclennan, Robert

      Wareing, Robert

      McTaggart, Robert

      Weetch, Ken

      McWilliam, John

      Welsh, Michael

      Madden, Max

      Winnick, David

      Marek, Dr John

      Maxton, John

      Tellers for the Noes:

      Maynard, Miss Joan

      Mr. John Home Robertson and Mr. Don Dixon.

      Meadowcroft, Michael

      Michie, William

      Question accordingly agreed to.
      Bill read the Third time, and passed.

  Bretby Hall Hospital
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Goodlad.]
  11.47 pm
  Mrs. Edwina Currie: I wish to raise the subject of the closure of Bretby Hall hospital in my constituency, a subject that raises issues not just for my area but for the rest of the country. I am grateful to my hon. and learned Friend the Member for Burton (Mr. Lawrence) for his advice on this matter.
  Bretby Hall is a small, 86-bed orthopaedic unit, housed in a magnificent old property in south Derbyshire. The house once belonged to Lord Chesterfield, and has been an orthopaedic hospital since 1926, before the creation of the National Health Service. It is managed by the Southern Derbyshire health authority, which covers several constituencies, including those of Derby, and in turn by the Trent regional health authority. It is one of two main orthopaedic units in south Derbyshire, the other being at the Derbyshire royal infirmary at Derby, which does the main trauma and accident cases. Bretby is used only for cold surgery — that is, planned operations. The beds cannot be used for anything else, and in my eyes that is one of the hospital's virtues.
  The closure arises not because of lack of money but because of increases. Under the resource allocation working party formula, both Trent and the Southern Derbyshire health authority are the gainers. Trent has 500 more posts as a result of the recent manpower review, and the Southern Derbyshire health authority has embarked on a large capital building programme at its two main district general hospital sites—Derbyshire royal infirmary and Derby City hospital.
  Before the contracts were let, the DHSS sensibly asked how the additional facilities were to be used, and the consideration of the transfer of various small units, such as the Derwent hospital and the Derby children's hospital, has led to the problem that we now have. The main victim of this consideration has been Bretby. The closure is out for consultation, and the transfer. if it is agreed, will take place in 1986–87, following the provision there of a twin theatre and of an extra lift at Derby city hospital. The additional cost will be about £2 million, and there will be increased revenue costs as well.
  I emphasise that the intention is that there should be no loss of service, and I am not criticising the district health authority. As a former chairman of the authority, I understand the pressures that it is under. It envisages some gains. It tells us that there will be more modern facilities — I have to add, somewhat more modern facilities, because a new theatre and physiotherapy department have only recently been provided at Bretby, the latter with private funds. There will be fewer beds in the new unit, for there will be a decrease from 86 to 76.
  We are told that access may improve for some patients, but the letters that I have received from throughout Derbyshire, Staffordshire and Leicestershire suggest that access is not a problem for the patients who have been treated at Bretby. We are told that on the district general hospital site there will be less risk to patients, and perhaps better status for staff and more training facilities for staff of all kinds. That is not what the consultants say, and I

  421
  stress that it is the consultants who work at Bretby and at other district hospital sites who are leading the fight to keep Bretby Hall open.
  Something extremely special would be lost if Bretby Hall were to close; that is why I am so pleased to have the opportunity of raising the issue in an Adjournment debate. In the year that I have represented the neighbourhood of Bretby I have visited Bretby Hall hospital on a number of occasions. It is always a delight to visit it, for it has a very special atmosphere. It is special for reasons other than the fact that it is in a beautiful house, that there are wards in what was formerly a ballroom, that there is a former music room with a beautiful parquet floor and that every ward looks out over magnificent gardens with fields and the Derbyshire hills beyond. Whatever else we can do in Derby, we cannot provide those attractions.
  I have no doubt that Bretby Hall is special because of the atmosphere of a small, friendly local unit. That atmosphere is real and it is understood by the patients and the staff. There are about 170 staff at Bretby and they are nearly all local people. They are deeply committed to working at the hospital. Bretby Hall has no difficulties in recruiting staff, even scarce and rare staff, such as theatre sisters. They will work at Bretby Hall but not in Derby, and they are most reluctant to move. The effect on staff morale of the proposed closure is disastrous. I suspect that if the decision is taken to close Bretby Hall we may well see over the next couple of years the progressive collapse of the unit. It may not be possible to maintain the service to patients in the way that we would like.
  Bretby Hall is special in a number of ways. For example, it has never cancelled an operation. If an elderly constituent is booked in for a hip operation, he or she knows that it will take place. The patients know that they can count on the hospital. The through-put is astonishing. It is typical there to carry out a hip operation in an hour and a half and to get a patient home in 12 days flat. The average length of stay for an orthopaedic patient is nine days and that is being reduced. When I was there last week, the hospital was dealing with 10 patients in one theatre in one day. That is quite a record, but sometimes it is exceeded.
  Mr. Ivan Lawrence: In paying this profound compliment to the staff of Bretby Hall hospital, is my hon. Friend not paying a substantial compliment to my constituents in Burton-on-Trent?
  Mrs. Currie: I am glad to have the opportunity to confirm that that is so. I am paying a compliment also to my own constituents, and I am delighted that some of them are listening to the debate.
  I have talked to the surgeons and I have asked them why Bretby Hall seems to be so successful. One reason is that it is a small hospital. I am told that it is quick and easy to transfer patients as it is not necessary to wait for a long time for porters or administrative staff. Over and over again the consultant surgeons have said: "It is simply easier to work in Bretby Hall and to get on with these things."
  On these grounds alone, Bretby Hall is special. If one makes the effort to study the statistics and to compare Bretby Hall with other major orthopaedic units it is interesting to find that its through-put is much higher than that elsewhere. Compared with Oswestry and the royal
  422
  orthopaedic hospital in Birmingham, the Woodlands, near which I used to live, the number of cases per theatre is revealing. Bretby Hall can deal with 200 hip operations while Oswestry can deal with only 154 and the Woodlands 190. As for operations on knees, Bretby Hall can deal with 102 per theatre while Oswestry deals with only 18 and the Woodlands only 28. Bretby Hall has four consultants while the Woodlands has 12 and Oswestry has 25. Bretby Hall operates on only four days a week instead of five elsewhere and it does not have the large number of permanent junior staff to assist that are to be found in other units. On these grounds alone, the future of Bretby Hall needs to be reconsidered.
  These levels of achievement are to be found at Bretby Hall for reasons that are set out in a report from a working party to my right hon. Friend the Secretary of State for Social Services, which is known as the Duthie report on orthopaedic services. My hon. Friend the Parliamentary Under-Secretary of State will be well acquainted with the report, especially as Professor Duthie is one of his constituents. Paragraph 3.4.1 reads:
  "Because of its inevitably demanding nature, "trauma"
  that is, accidents—
  "will always take priority over elective surgery. Beds booked for elective patients in wards which receive both trauma and elective surgery become filled with accident and emergency cases and theatre time for elective surgery has to be used for traumatic cases …
  Since few orthopaedic units have sufficient beds to cope with the influx of traumatic cases and at the same time to meet the demands of elective surgery, it is only in those places where trauma and elective beds are geographically separated that elective beds are protected. Where, within a single hospital, endeavours are made to reserve beds for elective cases trauma cases still overflow into them. It is without doubt for this reason that many see as the only solution of the waiting time problem the strict separation of facilities for traumatic and elective treatment."
  There could not be a better description of the organisation of orthopaedic services in and around my constituency with elective work at Bretby Hall and trauma work at Derbyshire Royal infirmary.
  Bretby Hall hospital raises one or two wider points. It is an orthopaedic hospital. Of all our long waiting lists, the waiting lists for orthopaedics is the worst, nationally and locally. At the time that Professor Duthie was making his report, the Trent region was the worst in the country for orthopaedics, and it is not all that much better now.
  The most recent figures that I could obtain were in the Derby Evening Telegraph of 9 February 1984. In southern Derbyshire, almost 750 non-urgent orthopaedic cases out of a total waiting list of 1,755 have been waiting for longer than one year, and 31 of the 50 most urgent orthopaedic cases have been waiting for longer for one month. That is way beyond Government guidelines.
  I suggest that, as we are messing around with orthopaedics, we need more assistance, not a transfer. Yesterday's research is today's routine activity. Improvements in anaesthesia especially mean that most elderly people can be treated safely and frequently under local anaesthetic. I am not sure that it would suit me to have my knee treated under a local anaesthetic, but it seems to suit many elderly people and they recover more quickly. One surgeon has estimated that we need about 10 per cent. more beds in orthopaedic surgery to cope with increases in the number of fractured femurs, let alone increased demand in other respects.

  423
  The Southern Derbyshire health authority has set up a working party on orthopaedics. I have two recommendations to make to that working party: first, provide more beds at Derby city hospital for all the difficult cases and reduce waiting lists; secondly, leave Bretby Hall alone. I feel strongly about that point.
  One of the last recommendations of the Duthie report was:
  "No specialist orthopaedic hospital, however small or isolated, should be closed unless it can first be guarateed that the facility planned to replace it will provide the same or a better standard of service for an equal or increased number of patients within a similar period of time."
  Bretby Hall is special for two other reasons. First, it is in an old house. That is typical of the NHS, especially in the provinces. Reinstatement of that house could be expensive, but I challenge the notion that an old property is always dearer to run. The NHS does not charge depreciation or interest on its capital, so it is a little difficult to compare an old and a new hospital, but my experience of local government suggests that new buildings are invariably more expensive and frequently a great deal more expensive than the existing facilities.
  The Southern Derbyshire health authority figures show that there will be an increase in running costs after the transfer of £127,000 a year, and that is for 10 fewer beds. I challenge the notion that it has to be NHS money. Bretby Hall is a grade II listed building. Is it so impossible to get the Department of the Environment and the Department of Health and Social Services together so that we can restore Bretby Hall, the house, to its former glory and enable NHS money to be spent as it should be — on equipment, drugs, services, and so on? I should be grateful for the Minister's comments.
  Finally, there is the classic dilemma of the countryside versus the city. I used to be responsible for a big city hospital. I am now responsible for a country area of 50,000 electors and a city area of 26,000 electors and I am conscious of the need to serve all my constituents and of the health authority's responsibility to cover an enormous area of Derbyshire.
  I question the wisdom of always putting services in the towns and cities and expecting country people to travel to them. That may be fine for people in Derby, but it is not fine for the large number of people who live nowhere near the city. I question the wisdom of closing all our little hospitals. In the past five years, 112 small units have been closed. Admittedly, more beds have been provided, but they have been in bigger units, with an average of more than 300 beds each.
  In questioning the wisdom of closing all the little units and putting all the services on one site, I realise that I am questioning the whole pattern of NHS hospital planning, but I suspect that much of it is 20 years out of date. The concept of the big city hospital on a single site was perfect for the 1950s and the 1960s when our cities were growing, but it took 20 years to obtain the money, which I appreciate has been provided by the Government. Nevertheless, the plans do not reflect the changing pattern of population. All our major cities are losing population, so the services are moving into the cities as the population moves out.
  The pattern of treatment is also changing. Orthopaedics did not exist 20 years ago. Now that it is a basic, standard
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  service, it might be better to provide small, perhaps multipurpose local hospitals and units with ready availability of basic services such as orthopaedics instead of constantly building monoliths in towns.
  Despite the good will of a decent, caring health authority and all the arguments for the transfer of orthopaedic services to Derby, there is a deep-seated, unhappy feeling in my constituency that closing Bretby Hall hospital and others like it all over the country is a mistake. I hope that the authorities will take heed of what has been said and reconsider their plans.
  12.1 am
  The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): I am very pleased that my hon. Friend the Member for Derbyshire, South (Mrs. Currie) has raised the important issue of Bretby orthopaedic hospital. I am also glad to note that my hon. and learned Friend the Member for Burton (Mr. Lawrence), with his characteristic care and concern for these matters, has been present to take part in the debate.
  Mrs. Currie: My hon. Friend the Member for Leicestershire, North-West (Mr. Ashby) is here, too.
  Mr. Patten: Yes, and I await his intervention. I was paying complements only to those who had spoken.
  Mr. David Ashby: Will my hon. Friend give way?
  Mr. Patten: It is a little early in my speech to give way. I must first devote my attention to the remarks of my hon. Friend the Member for Derbyshire, South.
  The orphopaedic services provided by Bretby hospital are well known and the buildings housing them are known as a fine example of Victorian architecture. I was glad that my hon. Friend linked those two points as she did.
  I wish to deal with four matters. First, there is the consultation process which surrounds any closure proposal. Secondly, there is the relationship between the important points raised by my hon. Friend about the capital programme and the recommendations of the Duthie report and the constant dilemma in the Health Service of large versus small and urban versus rural. Thirdly, I wish to deal with an important issue concerning the staff and the morale of the excellent staff who work at the hospital. Finally, I wish to say a little about the building, although some of the issues are matters for my right hon. Friend the Secretary of State for the Environment and not for me or my colleagues at the Department of Health and Social Security.
  I appreciate that any decision about the hospital would affect people in a wide area.
  Mr. Ashby: Does my hon. Friend appreciate that this excellent hospital draws patients from a very wide area, including north-west Leicestershire, so that there is great concern about this over a much wider area than Derbyshire?
  Mr. Patten: I am grateful to my hon. Friend for drawing attention to that important matter and I shall certainly bear in mind what he says about the number of patients drawn from his constituency and their opinion of the hospital.
  I must say at the outset that I am in a difficult position today in terms of saying anything definite to my hon.

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  Friend the Member for Derbyshire, South as no decision has been made to close the hospital. I understand that the southern Derbyshire health authority will shortly be issuing, or has already issued, a consultation document about the hospital. The consultation which is to follow will be carried out according to procedures clearly laid down by the Department. Obviously tonight I must not and cannot in any way prejudge the outcome of the consultations which the southern Derbyshire health authority is currently undertaking, but I am sure that it will consider all proposals carefully.
  I can assure my hon. Friend the Member for Derbyshire, South that, if the proposals come to my right hon. and learned Friend the Minister and myself, any decision will be taken only after the most painstaking and thorough consideration of the case. Should such a recommendation come to us, I should be delighted to see my hon. Friend and any of her constituents to discuss the case in person further before any decision is taken.
  I was pleased that my hon. Friend referred to the important work done on orthopaedics by my distinguished constituent, Professor Duthie. The working party chaired by Professor Duthie was set up to consider the problem of waiting times for outpatient appointments and admission to hospital for orthopaedic patients. I was very interested to hear about the regime of patient management in the hospital. We certainly recognise the need to reduce orthopaedic waiting lists and times. Indeed, perhaps waiting times are as significant as waiting lists in this context.
  We are urging health authorities to make the fullest use of the report in considering how to improve the services offered to orthopaedic patients in their districts. I am glad that that is being put into effect by the Trent regional health authority, under its excellent chairman, Mr. Michael Carlisle, who has asked all districts in its region to review orthopaedic services in the light of the recommendations of Professor Duthie's own report. I am convinced that in formulating its proposals for Bretby hall orthopaedic hospital the southern Derbyshire health authority will take account of the report's conclusions, particularly as they relate to the use of small hospitals such as Bretby hall.
  My hon. Friend rightly pointed to one of the report's recommendations, to the effect that no such hospital should be closed—I had a small bet with myself that she would pick on this recommendation, and happily she did—unless alternative services
  "of the same or a better standard for an equal or increased number of patients"
  can be provided. That is a significant sentence. I am sure that it is a view shared by the admirable League of Friends of Bretby hospital. I understand that it does invaluable work. Indeed, I pay tribute to that great unsung army who work within the NHS — the leagues of friends of hospitals—who do so much good, and who do not get the public recognition which they so often deserve. However, what they do is deeply appreciated by my right hon. Friend the Secretary of State and myself.
  I come to the next important issue, which involves the relationship of the capital programme, the debate about large and small hospitals, and the implications of the Duthie report. As someone who may have to consider proposals about this hospital at a future date, I can only speak tonight in general terms about this important issue.
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  The pattern of a district's health services will inevitably change over time, particularly where there are plans for major redevelopment, as is the case in southern Derbyshire. I suspect that those plans for major redevelopment may, indeed, have implications for the constituents of my hon. Friend the Member for Leicestershire, North-West (Mr. Ashby), who is in the Chamber tonight.
  During the next 10 years the health authority has a very ambitious capital programme, which is likely to total more than £40 million at current prices. The programme includes the redevelopment of services at Derby city hospital, to where the health authority proposes, I understand, to transfer the services now at Bretby hall. There are also major capital developments under way at the Derbyshire royal infirmary and at Ilkeston general hospital. When one invests £40 million in a development scheme, it must involve the appraisal and continuing reappraisal of the services already given. It must mean that we look at the pattern of service delivery.
  Health authorities up and down the country are rightly having to go through that re-examination. As my hon. Friend the Member for Derbyshire, South knows all too well, the NHS is now seeing the biggest programme of integrated building development and redevelopment that has been seen at any time since 1948. The programme involves the spending, on current plans, of more than £1 billion on some 140 separate schemes throughout the country. A Minister in my Department could be forgiven for asking, from time to time, "What cuts?" It is the biggest building explosion and capital reconstruction of the NHS that Britain has ever seen.
  Sometimes such redevelopment may—and I pick my words carefully — involve the closure of certain hospitals, some of which may be small, others of which may be out of date. Out-of-date plant is hard to maintain, and needs to be replaced. That is not a negative approach. It is not about closures or cuts; it is about providing an improved quality of health care for all those in the district. If we can focus our attention on the need of the patients rather than on the needs of buildings, that is the correct way to see whether we are delivering services to our clients in the right way.
  In a modern Health Service, that can mean increasing centralisation of some, although not necessarily all, of the services that the NHS must provide. However, I appreciate that we need to strike a balance between the effective use of expensive medical technology, highly trained nursing and ancillary staffs, and ensuring that the services are accessible to the community which which serve and they are wanted by it. That is not an easy task. It would be wholly wrong for the NHS to attempt to concentrate all its medicine in city centre hospitals. Equally, it would be a delusion for us to think that we can supply to every small hospital the complete range of modern medical techniques. I know that my hon. Friend agrees with that.
  I am sure that the health authority will be considering the health care needs of all the people in southern Derbyshire, whether they live in Derby, in the smaller rural communities or across the county boundaries in Leicestershire. Whatever the outcome of the proposals for Bretby hall, it must be proper and desirable that health authorities should examine and reappraise how all their services might be delivered to the public more effectively and economically. It is especially galling for health authorities, when they take the trouble to think about the

  427
  services that they deliver, that every time they publish a document looking at their services the press talks about cuts. A modern Health Service cannot stand still; it must change—we hope for the better.
  Thirdly, and far from lastly, I must say a word about the excellent nursing staff who, I understand from what my hon. Friend told me before the debate, work at Bretby Hall along with ancillary and technical staff. Orthopaedic nursing is skilled and important. The staff must be concerned. The consultation procedure requires health authorities to include in any consultation document propoals for the alternative employment of staff, but that may not always be easy when facilities are being transferred from one hospital to another. I am sure that this is recognised by health authorities throughout the country. Of course, all staff interests have ample opportunity to comment on the proposals during the next three months. I hope that they will take that opportunity. Indeed, I should be surprised if they were not planning to do so.
  I find myself in some difficulty on the question of the building. As my hon. Friend recognised, the importance of the listed building—I understand that it is Victorian turreted—is not an issue for my Department but for the Department of the Environment. However, I want to say a few words about the building's future. The NHS prides itself on the care with which it treats historic buildings. The future use of Bretby Hall cannot be considered until a decision has been reached about the future location of orthopaedic services in the area. I cannot do anything that would pre-empt the consultations that are now under way. However, the health authority is aware of the listed status of the building, and this will be an important factor in considering its future use.
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  Our guidance to health authorities on the correct handling of listed buildings is clear and unequivocal and we make our displeasure known rapidly to any health authority which plays ducks and drakes with the historic fabric of houses that are in our care. The relevant guidance, in the NHS "Handbook on Land Transactions", says that an authority
  "should not arrange for the demolition of, alteration to, or extension of a listed building in a way to affect its character, without the prior written agreement of the local planning authority."
  That leaves no doubt about where a health authority's duty lies, and I am happy to remind authorities of that tonight. If a planning authority objects to a health authority's proposal for the use of a listed building, the case would be referred to Ministers for decision. I hope that that reassures my hon. Friend that, whatever the outcome of the consultations on the future of Bretby Hall as a hospital, its place as part of our architectural heritage is not threatened.
  I realise that tonight I have not been able to give any firm commitments in response to many of the questions which my hon. Friend asked and which, I know, concern my other hon. Friends. I hope she recognises that this is not because of any lack of concern, but because of a wish not to undermine or prejudge the local considerations taking place on how the needs of southern Derbyshire can best be served. I hope that if I have done nothing else tonight I have reassured my hon. Friend that none of the important issues which she has raised will go by default.
  Question put and agreed to.
  Adjourned accordingly at sixteen minutes past Twelve o' clock.

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

Physiotherapists: Employment
Baroness Lane-Fox: 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 the value of the service that can be rendered by the 21,000 members of the Chartered Society of Physiotherapy is fully recognised and utilised through the National Health Service and private practice.
The Earl of Caithness: My Lords, the value of the service provided by the chartered physiotherapists is fully recognised by Her Majesty's Government. Members of this profession play an important part in the treatment and rehabilitation of patients both within the National Health Service and in private practice. Within the National Health Service the employment and use of physiotherapists is a matter for individual health authorities and depends largely on local needs and the resources. The work of physiotherapists in private practice is not a matter for which Her Majesty's Government have responsibility.
Baroness Lane-Fox: My Lords, I thank my noble friend for his reply. Is he aware that those of us who have benefited immeasurably through physiotherapy services are confident that pressure on NHS beds could be greatly reduced by increased domiciliary physiotherapy and by the teaching of preventive measures in schools and colleges? Can he say whether the Government will encourage these methods?
The Earl of Caithness: My Lords, with the encouragement of this Government the majority of health authorities throughout the country already provide, in various forms, a physiotherapy service in the community, which can include treatment of patients in their own homes. The form and extent of the services provided will depend on local needs and circumstances. The Government accept that the contribution of the profession to preventive education generally is an important one. How this contribution can best be developed is currently under discussion between the Health Education Council and the profession.
Lord Wells-Pestell: My Lords, as one who is walking today as a result of prolonged physiotherapy, may I ask the Minister whether he is aware how much we on this side of the Chamber appreciate the fact that he has said that the concern of the Government is the staffing of the National Health Service by physiotherapists? It is important that such a contribution is found in the National Health Service, and many of us hope that it will be increased.
The Earl of Caithness: My Lords, I am grateful to the noble Lord. I, too, have benefited from physiotherapy, and I think that the physiotherapists are doing a marvellous job.
Baroness Fisher of Rednal: My Lords, may I say to the noble Minister—
Noble Lords: No! Ask.
Baroness Fisher of Rednal: My Lords, I apologise. May I ask the noble Earl whether he is satisfied that many of the persons who are suffering from strokes are getting the full benefit of the physiotherapy services? I ask that because this is not the feeling that we have in the West Midlands, where (is the Minister aware?) many of the hospitals are not able to give to stroke patients the physiotherapy that is so essential for them to start life again.
The Earl of Caithness: My Lords, I do not know specifically about the West Midlands. As I have said, it is a matter that varies from area to area, and is kept under constant check. But I will draw to the attention of my right honourable friend the points raised by the noble Baroness.
Lord Winstanley: My Lords, in the light of what the noble Earl has told the House about the value of domiciliary physiotherapy services, may I ask him whether he is aware that the supply of those services in many areas in no way matches the demand, and that in urban areas it is becoming increasingly difficult to get home physiotherapy for the elderly?
The Earl of Caithness: My Lords, I do not think I can add to my last answer. I will of course make sure that note is taken of these points.
Baroness Masham of Ilton: My Lords, may I ask my noble kinsman number two whether he is aware that I have had seven most enjoyable years as president of the Chartered Society of Physiotherapy? I should like to ask him when the review body's report on the professions allied to medicine is to be published; and, if any benefits to the Chartered Society of Physiotherapy are to come out of that. I hope they will not be from cuts in the existing National Health Service resources.
The Earl of Caithness: My Lords, I am not aware of a date for the publication of the report, and I do not think I can predict what it is going to say.
Lord Ennals: My Lords, this being June 6th, the anniversary of D-Day, is it not the most appropriate day for this Question to be asked? Is it not the case that very many of those who were wounded in Normandy—and I was felled by a machine-gun 40 years ago—are deeply indebted to physiotherapists for their ability to perform in any way however today? Will the noble Earl recognise, as the noble Lord, Lord Winstanley, has said, that there is a great shortage of physiotherapists? Though there may be 21,000 members of the Chartered Society of Physiotherapy, there are only 15,000 practising physiotherapists, and very few of them, relatively, are in the community. Is

621
he aware that the chartered society is very worried about the availability of funds for the training of more physiotherapists, which are very much needed in an ageing society and a society where people are discharged from hospital much earlier than used to be the case?
The Earl of Caithness: My Lords, I am aware of the concern that is felt on this point, and we are in discussions with the society.
Baroness Masham of Ilton: My Lords, may I ask one more question? Would it not speed up matters if GPs could refer patients directly to physiotherapists? Sometimes they have to go through consultants; there is such a long waiting list for patients to see consultants, and this holds up the whole issue.
The Earl of Caithness: My Lords, I would think that at the moment GPs can refer direct to a physiotherapist.
Baroness Lane-Fox: My Lords, will my noble friend the Minister say whether his answers can be taken to reassure the chartered society that its ability to provide better and more economic care in community health is well understood?
The Earl of Caithness: My Lords, indeed I can.
Lord Wells-Pestell: My Lords, is the Minister in a position to say how many physiotherapists are engaged in the National Health Service and how many in the private sector?
The Earl of Caithness: My Lords, yes. I think I am right in saying that there are about 9,000 whole time equivalents in the National Health Service.

St. Helena: Report
2.44 p.m.
Lord Greenhill of Harrow: My Lords, I beg leave to ask the first Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to implement the report of Sir Neil Marten on St. Helena.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, the report is being considered and any decisions arising from it will be announced in due course. Agreement in principle to establish a new central school was announced during Prince Andrew's visit to the island in April.
Lord Greenhill of Harrow: My Lords, does the Minister not agree that we need to know more about this island? The past is a good deal more familiar than the present. Does she not agree that small colonial territories like St. Helena for which we have full responsibility should have first call on our aid money? The island is without natural resources and our
622
subsidies should provide a standard of living that meets the reasonable requirements of the 5,000 islanders and reflect credit on our colonial administration. I know from my own observations—
Noble Lords: Speech!
Lord Greenhill of Harrow: Is the noble Baroness aware that the requirements of the island are comparatively modest and that—
Noble Lords: Speech!
Lord Greenhill of Harrow: Speech, all right. Is she aware that they are comparatively modest and, in particular, will she examine more closely whether the islanders should be given freer access to this country?
Baroness Young: My Lords, I agree with most of the points that the noble Lord has raised. I can confirm that the present level of aid is over £7 million in the year 1983–84 and that it represents over £1,200 for each inhabitant on the island. Indeed, the unique economic problems are recognised in the substantial programme which clearly demonstrates our support for the island. The projects that are supported include expansion of agriculture, forestry and fisheries. With regard to the noble Lord's second question about increased immigration into the United Kingdom, I can confirm that the special dependent territories' work permits quota is subject to regular review and the needs of St. Helena are taken fully into account.
Lord Oram: My Lords, can the noble Baroness say anything about the employment situation in the island? What is the level, and what are the prospects of jobs for the people there?
Baroness Young: My Lords, a large part of our development aid programme is designed to be labour intensive which alleviates considerably the problems of unemployment. We are exploring the possibilities of other employment elsewhere, including the Falkland Islands. So far as employment on Ascension Island is concerned, there are at present 750 St. Helenans employed on Ascension Island but this figure is likely to be reduced over the next year or two as construction projects are completed.

Overseas Students: Aid
2.48 p.m.
Lord Greenhill of Harrow: My Lords, I beg leave to ask the second Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they can give an assurance that so-called "Pym package" of aid for overseas students will be continued after the financial year 1985–86.
Baroness Young: My Lords, we intend to make suitable provision for the continuation of additional support for overseas students in 1986–87, which is the last year to which present public expenditure plans extend. I cannot yet say, however, how much money can be made available.
Lord Greenhill of Harrow: My Lords, I thank the noble Baroness for her reply. I know that it is very difficult for her to be precise about future expenditure. Would she not agree, however, that it is most important to give sufficient assurances of Her Majesty's Government's intention to persist with these programmes in order that students and governments can make plans for the future and can decide to send their students to this country rather than elsewhere?
Baroness Young: My Lords, the noble Lord, Lord Greenhill, will be aware why I cannot give the figures. Under the PES arrangements, we only look three years ahead. But it is our hope, of course, that the numbers of students that can be helped will be maintained.
Lord Mulley: My Lords, while thanking the noble Baroness for the assurance that this modest scheme is to continue, will she not convey to her colleagues the tremendous damage that has been caused to our relations with other countries through the differential between the fees charged to overseas students and those charged to our own students? Is she also aware that in the long run, as future leaders of the third world increasingly seek higher education and technical qualifications in other countries, this will be very detrimental to us as well as damaging in international affairs?
Baroness Young: My Lords, the noble Lord, Lord Mulley, may like to know that 3,596 additional awards were made under these schemes in 1983–84, and it is estimated this figure will increase to 5,000 in the year 1984–85. We believe that this is a measurable contribution to providing help for students from overseas to study in our educational institutions.
Lord Kaldor: My Lords, would the noble Baroness not agree the absurdity of the present arrangements concerning overseas students? I use the term "absurdity" with respect to their discriminatory character as between members of the Commonwealth and members of the European Community. These arrangements have been mitigated but by no means remedied by the so-called "Pym package". Indeed, these arrangements would never have been adopted had officials or Ministers been aware of the implications of the Rome Treaty for any discriminatory scheme between home and overseas students.
Baroness Young: My Lords, as the noble Lord will know—indeed, he has answered the second part of his question—the reason for the treatment of students from the Community is that it is part of the agreements made under the Treaty of Rome. In regard to Commonwealth students, he may like to know that under the various schemes, including the foreign and Commonwealth scheme, there are now 353 students from Malaysia, 590 from Cyprus, 1,201 from Hong Kong and 42 from other dependent territories.
Lord Kaldor: My Lords, New Zealanders and Australians still have to pay 10 times as much as people coming from Greece.
Baroness Young: My Lords, the fact is that students have to pay the full economic cost of the course. But
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there are these various provisions and there are a number of other provisions, besides the Foreign and Commonwealth Office scheme, for helping students. Indeed, much of the money from the Foreign and Commonwealth Office goes to support students on various shared schemes.
Lord Broxbourne: My Lords, in regard to the 590 students from Cyprus, can my noble friend say whether they come from both parts of that unfortunately divided island, and, if so, in what proportions?
Baroness Young: My Lords, yes; they do come from both parts. There are both Greek Cypriots and Turkish Cypriots. Without notice, I cannot give the exact numbers.
Baroness Seear: My Lords, do we understand from the noble Baroness that no students from the African continent are benefiting, notwithstanding the enormous contribution we have made in the past to the education of African students?
Baroness Young: No, my Lords, I did not say that. I quoted these as quite specific countries that have been helped under specific schemes. Of course, there are students from African countries who are benefiting from the Foreign and Commonwealth Office scheme and from other schemes.
Lord McIntosh of Haringey: My Lords, would the noble Baroness agree that one important reason for encouraging overseas students in our universities is the interests of our own industry and commerce, and that this is recognised by the contribution made by private industry and commerce to overseas students here? Would she undertake to discuss with the Department of Trade and Industry the possibility of their contributing to the funding of the scheme for future years, in order to increase the amount of funding available?
Baroness Young: My Lords, this funding to which the Question is directed, which is the funding from the Foreign and Commonwealth Office, is an FCO matter. But it is something which is done on behalf of the Government and we recognise the benefits that come, both to the students themselves and to our commercial interests among other interests.
Baroness David: My Lords, do I understand from that answer that the Department of Trade is not contributing anything at all from its Vote, as the Overseas Students' Trust suggested in their policy paper?
Baroness Young: My Lords, my understanding is that there may well be funding which goes into other trusts, but the issue of the Question is the FCO scheme.
Lord Caradon: My Lords, in view of the great importance, as everyone can appreciate, to universities, schools and students all over the Commonwealth and elsewhere of knowing what their applications can involve and lead to, would it not be possible for the noble Baroness to give a somewhat

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more positive assurance of intention that these schemes shall continue and, indeed, be extended?
Baroness Young: My Lords, the Government have made it quite plain that they think it is very important that we should have the schemes which have been introduced. We believe them to be very valuable and we welcome the fact that there are now a number of students studying in our educational institutions as a consequence of this. What we have said is that we cannot make an open-ended commitment—we cannot afford to make an open-ended commitment—to the situation which existed before the full-cost fees were introduced.
Baroness David: My Lords, may I ask the Minister whether the review and monitoring which was promised in the Government document responding to the Overseas Trust paper has happened, or when it is going to happen?
Baroness Young: My Lords, perhaps I might write to the noble Baroness on that matter.

Population Control
2.55 p.m.
Lord Gisborough: 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 support they propose to give at the forthcoming UN Conference on Population and Development to proposals for limiting the growth of the world's population.
The Earl of Caithness: My Lords, the United Kingdom recognises the need for urgent action to be taken to reduce the rate of growth of the world's population for humanitarian reasons, to achieve higher standards of living and to improve the quality of life.
The United Kingdom supports the principles set down in the World Population Plan of Action. The review and appraisal of the World Population Plan of Action and its further implementation will form a major part of the forthcoming International Conference on Population, which is to be held in Mexico City in August of this year.
Lord Gisborough: My Lords, I thank my noble friend for that Answer. Can he say approximately how many countries are concerned in regard to their population growth and in what general areas of the world those countries are? Apart from food shortages, can be say what effects the increasing population are having on these countries?
The Earl of Caithness: My Lords, attitudes in developing countries have changed dramatically in the last 20 years and there are now some 72 countries, accounting for almost 80 per cent. of the population of the third world, which have policies aimed at providing family planning services.
Lord Boyd-Carpenter: My Lords, is my noble friend aware of the fact that the best way to ensure the success of this most important conference would be to secure for it the advice and counsel of that wise man, the Prime Minister of Singapore?
The Earl of Caithness: My Lords, I will pass on to my right honourable friend my noble friend's thoughts and comments.
Lord Oram: My Lords, is the noble Lord aware that answers in another place on this subject have revealed a certain complacency on the part of the Government about this conference—a complacency which today's Answer has done only a little to correct? Can he tell the House at what level this country will be represented at the conference? Will it be at ministerial level, or what other level? Since unchecked rises in population have the effect of negating much of the development work of aid agencies throughout the world, is it not most important that this conference should have every possible success? Are the Government playing their full part to ensure that success?
The Earl of Caithness: My Lords, with regard to the first part of the noble Lord's supplementary question, I want to say that in this matter I was not aware there was any complacency on the part of Her Majesty's Government. We take it very seriously. The United Kingdom delegation is expected to be led by a Minister and it will include officials from the Foreign and Commonwealth Office, the Overseas Development Administration and the Office of Population Censuses and Surveys. The leader of the United Kingdom delegation will be making a speech at the plenary session of the conference.
Lord Renton: My Lords, is my noble friend aware that England, taken as a separate entity, and leaving aside the small island and city states, is one of the six most densely populated countries in the world? However, thanks to an initiative in your Lordships' House in 1972, we have successful family planning arrangements which are enabling us to reduce the birth rate and stabilise the population. Is my noble friend further aware that therefore the active participation of Her Majesty's Government in this conference will be welcomed by many other countries as an example?
The Earl of Caithness: My Lords, what expertise and benefit we can bring to the conference with regard to family planning, we certainly will bring.
Lord Winstanley: My Lords, further to the supplementary question asked to the noble Earl by the noble Lord, Lord Renton, can the noble Earl give the House an unqualified assurance that the Government have no intention of cutting back on birth control and family planning services here at home? Will the noble Earl further agree in that connection that, while we do not have an acute population growth problem here in Britain, the birth of any child unwanted at the time of conception is itself a serious matter?
The Earl of Caithness: My Lords, the noble Lord, Lord Winstanley, tempts me down a very different path. If the noble Lord would like to put down a

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Question on that matter I might not be able to resist the temptation.
Lord Brockway: My Lords, I should like to ask the Minister two questions. First, does he not agree that authoritative surveys have indicated that the growth of population decreases with a higher standard of living? Therefore, would not the Government meet this problem by seeking world action to lift the standard of the hungry people of the third world? Secondly, does not the growth of population require greater food production? Is it not now possible that the deserts of the world could be used, by world action, to produce the necessary extra food to meet the growth of population?
The Earl of Caithness: My Lords, an increase in the world's population from 4.8 billion now to a forecasted 6.1 billion in the year 2000 will mean that more food is required. But taking that a stage further I really do think is another question.
Lord Gisborough: My Lords, will my noble friend arrange that attention is drawn at the Mexico Conference to the destruction of forests and of topsoil by the pressure of population expansion, so that studies can be made on the future decreasing ability to produce food in those areas; on the decreasing supply of timber in the future; and on the possible catastrophic change in world climate?
The Earl of Caithness: My Lords, as my noble friend Lord Gisborough will be aware, the World Population Plan of Action in 1974 stressed the need to promote improved methods of identifying, extracting, renewing and utilising scarce natural resources, and that will again be covered in the Mexico Conference.
Lord Bauer: My Lords, is my noble friend aware that it is highly doubtful whether population pressure or growth are significant factors in world poverty? Is he further aware of the fact that many millions of the poorest people live in abundant lands, as, for example, the Aborigines and tribes-folk?
The Earl of Caithness: My Lords, I shall read my noble friend's remark with interest.

Barclays Bank Bill
3.4 p.m.
Read a third time.
Clause 4 [Change of name of Barclays and of name, status and memorandum of BBI]:
The Chairman of Committees (Lord Aberdare)The Chairman of Committees (Lord Aberdare) moved the following amendment:
Page 5, line 32, leave out ("or) and insert ("to").
The noble Lord said: My Lords, this is a purely drafting amendment so that the Bill will now refer to "Schedule 1 to this Act" rather than "Schedule 1 of this Act". I beg to move.
On Question, amendment agreed to.
Lord Aberdare: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Aberdare.)
On Question, Bill passed, and returned to the Commons amended.

Successor to the Second Lomé Convention: ECC Report
3.5 p.m.
Lord Brimelow Lord Brimelow rose to move, That this House takes note of the Report of the European Communities Committee on the Successor to the Second Lomé Convention (15th Report, 1983–84, H.L. 168.)
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. The Motion asks this House to take note of the Report of the Select Committee on the European Communities on the Successor to the Second Lomé Convention. That title calls for a word of explanation. Had it been possible to entitle the report, "The negotiations for a Third Lomé Convention", that would have given a clear and exact indication of its contents. But agreement on the designation of the agreement, if any, which is to succeed the Second LoméConvention has not yet been reached. The Select Committee had, therefore, to content itself with the vague and noncommittal title, A Successor to the Second LoméConvention.
Few people in this country are thoroughly familiar with the two Lomé Conventions, the second of which now links the European Community with 64 African. Caribbean and Pacific countries, normally referred to as the ACP countries. Of those who have some knowledge of the Lomé Conventions, but not a detailed knowledge, the impression is prevalent that they relate to aid. It is quite true that aid does loom large in the Second Lomé Convention and in the negotiations which have been in progress since October 1983 for a successor agreement. But the ACP Governments do not regard themselves, and do not like it when they are regarded by us, primarily as suppliants for aid.
The Community is dependent for certain commodities on imports and of those imports the ACP countries are, for some commodities, important suppliers. I have in mind particularly tropical agricultural produce, some minerals, and oil. Conversely, the ACP countries are important markets for our exporters. They regard themselves as part of an interdependent system of states and they should like to see that economic interdependence developed to the mutual advantage of every participating state. For this reason the current negotiations cover far more than the formulation of future aid programmes.
The range of these negotiations is shown by the terms of the working parties which have been preparing recommendations for consideration by Ministers. One group has been addressing the problems of agricultural co-operation, integrated rural development, food self-sufficiency, and food security. A second group has been considering trade, commodities and the problems of an organisation

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known as STABEX, which was set up under the First Lomé Convention to help to smooth out the fluctuations in income derived from the export of certain agricultural products and iron ore.
A third group has been considering the development of mineral and energy resources. This group has also been reviewing the problems of an organisation known as SYSMIN, which was set up under the Second Lomé Convention and which so far has helped Zaire and Zambia, in a period of recession, to maintain (but not to develop) their capacity to produce minerals.
A fourth group has been considering how to develop industries, fisheries, technology and tourism. A fifth group has been studying how financial and technical co-operation can be developed. A sixth group has been examining how trade could be facilitated by customs co-operation and by some relaxation of the rules of origin which determine the entitlement of imports of goods from ACP countries to customs privileges in the Community.
A seventh group has been reviewing the possibility of improving transport and comunications, with special reference to the needs in those two fields of the least developed, landlocked and island ACP states. An eighth group has been charged with a miscellany of subjects—social conditions, research, training, cultural co-operation, and co-operation between the ACP countries themselves, with special reference to the feasibility of more regional co-operation. The ninth, and last, group has been reviewing institutional and legal questions.
Any increase in the pace of development across so wide a front in so many countries would call for resources on a scale of which there is at present little prospect. In recent years most of the governments of the European Community have been trying to curb inflation. To this end they have followed policies of budgetary stringency. These have contributed, at least in the short term, to the depression of trade. They have also. in most Community countries, limited the funds available for aid. It has been possible to give the ACP countries full protection against adverse changes in their terms of trade, against increases in the cost of energy, and against the growing cost of servicing their debts. Some of them, far from enjoying development, have had to suffer retrogression.
In the current negotiations two meetings, apart from the opening session, have so far been held at ministerial level. Nothing in what has been published about these two ministerial meetings warrants the expectation of a sharp increase either in aid or in the earnings of ACP countries from their exports to the Community.
The importance for the developing countries of the world of the expansion of their foreign trade was discussed in your Lordships' House on 23rd May. I was abroad at the time and therefore, to my regret, I was unable to take part in that debate. The broad issues which were then discussed—protectionism, the effects of the common agricultural policy, interest rates, the debt burden, et cetera—lay outside the terms of reference of Sub-Committee B in preparing the report which we are debating today. The subcommittee's terms of reference were limited to the
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negotiations now in progress with the ACP governments. Accepting that limitation, in its report the sub-committee made only a small number of recommendations, most of them quite modest, in the hope that some of them at least might find acceptance and be embodied in whatever agreement may succeed the Second Lomé Convention.
I shall take first the sub-committee's recommendations in the field of trade. For some ACP countries, though not for all, the expansion of exports to the European Community appears to be the best route to further economic development. Most of the industrial products which they export to us are already duty free. But entitlement to that privilege is governed by the detailed and very strict provisions of the Second Lomé Convention about rules of origin. Since derogations from these rules could be abused, the sub-committee accepts that the Commission has been justified in subjecting applications for derogations to careful scrutiny, but it nonetheless considers that this is a field where the Community could afford to be more generous and more expeditious than it has been hitherto.
It would like to see the ACP countries permitted to export to the Community as their own products goods containing imported components and parts originating in other developing countries where these are an obvious source of supply. It would favour the utmost simplification of procedures when incorporated components would themselves face no tariff barriers if they had been exported direct to the European Community.
The STABEX scheme provides some compensation, but not necessarily full compensation, for falls in the income derived from certain exports. It has hitherto included iron ore, but at the end of this year iron ore will be transferred to SYSMIN and thereafter STABEX will cover only agricultural products. The funds earmarked for STABEX are subject to a ceiling, and that ceiling did not suffice to provide complete compensation for the falls in export earnings experienced in 1980 and 1981. The unpaid claims amount to about 367 million European currency units, which is roughly £200 million. If commodity prices rise during the period of the next agreement and if in consequence STABEX has unused funds, the subcommittee would like to see those deficits made good.
Under the existing convention, ACP countries which have benefited from STABEX payments may be required to make refunds when increased export earnings permit. It would be equitable for the European Community to assume a corresponding liability when reduced calls on STABEX funds make it possible to compensate for past deficits.
The ACP governments which have received STABEX payments have been at liberty to use them as they wished. They have often regarded them as free foreign exchange. In general, these payments have not been used to remedy the difficulties which made them necessary. This has been a cause of concern to Her Majesty's Government, who should like to see STABEX used to remedy shortcomings in development programmes. The sub-committee thought that that was right.
Given that under the successor agreement STABEX will relate exclusively to agriculture, the subcommittee hopes that the current negotiations will be used to include some products not at present covered—principally tobacco, on which some ACP countries are highly dependent. The sub-committee also hopes that thought will be given to the possibility of including in the successor agreement processed products derived from sisal and timber.
More generally, the sub-committee felt that the possibilities for using STABEX to promote the growth of processing industries had not been fully explored. If, as we all hope, world trade picks up from now on, there is a possibility that some of the funds earmarked for STABEX and SYSMIN may not be used. The sub-committee would not like to see substantial potential investment resources kept lying idle because of over-rigid regulations. They would welcome the introduction of a flexibility which would make such funds available for the operations of the European Development Fund, and which would facilitate transfers between STABEX and SYSMIN.
Turning to SYSMIN, the sub-committee were somewhat critical of the way SYSMIN has operated hitherto. Just as they wished to see STABEX payments used for the solution of development problems, so they wished to see SYSMIN payments made available for the diversification of development of mineral-dependent economies. In brief, they would like to see STABEX and SYSMIN operating on parallel lines.
On a minor point, of interest in this country only to rum drinkers, the sub-committee think that ACP rum producers should have quota-free access to the Community market. The present complicated system of annual quotas is a nonsense that should be brought to an end.
The Community's common agricultural policy limits the concessions which the Commission can offer to the ACP countries in the field of agricultural produce. Where markets are distorted by the existence of Community surpluses, the sub-committee were not able to make specific recommendations. They simply expressed the hope that during the current negotiations the Community will offer concessions wherever it is possible to do so. The reform of the common agricultural policy—which is a necessary pre-condition of rational international trade in some agricultural products did not lie within the subcommittee's terms of reference.
I now turn to the sub-committee's recommendations in the field of aid. The sub-committee accepted that for some ACP countries a revival of the world economy and an upsurge in world trade will be more beneficial than any foreseeable provisions of a successor to the Second Lomé Convention. But some of the ACP states are among the poorest and most disadvantaged in the world. For them the need for aid is likely to persist.
The problem which calls for the urgent attention of all aid donors is that of hunger, particularly in Africa. In October 1983, the month that the current negotiations for the successor convention began, the
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Food and Agricultural Organisation held a conference on African food problems. It reported that 24 African countries, all of them ACP states, were affected by food shortages. Given this background, the subcommittee welcomed Commissioner Pisani's wish to move away from large-scale project aid and to devote a greater part of the resources at his disposal towards the achievement of adequate and secure food production, particularly in the areas threatened by food shortages. One member of the sub-committee was already pressing for this change of emphasis many years ago when he was Parliamentary Under-Secretary in the overseas development ministry.
But the shift of emphasis for which Commissioner Pisani is now working will not be appropriate for all ACP countries, some of which are self-sufficient in food: and where it is appropriate it will not be free of problems. The difficulties and the qualifications are reviewed in paragraphs 65 to 70 of the report, and I shall not repeat them here.
One thing is certain. Food sector strategies will call for differing approaches in the countries which adopt them. The possibilities and the problems vary from one country to another and, in some countries, from one region to another. From the outset, Commissioner Pisani has emphasised that when an ACP government decides to opt for the food sector strategy, it will be essential for that government to enter into careful discussions with the Commission about the whole range of policy decisions which will be needed to make that strategy a success. From the point of view of the Community this makes sense.
Community aid to many ACP states is only a small fraction of the total aid they receive, and Community aid in itself is not sufficient, and will not be sufficient, to finance a switch to food sector strategies. Coordination with other aid donors will be essential, and the Commission, for that purpose, will need to be well informed of all relevant needs. But in some ACP states the reaction to the Commission's insistence on the need to discuss policies has been suspicious. Hitherto, any conditions attached to aid received from the European Development Fund have, as a rule, been limited to the project for which that aid is given. But the need to ensure the success of food strategies affects a wide range of domestic policies. In some ACP states the Commission's request for the discussion of policies has been interpreted as an attempt to impose new conditions on the grant of aid and as an infringement of the sovereignty of the receiving government.
Pilot studies in food sector strategies are now under way in four countries. In Mali and Rwanda they seem to be going well. In Kenya they have given rise to misgivings. In Zambia the disparity between the extensive changes required of the government, the modest amount of Community aid, and its slow dispersement, together caused strain. We are told (Question 619) that of late the strain has eased. At the recent ministerial meeting in Suva the doubts and sensitivities of the ACP governments were discussed, and a search is now in progress for formulae which will allay, ACP misgivings.
For some of the areas threatened by hunger, food aid may continue to be necessary for a long time to come. But the sub-committee were well aware that food aid can, in certain circumstances, discourage

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local food production, and they were not happy that the surpluses produced by the common agricultural policy create a constant incentive to give food aid where other forms of aid might be more appropriate. Food aid needs to be carefully co-ordinated with food sector strategies. For this reason the sub-committee support the suggestion already made by Her Majesty's Government that in the successor agreement everything relating to food should be brought together in a single chapter.
Some non-governmental organisations have acquired considerable expertise in developing food production in areas of subsistence farming. The subcommittee would like to see the Community making the best use of their services, but care will be needed. The Community is bureaucratic. To some extent the success of the non-governmental organisations has, stemmed precisely from the facts that they are independent and not bureaucratic.
The Overseas Development Administration announced on 16th February of this year that in the financial year 1984–85 there would be a small rise to £1,174 million in the funds allocated to all United Kingdom aid. Since the increase is small, it has to be assumed that the United Kingdom Government will not advocate any substantial increase in the total of Community aid under the successor convention. Nor were the sub-committee given any grounds for believing that the other member governments of the Community would recommend substantial increases in Community aid.
Meanwhile, the United States' contribution to the International Development Agency has been reduced and that reduction has not yet been made good by other governments. The ACP governments have made clear their hope that the resources transferred to them under the successor agreement will be much increased, but the view of the sub-committee is that the funds from which such an increase could be financed will not be there.
Within the ceiling of United Kingdom aid it will be possible to increase the allocation to Community aid, but that, given the ceiling, would mean reducing the allocations to the World Bank group to our bilateral aid programmes. The sub-committee have not recommended that. As aid givers, the World Bank group are experienced and efficient and the subcommittee view with approval the efforts of the United Kingdom Government to mobilise additional resources for the International Development Agency.
As for our bilateral aid programmes, they help to meet needs in areas not covered by the Lomé Conventions. Because of the existence of an aid ceiling, these bilateral aid programmes are being squeezed by the increase in our contributions to the international aid donors. In recent years the value in constant prices of all aid given throughout the world has been falling, but with population growth and the depression in world trade, the need for aid has been increasing. In the opinion of the sub-committee, the time has come for the United Kingdom Government to accord higher priority to aid in the general pattern of its expenditure. The efforts which the Government have been making on behalf of the International Development Agency could perhaps be interpreted as a recognition of that need.
Although the sub-committee's recommendations are so modest and so temperately worded that they might be regarded as anodyne, when I presented the sub-committee's report to the Select Committee for its approval, I felt bound to point out that its recommendations were in fact controversial. A Government who have given priority to the fight against inflation and who have already determined the aid ceiling for the present financial year can hardly be expected to agree without qualification to a recommendation that they should now give higher priority to aid. Those who think that the best thing the Community could do to help the developing countries would be to buy more from them are likely to be critical of the report's acceptance that early and rapid progress is unlikely in this field.
Those who have studied the ineffectiveness of some past aid programmes, those who have drawn attention to the examples of the waste of aid resources, those who have condemned the deleterious effects of some forms of food aid, those who are conscious of the manifold sources of resistance to change and of the difficulty of changing the emphasis of aid programmes—all of these people may well be of the opinion that in five years' time, when the performance of Community aid under the successor agreement is scrutinised, many of the old criticisms will be found still to be valid. The governments of the ACP countries and their negotiators may be disappointed that the report has not been more outspoken in support of their aspirations, criticisms and demands. The view of the Select Committee, when it gave its approval to the report, was that such issues are best debated on the Floor of this House.
When some of the ACP ambassadors in Brussels, who are the day-to-day negotiators for the ACP countries, gave oral evidence to the sub-committee, they asked what was the attitude of your Lordships' House towards development and development aid: towards protectionism, especially in relation to agricultural produce and in relation to the poorest countries; towards the need for an increase in aid; towards the reform of the common agricultural policy, with special reference to the production of sugar beet in the Community, and to the Commission's proposal for the taxation of imported vegetable oils; towards a suggestion that the successor agreement be ratified by the joint EC-ACP Parliamentary Assembly on behalf of the EC-ACP member states; and towards the reinforcement of the various EC-ACP institutions. Many of these questions lay quite outside the terms of reference of the sub-committee and, indeed, of the Select Committee. Such replies as we were able to give will be found on pages 260 and 261 of the minutes of evidence. If the noble Baroness who is to reply has anything additional to say in answer to these questions, I am sure her words will be studied most attentively by the ACP negotiators.
I am conscious that I have passed over in silence quite a number of the recommendations of the report. Most of them were suggestions which might improve the administration and effectiveness of Community aid. To have covered them all would have made this introduction inordinately long.
Before I sit down I wish to express the gratitude of the sub-committee to its specialist adviser. He had

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previously been the sub-committee's specialist adviser for its earlier, and much more extensive, report on development aid in general. His advice on the choice of witnesses, on the formulation of issues, and on the shaping of a report which covers an intractably broad and diverse field gave great assistance to us.
I also wish to thank our clerk, who was new to his job, and who worked like a Trojan to ensure that copies of the report were ready in time for the ministerial meeting in Suva last month. Lastly, I express the thanks of the sub-committee to all the witnesses—ambassadorial, private, ministerial, and official—who so generously made their knowledge and experience available to us.
And now, having presented the report, I shall listen with attention and interest to what your Lordships and the noble Baroness who is to reply have to say about it and about the issues which it raises. My Lords, I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on the Successor to the Second LoméConvention (15th Report, 1983–84. H.L.168)—(Lord Brimelow).
3.38 p.m.
Baroness Young: My Lords, I am sure the whole House will be grateful to the noble Lord, Lord Brimelow, for introducing this debate today. I am grateful, too, for the opportunity provided by the Select Committee's report to stress the importance that the Government attach to the current negotiations on a successor to the second Lomé Convention. Your Lordships will notice that I, like the noble Lord, Lord Brimelow, deliberately avoid the shorthand "Lomé III", because no decision has vet been taken as to where the next convention will be signed. That will be a matter for the African, Caribbean and Pacific states to decide among themselves; but the Government would certainly be happy to see a Commonwealth country act as host to the signing ceremony.
I should like first to welcome the Select Committee's report and to congratulate the noble Lords involved on the thoroughness and excellence of their work. Three years ago the same Select Committee produced a volume of similar proportions to the one which we have before us today on the more general question of the European Community's development aid policy. That has since become a standard work on the subject. I have little doubt that the present report will soon attain the same status.
The report rightly addresses itself to the political nature of the Lomé relationship. Lomé is the Community's major aid and trade pact with the developing world. More than half the world's developing countries are party to the convention, which, with the expected accession of Angola and Mozambique, will soon include the whole of independent black Africa as well as all the former British colonies in the Caribbean and Pacific. Of the present convention's 64 signatories, 35—the majority—are members of the Commonwealth. Or, put another way, three-quarters of Commonwealth members are in Lomé. Small wonder, therefore, that we want the current negotiations to succeed.
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The committee consider that both trade and aid are important to the development of the ACP economies. The Government agree. For the ACP group as a whole, the financial flows resulting from trade with the Community are between two and three times as great as those from aid from all sources. The Government believe that it is essential to increase the opportunities for the ACP to sell their products to the Community, and in the long run to decrease their reliance on external aid for funding their development investments. The Government agree that the Community should offer trade concessions wherever it can, and consider that removal of the few remaining tariffs on imports of agricultural products from the ACP countries would be of mutual benefit to both the Community and the ACP. The Government, like the committee, also consider that European Development Fund (EDF) aid can make an important contribution to the promotion of ACP exports and to the development of regional ACP markets.
The Government also share the view of the committee that the encouragement of food processing and development of industry in the ACP require changes in the Lomé rules of origin. Possibilities are the extension of allowable non-ACP content to include that from those Generalised Scheme of Preferences (GSP) and Mediterranean countries at a similar level of economic development, changes in the required percentage of value-added in the ACP, and simplification and expedition of the derogation procedures to allow for deserving exceptions. We have tabled proposals to this effect in Brussels: these have made some headway, but there is still room for further improvement in the Community's position.
In the Government's view such changes to the origin rules would increase the incentives to private Community investment in the ACP. We consider private investment an essential source of finance for ACP development, and have also proposed that the next convention should contain clearer provisions to encourage private investors.
If we turn to aid, it is convenient to look first, as the report does, at the Lomé STABEX and SYSMIN schemes, which are specifically intended to help particular commodity production sectors. The Government agree with the committee that it is preferable not to tie up too great a share of the EDF in specialist schemes like these, where funds may lie unused (as they have under the current SYSMIN scheme) or be inequitably distributed; but the level of resources to be devoted to these schemes under the next convention will not be decided until the size of EDF VI is agreed at the end of the negotiations. As to changes in the schemes, the Government, in accordance with our view on the need to improve the quality of EDF aid, support the Community position that STABEX transfers should contribute to the remedy of production problems in the sector which has triggered a STABEX claim, or diversification where appropriate. The ways in which this can be achieved are currently being negotiated with the ACP. The Community also consider that the ACP should, retain their right to propose the addition of new products to the list covered by STABEX; the scheme should however retain its tropical agricultural coverage.

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Finally, the noble Lord, Lord Brimelow, expressed the wish of the sub-committee that the unpaid ST ABEX claims for 1980 and 1981 be made good if funds allow under the next convention. I see difficulties in this. It would mean, in 1991, when the balance sheet for the next STABEX scheme was clear, making good shortfalls from 8 and 10 years earlier. Shortfalls from so long back will be a matter of history, and it is likely that by then there will be other issues to which the ACP and the Community might wish to put unused STABEX funds. I can however say that the Community has already agreed to reconsider this question at the end of the current convention, when it will be clear whether there is any unused balance in the current STABEX scheme.
The SYSMIN scheme for rehabilitation of capacity for the mining of selected minerals has to date been used only twice, and it is consequently difficult to evaluate its effectiveness at a time when there is an international over-capacity in the production of many minerals. The Government have, however, proposed changes to the scheme, including coverage for nickel, inclusion of related products in the calculation of SYSMIN claims, and greater flexibility for use of transfers, in recognition of the need to render the scheme more accessible to ACP states.
I mentioned the Community's concern to ensure that development aid makes the most effective possible contribution to ACP development under the new convention. We have proposed to the ACP that there should be a dialogue with them on their sectoral economic policies, which are crucial to the context in which aid is required to work. As experience has shown, the effects of aid can be minimal or even harmful if it is provided where local policies are inimical to its objectives. A commonly cited example is where local prices for farmers give inadequate incentives to them to make full use of development aid for agricultural production. Another example is provided by food aid which, while essential in emergencies for relief of famine, is all too often supplied with no regard to its integration with local agricultural policy, so that local farmers are under-cut, food consumption patterns changed and the capacity of local agriculture severely diminished. To overcome such difficulties and unintended consequences of aid, the Community has proposed to the ACP that they should discuss the local policy context in the areas most suitable for EDF aid. In this way both sides can establish where Community aid may be used to greatest effect.
The examples I have mentioned have been drawn from agriculture, and with very good reason. Agriculture remains for most of the ACP the principal contributor to their economic production. For most ACP it is the major employer. And, of course, if the continuing exodus of rural populations to cities where there are no jobs, no housing and inadequate sanitation is to be stemmed, the conditions of life in the countryside must be improved. The first requirement is that the ACP countries should be self-reliant in food, whether by their own production of food or by purchase, using earnings from their export of agricultural commodities and processed products.
This serves to highlight the inter-related nature of aid and trade policies. ACP exports will require
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markets in the Community and elsewhere. It is evident that the food sector strategies already being implemented in selected ACP states will be of major importance in the new convention. We see it as a necessary condition of successful food strategies that all forms of Community aid should be effectively coordinated; and we welcome the committee's support for the Government's proposal that a separate food chapter in the next convention could usefully serve to highlight the interdependent nature of the various aspects of Community aid—including food aid—in the pursuit of food self-reliance.
Not all of the ACP will give equal prominence to agriculture. For many the development of other sectors—for example, mining, industry or transport—will be important. The policy dialogue will aim to establish where the need is greatest and the contribution likely to be best used. Like the committee, we see a major role for the Commission delegations, presently all too often under-used, in establishing the groundwork for this sort of discussion. It will also be important to ensure co-ordination, not merely of the various elements of the Community's trade and aid relationship with the ACP but also with the aid efforts of individual member states and with other donors. The dialogue, which we envisage as a continuing and flexible process, will offer opportunity for this.
It will now be rather evident that the Government place great faith in constructive dialogue with the ACP as a means of increasing the effectiveness of Community aid. We would also agree, however, with another important change recommended by the committee concerning the evaluation of completed projects. There is at present no regular evaluation of major Community aid projects. Nor is such evaluation made available to member states, the ACP, or the interested public. In both respects this contrasts with the practice of the leading multilateral aid agencies. The Government are pressing—with some success—for more evaluation of EDF aid under the new convention, to act both as an audit of performance and guide to the future based on experience. Perhaps both an enlarged evaluation unit within the Commission itself, and/or a greater role for the Court of Auditors, offer the greatest prospects for improvement.
I should not go on without reference to the next European Development Fund itself. The Government believe it is right that this should not be discussed with the ACP until the end of the negotiations on the substance of the new convention. However, I can say now that a principal factor in the Community's decision will be the ability of its member states to pay. The United Kingdom share of the EDF comes of course from our own aid programme. In considering their position, the Government must therefore take account of the other competing calls on a total aid programme necessarily contained within a given ceiling. Although that ceiling, like all Government expenditure, is reviewed regularly, it is right and necessary that it should be subject to the same disciplines as other areas of public expenditure. It remains the Government's policy to maximise the room for manoeuvre for our own bilateral aid effort by looking critically at expenditure on all our contributions to multilateral programmes.

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The committee has pointed out that a significant increase in real terms in the size of the EDF would require the diversion of United Kingdom funds from other uses, particularly our own bilateral programme or our contributions to other international bodies. The Government note that the committee would deprecate such a diversion. In fact any increase, even in cash terms, would have this effect, so we are faced with a difficult choice. The final judgment on our contribution to the next EDF will be taken in the light of all the financial and political factors.
There are several other important recommendations which shortage of time prevents me from dealing with as fully as they deserve. Perhaps I may mention some of them briefly. The Government agree that EDF procedures can be slow and complex. An improvement will be necessary if the ACP are to be enabled to spend their EDF allocations as quickly as intended. We also hope that reforms in internal Community procedures—notably in provision of better advance information in EDF contracts, in the abolition of quotas for consultancy contracts, and in improved payment procedures—will result in an even greater share of contracts for United Kingdom firms, although our performance in this field has shown a steady and encouraging upward trend.
The Government share the view that nongovernmental organisations have a valuable role in tackling the problems of ACP development, and have also done a very effective job in publicising the issues involved in the Lomé negotiations. I am thinking in particular of the excellent series of "Lomé Briefing" papers produced under the auspices of the Liaison Committee of Development NGOs. There must however he a doubt about whether the NGOs could realistically absorb a large injection of Community financial assistance without fundamental change to their independent character.
The Government agree that some major ACP problems—for example, the fight against decertification—will need to be dealt with on a regional basis. To deal with the most important issues is precisely the purpose of the EDF, which has a pocket of money specially set aside for regional projects. The Government also agree that cultural aspects of development are important and may be aided from the EDF.
On the question of rum, which was raised by the noble Lord, Lord Brimelow, I can assure the House that the Government share the sub-committee's views about the drawbacks of the present system. We have continually pressed for the removal of the least defensible aspect of the current regime, the separation of the United Kingdom market from the rest of the Community, with separate quotas for each. So far, we have met with little success. but the question is still under negotiation.
Near the end of his speech, the noble Lord, Lord Brimelow, referred to the request from ACP Ambassadors for guidance as to the attitude of your Lordships' House towards a number of issues. He noted that anything additional I might have to say on these issues would be studied intensively by the ACP negotiators. I believe that I have covered most of these
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points in my reply. There are however a couple of additional points which I could usefully make. The common agricultural policy was, as the noble Lord rightly noted, outside the remit of the Select Committee's report. I need hardly remind your Lordships of the Government's efforts to reform that policy. On sugar beet, the Community has already taken a number of steps to reduce its production and is actively participating in discussions for a new International Sugar Agreement. We very much hope that an effective international agreement can be negotiated. At the end of the day, this will be the best contribution to the stabilisation of world sugar prices to the advantage of both importing and exporting developing countries. As for the Commission's proposal for the taxation of imported vegetable oils, I can assure your Lordships that the Government are firmly opposed to this, and I do not believe the Community will ever agree to such a tax.
I note the suggestion that a successor agreement might be ratified by the joint ECP/ACP Parliamentary Assembly. As a matter of constitutional practice, however, since the next convention will be a mixed agreement to which the Community, member states and ACP states will be party, it will have to be ratified by each signatory according to its own procedures. The Government support the suggestion that EC/ACP institutions should be reinforced to make them more effective. It has already been agreed in the negotiations with the ACP that there should be a consolidation of the present two parliamentary bodies, the EC/ACP Consultative Assembly and the Joint Committee.
Finally, it has been suggested, notably by Commissioner Pisani himself, that the next convention should be of unlimited duration, with a number of time-limited protocols covering particular issues—for example, trade co-operation or STABEX. This question has not yet been tackled in the negotiations, but the Government share the committee's scepticism about the value of such a change.
I trust that I have shown that the Government warmly welcome the contribution that this report has made both to the development of Government thinking and to public debate on the Lomé relationship. There is scarcely a recommendation in it with which the Government would wish to disagree.
3.57 p.m.
Lord Banks: My Lords, the House will be grateful to the noble Lord, Lord Brimelow, and to the Select Committee for the very thorough and comprehensive examination which they made of the negotiation to secure a successor to Lomé II, and it has been very useful at the beginning of our discussion to have this statement of the view of the Government which has just been given to us by the noble Baroness, Lady Young. It is clear that this is an important subject; yet it is equally clear—I think the report brings this out—that the Lomé Convention is of a limited nature. I think a few facts will support that contention.
The 64 ACP countries involved in the convention represent only one-eighth of the third world

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population. Only five of the 25 most populous nations are included and the EEC of course has a series of aid and trade agreements with the rest of the developing world. Lomé accounts for only half of the EEC's own development aid and it accounts for only 12 per cent. of the development aid provided by the EEC member states, most of which is bilateral. Developing countries are naturally affected by the other policies in which the EEC is involved—for example, the common agricultural policy, as we have heard this afternoon, and the multi-fibre arrangement. The EEC generalised system of preferences applies to all developing countries. While it is true that more than 95 per cent. of Lomé exports come to the EEC duty free, most of them would in any case—I believe it is about 30 per cent. which actually benefits from the Lomé Convention in this respect. The money provided for all Lomé purposes, as one of the representatives of the ACP countries pointed out in evidence to the committee, is the same as the export earnings of British Steel. To say all this is not to criticise Lomé but to get it into perspective.
In spite of their limited nature, I believe that Lomé I and Lomé II have been very important experiments. I think there has been particular value in the institutional structure and the philosophy of equality which inspires it. There has been the specific experiment of STABEX which is designed to support earnings rather than prices. That was a distinctive change in the normal practice in these matters and that is a principle which I would think is capable of considerable expansion, as the report suggests. I regret that it has been used to some extent as a balance of payments relief, as the noble Lord, Lord Brimelow, explained to us, rather than to help particular producers affected. Nevertheless it is something that has been attempted on a small scale which could with value be extended further.
If the report makes clear that there is much to Lomé's credit, it also makes clear that nevertheless, particularly during the period of Lomé II, there has been growing disappointment and disillusionment with it. Recession, inflation, population outstripping food production, high interest rates and increasing debt have created an unfavourable economic background. STABEX has twice run out of funds, as we have heard, to meet legitimate claims and the balance of trade has moved strongly in favour of the EEC'. There have been complaints that the European Development Fund is under-funded and there have been the complaints to which reference has already been made of bureaucratic procedures for disbursement on the part of the Community. But, perhaps most disappointing of all, Lomé countries have failed to maintain their share in EEC markets even in comparison with other developing countries.
But I do not think that we should despair because there have been these disappointments. I think we must learn from experience and seek to make the successor convention wider in scope and more effective. Turning for a minute to aid, the EEC member states provide 39 per cent. of the aid which the ACP countries receive. The EEC itself as a group, as an entity, provides a further 9 per cent. and, of course, it is largely that 9 per cent. that we are concerned with when we are thinking about Lomé
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I understand that the figure which is available is not negotiable and that this is resented by the ACP countries. Last time they got half of what they asked for. This time, as I understand it, there is to be no discussion. The noble Baroness, Lady Young, if I understood her aright, said that there would be discussion at the end when all the other talking has taken place. One wonders if that is perhaps entirely the right order in which things should occur. And there is the related problem, to which the noble Lord, Lord Brimelow, referred, that if the United Kingdom increases its contribution to Lomé it decreases it elsewhere, so what we have to press for if we want to increase the amount available for Lomé is an overall increase in United Kingdom aid. I would support the plea which the noble Lord, Lord Brimelow, made for a higher priority to be given to aid.
Clearly the EEC must have the last word on the EEC figure, but I should have thought it should be discussed, and discussed in relation to overall total aid from all sources, with the ACP countries. The European Development Fund's real value has declined over the years. I should like to ask the noble Baroness when she comes to reply whether the new European Development Fund allocation is going to offer increased real value. We have already heard mention of the need for larger allocations for STABEX.
The report deals with the views of Commissioner Pisani that there should be a concentration now, so far as aid is concerned, on improving agricultural production. I am sure that there is much sense in that and that what both speakers so far have said about food aid and its effect on self-reliance in food must be given proper weight; and, in order that this matter should be discussed with the ACP countries, there is the proposal on which the noble Baroness put great stress for policy dialogue. But, as the noble Lord, Lord Brimelow, pointed out, this has problems and it needs sensitive handling because some of the ACP countries, at any rate, fear that this is just one way of attaching conditions which would be an infringement of their sovereignty.
Then there is the question of industrialisation. We cannot altogether neglect that, although it is right to make agriculture the priority in the conditions of today. But only 4 per cent. of exports to the EEC from the ACP countries are manufactured goods. I wonder whether the Government are anticipating that there will be any increase in that. I am aware that there is very little restriction—there is some, particularly in the field of textiles on the import of manufactured goods; but this is a matter which involves development and aid as well as trade. I was glad that the noble Baroness spoke strongly about the need to have more effective disbursement. It was hopeful that this could be achieved. Comparing aid and trade, in 1982 the disbursements from the European Development Fund were equal to about 3 per cent. of the value of the ACP countries' trade with the EEC.
It will be seen that the benefits of aid can easily be cancelled by marginal changes in EEC trade policy. In 1982 the 64 ACP countries received £400 million in aid from the European Development Fund. In the same year they received £10,000 million from the sale of exports to EEC countries, so it would seem to be

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right as a general proposition that trade is more important than aid, important though aid is. I accept what the report says, that this would not apply to every ACP country, but I put it forward as a generality. It has been suggested that aid not trade might well be the motto of the EEC countries in their approach to the current negotiation. I would wonder if the noble Baroness would think that that was fair or whether that gives an unbalanced view of what the governments of the EEC have in mind at the moment. I would think that there is a need for freer access for produce which competes with the common agricultural policy; and the noble Lord, Lord Brimelow, touched on that.
I noted the evidence in the report from the Consumers in the European Community Group, who said that, by and large, the EEC is only prepared to allow duty free imports from ACP countries of food that cannot be grown in the EEC. They went on to say that there are cases where the Community does tax food imports from ACP countries even when the EEC does not produce the food concerned. That would not seem to be justified. There is the question, too, of the impact on developing countries generally of the agricultural export policy of the EEC. That, too, has already been mentioned this afternoon. I think that perhaps it might be wise to look again at the operation of the safeguards clause. One wonders to what extent the threat of its use is used to achieve what is perhaps euphemistically described as voluntary restraint.
I was glad to hear that the noble Baroness, Lady Young, was in agreement with the report over the relaxation of rules of origin. I would hope that now something will be achieved in that sphere. It seems to me also that in thinking of these problems we cannot leave out of account the effect on ACP countries and other developing countries of the economic policies which are followed in the countries of the developed world; and that if the EEC countries were able to come together to give some stimulus to their economy—to investment in their infrastructure, for example—this in turn being the engine which drew their own economies more speedily out of the recession, they might at the same time provide an engine to do the same for the third world.
Then finally there is the problem of the overall coordination of all aid from all sources. Ideally, of course, the greatest help should go to the severest poverty anywhere in the world. That conflicts with the principle of selecting 64 nations, mostly with historical ties, for favoured treatment. That is now an established policy. It is understandable that the EEC should want to maintain these relations and close connections that have been built up, but a compromise is obviously necessary and it will not always be easy to achieve. However, I believe that the British influence should lead towards a universal approach rather than a selective approach and that we should be seeking, where possible, to include more people and more countries within the scope of the provisions of the Lomé Convention and its successor.
I hope that the EEC and ACP countries will be able to rise above past disappointments and recapture something of the original vision, and create together a more satisfactory and satisfying outward-looking relationship in the future.
4.11 p.m.
The Lord Bishop of Chichester: My Lords, I am sure we must all be grateful to the noble Lord, Lord Brimelow, for this Motion and for giving us the opportunity to debate this report. The existence of the first Lomé Convention was for many of us an important factor in commending the European Community at the time of the referendum. I am sure we are also grateful for the encouragement which has been given to the recommendations of the report by the noble Baroness, Lady Young.
I claim no expertise in the technicalities of this matter, but we on these Benches have a special concern for the current negotiations with which the report deals because we are members of the worldwide Anglican Communion, in which we are partners with bishops and others in many of the ACP countries. My own diocese has a special link, along with Guildford and Portsmouth, with the provinces of Nigeria and West Africa. The Bishop of Accra has been for the last month in Sussex, visiting parishes and addressing meetings; and he will be staying with me this coming weekend. So we are acutely aware at a personal level of the appalling problems of poverty, hunger and disease in many of the ACP countries. I am not so widely travelled as many of my colleagues. but I shall never forget the impression made upon me by a visit to Sierra Leone and Ghana, and by the enormous contrasts in riches and poverty that one sees walking through the streets of, for example, Freetown.
Therefore, for us "partnership" is a very important word in relation to this whole field of concern, and that is what I particularly want to emphasise in today's debate. It is what I understand to be spoken about expecially in Part 3 of the report. Some of your Lordships will no doubt have read Schumacher's last book, and may well remember a particular story that he tells of a family—a father, mother and a bright little boy of eight or ten—who went into a restaurant. They sat down, and the waitress brought three menus. The little boy looked at his menu and said, "I'll have liver and bacon". The father looked at the menu and mother looked at the menu, and the father then said to the waitress, "Three steaks, please". The waitress, writing it down, said, "Two steaks and one liver and bacon". After she had gone the little boy turned to his mother and said, "Mummy, she thinks I'm real".
I think that story has an important moral for us, because we are all tempted to think that we know what is best for other countries. It is vital that all discussions about aid to developing countries should be conducted and thought of in ways which respect the human dignity of those being aided. This, as I see it, involves for the giver that he must give freely and not because he expects to get some advantage in return, and also that he accepts that what he gives will be freely used by the recipient, possibly even in ways that the giver thinks unwise or does not much like. Obviously there are some limits to this, but there is an important principle at stake about the kind of relationship there should be: it should be one of partnership.
I want to stress in this field the importance of the voluntary contributions of individuals in this whole range of aid—the non-governmental contributions which, because they involve a large number of people,

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I believe help to build up the right sense of relationship. We in the Church of England have tried to make a contribution to overseas aid by asking all our members to give 1 per cent. of their net take-home pay for this purpose. A resolution to that effect was passed as long ago as 1975 by the General Synod in a Motion promoted by the present Archbishop of Canterbury. I may say that the Archbishop would very much have liked to have been present here today to speak in this debate, but he has to be in the chair at a meeting of the House of Bishops outside London, at a place which perhaps I should hasten to say is not Epsom. The General Synod, in taking this action, was following the example of the Methodist and the United Reformed Churches.
It is difficult to be precise about the response to this, because different dioceses deal with the matter in different ways: some by a process of direct grant through the diocesan budget and others by appeals to parishes. However, every diocese now has its own diocesan development representative, and there is a central committee trying to keep them all up to the mark. I am quite sure we could do more than we do, but it is in fact increasing.
This cannot, of course, take the place of governmental contributions, and therefore it must be a cause of some concern to read statements made by the director of Christian Aid to the effect that the 1984–85 expenditure on the net aid programme will be 17 per cent. lower in real terms than the aid given in 1978–79. Also, we learn that nearly two-thirds of the British bilateral aid programme is tied to the export of British goods, and in a way which benefits British companies. It is doubtful whether it really helps the poorest.
Again, between 1978 and 1982 British aid to the United Nations development programmes fell 56 per cent.; and in 1981, at the Paris Conference, Britain refused to give 0.15 per cent. of national income to the least developed countries. At the same time, we are grateful for what the noble Baroness has told us, and it is cause for pleasure that in March this year Britain agreed to spend £106,000 million on development education up to 1987, and that the Government have committed themselves to increase the benefits which projects bring to the developing countries and, in particular, to the poorest sections of the world community.
This last point touches on the problems of how, without infringing the proper independence of the countries to which aid is being given, we can try to ensure that the poor do not get poorer and the rich richer. One way may be, as the noble Lord, Lord Brimelow, said, by assisting in long-term development projects for food production as against simply exporting large quantities of food. Reference has been made to the four African countries, in which, since 1982, there have been pilot projects of this kind. Paragraph 65 of the report indicates that there are some qualifications and hesitations in what is to be said about these, but it is notable that other ACP countries, seeing this, have requested help of a similar kind. That is an important example of the sort of partnership that I have had in mind in what I have been saying.
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I should like to end with a word about the importance of the two Lomé Conventions and of these current negotiations for the European Community itself, because partnership is a two-way thing. Many of us who were enthusiastic supporters of Britain's entry into the European Community have been greatly saddened by the way in which the European vision, the thought of what Europe has to give to the world—its potential contribution to world peace, the rule of law in the affairs of nations and above all, the European religious and cultural tradition—has all been submerged (indeed, it has almost vanished from sight) under the perpetual arguments and conflicts over internal economic policies. To be compelled to direct our attention to the Lomé Convention and to the needs of the developing countries will at least, if only for a moment; lift our eyes above these preoccupations to the needs of others and to what Europe ought to be contributing to the world.
As I said, partnership is a two-way thing, and, indeed, our ACP partners may help us to think a little more critically about what we expect as of right to be our standard of living, and perhaps remind us, as in a different way this week does, of the spirit of service and sacrifice called for from all of us at all times in the cause of human dignity and freedom. I hope that Her Majesty's Government will do everything they can to give strong support to the current negotiations and to stress their urgency.
4.24 p.m.
Lord Pitt of Hampstead: My Lords, like other noble Lords, I am very grateful to the noble Lord, Lord Brimelow, for giving us an opportunity to discuss this matter. I also wish to compliment him on his chairmanship of the sub-committee and thank him for permitting me to exercise my right as a Member of this House to attend meetings of the sub-committee. Of course, not being a member of the sub-committee, I am not responsible for the report. However, I welcome it. Much of it is in the spirit in which I would have written such a report, and therefore I welcome it. There are one or two points on which I would not ncessarily go 100 per cent. with the sub-committee, but these will emerge in the course of my remarks.
I was an observer in Brussels when the very first Lomé conference started and there were great hopes as to what would emerge as a consequence. It is fair to say that 10 years later our faith is not as strong as it was, because the results have not been as good as any of us had hoped. At this stage, therefore, we must see how in the course of the negotiations upon the next agreement we can remedy any defects that there may have been and move forward and revive the hopes that we had 10 years ago.
I shall comment on a few of the issues, starting with the volume of financial resources. I do not disagree with the suggestion that the volume of aid should be declared at the end of negotiations. I am not against that. I am, however, very critical of the fact that all the information that I obtain suggests that, while the EEC Governments are insisting that they will not declare what will be the volume of aid until the end of the negotiations, they have nevertheless given a very

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limiting financial brief to the negotiators. That I would have to criticise. If we were looking at the issues, deciding how we would deal with them and, in the end, provide the resources for dealing with them, then the approach of the EEC Ministers would be right. If, however, they are definitely going to limit funds, they ought to begin by making it clear that the funds are limited and thus, in the course of the negotiations, allow the ACP countries to decide which of the policies they would wish to push. To leave the level of funds to the end, and allow them to negotiate in the expectation of higher funds than they will receive, is quite wrong.
Therefore, I hope that Her Majesty's Government for their part, will make sure that the role they play in this is correct—either that there will be limited funds, and saying so, with the negotiations based on that, or, alternatively, negotiate and, at the end of the day, provide the funds to meet the agreements that have been made. It seems to me that it cannot be done in the way that it is being done.
The last Lomé agreement was in per capita terms 20 per cent. lower than the first one. As I have been saying, what the level will be with this one we do not know. At least, we should try to match the last Lomé agreement. But in fact we ought to be matching the first one, because, if in 1974 we thought that a particular level of funds was necessary in order to attain the objectives that we had in mind, then, unless those objectives have been attained, or are being attained, a reduction in funds is not a logical course. Therefore the objective should be to try to raise the level of contribution to what it would have been had we kept to the level which existed in the first Lomé Convention. My hopes are not very high. Nevertheless, I hope that this point will be borne in mind and that the Government, with this objective in mind, will try to be a little more liberal when making funds available.
We are speaking about the period from 1985 to 1990. A large increase in aid would not be required in 1985–1986 in order to start off the process. The process could be started off by a small increase in 1985–1986, followed by another increase in 1986–1987. and further increases in 1987–1988 and 1988–1989. The funds have to be declared now, but they could be made available on that understanding. Although the economic situation is not very good, I hope that, nevertheless, the appropriate funds will be allocated and that the economic situation will not be allowed to dominate the whole issue.
I am pleased that the Government's attitude to trade is not too bad. As this is a trade and aid agreement, I believe that we should try to do the best we can at both levels. It is perfectly true that for many of the territories it is the trade, rather than the aid, agreement which matters. What is required, therefore, is a trade regime which is capable of stimulating ACP trade. It is in that context that our whole attitude to trade should be examined.
I am glad that the Government are willing to look at the rules of origin and that they support their revision. I had hoped that the Minister would say that the Government support the recommendations contained in the report. It should not be too difficult to do so. The
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present position is that materials from either ACP or EEC countries are allowed in. We are asking that, in addition, goods should be allowed in from other developing countries, as well as from EFTA countries. EFTA goods already have free entry into the EEC. Therefore, it should not be very difficult for the Government to say that they will back this approach in the negotiations. I hope that, even though the Government do not say so, they will nevertheless back this approach because it would be a way of helping the developing countries.
It is particularly important that we should liberalise the rules of origin for the fishing industry. Many of these countries will soon have a further economic zone which they will wish to exploit, but there is no way in which they will be able to provide the fishing fleet with which to export their fish. It will have to be exported by the fishing fleets of other countries. In effect, therefore, there must be some liberalisation in order to allow such countries to benefit. I hope that all these matters will be borne in mind and that the rules of origin will be liberalised sufficiently to enable these countries to benefit from them.
The STABEX scheme needs to be improved. STABEX is one of the Lomé successes. On the other hand, it is quite clear that the funds made available have been insufficient. I do not see why it should be difficult to use the interest from EDF, which belongs to the ACP states, in order to replace the STABEX funds when they run out. There is always in hand a large amount of interest from EDF which could be used for this purpose. I hope that there will be an examination of this approach in order to meet the shortage of funds for STABEX.
In addition, STABEX needs to be improved by expanding the range of products which are available for it. The noble Lord, Lord Brimelow, mentioned tobacco. I shall mention citrus. I see no reason why citrus products should not be part of the STABEX scheme. Furthermore, the dependence and fluctuation thresholds were intended to limit the funds. I hope that this problem will be looked at very carefully in order to examine whether they are necessary, or at what level they are necessary. For example, is 2 per cent. necessary in the case of the least developed territories? In the case of the better developed territories, is 6.5 per cent. necessary? Perhaps it ought to be 5 per cent., or 4 per cent. This problem ought to be looked at because more territories ought to be able to benefit. STABEX has been criticised by the Court of Auditors. I hope that their criticisms will be borne in mind, in particular their criticism that there are inconsistencies in the way in which it is calculated and administered. As the Court of Auditors have said, there should be greater transparency in calculation and greater predictability in operation. I hope that it will be looked at in that light so that an improvement can be made to the STABEX scheme.
I now turn to SYSMIN. Some degree of compensation is required because, as at present administered, the SYSMIN scheme does not allow for any degree of compensation. In addition, in order to maintain its present export capacity a certain measure of compensation—I am not suggesting that it should be total—should be added to the SYSMIN scheme. I hope that this point will be seriously considered.

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Since I come from the Caribbean, I have to say I hope that serious consideration will be given to tourism and to the way in which the EEC can help territories whose main asset is their beauty to benefit from that. A regime to help tourism could be agreed. I hope that serious consideration will be given to this point.
Serious consideration should also be given to shipping. I regret that the sub-committee did not have an opportunity to tackle this serious issue, in terms of how these territories will benefit from any trade preferences which are given to them. Whatever benefit they may gain can be absorbed—just like that—in the cost of shipping goods to Europe. Shipping, therefore, is a question which requires serious consideration.
Regional co-operation is of the utmost importance. It is important to the Southern African Development Conference. It is also important to the Caribbean—to CARICOM. I spoke earlier about such territories exploiting their exclusive economic zones. Many of these territories cannot individually exploit their exclusive economic zones; that will have to be done on a regional basis. Therefore, assistance with regional activities should be given a great deal of support within the agreement.
Also, I believe that the EDF could use the regional financial institutions to better effect. I do not refer only to the distribution of funds but also to the knowledge they have of the areas concerned and to their value as people who can help in assessing the value of a particular project. It seems to me that that is an area in which the present regime is lacking. I believe also that in the management of the fund all told, more could be done not only by using the delegations but also by using local people; not only on the staff of the delegations but having some ACP experts in Brussels. From what I hear, it seems that there is a need for more sensitivity in DG VIII to the actual needs and conditions of the territories with which they are dealing. Therefore, to have some ACP experts in DG VIII would be of value. It may not be in keeping with the constitution to have them there, but if one had them in delegate offices and used them, that would be just as good.
I want to comment now on three or four products of importance to individual territories. In the case of beef, for example, those territories permitted to export beef to Europe were given a quota of 30,000 tonnes before Zimbabwe joined. When Zimbabwe joined, the quota was increased to only 38,000 tonnes. I gather that the territories requested a quota of 44,000 tonnes but that they have been given only 30,000 tonnes. This seems to be absurd. I hope that the information I have received is wrong and that this will not be the way in which the matter is handled.
Bananas are an absolutely essential export commodity for the Windward Islands. The retention of the export structure for bananas is therefore of the utmost importance. Wherever possible, the provisions should be extended, and I hope that will be considered. Sugar has been mentioned before. This is an area of serious conflict. We have the EEC accepting a certain sugar quota from these territories and then dumping its surplus sugar on the world market. As a consequence, the world price of sugar is made very
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low, so that the territories which depend on sugar exports find themselves in difficulty.
It should not be so difficult for the EEC to find a way of helping those territories. I agree that if they join the international sugar agreement, that will be a first-class development. I know that the British Government have been pushing them to do so and I was glad to hear from the Minister that there seems to be some hope that they will. Even if they do not do so, there are opportunities for them. Sugar can be included in other products, for example. If one asks what percentage of exports a particular commodity represents, I can assure your Lordships that sugar represents more than 6.5 per cent. of the exports of Barbados, because its main export is probably sugar and rum. If there is a fall in the world price of sugar, territories relying on sugar exports are really and truly hit.
It seems to me that something could be done, even if it is only in assessing the price at which that sugar is bought. One could take account of the fact that a volume of sugar was about to be dropped upon the world market, thus forcing prices lower. One could then pay those territories a compensatory price. They would be paid a little more than they receive now. The price that they receive now is analogous to the price paid to European sugar beet producers. The territories could be paid an extra penny or two, to compensate them for the fact that they will lose when there is dumping. The real solution, of course, is not to dump sugar on the world market, and we hope that will be achieved one day. In the meantime, we must find ways of helping the territories which are hit in the way I have described.
Again, I was glad to hear the support from all sides of the House for the rum regime. There is no reason why there should be any problems or any quota. What is more, there is no reason why rum should not move from one EEC territory to another quite freely. One ought to be able to achieve agreements of that kind, and I hope that the British Government will be pressing very hard for such agreements.
Finally, I wish to comment on the policy dialogue which everybody seems to be so happy about. I am not saying that we should not have it, but I am saying that we should be careful how it is done. It must be a dialogue between equals. When all is said and done, the EEC is providing only 9 per cent. of the aid which goes to the territories in question. If all the others providing the remaining 91 per cent. also insist on policy dialogues, it may be found that their attitude is not the same as that of the EEC. Where will the territories stand then? All the territories will have to conform because they are compelled to do so. They do not receive money from the IMF unless they conform with whatever policy is laid down. Supposing the policy suggested was different from that of the IMF, where would the territories stand then? Although a policy dialogue looks to be a sensible idea, one must approach it with caution.
I have spoken for long enough, but I hope that I have given the Minister some points which she will be able to give to her right honourable friend to take to the various meetings. I believe that Britain needs to play a forceful part in the negotiations. When all is said and done, the majority of the ACP countries are Commonwealth countries.
4.48 p.m.
Viscount Rochdale: My Lords, it was a great satisfaction to me to be able to serve on the subcommittee under the very penetrating chairmanship of the noble Lord, Lord Brimelow. I should also like to congratulate him, as other noble Lords have done, on the very skilful way in which he has introduced this debate. This debate follows closely on that introduced by the noble Lord, Lord Hatch of Lusby, on 22nd May, to which reference has also been made. Unfortunately, I was not able to listen to all of that debate but I have read Hansard very carefully and it was quite clear that it emphasised very much the importance of the subject we are now discussing. There was a great deal in that debate which impinges directly on the work of the report.
The report, as I understand it, can be divided under two main headings. The first is the subject of aid—whether in cash or in kind. The second is the subject of trade between the ACP states and Community members. While the relative importance of these will vary with the circumstances of individual recipient countries, I suppose one can safely hope that—except in the case of emergencies such as drought, crop failure or earthquakes—the need for aid as time goes on will come to be regarded as a transitional demand only. Ultimately, as self-sufficiency in food becomes more of a reality—however long that may take, perhaps many decades—the need for aid will gradually diminish and perhaps come to an end. On the other hand, increasing trade must surely be regarded as essentially a continuing, important and necessary way of life for the mutual benefit of the ACP countries and the members of the Commission.
In the short time that I propose to speak I should like, first, to give one or two general impressions that I received from the evidence that we were given, both oral and written. The aid received from the Commission through the EDF is, of course, as the noble Lord, Lord Pitt, mentioned only a moment ago, a relatively small part of the total aid from all world sources. Small as it is—and I say this with great regret—1 doubt whether as a general rule the best use is always made of the limited resources available; or, to put it in other words, I doubt whether those at the receiving end always get the best value for the money allocated to them by the donors.
I hasten to say that I am not seeking to criticise the efforts of the many men and women who work for the Community, whether in Brussels or in the delegations overseas. I imagine that they may well be overworked and probably are, but I get the impression that some of the procedures that have to be used and followed are too cumbersome, and that there is room for simpler procedures, for more flexible administrative arrangements and for more co-ordination between the various sources from which aid comes. There could be more delegation to those on the ground and, as has already been mentioned—and this is one of the most important things—better evaluation and monitoring of what actually is being achieved on the ground in the ACP states.
One realises that if one pursues this a long way it could result either in an unacceptable increase in
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workload for those who have to carry it out or in higher administrative costs. But I still wonder whether, even if those costs were increased, it might not result in an important net gain at the receiving end. I feel that this is something that should be looked at. In this field I get the impression that the bilateral aid and the aid from the NGOs can often be more effective. For that reason I deprecate—as, indeed, paragraph 103 does—any diversion of funds away from the United Kingdom bilateral aid to Community aid. Similarly, with the pattern of world trade constantly and inevitably changing—with all that that involves, which is a pretty considerable matter—there will be a need, as I see it, for periodic review of arrangements, with perhaps fairly substantial adjustment to them. Therefore I would not favour the successor convention being of unlimited duration. That, too, is referred to in the report.
Having given those general impressions, I now turn to the matter of trade. The importance of trade must vary with the individual ACP countries: with their stage of development: their natural resources, whether mineral or crops; and the stage of development of their human resources, whether in the field or in industry, or in their government institutions. In the long term a worldwide network of trade-flows must be to the advantage of all and must be our constant objective. The problems inherent in the development of this kind of trade are many and varied. They are discussed in the report at some length in paragraphs 37 to 49. In so far as they deal with, shall we say, industrial or processed goods from the ACP countries to the Community—to the old industrial countries—they can at times be painful. Any one of your Lordships who like myself, has been in any way associated in the past with the textile industries will know only too well what that can mean. However, I do not intend to pursue that line of thought, although other noble Lords may wish to do so.
I want to refer, in particular, to paragraph 86, which the noble Lord, Lord Pitt, mentioned and which deals very briefly indeed with shipping. It is the question of the shipping interests of the ACP countries and the countries of the Community. International trade—and that is what we want to promote—demands, as a necessity, efficient, reliable and rapid shipping services to transport the cargoes concerned. Unfortunately, however, the written evidence that the sub-committee received from the General Council of British Shipping on behalf of itself, and also from CAACE, its opposite number in Europe dealing with the European countries' shipping bodies, did not arrive in time for it to be fitted into the programme for the hearing of oral evidence that we were able to carry out. The written memorandum submitted by the General Council of British Shipping is printed in the report on page 313, and I should like to comment a little on it. However, I must emphasise that, as this could not be discussed in any detail by the sub-committee, what I have to say can only be my own views and not necessarily those of the sub-committee.
In the Lomé II convention, at Annexe 19, there is a declaration recognising the need for harmonious development of efficient and reliable shipping services on economically satisfactory terms between the ACP countries and European states. Unfortunately, this

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declaration carried no obligation with it for signatories to the convention to follow up. So it is that we see a number of ACP countries who were involved in the negotiations, and who were actually signatories to the convention, pursuing a protectionist maritime policy which must not only be a disadvantage to the shipping lines in Europe, including our own, but also, from their point of view, reduce competition and increase costs, and so be of no help at all, whether to exporters or importers, whether in ACP countries or in Europe.
I find this very disturbing. With the emphasis, which we heard very clearly in other evidence that we received, that ACP countries reasonably wish the negotiations to be regarded (and I am using their own words) as between equals, and with the United Nations liner code having come into force last autumn with all its possible teething troubles, it seems only equitable that shipping should feature in the negotiations that are now going on and in some way be built into the new convention on a give-and-take basis. To date, that has not been the practice. Despite, as I understand it, some diplomatic approaches to the offending countries, they seem to have had no effect at all.
The General Council's memorandum urges an undertaking on the part of all signatories not to discriminate against each other's shipping. It makes six specific suggestions, which can be read in the report. I am not going to develop them in detail today, but they can be developed. There is a good deal to be said for each of them. They deal with different undesirable practices, but what they all amount to, in effect, is one form or another of discrimination against each other's shipping lines.
One final point on this matter is: could there not be an assurance that Community aid cargoes will be equitably divided between ships operated by the Community, on the one hand, and ACP lines, on the other—always provided, of course, that they can produce an efficient and competitive service? Too often we have found Community aid cargo having been either reserved by the recipient ACP countries exclusively to its own ships or shipped by state-subsidised Eastern bloc shipping. I cannot imagine that that sort of reservation of aid cargoes is really in the spirit of the original Lomé Therefore, all I hope is that this question of shipping is discussed in the negotiations, and that something will be written into the new convention, just as it has been written into Lomé II.
5.3 p.m.
Lord Seebohm: My Lords, although I am a member of the Select Committee, I was not on Sub-Committee B, so I think it is quite appropriate to say how much I value this report. In fact, I think it is one of the best we have produced in the last few years. I am sure the House would agree that Lord Brimelow deserves much praise, not only for producing this report but for the amount of work that he personally put into it, to which I was a witness.
A great many of the things I was going to say have been dealt with, so my speech is going to be very short, but I have one or two points which have not been raised. The first point that I was very glad has been raised and has been stressed is the fact that the Lomé
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Convention is not just a matter of aid. In actual figures, I believe the total is about 3 per cent. of volume in proportion to the volume of trade between the EEC and the ACP countries. In my view, there can be no doubt that it is a very valuable instrument for both diplomatic and economic reasons, and it highlights the interdependence of the first and third worlds.
However, I think it could be much improved. This was very well summed up by the Foreign and Commonwealth Office, whose officials told the committee on 26th October that their major worry about the Community Aid Programme was the disproportionate share which goes on food aid and the purposes to which it is put. This has been already been mentioned, but I think it is a very important point. They went on to say that, while they accepted the role of food aid in emergencies, most of the food aid is not to remedy disaster, but goes rather to provide for imports to the recipient countries, thus reducing the incentive to increase domestic production, distorting market forces and consumption habits and delaying necessary reforms. As your Lordships may remember, this was the theme of the debate on world hunger that took place in this House last July. I make this point now because most of the criticisms are administrative criticisms, but I believe that the actual policy of the aid giving also deserves some further examination to decide whether the policies are right.
The other matter that slightly disappointed me was that there seemed to be very little, if any, reference to any priority being given to areas of the greatest devastation caused by lack of water control, desertification, soil erosion and destruction of forests. In 1981 the World Bank pointed out that there is a declining growth rate in agricultural production below the rate of population growth and underlined the urgent need to reverse this process. The ACP countries do not appear to give this problem the very high priority is should command. I think the actual figures for this are rather interesting: in the Community only 10 per cent. of the population are engaged in agriculture, yet it has the highest priority of everything in the Community budget. In Africa, 80 per cent. of the population are engaged in agriculture and up until recently it has received virtually no priority at all. I am sure that this is well appreciated by the Commission and the Council of Ministers, but it is difficult to do much about it unless the ACP countries can be persuaded or convinced that it is agriculture in general and the special problem that I have described that should be given priority.
This brings us once again to the very sensitive area of conditionality. When oral evidence was given by a group of ACP ambassadors, their leader, His Excellency Ambassador Kazunga of Zambia, said in no uncertain terms:
"Nor are we amenable to the introduction of conditionality in our arrangements which have always been predicated on a basis of complete equality of partnership".
How they are to be persuaded to ask for these urgent and fundamental reforms of aid I do not know. However, I believe that the matter is so important that discussions should take place at the highest possible level and that in the last resort these priorities should be insisted on. I further believe that any country that produces a plan that seriously meets these criteria

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should receive massive financial and technical support to ensure success. I would remind your Lordships that the reinforcement of success is not only a principle of war.
Another worry that I have is the extent to which this country seems to favour increasing multilateral aid through the EDF. I stress this again. The point has been well made that any reduction in bilateral aid could act very seriously against both our interests and the interests of the recipients. On the face of it, it appears that multilateral aid has much to be said for it. It could make a larger impact. It is more acceptable. But against this there is the cumbersome administrative machinery which we see particularly in connection with the Community, where we have so many different directorates engaged in all these policies of aid.
So far as the United Kingdom is concerned, I have no doubt that we have a greater expertise in development matters than any other member of the EEC, if not any other country in the world. I think many of your Lordships may have seen the report of the CDC which appeared a few days ago—a most remarkable document, which I commend to your Lordships' attention. Although I know it is not a private sector enterprise in that sense, but it is run on normal private sector principles, using equity, and so on. it has, in fact, succeeded in the most astonishing manner, and this last year has made a net profit, after all expenses, of £11 million which has been added to its reserves, bringing them up now to £93 million. I believe the earnings ratio is now about I0 per cent. on the capital employed.
It is important when we are talking about aid to think in terms of what is done by such bodies as the CDC. Too often. I believe, questions have been asked in your Lordships' House about the amount of aid in cash terms. If one thinks of the CDC, this is not done in disbursements from the Treasury, although there might have been a few millions involved in topping up over the last few years. By simply giving a guarantee, extended in this House the other day to £750 million, it is possible to provide aid of that amount on a rollover basis. The amount of aid that the CDC has produced over the last ten or 20 years is far greater than that. When we think of the volume of assistance we give to ACP countries, where the CDC largely operates, that has to be taken into consideration.
I wish now to discuss private investment, which brings with it so much essential skill. This aspect, although not described as aid is potentially even more important than all the activities of the EDF. It has often rightly been said—I have perhaps used the argument too often myself but I repeat it without shame—that equity investment is the cheapest and most effective form of finance. It costs nothing until it has earned profit and a sufficient cash flow from which dividends can be paid. It costs nothing if the project fails. Those who have put it up lose their money but there is no debt left in the form of Government loans that have to be repaid out of taxation and carried forward in due course.
If I have any criticism of the Select Committee report, it is that it does not emphasise enough the
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importance of private investment. I shall be interested to know whether noble Lords such as the noble Lord, Lord Bauer, and the noble Lord, Lord Hams of High Cross, will support what I am about to say on this. Paragraph 83 of the report states that,
"given the vagueness of the references to this subject in Lomé II, there would be advantage in seeking the inclusion in the successor Convention of 'sensible, effective and clear provisions that would help to create a better climate for Community investment'."
We should have said more. I hope that the Commission will be much more specific and negotiate a code of practice that will include, inter alia, these points. First, there must be freedom for firms to employ expatriates with special skills in management, marketing and technical services; and, secondly, there must be freedom to repatriate a reasonable proportion of profits, employee savings and capital that becomes surplus to requirements. Thirdly, those responsible must refrain from imposing penal taxation on profits or employees' salaries—something which I am afraid I have seen only too often in the countries where I have operated. Fourthly, there must be a guarantee not to nationalise or expropriate undertakings without full compensation. Fifthly, there should be no insistence on a minimum 50 per cent. holding in the equity by the ACP country concerned. Sixthly, the code should be applied equally to all existing private sector firms. Lastly, there must be agreement on how dispute settlement procedures are arranged.
If some agreement on these lines proves negotiable, the Community, as a quid pro quo, should relax some of the rules on origin, include additional products in the STABEX scheme and allow more flexibility in the SYSMIN scheme in order to encourage diversification and help to finance new undertakings. There was an agreed statement by the ACP countries on the second Lomé that private investment would be welcome. It would appear to be timely to take them up on this in the hope of making progress on agreement of a really genuine code of practice.
5.14 p.m.
Lord Sainsbury: My Lords. may I first offer my congratulations to the committee and to its chairman for having compiled an excellent and comprehensive report on a subject that noble Lords must admit is both extremely complex and politically sensitive. Statistically, trade with the EEC is vastly more important to the African, Caribbean and Pacific states than Community aid—a fact to which many noble Lords have already referred. In fact, the value of the ACP countries' annual exports to the Community is well over twenty times that of the total aid available from the European Development Fund. Thus, in preparing for the Lomé renegotiations, in my opinion the EEC has paid undue attention to aid policies in relation to the resources that they are willing to make available. Much as these policies may be commendable, I am sure that noble Lords will agree that there are already many organisations, both governmental and non-governmental, better qualified and more experienced than the EEC in developing and administering aid programmes.
It must also be recognised that, however much aid programmes increase domestic production. many of the ACP states will still depend on exports to meet

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their outstanding debt obligations and to buy essential imports. Therefore, a "trade sector strategy", as suggested by the Overseas Development Institute, may be a better approach for the EEC to adopt than Commissioner Pisani's "food sector strategy". Evidently, such a trade policy cannot be applied in the same form to everybody. In any case, there is a need for a flexible approach, given the great disparities in the nature and stages of development of the ACP states.
In many of these states there is undoubtedly scope for encouraging and improving the first-stage processing of foodstuffs, as well as their standardisation, packaging, storage and marketing. For example, very recently the Ivory Coast has developed techniques for long-term storage of cocoa. If adopted on a commercial scale this would allow producers to increase their control over the flow of cocoa shipments and thus improve their marketing.
Within the ACP, a growing population and the rising expectations of urban dwellers may, given time, lead to increased domestic demand for value-added processed food and drink products. As it is, the Food and Agriculture Organisation has warned that weaknesses in Africa's infrastructure, marketing and processing will limit the extent to which the demand for food can be met from their own rural resources.
As to export markets and especially those in the EEC, there is the question as to whether the ACP states will be able to find and penetrate these. The Coffee Trade Federation emphasises that industrialisation to give value added should not be indulged in unless a full market study reveals a potential profitable market for the end product. And, as many noble Lords may be aware, this applies to products other than coffee.
In the past, ACP exports have shown a poor performance in the EEC markets. Certainly, part of the blame rests with the EEC's imposition of levies on some processed agricultural exports, stiff rules of origin, and other non-tariff barriers. Naturally, the EEC has been anxious to protect its own manufacturing industry. According to the Food and Drink Industries Council, the ACP have supplied to the United Kingdom semi-processed products, such as cocoa butter and paste, which have not caused competitive difficulties. However—and I quote from their evidence:
"It is a sad reflection on the relative lack of progress under the Lomérelationship that ACP countries are not yet seen as capable of offering serious or damaging competition in finished or semi-processed food and drink products, though their potential for doing so is recognised in one or two sectors."
Not all the blame for the ACP states, failure to expand exports of food products to the EEC can be placed on the existence of tariff and non-tariff barriers. There are, of course, certain absurdities in the operation of tariff preferences which must be rectified. The case of the out-of-season strawberries from Kenya has been the most frequently quoted, and evoked considerable indignation. This is because the Kenyans were not granted the same tariff concessions as those given to the Mediterranean countries. However, there has been little mention, if any, of the fact that quality may be as important a determinant as price in the development of a market for fruit. Quality refers not only to good eating characteristics, but also to
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standardisation of the product, regularity of supply, packaging and presentation. The Mediterranean countries, and particularly Israel, have secured markets in the EEC by adopting a very successful marketing strategy. The ACP states will need some marketing assistance if they are going to produce goods which can compete against those from the Mediterranean.
A plan to improve the marketability of food products and to encourage first-stage processing of agricultural products cannot be divorced from plans to improve agricultural production. A chain is only as strong as its weakest link. This is well illustrated by the corned beef canning industry in Botswana. Supplies of corned beef from Botswana tend to be irregular, not because of any deficiency in the canning operation, but because of great fluctuations in the numbers of cattle. The severe drought of the last few years has reduced the herd considerably. The prevalence of disease, notably foot and mouth, also impedes export trade. Faced with intense competition from Brazil, Botswana, even though benefiting from duty-free entry, can only hope to maintain and expand its corned beef market in Europe by ensuring more regular supplies. This will depend on the success of agricultural development programmes and the animal health operation currently in progress there.
At the other end of the chain, the EEC should offer greater help with port construction, warehousing, and the material handling of exports, as was suggested by the London Commodity Exchange in their submission to the committee. To return to the corned beef canning industry, I understand that production in Kenya is being constrained by lack of cold storage facilities.
Undoubtedly, there is room for investment in the food processing industries of the ACP countries. And there would seem to be a role for the EEC in providing that investment, as the noble Lord, Lord Seebohm, has already pointed out. However, the necessary safeguards will have to be provided in order to attract investors. Perhaps something along the lines of the code of practice suggested by the Food and Drink Industries Council could be embodied in the Lomé Convention.
Even though the Community should place more emphasis on the trade aspects of the Lomé Convention, this by no means implies that aid should be neglected. But a distinction must be made between food aid and disaster relief. As I have said in earlier speeches, food aid is a subject of strong emotive appeal, one which many regard as a humanitarian and high-minded way of getting rid of surpluses. It is not an adequate substitute for food production in those countries which are suffering from food deficiencies.
In my opinion there is no doubt that the Community has been misguided in dumping some of its surpluses in the third world. Leaving aside any moral judgments that one might make, this type of action should be condemned for leading to a severe misuse of resources. For example, the ODI found that the cost to the Community of funding cereal aid to Mauritania was over twice as much as it would have cost Mauritania to buy the cereals from the cheapest source. Surely it is time that the EEC stopped burdening the third world with its own problems.

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My Lords, in concentrating on the trade aspects of the Lomé Convention, and particularly on the potential for increasing value-added, one must always be conscious that these will not solve the poverty and hunger problems of the rural populations in the ACP countries. However, it can be hoped that the EEC can contribute to development by operating a suitable trade sector policy alongside, and not at cross-purposes with, appropriate development programmes administered by other organisations.
In conclusion, may I say that the liberalisation of international trade should be part and parcel of any trade policy. The interdependent world's economic problems are being prolonged and aggravated by protectionism based on narrow, national self-interest. Let us hope that, in time, a wider, wiser vision will prevail.
5.31 p.m.
Lord Hatch of Lusby: My Lords, I have never tried to hide my opposition to the entry of Great Britain into the EEC. It is an opposition which is based on premises different from those of most of my fellow opponents on this side of the House and, I should say, different from those of all the opponents of that entry on the other side of the House. It is an opposition based upon my concept of internationalism. I would fully accept that Mrs. Shirley Williams, one of the founders of the SDP, was sincere in her concept of internationalism when she used that as her reason for supporting entry into the EEC. In my view she was wrong, and certainly her views were not shared by the other members of the Gang of Four or by many others who have since joined the SDP.
However, my concept leads me to thank the noble Lord. Lord Brimelow, for giving us this afternoon the opportunity to debate what has always been claimed by internationalists to be the brightest jewel in the EEC crown that was offered to us by them. I have always conceived—indeed, more than that, I have discovered by analysis—that the EEC is essentially an exploitive institution. It has been subsidised, and is being subsidised, by a number of members of the third world. That was my belief at the time of the referendum in 1975, and in my view it is a belief which has been borne out by experience. We have seen transfers of resources from the third world countries to Europe. We have seen the lesser developed countries maintained in their position as the suppliers of raw materials. We have seen the inhibitions which have been placed on them in regard to any development of the industrial and manufacturing processes within them.
Now we are seeing something further—something which is, to any rational mind, incredible. We are now seeing the transfer of capital from the third world to the EEC. We are seeing, through the payment of debt interest, greater sums being paid from third world countries to Europe than the whole total of overseas aid and investment going from Europe into those countries. In fact, as I understand it, in the last year the net loss of third world countries vis-á-vis the EEC countries was in the region of 21 billion dollars; I repeat that that was the net loss.
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I well remember when we were debating and discussing the question of entry of the United Kingdom into the EEC, how at that time the Ivory Coast was given as the great economic success story of Africa. But at that time—the best time for both the EEC and the Ivory Coast—twice as much capital was leaving the Ivory Coast every year for France as was being either invested, or given, as aid to the Ivory Coast. So I claim that the case that I am making that the EEC has been subsidised, and is being subsidised, by the peoples of the third world is a valid one. Of course, since then we have also seen a growing balance of trade deficit between the ACP countries—the African, Caribbean and Pacific countries—and the EEC.
Two weeks ago this afternoon the House was kind enough to grant me the privilege of introducing a Motion for debate on trade between this country and the developing countries. I very much appreciated the participation of those noble Lords who spoke and the Minister who replied. I do not want to repeat the arguments put forward in that debate, with one exception. However, I am a little surprised that the noble Lord, Lord Brimelow, in introducing the debate on this report, told us that the terms of reference did not allow for a consideration of what I would have thought was essential; namely, recognition of the context within which the negotiations for a new Lomé convention, or the continuation of the Lomé agreement, are taking place.
If we are going to consider those negotiations and if we are going to ask Her Majesty's Government what is their attitude to those negotiations, surely it is essential—and surely it was essential for the Committee—to consider the context in which we have to analyse the arguments within the range of those negotiations. I would simply refer to that last debate in the terms of that context.
Is it not the case that the third world is being prevented from developing and from increasing its purchasing power by the growing walls of protectionism, by the rising rates of interest, and by the operation of the International Monetary Fund whenever any of these countries is in difficulties in its balance of payments? Is it not the case that the squeeze on production within these countries, through those means, is not only depressing their purchasing power, but at the same time distorting their economies? Interest rates alone are forcing such countries to turn increasingly to cash crops and to neglect the agriculture which supplies their own people. They are forcing countries to take desperate measures in order to export at all costs, even when prices are below the cost of production. I have so often referred here to the case of copper and Zambia. They are forced to export in order to pay for the interest charges on their foreign debts. In the case of Zambia, last year 65 per cent. of their exports had to be paid out in interest on their foreign debts. So only 35 per cent. was left to buy the goods of the industrialised world, including those of this country.
Therefore, I cannot leave the debate of two weeks ago without recognising what the effect will be on the people of Bathgate; they will say that 40 per cent. of the people of West Lothian will be unemployed, and will have no chance and no prospect whatever of being

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employed again, with all that that means to themselves, their families and their children. So, on the one hand we are having unemployment here in the industrialised world and, on the other hand, in the third world hunger, unemployment and dangerously bad health continue to increase through lack of resources.
Lomé was intended to try to bridge that gap. Lomé was intended to deal with these issues. I should have thought that that is why this context was crucial to any consideration of the negotiations for a future Lomé. But, as my noble friend Lord Pitt pointed out, Lomé has not fulfilled the expectations of any of its erstwhile supporters. Mr. Ramphal, the Secretary-General of the Commonwealth, who himself had taken part in the negotiations for the first Lomé Convention, now agrees that:
"the Convention's cumulative impact on the economic development of the ACP has been remarkably small".
It was Jean-Pierre Cot, the former French Development Minister, who noted that certain parts of Africa, which putatively enjoy the benefits of Anglo relationships with Europe, were actually undeveloping, and he concluded in his article that:
"we have to admit that the Lomé Convention has failed or, to be more precise, that the Lomé Convention is unsufficient to guarantee the development of the ACP countries".
Finally, the chairman of the APC itself, Archibald Mogwe of Botswana, summed up this whole position at the beginning of these negotiations in these words:
"Our situation threatens to be a permanent one. There are no signs of a respite. Lomé has not succeeded. For despite its preferential nature, not one of the 63 ACP states… has been able to emerge as a newly industrialising or semi-industrial country".
So I am by no means alone in saying that this bright jewel of Lomé has certainly not justified either our membership of the EEC or the claims that the EEC represents an international policy for the United Kingdom.
As has already been pointed out, most of the goods that are exported from ACP countries to the EEC are duty free, anyway; it is reckoned that about 75 per cent. of them are duty free because they do not compete with European goods. But where there is control, that control is exercised particularly over agricultural goods—foodstuffs—which compete with European production. Yet we should observe the trend as well as the absolute figures, and the trend shows that only 4 per cent. of ACP exports to Europe are manufactures, underlining the issues which Mr. Mogwe had pointed out, that still the ACP countries are basically the providers of the raw materials to the European continent and that still they are unable to develop their manufacturing industry, which is essential for development and growth.
Let us look at the recent trend as regards the relationship between the ACP countries and the EEC. In 1977 the ACP share of imports into EEC countries was 7·3 per cent. In 1982—and these are the latest figures which I have been able to obtain—that had fallen from 7·3 per cent. to 5·5 per cent. It was a very substantial fall.
I want to say a few brief words on the question of aid. I should like to ask the noble Baroness who is to wind up for the Government to answer a specific question on this. If we look at the operation of the
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European Development Fund, we might ask: "What on earth has happened to the money? Where is that money?" According to my information, at the end of 1981 only a half of the Lomé I funds, which commenced in 1975, had been disbursed. What happened to the other half? At the end of 1982, when we were into Lomé II, which started in 1980, only 10 per cent. of those aid funds had been committed. I should like to ask the noble Baroness what has happened to the rest.
I believe it is estimated that by next year the backlog on the committal of those aid funds will be as much as 3,000 million European currency units or in American terminology 3 billion. These funds are not index-linked so they are losing value all the time. While they stay in whatever bank they are invested in, inflation reduces their value. It may seem strange to beg the Government to do something contradictory to the French Socialist government representative in Brussels, Mr. Edgard Pisani, but I would beg the Government to ignore his claim for the communitisation of aid funds, because I believe that even under this Government the bilateral disbursal of aid funds is much more efficient, it is less bureaucratic-ridden, it is not delayed so much, and it is better allocated than through the European Development Fund.
My argument is well borne out by the European fund's own court of auditors, which has publicly upbraided the Commission for the slow spending and for often financing projects inside the ACP for questionable development value. I would suggest that that is conclusive evidence that the EDF is in a very bad way, and I should like the noble Baroness to tell us what Her Majesty's Government's attitude is to the EDF, what they are doing to try to end what is a scandal in not just the misuse but the lack of use of funds which have been provided for aid to the ACP countries.
My noble friend Lord Pitt has enabled me to leave aside the consideration that I wanted to give to STABEX, with this one exception, that again on STABEX there is some bureaucratic delay. How was it that in 1981 STABEX provided only for 50 per cent. of the legitimate claims made, and how was it that in the following year, 1982, that figure fell from 50 per cent. to 40 per cent.?
I would agree with my noble friend Lord Pitt and other noble Lords who have said that STABEX plus SYSMIN are probably the two most promising, most constructive institutions within the framework of the Lomé Convention, provided that they have increased finance—perhaps at the expense of the European Development Fund—and that they are able to increase the commodities that they can cover (whereas today sugar beet, citrus fruits and tobacco are all excluded), and that the SYSMIN combination with STABEX is extended to the mineral producers who are among those suffering the greatest hardship for the collapse of commodity prices.
In these negotiations let us transfer what is being spent, or a great deal of what is being spent, on food aid. Again I agree with so many noble Lords that this should be emergency aid only and should not be undermining the farmers themselves. It should be used only in an emergency, or drought, or political

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upheaval, and so on. It should certainly not be allowed, as it is today, to be a dumping medium for the common agricultural policy which, as my noble friend Lord Pitt pointed out. in the case of sugar and indeed of other agricultural products is a world-wide scandal. Again what is the policy of Her Majesty's Government towards agriculture in this country within the CAP in so far as it affects the ACP countries and their necessity to continue to produce agricultural products?—because at the moment that food aid programme, I understand, is four times as large in monetary terms as STABEX itself.
Finally, may I ask the noble Baroness another question? Is it not the case that this report demonstrates once again the much greater emphasis that needs to be put on trade between this country and the developing world than upon the aid issue? If that is so, is there not a crying need, as there has been not just with this Government but with every Government since the war, for much greater co-ordination in the economic relations between this country and the third world? Should there not be co-ordinated policy through the Foreign and Commonwealth Office, through the Treasury, through the Department of Trade and Industry, and, as I have suggested before, including also the Ministry of Education referred to so clearly by the right reverend Prelate the Bishop of Chichester?
There must be co-ordination of Government policy if the Government are going to stand up to that industrial lobby, to the large farmers, to the landowners who today are benefiting from the wasteful CAP policy raising food prices in this country and starving farmers and their families in the third world countries. The European Community will have to be radically reformed if it is to meet this major challenge of our age. It is the challenge to the wealthy, comfortable Europeans which will determine the character of the world in which our children will live, and whether they are allowed to live there at all.
5.54 p.m.
Lord Harris of High Cross: My Lords, I am afraid that I must start with an apology: that owing to the record length of many contributions—if I may say so, particularly from the Labour Benches—I shall almost certainly have to leave before the closing speeches, which I shall have to content myself with reading in Hansard. As a penance, I shall speak even more briefly than usual. My anxiety from the Cross-Benches is that the formidable expertise represented by the members of the European Communities Committee and other speakers in this debate may be in danger of being dissipated in coded exchanges about such mysteries as STABEX, SYSMIN, derogations, the distinction between "dialogues on policies" and "discussions of strategies", and the great issue of whether or not we should go for "budgetisation". The chief exception so far has been my noble friend Lord Seebohm, with whom I am in close agreement.
I found it most difficult to follow the noble Lord, Lord Hatch, who has now persuaded himself that countries that pay interest, or repay their debts, are subsidising their creditors. As my noble friend Lord
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Seebohm explained, private equity capital has the great advantage for the recipients that it imposes no burden since there is no charge against a project unless the investment yields a surplus above its cost. I persist in believing that the central issue buried in this report is whether the continuation of decades of foreign aid to centrally mismanaged economies is really helping the millions of people who have most claim on our charity and whose lot remains wretched.
The committee calls for higher priority for aid in paragraph 102, and yet goes on in paragraph 108 to call for more thorough evaluation of past results. This plainly puts the cart well ahead of the horse. It seems to me that the never-ending demand by recipients for ever more aid suggests that past subsidies of this kind have not done the trick. The best up-to-date evidence of failure is provided in the recently published study entitled The Economics of West Africa, by Douglas Rimmer of Birmingham, whom I regard as one of the most authoritative and dispassionate students of the theory and practice of development in a dozen of the 64 African, Caribbean, and Pacific states. He shows in quite short compass how countries as well-endowed as Ghana, Nigeria, and to a lesser extent even the Ivory Coast, have misdirected their own resources, along with foreign aid, by neglecting the fundamental principle of comparative advantage.
No independent country is obliged to give first priority to economic development. But what if instead they pursue quite different goals hostile to the long-run material prosperity of their people? The noble Baroness, Lady Young, illustrated ways in which aid recipients damage their own efficiency and progress by perverse policies. Among the many more baneful examples given by Mr. Rimmer are the following: forced industrialisation; pervasive price control; self-sufficiency; import substitution; political centralism; equality; the persecution of minorities: the politicisation of economic life; utopian resettlement of rural populations; punitive taxation; statutory monopolies: nationalisation: and. most ugly of all. "indigenisation". No wonder these countries are not exactly flourishing.
Perhaps the strongest ground for offering them subsidies is to assuage the guilt of the old colonial administrators and the new tribe of development economists who taught African rulers that central planning and indiscriminate investment would lead to the take-off into self-sustained growth that would make aid redundant. But there must surely be some limit to the continuation of this reverse Danegeld.
Taught by that other international authority, the noble Lord, Lord Bauer, I no longer call for an immediate end to these damaging and distortionary subsidies. Instead I start by following another disillusioned observer Gunnar Myrdal, formerly the Swedish champion of aid, who suggested two or three years ago that aid should in future be concentrated on emergency relief only. For the rest it should be phased out—this is my view and not Gunnar Myrdal's over five years whilst we redirect our efforts to increasing mutually beneficial trade. Thus we should remove tariffs and other barriers, including bureaucratic customs formalities exposed in the impressive evidence of Mr. John Raven, reproduced on pages 298 to 304 in the report before us.

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We should, I think, take on the intellectual and professional interest groups that have battened on foreign aid in both donor and recipient countries. I believe it would simplify and purify our dealings if such aid as continues during the transitional period were confined to bilateral, untied cash transfers. Future gifts should be made conditional upon the adoption by recipient governments of policies consistent with the long-run economic welfare of their own people. If it is said that this would be interfering with their domestic affairs, we must frankly confess that we have already been interfering, with rather disastrous results. Indeed, our past indulgence in aid has led them sadly astray. We have encouraged their amateur planners to persist with misguided policies which anyway our own academics taught them and which have made them abjectly dependent on indefinite continuation of subventions.
In conclusion, if asked what criterion we should henceforth apply in giving aid, I would suggest simply that favoured governments must recreate the conditions of safety and security for life and property essential to encourage commercial development by harnessing domestic, no less than international, enterprise and investment.
I urge Her Majesty's Government to give thought to the code of practice to attract foreign private investment as outlined by my noble friend Lord Seebohm from his unrivalled experience in fruitful, successful commercial banking throughout the Commonwealth. By way of encouragement and inspiration to the frustrated non-recipients of aid in future, I would offer the shining example of Hong Kong and other Asian oases. They show what people can achieve for themselves when governments are content to establish the stable environment so notably lacking in much of the third world.
6.3 p.m.
Lord Kissin: My Lords, I also had the privilege to serve on the committee that was so ably guided by the noble Lord, Lord Brimelow, and which has skilfully brought us face to face with the problems that the negotiators for the next Lomé Convention have to analyse. In today's climate the international community is not terribly concerned with Lomé III, but for the last eight years the European Community, with the African, Caribbean and Pacific countries, has conducted within the framework of the first and second Lomé Conventions a fruitful trade and aid experience which we all know has not, however, achieved the results that were hoped for.
The committee's work was concerned with the question whether the previous Lomé Conventions represented a statement of principle adopted by the two parties to the agreement, or whether it was intended to create an equal partnership. The committee inquired what kind of partnership had been established and what kind of partnership the parties were aiming for now. I think it became clear during the committee's deliberations that the rhetoric of the term "co-operation and development" has far outstripped the actual achievements. The fact is that in the last few years the ACP countries have been running a considerable trade deficit, and the concept of a
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balanced economic relationship has not been achieved.
The statement of general principles does not provide the dynamics for economic development. In my view, aid and trade are the main factors of the Lomé Convention, but however hopeful we are and whatever wishful thinking we express in this House, I do not believe that the governments of the European Community will increase substantially the cash element of the aid programme. The new Lomé Convention must be negotiated within the terms of a better trade relationship. The real question, therefore, is: how can trade be so rationalised that the parties to the convention become real and equal partners? This was the original aim of Lomé
The new agreement must create guidelines for free enterprise and trade, both in the Community and in the developing countries, and it must be established in a way that the parties can operate in terms advantageous to both. I fear that, contrary to what many speakers have said in this House, as a first step the European Community is required to attempt to eliminate legislation within the Community which perpetuates the vicious circle of denying ACP products access to European markets. Given the many agreements within Lomé there is insufficient realisation that consumers rather than governments provide the operating basis for economic development. Agreements about particular products and commodities can be of value only if they make it possible for private initiative and private enterprise to derive an advantage from trade with each other.
One of the main questions that the committee had to consider was how to improve trade between the Community and ACP countries, and whether it is realistic to think in terms of improvement when the Community members themselves find considerable problems in maintaining a liberal trade regime within the European Community. The experience of Lomé I and II has shown that there are limits to how far negotiations with ACP countries can in reality lead to liberalised trade before they are confronted with the immovable obstacle created by some of the Community's internal problems and policies.
The common agricultural policy, which is constantly debated in the Community, is, in its present form, working directly against the interests of the ACP countries and developing countries. Although the Community allows duty-free imports of tropical commodities that cannot be grown in Europe, such as coffee and cocoa, it restricts access to those products when it can produce them itself. It appears that ACP producers face restrictions even when, as for instance in the case of beef, Community producers cannot fulfil the requirements of the European food processing industry. Somehow, this does not appear to make sense. It must be in both parties' interests to create jobs—and how many could be created, both in Europe and in the developing countries, if the processing industry were allowed as the noble Lord, Lord Sainsbury, has said, to buy its raw materials at competitive prices from efficient low-cost producers wherever they are located?
Although the sugar protocol was not part of the consideration of the committee, I want to make a brief

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reference in view of the letter that the noble Earl, Lord Jellicoe, and the noble Lord, Lord Campbell of Eskan, have written today in The Times. I am entirely in sympathy with the contents of the letter, and the sugar situation is in a way significant as an indication of the problem that arises between the interests of the European Community and the ACP countries.
Many ACP countries depend on the export of sugar for their livelihood, but since our accession to the Common Market in 1974 the supply position of sugar has totally changed. Just as an illustration, I would mention that when we entered the Common Market there was a boom in the sugar price and the cost of white sugar was 60 cents per pound. Since then the Community has increased its own production of sugar by 60 per cent. from 8.5 million tons to about 14 million tons a year and during the same period consumption has dropped from 10.7 million tons to 9.5 million tons. The price today for white sugar is 6 cents per pound. The Community had therefore exported the surplus, irrespective of the cost which often exceeds by several times the intrinsic value of the commodity involved.
Consumers in the Community are disadvantaged by paying high prices for commodities produced in Europe and by having to subsidise exports. I consider that the aid could be given by the Community if it were to stop subsidised exports of cheap, European-produced commodities, knowing that ACP producers suffer from restrictions placed on their exports.
I am making this point in order to give an example of the unresolved problems which exist in the philosophy of the Community vis-á-vis the developing countries. In fairness, the Community has started to face up to some of the problems created by the common agricultural policy, but there is still a reluctance to make fundamental and vital reforms. The reforms at present contemplated do not appear to me to solve the problems that we face.
It is understandable that the Commission wishes to negotiate long-term contracts to supply agricultural products in surplus in the Community, but is this the way to create an equitable partnership between the ACP countries and the Community? It may be an expedient way to dispose of food mountains, but it simply delays the day when the Community will have to tackle the underlying problem of over-production which prevents the ACP countries from developing their own food self-sufficiency.
I am not an expert in many of the commodities covered in the Lomé Agreement, but from evidence before the committee I have learned that import restrictions, such as the multi-fibre arrangement, prevent ACP countries from expanding and diversifying their industries. Attention was drawn to the case of Mauritius, whose export of textiles to Britain in the 1970s led to these countries imposing what euphemistically became know as "1untary restraint agreements". The negative consequences of such agreements are now widely felt. They affect not only those countries involved, but also those countries who would expand their own industries further if they had access to the European market.
The same considerations apply to the rules of origin for materials used by ACP industries. Noble Lords
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have already referred to this, and the noble Lord, Lord Harris of High Cross, has specially mentioned the term "derogation", and so I shall not bore the House by giving further examples. But the restrictions that exist disrupt economic developments. The Community is inclined to make short-term concessions, but there are such constant domestic political pressures for protectionism within the community member states, which make long-term agreements very difficult, that I fear that there are no easy solutions.
Member states feel differently about the effects of low-cost imports of their own industries. But if the aspirations of Lomé are to be realised, then it is essential to develop a more coherent Community strategy to trade. The Community has to analyse and pinpoint those industrial sectors which are of importance to ACP countries and which do not increase the pressure for protectionist demands within Europe. This will be an important test of the Commission's "dialogue on policies". Member states should be prepared to give the Commission some flexibility in how it_conducts these negotiations.
Tribute has been paid to the existence of SYSMIN and STABEX. They have been of great importance, but the committee has also learned of the bureaucracy that has interfered with the work and with the success of these institutions. In addition—and this I consider important—money has often been invested (and we all know of such instances) in large prestige. capital projects which produce few benefits for the majority of the population, and aid is often given to improve and seal political relationships, rather than to promote economic growth.
Personally, I welcome the new initiative from the Community's commissioner, Mr. Pisani. But putting emphasis on aid for rural development and, in the commissioner's own words, "food sector strategies", the Community has begun to realise how ill-utilised much development aid has been in often fragile ACP economies. One must watch the experimental schemes in Kenya and other countries, with much interest.
I do not underestimate that aid is an important component of the aims of the Lomé relationship, but real aid can come only from better trading facilities. Attention must be focused on the role of the private sector in promoting development in ACP countries.
I would suggest that it is important to give consideration to some ways of creating incentives for private companies to commit resources to countries which have, by our standards, been politically unstable and hostile to foreign investors. The noble Lord, Lord Seebohm, has given us many examples of what is required.
ACP countries must play their part. If they wish to benefit from the expertise and capital that a foreign company can bring, they must give clear signs to the Community that they are prepared to allow them to operate freely. Developing countries ask us in the Community to be both consistent and flexible. We have the right to ask the same of them.
In times of international debt problems there are open to us solutions which ought to be investigated by introducing an insurance mechanism as a positive aid. Companies within the European Community require the security of some realistic insurance scheme that

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protects their investments overseas. Some discussion on this is urgently needed.
The Lomé principles are now an integral part of Europe's political and economic relations with the third world, but the need is for better definition and therefore for better performance. This has become clear from the committee's report. If we do not succeed in this, we shall foster resentment within the developing world.
One must fully realise that this will involve difficult adjustments within the Community. The current negotiations, however, afford an opportunity to reconsider the protectionist policies and trade barriers which, in the long run, harm both Europe and the developing countries.
The signatories to the Lomé Convention are committed, in the words of the convention, to,
"reinforce on the basis of complete equality between partners, and in their mutual interest, close and continuing co-operation in the spirit of international solidarity".
If we wish to adhere to this, we must accept the responsibility for changing some of our policies within the Community in a practical attempt to create an equal partnership.
We have all had sufficient experience over the last eight years to know the way to give real aid to the extent of our ability to assist. This assistance must come, I suggest, through mutual trade. Undoubtedly from this both sides have a great deal to gain.
6.20 p.m.
Lord Bauer: My Lords, I too most warmly thank the sub-committee for its lucid, concise and wide-ranging report. The main issues fall into three broad categories: first, the general case for official aid; secondly, bilateral versus multilateral aid; and, thirdly, the complexities of Lomé. The report takes for granted the case for official aid. I disagree with this axiomatic approach. But, following Carlyle's advice, I accept the universe.
In the context of the European Development Fund, the sub-committee shares the Government's repeated preference for bilateral aid. Is it not, therefore, baffling that the share of multilateral aid in United Kingdom aid, already about 40 per cent. will soon rise to 50 per cent? I wish the committee had examined this issue. Donors have no effective control over multilateral aid. In FAO and UNESCO the impotence of the major donors is familiar. During the Falklands War, the United Kingdom delegation unsuccessfully protested to the United Nations Development Programme against its aid to Argentina. Under bilateral aid, support for barbarous policies can at times be checked more effectively, as we saw when our aid to President Amin stopped, while EEC aid continued. Is not such unconditional aid objectionable on moral, no less than on political, grounds? By severing contact between donors and recipients, multilateral aid is also less efficient.
Nor is multilateral aid disinterested and objective simply by being freed from domestic pressures. The staffs of international aid organisations have their own political and professional interests. Their constituents are most third world rulers whom the officials understandably wish to please, besides wishing to
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enlarge their number, resources and power. Aid goes to governments and not to the people at large, which may help to explain why small countries tend to get more aid per head than large ones—a given volume of aid supports more constituents. Of course, where bilateral aid is tied, it is in part an export subsidy. Hence my preference for untied grants, clearly distinguishable from domestic subsidies.
These considerations are reinforced by the subcommittee's unduly mild reservations about the EDF. The evaluation procedure is altogether inadequate. Last year, I visited a major EDF-supported tea project in the warring region of southern Sudan. The project was managed by expatriates. It was well behind schedule and the large budget already overspent. It will not yield a return in the foreseeable future, if ever. Any output will compete with tea production in neighbouring Kenya. I was accompanied by a Western ambassador, who was critical both of the concept and of the conduct of the project, notably the lack of effective EDF control, but thought that that criticism would have no effect except to arouse resentment against his country. I strongly support the committee's suggestion that EDF resources should not be expanded.
The much-applauded STABEX scheme compensates for a decline in exchange earnings from agricultural exports. This instrument confuses the smoothing of fluctuations in exchange earnings with raising them. The smoothing of income fluctuations is ambiguous for such reasons as the distinction between movements of real and money prices and incomes and the changing composition of the body of producers, but in any case it is distinct from raising exchange earnings. How could the huge African and Asian-owned cocoa and rubber industries have developed before the war if fluctuations in export earnings were so damaging? What about the damage done by Government policies, including special taxation of exports? Why should governments in prosperous times not set aside contingency reserves against adversity? Are we not in danger of displaying contempt for third world people whose ability to take a long view is shown by their readiness to plant tree crops which take many years before yielding an income?
Furthermore, the error of imagining that the terms of trade move systematically against the third world is proved by their large improvement between the early 1960s and the late 1970s both for the third world as a whole and for major ACP countries. A more revealing truth is that since the war producer prices in many ACP countries have been set, not by the market but by governments, well below world market levels for various political reasons. Schemes such as STABEX divert attention and money from the more pressing needs of near-subsistence producers who live in extreme poverty and insecurity. Indeed, in many ACP countries, emergence from these conditions is obstructed and misery aggravated by government policies, including underpayment of producers, persecution of traders, suppression of trade, and the neglect both of public security and of the infrastructure, especially roads. Government policies are often behind famine in Africa—not that governments cause drought, but they certainly aggravate its consequences.

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My Lords, the ACP is a collection of highly diverse countries. The Lomé arrangements, notably STABEX and the EDF, are complex, cumbersome, even obscure. They also set up various tensions and conflicts, notably between donors and recipients. We should work towards a running down of these arrangements, which do little for the poorest. They should gradually be replaced by freer trade, lubricated by bilateral aid, preferably in the form of terminable cash grants to governments of poor countries which genuinely try to improve the lot of the needy.
6.27 p.m.
Lord Saint Brides: My Lords, the sub-committee's report is a shrewd and thorough one and its authors have served the House well. Britain was a latecomer to the EEC and its aid arrangements. In consequence, it has been an uphill struggle to make our influence felt in working a system which in its original form—that is to say, during the Yaoundé epoch—was devised without us. We have done well to secure its extension to so many Anglophone territories but even so it still does not cover three very large Anglophone ex-colonies of Britain, India, Pakistan and Bangladesh, whereas it does cover virtually all the French, Dutch, Belgian and ex-Italian colonies. It follows that Britain needs to be especially careful to ensure that the direction of our global aid flows is not for this reason distorted.
We must also do our utmost to ensure that our own especially British blend of pragmatic concern for particulars and intuitive grasp of how best to cope with the feelings and predilections of local people (gained by reason of our long and close national experience in dealing with the third world) is given its chance to operate in the EEC context as elsewhere. At governmental level, this long and close national experience used to centre in the Colonial Office, the India Office and the British overseas services that they controlled and maintained and, in the past, generations of young Britons found a worthy, personal goal in service to the Empire and people. Their work finds its counterpart today in what that knowledgable and highly competent body of men and women, the ODA, is trying in very different circumstances to achieve through the judicious application of British aid.
The grant of independence to virtually all our former territories has not meant that we as a country have lost interest in their welfare. On the contrary, in Britain the level of informed concern about them remains remarkably high. Incidentally, this is in sharp contrast with the state of public opinion in the United States, where, as I know from recent personal experience. the level of interest in, and understanding of, third world countries is, to say the least, a good deal lower than it is here.
The Minister for Overseas Development told the sub-committee that over the next year or two Britain would focus its contribution to Lomé aid on making that aid more effective. As he said, it is not enough to offer resources; we need to see results. But, in order to get results, it is necessary to recognise, take into account, and adapt to, the individual circumstances of each recipient country—each ACP country in this case—and sometimes of individual regions within that
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country. If so much was achieved—and a great deal was achieved—by Britain during the colonial period, although it is unfashionable to say so, it was because that kind of detailed thought and study was given continuously, both on the spot and here in London, to the special problems of each individual territory.
As the noble Lord, Lord Brimelow, said, very wisely I thought, during the proceedings of the subcommittee:
"If good is to be done it has to be done in minute particulars".
The trouble about multilateral aid-giving, as several noble Lords have already said during this debate, by international organisations to an artificially assembled group of highly heterogeneous clients—and what could be more artificial or more heterogeneous than the ACP countries—is that too often procedures are devised and policy decisions taken as if the recipient countries were a much more homogeneous group than they actually are. Matters are not made easier by the recipient countries themselves, who, believing that their strength resides in their numbers, choose to play down their differences in order to maintain the common front by which alone they believe they can obtain the concessions which they seek.
On the basis of my own fairly prolonged and intimate experience of aid administration, though admittedly it was in the South Asian sub-continent and not in any of the ACP countries, I believe unrepentently that, as several noble Lords have already said, bilaterally given aid is generally more effectively directed and more effectively deployed aid. Our own bilateral record of success—this is a point on which I was happy to find myself in agreement for once with the noble Lord, Lord Hatch of Lusby—in providing the appropriate type of aid in timely disbursement, in the efficient organisation of technical assistance, and in the evaluation of projects, is at all points superior to that of EDF or Lomé aid so far. While recognising that multilateral aid-giving, not least in the EEC context, has come to stay, I wholeheartedly wish the Minister success in his arduous task of seeing that British standards of efficiency in aid-giving—to which the noble Lord, Lord Seebohm, made eloquent reference—are applied in the EEC multilateral context, too.
Of course, I recognise the problem which confronts rich countries, or relatively rich ones, in this post-colonial area when transferring resources to fiercely independent poor ones. In the process of doing so we the rich, or relatively rich, countries are assuming a measure of involvement with the internal economic and social affairs of the recipient countries, but without any longer possessing, as we once did, the power to ensure that our intentions in providing the resources are in fact met.
We in Britain cannot change this state of affairs. We cannot put back the clock and nor would the great majority of us do so even if we could. But this situation creates a certain inescapable tension with the recipient countries which, while anxious to receive as much aid as they can get, are anxious to get it in ways which set the least possible limits on their freedom to spend it as they wish. If their chosen priorities are not those of the aid donors, so much the worse for the aid donors. We shall certainly have a tussle over the improvement of

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food production within some African countries where, as the Sussex academics' Institute of Development Studies told the sub-committee,
"The role of agriculture"—
they refer to these countries—
"as a milch cow to support a dubiously productive urban élite—produces price distortions that harm efficiency and equity alike".
The noble Lord, Lord Bauer, also made telling reference to this point. As I believe Commissioner Pisani himself has said, to "parachute"—that is the expression I am told he used—surplus EEC food supplies into some African countries could well have the unintended effect of depressing indigenous agricultural enterprise still further. I was much encouraged to hear the noble Baroness, Lady Young, speak to your Lordships on similar lines, and the noble Lord, Lord Seebohm, also referred to it in his speech.
In conclusion, I wonder whether we ought not, if we can, to channel a good deal more EDF aid through the NGO's such as Oxfam with its flexibility and its modest low-profile and low-key approach. Oxfam and the other similar organisations in this country, in the Federal Republic of Germany and in Holland have a remarkable record of constructive achievement at the grass roots precisely because they are nongovernmental and non-bureaucratic and cannot plausibly be accused of neo-colonialism. The World Bank has stressed the need to reverse the decline in food production in Africa by reforming local policies and concentrating on smallholder production. The Overseas Development Institute suggested in its evidence to the committee that where small projects are appropriate the EEC should sub-contract more to grass-roots organisations such as the voluntary agencies. If we wait for the recipient countries themselves to suggest this to us we may have to wait a very long time by reason of their natural desire to have full control over the spending of all aid funds; but we need to balance regard for this desire of theirs against our own strong desire to see Lomé aid disbursed more speedily and effectively. I believe that this is an area in which our concern for effectiveness should come first.
6.38 p.m.
Lord Rhodes: My Lords, the noble Lord, Lord Brimelow, has been a delightful chairman of our subcommittee. He has not spared himself or us in the compilation of this report. If one is ideologically against the Common Market Lomé is not a good thing, but if one is committed to the Common Market, as I believe we are for all time—we ought to give it a chance because it takes a long time for human behaviour to change—Lomé is a good thing. What we have been trying to do while we have been discussing it upstairs is to improve it.
I want to go on to one or two practical things. There we are upstairs studying Lomé week after week, and then we get a big report like this. And I question what happens to it. I shall tell your Lordships what has happened to it to date. Manchester's Stationery Office has eight copies; Edinburgh's Stationery Office has 10; Bristol, two; Birmingham, one; Belfast, two; Holborn bookshop 100; the House of Commons, 30; the Printed Paper Office, House of Lords, 100; and Mr.
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Phelps (our clerk), 200. That makes a total of 453 copies,
We have not sent any to Members of the European Parliament—perhaps we do not like them. But, on the other hand, neither have we sent any copies of this report to anybody on the continent. We do not know, for instance, whether there are on the continent comparable organisations considering this kind of question in this kind of way. But I think it would be a good thing if these reports, which are churned out upstairs by first-class people, had a record placed on them every six months, say, to show where they have gone or to show whether we have wasted our time by leaving a thousand of them in some warehouse or other.
A thread runs through this report: it is the need for the evaluation of the aid given under Lomé II and how to use the lessons learned to create a better Lomé III. It is perfectly right and proper that donor countries in Europe should query whether or not they are getting value for money. We have found that the resources devoted by the Commission to evaluation are smaller than those of any other comparable source, such as United Kingdom bilateral aid or those of other World Bank operations. Indeed, we heard in evidence that the resources for evaluating European Development Fund activities have been reduced during the past two years and that one man and half a secretary were the sum total of the evaluation taking place at the time the evidence was given.
We are not alone in highlighting the problems of procedure and effectiveness. Many outside observers have drawn attention to it, and the European Court of Auditors covered the same ground in their annual report for 1982.
Readers of the report will have seen that in paragraph 76 we draw attention to the need for reforms of the European Development Fund. It is worth looking at. This is a multilateral fund, supported by European member states, and it is located in the European Commission. But it is not funded from the Community's own resources, and it is not subject to scrutiny by the European Parliament, as are other Community funds. Also, because of the way it was set up originally, the European Development Fund suffers from complex and cumbersome procedures which have made its disbursements far too slow. This has been explained by Brussels on the grounds that high standards of accountability have to be maintained.
It has also been suggested that the administration in many of the recipient countries leaves much to be desired. Of course it does. The Community started a large aid programme with inadequate administrative resources 10 years ago, and it has never been able to catch up. In consequence, it has been feeling its way ever since with countries particularly low down on the development list.
But everybody concerned with the report has no doubt whatever that the procedures are unduly rigid and laborious and should be simplified forthwith. It could be that simplification would follow the inclusion of the European Development Fund in the Community Budget. Indeed, the Commission and the European Parliament would like to see this happen and they regard it as anomalous that there should be a

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separate aid fund with a separate procedure solely for EDF aid to ACP states.
The weight of opinion in the committee is that the present financial crisis in the EEC must be resolved before incorporating the EDF into the Community Budget. Perhaps when the Minister comes to reply she will comment on this matter. I think she already touched on it in what she said earlier.
That leads me to the recommendations in paragraph 78. There are, apparently, Commission delegations in 42 countries, with personnel of up to 250 people. Up to now no decisions have been taken as to their role in policy dialogues; yet potentially these delegations are one of the most valuable features of EEC arrangements. They comprise technical specialists who could play an invaluable role by being able to take decisions on the spot and by being a source of information to the Commission in Brussels.
In practice, little use has been made of these delegations, and the net effect to date has been negative rather than positive because, without anything to do, they tend to form another tier of bureaucracy. The result is that the most trivial decisions are referred to Brussels, which sometimes take months and months to negotiate.
The committee is therefore of the opinion that they should be encouraged to take a lead in recommending the type of aid which is suitable for their particular recipient country. We also think that these delegations should, and could, be used to monitor and to help with the evaluation of projects, and to make policy recommendations.
My next point—a short one—concerns coordination. In this connection it must be remembered that if the Commission succeeds in changing the direction of its aid, the administration of aid is bound to be more complex: and it is highly desirable that there should be co-ordination between all participating donors, such as the World Bank, the IMF, the United States, and other donors, with the countries they are trying to help. We also believe that there should be complete co-ordination between Community aid and the bilateral aid policies of the member states. Surely there is a role here for the Commission delegation in ACP—countries which are well placed to do a local co-ordinating job, always provided that they are given adequate instructions and authority.
Now I come to my most serious point, and I regard it with such sincerity that I hope the House will take notice of it. We have been told about the shortcomings of Lomé and we have heard about the shortcomings of the EEC. But almost on the last day of our deliberations on Lomé we found some information that is absolutely and utterly vital to anything which is designed to help the Lomé countries with information, et cetera. As I said, it came at the end of the committee's deliberations. We received a short memorandum from the European Institute for The Media, based on the University of Manchester. It brought to our notice the issues in media development in ACP countries relevant to Lomé III. The memorandum highlights the importance of radio in developing countries.
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The print media is often difficult because of low literacy and/or poor surface communication. Television is expensive, so radio remains the instrument of contact between government and governed. It is used for agriculture extension, health education, political education and a whole series of related activities. But let me quote to your Lordships from the memorandum, which gives a far more graphic description than ever my words could give. It reads:
"The declining economic conditions in many ACP countries have also had negative effect on their media systems. Resources which were previously scarce have all but dried up. Even the basic resource of sound radio, the transistor battery, has become virtually extinct. Battery production units in Tanzania and Ghana, for example, have had to be closed down for lack of raw materials for production. In Zambia, among other countries, we are told that boiled-up batteries are sold at a premium on the black market.
"Shortage of foreign exchange also inhibits the maintenance of production, transmission and reception equipment. Spare parts, hard to come by at the best of times, can no longer be afforded. Little is said, but whole sectors of the communication system are closed down because an essential piece of equipment is broken. This decline in standards of operation extends to the production field; the absence of maintenance resources makes studios unusable. Static budgets become progressively less capable of paying for the escalating prices of marketing products. Persistent efforts in the field of programme exchange fail to materialise; and the optimisation of production resources by means of co-production arrangement tends to be inhibited by political constraints.".
That is the result of investigations, seminars, et tetra, by the Institute for The Media which, if we were not in the Common Market. would not be available. This is one of the most important items that there are in this report. We have had a Derby Day today. What is the Derby called? It is called the Ever Ready Stakes—batteries. The West can give £207,000 for a first prize in a horse race. Why can it not do something more for the people who need it most?
6.54 p.m.
Lord Walston: My Lords, I start with an apology for not having been here at the opening of the debate, and particularly an apology to the noble Lord, Lord Brimelow. I plead a prior engagement which I can claim had its origins 50 years ago today. Specifically, I was helping in the celebration of the Golden Wedding of our noble friend Lord John-Mackie and Lady John-Mackie. I hope your Lordships will think that that is sufficient reason for my not having been here at the outset of the debate. I shall certainly read the report of it, although I would have preferred to listen to it.
I should like to pay tribute to the noble Lord, Lord Brimelow, and his colleagues for this very valuable report on a very important matter. It is a balanced and well-informed report, and it is good that we have a chance today of discussing it. I certainly went along with the noble Lord, Lord Rhodes, when he said that Lomé is a good thing. It is a good thing. Some people may prefer direct bilateral aid. We certainly do not wish to stop giving that, and we may in our conceit, or from our own experience, believe that bilateral aid from this country is more efficiently made use of than aid from Lomé But as the noble Lord. Lord Rhodes, so rightly said, we are part of the Community. It is a duty of the Community to help with the problems of the third world. We as a member of the Community, and the member with the greatest colonial past and

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knowledge of overseas territories, must play a leading part in the promotion of Lomé.
I should also like to pay tribute to what I would call the founding father of Lomé, M. Claude Cheysson, now the French Foreign Minister but at that time the commissioner in charge of these matters. I would say it is due almost entirely to his vision, his enthusiasm and his personality that we have got as far as we have with Lomé, and I hope that your Lordships go along with me in expressing our gratitude to him for that.
But having said that, I certainly would not maintain that the success of Lomé to date has been altogether unmitigated. In fact, it has had very many disappointments, and I do not believe it has lived up to the expectations of any of us who were involved in its earliest days. It has been in some respects disappointing, and it has certainly shown that there are many aspects of it which can and must be improved if it is to go on and achieve the purposes which most of us—though I am afraid, from listening to some of the speeches, not all of us—believe it should achieve.
The main reason for its failure is the very simple one of shortage of cash. There has not been enough money available. That is something which is very well pointed out by this report, and in its conclusions and recommendations at the end it is made absolutely clear that more money should be made available. Again quoting the noble Lord, Lord Rhodes, we cannot in this country plead poverty when we see money that is spent on not altogether productive purposes, however much pleasure losing money on the Derby may give to certain people. The same applies to the other member states.
Another reason why Lomé has not been as successful as one had hoped is inflation. The money which was made available in its initial stages has been overtaken by inflation and is worth a great deal less at the time it is disbursed than it was at the time the sum was voted. A third reason—and one has to say this with some regret—has been both the central and the regional administration. That is not surprising. You cannot create an organisation of this sort de novo and expect it to reach the pinnacles of administrative success; but it is only fair to point out that there are many ways in which it could be improved.
One of the points which the report makes, which is very close to my heart, relates to regional administration. I do not have sufficient personal experience throughout the ACP countries to pass judgment on the calibre of the regional officers. However, either they should be improved in calibre or they should be given more independence from the centre. They should be good enough (some of them undoubtedly are) to be able to do the job without continual reference back to Brussels. All of us can think of examples of inordinate delays over perfectly sound projects—projects which undoubtedly ought to be looked at carefully but which do not need the minute and bureaucratic interventions and interferences to which they are submitted at present.
Many noble Lords have quite rightly referred to STABEX, one of the most exciting ideas of the first Lomé Convention. It would not excite or please the noble Lord, Lord Bauer, because, as I understand him,
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he does not believe in stability. However, with the greatest respect I would suggest to him that he may be living somewhat in the past. In the old days, when copper was dug by people with picks and shovels and when rubber was produced in a fairly primitive way from a plantation of low-producing and ill-fertilised rubber trees, perhaps one could say that if one disregarded the standard of living of the people engaged in the production it did not matter very much whether there was stability. If the price rose, all one needed to do was to give people a few more picks and shovels, or to plant a few more trees; in due course the trees would grow up and produce something and the price might still be high enough. But we have moved out of that age of primary production, and it is essential that we should move out of it.
As the noble Lord knows perfectly well, copper mining requires enormous capital investment. For proper rubber cultivation, investment in research, in breeding and in machinery for producing and processing the latex is needed. No firm in its senses will invest the kind of money that is needed unless there is some degree of stability. That applies to the whole development of the third world. Therefore, we should rely more on STABEX and more money should be allocated to it.
Nevertheless, I would suggest that there is a weakness in STABEX. If, as I understand it, a country warrants payment from the STABEX fund, the payment is not made in such a way as to go eventually to the producers of the commodity; it goes to the central government and it can be used by that central government in any way they may wish. They can use it for paying the interest on their national debt. I know of one particular example where the payment was used in order to create short-term employment in the area of the Minister concerned where a crucial by-election was to take place. The payments can be used in a variety of ways which are very far from what was in the minds of those who originally thought up the scheme. There should be a considerable strengthening not only of the amount of money that is made available but of the way in which it is distributed.
I agree very much with the noble Lord, Lord Saint Brides, and other speakers—and the report—in stressing the importance of voluntary organisations and non-governmental organisations. They have a great deal of expertise. I would specifically mention the Commonwealth Development Corporation in this country which has vast experience, extending over many years, of profitable investment. If larger sums of money than are available at present were to be made available to these organisations by Brussels, it would be put to very good use indeed.
There is one specific point which I hope your Lordships will forgive me for mentioning. As your Lordships know, one is frequently asked to do certain things and frequently one does not, but in this case I believe it to be important to do so. At page 292 of the report, paragraph 5 states that:
"Sugar traders were adamant that there must not be any increase in the ACP sugar quota, even if Portugal joins the EEC".
I have received a letter from Tate and Lyle who, as your Lordships know, are not unconnected with sugar.

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It says:
"The source of this statement has not been traced, but the London Sugar Brokers' Association have asked to change the record of their evidence in accordance with the attached statement from the secretary".
I hope that the record can be put straight, because it is of considerable concern not only to Portugal but to the ACP countries, Portugal at present being a consumer of approximately 100,000 tonnes of sugar. If that amount were to be taken into existing quotas, it would be to the detriment of the ACP countries.
Various points have been raised. The noble Lord, Lord Hams of High Cross, stressed the importance of persuading governments to adopt wiser policies. He said that this might be called interference but that we had interfered frequently in the past and this would be a wise form of interference. I shall not dispute with the noble Lord whether or not it would be a wise form of interference. However, I would suggest to him that enormous difficulties face any Western country, whether it is the Community or individual countries, when trying, on the one hand, to persuade governments to adopt wise, to our mind, policies and when trying, on the other hand, to persuade them to adopt more democratic policies, thus keeping them away from the one-party state.
We in our somewhat sophisticated democracy know, especially when elections are looming (we may be witnessing some transatlantic examples at present) that there is a great temptation for the Government to introduce legislation which is attractive to the voter, or to fail to introduce legislation which is unattractive to the voter. If we are to promote democracy, we must realise that this is what will happen. We must realise that persuasion, by whatever means one sets about it, to adopt wiser methods simply does not go hand in hand with democracy. It is only where there is a fairly authoritarian government that this can be achieved.
The noble Lord, Lord Kissin, referred to sugar and the common agricultural policy. I do not want to defend the CAP—I have criticised it often enough before your Lordships, and elsewhere—and I certainly do not want to defend the present sugar regime. However, it is worth pointing out to those of your Lordships who may have forgotten it that the vast majority of sugar on the world market—over 80 per cent. in most years—is subject to special negotiations and is sold at special prices which bear little, if any, relationship to what is called "the world market". It is only a relatively small amount—between 15 per cent. and 20 per cent.—that actually comes onto the world market.
In general—and I repeat that I am not defending the common agricultural policy—the great majority of the commodities which are produced under the CAP in such surpluses are those which do not in any way compete with the third world. So a reform of the common agricultural policy would in no way solve the problems which are facing the third world.
We cannot get away from the fact—and this has been said so often in our debates on the subject—that there are two things above all which the third world needs. It needs more investment, and it needs more aid. It needs more aid for its infrastructure. I am speaking of those things which cannot pay an
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immediate dividend and which certainly cannot make interest-free payments—the schools and all the rest, which I shall not detain your Lordships in describing because you have heard of them often enough.
There must also be an increasing tendency for the Community and the rich countries, when they invest in the third world, to invest not at fixed interest rates. They may be attractive at certain times but they can, as we are seeing now, plunge large sections of the third world into a position where it is impossible to meet those interest payments. There must be participation instead by way of equity in the undertaking; and money should not be put into undertakings which are not likely to be able to declare a dividend within five, six or eight years or some other reasonable period of time.
If all that is done, I believe that we shall have gone a long way towards solving the problems from which the third world is suffering at the present time. I hope very much that the discussions which are taking place, and which will continue to take place until Lomé III is finalised, will give thought to the overriding problems I have described. I believe that the report which the noble Lord, Lord Brimelow, and his colleagues have produced will help those concerned along the right path.
7.12 p.m.
Lord Oram: My Lords, it was a privilege for me to serve under the chairmanship of my noble friend Lord Brimelow on the sub-committee that has produced this report. If, as a chairman, he had a fault it was that he made the members of his sub-committee and the witnesses work most unusually hard. But in doing so he certainly set a good example, because he worked hard and he was always master of the particular aspect of the subject that we were examining in any particular session. I am also glad to have this opportunity of joining at the Dispatch Box the debate he introduced so effectively.
I will begin by suggesting why the Lomé Convention is of particular interest and significance within that vast complex of national and international machinery concerned with the economic relationships between the developed and the less developed countries of the world. It is because the provisions of the Lomé Convention are much more than an aid programme, for they constitute—at least in principle—comprehensive coverage of the economic relationships between its member countries. For example, many noble Lords have referred to the STABEX scheme, which provides for some rectification of a loss in the export earnings of ACP countries due to reductions in commodity prices. Moreover, the convention—unlike many of the instruments of aid and development—is a formal and contractural relationship on equal terms between its European members and their former colonies.
In my view, those factors make the convention stand out as a distinctive and imaginative scheme, potentially superior to other development organisations. but I advisedly use the words "in principle" and "potentially" because, as has been made clear in this debate, it is impossible to claim that the Lomé Convention has been in practice fully successful. For instance, although it is claimed that it

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is a contractual relationship between equals, this is not—and perhaps it cannot be—the truth of the matter. When one person in a bargain holds the purse strings and the other person wants some of the purse's contents, then the former clearly dominates the situation. The same is true of nations; if some are characterised as the "haves" and the others are characterised as the "have nots", then one cannot, however theoretical the equality may be, have equality between members of this convention is such different circumstances.
The committee states in the report, and I quote from paragraph 35:
"In such circumstances it is incumbent on the stronger negotiating partner to exercise restraint and to accept responsibility for a fair outcome".
I hope very much that this advice from our committee is being followed during the official negotiations and that the advanced countries—the European members—will not only listen with sympathy to the case put forward by the ACP countries but will make a conscious and generous effort to meet the needs expressed on the other side of the table.
I believe that our sub-committee can claim that we did take that attitude and that we were right to do so. When a few of us from the sub-committee went to Brussels to see Mr. Pisani, the commissioner for development, we took the opportunity to meet the ambassadors from the ACP countries. We had such a fruitful, although limited, exchange that we were glad it was possible for them to come to London for a further exchange. We had a formal session with them here, at the Palace of Westminster, and their evidence is printed on pages 242 to 263 of the report. I believe that that section is a most important part of the published volume.
In my view, it is also very much to be hoped that the ideas of the Commissioner for Development, Mr. Pisani, which were put forward in his original memorandum, will find a place in the final outcome of the negotiations which are now proceeding. I express this hope despite the less than warm welcome which his ideas first received from the Council of Ministers and from the representatives of the ACP countries as well. That makes me think that he might well have been right, and it is why I hope that his ideas will prevail. Those ideas—and particulary Mr. Pisani's call for food self-sufficiency and the use of local resources—are summarised adequately in paragraph 15.1 believe that that, too, is an important part of what we have to report. I must say that I was a bit taken aback when, in one of the documents we received, the Pisani thesis was described as "new dogma". As my noble friend Lord Brimelow has pointed out, since I had been saying much the same thing for the past 20 years, beginning when I was a junior Minister at the Ministry of Overseas Development, I could not readily accept that it was either "new" or "dogma". But it was not altogether suprising, in my view, that the first reaction of the ACP countries to the Pisani memorandum was one of caution and suspicion. They are ever watchful—and rightly so—for any renewal in today's world of the economic exploitation which characterised the era of imperialism. When they are told by industrial countries that they should stick to agriculture third world countries are naturally very
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wary lest their population should become forever the hewers of wood and the drawers of water. In fact, I believe, and I believe Commissioner Pisani believes, that his approach is the most certain way of lifting their populations out of their inferior status in world society.
It is on the basis of sound agricultural and rural development that appropriate methods of industialisation can be built and that is the path to higher living standards for their people. That, I believe, is what Commissioner Pisani is advocating and pursuing. As I have said, it is understandable that the developing countries do not readily accept this message. The noble Lord, Lord Walston, referred to M. Cheysson as the originator of the Lomé Convention. He has played a part in the current negotiations. I believe it is true to say that it was a statement from him that helped to remove some of the misundertanding that existed in the minds of the ACP representatives. Indeed, as I have mentioned, when a few of us went to Brussels and met the ambassadors from the ACP countries we sensed at first an atmosphere of stiffness, of suspicion and of obvious misunderstanding. In the first place, the fact that we were Peers of the Realm seemed to make an undue impression of our importance. Secondly, we seemed to be regarded as representatives of Her Majesty's Government; and naturally some of us were only too anxious to defend ourselves against any such accusation. However, before long we had disabused them of the notion and the combined charm of my noble friends Lord Brimelow and Lady LlewelynDavies soon established the possibility of a very cordial and constructive interchange.
These ACP countries are wary when proposals are put to them from the developed countries, and understandably so when you consider their present situation in relation to their European partners. I should like to quote, because I cannot express it better in my own words, from an excellent small pamphlet on the Lomé negotiations published by the Catholic Institute for International Relations. Its publication Comment states on page 16:
"The ACP stress that the Lomé Convention is but one part of the multi-faceted interdependence between themselves and the Community from which the Community benefits. They argue that this interdependence creates a net flow of resources from the ACP to the EEC through the remittance of profits by European firms working in ACP countries, through the interest paid on ACP debt to European financial institutions, through the Community's trade surplus with the ACP, and through terms of trade under which the ACP have to produce more and more exports in order simply to stand still and maintain current levels of imports from the Community."
Starting up as they do from that inferior position it is, I suggest, understandable that they are going to look warily at any proposals which might make their situation worse.
But it was not only the Community's development proposals which roused their suspicions, it was also the suggestion that there should be the so-called "policy dialogues" prior to the provision of development aid. This must have sounded like the laying down of conditions before aid could be provided. It was here, as I have already indicated, that the intervention of M. Claude Cheysson was so helpful. He said:
"For us it is clear that the definition of sectoral policies—whatever

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the ideological nature of the government in power—is within the competence of the countries concerned."
It is important that our negotiators should make that clear when they are advocating policy dialogues.
It would also help if this concept of policy dialogues was seen to be a two-way process, which is a suggestion that has been adopted by the European Parliament. I accept entirely that the policies of the developing countries need to be examined and improved, but could it not also be the case that the policies of the European partners towards the ACP partners are also capable of critical examination. I recall, for example, that soon after the present Government took office they declared that their aid programme would in future be conducted so as as to secure political and commercial advantages for this country. Could it not be that a policy dialogue about that declaration of policy could be conducted by members of the Lomé Convention from both sides of the bargain, particularly since that convention is supposed to be between equal partners?
Thinking of this particular week, is it too much to hope that self-examination and critical reappraisal of the policies of the industrial world towards the developing world will be the main subject of discussion at this week's London summit? I suggest that it is impossible to imagine the the indebtedness of Latin American countries to Western banks will not be prominent on the agenda of that summit conference. But let us not forget, since Lomé is largely concerned not with Latin America but with African countries, that the debt problem about which we are reading and hearing so much has a Lomé dimension. The individual debts of African countries may be small compared with those of Latin America, and therefore may not trouble the Western banking system so much, but the debt problem of the ACP countries is indeed serious for them. Wrestling with that problem may force them to adopt policies which they would not wish to adopt and which would have the effect of making their poor people poorer still. That is why I hope that these matters of the relationship between the West and the South, or the developing countries, will be taken on board in this week's summit conference.
I come finally to the point about the size of the resources available at the end of the negotiations. I am very glad that in the report of the committee which we are considering, it is clearly stated—and my noble friend Lord Brimelow and others have quoted it—that:
"We would like to see higher priority accorded to aid in the general pattern of United Kingdom Government expenditure".
I believe that that is a vital part of the recommendations which our committee has put forward. The noble Lord, Lord Banks, and my noble friend Lord Pitt had important things to say about this principle of putting the decision about the size of the resources at the end of the negotiations rather than taking it on board earlier in the negotiations. I took this question up with the financial spokesman of the ambassadors who came to see us. I suggested to him that, as I understood it, their position was not that they wanted right at the beginning a sum of money to be agreed upon but that the criteria by which that sum of money was to be negotiated should be established early in the negotiations.
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Perhaps the noble Baroness can help us. I was wondering whether any progress was made in the recent Fiji conference in this respect. Was any progress made towards establishing not a global sum but the criteria by which that global sum could be calculated? This is vital. It is a question of what resources will be available at the end of the day. Otherwise one could go from one item on the agenda to the next item on the agenda and get harmony and agreement and then, when one came to the very last item of the agenda, all would be thrown aside because it would be found that no agreement could be reached about the global amount.
That is why the question of the negotiations for a new Lomé Convention relates very much to the attitude of our Government to aid and development policy in general. I believe that it will have to face the fact—as our committee has recommended—that more resources should be put into our efforts to help the third world and particularly the partners of the Lomé Convention, otherwise the outcome of the negotiations will be a failure.
7.33 p.m.
Baroness Young: My Lords, this has been a most useful debate, concentrating, as it has, on the many important issues in the current negotiations. I very much welcome the support which the Select Committee has given to the Government's approach. A very wide range of issues has been raised this afternoon. Many of your Lordships have said that in the next convention priority should be given to supporting agriculture. The Community must get away from prestige projects, which Commissioner Pisani has graphically termed "cathedrals of the desert" and which are of little relevance to the vast bulk of ACP populations.
I also welcome the general recognition that it is right for the Community to press for more dialogue with ACP countries to ensure that the substantial aid which the EDF disperses is used to proper effect—a point that has been made by a great many of your Lordships today. In the early stages of the negotiations the ACP were wary of the concept of policy dialogue—a point made by the noble Lord, Lord Oram—which they believed was an attempt by the Community somehow to undermine their sovereignty. I am pleased that they have now appreciated that the European Community had no such intention and are participating pragmatically in a consideration of how the Community's ideas might best be reflected in the text of the next convention.
Furthermore, an improvement in the effectiveness of EDF aid can only be to the benefit of the recipients of that aid. Many of your Lordships agreed with the Government's conviction that trade rather than aid is the most effective developmental tool. Lomé already offered extensive preferences to the ACP countries—around 98 per cent. of their exports into the Community free of tariffs and of any form of quantitative restriction—but the Government believe that more can and ought to be done. We shall, therefore, reinforced by the Select Committee's report and by those noble Lords who have spoken today, continue to press within the Community for some further movement in this field.

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I should like to say a word about the state of play in the negotiations. Useful progress was made at the last ministerial negotiating conference in Fiji at the beginning of May. Officials are now working hard to refine the conclusions of this meeting and to turn them into texts. The next negotiating conference is scheduled for 28th and 29th of June in Luxembourg. The French presidency has given notice that its aim is to settle the main outstanding issues under negotiation at this conference. We fully support that objective, while recognising that a further session is likely to be necessary before the summer break.
A great many detailed points have been raised in the course of the debate this afternoon on which I should like to comment as far as I can. I regret that time does not allow me to take up all the points that have been raised. The noble Lord, Lord Banks, and the noble Lord, Lord Oram, were both concerned that we should discuss the size of the next EDF sooner than agreed by the Community. But it would not be sensible to discuss the size of the EDF until negotiations on substance—that is, on its use—have been concluded.
Both noble Lords were also concerned about the need to maintain the value of the EDF. The Community cannot yet, however, commit itself to any figure for the new EDF, but it would be right for me to say today that even maintenance in cash terms would be difficult for the United Kindom. As the noble Lord, Lord Banks, suggested, some critics have dubbed the EEC approach as aid, not trade. But as I think I have made clear, the Government do not take this view and we have advocated improvements to the trade regime. Trade is much more important than aid.
The right reverend Prelate the Bishop of Chichester stressed the importance of interdependence and partnership, and the Government accept the message of the second Brandt Report, Common Crisis, that we live in an interdependent world. The economies of the industrialised nations and developing countries are closely interwoven. This inter-relationship is underlined in the truly joint nature of the Lomé institutions. As for partnership, the Government share the right reverend Prelate's concern. He mentioned the exemplary nature of the food strategy exercise in four African countries. Although these have not been without their problems, we see them acting as a precedent for what the Community understands by policy dialogue. It must make sense for the two sides, the European Community and ACP, to sit down together and talk about the context within which individual aid projects are set.
The Government also agree with the noble Lord, Lord Pitt, that the Lomé regime should stimulate ACP trade, both with the Community and with each other. The Community of course provides aid to trade promotion to encourage the ACP countries to use fully the concessions of the Lomé trade regime, and we are working to improve these. The noble Lord, Lord Pitt, made a plea for the use of EDF interest to pay STABEX claims. The excess claims in 1981 were in fact partly settled from this source. However, these funds are limited and, as I said in my opening speech, the Community will reconsider the question of unpaid claims when the current scheme comes to an end.
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I very much welcome what my noble friend Lord Rochdale said in support of the Government's view that the proper valuation of EDF is vital. As I have indicated, this was a point made by many other noble Lords. We have been pressing for this within the Community for some time and we are pleased that we have made some progress with our partners. I am confident that appropriate provisions will be written into either the next convention itself or the Community's own internal procedures.
My noble friend Lord Rochdale also made a number of points about shipping. I can assure my noble friend that the Government have studied with care the memorandum submitted to the subcommittee by the General Council of British Shipping. This issue has not yet been discussed in the negotiations, but I believe that the next convention will, as the noble Lord favoured, contain appropriate provisions, as did Lomé II. My noble friend suggested that these should comprise a formal arrangement under which the Community aid cargoes would be divided evenly between EC and ACP. The important thing is to ensure that Community aid is transported in the most effective way possible, whether the shipper is ACP or EC.
The noble Lord, Lord Seebohm, in what I thought a most interesting speech, mentioned the harmful effects of food aid. This form of aid is not provided under the Lomé Convention, but many ACP countries receive food aid. The United Kingdom considers it vital to replace this kind of aid with the most appropriate agricultural imports—such things as seeds and fertilisers—and to ensure that this is fully co-ordinated with the recipient agricultural policy. We think that a food chapter might be of value in achieving this in the new convention.
The noble Lord, Lord Seebohm, also drew attention to the importance of the CDC, and I have recently looked at its very interesting annual report. I welcome very much the tribute of the noble Lord, Lord Seebohm, to the kind of development assistance that is provided by the CDC. This is a salutary reminder that the quality of aid is much more important than its quantity.
I hope that the noble Lord, Lord Sainsbury, will recognise that I have already made clear in my remarks that the Govenment have no difficulty with the suggestion that he made that it would be appropriate for Community aid to certain ACP countries to focus on trade development rather than agriculture. Each ACP country's indicative aid programme is spent according to the priorities of the ACP country itself. I have no doubt that it will be right for a number of ACP countries to concentrate on the development of processing industries, port facilities, cold storage facilities and other matters that he mentioned. The Government fully agree that one of the tasks of the negotiators will be to ensure that ACP countries can take full advantage of the trade opportunities available to them.
The noble Lord. Lord Hatch, asked about the slowness of EDF disbursements. I can tell the House that at the end of March 1984 just over 50 per cent. of EDF 5 had been committed and only some 20 per cent. spent. This, I agree, is a very poor rate of disbursement. The Government have proposed that

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EDF procedure be simplified to improve on this record. Greater delegation of authority to the Commission delegations and ACP would help. This is something that again has been referred to by many noble Lords, in particular the noble Lords, Lord Saint Brides and Lord Rhodes.
The noble Lords, Lord Hams and Lord Bauer, expressed concern about the effect of aid on ACP development. I think, however, that it is important to get aid in perspective. It is only one relatively minor element in the global flow of finance to developing countries. It is. however, disproportionately important to the low income, non-oil producing countries, many of them ACP members. In the present international climate it would be unrealistic to expect either private investors or commercial lenders to substitute for these aid flows. My noble friend Lord Bauer rightly drew attention to the damage done to ACP development by inappropriate policies, especially in the areas of pricing and marketing. The Government share the concern of the Community at this problem. We hope that the pricing dialogue proposed in the new convention will ensure that EDF aid is provided only to those sectors where local policies are conducive to success.
The noble Lord, Lord Kissin, will not be surprised to learn that I agree with very much of what he said about the excesses of the common agricultural policy. Since we joined the Community the Government have been pressing consistently for improvements. In particular, the Government share his concern about the concept of long-term agricultural contracts. We agree that such contracts would only serve to institutionalise the surpluses that we believe must be reduced. We are therefore firmly resisting this idea.
The noble Lord, Lord Kissin, the noble Lord, Lord Seebohm, and a number of other noble Lords, mentioned the need for better provisions in the convention to promote and protect private investment in ACP countries. The Government agree, and we have submitted proposals as to how the imprecise provisions of the present convention could be tightened up to make it easier to negotiate effective bilateral investment promotion and protection agreements. These are, we believe, the best instruments for achieving the desired objective.
As for the suggestion of the noble Lord, Lord Kissin, that we should examine the possibility of an investment insurance scheme, I can say that the Community is currently studying this very idea. If such a scheme were to be introduced, it would be essential for it to be self-financing, as is our own national insurance investment scheme.
The noble Lord, Lord Saint Brides, referred to the exclusion of India, Pakistan and Bangladesh from the Lomé Conventions. These major Commonwealth nations do, however, receive substantial development aid from the Community under its non-associates programme. Indeed, India is the largest recipient of EC aid, including food aid. The Government will continue to press for a significant share of Community aid to be devoted to these countries within available resources. I was interested to hear what the noble Lord had to say about voluntary organisations and the effectiveness of their way of using aid money.
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This will be the third convention between the ACP and the Community and will take the special relationship between them to 1990. There is no denying that economic progress in the developing countries, not least the ACP, has been disappointing over the life of the first two conventions. But there is equally no denying that the aid, trade preferences, and other help, provided under Lomé have made the position of the participant countries better than it would otherwise have been. The third convention will no more solve their problems than have the first two conventions. Solutions lie more in the state of the world economy and in the way individual countries manage their own affairs than in such external factors as Lomé. But through the Lomé relationship the Community and the United Kingdom can make a significant contribution. It has been valuable to have this debate. I should like to conclude by thanking once again the noble Lord, Lord Brimelow and his committee for the report on the successor to the second Lomé Convention.
Lord Hatch of Lusby: My Lords, before the noble Baroness sits down, may I thank her for answering one of my questions. I remind her, however, that I asked another specific question about what Her Majesty's Government were doing in the agricultural field in relation to the production of food in this country and the production of food in the third world. Is it not the case that this Government are spending as much on subsidies to food in this country as on every other aspect of life in this country, and that this subsidy is undermining the production of food in the third world and the export of that food to this country?
Baroness Young: My Lords, I thought that I had answered that in the reply that I made to the noble Lord, Lord Kissin, when I talked about the common agricultural policy. On innumerable occasions the Government have made it perfectly plain that we are working for a reform of this policy. What the noble Lord, Lord Hatch, is I think concerned about is the effect of the common agricultural policy, to which, as a member of the European Community, we belong. on the agricultural economies of ACP countries.
Lord Hatch of Lusby: And the prices, my Lords.
Baroness Young: And the prices as well, my Lords.
Lord Bauer: My Lords. I had hoped that the noble Baroness would say something about bilateral and multilateral aid. As the Government have repeatedly expressed their preference for bilateral aid. and as a number of noble Lords have given good reason for supporting it. why is it that multilateral aid is expected to rise from 40 per cent. to 50 per cent., as mentioned in the report of the sub-committee?
Baroness Young: My Lords, as I indicated—I think it was in response to the point raised both by the noble Lord, Lord Banks, and the noble Lord, Lord Oram, on the amounts of money that were involved in this—we have not yet taken a decision on this matter. The most important question on the EDF is how it is going to be used, and I think it would be better to let the discussion rest at that point.
7.51 p.m.
Lord Brimelow: My Lords, since the noble Baroness the Minister has replied so fully and so courteously to the debate, my duty is simply to thank those noble Lords who have taken part in the debate and the other noble Lords who have listened so patiently. They have given us their support, and we appreciate it.
It would be ungracious of me if I did not pay a special tribute to the noble Baroness, Lady Young, who has spoken twice. Her first intervention answered every point in my opening speech. It was full, relevant, precise and highly informative, and I listened to it with great pleasure. In her second intervention she has dealt very fairly with the points that were made in the debate.
In the speech by the right reverend Prelate the Bishop of Chichester reference was made to the fact that the most reverend Primate the Archbishop of Canterbury would have wished to take part in the debate had he not been prevented by another of his many duties. That remark will not have passed unnoticed and unappreciated in your Lordships' House. But I am grateful to the right reverend Prelate himself for bringing into the debate a dimension of human dignity with which we are concerned all too seldom.
I should like to thank the noble Lord, Lord Saint Brides, for being here. He wrote to me from France to say that he would come specially for the debate. That was good of him. I am sorry that we dragged the noble Lord, Lord Walston, away from a golden wedding which we should all have liked to attend.
Many years ago my attention was arrested by an article by the noble Lord, Lord Bauer. Its title was a question: "Trickle Down for Ever?" "Ever" and "never" are big words which men brought up in the Foreign and Commonwealth Office seldom use. Your Lordships may not be aware that the oldest dipLoméatic archive in this country is not to be found in the Public Record Office, now happily re-opened to the public: it is in the British Museum. It is a collection of clay tablets found at Tel-el-Amarna in Egypt. This collection contains a number of messages from princelings in Syria and Egypt to the Pharaohs of the Eighteenth Dynasty—shall we say fifteenth and fourteenth century BC?
The gist of these messages was:
"O great king, send us presents; send us military assistance, and send us gold"—
which in Egypt is as plentiful as sand. Substitute "credits" for "gold" and the messages have a fairly modern ring. So the circumstances which give rise to the demands for aid and the demands themselves, and the failure of the aid sent to get rid of the circumstances which give rise to the demands, have been going on for (shall we say?) three thousand five hundred years, which is all the records show. Probably they have gone on for much longer. Will they go on for ever? I do not know. I think our job is to try to chip away, to reduce the need for aid, and thus gradually to reduce the scope for aid itself.
But in this debate we have also dwelt on the need to expand trade. I am not at all convinced that the world yet knows how to cope with the re-expansion of trade without finding a resurgence of inflation. But that is a
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matter for another debate. The Motion before the House is to take note of the Select Committee's report on the successor to the Lomé Convention. My Lords, I beg to move.
On Question, Motion agreed to.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the noble Lord, Lord Kennet, has agreed not to proceed with his Unstarred Question tonight, in view of the late hour at which it might well have come on. The Unstarred Question has been retabled for Friday, 22nd June.

Video Recordings Bill
7.56 p.m.
Report received.
Clause 2 [Exempted works]:
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 1:
Page 2, line 5, after ("with") insert ("politics,").
The noble Lord said: My Lords, I am very grateful to the noble Lord the Chief Whip for the announcement he has just made. It will relieve us of any anxiety that we are keeping other noble Lords waiting for the conclusion of this business. That does not mean to say that I am going to prolong it any further than I think is necessary. I will do my best and I am sure other noble Lords will, too.
I beg to move Amendment No. 1. On 5th May The Times newspaper had a leading article headed, "Abusing the Statute Book". I am quoting when I say that I read:
"Legislation thrust on a Government by the British public in one of its periodic fits of morality is apt all too often to prove irrelevant or actually harmful when it comes to be applied in the courts. The Home Secretary has done well to resist being bounced into hasty legislation by the wave of anxiety, real and justified as it is, over the problem of glue-sniffing".
The article went on to apply by inference those strictures to the Bill before the House tonight, because it described the Bill to control video nasties as,
"another Bill conceived hastily in a moral fit".
If the quality of legislation has to do with certainty and clarity, this Bill must fail miserably by any test one likes to apply. No more is that so than in Clause 2 where we are dealing with exempted works. The more I think about the replies we have had so far on this clause, the more doubtful I am that this is a justifiable piece of legislation, worthy of the name of this House. But looking at it as it is we find that the clause says:
"(1) Subject to subsection (2) below, a video work is for the purposes of this Act an exempted work if, taken as a whole"—
then paragraphs (a), (b) and (c) follow. Obviously there are difficulties about a video recording designed to inform, to educate or to instruct. It gets a little more specific when dealing with sport, religion or music. It has occurred to me that in the absence of a reference to politics we may get into some very difficult questions of what is an exempted work on a video recording dealing with politics. I know that in all cases of exempted works Clause 2(2) contains an overriding

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condition. In my view it is an offensive one, but we are not dealing with that at this particular moment.
As I understand it from what the Minister has said so far on the Bill, the great difficulty is that we exempt ourselves under this clause and under the several headings given in it. It seems like a do-it-yourself exemption and one takes the risk oneself in exercising judgment. I do not know whether it would be permissible for a cautious or nervous producer to go to the censorship authority and ask: "Is this video in your opinion an exempted work?" They would probably reply that they are not the judges of what is an exempted work and that it is a matter for the courts.
But what about political and other controversial types of videos that do not fall within the mischief of Clause 2(2), but which may raise some questions of fitness to be viewed in the circumstances which this Bill envisages? My fears may be unfounded and it may be that the Minister can advise us as to where he thinks politics would come. Do politics come under information? Do they come under education? What about propaganda? What about something which may offend against good taste but which may not necessarily be either obscene or so deeply offensive as to excite censorship judgment?
We are promised guidelines, but we have not got them and it does not look as if we are likely to get them to allay these fears—certainly not in time to dispel some of the problems that we may have. In my view, videos will be used increasingly for political propaganda purposes. Let us suppose that we have one which is entitled, "The Knocking of Neil Kinnock" and it is very offensive about my right honourable friend the Leader of the Opposition. Let us suppose that there is a video entitled, "The Unfrocking of Mrs. Thatcher", which is suggestive of a very offensive video. Would the British Board of Film Censors recall the noble Lord, Lord Hill, to say, "Yes, but not in front of the children"?
Theatre censorship has been dismantled. We have a voluntary arrangement for the cinema. We are now erecting this third structure of censorship which relates to showing things in the home. Behind all three stands this macabre sentinel, the Obscene Publications Act 1959, to remind all and sundry—statutory bodies and voluntary bodies alike—that the ultimate censor is the Director of Public Prosecutions.
Can we be told when any Government last interceded with the Board of British Film Censors to influence its policy or decisions? Will the designated authority be clearly independent and not under Government influence or direction? Will there be consultation between the designated authority and the Government on matters which they fear might give rise to controversy but which do not fall, perhaps, within the four corners of the stipulations laid down in the Bill? I do not know. Without guidelines one has difficulty in judging the basis upon which the censorship authority is entitled to approach matters of some controversy or difficulty. So are we sure that offensiveness, bad taste, political bias, the criticising or lampooning of the monarchy, the Church or other institutions, including this one—because we will probably not be immune from some offensive references in the course of the development of political propaganda through video recordings—are dealt with?
I suggested earlier in our debates that I thought that the main purpose of the Bill was for the protection of the children. I believe I am right in saying that the Minister said that it was more than that—it was for the protection of grown-ups as well. I have with me a list, with which I shall not trouble your Lordships, of the occasions upon which the Government of the day have interfered with the complete freedom and independence of the British Board of Film Censors. For example, a pacifist film produced by the Peace Pledge Union in 1935 was refused a certificate by the British Board of Film Censors on the grounds that it might lead to disturbance. However, in the following year a film on the territorial army was approved and widely exhibited.
The answer may be that they would be shown in the home. It might even be said that they would be shown in the privacy of the home and so they would not create any public disturbance. However, I would be glad of some reassurance on this point. There can, at any time, be doubt as to whether the instructions to the British Board of Film Censors are clear enough. Their approach to their statutory duty is clear enough. What comfort may individuals have in claiming that the works they are producing are exempted works under the Bill? I should be glad of any comments that the Minister may make on this matter.
In my view, politics should be included. After all, religion is a form of politics—it is a form of conviction and belief. Politics are a form of conviction and belief. They both can be extremely controversial. But religion is included because, presumably, it has a sanctity that politics do not have. I should like to be more certain in my mind than I am at present about the position of politics and political propaganda circulated among the faithful or among the widely spread public who care to buy it at any price that they might have to pay to view in the home. I am thinking, for example, of some political message or other. Where will the designated authority stand on these matters? Are they going to be concerned only with sex, horror, mutilation, genitals and all the things that they are supposed, under this clause and others, to exclude from films to be shown in the home? I beg to move.
8.10 p.m.
Lord Nugent of Guildford: My Lords, I am sure that noble Lords are grateful to the noble Lord, Lord Houghton, for once again his interesting tour d'horizon of the Bill. He reminds me of that beautiful bird, the thrush:
"That's the wise thrush; he sings his song twice over, Lest you should think he never could recapture the first fine careless rapture".
The noble Lord does just that: not just twice, but many times over he goes round the same course.
The simple answer to his point is that in Clause 2(1)(a) the words,
"designed to inform, educate or instruct".
fully cover politics. I am perfectly certain that everything which the noble Lord himself has said in his long and distinguished career in politics has been said with just those motives. It may be that it all sounded like propaganda to me, but I dare say that he would have said the same about what I said. The fact is that in the world of politics we all know perfectly well what

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it means, and it is just for those purposes: to inform, to educate or to instruct, and to hope that by the weight and logic of our orations we shall persuade people that our cause is the right one.
To ask that politics should also be included in this subsection is, I believe, quite unnecessary to the scope and substance of the Bill, and the noble Lord can rest easy on this. There may be other points of doubt—undoubtedly there are, with 50 amendments on the Marshalled List—which have to be cleared up, but this is one where he can rest assured (as I hope can all of us in the political arena) that we shall be able to continue to express our views with complete freedom and rest confident that Clause 2(1)(a) will completely cover us.
Lord Winstanley: My Lords, I was most interested to hear what the noble Lord, Lord Nugent, said about this amendment. I shall resist the temptation to follow the noble Lord, Lord Houghton of Sowerby, in his general remarks about censorshp and the Bill as a whole, although I am bound to say that perhaps a more apt quotation to refer to the noble Lord, Lord Houghton, than the one produced by the noble Lord, Lord Nugent, concerning the thrush would be the words of Lewis Carroll in the Hunting of the Snark, who said:
"What I tell you three times is true".
I am bound to say that some of the remarks which the noble Lord, Lord Houghton, has made more than three times seem to me to be entirely true.
The noble Lord, Lord Nugent, said that politics was wholly covered in Clause 2(1)(a), which states that a video work is:
"designed to inform, educate or instruct".
If that be the case, I cannot see what possible harm could be done by inserting the word "politics" before the word "sport" in paragraph (b), so that if the video recording was concerned with politics, sport, religion or music it would have exemption. That surely would make the matter utterly clear.
I know that the noble Lord, Lord Nugent, has said that politics is entirely exempt; it is exempted under paragraph (a). If it is exempted, why not say so? Why not accept the amendment of the noble Lord, Lord Houghton, and include the word "politics" in paragraph (b), so that everybody knows exactly where they stand?
Lord Ardwick: My Lords, briefly, I am of exactly the same opinion as the noble Lord, Lord Winstanley.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, I do not wish to plunge into silence simply because there is silence, but I would remind your Lordships that this is Report stage and my noble friend Lord Nugent cannot rise to his feet constantly. It seems to me that if we are to include the word "politics" we ought also to include "geography", "meteorology", and so on. We need a general definition, and that is what is already in the Bill.
Lord Jenkins of Putney: My Lords, with respect, I do not think that that is an entirely adequate reply.
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After all, politics is a matter of political contention. It is something which people vote about: it is not in the same category as geography or even history, although, goodness knows, people get pretty excited about that from time to time. I should have thought that the issue of politics is something which ought to be included particularly. After all, to some people politics is a religion. If religion is included, what possible grounds can there be for excluding and not specifically naming the modern form of religion, unless the noble Lord, Lord Elton, is arguing (and I do not think he is) that politics is religion and thus is included?
The noble Lord, Lord Nugent, says that politics is information. There are those who think that politics is disinformation. Indeed, one might say that one man's information is another man's disinformation. Therefore, I do not think it is sufficient to say that politics is covered by information. I do not always agree 100 per cent. with my noble friend Lord Houghton, though I am inclined to follow the view expressed on this side of the House that for a good deal of the time he is very much on the ball. On this occasion I think that my noble friend is on the ball, and I hope it is possible that the noble Lord, Lord Nugent, or even the representative of the Government, the noble Lord, Lord Elton, might be prepared to say that at least they will look at this again.
Lord Houghton of Sowerby: My Lords, I am disappointed that neither the sponsor of the Bill nor the Minister is prepared to stand up and defend the right of your Lordships' House to include in this Bill our most noble vocation. Why should politics take a place in the list of exempted works subordinate to sport or, for that matter, music? I leave religion in a more pre-eminent position, but why sport? What special quality is there about sport which claims a particular place here? Politics is something by itself. It is not information, education or instruction; it is an activity, and a contentious one. It receives a great deal of publicity, and can give rise to deep passions—anger, and other human emotions.
Some words are regarded as unparliamentary. Apparently a new one—"fascist"—has been added to the book in another place in the last couple of days. But what if there is a video that begins to hurl that word about? Will that be regarded as being suitable for young children to listen to and view?—because they probably will not understand what it means. Other things could be ruled out because it is expected that children will react differently to them. I am very sad about this.
I do not think that, for the dignity of your Lordships' House or for the activity that we pursue in this House and outside, we should be content to have politics omitted and sport, religion and music included. There is no other claimant for inclusion; no other claimant has been put forward throughout the whole of these debates. In the circumstances, if the House wishes to go on record as having rejected the elevation of its activity to a place of exemption in Clause 2 of this Bill, so be it.
On Question, amendment negatived.
Lord Jenkins of Putney Lord Jenkins of Putney moved Amendment No. 2:
Page 2. line 7, leave out subsection (2).
The noble Lord said: My Lords, under the subsection with which we have just dealt certain works are excluded from the consideration of this Bill. I have not yet become very clear about precisely how they are excluded, but that is a subject for later consideration. As I understand it, the authority will decide what the category of the work is, but I do not know whether the authority will also decide what works come before it or whether a work is exempted. That may have escaped me and it may have been explained previously, but I have not noticed it.
I take it that those submitting the works will argue that they are exempted works. But to whom will they submit the argument of exemption? Will it be to the designated authority? In other words, will the authority decide not only that which it categorises but that which does not need categorisation, as well as those which fall outside the scope and are not to be released at all? That is a preliminary point.
The real point is the question of whether, having exempted certain works, it is then appropriate to draw back from that and say that under certain circumstances although normally such works fall into the category of exemption, works falling into these categories—the categories set out in subsection (2)—are nevertheless not exempted. When one steps into that difficult situation one immediately has problems. From the moment one does that one descends into the question, or rises into the question—whichever it may be—as to what is the purpose of the work. Is it an elevating purpose, or is it a degrading purpose?
It is possible to say that a work may be concerned with human sexual activity and may be designed to inform, educate, and instruct, and that therefore in the normal course of events it should be an exempted work under subsection (2)(a). Now are we going to say that in all circumstances human sexual activity falls into a non-exemption category? A great deal of confusion arises here. Some of the activities which are set out here are obviously repugnant. But if we include in a single subsection,
"human sexual activity or acts of force or restraint associated with such activity"—
in other words, ordinary human sexual activity, and human sexual activity which probably is not regarded as ordinary—then in that single subsection we are saying that something which is generally approved of, generally indulged in, is in the same category as things which are generally disapproved of and are probably not widely indulged in.
We are running into great difficulty here. Having considered it in some detail, I think that the only thing to do is to leave out subsection (2) and to provide that a video work is an exempted work if, taken as a whole, it is designed to inform, and not to seek to make the exclusions from the exemptions which are provided in the subsection. I do not think it would be necessary, because the works will come before the authority in any event, and I think that the authority can be relied upon itself to decide these difficult questions.
Whether something which is presented is in fact elevating and informative, or whether it is degrading and harmful, is a difficult and controversial question. One recalls the early anti-nuclear film "The War
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Game", which the BBC decided not to transmit because they thought that it would frighten people too much and that it was too horrible. Nowadays, 16 years later, we recognise that nuclear war is much more horrible, and would be much more horrible, than anything depicted in "The War Game". We can now see in retrospect that the BBC were wrong to take that decision, although the purpose of the film was certainly to shock, perhaps even to frighten, people, since there are times when in the public interest it is necessary to shock and frighten people. It is not always wrong to do so.
So far as Clause 2 as a whole is concerned, I think that is a necessary part of the Bill. But so far as subsection (2) is concerned, the Bill would be better without it. It would be less confusing, and on the whole it would be a better Bill. I hope, therefore, that the noble Lord, Lord Nugent, will say that, provided he can achieve the central purpose of Clause 2, he will not seek to derogate from it and give the authority too close a guidance, which is what is attempted—and I think unsuccessfully and undesirably attempted—in subsection (2). I beg to move.
8.24 p.m.
Lord Nugent of Guildford: My Lords, I must thank the noble Lord, Lord Jenkins, for arguing his case so ingeniously. As he knows, this question was debated at length during the Committee stage of the Bill. He is now really asking us to rehearse similar arguments to those we discussed before. I should like to remind him of the wise words of the noble Viscount, Lord Tonypandy—I am sorry that he is not well enough to be with us—when he said that if we take this subsection out of the Bill, we may as well say goodbye to the Bill. It knocks the heart out of it. This is an aspect of the matter of which we should all take note. There is real substance in it.
Of course the noble Lord is right that if a producer, or anyone producing a video work, wants an opinion about an exemption, at the end of the day he will have no alternative but to present it to the designated authority—the British Board of Film Censors, as it will be—for a classification. There is no other way of being sure. But in a general way this clause, and others, will be a guidance to producers as to what will, and what will not, be acceptable. This of course is an important part of that issue.
The noble Lord says that if we take out this provision, it will then be left entirely to the British Board of Film Censors to decide whether or not they think that a video work should be classified, and how it is to be classified. The general opinion of Parliament, up until now, has been that some guidance is needed on these more precise matters of sexual activity and violence. Where they meet the conditions set out in paragraphs (a), (b), and (c) they will, generally speaking, not be acceptable. That is a guide which I think in general, if my judgment is correct, most people feel is one that we should give to the authority, and which has in a general way guided them in what they have done in their work to date in regard to films. It is for those practical reasons that the subsection should remain in the Bill.
Again, without rehearsing all the arguments that we debated before, I would ask the noble Lord to see that

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there is a cogent reason for putting in this, at any rate basic, guideline. Some people would like to say very much more, and others would like to say less. Again, as with so much of this Bill, it is a matter of balance. But when the noble Lord says that we should take out this subsection altogether, I say that most people would feel that we would be taking out what is regarded as a basic safeguard to prevent the extremes of sexual indulgence, or violence, being shown in this way. I hope that the noble Lord will see that there is another side to it in addition to the side that he argued so cogently.
Lord Howard of Henderskelfe: My Lords, I rise on only one small aspect because it illustrates the real difficulty which Parliament as a whole has been in over this whole field. It concerns the difference between films as shown in the cinema, cassettes which may be hired or bought, and broadcasting as a whole. I should like to remind the noble Lord that the BBC did not show "The War Game" precisely because it was thought that it would, or it might, considerably alarm in particular people living alone, old people, and perhaps children. But in fact during all that period "The War Game" has been available as a film to groups of people who wished specially to get together to view. This illustrates the real difference between what is broadcast into the home and what is available on video cassettes for the home, and what is seen in the cinema. Therefore, the same criteria do not necessarily apply.
Lord McIntosh of Haringey: My Lords, I refrained from adding my name to the amendment put down by my noble friend to some extent because of the reasons put forward by the noble Lord, Lord Nugent. I accept that, in the intentions of the sponsors of this Bill, to take out subsection (2) would cut the heart out of the Bill. I accept that the Bill has been promoted and argued for throughout as a Bill against, the phrase used was "video nasties". The only reason I rise now is to say that although I cannot support the amendment, I think that the attitude of many people, and certainly of myself, towards the Bill as a whole would be totally different if subsection (2) did not include the phrase "human sexual activity" and if subsection (2)(a) said "acts of force or restraint associated with humans or human sexual activity" and if the final sentence in the subsection did not say "designed to any significant extent to stimulate or encourage human sexual activity".
The Bill has been argued for—and this is common ground—as a Bill against video nasties. To extend it to be a Bill against the depiction of human sexual activities, erotography, pornography or whatever you wish to call it, is a very wide extension. It has not been argued clearly before the public and I believe, that if it had been argued more clearly and openly, the public—or at least a significant part of the public—would make a distinction between those two things and would wish to see a distinction in the legislation. Although I do not support the amendment, I do think subsection (2)(a) is significantly defective in that respect.
Lord Ardwick: Surely, my Lords, all the clause says is that a video work shall not be an exempted work if
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it depicts these things. This surely does not mean that a work which does depict some of these things should not come forward for classification.
Lord Elton: My Lords, if I may add my mite of clarification, I shall be as brief as those who have spoken before me. Starting with Lord McIntosh of Haringey, I think the noble Lord, Lord Ardwick, has put his finger on it. The purpose of Clause 2(2) is to provide that a work which would otherwise be an exempt work under Clause 2(1) shall not be exempt from the need to be classified. It does not mean it shall therefore not be shown. The video nasty is normally a very violent thing: that is the creature which is not classifiable and because it falls in Clause 2(2) it would be subject to the need to be classified and therefore would not be marketable.
That brings me to the question of the noble Lord, Lord Jenkins of Putney. If I can take it a little further than he took it, it is about what happens to the unfortunate person who thinks he has an exempt article on his hands, puts it on the market and then discovers that it is not exempt. That is the logic of what he said. My Lords, of course, we all have to take that sort of decision a number of times, and, to take a rather absurd example that comes to mind, you know whether you have a bicycle or a motorbicycle. One needs to be licensed and the other does not and there is no reason for making a mistake here. There are other cases where the choice is perhaps more difficult and there is therefore a defence if you get it wrong innocently. The law is designed to catch those who get it wrong deliberately—in other words those who market without a certificate material which the law requires to have a certificate, because that is the only way they can sell it and they wish to make a profit. If the noble Lord will look at Clause 10(2)(a), if my memory serves me right, he will find that it is a defence to a charge of committing an offence under this section, that is the offence we are talking about,
"that the accused believed on reasonable grounds that the video work concerned"—
I leave a few words out—was an exempted work. In other words, my Lords, if you innocently break the law you are exempted from the penalties of the law, although thereafter of course you would have to get the thing licensed, certificated.
Lord Jenkins of Putney: My Lords, I am grateful to the noble Lord, Lord Elton, for that explanation.
A noble Lord: Order!
Lord Elton: If I may explain what is going on, my Lords, the noble Lord moved the amendment and he has the right to reply: in other words, he may speak twice.
Lord Jenkins of Putney: My Lords, I am grateful, I thought I was in order, although I am not necessarily always in order. I am most grateful to the noble Lord, Lord Elton, for that explanation, which I think does clarify the issue. It may not be usual to accept explanations given from that Box, but on this occasion I shall breach the rules and do so.
I nonetheless find this clause unsatisfactory. In spite of what has been said—and I recognise the strength of

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it—it seems to me to be eminently unsatisfactory in subsection (2)(a) to have a sentence which puts in the same category "human sexual activity or acts of force or restraint associated with such activity". That means that it equates a loving human relationship with rape. It makes no difference between the two and it says that either of these is in the same category. I find that extremely unsatisfactory and I think that the public at large, when it comes to see what is involved in this Bill, will also describe that as extremely unsatisfactory.
We have sought, as it were, to exclude a loving human relationship—and there are films which have been produced which seek to depict in entirely acceptable terms what that relationship is—rather than to equate that with the horrible things which we are trying to prevent in this Bill. It seems to me that, in seeking to take out subsection 2(2) altogether, I may possibly be going too far, but I shall cudgel my brains and seek advice to see whether it is not possible at some later stage in the Bill to stop this procedure, which seems to me to be offensive in the extreme, of putting together a willing and entirely desirable relationship, sancitified by law, in the same sentence and of regarding it as similar to what this Bill rightly seeks to condemn.
Having said that, I think that perhaps the total omission of subsection (2) goes too far and, if your Lordships will permit me, I shall withdraw the amendment.
Amendment, by leave, withdrawn.
8.38 p.m.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 3:
Page 2, line 19, leave out subsections (3) to (5).
The noble Lord said: This is a paving amendment, my Lords, to Amendment No. 15, to which, with the exception of the last subsection, subsection (12), I shall also speak.
Amendment No. 15: Clause 3, page 4, line 16, at end insert—
("(10) The supply of a video recording with a view only to its use—

(a) in training for or carrying on any medical or related occupation,

(b) for the purpose of—

(i)services provided in pursuance of the National Health Service Act 1977 or the National Health Service (Scotland) Act 1978, or

(ii)such of the services provided in pursuance of the Health and Personal Social Services (Northern Ireland) Order 1972 as are health services within the meaning of that Order, or

(c) in training persons employed in the course of services falling within paragraph (h) above,

is an exempted supply.
(11)For the purposes of subsection (10) above, an occupation is a medical or related occupation if, to carry on the occupation, a person is required to be registered under the Professions Supplementary to Medicine Act 1960, the Nurses, Midwives and Health Visitors Act 1979 or the Medical Act 1983.
(12)The supply of a video recording otherwise than for reward, being a supply made for the purpose only of supplying it to a person who previously made an exempted supply of the recording, is also an exempted supply.").
My Lords, the thought here is to clarify the exemptions which are specified in subsections (3) and (4) of Clause 2 and put them into Clause 3, which deals with the exempted suppliers rather than the exempted works. Setting them out in this fashion, we shall achieve more precisely what we wish to do, and we
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have at the same time extended in subsection (11) the list of professional people who will be exempted for this purpose. So we have now included midwives and supplementary professions which would also cover ambulance workers and so on who may very well need to have education which would require works of this kind. That is the purpose of the amendment. I beg to move.
Lord Houghton of Sowerby: My Lords, I do not think that the noble Lord has fully explained why this transfer of some items from the list of exemptions to the list of exempted supply is called for. This surely is a downgrading to a classification which is subject to the earlier part of Clause 3 of items which in the Bill as it stands are exempt works and receive with the exemption all the freedoms of movement and so forth that an exemption confers on a video recording.
At the bottom of page 2 we see in Clause 3(2):
"The supply of a video recording by any person is an exempted supply if it is neither—

(a) a supply for reward, nor

(b) a supply in the course or furtherance of a business".

But in Clause 1(4) we see that "Supply" means:
"supply in any manner, whether or not for reward, and, therefore, includes supply by way of sale, letting on hire, exchange or loan; and references to a supply are to be interpreted accordingly".
We should not have the discrepancy between Clause 1(4) and Clause 3(2).
It looks as if there is something in the background to "supply" which reduces the status of the work because it can be subject to a more stringent condition under subsection (2) than otherwise. I do not get this at all. I am sure, with great respect to the noble Lord. Lord Nugent, he did not think of this himself. Somebody put him up to it. I think the person who put him up to it ought to explain it so that we know where the truth lies. There is some hanky-panky going on here, and I should like to know what it is.
Why are we down-grading noble things which were exempt works up to now and at this moment we say we shall shovel them all into "exempted supplies" which are of inferior status and subject to different conditions from "exempted works"? After all, I think that there is question of comparable esteem in this matter. Why should some things be written down to be "exempted supplies" from being "exempted works" when such activities as sport are retained among "exempted works"? I think some further and more convincing explanation has to be given about why we have to do this, even though in this process, as the noble Lord, Lord Nugent, said that we are extending somewhat the list of exempted supplies.
Of all the confusions in this wretched Bill the difficulties between "exempted works" and "exempted supplies" will remain to the end of its day. It will not be obvious to many people what it is all about until they get caught by the conditions of "exempted supplies" which are very stringent indeed when one looks at them. Is it because these things which were "exempted works" before might be passed on for reward or might be the subject of business activities? What is it that has led to this reduction in status of these matters? A whole slab of them goes out from "exempted works" into "exempted supplies". I hope that the Minister can throw some light on this.

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With deep respect to the noble Lord, Lord Nugent, I think that on this matter, if I may say so, although the voice is the voice of Jacob I am quite sure that the hand is the hand of Esau.
Lord Brain: My Lords, there is also concern from the aspect of medical photographers and people such as that who have to prepare this. As at present drafted, the Bill makes it quite clear that particular recordings are made for a certain purpose and are therefore exempt. They can be handled in a certain way; they can be catalogued and properly managed. But it also means that any tape can be used in an appropriate purpose without the time-consuming bother of editing it for a particular use. It means that a lecturer can use sections of a tape as he wishes during his demonstration and, if there is a question coming along, he can continue to tape something.
But with the proposed amendments the exemptions can only be decided when the recording is being supplied with a view to use. Who is to keep all the information to show at what stage a view is to be taken as to what a particular recording is to be used for, or a particular length of tape? What happens if a lecturer, having prepared a lecture, wants to use another section of a tape, or another tape, which has been given to him for a particular use which is totally different? I could continue to give further examples, but I will not delay your Lordships now.
The "view to use" wording also may cause confusion again with Clauses 9 and 10, because how does one take a "view to use" of something if it took place? I am afraid it seems to me to be a slightly difficult thing to anticipate the courts to rule on.
Clause 2 seems to me to be based on the idea that recordings are exempt if they are made to educate, inform or instruct. It then goes on to say that, if one brings into this certain matters, "Sorry, they are not exempt and have to go forward for certification". Then one says that, because of the particular nature of the people who are to see these tapes, they can then be re-exempted. I find that this amendment is defective.
Lord Ardwick: My Lords, I was going to suggest that it might be convenient if we were to take Amendments Nos. 7, 8 and 9 during the course of this debate. But in view of the arguments that have arisen, I wonder whether it might be more convenient if I were to wait for the Minister to make his contribution to the debate. I should perhaps leave it to the Minister to make his contribution to the debate. I thought that to introduce some new amendments would give the Minister the opportunity of speaking again on my particular section of this discussion.
Lord Elton: My Lords, I do not think that we want to get into a muddle with overlapping amendments. I am quite sure that my noble friend, having heard the questions put, is capable of replying to them himself. I was not intending to intervene and thereby protract this debate, which presumably means that the noble Lord will then be himself speaking to his own amendments in a separate debate. Is the noble Lord content with that?
Lord Ardwick: Yes, my Lords, as the amendment is an amendment to that of the noble Lord, Lord Nugent of Guildford, I thought that we might take them both together, but it does not really matter.
Lord Nugent of Guildford: My Lords, I should reply to the noble Lord since he has implied that I do not understand what the amendment is about. As I moved the amendment I have the right to reply to the debate. The justification for the amendments is exactly as I said: it is to ensure that the amendments more precisely fulfil their purpose in that these particular works will go to the professionals for whom they are intended. That is the specific intention. As originally drafted with these exemptions in Clause 2, where there were exemptions for the works, it would be possible for an unscrupulous producer to produce a work of this kind and introduce a pornographic feature to it which could then have a commercial value. The whole object of these exemptions is to provide for the needs of the professionals as set out, now much more clearly, in Amendment No. 15: the medical services, the health and personal social services and, indeed, for the Professions Supplementary to Medicine Act—the nurses, midwives and health visitors. This is the object of the exemption and, in so far as this amendment more precisely ensures that the supplies are directed to them and go to them, this is the fulfilment of the Bill.
If the exemption is operated as in the original Bill, then there could be a danger that it could be abused. But by redefining it in this fashion, that danger is removed. I hope that your Lordships will feel that this, after all, is what we are trying to do. We are trying to make proper exemption for these professional services whose needs we recognise.
Lord McIntosh of Haringey: My Lords, before the noble Lord sits down, I would say, with all respect to him, that he has answered very clearly the question raised about the categories of exemption which were intended—the degree to which related medical professions should be involved—but he has not at all answered the question as to why these exemptions should now appear in Clause 3, rather than in Clause 2. After all, throughout the proceedings in another place, and in Committee here, the question of abuse of supply was never raised once. Why should it arise now?
Lord Elton: My Lords, I shall come to my noble friend's aid to preserve the conventions. What we are arguing about is a very simple point, though it is wrapped up in a lot of subsections. In Clause 2 we are dealing with exempted works and in Clause 3 we are dealing with exempted supplies. If you produce a work which is nominally for a psychiatrist, let us say, or, first of all, if you produce one which is genuinely for a psychiatrist, then it will be supplied only to psychiatrists, and that would be perfectly all right. The noble Lord is not worried about that. But what happens if your unscrupulous producer produces something in a sham clinic which is, in fact, a pornographic film of which the public ought to have notice from the label that it is a pornographic film? If it masquerades successfully, it becomes an exempted work and it may be that one or two crooked psychiatrists will justify the production by accepting it.

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The noble Lord again shakes his head, but I assure him that the people who produce these things command large sums of money and maybe some psychiatrists who have ceased practising may be rather short of funds: and it is not beyond the bounds of possibility that this loophole would be exploited.
I do not like using hypothetical illustrations, but it is possible that an improper supply would take place. That is why it is necessary to transfer this from the category of exempted work to the the category of exempted supply. The noble Lord can then produce it in his lecture theatre and use all or any part of it as he wishes, regardless of the content without fear of being in breach of the law. But if it was supplied to him for that purpose, it is also protected—that is the point; whereas, if it was supplied to somebody else for a different purpose, it would fall foul of the law. That means that works of this type require to be labelled so that people will know what is in them. It is no more sinister than that.
On Question, amendment agreed to.
8.54 p.m.
Lord Howard of Henderskelfe Lord Howard of Henderskelfe moved Amendment No. 4:
Page 2, line 32, at end insert—
(" (6) A video is for the purposes of this Act an exempted work if it exclusively contains material broadcast over the transmitter of the Independent Broadcasting Authority or the British Broadcsting Corporation in respect of which the Independent Broadcasting Authority, the programme contractors to the Independent Broadcasting Authority under the Broadcasting Act 1981 or the British Broadcasting Corporation own the copyright, and which is material previously approved for broadcasting over such transmitters by the Independent Broadcasting Authority or the British Broadcasting Corporation respectively.").
The noble Lord said: My Lords, in moving this amendment, I shall inevitably, with the leave of the House, have to make the odd comment on Amendment No. 26, which is also in my name and the names of other noble Lords. I should make it clear that I am not moving Amendment No. 26 at this stage, but I shall have to make reference to it in order to illustrate one or two of the points which will come up.
Amendment No. 26. Clause 8, page 7. line 14, at end insert—
(" ( ) For the purposes of section 2(6) above, the Independent Broadcasting Authority, the programme contractors or the British Broadcasting Corporation, as the case may be, shall label the case in which the video recording is kept to show the time of first broadcast.").
I am sure your Lordships will not be misled into believing that we are trying to delay in any way, or to obstruct, the passage of constructive and necessary legislation. That some of us believe it might have taken another path through other channels and that some of us believe it might more properly have been dealt with under the Obscene Publications Act is irrelevant to what I am now about to say. I. and the noble and distinguished Lords who have joined with me in putting down these amendments, would be the last people to do anything to obstruct the banning of the pernicious trade in video nastier. I use the colloquial term in view of what has already been said about some of the beauties of human sexual activity because I think we can all recognise the difference between such cassettes and others which, while they may contain scenes of sex or violence, are not primarily designed for this purpose. They are not designed to titillate.
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They may be designed in another way, but they are not designed as pornographic works, if you extend the word "pornography" to include violence, which we must do in this context.
This amendment is designed to deal with a wholly different problem. We hope, by it or some similar provision, to protect the arrangements for the independence of broadcasters and broadcasting. These have stood the test of time and have resulted in a television service in this country which I firmly believe to be, and is generally accepted to be, of a higher quality than that which obtains in any other part of the world.
It may well be asked why a requirement to submit video cassettes made by the BBC or by companies franchised by the IBA. is in any way objectionable and why these should not go through the same hoops as video cassettes made by others, and why, indeed, we are asking for any form of different treatment because it might give us some commercial advantage over those who have to go through these hoops. There may be some delay, inconvenience, or extra cost caused by the procedures laid down in the Bill, but this is a minor matter compared with my real fears. These can be briefly expressed by the suggestion that once video cassettes originated by the BBC and ITV companies are subjected to a form of outside censorship which is not within the control of the BBC or the IBA, this is the thin end of what may eventually become a very thick wedge and may well lead to a demand from the minority for a more general power of censorship over broadcasting as a whole. As gradual realisation comes about that programmes can be reproduced on cassette by recording direct from the air and that these, though not available for hire or sale, are available in the home, this may well increase the pressures to which I have referred.
In my view, particularly in quarters where some of the programmes which come from the BBC or IBA are already unpopular—and certain Members of your Lordships' House take this view—it will lead to a demand for some form of outside censorship of programmes which are broadcast. This may sound fanciful, and I think that many of your Lordships may say, "Do not be silly, this cannot come about. We have had far too long experience of self-regulation in this field for anybody to suggest that broadcast works should be censored in this way". Indeed, I hope that I shall be proved to be fanciful if this Bill, sadly, goes through in its present form. But one cannot be certain of what may result due to the agitation of articulate and vociferous minorities—activities which often result in legislation directed towards the protection of their particular sensibilities, which may well not be shared by the public at large.
The broadcasting scene, with the advent of the cassette, cable, and DBS, is likely to be very different at the end of this decade from that which obtains today. I am trying this evening to take the long view, the view which will protect broadcasting over a period longer than the two or three years which I think some thought of as a suitable period to experiment with what is suggested in this Bill.
I think that at this stage, particularly in view of the support which I have from the chairman of ITN, who

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for many years (more than anybody else, I understand) was also chairman of the Independent Television Contractors Association, from an ex-chairman of the IBA who cannot unfortunately be in his place tonight, and from a distinguished Member of the Opposition Front Bench, I should say a word about the fundamental differences in this field between the BBC and the IBA.
The BBC originates the majority of its own programmes hut, of course, buys in a certain amount of material from abroad, largely of American origin. At present, the BBC never obtains other than the broadcasting rights to most of its bought-in material, except for a certain proportion, usually of a travelogue or natural history kind, which comes from countries other than the United States. Nor can I see this position really changing. I cannot, for example, see the producers of "Dallas" or "Dynasty" ever allowing the BBC to acquire the cassette rights to their material, even in Europe. Until recently, indeed, the BBC made a point of buying the absolute minimum rights which would enable it to broadcast a programme, in order to try to save money for the licence payer. It is only recently that we have started buying additional rights other than those purely for broadcasting. This has not always been the case with ITV, which I think has pursued a somewhat different line and has often acquired world rights from writers, producers, actors and so on.
So far as material originating in the BBC is concerned, an elaborate procedure ensures that it is examined at different stages, and programmes can be stopped at many stages of their production, from the writing of the script onwards, right up to their final edited form. This kind of arrest of a programme which might be objectionable can happen at many different levels. It can start with the producers themselves and go on to the heads of departments, the channel controllers, the Director of Programmes (Television) and the Managing Director of Television. Even the Director General himself could be involved.
If some of your Lordships who do not like this amendment were to quote examples to me of programmes which appear to have slipped through this net, I think I should rejoin by saying that I can certainly recall, without having to look up the facts, at least two occasions when the Director General himself forbad the broadcasting of fully-finished programmes ready for broadcasting. Cries of "Censorship!" went up from the producers when in fact he was exercising his proper managerial functions in saying that this was not a suitable programme to go into the home—and that, I may say, at considerable cost to the BBC in financial terms. The final longstop is the Board of Governors, which is responsible for all the programmes which emanate from the BBC. Although the board, as a matter of policy, does not view programmes prior to their transmission, it still reserves the right to do so. The reason for this is obvious if you think about it. The board cannot be critical of a programme which it has itself authorised for transmission.
The IBA procedure, of course, is somewhat different, just as the IBA differs from the BBC by being a statutory body instead of a chartered body. The
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BBC's standards of decency, and so on, are incorporated in the Royal Charter and Licence, whereas the IBA is governed by its statutes. In addition to its work of providing and controlling transmitters, engineering, research, awarding of franchises and monitoring the way in which the companies carry out their franchises, the IBA has an important role to play in the regulation of programmes. It can forbid a programme to be transmitted, both by its own statutes and by its control of the transmitters themselves. Or it can demand changes in these programmes, and has frequently been known to do so. It has in fact a power which it has not been slow to exercise, quite properly in the past.
ITV is also different from the BBC in one other respect, in that rather more—and in the case of Channel 4 a great deal more—of its production comes from independent producers or quasi-independent companies rather than from within its own ranks; and I am not now talking about material brought in from abroad, but of material made in this country. In neither case, of course, are we talking about the numerous cinema films which both the BBC and ITV transmit, since again neither the BBC nor the companies buy the cassette rights of those films. We are therefore talking about programmes which have already been through a fairly stringent process of examination and, yes, indeed, regulation before they were ever broadcast.
Some of your Lordships may have thoroughly disliked some of these programmes. So have I. But this does not mean that they should not have gone out. Some noble Lords may have thought that brief moments, particularly in drama, were of a disgusting or obscene nature, but as a proportion of the whole these episodes have been miniscule. We are, in other words, so far as the BBC and ITV are concerned, using a steamhammer to crack a very small nut indeed. This seems to be an absurd state of affairs, and one which can be remedied by appropriate clauses in the Bill and not by the Bill as it stands at present.
We are concerned here principally, so far as the BBC and ITV are concerned, with programmes which go out after the so-called "watershed"—which in the case of the BBC is 9.30 p.m.—and not with peak-time programmes before that. I appreciate that the purpose of the Bill is so to classify video cassettes which are for sale or for hire that those buying or hiring such programmes will know the nature of their content. The simplest method of doing that would undoubtedly be by reference to the watershed—i.e., by reference to the time that the programme was originally transmitted—perhaps, on occasions, with some warning attached such as is already broadcast, suggesting that certain passages of a particular programme may be unsuitable for children or for those of a sensitive nature. I can, however, see that this might produce certain problems in other parts of the Bill, particularly in relation to the criminal sanctions which are available under it.
There are a number of different ways in which we could solve this problem. The corporation and the authority could perhaps be designated as agents of the certifying authority. The BBC and the companies could be allowed to do their own labelling, and no doubt ingenuity will discover other methods whereby the purposes of this Bill could not be circumvented,

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and yet they would not introduce all the evils of outside censorship. What I do suggest, however, is that we must discover a way whereby programmes from independent TV and the BBC can be allowed to be self-regulating, which essentially consists of exempting them from certain provisions of the Bill but coupling that exemption with a requirement to label, which could bring into operation the other clauses of the Bill—and this is the amendment to which I am in fact speaking.
With your Lordships' leave, there is an alternative way of dealing with this problem, which I have not put down as an amendment at this stage and which I have not discussed with anyone since it only occurrred to me last night when I was re-reading the Bill in its present form. Briefly speaking, this would consist in designation by the Bill itself under Clause 4 of the IBA and the BBC as the appropriate authorities under that clause for classifying and labelling video cassettes of material which was originated by the authority and the corporation and which had already been broadcast. Coupled with this would be a requirement that such video cassettes would be classified and labelled in the same manner as is to be done by the authority which is to be designated by the Secretary of State, together with a requirement that the IBA and the corporation consult with the authority on criteria and standards, so that a substantial degree of uniformity would exist in their classification and labelling. That is something which I hope the Government and the sponsors of the Bill may well consider with all seriousness.
However, speaking as I am to Amendment No. 4, I merely put this forward as the basis for further discussion, although it is a basis which would retain the independence of the IBA and the BBC while avoiding the necessity for a submission of their programmes to an outside authority and, I believe, would cope with the problems posited by programmes commissioned from independent producers, which I know has much concerned those who have been drafting this Bill. The main copyright in these often does not rest with the authority or with the corporation; but under this system that would not matter. I think this is a way to proceed which may commend itself to those responsible for the Bill.
If this is not done—and I believe it is not beyond the wit of parliamentary draftsmen to achieve this, even in the short time which remains to us before the Bill must leave this House—then I fear there are very sinister implications for the future of broadcasting. We may well end up, unless we are careful, with a fully state-regulated system such as obtains in the majority of other countries. I do not believe that the majority of your Lordships would want us to reach the position, which has obtained in the case of the BBC for 60 years and in the case of the IBA for 30 years, in which we would no longer hear from Ministers, in answer to questions about programmes, that this is not a matter for Ministers but one for the members of the Independent Broadcasting Authority or the governors of the BBC. To destroy the independence of broadcasting at some future date, as a by-blow to an otherwise welcome Private Member's Bill, would indeed be a bitter pill to swallow. I beg to move.
9.12 p.m.
Lord Buxton of Alsa: My Lords, in rising to support the noble Lord, Lord Howard, I should like to assure your Lordships that I do not intend to speak at length because I have done so twice on two previous occasions when moving this amendment, and everything that I have to say is already on the record. Therefore, it would be wearisome for me to extend the debate. However, I should like to add just one vital point to what I have said before. I understand that there are advantages and benefits in this Bill going through in the form of a Private Member's Bill, because of the advantages of the time-scale and the urgency of dealing with the "video nasties" which concern us all.
The noble Lord, Lord Howard, has said again, as I have said before, how much we support this objective; and everything I have said and what my fellow movers feel is not in any way antagonistic towards the rapid fulfilment of the objectives. I would be happy about it except for one thing, and that is where it impinges in any way on the traditional freedom. independence and judgment of our public broadcasting services. I really think that, after 60 years and 30 years, this is one of the things that are held most sacred by Parliament and public.
I do not believe that anything which impinges upon that traditional independence of the broadcasting services should be attempted in a Private Member's Bill. If there is to be any tampering or dealing with the public broadcasting services and anything which some of us believe might carry grave consequences in the future, with a sort of reverse take-over and ultimate censorship in one form or another, then it is my belief that it should be done only in the form of major Government legislation following a White Paper and prolonged public debate.
To sum up, I should like to say this, with great respect and with due humility. When so many of us with a long life in broadcasting, and especially when supported by former chairmen of the BBC and the IBA, are so convinced after several debates and after several meetings outside the Chamber about the dangers of censorship, we cannot just let it go at this stage and allow ourselves to be steamrollered when we know that we are really looking after the interests of the public. We cannot all be wrong about this and we know that there is very considerable unanimity on the matter on all sides of the House. I therefore urge my noble friend once again to give us, as he has so kindly and considerately done before, some opportunity for continuing to try to persuade the Government on this very vital matter.
Lord Ardwick: My Lords, my noble friend Lord Mishcon, whose name is down to this amendment, has had to take leave temporarily of this Chamber to expend his eloquence on another gathering which has been looking forward to it for some weeks, but he will be coming back. He will be sorry to have missed this debate. Speaking for myself, on Second Reading I was in complete agreement with him, and with the noble Lords who have just spoken on this subject, and I have great sympathy with the amendment.
The only thing I was worried about was that the time classification was simply not good enough. I thought

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that some advantage would be taken of the time in the interval that has elapsed to translate the time classification into some kind of categories analogous with those used by the British Board of Film Censors. That has not been done, but apparently it is now to be done. I hope it will then prove to be acceptable, because I see all the dangers and all the difficulties of subjecting the broadcasting companies to external censorship.
There are bound to be differences in any other judgment from those which the broadcasting companies take on some occasions, and this can only undermine and rob the broadcasting companies of their self-confidence. So I hope that there will be some successful conversations. There is always a danger from these vociferous and articulate minorities, as they have been described, that a successful plea for retrospective censorship, which is what is being put, will lead to a demand for a pre-censorship by an external authority of things which are to be broadcast. This is dangerous and very much to be feared.
Lord Winstanley: My Lords, so that there can be no possible doubt about the extent of support in your Lordships' House for this amendment, may I indicate as briefly as possible that my noble friends and I who sit on these Benches are deeply concerned about the dangers inherent in this Bill, if it is unamended, to the freedom and independence of the BBC and the independent sector of broadcasting—dangers so admirably and succinctly illustrated by the noble Lord, Lord Buxton. An amendment of this kind is absolutely essential. Indeed, I hope that it will be pressed, if it is not accepted by the sponsors, or if we do not get some very clear assurance that something will be done.
My main anxiety about this Bill is that in general terms I do not think that it will achieve its purpose. The main thing it will do is to erect a layer of bureaucracy which will cause an immense amount of trouble to sensible and serious people who are doing very valuable work, and the villains whom we are trying to catch will merely go underground. We are dealing here not merely with administrative and bureaucratic trouble for people doing valuable work; we are dealing with the very freedom of broadcasting in this country.
As the noble Lord, Lord Howard of Henderskelfe, illustrated admirably, the controls over the two sectors are rather different. In many ways the independent sector is more closely controlled. If the Director General of the BBC, as once happened, decides that a certain programme should not be transmitted, this, it seems to me, is the exercise of editorial discretion. If, on the other hand, one of the independent contracting companies prepares, after very careful thought, a programme which is looked at by all its own authorities and finally the IBA says that the programme must not be transmitted, that, frankly, is censorship. If we are going to have another element of censorship, we are embarking upon a very dangerous course.
I hope I shall hear that the sponsors accept the amendment or, if they do not accept it precisely, that they are prepared to take some steps before the Bill is
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enacted to make absolutely sure that this very real danger— and the bother and trouble which could arise from the Bill, unamended, quite apart from the danger—is dealt with in some way.
Lord Robertson of Oakridge: My Lords, I should like to assure the Minister that the argument is not all one way. I oppose the amendment for the following reasons. The television authorities are feeling unnecessarily threatened and slighted. We need go back only an amendment or two to what my noble friend Lord Howard of Henderskelfe said: that the classification of videos for home viewing is a totally different matter from the control of material to be broadcast over the networks.
It seems to me to be right that there should be one designated authority to deal with the classification of videos. We are concerned here not with video nastier but with the more general aspect of consumer protection; namely, to help the buyer of a video to have some idea of its nature. If all television programmes were such as to qualify for "U" certificates there would be no problem, but that is patently not so. Some programmes are considered by the television authorities themselves as suitable for showing only late in the evening. Other programmes, while largely unexceptionable, contain some material that is unsuitable for viewing by children.
Many of your Lordships will have seen and enjoyed the wonderful series "The Jewel in the Crown". However, it contained one or two scenes of very explicit sex, which most of us, I am sure, would consider to be totally unsuitable for children. If the videos of these programmes were sold without any indication of their suitability for viewing by young children, somebody might well hire a video of part of the series for, say, a children's birthday party. Imagine the embarrassment of that person if one of the explicit scenes came on the screen. For this reason I believe it to be essential that the Bill should make adequate arrangements for the classification of all videos, including those broadcast by the television authorities.
9.23 p.m.
Lord Elton: My Lords, I wonder whether your Lordships consider that the feelings of your Lordships are sufficiently on the record now for me to reply to them. We are addressing ourselves, as both my noble friend Lord Buxton of Alsa and the noble Lord, Lord Ardwick, said, to an amendment which is in the same form as when we saw it before. During the Committee proceedings I explained the Government's principal objections to the proposal that material which had been broadcast by the BBC or the IBA should be exempt from the need to be classified under the arrangements set out in the Bill. My honourable friend Mr. David Mellor has since had some very useful discussions with my noble friend Lord Buxton of Alsa, the noble Lord, Lord Howard of Henderskelfe, and other representatives of the broadcasting interests to see whether some of the difficulties we see could be resolved to everyone's satisfaction.
We have further considered the matter, in consequence, but I have to tell your Lordships that, despite those helpful discussions, the Government are not convinced that material which has been broadcast

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should, for that reason, be exempt from the need for classification.
Perhaps I may first remind your Lordships very briefly of the points I adduced in Committee. I was, first, anxious to give—and am even more anxious to repeat—the assurance that our position does not for a moment imply a criticism or lack of confidence in the broadcasting authorities. The reasons for my being able to say that in this context may become clearer as we go on, but we believe that if broadcasters wish to enter the video market—and we see every reason why they should do so—the guiding principle should be that they ought to conform to the same rules as everyone else competing with them in the same market.
Much of the material broadcast by the BBC and the IBA will benefit from the exemptions in Clause 2. These exemptions apply according to the nature to the material in question—not to its source. They will exempt material designed to educate, inform or instruct and material concerned with sport, religion or music so long as it does not fall foul of the proviso in Clause 2(2). We are therefore talking in the main about material designed to entertain. As I have said before, there is no question of such material—if it has been seen already on television—being refused a certificate by the BBFC. But outlawing video works in respect of which a certificate cannot appropriately be given is not, of course, the only purpose of the Bill.
Another very important aspect is that it will provide for classification across the board, so that customers and retailers may know the kind of audience for which a video is suitable. I am obliged to the noble Lord, Lord Robertson of Oakridge, for the illustration he gave of the necessity for this provision. Furthermore, the Bill provides statutory controls to back this up by making it an offence to supply or offer to supply a video recording in breach of the certificate attaching to a video work contained on that recording. A video of a horror movie, say, which might well fail to be caught by Clause 2(2) could be exempted under this amendment and could therefore be supplied to children—even if it had been shown late at night precisely because few children would be watching at that time. It was the noble Lord, Lord Ardwick, who, at Second Reading, pointed out how unfortunate it would be if a parent assumed that "The History Man" would help his children with 0-level history.
The amendment to Clause 8 seeks to meet this difficulty but, in our view, it does not do so adequately. It would require contractors to the IBA or the BBC, as the case might be, to label the case in which a video recording is kept to show the time of first broadcast. I am not sure that the time of transmission is always a proper guide to the suitability of the programme concerned and, in any event, it is asking a lot of the retailer and of the customer to have regard to two quite separate and different systems of classification. Furthermore. the amendment would do no more than provide guidance. It would not, for exemple, make it an offence to supply to even the youngest child a recording containing a programme which the broadcasting authorities may have put out late at night precisely because they considered it to be unsuitable for such children. That is a serious weakness.
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Those, broadly, are the reasons why we are opposed to the proposals in the noble Lord's amendment. But I wonder if there are not various ways in which we can move forward within the Bill as it now stands. Clearly, it would be unreasonable and unnecessary for a designated authority's examiners to scrutinise frame by frame (although that is not an apt term because frames go with cinematographic film and so perhaps I should say "strip by strip") every programme which the broadcasting authorities may wish to issue in video form. That would be a waste of everybody's time. I know that the BBFC fully recognise this point and have it mind to propose the setting up of machinery to ensure that material submitted by the broadcasting authorities can be classified with the minumum of difficulty. The Government strongly support the establishment of liaison arrangements along these lines, and the board will have our full backing in initiating discussions with the broadcasting authorities to sort out the practicalities.
That, I suggest to your Lordships, is a better way forward. The arrangements I have outlined do not detract from the principle that, save for specific exemptions listed in the Bill, video material will need to be classified under the arrangements made by the designated authority before it can be supplied commercially. The full range of controls, including the restrictions on supplies in breach of a classification certificate, will apply to video works comprising programmes which have been broadcast as they will to other material. At the same time, the sensible arrangements which we propose should be looked at would avoid expensive and time-wasting duplication.
The noble Lord went on to speak about what he termed the thin end of the wedge, and the noble Lord, Lord Winstanley, said that the effect of the Bill, because of the necessity for parity with material not broadcast, would threaten the independence of the broadcasting authorities. The noble Lord, Lord Ardwick, said that it would threaten their self-confidence and my noble friend Lord Buxton said that a Private Member's Bill was not appropriate to a threat of this stature to bodies of such constitutional importance.
With the very greatest of respect—and I take on board the extraordinarily wide and distinguished support which noble Lords have on this amendment—I wonder whether they are not slightly over-stating their case in this regard. Nobody is proposing to touch their product in the medium in which they were principally constituted to operate and in which they have won the outstanding opinions of people throughout the world—and our own very high regard—but only in a medium where, if they embark on it, they will no longer be on that ground. I have expressed that badly, but if they produce broadcast material, they are masters in their own house.
For example, if they produce books which are not broadcast material but which are based on broadcast material, they are subject to the regulations applicable to that medium; such as the copyright laws and the obscene publications laws. I do not think it is a breach of a fundamental constitutional principle if, when they go out of their home medium, as it were, in another direction, that should be subject to the same regulation as other people who are in the same medium.

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However, I recognise the concerns which have been expressed by noble Lords and I appreciate that they are genuinely felt by the broadcasting authorities, and I understand their reasons. Despite that, as I made clear, I cannot commend the amendment to your Lordships. However, I should like to assure noble Lords that the Government stand very ready indeed before Third Reading to discuss with the broadcasting authorities and other interests, and with the noble Lords who have spoken in support of the amendment, the possibility of alternative arrangements being made which might meet their concern without, so to speak, damaging the fabric of the Bill. I make that offer without commitment as to the outcome of any discussions. Nevertheless, I make it in earnest, and noble Lords will have access to those with the responsibility directly in their hands, which will be to their advantage.
I can also undertake that if the Bill remains in its present form—and perhaps I make this offer precipitately, because we do not yet know—and when the arrangements have in that case bedded down, if the broacasting interests remain convinced that the arrangements are damaging to broadcasting in the long term, the Government's interest will be the same as that of the authorities. We do not wish to challenge or weaken them in any way, and the Government will be willing and ready, under those circumstances, to re-examine the position and consider whether a change in the arrangements is, indeed, necessary.
I do not think I can go further at this stage and your Lordships will not wish me to take longer. However, if noble Lords will stay their hands, I think that the conversations which I propose they should have with my right honourable friend might very well be the best way for them to proceed.
Lord Houghton of Sowerby: My Lords, I am sure the House will be grateful to the Minister for what he has just said, but since there is a good deal of mutual respect going around, I shall say to him, with respect, that at this stage in the consideration of the Bill it is incumbent upon the Government to show their hand a little more firmly and a little more clearly as to what they are prepared to do. After all, these discussions have been going on right from the beginning of the consideration of the Bill in your Lordships' House. There was a very unsatisfactory debate on this matter in another place in Standing Committee and, I believe, on Report. This is a very grave matter and unless the House is prepared to show some determination of its own to get suitable accommodation on this question, we shall not get from the Government the response that the matter deserves.
If I may say so with double respect to the noble Lord, what we have listened to is a very rapid reading of a classic example of the Civil Service mind where logic is carried to the extreme. Apparently there is no Minister who can brush it aside and say, "We are having none of this nonsense. There is a limit to what we are prepared to do to achieve the purposes of this Bill and one thing we are not prepared to do is to subordinate the statutory broadcasting authorities to the miserable conditions of the Bill, which is intended,
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if possible, to prevent throughly objectionable video recordings reaching children in the home".
The trouble is that when you embark on a Bill of this kind you never know where to stop; you want to carry it to the bitter end so that there are no loopholes. When the noble Lord said that the broadcasting authorities who go into the video business should be subjected to the same conditions as everybody else, I would point out that they are unlike everybody else. They are two statutory bodies, one governed by an Act of Parliament and the other by its Charter. They are given statutory responsibilities and appointments are made by the Government of those who are judged to be capable, honourable and wise enough to discharge them. I think both the broadcasting bodies have been treated in a derogatory way. There is something which I am sure the broadcasting authorities can offer by way of indication of when the particular films concerned were broadcast. We have heard that.
Quite frankly I do not think it matters an awful lot that every household has not got the clearest indication of what to show on a video. Have they not got any discretion of their own? Have they not any judgment of their own? Do they not look at programmes themselves and exercise some responsibility? The way in which the whole of this subject is put in the hands of a sort of nanny state I think is quite objectionable, and I think that this is one of the most disgraceful features of the Bill.
Unless the House shows some resistance to this palsy that we listened to a few moments ago, then I think the Government will never come to terms. I think if it is still in the Bill there ought to be a very strong movement in your Lordships' House to reject the Bill on Third Reading and put our foot down. We have already been subject to the whole of the discussion on this Bill—on a Private Member's Bill which contains proposals relating to civic freedom—and the position of the two statutory authorities which are quite unsuited to be included in a Private Member's Bill and sponsored, if I may say so, by a noble Lord of the House, other than of the Government.
The Government should take responsibility for what they are putting in this Bill and not keep up the pretence that it is really nothing to do with them; they are getting up now and again in order to assist the House to reach a conclusion on submissions in response to the Bill. I think it is disgraceful. I cannot understand why noble Lords opposite sit there in a conspiracy of silence, just ready to vote everything down, apparently having no minds of their own or courage of their own to get up and make a stand for liberty and the independence of our statutory authorities. I know that noble Lords opposite do not like this, but occasionally they have to put up with it.
Lord McIntosh of Haringey: My Lords, I do not think the noble Lord, Lord Howard, would welcome general support from me for his amendment, but I feel it necessary to respond to one particular point which the noble Lord, Lord Elton, made in his speech when he referred to the fact that BBC publications—the written word—are subject to the Obscene Publications Act. Indeed, they are and so would videos produced by the BBC and IBA be subject to the Obscene Publica-

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tions Act. Although some of us would feel that the interpretation of the Obscene Publications Act recently has been particularly harsh, I do not believe that either the BBC or the IBA would have objections in principle to that subsection of the Obscene Publications Act which provides for the courts to interpret the law as to what is acceptable to the public. It is quite a different thing from the censorship which is proposed in this Act, which establishes an authority which carries out the classification and by implication, or indeed explicitly, non-classification if a classification is not to be awarded.
Those are the differences. It is not a difference between the printed word and videos. It is not to say that the broadcasting authorities wish to be above the law. It is to say that the Obscene Publications Act does that task very adequately at the moment—some would say more than adequately—and that the imposition of censorship is the thing which is objectionable in this Bill as it now stands.
Lord Howard of Henderskelfe: My Lords, may I, with the leave of the House, reply to one or two of the points that have been made. I have personally been convinced during the course of discussions that it is essential to classify, not perhaps in a complicated way, videos that are for sale or for hire and that to do so by the time at which those videos were originally broadcast may—and I only say "may"—not be entirely satisfactory. I do not believe that the present classifications that the BBFC operates are entirely satisfactory. I should not like to see them applied as they stand at present to video cassettes. Nevertheless, there is much to be said for some similar system.
I am in absolutely fundamental disagreement with the noble Lord, Lord Elton, on only one aspect. If we are entering a new field—over the years we have entered many new fields—we should be subjected to exactly the same constraints, the same hoops and the same impositions as all other entrants. We have not been so constrained in the past. I would remind him that the BBC was given the first two channels on DBS. Certain events have occurred since then which have
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made it somewhat difficult for advantage to be taken of it. This was not giving everyone an equal start, and this equal start business seems to conflict in some measure with other aspects of Government policy in regard to commercial trading. On that matter, therefore, I differ from the noble Lord wholeheartedly.
I detect a willingness to move some way towards us. I also see that there are problems with exemptions in relation to the criminal sanctions that apply under the Bill. I think that there are ways through. I have tried to suggest that there are various alternatives that we could discuss in the short time remaining to us before Third Reading. As the noble Lord has told the House, I am to see his right honourable friend the Home Secretary next week. This could have advantages. We might be able to devise a system that would satisfy all of us whereby cassettes are satisfactorily labelled but are not examined by some outside censorship body. I cannot promise any more than the noble Lord that I shall carry all my colleagues with me. I shall, however, do my best to see whether we cannot reach agreement to ensure that the Bill leaves the House in a better shape than it entered it. We pride ourselves on doing this to Bills. I see no reason why we should not do so on this occasion.
I can assure the noble Lord, Lord Houghton, that I do not lack fire in my belly on occasions. If we are unable to reach some form of agreement and if we cannot see our way forward to something that can satisfy either of us, not fully but in some measure, then I shall be perfectly prepared at the next stage of the Bill to divide the House on the amendments that I shall then put down. I hope that we shall be in a position where the sponsor of the Bill himself will be able to put down amendments that we have agreed beforehand. If this is not so, I shall be perfectly prepared to divide the House on amendments that I shall put down. Obviously, that means that I do not wish to divide the House this evening. I have consulted with my noble friends and supporters, and they agree that it would be inappropriate to do so when we have been generously offered the opportunity of much fuller discussions during the short time that remains. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3[Exempted supplies]:
9.45 p.m.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 5:
Page 3, line 3, leave out ("The supply of") and insert ("Where a person (in this subsection referred to as the "original supplier") supplies").
The noble Lord said: My Lords, in moving this amendment I should like to speak also to Amendment No. 6.
Amendment No. 6: Page 3, line 5, leave out from ("recordings") to end of line 8 and insert ("the supply is an exempted supply—

(a) if it is not made with a view to any further supply of that recording, or

(b)if it is so made, but is not made with a view to the eventual supply of that recording to the public or is made with a view to the eventual supply of that recording to the original supplier.

For the purposes of this subsection, any supply is a supply to the public unless it is—

(i)a supply to a person who, in the course of a business, makes video works or supplies video recordings,

(ii)an exempted supply by virtue of subsection (2) above or subsections (5) to (10) below, or

(iii)a supply outside the United Kingdom.").

The purpose of these amendments is as follows. Clause 3 is concerned essentially with supplies in one direction. In many cases the return of a video recording to the maker of an exempted supply will itself be exempted; but we have realised that this will not always be the case. For example, the return by the broadcasting authorities of a video recording supplied by an amateur producer-that is, one who does not make video works or supply video recordings and therefore does not benefit from Clause 3(4) as it now stands-may not be exempted under either Clause 3(4) or, indeed, Clause 3(2).
The point I am making is that in certain circumstances where an amateur producer of a video recording supplies it, for instance, to broadcasting authorities and they wish to return it to him because they decide not to use it, he does not benefit from the exemptions in Clause 3. Thus the broadcasting authorities may not be able to return to an amateur a video which they decide not to broadcast. There are similar considerations applying to other sorts of exempted supplies.
These amendments deal with this point by ensuring that the supply of a video recording otherwise than for reward, for the purpose only of returning it to a person who previously had made an exempted supply of the recording, is also an exempted supply. The necessary consequential changes are made to Clause 3(4) and the opportunity has been taken at the same time—this is what my brief says—to make the subsection more readily comprehensible. I apologise to noble Lords for the complexity of the matter but I think the point is a clear one. I beg to move.
Lord Mishcon: My Lords, I wish to apologise to your Lordships for the garb I am wearing in addressing your Lordships from this Dispatch Box. May I assure your Lordships that it is not in purported celebration of my carrying any amendments tonight.
I am wondering whether the noble Lord, Lord Nugent—I almost called him my noble friend, and I know he will not object to that—could help me on this,
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for the convenience of the House. He has just moved Amendment No. 5. May I take it that at this stage he is moving only Amendment No. 5 and is not carrying forward in his speech Amendments Nos. 6, 12, 14 and 15? If he were, then, of course, I would address your Lordships on my amendment to his amendment, and then on the main amendment, Amendment No. 9. I am wondering whether the noble Lord can kindly help me.
Lord Nugent of Guildford: My Lords, I am moving only Amendment No. 5. I am speaking also to Amendment No. 6; but if Amendment No. 5 is accepted I shall then proceed to move Amendment No. 6 and the noble Lord will be able immediately to move his amendment to my amendment.
Lord Mishcon: My Lords, I am most grateful.
On Question, amendment agreed to.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 6:
[Printed above.]
The noble Lord said: My Lords, I beg to move Amendment No. 6, to which I have already spoken.
Lord Mishcon Lord Mishcon moved, as an amendment to the amendment, Amendment No. 7:
Line 12 (paragraph (i)), at end insert ("or").
The noble Lord said: My Lords, I repeat my gratitude to the noble Lord for guiding me as to the sensible way in which to deal with his amendment and my amendments to it. I have no objection whatever to the spirit of the noble Lord's amendment. My sole reason for moving an amendment to his amendment is that, if his amendment were passed as it is, it would mean that the question of exports of videos from the United Kingdom would in no way be covered by this Bill-indeed, they would be exempt.
As your Lordships will know, it is the purpose of my Amendment No. 9 to see that exports are covered by this Bill. Therefore, I believe that it would be for the convenience of the House if, at the same time as I move my amendment to the amendment of the noble Lord, Lord Nugent, I speak also to Amendment No. 9, which I will move formally later.
Amendment No. 9: Page 3, line 6, leave out from ("persons") to ("other") in line 7.
At the Committee stage of the Bill, I made a plea, which received a measure of support in the Committee, that it would be extremely wrong for exports not to be covered by the Bill, and I gave the following reasons for saying so. First, as the main target of this Bill are what we have termed in shorthand English "video nasties"—and we know exactly what we mean by that—there will be, on the passing of this Bill, (which many of us hope will take place soon) a situation where those who deal in video nastier will find that they have no trade, certainly no legal trade, and if they carry out illegal trade it will be subject to grave perils. There will be no trade left for them in the United Kingdom. That will mean that there will be a great temptation to see that the stocks that are then carried, and that would be valueless in the United Kingdom, are at once got rid of overseas.
Secondly, as it is not usual for people of this ilk contentedly to be put out of business, one can well imagine that their next attempt will be to continue in business and again to see that their goods are exported overseas in future and that fresh videos of this nature are either made or purchased. That is hardly going to redound to the credit of the United Kingdom. In Europe there has already been expressed grave anxiety as to the extent and possible growth of this wretched trade in video nasties. As a member of the European Community—quite apart from exports to countries outside it—I should not have thought that this country would want to be known as being one of the main exporters to the European Community.
There is a third reason. One imagines that the only way in which those videos that have no categorisation and which, therefore, are illegally dealt with in the United Kingdom, will be traced, is when inspectors under this Bill go into premises because they have reason to believe that there are video nasties there. Without exports being covered by this Bill and, indeed, with exports being exempted from this Bill, all the owner of the warehouse or other premises has to say to an inspector is: "You have no right to inspect that pile of video tapes over there; I intend them for export". That means that the inspector has no rights whatever to inspect.
It has been said that there are two answers to this plea for exports to be covered. One answer is that it really is not for us to put classifications on videos for people overseas, that we ought to leave it to their own law to deal with the matter. If I may say so, that is no answer at all to a caring community. We either care for our own people and say that it is necessary in regard to these goods that there should be a warning as to the nature of the goods that are being acquired, or there ought to be some way of preventing these goods falling into the hands of young people and being put before the eyes of young people. Surely we also owe a duty to our export trade.
The second answer that is given is that we shall harm our perfectly proper export trade in video tapes. That is a much more powerful argument and must be dealt with. I was in communication with the association representing the video industry and I told it of my concern. It told me that it shared my concern and I think that I can properly say that it was the hope of that association, of myself and of those who think with me that this situation could be covered by an amendment which would have met with the association's blessing. I must say frankly that that was not achieved, but not because the association did not agree with the spirit of the amendment: rather, it said that there were two respects in which it felt that the very proper export trade might be adversely affected.
One was that very often British firms of repute in this industry are asked to manufacture or process parts of a video production, and that it would obviously be impossible for a classification procedure to be applied there and for an export trade properly to be carried on. I hope my recollection is right when I say that I believe that that is covered by Clause 3(4) of the Bill. If I happen to have quoted the wrong clause, I know that
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I shall be corrected by those who oppose me on this amendment but who are always extremely courteous and helpful in doing so. However, I think it is Clause 3(4) which would exempt that in any event, even if it were dealt with in the United Kingdom.
The second category of case where British firms thought that they might be hurt if exports were included in the Bill is where they are asked, usually as a very speedy matter, to duplicate, to copy, a tape which is sent over here and which has to be processed in some numbers. They felt that if there were a classification procedure applied to those tapes, there would be such a time lag that the export trade and the orders for the export trade would be adversely affected.
My suggestion in that connection is simple. All that the British Board of Film Censors, if they are to be the designated authority, would have to do would be to see that there was on hand at all times a small branch of the inspectorate—it might be one or two members—to deal specifically with the export trade, or indeed with matters which have to be dealt with urgently. I see no difficulty in that. We all know that in the normal case of the reputable trader all he would have to do would be to tell any member of the inspectorate exactly the nature of the tape and the source of the order. A quick test by the inspector would then obviously reveal whether the description was correct, and there could easily follow classification, or a decision—and a speedy decision—as to whether it was not exempt at all.
We have, on the one hand, some maybe hypothetical difficulties, maybe even a few practical difficulties, but, on the other hand, if we do not include exports, we are passing a Bill in this House and sending it back to the other place completely imperfect in the very realm where we are trying to gain success. In other words, we are radically interfering with the power of inspectors in appropriate cases to inspect, and we are, furthermore, walking into a situation where the unseemly trade which we are trying to stop will in fact be diverted overseas. It is not good enough to say that we do not manufacture at the present moment to a large scale, that we only import these video nasties and get rid of them again. That market will still be there, and one does not know whether or not, if the market is stemmed in the United Kingdom. manufacture would perhaps start here purely and simply for export.
I again emphasise, as I hope I have done throughout the time I have addressed your Lordships on this Bill, that I and my noble friend Lord Ardwick are expressing a personal view upon this matter. We have no right to express anything other than a personal view. But I think I can tell your Lordships that it is a personal view strongly held, and is certainly not on any party lines at all, but is shared, as your Lordships will remember at Committee stage, in all parts of your Lordships' House. I beg to move.
The Deputy Speaker (Lord Wells-Pestell): My Lords, amendment proposed, line 12 (paragraph (i)), at end insert ("or"). I would remind your Lordships that Amendments Nos. 7 and 8 are amendments to Amendment No. 6.
9.59 p.m.
Lord Elton: My Lords, the noble Lord once kindly said that he found me more acceptable after dinner than before. On that occasion he referred to my dinner. On this occasion I refer to his. It is always a pleasure to see him coming back if, as I believe, he has already delivered himself of one speech to rapturous applause elsewhere. I can only say that perhaps he is too eager for success if he comes here immediately expecting a repetition.
I accept that this is not a party point, and that the noble Lord is as anxious as are my noble friend and I that the Bill should be as good as we can get it. I know that is why he has put his amendment forward.
May I first briefly explain how the Bill deals with exports as it is now drafted, or as it will be drafted when my noble friend's amendment is—as I hope it will be—accepted? The effect of the Bill—and I will use the numbering as it is now—is that Clause 1(4), together with Clause 23, ensures that the Bill applies to supplies in this country, whether or not they are for export. That is the first thing: any supply for export within the United Kingdom is caught.
However, Clause 3(4) exempts supplies to a person who, in the course of business, makes video works or supplies video recordings, unless the video recording is supplied with a view to the supply of the tape or disc in question to ordinary members of the public in the United Kingdom; that is those of us who do not in the course of business make video works or supply video recordings. Broadly, therefore, a supply to a dealer overseas is exempted provided it is not with a view to the re-export of the video recording in question to ordinary members of the public here. If it is, again it is caught. Supplies direct to non-dealers overseas are not exempted.
Now we come to the nub of the matter. Finally, as the House will appreciate, the controls in the Bill cannot, of course, apply to supplies which take place abroad, because we have no means of enforcing them. As I understand it, the noble Lord, Lord Mishcon, has three main concerns. He is worried that dealers would offload overseas offensive material which would be likely to be refused a certificate once this Bill comes into force; that some of those dealers who are prepared to peddle this sort of material will go further and will produce or re-export objectionable videos for overseas markets; and that dealers in unclassified material may be able to circumvent the controls in the Bill by claiming that they have them in their possession for export purposes. I think that was his last point.
As always with the noble Lord, there is a great deal in what he said on each of these points. I am not certain that the picture is quite as bleak as may sometimes appear, however. It will, of course, be possible for dealers to send overseas material liable to be refused a certificate. Indeed, even if this amendment were accepted, they could do so at any time before the Bill comes into force. For most dealers, however, the potential profits would simply not be sufficient to justify their seeking out the necessary markets; nor, as has already been pointed out, are the sort of video nasties which have concerned us all generally made in this country. The noble Lord
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disarmed that point before I make it. But the Bill will not therefore be forcing existing manufacturers to find a new market abroad, and by closing off the home market we shall, I think your Lordships will agree, make the United Kingdom even less attractive as a manufacturing base for this sort of material than it is evidently at present, because you need a home market to justify an export manufacture.
We then come to the difficulty that would be faced by law enforcement officers who, when searching premises where video recordings are stored, are confronted with a claim that they are intended for the overseas market. The noble Lord argued most persuasively about this. Under the Bill it would be for the defendant to show that on the balance of probabilities the supply was an exempted supply. I should not have thought that a simple claim to this effect would be sufficient to satisfy the court, and of course a warrant could be secured to secure the material so that the person who had it and who intended to supply it would have to justify his having it to the court. Moreover, the noble Lord will no doubt remember that the Obscene Publications Act would apply in many such circumstances, and this will again provide certain safeguards.
There is a further consideration which applies to all the points which the noble Lord has raised. The Bill does not of course apply to supplies made overseas. The noble Lord, with his great experience in these matters, will appreciate why that should be so. I am not quite sure whether I am repeating that point, so I will go on to say that even if this amendment were accepted the dealers would still be able to send the material abroad by the simple expedient of ensuring that the supply takes place overseas. This is the story which could be fed to law enforcement officers in the sort of example which the noble Lord, Lord Mishcon, has cited. I do not really feel that his amendment would suffice to tackle the potential problems to which he has drawn proper attention.
Those are regulatory considerations. We must not forget the commercial considerations. I recognise the hard work the noble Lord has done, which is not always possible or often done from the Opposition Benches, of going to the people directly concerned and consulting them on the matter. Your Lordships will probably all have seen the British Videogram Association's letter of 2nd May addressed to Members of your Lordships' House. This points out, as I mentioned in Committee, that British laboratories earn considerable sums from making copies of video works for distribution overseas. There is no reason why such material should be classified before copies of it can be sent overseas, and not much assurance that people abroad want to know what our classification authorities think of the material that they are importing. Any such requirement could, therefore, tip the balance of foreign producers' preference against British laboratories and lead them to take their work elsewhere.
The noble Lord sought to make little of that, but I would add this cautionary thought. The arguments which I put forward will probably not suffice to persuade the noble Lord, reasonable though be is, that his amendment is not satisfactory for its purpose. But

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if they do not, I hope he will recall that they appeal to others, including as he has made clear, the trade. Even if the objections appear to him to be hypothetical that interest is not unrepresentative of another place. This argument would have to be re-run there.
I am sure that in considering how it should proceed he will consider the point which I know is of great concern to him, that for those reasons this amendment might not be acceptable in another place. If we were to agree it, we might therefore jeopardise the prospects. If it seems to him that there is possible gain—and it is an attractive gain which he seeks to make in the cause of the Bill—I wonder whether it is not outweighed by the possible risk that it might entail.
I am not counselling your Lordships to make an ill-advised decision which is contrary to their moral instincts, because I sought to show that most of the areas with which the noble Lord is concerned are either entirely or partly covered by what is already in the Bill. I have also sought to show that, where they are not, his own solution is not entirely effective. I wonder whether he would care to reflect on that.
Lord Mishcon: My Lords, while walking from my seat to the Dispatch Box I have indeed reflected. I must tell your Lordships that I am extremely unhappy that exports will not be covered by the Bill. The noble Lord, with his usual courtesy, was answering the arguments and said that they were fairly and reasonably presented. So were the answers of the noble Lord the Minister. But I must tell him, in all frankness, that I found them unconvincing, except when he talked to me and to your Lordships about the risks that there might be to this Bill.
The last thing I want, again talking purely personally, is for this Bill to be put in jeopardy. I would be less than frank if I did not say that it is my view—I put it forward most respectfully—that when a serious Bill of this kind is to be brought before Parliament, it is so much better if it starts its life as a Government Bill. Then one knows that the Bill is not in the jeopardy to which the Minister has just referred. Because I know I must take seriously what he says, if he says to the House that there is this jeopardy, that is the only consideration—I tell your Lordships this absolutely frankly—that moves me at this moment to say that I withdraw the amendment. But I do so with great unhappiness.
Amendment to the amendment, by leave, withdrawn.
[Amendment No. 8 not moved.]
Amendment No. 6 agreed to.
[Amendment No. 9 not moved.]
10.15 p.m.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 10:
Page 4, line 3, leave out from ("recording") to end of line 4 and insert ("with a view only to its use for or in connection with—

(a) broadcasting services provided").

The noble Lord said: My Lords, I beg to move Amendment No. 10 and I shall speak also to Amendments Nos. 11 and 12.
Amendment No. 11: Page 4, line 6, leave out from ("or") to ("a") in line 7 and insert ("b").
Amendment No. 12: Page 4, line 11, leave out ("its distribution by").
Noble Lords will remember that at the Committee stage the noble Lord, Lord Houghton, moved an amendment expressing anxiety about certain supplies between the various broadcasting interests of a video recording containing a work broadcast or intended to be broadcast. I saw the noble Lord's point and felt that something should be done to meet it. These amendments are designed for that purpose. We realise that certain supplies among broadcasters are not covered by the existing exemptions in Clause 3. We have had some discussions and I am happy to put down these amendments, which I hope will meet the point which concerned the noble Lord. I believe that they should relieve the anxiety of the interests concerned.
Lord Howard of Henderskelfe: My Lords, I should like to say that the corporation with which I was formerly connected has some anxieties about the lack of any such protection for works moving between various parts of it and, therefore, I am grateful to the noble Lord for proposing these amendments.
Lord Houghton of Sowerby: My Lords, may I join in the shower of gratitude which is now being poured upon the noble Lord, Lord Nugent? Praise is difficult to get in this debate, whichever side you are on. I think that I should say that I am grateful to the noble Lord for having taken the trouble to meet us.
On Question, amendment agreed to.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 11
[Printed above.]
On Question, amendment agreed to.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 12:
[Printed above.]
On Question, amendment agreed to.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 13:
Page 4, line 14, after ("purpose") insert ("only").
The noble Lord said: My Lords, I beg to move Amendment No. 13 and I should like to speak to Amendment No. 14 with the leave of the House.
Amendment No. 14: Page 4, line 16, after ("certificate") insert ("or otherwise only for purposes of arrangements made by the designated authority").
This amendment widens the scope of the exemption in Clause 3(9) to deal with a small but important point which is being drawn to our attention by the British Board of Film Censors. Under Clause 3(9) as it stands the supply of a video recording for the purpose of submitting a video work contained in that recording for the issue of a classification certificate is an exempted supply, as we all know. But supplies are

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sometimes made through the BBFC for other purposes. For example, the board may ask to see a video work not so that it can be classified but so that the board can keep abreast of standards which apply abroad. The board sometimes finds itself considering a video work to see the version of the work approved by an overseas classification authority. In certain cases, such a supply would be exempted under Clause 3(2) as being neither for reward nor in the course of business; but not all such supplies would benefit in this way. This amendment ensures, therefore, that the designated authority can conduct its work without the possible difficulties to which I have referred, I beg to move.
On Question, amendment agreed to.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 14:
[Printed above.]
On Question, amendment agreed to.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No.15:
[Printed earlier: col. 699.]
The noble Lord said: I have already spoken to this amendment.
On Question, amendment agreed to.
Clause 4 [Authority to determine suitability of video works for classification]:
Lord Jenkins of Putney Lord Jenkins of Putney moved Amendment No. 16:
Page 4, line 19, after ("person") insert ("recommended by the British Board of Film Censors").
The noble Lord said: My Lords, it may be for the convenience of your Lordships if, in speaking to Amendment No. 16, I refer also to Amendment No. 19:
Amendment No. 19: Clause 5, page 5, line 38, at end insert—
(" ( ) Before proposing a designation the Secretary of State shall consult with the British Board of Film Censors.").
Although it is an amendment to the following clause rather than to Clause 4, the purposes of the two clauses are similar except that Amendment No. 16 is somewhat more draconian than Amendment No. 19.
What Amendment No. 16 seeks to do is to limit the persons who may be designated by the Secretary of State to those recommended to him by the British Board of Film Censors. What Amendment 19 seeks to do—I assume that I have your Lordships' permission to refer to it—is a more customary and less rigorous thing. It says that:
"Before proposing a designation the Secretary of State shall consult with the British Board of Film Censors."
This is a common form in legislation. It is rather unusual that the appointees of the Government shall be limited to those actually recommended by a particular body and, on reflection, I think that this may go a little far. I felt it desirable to introduce the subject at this stage because I think, more properly speaking, it is the point at which the issue should be raised, although I think the course proposed under Amendment 19 is one more likely to commend itself
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to the noble Lord who has responsibility in this matter than the course proposed under Amendment No. 16.
The object of the exercise will be plain to your Lordships. There is obviously and desirably in this matter a close association—though we do not know precisely how close or what the particular relationship will be—between the designated authority and the British Board of Film Censors. Whether it is the British Board of Film Censors or a sub-committee of the board, it is desirable that the relationship should be extremely close; otherwise, we could have a complete nonsense between what is being done by the voluntary body and what will be done by the statutory body to be created. It is rather unusual that on one hand we have a voluntary self-governing organisation in relation to cinema films while on the other we are proposing to set up a statutory body to control video films. That is a peculiar relationship and perhaps the Minister will take the opportunity to tell us what the relationship between the two is to be after the Bill is enacted.
In any event the relationships will be close. It seems to me that there ought to be not merely an understanding between the two but a statutory relationship. I think that the British Board of Film Censors, which if I understand what the Minister has said on previous occasions, is to be closely associated with the matter, has already been consulted. If that relationship is to exist, it ought to be given statutory form, and the minimum statutory form which I think it ought to have is that which is set out in Amendment No. 19. But for the moment, my Lords, I move Amendment No. 16.
Lord Elton: My Lords, I start by answering a point which I think I heard the noble Lord, Lord Jenkins of Putney, make which anyway is of substantive, if curious, importance to his amendments. The British Board of Film Censors is not a body corporate. It is simply a name given to an extra-statutory collection of people. It is therefore not a legal entity as such. The substantive importance of course is that the noble Lord uses it as a point of reference in his amendment. To that extent it is substantive because it makes the amendment effective. But, leaving that aside, I am not certain that I have altogether followed the noble Lord because I take it that his reference is to the principal officers of the board who are to be the designated authority and I do not see why the Secretary of State should be required to consult them about the proposed designation when they are in fact intended to be the designees, as it were. Again, it would be odd, would it not, if, as the amendment proposes, the Secretary of State, in making a designation which could, in theory at least, involve the replacement of the principal officers of the BBFC, were to be permitted to propose only those persons who have in turn been proposed by them. It stretches the imagination to expect such a conflict, but it would be an odd way of tying the Secretary of State's hands. I wonder whether I have set at rest the noble Lord's concern at not finding there a form of words which is perhaps customarily present in other circumstances.
Lord Jenkins of Putney: My Lords, I am most grateful to the noble Lord. I wonder whether he would be kind enough to clarify this a little further. He says that the British Board of Film Censors, or, rather, their

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senior officers, are intended to be the designees. Perhaps I am wrong, but so far as I am aware it does not say this in the Bill, and consequently what I am seeking to do is to establish in the legislation that the British Board of Film Censors or their officers are in fact to be the designees. I am not quite sure whether I have gone the right way about it, but it seems to me very important that we should not have a situation arising in which the noble Lord has told us that these people are to be the designees but where, in point of fact, without any breach of the law, a subsequent Minister could decide to appoint Tom, Dick or Harry.
To me it is extremely important that these people should be the officers of the British Board of Film Censors, and what I seek to do is to establish in the legislation in one way or another that it shall be those people, because I regard the link between the two as absolutely essential. Therefore, if the noble Lord can tell us that in some way or other this purpose will be achieved, that it will not be just something that a Minister has said at a particular time but that it will be in some way incorporated in the legislation so that there will be an obligation on future responsible Ministers to ensure that this relationship between the designated authority and the British Board of Film Censors is maintained, I shall be happy. But until that assurance is given I am still not happy.
Lord Elton: My Lords, with your Lordships' leave—I know it is not lightly given—I would say that the proposal in the Bill is that the Government should designate an authority, and that is the designated authority. We have from the outset made it clear what our intention is and we have made it manifest by long discussions with the British Board of Film Censors—which I understand I can refer to in conversation but not in statute because it has an existence which I can recognise but which the statute cannot—that it is our intention to designate their principal officers; but that does not appear on the face of the statute and I cannot bind successor governments. However, I would be very surprised if a body which has survived without a statutory entity for so long a time were now suddenly to fade into insignificance because it is not mentioned in this statute either.
I fear that I may not have convinced the noble Lord. If there is more technicality that I can bring to bear at a later stage, I shall do so; but I have to remind him that what he has on the Marshalled List will not do anyway.
Lord Jenkins of Putney: My Lords, I entirely accept the last point, and, whatever may be future action in the matter, with your Lordships' permission I would seek to withdraw the amendment.
Amendment, by leave, withdrawn.
10.29 p.m.
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 17:
Page 4, line 25, at end insert ("privately").
The noble Lord said: My Lords, I beg to move Amendment No. 17. I gave notice during the Committee stage that I would come back to this
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matter at a subsequent stage of the Bill. What I am proposing to do is to try to restore something of a balance in subsection (1)(a) of Clause 4.
During the Committee stage I proposed to leave out the words which were added in two instalments in the Committee stage in another place, because I thought that these cautionary words were out of place in this clause of the Bill dealing with making arrangements. The words were not in the Bill as originally drafted. The arrangements were,
"for determining for the purposes of this Act whether or not video works are suitable for showing".
That is how the Bill was worded when it received its Second Reading. But in the course of discussion in the Standing Committee in another place it became quite obvious that every opportunity would be taken in the Bill of indoctrinating the censorship authority. They were not to be left to think for themselves. They were to have an indication given to them at every touch and turn.
During the Committee stage in another place the view was expressed by some Members that the words that were added were declaratory—a term which, it is said, lawyers use, which is why it is so long—and that where they were not obvious they were meaningless, so it did not matter tuppence whether they were in or not. Of course, it was in the home. That is what the Bill is all about. Why tell the censorship authority that they must have special regard to this matter in the home? Home, sweet home, is the label on the whole Bill. As to having special regard, nobody knows whether you have had special regard if you declare on your honour that you have had special regard. It is almost a clinical judgment. and no reasonable person can say that you have not had special regard. Nevertheless, these words are here, and I have been wondering what could be done just to put the matter in a slightly different perspective.
There was a report issued by a video working party in January 1983, convened by the British Board of Film Censors at the request of the British Videogram Association. So far as I can recall, this report has never been referred to in the whole of the debates. It was an attempt to find a basis for voluntary regulation of the whole problem. But almost by the time the report was issued the Government had decided that they were going to introduce statutory provisions to deal with the matter. In it went into the manifesto, and the Government had no further interest in a report which dealt most intelligently with the idea of voluntary rating.
That is merely an introduction to what I am about to quote, because they put it very fairly in paragraph 8 on page 3 of their report. They stated:
"Of all the media of screen entertainment, video is the one which permits the greatest degree of private and deliberate choice. A videogram is a physical entity obtained from the shop, much like a bookshop, and selected from a wide choice of available material. It is carried home privately by the consumer to be viewed in private whenever and in whatever circumstances he chooses. There is no common carrier as there is in broadcasting or even in the narrow casting of cable television. Nor is there the sheer theatrical experience of the cinema. Of all the new technologies, therefore, video is the closest to traditional publishing. But"—
they said—
"on the other hand. there are some powerful social considerations to be balanced against this".

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They went on to say what they were. We are very familiar with them.
They pointed out, for example, that video is viewed on an ordinary television screen and frequently in a family setting and that it is watched in the same physical manner, if not always with the same mental attitude, as broadcast television. They said that there is a need to guard against the confusion of young children as between one programme and another—a familiar line of country—with social considerations to be set against the fact of private and deliberate choice, which confers upon the citizen some responsibility for his own actions.
In that sense there is a balance between the liberty of the person and the social responsibility of what he may do. But the Bill does not recognise any balance. It is pitched wholly one way. It is against freedom and it is for statutory discipline and restraint. The words that were put into Clause 4 were wagging a minatory finger at the censorship authority without the slightest acknowledgment that there was such a thing as privacy in the home.
Noble Lords may say, "Is it not obvious that the home is mostly private? An Englishman's home is his castle—or we think that it is". But the obvious was not allowed to go unstated in their own amendments to the Bill because that did not suit the purpose of those who drafted them. They wanted to say to the censorship authority, "You are making these arrangements, but you must bear in mind the likelihood that the films you are passing will be seen in the home. We want you to have special regard to this fact when making your decisions on classification".
I tried to find a way to put the privacy of the home together with the possibility of dangerous exposures in the home. I thought of the words "the privacy of the home". Then I thought that people would say, "But the home is not so private as all that". Privacy suggests the closet where people are almost in solitude, looking at something alone, whereas the home is not like that. There will probably be three or four children in the home, although we have to bear in mind that today two-thirds of the households in Britain contain no young children under the age of 16. However, some homes still have young children in them.
Then I considered the word "privately". Is anybody going to argue about the factual likelihood that videos will be watched privately in the home? But the critics may say, "You are putting the wrong idea into the heads of the censorship people. You are suggesting to them that they could stretch their judgment a little further than they would otherwise do, because they will be made conscious of the fact that what is shown will be shown privately in the home". Where are we on this use of words? The problem is that when one first uses words which are probably unnecessary and harmful in the first instance one gets into trouble trying to put them right.
The Bill, as drafted by Mr. Graham Bright, was a tolerable Bill which met the wishes of the House of Commons at the time of its Second Reading. But the almost vicious morality lobby drew inspiration from the campaign which had waged at the time they were sitting in Committee and another place rather lost their sense of what was just.
The video industry is now suffering from the smear that the press, Parliament and the public have cast over the whole of the video trade. It is a great pity. I am trying to take a slightly more tolerant approach, so that we manage to get the common sense of this into perspective.
The duty of this House—here as nowhere else in the land—is to hold balances and make judgments which are respected for their wisdom. This clause, as drafted, does not, I think, fulfil that standard. The censorship authorities do not need to be nudged in this way. They should not be nudged in this way. They are given a duty. When they are appointed, they should know what is that duty. If they are given guidelines, then they will have more help still.
No one can deny the factual validity of the balancing word I am trying to introduce. The likelihood is that everything will be seen privately in the home; that is the likelihood. It will not be seen publicly in the home. The chances are that the videos will not be seen by people other than those in the home. Families usually take their enjoyment together.
I am now looking to see whether your Lordships are free from the bias which has afflicted the approach to this Bill in another place, and whether this House will ask another place to adjust their approach by the use of one true and non-emotive word, which will at least indicate that there are two sides to the home. One side is where people may be free to come and go, and where neighbours may come and go. But in general, when videos are being shown in the home, they will be shown privately and will not be open to other people. There may be children in that home, or there may not, but the videos will be seen privately.
If this amendment is objected to, I shall listen carefully to the reasons in a spirit of common sense, in terms of preserving a balance of approach to this matter, and in the interests of truth. I beg to move.
Lord Nugent of Guildford: My Lords, I have listened with close attention to the noble Lord, and yet I am bound to say that I cannot see that his amendment would add very much to the existing subsection. Perhaps I may refer to his own words, which I wrote down: "The likelihood is that everything will be seen privately in the home". That is the case; and so by inserting the word in question we would not be adding anything that could be considered as either guidance or declaratory. The noble Lord himself has objected strongly to including anything that is declaratory. If this amendment had any value at all, it would be only that.
Lord Houghton of Sowerby: My Lords, if the noble Lord will allow me to intervene, I must say that he cannot have it both ways. My first proposition was that words as words—not perhaps having any very useful meaning—should be left out. But, no, they had to stay in because they had a significance. Therefore, my word "privately" has a significance. I am adding a word to words. If, with great respect, the noble Lord wants to keep the words, then I want him to add this word. He may say that it does not add very much. All I am saying is that it adds what I think should be added.
10.45 p.m.
Lord Nugent of Guildford: My Lords, when the noble Lord reads his speech tomorrow he will see that he has said both things that I have said to him. I made a note of them as he said them. But the point he made towards the end of his speech, that the likelihood is that everything will be seen privately in the home, is the fact of it. There is no particular objection or significance in the word, either way. It will not add anything because it is the case that normally things will be seen privately in the home. In the circumstances, I do not think that I should advise your Lordships to accept a word which will add nothing of any kind to the Bill.
I hope the noble Lord will see the logic of what he said. The word adds nothing to the Bill. He does not like the words "in the home" and he has made that point very clear. A great deal of his speech was directed to that. But his amendment is about the word "privately" and he has answered that himself. I hope he will see the logic of that.
Lord Houghton of Sowerby: My Lords, if I am pressing the noble Lord to add a word which has a significance to the mover of the amendment which the noble Lord thinks does not add anything to the words already in the Bill, does he not attach any importance to the desire of someone to put it there? It may be that this is all semantics and that we are only playing with words. If the noble Lord reads his own speech tomorrow he will, if I may say so, see that at the end of it what he should have said was, "Nevertheless, in the circumstances if the noble Lord presses for the word to be there I will accept it, but I warn him that it does not seem to me to make any difference. If he thinks that it does, who am I to stand in his way?" That is what I expected the noble Lord to say. I was waiting for it.
If he had done that it would have been the first concession that has so far been made to the Bill on a straight amendment from this side of the House. I was going to attach great importance to that fact alone. But no, there is no feeling of concession anywhere here. What is the reason? Why is this House betraying its traditional role and just doing nothing except sit quiet and stick to it and let the talking go on? There should be some give somewhere. If there is no give on something that does not matter, how can we get some give on something that does? There is some logic in that, too.
It is extremely difficult to keep calm in this atmosphere. There are no party politics in this. Your Lordships' House is surely not afraid of the House of Commons on a matter of this sort. I believe that the sponsor of the Bill and the Government have got entangled in the procedural problems of a Private Member's Bill. They feel they have no control over it because it is not a Government Bill. But it is monstrous that a Bill of this significance should be subject to all the problems of a Private Member's Bill, either here or elsewhere. It is much too important for that. Why do the Government not come out into the open and say they will take over the Bill and provide the necessary time for adequate discussion and do the job properly?
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There seems to be no point in dividing the House on this or anything else. Some Divisions have to take place in order that those of us who take a point of view should be able to have it on record. I am gravely disappointed in the noble Lord if he is arguing, as he has done, that the word adds little or nothing. Of course, what he says is true and it would be done privately. Whoever said it would not be? I said earlier, when I wanted to take words out, that of course it would be done in the home. Why are we saying that it will be in the home when everyone knows that it will be in the home?
But would the noble Lord agree to the words being taken out? No, of course he would not. When we said, "having special regard to the obvious", that is really what we are talking about: special regard to the fact that it is in the home. Would he take out the words "special regard"? No, he would not, because he wanted this minatory finger to be pointed to the designated authority. I am not going on chastising the noble Lord. I must say he puts up with it with remarkably good humour. I am glad that my noble friend appreciates the nobility of his character, but I feel very angry.
On Question, amendment negatived.
Lord Houghton of Sowerby Lord Houghton of Sowerby had given notice of his intention to move Amendment No. 18:
Page 5, line 11, at end insert ("or a licensed video shop").
The noble Lord said: My Lords, I shall not move this amendment at this point. The reference to a sex shop in Clause 4 is very much out on a limb. I hope your Lordships will allow me not to move Amendment No. 18. I do not think that the whole debate on the licensed video shop proposal should take place at that point. Where I propose to move the major amendments will be at Amendment No. 30 when a number of amendments, all related, follow and a reference is made to the schedule in which the full proposals of the scheme are set out.
If, by any good fortune, the amendments that I want to make are accepted, then it would be possible to come back at a later stage and just deal with the reference to a video shop in Clause 4, which would only require the addition of just two or three words in order to tidy it up. That would come on Page 5, line 11. So I think it would be for the convenience of the House, and it would certainly make it easier for me, if I deal with the main issue on Amendment No. 30.
[Amendment No. 18 not moved.]
Clause 5 [Parliamentary procedure for designation]:
Lord Jenkins of Putney Lord Jenkins of Putney had given notice of his intention to move Amendment No. 19:
[Printed early: col. 725.]
The noble Lord said: My Lords, in stating that I do not propose to move this amendment, I should like to express my appreciation of the manner in which the noble Lord, Lord Elton, has this evening reinforced the assurances which have been previously given and expressed the hope that some way will be found of legislatively giving effect to those assurances.
[Amendment No. 19 not moved.]
Clause 6 [Annual report]:
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 20:
Page 6, line 17, after ("Act") insert ("together with a statement of accounts").
The noble Lord said: My Lords, this may be superfluous but I wanted to make sure that in the annual report of the censorship authority we could see something of their finances because they are going to operate at the expense of consumers. I feel sure that in any adequate report to Parliament and to the public information about where they got the money from, what they did with it, how much they paid out in salaries, and the conventional contents of a financial statement should be available.
I do not know what the British Board of Film Censors do now regarding their finances. It is not a public body and they are not answerable to the public. Therefore, for all I know they may circulate all the relevant material within the industry itself. However, I beg to move this amendment. It seems to me that it goes almost without saying that there would be a statement of accounts; but in a Bill which, in order to get anything done at all it has to be written into the Bill. this provision may be desirable. In any event, I beg to move.
Lord Nugent of Guildford: My Lords, the noble Lord is right in saying that the amendment is superfluous. The provision in Clause 6(1) gives the Secretary of State power to require the report to be made in any form he wants. It is perfectly obvious that he would want a statement of accounts because, among other things, somewhere else in the Bill he has to approve the tariff that will be charged for the classification function. So the noble Lord is right.
However, if it will not upset the noble Lord for the evening, I shall be prepared to accept the amendment so that he may feel that he is playing the very constructive part which, indeed, he is playing, in helping us to get this Bill in the best shape possible when it goes on the statute book.
On Question, amendment agreed to.
[Amendment No. 21 not moved.]
Clause 7 [Classification certificates]:
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 22:
Page 6, line 29, leave out paragraph (a) and insert—

("(a) a statement that the video work concerned is suitable for viewing by persons of any age; or

(aa) the statement mentioned in paragraph (a) above together with a statement as to the particular suitability of the work for viewing by children; or

(aaa) a statement that the video work concerned contains material which may make parental guidance desirable as to the viewing of the work by young children; or").

The noble Lord said: This is an attempt to straighten out in better form the requirements of a certificate under Clause 7(2)(a). The paragraph as it now stands contains a long description, part of it within parentheses, which combines several different classifications, and does so all in one gulp. The purpose of my amendment, supported by my noble friends, is to pull out the concertina, so to speak, and to identify the classifications separately and more clearly.
This may be thought to mean that the classifications for the purpose of the Bill will be those used by the British Board of Film Censors: that there will be "U" meaning universal; "PG" for parental guidance; "15" meaning passed only for persons of 15 years and over; "18" meaning passed only for persons of 18 years and over; "18R", which is the restricted 18 classification; and "Universal UC", meaning particularly suitable for children. It is quite a good idea when the whole purpose of the Bill is directed towards preventing children seeing things they should not see that the British Board of Film Censors should indicate what is suitable for them to see.
The amendment proposes only to separate and identify the components of subsection 2(a)—that is to say,
"(a) a statement that the video work concerned is suitable for viewing by persons of any age; or
(aa) the statement mentioned in paragraph (a) above together with a statement as to the particular suitability of the work for viewing by children; or
>(aaa) a statement that the video work concerned contains material which may make parental guidance desirable as to the viewing of the work by young children".
We then come to the existing paragraphs (b) and (c), which are clear enough and do not need amendment.
It may be that the main problem here is PG (parental guidance) but I see no reason why the classification used by the British Board of Film Censors in that particular respect should not also be used for videos seen in the home. To get this clear in this way would be so much better than leaving subsection (2)(a) in this rather jumbled condition. It may be put there to enable the British Board of Film Censors, as the designated authority, to have some room for flexibility in shades of differences or classification, but I am sure we all understand that if the classification for videos in the home is the same as the classification for the cinemas, it simplifies the matter and everybody has a clear recognition of what are the distinctions.
That, of course, does not remove from parents their own discretion in showing to children films that may have the classification which means young children would not see them in the cinema; but we cannot have a detective in every home. I hope, therefore, that this proposal simplifies the situation, clarifies it, and makes it understandable to all concerned that we have one set of standards and that they can be followed for videos as well as for films. I think also that if there is to be a classification given to films that have been shown by the broadcasting authorities, it would help if, in any identification that was thought to be needful, they would follow the same standards and degrees of classification.
I hope that appeals to the House as being a desirable improvement to the subsection as it is at present. It does not detract from it; it adds nothing to it. It just makes it clear, orderly, and well understood. I beg to move.
11.2 p.m.
Lord Elton: My Lords, I am grateful to the noble Lord for bringing us succinctly to ground on which we are in discussion with the British Board of Film Censors. As it now stands, Clause 7(2)(a) deals with

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the PG category as follows. It makes clear that PG certificates must contain a statement that the video work concerned is suitable for viewing by persons of any age, with a qualification—I emphasise the words, "with a qualification"—as to the desirability of parental guidance with regard to the viewing of the work by children.
The PG category was introduced by the board for the cinema some 18 months ago. The Bill was drafted with the intention of allowing the board to continue to award such certificates to works in video form as they would for the same works in relation to the cinema. In our view, the form of words contained in Clause 7(2)(a) is the best way of reflecting the PG category in language appropriate to legislation and in a form consistent with the Bill.
Under the Bill as it stands, PG material is to be made available to persons of any age. Both the BBFC and ourselves are agreed on this. But certificates will contain a specific warning as to the desirability of parental guidance. The PG classification is therefore a half-way house between, on the one hand, U certificates awarded under Clause 7(2)(a) and, on the other, the categories dealt with in Clause 7(2)(b) and (c) for material which is not to be supplied to persons below a certain age.
Thus, in awarding a PG certificate the designated authority will be saying, in effect, that they do not think it is necessary to stipulate in the certificate that the work is suitable for viewing only by persons of, say, 15 or 18 years and above, but that they consider that parental guidance is desirable with regard to the viewing of the work by children. "PG" therefore carries with it the connotation that parents may feel that the work is unsuitable for their particular child; or unsuitable at that particular time for their child; or may wish to ensure that their child does not watch the work, or does not watch it on his or her own.
Under the Bill as it stands, therefore, a PG certificate does not mean that the video work concerned is suitable for viewing by all persons. Instead it means that it is suitable for viewing by at least some persons of all ages with a qualification as to the desirability of parental guidance.
Turning to the amendment of the noble Lord, Lord Houghton, paragraphs (a) and (aa) reflect provisions already in the Bill and our difficulty is not with them. Like the Bill, your Lordships will see that they state the extent of the suitability of the work in question for viewing by particular people. That is to follow the scheme of the Bill.
Where we still find ourselves in difficulty is as regards paragraph (aaa) of the amendment, because that paragraph does not mention suitability—it only mentions that, so far as children are concerned, parental guidance may be desirable. That, of course, is a description that could apply to a very wide range of material indeed—much wider than that to which I am confident the designated authority would, in fact, apply it. In this context, your Lordships may regard as a molehill what the trained legal eye detects as a mountain. Laymen among your Lordships can fairly ask why—if we are confident that the authority will
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only put what we and the public already know so well as PG material in this category—it is necessary to get so fussy about the language.
As we demonstrated earlier this evening, in legislation language is important and a statute that does not say what it means is, in an important sense, not as good as it should be. However, your Lordships will by now have realised that the difference between the parties in their discussion is a narrow one and that we have the common objective of getting the categories in the cinematic and the video fields as similar to each other as is possible. It does not seem possible that this difficulty will not be overcome. Therefore, I am obliged to the noble Lord for this opportunity to explain where we are.
We will continue to be in discussion with the British Board of Film Censors on this matter. We are. of course, always ready to improve the Bill if that appears to be possible and there will, of course, be an opportunity to bring forward an amendment at Third Reading if, in the event, it seems possible to express the PG category in the Bill any more clearly.
I hope therefore that, on the basis of this explanation and of the assurances that I have given, the noble Lord will, with his customary forbearance, not now press his amendment.
Lord Houghton of Sowerby: My Lords, I hope that the noble Lord really meant it when he talked about my forbearance. I accept his compliment with humility. I certainly do accept what the noble Lord has said, and I look forward to the result of further consideration of the matter. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 23 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 24:
Page 6, line 42, at end insert—
("( ) In any statement made under subsection (2)(b) above no age shall be specified above the age of 18.
The noble Lord said: My Lords, I am encouraged by the recent words of the noble Lord, Lord Elton, in my belief that this amendment does not propose anything which is at variance with the Government or the sponsor's intentions, but does make clear what might be an anomaly at some time in the future, although I understand from what the noble Lord has said that it is not in the Government's mind at the moment.
Your Lordships will recall that at the Committee stage it was not initially clear whether there was a possibility of an age older than 18 being specified as part of a classification system. On further inquiry the noble Lord, Lord Elton, did say that the Bill, as drafted, does not actually rule out the possibility, for example, of a classification being at the age of 21. I drew attention to the fact that, although 18 is the age of consent and has been, I would think, universally accepted as being the age at which cinema censorship and video censorship ought to stop, the age of 21 still has legal significance as the age at which homosexual practices between consenting males is permitted, and that it would be possible for a future government or a future designated authority to take the view that,

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because the age for homosexual practices is 21, there would be an argument for introducing a classification for the depiction of those practices also at the age of 21.
I do not believe that that is the intention of the sponsors of the Bill. I do not believe that it is the intention of the Government. I believe that it would be repugnant to have censorship for any other than those who have not reached the age of consent, and I hope that the Government, either by indicating that they can find a better way of doing it or by accepting this amendment, will give effect to what I believe ought to be the universal wish of the House. I beg to move.
Lord Nugent of Guildford: My Lords, this is a point which was discussed in a slightly different form at some length at the Committee stage, and I quite understand the noble Lord's anxiety that he does not want to see this age limit raised from 18 to 21. I can assure him that the Government's intention is that it shall be introduced at the same levels as are now being used by the BBFC—that is, the ages of 15 to 18—and that there is no intention of changing it in any way.
We should prefer not to put ages into the Bill. We think that the right thing to do is to leave the board of film censors to make such changes as they think are necessary from time to time. However, I am bound to say that, if they raised the limit, it would clearly be a matter which all governments should closely examine. As the noble Lord knows, the Home Secretary has an overruling hand on this body and apart from his contacts in the meantime, he receives a report which he can look at every year. Therefore, I do not think that it is very likely that the kind of change which the noble Lord fears would take place. In the meantime, we should prefer the Bill to remain as it is without specifying age limits, and I hope that, with the firm assurance that the 15 to 18 age limits, as now, will be continued in the future, the noble Lord may feel content to withdraw his amendment.
Lord McIntosh of Haringey: My Lords, I am grateful for the assurance that the noble Lord has given, and I share his view about the undesirability of having an age older than 18. However, I am afraid that the noble Lord's firm assurances are not good enough. If we are in agreement, that is excellent for the proposed designated authority and the existing Government. My point is that, under the terms of the Bill as drafted, it is possible for another designated authority and another government—a more censorious government, if I may put it that way—to do something which would be legal within the terms of the Bill and yet would be profoundly repugnant to those who have come to accept that the age of consent is 18 and not an older age. I am sorry that the noble Lord has not felt able to accept this amendment, and I am sorry to say that I think it is necessary to test the opinion of the House.
Lord Elton: My Lords, before the noble Lord tests the opinion of the House, I think it would be as well to pause for a moment to consider. I am not clear what are the grounds on which be thinks the age of consent might appear to the Government to be more appropriate at a level higher than the age of majority. The age
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of majority is clearly fixed at the age of 18 by statute. I have always thought that that sort of change was on account of the ratchet effect. I cannot see voters of 18 flocking to the polls to deny themselves the vote until they are 21.
Therefore, I wonder whether the noble Lord could explain a little more fully what it is that leads him to fear that this change might commend itself to a future government, to the extent that they would not merely believe that it was in the public interest to raise the age of consent, or whatever, above 18, but would actually direct an independent body to introduce this into its policy. The Bill is careful to avoid Government censorship and does not give the Government power to direct the authority in this sort of matter. I wonder whether the noble Lord would feel that this was something on which he could reflect further and perhaps return on Third Reading if he is still not content.
11.15 p.m.
Lord McIntosh of Haringey: My Lords, I take it that that was an intervention in my speech and that I therefore have your Lordships' permission to speak again. I realise that this is not normal, but it was a direct challenge to me.
Lord Elton: My Lords, it is only abnormal in that I forgot the customary preface of, "Before the noble Lord sits down". I add it posteriorly, perhaps.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord. The position that the noble Lord describes is not one that I recognise. It is true that the Bill deliberately puts the Government at arm's length from the process of censorship. That is agreed. The Bill provides for the appointment of a designated authority which determines the categories of censorship. But although the Government have some responsibility for it, it is the designated authority which determines the classification, and it is possible for a Government, in one of this country's periodical fits of morality—I think that is the Victorian phrase—to seek to advance the limits of censorship.
That is happening now. We are seeing the limits of censorship advanced in this Bill and in the application of the Obscene Publications Act. I am not satisfied that there is no chance that this would happen in the future. I am confirmed in my lack of satisfaction by the words of the noble Lord, Lord Nugent. He said that it was very likely that the age of 15 would be the age used for classification purposes. For this purpose "very likely" is not good enough. I beg to move.
Lord Houghton of Sowerby: My Lords, may I offer two or three observations here. The danger in the Bill as at present drafted is that it leaves open the possibility that at some stage the classification of videos might be pressed to run, with certain restrictions, to the age of 21. In another connection entirely the adulthood of persons at the age of 18 has already come under some criticism; this has been in regard to marriage between persons of prohibited degree. I am referring now to the marriage of a person to his stepdaughter. In the consideration of that proposed legislation there was a distinct movement to

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put the age of marriage in those circumstances at 21, notwithstanding that it is lower than that for people in general.
It may be that a Government even more reactionary than the present one might wish to put certain video material beyond the reach of people until they are 21. I believe that the more flexibility the sponsors of the Bill wish to keep in it, the more room there will be for manoeuvre, which may be used in undesirable, as well as desirable ways. I believe, too, that that will later make the stronger my case for setting a limit of five years to the lifetime of the Bill without renewal by expressed wish of both Houses of Parliament. Otherwise we shall be putting into this Bill a provision which may last for many years to come and which could be dangerous in the hands of people who had a different sense of responsibility.
If the age of 18, as a numeral, raises difficulties, why cannot it be stipulated that the age limit should be that at which a person reaches manhood, or womanhood, within the law, expressed in terms of ability to sign contracts, to vote, or whatever it may be. There is an age at which a person at present reaches adult status, and that is the age beyond which we do not want any of this to go. That is the point. If it is not there, if it is an age stipulated by the authority, it can be any old age that they like to think of.
Again, I cannot understand what the difficulties are. I know that in drafting Bills advisers say, "Keep it open, don't commit yourself, don't get tied down, leave room for manoeuvre. We don't want to have amending legislation; be able to do it within the ambit of the discretion left to you". and so on and so forth. There are, however, some things that do have to be stated clearly, and I think this is one of them.
Lord Monson: My Lords, I started off with no very strong feelings either way about this amendment, but having heard all the arguments I simply cannot understand why it is being resisted, if it is simply a question of dotting the i's and crossing the t's. Like the noble Lord, Lord McIntosh, I am becoming rather suspicious and therefore will certainly support him in the Division Lobby if need be.
Lord Nugent of Guildford: My Lords, perhaps, with the leave of the House, I could say just one further word. First of all, I did say to the noble Lord—not that it was very likely that the ages of 15 to 18 would be the ages used by the BBFC—that they would be, definitely. So let us get that on the record.
Lord McIntosh of Haringey: My Lords, if I misunderstood the noble Lord, I beg his pardon.
Lord Nugent of Guildford: My Lords, I hope that will have reassured him, but at any rate we shall start on the basis that he, and I imagine his noble friends, would wish. However, the point is again a very small one, although I agree that the significance the noble Lord. Lord Houghton, has attached to it makes it seem a very great one. I do not think any government or any Home Secretary would ever wish to see the age raised above 18.
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However, I am willing to look at it in the circumstances, as these grave doubts have been expressed, to see how it should be amended, if we are to put it in, and come back to it on the next stage. Perhaps with that undertaking the noble Lord would be willing to withdraw his amendment.
Lord McIntosh of Haringey: My Lords, with the leave of the House, I am grateful to the noble Lord for that undertaking. I take it as being somewhat stronger than simply considering the position; I take it as saying that it is a question of the appropriate wording, and I hope I am correct in that. If I am, then I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Jenkins of Putney Lord Jenkins of Putney moved Amendment No. 25:
Page 6, line 42, at end insert—
("( ) All films classified prior to the date of this Act by the British Board of Film Censors in the categories (U.) (P.G.) or (15) shall receive a similar video classification certificate from the Authority without further examination.").
The noble Lord said: My Lords, this is quite an important amendment because there are, I understand, some 4,000 to 6,000 titles already on the market and, if no such clause as this is included, all those films which may become videos which were classified prior to the date of the Act by the British Board of Film Censors would have to be reviewed afresh. In order to make the amendment noncontroversial, I have in fact removed from it the controversial category of 18. Therefore, it is only those in the non-controversial categories of U. PG or 15 which are, under this amendment, required to receive a similar video classification—not the same video classification because it may be that the authority will decide to adopt some different nomenclature or wording—without further examination.
If this is not done, upon its constitution the authority will be, so far as I can see under the Bill as it stands at present, required to reclassify everything which comes on the market irrespective of whether it has already been classified by itself under another hat—by the British Board of Film Censors operating under another hat.
What this amendment seeks to do is to make the work possible, to prevent a great hold-up, to enable the new authority to get on with the job and not to put it to the necessity of re-examining every film which comes out as a video which has already been classified in a non-controversial area by the British Board of Film Censors.
I move this amendment in the confident expectation that it will be accepted, if not in its actual sense in the spirit in which it is moved, by those responsible for the Bill.
Lord Elton: My Lords, I recognise an amendment which is intended to be helpful when I see one. I am grateful to the noble Lord for his good intentions. It is aimed at reducing the considerable backlog of existing video works which the board will have to examine. It seeks to do so by requiring video works which have already been classified U, PG or 15 for cinematograph exhibition to be given the same classification under the arrangements set out in the Bill without further examination.

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I have great sympathy with that approach. It is in everybody's interests that the board should be able to get through the backlog of existing films as quickly as possible. We do not want the British Board of Film Censors to give a meticulous examination to every piece of obviously innocuous material where it is possible to avoid this. We hope that this will be avoided in connection with the backlog of video material in the same way that we have said we hope to help it in the matter of broadcast material.
Unfortunately, although the designated authority will be required under the Bill to keep records of video works which it classifies, the British Board of Film Censors does not, at present, have comprehensive records of works which it has classified for the cinema. Therefore it will not have a means of knowing if a video work submitted for classification is in the same form as the work originally classified for the cinema. It gives me real regret to have to say that, because it would be a tremendous saving in work if this was not necessary. But I hope that a great deal of effort can be saved by establishing, where works are in common format, that there can be the most cursory examination.
Lord Jenkins of Putney: My Lords, I felt a little uneasy about this. The amendment does not actually ask for the same video classification as the noble Lord just suggested. It asks for a similar video classification, recognising that it is not absolutely certain that the authority will adopt the categories of U, PG, 15 and so forth, but that the new authority should be able, if it so chose, to say, "We know all these films, or large numbers of them to be completely innocuous and we would therefore he able to say that they can go through." Such films would be Mickey Mouse and all kinds of thing of that sort which are quite likely to be reproduced on video. It would seem to me to be absurd to put the board under the necessity, as I believe is the case under the Bill as at present drawn, to re-examine every single film which has already been passed by it. I wonder whether the noble Lord can be a little more reassuring than he has been on this question.
Is it the case, as I rather suspect it may be, that the new authority will be under the necessity of reexamining every video, even if it knows, before it is examined, from the nature of the film and from the nature of the applicant in question that it could do a complete en bloc classification and thereby could get on with the real job and not spend an enormous amount of time looking through films which are of no offensive nature at all?
11.30 p.m.
Lord McIntosh of Haringey: My Lords, I wonder whether it is possible to find agreement on this matter, in which everybody is agreed on intention. Surely, not necessarily the British Board of Film Censors but film archivists of the British Film Institute maintain records of what films have been classified and the length in numbers of minutes. The risk of seven minutes of inoffensive material being taken out and exactly seven minutes of offensive material being put in is. surely, not very high. If the number of minutes is the same and the title and description are the same,
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surely it would be satisfactory for the British Board of Film Censors to give a similar certificate, without examination, with no significant risk whatsoever.
Lord Mishcon: My Lords, I wonder whether I could assist my noble friend in order that we may proceed, though not with undue rapidity for there are material points to be made. I see nothing in this Bill—and I stand to be corrected—which says that the designated authority has to carry out any examination at all. The duties of the designated authority are set out in Clause 1. All that they have to do is to determine, for the purposes of this Act, whether or not video works are suitable for classification. Quite obviously, the designated authority will not be anxious to give itself unnecessary work, especially at the commencement; and, if acting at all intelligently, what it will do is to say, "There has been a classification in the past. What we will do is not to give it a similar classification because there may be differences in classification, but to use the words, possibly, 'a similarly appropriate classification'." That, quite obviously, would be done.
I repeat that there is no duty to examine every inch of the tape. There is no duty, in fact, to examine one inch of the tape. The discretion is that of the designated authority, for them to determine, in all the circumstances, in all their discretion and in all their wisdom, what the classification ought to be.
Lord Elton: My Lords, will your Lordships permit me to speak briefly? I think the Minister is allowed sometimes to speak twice if your Lordships are willing. The noble Lord, Lord Mishcon, has been extremely helpful and absolutely right. It is in Clause 4(1) that the need to determine is placed, and it is up to the authority to decide how it determines. The noble Lord, Lord McIntosh of Haringey, has suggested both an ingenious way of doing this and an ingenious way of circumventing it. But the fact remains that it is up to the board to decide, and we are anxious that the process of determination should be as rapid and practical as possible. In other words, the Bill does allow what the noble Lord, Lord Jenkins of Putney, wishes it to allow. I do not wish to offend him in any way, but perhaps I cannot stand up again and if he is still wedded to the idea I have to say that were I to return to my feet I would tell him three matters in which the amendment that he has put down is defective, so that it would be necessary for him to return at a later stage anyway.
I may have been too precise in what I said about the records which the BBFC keep. They do not keep comprehensive visual records although they have comprehensive written records. The point is that you could not tell from the piece of paper what was on the piece of cellulose or tape. I have gone on for far too long. What I want to say is that, as Lord Mishcon has said, the Bill allows the board to operate in the way that the noble Lord, Lord Jenkins of Putney, says he wishes it to operate.
Lord Jenkins of Putney: My Lords, I am grateful. I had no illusions about the beauty and excellence of the drafting of the amendment. It was my intention originally to leave the question of the ultimate drafting to those responsible for the Bill. However, in view of

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the assurances that have been given it may be that it will be found that no further drafting is necessary. I intend at this stage, at any rate, to leave the question in abeyance and to seek your Lordships' leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 26 not moved.]
Clause 12 [Supply or possession of video recording on certain premises]:
Lord Jenkins of Putney Lord Jenkins of Putney moved Amendment No. 27:
Page 8, line 34, leave out ("a licensed sex shop") and insert ("premises licensed for the purpose").
The noble Lord said: My Lords, the Bill as presently drafted seems to me designed to assist sex shops which are in difficulty. By deciding that only existing sex shops shall be licensed for the purpose of selling these videos we are really giving to the existing sex shops or future sex shops a monopoly for the sale of this particular product. I find this a most extraordinary provision in the Bill. Why on earth should we decide that sex shops should suddenly have this additional benefit thrust upon them? Why would we not create in the Bill the term. "premises licensed for the purpose"?
It might be appropriate that a sex shop should be the premises which would have the ability to deal with videos. It might be appropriate that some other premises should be designated. But should we decide in this Bill that all existing sex shops are apparently to be the premises which are to have the privilege (if that is the right word) of selling this product, which may turn out to be extremely profitable?
If your Lordships are a society for the preservation and the enhancement of sex shops, the Bill as presently drafted is no doubt an excellent one. But I rather suspect that that is not your purpose; and if it is not your purpose to be regarded as benefactors of sex shops and as a Chamber which exists for the purpose of encouraging and supporting them, I suggest that your Lordships accept the amendment.
The Lord Bishop of Norwich: My Lords, I find myself very much in sympathy—
Lord Houghton of Sowerby: My Lords, may I raise a question of order? I beg the pardon of the right reverend Prelate, hut, beginning with Amendment No. 30, I have a whole string of amendments on this point, including a new schedule which is set out on the Marshalled List, and which is essential if premises other than a sex shop are to be included with a sex shop, or otherwise, in the Bill.
I do not mind where we take it. The main arguments have to be deployed somewhere. I have let go already two references to a sex shop in order to concentrate on the main group of amendments which begins with Amendment No. 30 and goes on to Amendment No. 38. I wonder whether my noble friend would feel that Amendments Nos. 27, 28 and 29, to which both our names are attached, should not be moved so that we can get on to the substantive amendment, Amendment No. 30, which then deals with a whole
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group of amendments, and then on to the schedule. Otherwise, I think that we are going to deal with this in penny numbers.
Lord Jenkins of Putney: My Lords, I am sorry to say this to my noble friend, but I do not feel entirely happy with that suggestion, for the following reason. Both our names are attached to this group of amendments. I think that they are all alternative. On the one hand, the first series of amendments suggests the substitution of,
"a licensed sex shop",
with the words,
"premises licensed for the purpose".
That is one series of possibilities. If that series of possibilities were proved to be acceptable to the House, then what follows would be unnecessary.
On the other hand, if those series of possibilities proved to be unacceptable, it might be necessary for one to proceed to the other possibility which is,
"a video shop for which a licence is in force under this Act",
as suggested by my noble friend. It seems to me therefore that one ought to deal with Nos. 27, 28 and 29, which deal with the question of premises, before dealing with the series of amendments which I think suggest an alternative to the first three amendments.
Lord Nugent of Guildford: My Lords, I wonder whether I may add a word to this little procedural discussion. I do feel that the noble Lord, Lord Houghton, is right. There is a major point here and it is of course related to the schedule. I should have thought that it would be for the convenience of the whole House if we debated the issue as one. In the schedule is set out an alternative scheme which would make other licensed premises, at any rate in principle, workable; and therefore I would strongly urge the noble Lord, Lord Jenkins, who I think has the ball in his court, that it really would be for the convenience of everybody if we proceeded as the noble Lord, Lord Houghton, has suggested. so that one debate could then cover the whole issue.
Lord Jenkins of Putney: My Lords, if that is the general wish of the House, I would see no objection to a general debate covering the whole field; but I think it ought to be agreed that, if the position arises in which the matter is put to the Question, then the amendments would be separate and would not form part of the whole.
Lord Denham: My Lords, if I may intervene at this point, of course the noble Lord, Lord Jenkins of Putney, is absolutely right. The matter before the House at the moment is the amendment of the noble Lord, Lord Jenkins. It is quite possible to debate other amendments, but the one we are actually considering is the noble Lord, Lord Jenkins', and when the debate is finished his amendment will be taken before any other. Of course. with the leave of the House, we can discuss any other amendment on the Marshalled List, but what I think we must be careful about is that this is Report stage and any noble Lord, other than the mover of the amendment is entitled to speak only once on any particular debate.
Lord Mishcon: My Lords, if I may intervene—only to be helpful, I hope—I personally, if I may respectfully say so, agree with every word of what the Government Chief Whip has said. I think that what we want to achieve is one debate on the whole issue of whether or not this should be limited to licensed sex shops; and, as my noble friend Lord Jenkins said, there are alternative ways of looking at this.
I think the proper procedure is what has been outlined already—namely, that there should be one debate on whether or not they should be limited to the licensed sex shop, and which alternative is the better alternative. It may be the one moved by the noble Lord, Lord Jenkins, or the one moved by the noble Lord, Lord Houghton, but I think the House wants to avoid—and this is why I am rising—that there should be a misunderstanding and that there should be a debate on this series of amendments by the noble Lord, Lord Jenkins, and a further debate hereafter in respect of the noble Lord, Lord Houghton's amendments. Therefore if we can have one debate and then the House can express its approval or disapproval of both alternatives, or one alternative, by the separate amendments being called, I think that would be desirable.
Lord Houghton of Sowerby: My Lords, may I pursue this point of order just one stage further? What I am anxious to avoid is Amendment No. 27 being put to the House and decided upon, which might preclude me from putting my subsequent amendments to the House. Sometimes the Lord Chairman says: "If Amendment so-and-so is adopted (or rejected), it will not be possible for me to call Amendment so-and-so". If I am under no such disqualification, then we can start the main debate at any moment. There will be one debate; but when we come to decide on which alternative the House may choose to have, we would reach separate decisions on separate amendments.
Lord Denham: My Lords, of course that is right. Just to put ourselves in order, all this discussion is taking place before the noble Lord, Lord Jenkins of Putney, sits down, so that none of us is precluded from taking part in this debate at a subsequent stage. Of course, this happens very often in the Committee stage of a Bill. Two amendments are mutually non-compatible and this is, I think, the case here. So the debate takes place on the amendment of the noble Lord, Lord Jenkins. We discuss all the other amendments. When, eventually, the Question is put, the House decides whether it is going to accept the amendment of the noble Lord, Lord Jenkins, the amendment of the noble Lord, Lord Houghton—in turn, as they are on the Marshalled List—or neither, or an alternative. So perhaps we can accept that the debate takes place on this amendment, with a general debate on this issue.
Lord Jenkins of Putney: My Lords, I find that entirely satisfactory and, as I have already moved the amendments in my name, perhaps it would be in order for someone else to proceed to move subsequent amendments or to take part in the debate which I have initiated on my amendments—
Lord Denham: Unless, my Lords, the noble Lord, Lord Jenkins, wishes to deal with the subsequent amendments on this point, which he has not yet had an opportunity to do.
Lord Jenkins of Putney: My Lords, it might be convenient, then, if, before I hear other views expressed, I were to say why at the moment it seems to me to be better to deal with the point in the way I suggest, rather than in the way that my noble friend subsequently suggests. One of the reasons why it is better to deal with it in the way I suggest—although my noble friend and I are close together on this, as has been seen by the fact that our purpose is identical, because we have signed each other's amendments and are therefore involved in suggesting alternatives—is that my amendment is simpler. It removes the sex shop from the scene and simply substitutes the words, "premises licensed for the purpose". In some cases it may be decided that the premises will be a sex shop. In some cases it may be decided that they will be some other premises. That seems to me to be simpler than the other method, which is more complicated, of introducing the words,
"or a video shop for which a licence is in force under this Act".
I do not think I need spend a great deal more time on this amendment. We both seek the same purpose, and at the present moment, before hearing anybody else on the subject, it seems to me that my way is the easier.
11.48 p.m.
The Lord Bishop of Norwich: My Lords, I have much sympathy with the amendments of the noble Lords, Lord Jenkins of Putney and Lord Houghton of Sowerby. I should like to apologise to your Lordships for not being here for the first two hours of our debate. I was, in fact, at the BBC doing a recording of three hours about fascinating work on the Video Recordings Bill which should come out next week, all being well. But it brought me back post-haste to the House at 10 o'clock, ever more eager for us to make sure that we have this Bill as well as we can make it in this way.
It is delightful to find both the noble Lord, Lord Jenkins of Putney, and the noble Lord, Lord Houghton of Sowerby, with these amendments on what can only be called the vicious morality lobby, because it looks as though they are both determined to do down these sex shops. As I have always wanted to do the same, I am rather delighted. At the same time, I have a feeling that the noble Lord, Lord Nugent of Guildford, has a few shots in his locker and has reasons for restraining us from doing down these unpleasant sex shops. So I shall hold my counsel until I hear the reasons why I should not be swayed into the vicious morality lobby by the noble Lords opposite.
Lord Houghton of Sowerby: My Lords, I prefer the version on this matter that I already have on the Marshalled List, because, if I may say so to my noble friend, his amendment requires a very long tail to it. The conditions under which the premises shall be licensed are required to be spelled out for inclusion in the Bill. That is an intricate task, as my noble friend will see if he peruses the long schedule which is the necessary accompaniment to the proposal to

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alter—and extend, for that matter—the supply of material which, for films for public showing, is classified as 18R.
In an earlier debate the noble Lord, Lord Renton, said that he did not know the difference between 18B and 18R. There is a good deal of misapprehension about what 18R is. 18R is short for 18-restricted. There are two categories of videos and films which may be regarded as appropriate for viewing by people who are aged 18 or over. One is 18, simple, and the other is 18R. What is the difference? The difference was made clear by the Minister at col. 196 in the Standing Committee of the House of Commons. He quoted from the Home Office circular of 1982 which said this about the classification:
"The classification will be applied to films which, while not portraying illegal acts or extremes of sexual perversion or horror or violence, are likely to be more explicit than films at present given an 'X' certificate".
This means that 18R is not a definition of video nasties; 18R is open to viewing either in a viewing booth in a sex shop or under club conditions outside a sex shop.
That is the position regarding films. Nobody has suggested that 18R material, classified as such by the British Board of Film Censors, includes what can be described as horror nasties. When I hear noble Lords saying that we all know what 18R is and what video nasties are, may I, with great respect, say that there is a good deal of misunderstanding about it. I have just read out what 18R is. 18R was a classification created on the recommendation of the Cinema Consultative Council and it obtained the consent of the Home Office. The words I have read out were part of the Home Office circular on the subject. At the same time as giving the description of the classification of 18R, it stated where they could be seen. They would be for restricted distribution only, through segregated premises to which no one under 18 would be admitted. These films are to be seen in club conditions and in sex shops.
But now we are dealing with videos. At present, 18R material in video recordings is available at video shops. It can be sold or hired from video shops which offer this material, though not all of them do so. Under the guidelines generally followed by retailers, these videos are available only to people over the age of 18. Under the Bill, 18R material is to be available only in licensed sex shops. This applies both to video recordings of classified films as well as to the new material which may be put on video only.
The amendment which I favour and the one which my noble friend moved removes the exclusive point of availability of 18R videos from the sex shop. Under my proposal, I do not deprive the sex shop of its part in the distribution of this material, but I add to it "or a licensed video shop".
The 18R material has excited a good deal of controversy. The Standing Committee in another place spent more time on this issue than on any other. Indeed, my calculation is that it spent more than half its time dealing with this issue. The reason was that many people had confused 18R with video nasties. But I want to emphasise that 18R is a classification
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given by the British Board of Film Censors to films—and it will be given to videos. The question is: from where should one be able to obtain 18R material?
When Mr. Graham Bright's Bill was first introduced into another place, it referred to this material as being available only on premises entry to which was restricted to persons over the age of 18. It said nothing at all about sex shops. or about licensed video shops. It just stated that they should be available on premises restricted to people aged over 18. That is how the Bill went into Standing Committee.
When the Standing Committee was in the middle of its deliberations on this matter, and just before the fifth sitting. the Home Secretary made an intervention which created a great deal of trouble inside the committee. On 20th January the Home Secretary—according to press reports available on 21st January—said this (and I am quoting from The Times):
"The Government will support an amendment to the Bill to be debated next Wednesday which will make unlawful the sale to any person, adult or minor, of sexually explicit material in the so-called restricted 18 category".
That was his proposal: to outlaw 18R altogether, giving it no classification and leaving it to the Obscene Publications Act 1959 to deal with any material that it was thought should be taken to court.
This created some consternation in the Standing Committee. After a very long debate over three sittings, it finally rejected the Home Secretary's proposition by 11 votes to 5; the reason being that the public would not stand for the complete banning of 18R material, which they can now obtain from video shops and which the Home Secretary was proposing to outlaw altogether. That is why such a decisive vote of the committee retained 18R material within the classification for video recording purposes.
Then came the day of 16th March and the Report stage of the Bill and its Third Reading. At a quarter past one on the afternoon of Friday 16th March an amendment was proposed to restrict 18R material to licensed sex shops. By a quarter to two, that amendment had been passed. That is how sex shops got into the Bill. I submit to your Lordships that Members of another place did not realise the consequences of the decision that they took.
I am not saying that the decision of the House of Commons was not substantive. When the sex shop proposition was put to a Division in another place at Report stage, the proposal to restrict 18R material to licensed sex shops was carried by 98 votes to 3. So the House was certainly doing it firmly, but it was doing it in haste and it probably thought it was doing something more sensible than it turned out to be. It is the decision to restrict 18R material to the licensed sex shop that I believe your Lordships' House should reconsider and we should ask the other place to have another look at the consequences of what it did.
First, a person over 18 is an adult. He or she has the vote, the right to marry, enter into contracts, take out a mortgage and is a grown-up person who does not need the guardianship of the state censor. Secondly, the decision of the House of Commons on the final

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hurried stages of the Bill on 16th March took little account of the divergencies, attitude and policies of local authorities in granting or not granting licences for sex shops. On reaching this decision Members of another place had never looked at the map of licensed sex shops. There is not one. I have tried to obtain one. I have asked the Home Office and the Department of the Environment how many licensed sex shops there are, but they cannot tell me. They say there is no central information about them. The best I can get through the trade is that there are about 100 licensed sex shops in England and Wales. There is certainly none in Scotland or in Northern Ireland. There is certainly none in West Derbyshire and I am informed that there is none in the county of Hampshire. That is the disparity of distribution of sex shops.
Mark you, to go from outlets which at present run into thousands to 100 sex shops in England and Wales and none in Scotland and Northern Ireland is a very drastic curtailment of availability of 18R material whether we like it or not. It could not have been understood in another place that its decision would be as restrictive as it turns out to be on the availability of this material.
Another point is that sex shops are not video shops in the sense we are considering here. The licence for a sex shop depends mainly on its having for sale what are euphemistically called sexual articles. That is its main trade. To make the sex shop the exclusive supplier of 18R material is inappropriate. It seems to me that at the time the decision was reached in another place on Report, on 16th March, Members of another place could see no ready alternative to the sex shop which they were able to deal with in the Bill. Therefore, they turned, unwisely in my view, to the licensed sex shops without knowing how many or how few they were or what their distribution was throughout the country.
In my amendment I extend the right of lawful supply to video shops expressly licensed to sell or hire 18R recordings. Most of the provisions in the schedule follow closely, or even precisely, the conditions laid down for sex shops in the Local Government (Miscellaneous Provisions) Act 1982. No video shop need seek a licence, but all who wish to supply 18R recordings must have a licence from the local authority. Many shops which supply videos alone with other goods will not wish to embark on this line of business at all, with all the strict conditions applying to it. Videos are on sale at garages, newsagents, booksellers, and are available in all sorts of places. But any video shop which wants to sell 18R would have to restrict entry to their premises to those aged 18 or over and their premises would have to be completely segregated from others, with separate entrance, exactly the same as sex shops. The local authority granting a licence would have control over the degree of exhibition of this material in the shop and in the window.
Where I have departed from the provisions of the Local Government (Miscellaneous Provisions) Act 1982 is in the right of appeal. The Act of 1982—and this amendment was carried in your Lordships' House—empowered local authorities as a matter of policy to decide within the discretion given to them that they would grant licences or refuse all licences.
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Some local authorities have done that. There were two sex shops in Glasgow and the local authority refused licences to both of them. There was one in Aberdeen and the local authority refused it a licence. There were two in Edinburgh: one has been refused and the other is at the present time under appeal. But if a local authority decides, as a matter of policy, to have no sex shops at all, then there is no right of appeal against that decision by any applicant. It is only if they discriminate between one applicant and another that the right of appeal may be granted.
I feel that in this matter some right of appeal has to be given where a licence is refused, more especially as steps are taken in the granting of licences for other purposes which do safeguard the applicant against any capricious or arbitrary decision of the local authority. For example, for the premises of betting shops, gaming establishments, bookmakers, betting agencies, licences are required but it is not the local authority that grants them. The licences are granted by a committee composed of not less than five nor more than fifteen of the justices who sit for the relevant petty sessions area. They must sit at least four times a year, and there is a right of appeal to the Crown Court. Local authorities do not have the power to ban all licensed premises from serving alcoholic drinks whether on the premises or off. Those applications are dealt with by the licensing justices.
I think that in the circumstances it is reasonable, when dealing with applications for a licensed video shop, that there should be the right of appeal if necessary to the magistrates' court and also to a Crown Court if so wished, because the video shop will not be dealing with a whole range of sexual articles, or even exclusively in 18R. If they stock any 18R material, they will be banning entry to their shops except to persons over 18 years of age. For the local authority to decide, as a matter of policy, that they will not grant any licences to video shops in these circumstances I think would be quite unsuitable.
So I am suggesting that in common fairness to the consumer and to the industry, we must provide more outlets for 18R material than 100 shops spread throughout the whole of England and Wales, with none in Scotland and none in Northern Ireland. I think it is unfair and contrary to the original proposal in the Bill to impose distasteful and irksome conditions upon the citizen who wishes to acquire lawfully and with reasonable convenience a product that he may choose to have for his own personal use in his own private home. The existing sex shops would retain their rights under the Bill.
The question is, how many video shops would be likely to apply for licences to sell 18R and thereby have premises exclusively open only to people over 18 and entirely separate from any other premises whatsoever? The best estimate I can get from the trade is that between 1,500 and 2,500 throughout the country might apply for licences as licensed video shops. We have to bear in mind that, in making that application, they close the shop to young people under the age of 18, that it means adult business only, and that they have to weigh up where their interest lies. Many of them, as I have said, will decide that they do not want 18R because they want free entry into their shops for

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other purposes and at a younger age. That is the best that I can do with this amendment. I commend it seriously to your Lordships' House.
I warn the House that there is going to be trouble when the public realise that, under the Bill, material that is now freely available to them if they are over 18 will not be there, that it will be miles away or inaccessible altogether. There must be more than a hundred outlets for 18R, when there are thousands at present. Otherwise, this is a form of censorship that was refused in principle in Committee. It becomes a form of censorship by restricted opportunity of acquisition. That is not the straight way of proceeding. If Parliament wants to make this material unlawful, it should do so by law. It should not just push it away and have such restricted opportunities of acquiring it that it really amounts to a form of censorship by deprivation.
That is, I think, all that I can say, and it is quite a lot. I do stress, however, the importance of the matter. We do not want an underworld of video work to start and to be widened. It has to be borne in mind that the underworld can take place in the field of 18R just as it can take place in the field of videos given no classification at all. It would be a great shame if lawful 18R material went into a kind of black market simply because of the restricted opportunity of buying it over the counter in a lawful fashion in a licensed video shop. If there is anything left in your Lordships' House that is worthy of respect, it is surely to consider what has been done and to reserve to ourselves the right to send something back to the other place if we believe that circumstances which were not known to it, which were not debated there and which, in my opinion, were imperfectly understood, should be reconsidered.
I stress that the material we are talking about is not nasties. It is classified material restricted to people over 18, who have a restricted opportunity of gaining it. I draw the attention of the House to the recent survey of British social attitudes, the 1984 report, which showed that in 1983 48 per cent. of people were in favour of pornography being available in special adult shops but not displayed to the public. One notices that the proportion of those in favour rises substantially in the younger age group and declines among those aged 55 or over. This rather suggests that the viewpoint of noble Lords might well be more consistent with the lower level of approval to be found outside among the 55s and over than that among the 18 to 35 age group. Whichever way one looks at it, there is a substantial body of opinion that believes that even what is called pornography should be available at special adult shops, but not on display.
The display would not be there if they obeyed the conditions of the granting of the licence by the local authority. When the time comes I shall move my amendment in the hope that it makes a complete job of it, and the House may feel that it is in the sort of shape that could be added to the Bill for reconsideration in another place.
12.15 a.m.
Lord Ardwick: My Lords, before the noble Lord sits down, can be tell us whether he found out from the trade how many club cinemas there are? These are the only cinemas where the 18R films can be shown.
Lord Houghton of Sowerby: My Lords, I have not got any information about that. I realise fully that the club cinemas are the only places where it may be shown publicly. Bear in mind that a club cinema is open to the public if they are members of the club. The difference is between showing in a club to a number of people or in a viewing booth at a sex shop, and having it in the home.
The Bill says people can have it in the home. The Members of another place decided that it should not be made unlawful. All I am dealing with here is whether the opportunities the Bill gives for acquisition of 18R films are reasonable in the circumstances and will give contentment to those who desire to have the arrangements, quite properly and lawfully, on a convenient scale for their own personal use.
Lord Robertson of Oakridge: My Lords, I want to be very brief. I have some sympathy with the thoughts behind these two groups of amendments. I must say that I thought licensed sex shops were set up in 1982 for the very purpose of dealing with this sort of material we are considering. I do not see that Amendment No. 27, by the noble Lord, Lord Jenkins of Putney, is a runner until we know more about it. Who is going to do the licensing? Under what arrangements will the licences be given? What is the actual purpose for which they would be licensed?
Lord Monson: My Lords, both the series of amendments are extremely important and worthwhile. On balance, I prefer the series headed by the name of the noble Lord, Lord Jenkins of Putney. The noble Lord, Lord Nugent of Guildford, is no friend of sex shops; I do not think there is any secret about that. Yet if this Bill remains unaltered it will mean enormous profits for certain sex shops, especially those in areas of the country where they are thin on the ground in consequence of earlier legislation with which the noble Lord had something to do. The huge profits will come about because of their quasi-monopoly position.
But there is a much more important factor. Some of your Lordships may have had a letter from a video dealer in Essex—a responsible-sounding individual who was strongly in favour of the Bill as a whole but who had important reservations. This dealer revealed that, contrary to popular supposition, the main customers for 18B or 18R films were not, as might be imagined, single people, mainly young bachelors. On the contrary, they were married couples who bought or hired these films in order to add spice to their sex life.
Generally such couples are interested only in normal, straightforward heterosexual sex. But if they are driven to sex shops in order to secure these 18B and 18R videos, is there not a danger—this was pointed out by the dealer in question—that for hardheaded commercial reasons the proprietors of these shops will try to interest these married couples in

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much of the other material that they sell, a great deal of it nowadays concerned with perverted sex? Surely this is not something that we should wish to see.
Lord Nugent of Guildford: My Lords, I listened with close attention to the noble Lord, Lord Houghton. I have spent a good deal of time studying his schedule, because that is the substance of his proposition. While I take the point which the noble Lord, Lord Jenkins, was making, his amendment does not have substance until we suggest how we are going to license, how the licences will operate and how they will be controlled.
Therefore, I regard Lord Houghton's amendment as a very serious amendment. I have spent a great deal of time studying and thinking about his schedule. Our difficulty is that in one way the noble Lord approaches the point, but in another way he does not. He speaks at length on the point about R 18 videos and their handling by the Bill. It is a fact that the R18 point is the most sensitive point in the whole Bill. That was certainly the case in another place, the history of which the noble Lord recounted very fairly and at length. It was clearly a matter of great difficulty in the Commons for a consensus to be achieved, but it was finally achieved.
The fact is that many noble Lords in this House, as well as many honourable Members in another place, wanted to see R18 videos excluded from classification on the grounds—and they were perfectly sound, practical grounds—that the viewing of films with that classification is legally limited to adults of 18 and only in licensed cinema clubs, and converting them to video tapes for viewing in the home or anywhere would allow them to be seen by anyone and by children of any age. So there was a perfectly logical point made by those who put forward that contention.
However, as the noble Lord had reminded us, the contrary argument is that the Bill is primarily a classification Bill and not a censorship Bill, despite what the noble Lord, Lord Houghton, says from time to time. Thus it was that those who objected to R18 being classified were persuaded to accept that R18 should be included in classification. But they did propose the safeguard of limiting the sale or hire of such video works to adults by confining it to licensed sex shops, where such regulations already exist.
As the noble Lord has rightly recorded, this amendment was put in by the House itself by a very large majority. I am not sure that the noble Lord was on very good ground when he said that the House of Commons did not understand what they were doing when they did it. They did it. The point here is that they felt that they had got to achieve a consensus somehow. They felt that classification was needed, and, therefore, they had to achieve a balance; and this is the way in which they did it.
I must say that throughout the conduct of this Bill in this House—and I will certainly admit to all noble Lords that this is a very complicated little Bill; indeed, as the sponsor I should apologise for its ever-growing complexity—I have tried to maintain that balance. I am perfectly certain that that is the only basis upon which either this House or the other place would accept it. It is a very delicate balance.
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That is the background to what the noble Lord is now proposing. The conditions applying to the licensing of sex shops by local authorities are very tight indeed. Schedule 3 to the Local Government (Miscellaneous Provisions) Act 1982, in the discussion of which many noble Lords took part, was completed after many hours of debate in this House to get it, as we thought, entirely right.
Local authorities were insistent that they should have the decision as to whether or not there should be a sex shop at all in their locality. Therefore, that was included in the schedule: they could decide that there should be a nil provision; they could also decide exactly what were the physical conditions with regard to the location of a sex shop. They were particularly keen that it should not be located alongside a school or anywhere like that. They were very strict that only adults over the age of 18 should enter, and that breach of that regulation would incur a penalty in that schedule of up to ₣10,000. Now I imagine that it is ₣20,000.
Although a great deal of work has been done on the new schedule (and that I recognise) which the noble Lord proposes in Amendment No. 51, it sets out a much looser control. It is true that the licensing authority may prescribe standard conditions applicable to licences, but those are not specified in the tight fashion that they were in the 1982 Act, and there is no obligation in the schedule with regard to limiting window displays. The age limit of 18 is there, but no penalty is mentioned as to what would happen if the regulation is broken. This means that the safeguard in that respect is greatly weakened. This is what it is all about.
Furthermore, the attitude of local authorities, which presumably would be the licensing authorities (although we do not know precisely), is that they are completely opposed to any extra duties without the certainty of the cost recoupment, and it is most unlikely that a fee of ₣350 would recover all their administrative costs.
However, much more serious from the point of view of local authorities is the lack of adequate power for a local authority to reject an application if it so desires. I can imagine that local authorities would have very much the same feelings about this as they had about sex shops. Of course, there would be no appeal. They were very firm about that. They realised that they were dealing with people who had vast financial strength behind them, and that if these facilities were made available, their legal costs would be infinite. Therefore, the House agreed that the proper way was for there to be no appeal.
Therefore, there are some very substantial practical points, which I am sure the noble Lord fully understands, involving the difference between his kind of licensing scheme and the scheme for the licensing of sex shops which now exists. I do not believe that in this delicate balance, to which I referred at the beginning, a change from the tight control of sex shops under the 1982 schedule regarding the sale of R18 material would seem the same to noble Lords here who are interested, as well as to honourable Members in another place. I think that they would regard this as a major change in the balance of the Bill. I am bound to

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say that I regard it as seriously weakening the purpose of the Bill unless one could be absolutely sure that the licensing conditions were as effective as they are for sex shops. I do not think one could be sure on a schedule, even if local authorities were willing to do it.
Therefore, I believe that the objections which I have mentioned are of such gravity that if we proceeded to amend the Bill in the way in which the noble Lord wishes to amend it, we would endanger the passage of the Bill here and, most certainly, in another place, because we would disturb the balance on which a consensus was achieved in the other place. I believe that we would then lose the Bill itself.
I recognise both the hard work which the noble Lord has done in drawing up this schedule and the reasons that he has adduced to us for the way in which he has drawn it up. But I do not believe that, in these very difficult circumstances with which we are dealing, something which is so different from the very tightly regulated conditions of the 1982 schedule would be satisfactory. Therefore, I must advise your Lordships that we could not accept this amendment.
12.30 a.m.
Lord McIntosh of Haringey: My Lords, I appreciate that the strong feeling in the great majority of Members of this House is of almost instinctive disgust at the kind of videos which the Bill is concerned with, and, from some of the sotto voce interjections this evening, at the things which are sold in sex shops. I appeal to the House not to allow that feeling of disgust to cloud its judgment when considering this series of amendments. As my noble friends have said, and indeed as the noble Lord, Lord Nugent, said, none of these preceding amendments makes any sense unless we are also considering Amendment 51 which brings in the new schedule.
It is necessary to look at the context in which these amendments are put forward. These amendments do not challenge the categories of film which are to be covered by the Bill. They do not challenge the classification. They are not concerned with those films—I take it they would be the video nastier—which are excluded from any classification by the designated authority. In other words, they are not concerned with those types of videos for which Members of this House feel this unfeigned disgust.
They are concerned with a different category, the category 18R, which in the terms of this Bill—which failed to be amended in another place—is approved of for selective viewing in certain places. The more general issues of morality which arise when considering the other categories, and those which fail to get classification, do not arise when we are concerned with this amendment.
The issue here is whether, having formed this category and allowed certain people to see those films under certain circumstances, it is right and proper to restrict that possibility to those who have access to—I must take my noble friend Lord Houghton's figures because I have no others—the fewer than 100 outlets in the country. Is it right to restrict it to those outlets
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when, as has been said, also in those outlets are other materials (sexual aids and printed materials, and so on) which may well disgust those people who see no objection to the films in the 18R category?
It is a question here not of defining what is a proper thing to be shown. For the purpose of these amendments that is taken as read. It is a question of saying—having defined it, having said that it is acceptable for certain kinds of people—is it now the right thing to do to restrict it to a small proportion of the population simply dependent on where they live and on the attitude of their local authority to the wider range of materials available at sex shops?
I cannot see how the firm defenders of the Bill can defend this particular final restriction on the availability of material which they themselves wish to be available for certain categories of people. I cannot see how in the general terms—although in the fairly expressed general terms—in which the noble Lord, Lord Nugent, has objected to these amendments it can be possible for Members of this House to object to the principle behind these amendments.
I do not know whether the differences between my noble friends Lord Jenkins and Lord Houghton are important. I do not know whether the final drafting of the schedule, or of some of the preceding amendments, is perfect and beautiful. I know that it is not inconsistent at all with the purposes of the Bill, and it removes from the Bill the possibility that there is in effect a rationing by price to be introduced if these amendments are passed. I shall support whichever amendment is put to the vote.
Lord Jenkins of Putney: My Lords, before I briefly give the further views to which I believe I am entitled, I should like to say to the right reverend Prelate that I do not go along with him in his wholesale condemnation of sex shops. I just see no reason at all why they should be selected out for special privilege in this fashion and given a monopoly of a new development which will no doubt increase their prosperity enormously. For that reason, I think this matter must be persisted with. But between them, my noble friends and the noble Lord, Lord Nugent, have convinced me that there must be a schedule to the Bill. One cannot provide for licensing without providing the means whereby the licensing may be carried away. I am therefore persuaded, having listened to the discussion, that my noble friend's amendments are more compatible with the schedule, because they were designed with the schedule in mind, than are my own amendments.
It would therefore be my view that, since this matter is one where I share my noble friend's views so cogently expressed just now, this matter must be pressed, and under those circumstances it would be my desire to withdraw my own series of amendments in favour of those in the name of my noble friend Lord Houghton, and to express the wish that he will seek the opinion of the House upon them.
Amendment, by leave, withdrawn.
[Amendments Nos. 28 and 29 not moved.]
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 30:
Page 8, line 36, at end insert ("or a video shop for which a licence is in force under this Act").
The noble Lord said: My Lords, I beg to move Amendment No. 30.
Lord Elton: My Lords, if I understand correctly that the noble Lord, Lord Houghton of Sowerby, is not intending to speak more than those few words, I would only respond that I think my noble friend has spoken so ably on this Motion and given such cogent reasons, it is not necessary for me to speak further.
But I would just say to the noble Lord, Lord Houghton of Sowerby, who said that the honourable Members in another place had acted, in effect, in ignorance and haste, that, as he rightly said, they spent a very long time discussing the matter of the 18R issue. That was exhaustively discussed in the committee. Then, at the end of it, my honourable friend, Mr. Graham Bright, came to the House at Report with the sex shop provision, and that was debated for exactly an hour. It happens, my Lords, that your Lordships debated the same issue for almost an hour a moment ago, and, if the subject was not completely exhausted, I think it very nearly was, and I think some of your Lordships nearly were too. So to suggest that the other place had acted in haste and ignorance, my Lords, I am afraid is simply not the case.
What the noble Lord is inviting your Lordships to do is to take the opinion of the House, and he seeks to persuade the House to fly in the face of the considered and long-gestated opinion of another place. Your Lordships will know what effect on the fate of this Bill that decision would have.
Lord Mishcon: My Lords, I want to add a plea, if I may, and I do it in all frankness. There has been a complaint made, as it were, by my noble friend Lord Houghton, that there are some local authorities—indeed, in Scotland, Northern Ireland and my own very dear county of Hampshire—which have decided that there should in fact be no sex shops.
This House has listened to many eloquent speeches from all Benches—and certainly not least the Benches on which I proudly sit—for the independence of local government and for the rights of local people and their representatives to decide what ought to be done in their locality. I am sure, therefore, that my noble friend Lord Houghton of Sowerby will at least respect—whether or not he pities the people of Northern Ireland, Scotland and Hampshire—the fact that local, democratically elected representatives have decided what should happen in their area.
My noble friend Lord Houghton, as well as my noble friends Lord McIntosh and Lord Jenkins, all of whom have served in local government, or Government, or both, know that there are also democratically elected representatives who sit in another place representing the views of the people. They are the elected representatives of the people. That is supposed to be one of the reasons why complaints are made about the composition of this House. That is certainly not an issue that I intend to debate at this hour, nor on this subject. But the noble
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Lord, Lord Houghton, has already said that this matter took up one half of the whole of the Committee's time which was given to this Bill. That democratically-elected House, through their representatives at Committee stage and, even more vocally, at Report stage—
Lord Houghton of Sowerby: Oh, come, come, my Lords.
Lord Mishcon: My Lords, my noble friend asks me to "Come, come". I certainly will "come, come" with the figures in the Division Lobby: the answer was 90-odd to three. If my noble friend does not like Division Lobbies and Division votes because he feels that they are automatic, I would remind him that to try to take any decision of a democratic nature at twenty minutes to one in the morning with a diminished House is hardly a way to test opinion in a Division Lobby. But the directly-elected representatives of the people decided by that 90-odd votes that this is the provision that they wanted in the Bill and that they did not want these 18R films to be procurable in any place other than licensed sex shops.
The third point is the last one that I make in an appeal to my noble friends, all of whom are as democratically minded as I am. I give myself no superiority to them at all in that regard; that is a matter on which we are completely united. The other place, having decided after that debate, both at Committee and Report stages, on the present provision, having debated all the issues, made their decision. My noble friends know as well as I do that it is impossible to envisage that the other place will change their decision if an amendment is put tonight and passed. It may be—and my noble friends, I am sure, realise it—that not only would their amendment not be passed tonight, but, because of numbers, it might succeed in adjourning the whole of the proceedings, which would hardly be a democratic thing to do. It would be done in the face of knowing perfectly well that this amendment, if passed, would not be accepted in another place. I speak again personally, as I have the whole time.
What would happen is that at nearly a quarter to one in the morning, with this sparse House, this Bill, which the majority in this House favour and want to see passed as soon as possible, would, by undemocratic methods, be defeated and would stand right in the face of the opinion of the majority of the people in this Chamber, not only tonight but on previous occasions.
I appeal to my noble friends in these circumstances not to press this matter to a Division when they know that the result will be a completely negative one in the face of the democratic wish of this House and another place, and of local government as a whole. In those circumstances, I can but make the plea. If it fails, I shall be disappointed in my noble friends; but then my noble friends are often disappointed in me. I shall therefore have to go away from this place with that feeling of disappointment. But I do make that plea because I know that I am talking to democrats and if they force this issue in these circumstances, it will be the most undemocratic thing that they have done.
Lord Houghton of Sowerby: Really, my Lords, no one would think that I had been in two Houses of Parliament for 35 years, would they, after having listened to this patronising lecture from my noble friend. I am fully aware of all the problems and circumstances here. But your Lordships' House will be urged by my noble friend in connection with the Police and Criminal Evidence Bill to send things back to the House of Commons knowing just as firmly that they will not have them on that Bill as he believes that they will not have them on this.
This House does not pay regard necessarily to the attitude of the House of Commons. What it does is to send something back to the House of Commons for reconsideration in the light of new circumstances or of different opinions. I claim to have brought before your Lordships' House conditions which were not known to Members of another place when they reached their decision on 16th March. The main point of the debate in the Standing Committee was not whether 18R should go to a sex shop but whether they should support the Home Secretary who wanted to ban it altogether. And they were expressing good reasons from the point of view of representations made by the constituents why they should not ban it altogether. Nothing was done in Standing Committee about sex shops, and the consideration came in the afternoon of Friday, 16th March, when the Report and Third Reading were completed in another place.
I can only say that when the House is sitting, those who are not here could be here if they chose and were able to be. Democracy has not excluded anybody. Therefore, decisions have been reached one way or another at all hours of the day and night on matters of great importance. One can only follow the procedures of the House. What does my noble friend think I am going to do by not pressing this to a Division or withdrawing it or surrendering it?
I will not surrender on this matter. I believe that this is of profound importance to those who are entitled under the law to reasonable convenience in the procurement of something which at the present time is open to purchase freely in shops up and down the country. And let me just remind him finally of this. The Local Government (Miscellaneous Provisions) Act, which gave local authorities the power to ban sex shops altogether from their areas, was at variance with the provisions made in the past on similar controversial activities which sought to open up in local authorities up and down the country. Betting shops were one instance. The publicans do not go to local authorities; the off-licencees do not go to local authorities; the betting shops do not go to local authorities; the gaming shops do not go to local authorities. Some local authorities would probably stop the lot if they had the opportunity of doing so.
But there are some things which rise above the so-called democratic decision of a local authority—very often capricious, very often on party lines, very often for all sorts of other reasons which we need not discuss. But the issue is plain. This House is not asked to pass changes in the Bill in its final form. This is what this House should traditionally do if it so feels; that is, send something back to the other place and say, "This is what we think. Do you agree?" If they do not, it comes
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back here and, traditionally also, we give way to the final view of the elected Chamber. My noble friend is seeking to deny some of us the opportunity of doing this. With great regret, I must say that I did not deserve his lecture. I will not accept it. So far as I am concerned, I am going to say. "Content!" until I cannot speak any more.
Lord Mishcon: My Lords, with the permission of the House and before my noble friend takes his very honoured seat, I say only this to him. I do not impose any lecture upon him. I merely talk to him as one colleague to another, and I hope with due respect. If a democratic decision upon this issue is really wanted, my noble friend has a completely obvious task; it is to withdraw the amendment at this stage—
Lord Houghton of Sowerby: My Lords—
Noble Lords: Order!
Lord Mishcon: My Lords, if my noble friend will allow me to finish, I shall give way. The task is not to try to impose a Division at this time, with this meagre number and with the obvious result, but to withdraw at this stage and bring it forward if he wishes at Third Reading at a respectable hour and with noble Lords present who could not be present at 12.50 a.m. only because they do not have the agility of my noble friend even though they may be considerably younger.
That is the appropriate thing to do so that a proper vote can be taken without the defeating end which taking a Division at this hour would have. I can only make the appeal to my noble friend. He has rights, and all noble Lords know it, but I do make the appeal because I know that when I am talking to my noble friend I am talking to a democrat who has sat with great distinction in two Parliaments.
12.51 a.m.
On Question, Whether the said amendment (No. 30) shall be agreed to?
Their Lordships divided.

DIVISION NO. 1

CONTENTS

Houghton of Sowerby, L.

McIntosh of Haringey

Jenkins of Putney, L.

Monson, L.

NOT-CONTENTS

Ardwick, L.

Long, V.

Attlee, E.

Mishcon, L.

Beswick, L.

Morris. L.

Buckmaster, V.

Norwich, Bp.

Denham, L.

Nugent of Guildford, [Teller.]

Elton, L.

Robertson of Oakridge, L.

Grantchester, L.

Rugby, L.

Halsbury, E. [Teller.]

Saltoun, Ly.

Lauderdale, E.

Swinfen, L.

The Deputy Speaker (Lord Aberdare): My Lords, as it appears that fewer than 30 Lords have voted, in accordance with Standing Order No. 55 I declare the Question not decided, and the further proceedings on the Bill stand adjourned.

Data Protection Bill [H.L.]
Returned from the Commons agreed to with amendments.

Inshore Fishing (Scotland) Bill [H.L.]
Returned from the Commons agreed to with amendments.
House adjourned at one o'clock.

  PUBLIC INDUSTRY AND THE CLOTHING, FOOTWEAR AND TEXTILE INDUSTRIES: GRANTS AND SUBSIDIES
  PUBLIC INDUSTRY AND THE CLOTHING, FOOTWEAR AND TEXTILE INDUSTRIES: GRANTS AND SUBSIDIES
  RADIOACTIVE WASTE: DISPOSAL
  RADIOACTIVE WASTE: DISPOSAL
  UNST, SHETLAND: RE-SEEDING OF MOORLAND
  UNST, SHETLAND: RE-SEEDING OF MOORLAND
  ECOLOGICAL WORK: RESPONSIBILITY
  ECOLOGICAL WORK: RESPONSIBILITY