Sitting of 29 January 1985

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

PRIVATE BUSINESS
Mr. Andrew F. Bennett: On a point of order, Mr. Speaker. It is my intention to object to all 18 Bills. Could they be put together and objection be taken to all of them at once?
Mr. Speaker: That might save time. Objection is taken to all of them. I shall read through the list quickly, and the Chairman of Ways and Means will then name a future day for all of them.
BIRMINGHAM CITY COUNCIL BILL
BRITISH RAILWAYS BILL
CAMBRIDGE CITY COUNCIL BILL
C-POULTRY COMPANY LIMITED BILL
FELIXSTOWE DOCK AND RAILWAY BILL
GOSPORT BOROUGH COUNCIL BILL
GREATER LONDON COUNCIL (GENERAL POWERS)
BILL
HARROGATE STRAY BILL
HASTINGS PIER BILL
LINCOLN CITY COUNCIL BILL
LLOYDS BANK (MERGER) BILL
NATIONAL BANK OF NEW ZEALAND LIMITED BILL
PLYMOUTH MARINE EVENTS BASE BILL
ROYAL BANK OF SCOTLAND BILL
SCARBOROUGH BOROUGH COUNCIL BILL
SOUTH YORKSHIRE PASSENGER TRANSPORT BILL
STREATHAM PARK CEMETERY BILL
YORKSHIRE WATER AUTHORITY BILL
To be read a Second time upon Thursday.

Oral Answers to Questions
  DEFENCE

    Trident
    Mr. Strangasked the Secretary of State for Defence if he will now announce his revised estimate of the cost of Trident.
    Mrs. Clwydasked the Secretary of State for Defence when he expects to announce the latest cost estimate of Trident.
    Mr. Meadowcroftasked the Secretary of State for Defence what is the most recent dollar-sterling exchange rate of which the review of Trident costs has taken account.
    The Secretary of State for Defence (Mr. Michael Heseltine): Each year the long-term programme of my Department is re-costed as part of a planning process. Established convention indicates that I should assume a dollar exchange rate of £1 to $1··38. The updated Trident figure on this basis, and at average 1984–85 prices, is £9,285 million. Approximately 55 per cent. of the work by value is planned to be undertaken in the United Kingdom. I see no case for changing the conventions on which this Government and previous Governments have worked. However, in view of public interest, I am making available to the Select Committee on Defence and the Public Accounts Committee an indication of the effects of the changes in the exchange rates so that those wishing to predict exchange rate changes over the procurement period of the Trident programme will be able to do so at the exchange rate that they consider appropriate.
    Mr. Strang: Will the Secretary of State admit that that cost is a gross underestimate, taking into account the current dollar-sterling rate? Will he further admit that the 55 per cent. figure in the United States is also an underestimate? Is it not outrageous that thousands of millions of pounds are to be spent in the United States on American technology and jobs? How can the right hon. Gentleman defend that situation to the millions of unemployed people in this country?
    Mr. Heseltine: No doubt inadvertently, the hon. Gentleman has got the figures wrong. The figure that we believe to be right is about 55 per cent. of the cost in the United Kingdom, as opposed to 45 per cent. as the hon. Gentleman says. The issue is whether Britain needs its own independent nuclear deterrent, and whether the D5 Trident system is the appropriate one. That was the decision reached by the Government, and upon which they were elected. It would not be difficult to persuade the British people, employed or unemployed, that the security of these islands depends on Britain's independent deterrent and associated defence policies.
    Mrs. Clwyd: The Secretary of State will no doubt recall telling the Select Committee on Defence on 22 May 1984 that the whole submarine will be built here. How can he say that when £17 million worth is being built in the United States and another so-called design contract costing $63 million has been given to General Dynamics

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    Corporation? Does he not recognise that, to use a favourite phrase of the Government, he has a grossly uneconomic weapon, which should be scrapped forthwith?
    Mr. Heseltine: The hon. Lady does not believe that Britain should have an independent nuclear deterrent, and nor does the Labour party, to which she belongs, but that party was soundly beaten in the election, one of the reasons being precisely that conviction. I do not have the record of my evidence to the Select Committee in front of me, but I shall check it. The submarine will be part of a contract that we intend to place with Vickers. We think that within that contract the American contribution could be about 10 per cent.
    Mr. Meadowcroft: Is there not a point at which the exchange rate will reach such an extreme that the missile system cannot be ordered without it causing immense damage to other conventional defence spending, unless the matter is fudged by extending the procurement life, presumably even beyond the life of the missile system?
    Mr. Heseltine: The hon. Gentleman has asked two questions, the first of which concerns the changing assumptions in the period concerned. Ministers have given no authority to change the assumptions on which the costing has taken place. I have added a further instruction to my Department that there will be no change in the assumptions and that, subject only to security considerations, if there were in my view to be a need to change the assumption I would report that fact to the House. Otherwise, the position remains as it was when Sir John Nott first explained the circumstances relating to D5 to the House in March 1982. There will not be a spread, as has been suggested. I agree that trying to predict 18 or 20 years ahead for a programme of this type produces some elements of guesstimate at the tail end of the period.
    The hon. Gentleman also asked about the scale and impact of the programme on the defence budget. It is a very large programme, but the House will take account of the fact that, when the Tornado programme was in its early stages, it was a larger proportion of the defence budget, which, in turn, was smaller than it is now. I do not remember there being a great outcry from the Opposition that there was no way in which we could accommodate the Tornado programme in the smaller defence budget of the time.
    Sir Anthony Buck: Does my right hon. Friend agree that it is important to emphasise that the programme will enable us to retain a capability which successive Governments have thought it appropriate for us to have and that more than half the money that is to be spent will be spent in the United Kingdom?
    Mr. Heseltine: My hon. and learned Friend is correct. He and the Government believe that an independent British nuclear deterrent is an essential part of the strategy that has kept the peace in Europe for a record period in contemporary history. As those policies patently have worked, and continue to work, we believe that they should be continued.
    Mr. Heathcoat-Amory: Does my right hon. Friend agree that cost can be assessed only in relation to effectiveness? Is he worried that the development of star wars defence systems might render Trident ineffective? Does that make a case for the development of alternative non-ballistic systems, which might also be cheaper?
    Mr. Heseltine: My hon. Friend raises an important question, but the time scale in which those questions will be answered provides the answer to his question. The star wars project is a research project which will cover a period of time which will ensure that, even if the Americans determine to go ahead with the project—nobody knows whether they will have the capability or, in the end, will take such a decision—the fact remains that we should have Trident in service long before that. It would play a critical role in the defence of the West long before the star wars project could be implemented.
    Mr. Steel: Will the Secretary of State confirm that three things have changed since the Government first took their decision: first, that the cash cost of the project has virtually doubled; secondly, that the time over which it is planned to repay it has been lengthened twice; and, thirdly, that the value of contracts to British industry has declined as a proportion of the total? Does he agree that those changes mean that we should re-examine the programme and decide whether, in the interests of British defence and industry, we should go for more spending on conventional defences?
    Mr. Heseltine: The right hon. Gentleman will know that we have increased the defence budget by about £3,000 million in real terms and that that enhancement is broadly continuing into the future. It has given us vast extra resources, part of which will be spent on Trident. I have read the right hon. Gentleman's speeches in which he suggests that assumptions have been changed. How does he square that with the comments of my predecessor, Sir John Nott who said:
    "I can confirm that we are talking about large numbers of jobs for British industry and a huge programme which will stretch over the period of 18 years." — [0fficial Report, 11 March 1982; Vol. 19, c. 979.]
    If the right hon. Gentleman had the courtesy to reflect that statement in his speeches to the House, his facts would be more accurate than they are without such reference.
    Mr. Bill Walker: Does my right hon. Friend agree that the Trident programme is unique, in that the envisaged costing covers the whole programme and everything that is required for Trident? All other defence expenditure costing does not include everything. For example, the Tornado programme did not include hardened shelters and the other necessary facilities. The same is true of warships and everything else. Does my right hon. Friend agree that when people talk about the cost of Trident it is the whole cost, whereas for all other defence programmes it is not?
    Mr. Heseltine: My hon. Friend has made a most important point. It is especially relevant to his example of the Tornado programme. It took up a bigger proportion of the defence budget. It was a more expensive programme on a lower defence budget. The costing for it gave us only an aircraft that could fly. The weapons systems with which it had to be equipped and the infrastructure from which it would fly had to be added to the cost. That shows dramatically that, although the cost of Trident is large, because it is of such significance to the defence of the United Kingdom it is containable in our much larger defence budget.
    Mr. Duffy: Even if the Secretary of State can contain the financial cost of Trident, is he not incurring greater opportunity costs in terms of the Alliance's real needs, which, on the military side, are sustainability in Europe

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    and, on the political side, conventional initiatives that will raise the nuclear threshold? Is he not in danger of appearing to behave as irrelevantly to the real needs of the Alliance with his Trident programme as President Reagan is with his star wars programme?
    Mr. Heseltine: It was precisely because the Government wanted to increase conventional capability that we took decisions which have added £3,000 million to the defence budget in real terms. Precisely for the reasons that the hon. Gentleman has put forward so articulately, we could not understand the proposal to reduce the defence budget by one third, on which he campaigned at the general election.
    Sir John Farr: I recognise the importance of Trident to us, but is my right hon. Friend aware that it would be much easier to support this policy if there were a bigger percentage of home-produced content in the weapon? Will he re-examine the weapon's control system to see whether it is possible for British contractors to quote for that part of the contract?
    Mr. Heseltine: I agree with my hon. Friend that it would be attractive if, in the concept of the two-way street, there were a larger United Kingdom component in the Trident programme. It was one of the many contracts in existence when we joined, and it is extremely difficult for contractors to break into a pattern of industrial organisation of that sort. Attempts are being made and a significant number of companies are involved in the process, although not as many as I should like. That has to do with the companies themselves, not just with the attitudes of the British or American Governments. I would not want to pretend that, where we had to make a major decision about this uniquely important defence system, we were able to negotiate offset arrangements of the sort that characteristically we would want. Whereas on the concept of the two-way street the Government have a 2:1 adverse ratio, in the not-too-distant history it was a 4:1 adverse ratio.
    Mr. Denzil Davies: In case the Secretary of State has not heard this news, let me tell him that the pound is not standing at $1·38 but is hovering around $1·10. That puts another £700 million, as he well knows, on the figure that he has given to the House. Therefore, the figure is £10 billion, not the £9·2 billion that he mentioned. Why does the right hon. Gentleman make himself look so ridiculous by pretending that all that money can be found without making substantial and savage cuts, in Britain's real defences? Apart from a perverse vanity, what is the point of going ahead with this weapon, which no rational person could contemplate using, and which, if it were used, would turn our island into a pile of irradiated rubble?
    Mr. Heseltine: Are we to gather from the right hon. Gentleman's statement that the nuclear weapons which the Labour Government thought so necessary were useful, whereas the Trident programme is not? The Labour Government consistently maintained Britain's indepedent deterrent and, in secret, modernised it through the Chevaline process. Yet this Government, who are merely continuing the same programme, have apparently lost that support.

    Experimental Aircraft Project
    Mr. Carter-Jonesasked the Secretary of State for Defence if he will make a statement on the present standing of the experimental aircraft project.
    The Minister of State for Defence Procurement (Mr. Adam Butler): The experimental aircraft programme is a joint venture by the Ministry of Defence and industry to bring together and demonstrate in one aircraft specific advance technologies which will be applicable to a variety of advanced aircraft. The design and construction of the experimental aircraft are progressing satisfactorily and it is on schedule for first flight in 1986.
    Mr. Carter-Jones: Is the Minister aware of the urgent need for a fighter aircraft? Will he make a decision on the European fighter in March? If not, in the interests of defence, the RAF and the work force, will he go it alone?
    Mr. Butler: I am interested in the fact that the hon. Gentleman has managed to switch the question to one about the European fighter aircraft, about which a question will follow soon. The experimental aircraft is not a prototype for the European fighter aircraft.
    Mr. Wilkinson: Will my right hon. Friend try to obtain data from this most important technology demonstrator and pool the data with that obtained from the French on the ACX aircraft, since both experimental aeroplanes will provide the technology needed for the Euro fighter, which we all hope will form the front line of the five air forces which have agreed joint staff targets?
    Mr. Butler: I am glad that my hon. Friend has pointed to the advantages of and need for collaboration in such matters. I hope that what he suggests will be possible.
    Mr. McNamara: Can we expect the French to share their research secrets with us, when the French Government have allocated nearly three times as much money to the ACX project as we have allocated to the European fighter aircraft project? Why will the Government not invest more money, in the interests of British industry and jobs?
    Mr. Butler: Again, we are straying into the question about the European fighter aircraft. I can only refer to the understanding that exists with regard to collaboration in aircraft matters. If we are to go ahead with the project, it will be essential to exchange technological information.

    Nuclear Missiles
    Mr. Jannerasked the Secretary of State for Defence whether, in the light of the recent accident involving American service men handling Pershing II missiles in Germany, he will review safety precautions for handling missiles with nuclear warheads in transit in the United Kingdom.
    The Minister of State for the Armed Forces (Mr. John Stanley): As I told the hon. and learned Member on 13 November, the arrangements for the safe transport of nuclear weapons remain constantly under review.
    Mr. Janner: Recognising, as I hope the Government do, the anxieties about the dangers inherent in the handling and transport of nuclear missiles, will the Minister answer a simple question: are local fire and police authorities informed when missiles are to pass through their areas?
    Mr. Stanley: As I told the hon. and learned Gentleman previously, guidance is issued to some chief constables and fire officers. I cannot go further than that, because it is not the Government's policy, any more that it was our predecessor's policy, to give any information about the routes or methods of transport of nuclear weapons.
    Mrs. Currie: With regard to the movement of nuclear weapons and their resting places, did my hon. Friend notice the comments of Mr. Roger Spiller, the male vice chairman of the CND, that the campaign at Molesworth, unlike the unsuccessful campaign at Greenham common, will not be left to women this time because
    "Molesworth is more impOrtant than Greenham common"?
    Does my right hon. Friend agree that that shows that the philosophies and practices of the CND are not only wrong and foolish, but sexist to boot?
    Mr. Stanley: I am grateful to my hon. Friend. I assure her that the addition of a male element will make this campaign no more successful than the previous one.

    FH70 Ammunition
    Mr. McWilliamasked the Secretary of State for Defence if he will make a statement concerning FH70 ammunition procurement.
    Mr. Butler: Deliveries of FH70 ammunition began in 1978 and procurement of certain kinds is continuing. The allocation of work on the FH70 programme is governed by a memorandum of understanding agreed by the participants to the programme.
    Mr. McWilliam: Is it not a matter of some concern that the FH70 ammunition, which was due from Germany at the beginning of December, appears not yet to be available to us? It is three months late.
    Mr. Butler: There have been some delays, due to problems in the Defence Procurement Executive of the German Government, but that does not alter the position with regard to the placing of the order. Much as I would have liked it to go to the royal ordnance factories, it was out of the question that it should do so under the terms of our understanding.
    Mrs. McCurley: In the light of my right hon. Friend's reply to the hon. Member for Blaydon (Mr. McWilliam), can he tell us whether the final cost of the contract for the FH70, which has gone to Germany, will be more than it would have been had the contract been carried out in this country?
    Mr. Butler: I understand that the prices are competitive in this matter.
    Mr. McNamara: As the ammunition is used in the main battlefield Howitzer, will the Minister of State give an undertaking that it is not the intention now or in the future to adapt the Howitzer to take either nuclear warheads or the enhanced radiation weapons?
    Mr. Butler: I can give the hon. Gentleman a categorical no. If I am mistaken, I shall let him know.
    Mr. Merchant: In regard to the FH70 order, will my right hon. Friend bear in mind the excellent record and delivery times furnished by the royal ordance factory at Birtley for previous FH70 orders and compare these with the apparent unreliability of the German source?
    Mr. Butler: I have explained that the delays which have occurred in regard to the project have been within the Defence Procurement Executive, not, so far as I am aware, within German industry. Nevertheless, I am prepared to pay tribute to the royal ordance factory in the way that my hon. Friend would like.

    Nuclear Tests (Radiation)
    Mr. Willie W. Hamiltonasked the Secretary of State for Defence if he will make a statement on the evidence given by his Department to the Australian Royal Commission currently in London investigating the safety of the United Kingdom nuclear test programme in the 1950s.
    Mr. Butler: Her Majesty's Government are cooperating as fully as practicable with the Australian Royal Commission. Twenty-five witnesses are being assisted to give evidence to the commission. They include high-ranking staff who were in responsible positions during the test programme, and the first to be called was Lord Penney. The Ministry of Defence has also made available a large number of trials and other reports and is providing the commission with access to and guidance on the massive volume of contemporary material relating to the test programmes.
    Mr. Hamilton: Have not the Government been criticised by the commission for refusing access to certain documents which it thought were vital? If so, is this not another example of the Government being more concerned to avoid political embarrassment than to show concern for national security?
    Mr. Butler: No. On the contrary, we have gone out of our way to be helpful. We have released documents ahead of the 30-year rule; we have given members of the commission access to Aldermaston; and we have assisted them in looking at the material. But—and I hope the hon. Gentleman will agree with me—quite rightly we are witholding information which is still classified, and for good reason.
    Sir John Farr: When will the report on the tests being conducted by my right hon. Friend's Department into British service personnel who were in that area in the 1950s be available, and when will the findings of the tests and analyses be published?
    Mr. Butler: The report will not be available until the autumn of 1986, due to its complexity. There would be no point in having the report if the findings were not made generally available.

    Scottish Junior Soldiers
    Mr. Bruceasked the Secretary of State for Defence what representations he has received concerning Government proposals to transfer the training of Scottish junior soldiers to England.
    The Parliamentary Under-Secretary of State for Defence Procurement (Mr. John Lee): Representations have been received on this subject from Members of both Houses of Parliament, representatives of local authorities and from members of the public.
    Mr. Bruce: Will the Minister acknowledge that he and his colleagues have totally failed to make a case for the

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    proposed closure and that the only case they have made is that they will save £3·382 million? In the context of the defence budget, is that not a paltry sum to end 200 years of starting the training of junior infantry men within Scotland? Will he reverse the decision and continue to ensure that Scottish regiments' recruits for the infantry are trained within Scotland?
    Mr. Lee: I know of the hon. Gentleman's interest in this matter, but the closure of Bridge of Don is part of an overall scheme which will reduce the number of establishments from 21 to 13 and save about 100 civilian jobs overall and £8 million worth of capital costs, and also substantial running costs. The decision has been taken and it is irrevocable.
    Mr. Pollock: Does the Minister appreciate that these proposals continue to cause grave disquiet among many of my constituents, who remain deeply unhappy at the prospect of losing an important visible regimental link at Bridge of Don? Is it not a fact that the argument on unit costs could be transformed by a simple policy change whereby more junior training took place at Bridge of Don rather than elsewhere? Will he examine that option carefully before any final step is taken?
    Mr. Lee: I understand my hon. Friend's concern, which he has expressed on a number of occasions in public and in private. We have looked at all the options. In 1983–84, 183 recruits went through Bridge of Don, whereas 785 went through the Shorncliff establishment in Kent, so there is really no comparison.

    European Fighter Aircraft
    Mr. Stan Thorneasked the Secretary of State for Defence if he will make a statement concerning the proposed European fighter aircraft.
    Mr. Robert Atkinsasked the Secretary of State for Defence what is the current position of collaborative negotiations on the proposed European fighter aircraft.
    Mr. Butler: The feasibility study on the European figher aircraft is continuing and we expect to receive reports on the outcome of the industrial aspects of that study shortly. Discussions are also proceeding at Government level on a range of activities affecting the programme. Defence Ministers will meet in the spring to review the latest position.
    Mr. Thorne: May we be assured that, should we go ahead with the production of a European fighter aircraft, a major portion of the production work will take place in the United Kingdom?
    Mr. Butler: If we follow precedent in this matter, the work sharing will be according to the number of aircraft that the respective air forces need.
    Mr. Robert Atkins: Will my right hon. Friend accept that rumours of a deferment of the meeting of Defence Ministers of the countries likely to be involved in the project, originally scheduled for the spring, respresent yet more success for the French, one of whose objectives seems to be to delay this project at any costs either to the benefit of their industry or to the detriment of ours? Does he appreciate that, in those circumstances, British Aerospace and other potential partners on the United Kingdom side are expecting a firm stand to be taken when the meeting eventually takes place?
    Mr. Butler: I said in my main answer that the Defence Ministers intend to meet in the spring to review progress and that the results of the study will be available shortly. That being the case, I hope that we can make progress on this matter. On the other hand, anybody with experience of the project will know that difficulties have arisen in the past, that compromises have been necessary and that there may be considerable argument before we can decide whether to go on to the next stage. It is the intention of the Government as a whole to make this collaborative project work if we can because it will be to the advantage of our Air Force and industry.
    Dr. Marek: Will the Minister confirm that the basic weight of this aircraft should be between 10 tonnes and 11 tonnes, because it would then be likely to meet the operational requirements of the RAF?
    Mr. Butler: No, Sir. The work is being done around a weight of 9½ tonnes, with some opportunity to investigate a variant on that.
    Lord James Douglas-Hamilton: Is my right hon. Friend aware that as up to 800 of these aircraft could eventually be produced for the countries interested in obtaining them, this is a matter of enormous importance for the development of future technology and employment prospect in Britain, especially for companies interested in tendering under the programme?
    Mr. Butler: The sales prospects for this aircraft within NATO and to third countries will be greater if it proceeds as a collaborative venture than if, for instance, we are forced back on to a unilateral solution.
    Mr. Denzil Davies: Is the right hon. Gentleman aware that there is considerable concern in the aircraft industry lest this project ends in fiasco? Is he further aware of the feeling in the industry that the Secretary of State for Defence is being led by the nose by the French? Is it not a fact that the requirements of the French air force and of the RAF are different, in that the RAF wants a combat fighter while the French want a ground attack fighter? Will he now say whether, if the project is cancelled and does not go ahead, we will build our own aircraft?
    Mr. Butler: I shall certainly not answer the last part of that supplementary question directly because, first, it is our intention to try to make the project succeed, and, secondly, if we cannot go ahead with all the partners which are at present involved, it obviously makes sense to see whether it would be sensible to proceed with other partners. My judgment is that industry in Britain is much more realistic and pragmatic about this matter than is the right hon. Gentleman.

    Joint Defence Consultative Process
    Mr. Dykesasked the Secretary of State for Defence if he is satisfied with the developments within the Western European Union of the joint defence consultative process originally proposed last summer.
    Mr. Heseltine: Yes. The Rome meeting of Western European Union Foreign and Defence Ministers last October was an excellent start. I am looking forward to the next meeting with my WEU colleagues later this year.
    Mr. Dykes: I thank my right hon. Friend for his answer. Does he think that, apart from the framework of

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    the discussions, this process is capable of producing beneficial side effects and results—as, for instance, British weapons sales to the French in greater measure? Is my right hon. Friend optimistic that we may be able to sell the ALARM missile system to the French?
    Mr. Heseltine: My hon. Friend will be aware that one of the matters about which the Ministers gathered in the WEU felt strongly was that we should not indulge in overlapping with other or existing organisations. Arms collaboration with our allies—the French would feature prominently in that collaboration—is very much seen as the preserve of the independent European programme group, where we have recently taken decisions and hope to move forward on a very significant range of collaborative projects.
    Mr. Michael McNair-Wilson: Can my right hon. Friend say to what extent he wants the WEU to evolve into a uniquely European voice upon defence and arms limitation matters?
    Mr. Heseltine: I believe that the Ministers from all the countries who attended that meeting realised that there were a range of reasons that brought us together. It was very much a formative experience for Foreign Ministers and Defence Ministers to meet one another. There is shortly to be another meeting. I have no doubt that in both that forum and a range of other appropriate fora, arms control will be a very live issue in 1985.
    Mr. O'Neill: Does the Secretary of State agree that the French are very much cooling off with regard to the suggested new liaison and that it is very unlikely that the optimism he has displayed will prove to be of any import? The important element is the French, and the French are no longer willing and happy to participate in this exercise.
    Mr. Heseltine: The Labour party has been so unsuccessful in speaking on behalf of the British people that I am not surprised that it should now speak on behalf of the French. I doubt whether its views will be any more attractive in France than they are in Britain.

    Chemical Weapons
    Mr. Greenwayasked the Secretary of State for Defence if he will make a statement on the implications for United Kingdom defence policy of the stockpile of chemical weapons by the Union of Soviet Socialist Republics and its allies.
    Mr. Proctorasked the Secretary of State for Defence if he will make a statement on the United Kingdom's defensive capability against chemical weapons.
    Mr. Heseltine: We view the massive Soviet chemical weapons capability with particular concern. We believe that total abolition is the best answer and are continuing to work in Geneva for a comprehensive, verifiable and worldwide ban on such weapons, including the destruction of existing stocks. In parallel, we keep our defensive measures under careful review in the light of the threat. A substantial investment has been made over many years to provide our armed forces with defensive protection against chemical attack.
    Mr. Greenway: Can my right hon. Friend shed any light on why the Soviet Union is currently running heavy
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    troop training programmes in protective clothing for chemical warfare, bearing in mind that this country abandoned chemical weapons nearly 30 years ago, that none are deployed currently in Western Europe and that the Soviet Union has at this moment 300,000 tonnes of chemicals for military use?
    Mr. Heseltine: I am the first to share my hon. Friend's anxiety about the training exercises in which the Soviet Union involves itself, including those involving chemical weapons. I believe that it would be far better employed in pursuing as actively as we and our American allies wish to pursue the arms control proposals that are on the table.
    Mr. Proctor: Bearing in mind that when, in the late 1950s, the United Kingdom renounced the offensive use of chemical weapons there was no similar response from the Soviet Union, what are the present prospects for the success of the talks?
    Mr. Heseltine: I am sure that my hon. Friend will understand that it is extremely difficult to forecast accurately the prospects for success in arms control talks. All that one can say on behalf of this Government is that we shall make every endeavour to bring those talks to a fruitful conclusion.
    Mr. James Lamond: Will the "every endeavour" that we are prepared to make include trying to convince the Americans that the challenge inspection facilities of chemical manufacturing plants should be extended to all plants, whether or not they are state-owned?
    Mr. Heseltine: If the hon. Gentleman follows the details he will be aware that the Americans have explained their attitudes on this, which will have an effect upon a wide range of plants in the United States outside those owned by the Government.
    Mr. Conway: Is my right hon. Friend happy with the priority that is given in our armed services to nuclear, biological and chemical training? Does he anticipate the early introduction of the next generation of NBC protective clothing?
    Mr. Heseltine: I can assure my hon. Friend that we maintain our research into those matters and update the equipment as appropriate from time to time. I cannot tell the House that I am satisfied with the existing situation. I do not see how any Secretary of State for Defence could be when a country, in alliance, that poses the threat to our interest has such large stocks of chemical weapons and we have none.
    Mr. McNamara: Will the right hon. Gentleman confirm that the United States has stocks of chemical weapons in Germany? Is he aware that the Opposition support wholeheartedly attempts by Her Majesty's Government to obtain a comprehensive ban on all chemical weapons and any efforts being made to improve the capability of NBC protective uniforms? What lessons have been learnt from Operation Lionheart in that respect?
    Mr. Heseltine: The hon. Gentleman will be aware that the United States' stocks of chemical weapons are of a very aged character, that there has been no updating of those stocks for a significant period and that they are of a limited scale. We are still studying the lessons of Lionheart in our Department. As I have already said, we shall continue to research and update the protective equipment in that area.
    Mr. Kirkwood: Will the Secretary of State confirm that it will be no part of the review that he announced earlier to allow the Americans to stockpile chemical weapons in British bases?
    Mr. Heseltine: I have no proposals of that sort before me.

    Ethiopia (RAF Aircraft)
    Mr. Wallaceasked the Secretary of State for Defence if he will extend the Ethiopian tour of duty of Royal Air Force transport planes for a further three months.
    Mr. Stanley: Our offer to extend the airlift to the end of March and to review the position again nearer that time has been accepted by the Ethiopian Government. I am glad to tell the House that the British RAF and Army detachment in Ethiopia has now airlifted some 6,000 tonnes of relief supplies, and has taken part in recent trials in the air dropping of supplies to more inaccessible parts of the famine area.
    Mr. Wallace: I think that hon. Members on both sides of the House will pay tribute to the work done by the RAF. The public, having responded so well to the appeals that have been made, think that it is important, both for distribution purposes and psychologically, that the Government continue their commitment. Will the Minister give the House more reassurance about the future extent to which food can be taken to the Tigré and Eritrea regions of Ethiopia by the RAF?
    Mr. Stanley: I am grateful to the hon. Gentleman for what he said about the contributions made by the armed services. Undoubtedly, they have been strikingly effective in the utilisation of the two Hercules that we have out there. We shall continue the dropping operation by conventional landing techniques, but, as I have said, we have just started exploring the possibility of air dropping. Whether we shall be able to do that will depend upon whether we can put together arrangements for the landing of ground parties, which is obviously crucial when dropping by free fall.
    Sir Hector Monro: Will my right hon. Friend go further and warmly congratulate the Hercules squadron—both the aircrew on their exceptional airmanship and the ground crew on their exceptional servicing record—thus keeping the squadron going on short runways and in difficult conditions, and thereby playing an important part in the relief of this difficult part of east Africa?
    Mr. Stanley: I am most grateful to my hon. Friend. I can certainly bear witness, from my experience out there just before Christmas, of the difficult landing and take-off conditions which the RAF has successfully dealt with, not least in coping with the considerable problems represented by the bird strikes, which took out about 9ft of the leading edge of one of the wings of the Hercules just before Christmas. All concerned have done outstandingly well.
    Mr. O'Neill: I congratulate the Government on their work, but will the Minister confirm that the cost of the work is being borne by the Ministry of Defence and will not come out of the Overseas Development Administration budget?
    Mr. Stanley: No, that is not quite correct. For the first three months of our contribution the costs were borne exclusively by the Ministry of Defence, on the defence budget. With the extension of the operation from the beginning of February, we have agreed to share the costs equally between the Overseas Development Administration and the Ministry of Defence.

    Royal Observer Corps
    Mr. John M. Taylorasked the Secretary of State for Defence when he last reviewed the role and resources of the Royal Observer Corps; and if he will make a statement.
    Mr. Lee: The role and resources of the Royal Observer Corps are kept under regular consideration in conjunction with the Home Office. The corps continues to provide an excellent service and there are no present plans for a review.
    Mr. Taylor: While I thank my hon. Friend for his reply, may I ask him to say whether he is committed to sustaining the resources and morale of those who serve the Royal Observer Corps, and will he from time to time say how the great majority of the British people appreciate its vigilance?
    Mr. Lee: I am delighted to have this opportunity of paying tribute to the Royal Observer Corps. Its morale is excellent. It does a first-class job for us. There are 11,000 serving members at present and the corps costs less than £5 million a year. It is a first-class unit.

  PRIME MINISTER

    Engagements
    Mr. Dykesasked the Prime Minister if she will list her official engagements for Tuesday 29 January.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today.
    Mr. Dykes: As there still is great public anxiety on the subject, will my right hon. Friend undertake this afternoon to look at the subject again and reassure the House and the nation that the Government will look twice at the dangers of imposing any additional forms of taxation on pension funds or lump sum payments?
    The Prime Minister: I recognise the concern about this subject. I refer my hon. Friend to the statement that was made in the House, in response to questions, by my right hon. Friend the Chancellor of the Exchequer. As my hon. Friend will be the first to appreciate, I cannot say anything more at the present time, but I do urge him to look at that statement by my right hon. Friend.
    Mr. Kinnock: Three weeks ago the Government were against the idea of increasing interest rates to defend sterling, but they did increase them and it did not work. Two weeks ago the Government scorned the idea of intervening to defend sterling, but they did intervene and it did not work. Can the Prime Minister tell us what she is going to do now?
    The Prime Minister: I recall the right hon. Gentleman saying on 15 January that he was absolutely against speculation against the pound and that he thought it was

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    "irresponsible and irrational". If that is what he thought then, I hope that that is what he thinks now, and that he thinks that the action that has been taken to stop this is right and well judged in the circumstances.
    Mr. Kinnock: I do think it irresponsible and irrational, but it is the right hon. Lady who believes in the market system and not us. Her response again today will impress nobody, either at home or abroad. It is the right hon. Lady who has surrendered policy-making entirely to the whims of the market. The result is chaos, a crisis of confidence and a huge rise in interest rate burdens on both business borrowers and home buyers. Is the right hon. Lady going to change her policies in the light of that experience, or will she go on with the same mixture of panic and paralysis that has brought us to this mess?
    The Prime Minister: I am not quite sure whether the right hon. Gentleman is objecting to what we have done or saying that we should have done nothing. In fact, the action that my right hon. Friend took was to maintain the financial strategy that has brought inflation lower for a longer period than any other Government have done previously and which, in spite of the effects of a coal strike—[Interruption.]—for 10 to 11 months last year has kept the current account in surplus.
    Mr. Kinnock: The right hon. Lady's strategy is coming apart at the seams, and she knows very well that it is coming apart at the seams. What we want is a real strategy to give proper growth and recovery to our economy, and all we are getting from the Government, especially now, is dithering and, again this afternoon, dodging. That will only mean more on the dole and more in debt. We have not a crisis of confidence in the country but an absence of confidence in the Government. Are the Government willing to change their policies, and will the Prime Minister really help by chucking out the Chancellor?
    The Prime Minister: The action taken has been such as to impose financial discipline on all sections of the economy, including the Government. I remind the right hon. Gentleman that gross domestic product is at its highest ever level. I hope that he is pleased about that. Fixed investment across the economy is at its highest ever real level. Retail sales are at their highest ever real level; they have increased by 4 per cent. in volume. Profits increased by 20 per cent.—[Interruption.]—in the first three quarters of 1984. The Government's record on inflation is second to none. If the right hon. Gentleman listens to what is being said about unemployment, he will understand that the most important thing in tackling unemployment is to keep down inflation.
    Several Hon. Members roseȔ
    Mr. Speaker: Order. I repeat what I said last week during Prime Minister's Questions. The Leader of the Opposition gets a fair hearing and it is only right that the Prime Minister should get an equally fair hearing.
    Mr. Hordern: As interest rates have been increased to a level that must put at rest any fears that there may have been about inflation, and as the markets are now offering the best opportunity ever seen for our exporters and business men to do business abroad, what reason have we to complain?
    The Prime Minister: As my hon. Friend will be aware, markets are opening up because of the strength of
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    the dollar and the weakness of sterling compared with the dollar. He will be aware also that it is vital to stay competitive on wage costs. The people who can benefit most from that are those who are best able to take advantage of the present exchange rate. My hon. Friend will know that our wage costs are rising and that the Opposition support every wage claim. At the same time, the wage costs of our competitors are either remaining stable or decreasing. If the Opposition want to improve the prospect of employment, they must help to keep down unit wage costs.
    Mr. Patrick McNair-Wilson: As, in part, sterling's problems stem from uncertainty over oil prices, and as over-production at a time of depressed demand leads to a disorderly market, will my right hon. Friend confirm that the Government have reserve powers to limit production and depletion in the North sea? Will she consider using these to underpin the light crude oil price and so help to bring back stability to the oil market?
    The Prime Minister: The policy that we pursue is really the same as that of the United States. We do not have powers to restrict production in the North sea, but we have powers to purchase 51 per cent. of that production at whatever is the market price. I think that we must stick to that.
    Mr. Steel: When will the Prime Minister recognise that the rest of the world does not share her rosy view about her handling of the economy and that it is possible that the rest of the world is right and she is wrong? Since she spoke on "Woman's Hour" and said that the pound was undervalued she has had to increase interest rates to their highest level for 150 years. Will she explain to the House why it is that the pound does not do what she tells it to do?
    The Prime Minister: I note what the right hon. Gentleman says about interest rates. He will note that interest rates in real terms are not as high as they have been in the United States, and I am often urged to follow the course of the United States.
    Mr. Willie W. Hamiltonasked the Prime Minister if she will list her official engagements for 29 January.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Hamilton: In view of the shambles in which the Prime Minister finds herself, does she not think that it is now appropriate for her to dispose of the Chancellor of the Exchequer, in the national interest? As she cannot find a satisfactory alternative, will she say whether the promised tax concessions will be implemented in the Budget? If they are, will that result in more new real jobs, in her terms?
    The Prime Minister: I think that the hon. Gentleman must await the Budget. I remind him that the Government have raised the thresholds of personal taxation by 16 per cent. That means that income that is tax-free has been increased by 16 per cent. The previous Labour Government lowered thresholds.
    Mr. Grylls: Does my right hon. Friend accept that, although the high interest rates that have had to be introduced are a worry and a difficulty for industry, business in Britain will, nevertheless, support the Government while they continue to keep inflation down? Indeed, business would probably send the Government a

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    message saying that they must try harder in dealing with inflation, because inflation destroys both large and small businesses.
    The Prime Minister: I agree with my hon. Friend. It is always a disappointment to have to raise interest rates, but the effect would be far worse if inflation were allowed to increase again. On 7 February 1978 the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said that
    "in terms of promoting employment opportunities throughout the country … nothing is more important than containing inflation."—[Official Report, 7 February 1978; Vol. 943, c. 1271.]
    Mr. Foulkesasked the Prime Minister if she will list her official engagements for Tuesday 29 January.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Foulkes: Is the Prime Minister aware that, at the weekend, all over Scotland there was snow, and temperatures at well below freezing, old people suffering from hypothermia and pneumonia, and yet still there was no exceptional weather payment? How much longer must the north of England and Scotland suffer these arctic conditions? How many more old people must die before the right hon. Lady changes her mind?
    The Prime Minister: This question is asked on every occasion, and on every occasion I give the hon. Gentleman and his hon. Friends the same reply: this matter is under review. The main heating benefit is the regular heating amount paid. The heating amount paid to pensioners under this Government far exceeds the amount paid under any previous Labour Government. This Government have everything to be proud of in the way in which they have looked after the heating allowance for pensioners.
    Sir Bernard Braine: I comment on the proposed celebrations of VE day. Does my hon. Friend recall that the war started with the cruel dismemberment of Poland and that, in what followed, Polish pilots helped to defend this island and Polish troops fought with distinction alongside our own troops? Yet, when the war was over, those Polish troops found that they had lost their homeland. I ask my right hon. Friend, most respectfully, whether she will ensure that Polish veterans living in this country, and Czechoslovaks who shared the same fate, will have an honoured place in any parades or church services?
    The Prime Minister: I gladly join my right hon. Friend in paying tribute to what Polish troops did in wartime and to the gallant way in which they fought throughout the war. We shall ensure that his point is taken fully into account.
    Mr. Simon Hughesasked the Prime Minister if she will list her official engagements for Tuesday 29 January.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Hughes: Has the Prime Minister seen the estimates that, if the coal strike ends, consumption of oil will decrease by between 500,000 and 1 million barrels a day? If the right hon. Lady is so good at predicting what will happen to the economy, will she predict what will happen to the price of oil in that event? And what will be the effect on the pound?
    The Prime Minister: Anyone who could predict that would not be on this earth, and I doubt whether they can even predict that up aloft.
    Mr. John Browneasked the Prime Minister if she will list her official engagements for Tuesday 29 January.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Browne: Does my right hon. Friend accept that, of the factors affecting sterling, many — such as the value of the dollar, the price of oil, the world recession and the size of the United States' deficit—are completely outside the Government's control? Does my right hon. Friend accept also—[Interruption.]—that the majority of my constituents, many of whom do not vote Conservative, think that she has done and continues to do an outstanding job?
    The Prime Minister: I agree with my hon. Friend, and all reasonable people would agree with him on the facts. The price of oil is outside the control of the Government. Total production is far too small to have an effect on the price of oil. The rise in the dollar is also outside the control of the Government. We have done all that we can about that by taking part with the G5 nations in co-ordinated intervention. We are left with two problems, which are the decisions that have been taken about the price of oil and the coal strike.
    Mr. Geoffrey Robinsonasked the Prime Minister if she will list her official engagements for Tuesday 29 January.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Robinson: Will the Prime Minister explain to the House why real interest rates in this country are now double those in Germany? Is it not a reflection of a complete lack of international confidence in her and her Government?
    The Prime Minister: No, Mr. Speaker. If the hon. Gentleman will study the international comparisons he will find that West Germany has run a strict financial policy for many years. Therefore, it has brought its inflation down further than ours. In West Germany it is 2·1 per cent. He will also find that it has kept its public expenditure under control and that it made considerable sacrifices for two years. West Germany has—[Interruption.] I wonder whether the hon. Gentleman is interested in the reply or whether his hon. Friends are just interested in shouting. He asked me about West Germany, and I pointed out that its inflation is lower than ours through a strict financial policy. In answer to a previous question, I pointed out that it keeps its wage costs down. Its unit wage costs are lower than ours. It has kept a strict control of public expenditure. In the past two years West Germany has cut unemployment and maternity benefits and delayed pension increases. With that strictness over the past two years, and some of the sacrifices made by her people, it is not surprising that the deutschmark should have risen against sterling.
    Mr. Kinnock: On a point of order, Mr. Speaker.
    Mr. Speaker: Does it arise out of Question Time?
    Mr. Kinnock: Yes, Mr. Speaker. As you may know, Mr. Speaker, early today we asked for a statement from

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    the Chancellor of the Exchequer on the Government's economic policy, and such a statement was refused. In view of that, the Prime Minister's utterly inadequate responses on that matter, which is of central importance today, and because of the Government's bungling
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    economic policy as evidenced by manufactured trade and output figures, unemployment figures—[Interruption.] interest rates figures and the current turmoil, I wish to give you notice that we shall be tabling a motion censuring the Government for their utter mismanagement.

Interest Rates
3.33 pm
Mr. Ian Wrigglesworth: Mr. Speaker, I should like to ask the Chancellor of the Exchequer the question of which I have given him prior notice. As you know, Mr. Speaker, the Labour party has—[Interruption.]
Mr. Speaker: Order. I called the hon. Member to ask a private notice question. It is only fair that he should be heard. I cannot hear.
Mr. Wrigglesworth: Mr. Speaker, the Labour party has illusions of adequacy. [Interruption.]
Mr. Speaker: Order. The hon. Member should ask the private notice question that he gave to me.
Mr. Wrigglesworth: If I may be allowed to do that, Mr. Speaker. I should like to ask the Chancellor of the Exchequer the question of which I have given him prior notice—if he will make a statement of the current level of interest rates.
The Chancellor of the Exchequer (Mr. Nigel Lawson): At noon yesterday, following a rise in market interest rates, one of the clearing banks raised its base rate from 12 per cent. to 14 per cent. The Bank of England raised its dealing rates by a corresponding amount when it dealt in the bill market at 12.15 pm. The other clearing banks followed within the next hour or so.
Yesterday afternoon I gave evidence on these and related matters at considerable length to the Select Committee on the Treasury and Civil Service, under the Chairmanship of my right hon. Friend the Member for Worthing (Mr. Higgins), which I understand will be reporting to the House shortly.
Mr. Wrigglesworth: Is the Chancellor aware that the Government's "outstanding" record, to which his hon. Friend the Member for Winchester (Mr. Browne) referred earlier, is the highest level of unemployment since the 1930s and now the highest level of real interest rates since Britain came off the gold standard in 1931? Is he aware that the Government bear a very heavy responsibility for that record because they have been responsible for the uncertainty and confusion about exchange rate policy, because they have taken no action on oil prices or the rate of depletion of our North sea oil, as his hon. Friend the Member for Winchester also pointed out, and because the international markets are reflecting their lack of confidence in the non-oil sector of our economy?
Will the Chancellor now make clear exactly what the Government's exchange rate policy is, at what level he expects to keep the pound and whether he is prepared to take action on oil prices or on the rate of North sea oil depletion? Is he aware that if he does not do that he and his colleagues will be causing the people of this country to pay the price of the Government's own incompetence and blind devotion to economic dogma?
Mr. Lawson: The hon. Gentleman should know perfectly well that no Chancellor is ever prepared to comment on market tactics and matters of that kind which would benefit only speculators and others and would be of no benefit to our country.
Sir Peter Tapsell: Will my right hon. Friend bear in mind that those who dominate the exchange
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markets of the world are seldom, anyhow in my experience, much preoccupied with the British public sector borrowing requirement; and that until we apply our minds to their practical concerns rather than to our own theoretical shibboleths we are unlikely to be able to restore sterling to its proper level in world exchange markets?
Mr. Lawson: My hon. Friend is a much travelled man with great experience of financial operators throughout the world. Nevertheless, in my experience, there is and always has been considerable concern in the markets, among finance ministries and indeed within the IMF, as some Opposition Members will recall, about the public sector borrowing requirement of this and other countries and about the budget deficit of the United States, a matter about which my hon. Friend himself has expressed concern in the past.
Mr. John Maxton: As the Bank of England is now intervening to protect the pound, and as the Chancellor has restored minimum lending rate and is prepared to co-operate with other economies to protect the pound against the dollar, does he still hold to the dogma that free market forces should be allowed to operate?
Mr. Lawson: Of course free market forces will operate. It is one of the illusions of right hon. and hon. Members on the Labour Benches that by a wave of a wand they can abolish free market forces. As I have said on a previous occasion, the decision taken by the Finance Ministers of the five major industrialised countries of the Western world a fortnight ago in Washington was that the time had come when it would be appropriate from time to time to intervene in a concerted way in the foreign exchange markets. [HON. MEMBERS: "Oh."] That was of course fully in line with the Williamsburg declaration which was signed some time ago.
Mr. Speaker: Order. These are hardly laughing matters.
Mr. David Howell: On the influence of the crude oil price on sterling, would not my right hon. Friend agree that the status of sterling as a petro-currency can be and probably is being very much exaggerated? Might we not do better to free ourselves completely from involvement in trying to fix the international oil price and to withdraw the price-fixing function of the British National Oil Corporation?
Mr. Lawson: My right hon. Friend is correct in saying that markets attach excessive importance to the value of North sea oil in our economy as a whole, sizeable though it is. Indeed, there is an idea that we are almost a one-commodity economy, whereas in fact oil and gas account for about 5 per cent. of gross domestic product and only 8½ per cent. of our total tax revenues. The price of oil is set by the market, not by BNOC.
Mr. Tony Benn: In view of the Chancellor's statement that public expenditure levels may have played some part in the fall of the value of the pound, could it be that world markets do not share his view that the £5 billion spent on fighting the miners was a worthwhile investment? Taking into account the fact that, since the fall in the value of the pound, not a single pit in Britain is uneconomic, would it not be wise for the Government to settle with the miners, who are responsible for building so much of our industrial future?
Mr. Lawson: The right hon. Gentleman's paranoia is well known. The Government are in no sense fighting the miners. They are supporting the working miners and the coal industry.
Mr. Nigel Forman: Is it not true that one of the unfortunate but inevitable consequences of the rise of interest rates by more than four percentage points in recent weeks has been to add more than £1,000 million to the costs of British industry? Will my right hon. Friend therefore pay attention to the strong arguments for taking action in the Budget directly to reduce the costs of industry and so to help to offset that adverse effect?
Mr. Lawson: I shall take note of what my hon. Friend has said when I make my Budget judgments and frame the Budget. It was with this in mind that I abolished the national insurance surcharge in last year's Budget. However, I think that my hon. Friend is basing his calculation of the effect of interest rates on industry on an assumption that may well not be correct — the assumption that the present level of interest rates will remain in force for a full year.
Mr. Richard Wainwright: Now that sterling has fallen to a relatively realistic exchange rate with the deutschmark, will the Chancellor embark on negotiations with a view to joining the exchange rate mechanism of the European monetary system?
Mr. Lawson: As the hon. Gentleman knows, that is a matter that we keep continually under review. I do not think, however, that recent events have changed the balance of the argument one way or the other with regard to joining the exchange rate mechanism of the European monetary system.
Mr. Neil Hamilton: Does my right hon. Friend recognise that one of the major features of the speculation against the pound in recent weeks has been the fear that the Chancellor may be getting soft on inflation and in particular that his control of the wider monetary aggregates may be rather too loose? Is not the prescription required to steady the market's nerves, therefore, the reverse of that suggested by many hon. Members? Should we not keep firm control of public expenditure and concentrate on increasing demand for industry's products through tax cuts rather than cutting costs in other ways?
Mr. Lawson: I agree very much with the thrust of my hon. Friend's remarks.
Mr. Gordon Wilson: Does the Chancellor realise that, whether he likes it or not, the international financial world regards the pound sterling as a petro-currency? Is he aware that the policy that he as Secretary of State for Energy and his predecessors followed, of aggressive over-production, is now undermining the value of oil in the world market and is leading to the problems that he is encountering, especially higher interest rates? Will he contact OPEC to see what he can do with it to keep the value of oil stable? He will find that that is beneficial to the United Kingdom economy.
Mr. Lawson: North sea oil has been one of the great successes of the British economy in the past few years. The policies that we have pursued have considerably assisted that success, which has led to the creation of many jobs in Scotland in the oil industry and in the offshore supplies industry.
Mr. Nicholas Soames: Does my right hon. Friend agree that the public find it difficult to understand why the Opposition, whose stewardship of the pound sterling has been nothing short of an unmitigated disaster, take such pleasure at the pound having a rough ride? Does he agree that reactions of this type do not help stiffen the currency in international markets?
Mr. Lawson: My hon. Friend is right. He will be aware that, against the EMS index, the pound sterling is higher today than it was when we took office in 1979.
Mr. Roy Hattersley: Will the Chancellor take this belated opportunity to remove some of the uncertainty which still prejudices the pound and therefore interest rates? Will he make it unequivocally clear that he has now abandoned the policy of allowing the pound to float freely?
Mr. Lawson: The policy of the Government under my predecessor and me has been that the sterling exchange rate is always taken into account in assessing the correct financial policy at the time.

Financial Services
3.46 pm
The Secretary of State for Trade and Industry (Mr. Norman Tebbit): With permission, Mr. Speaker, I wish to make a statement about the Government's proposals to establish a new regulatory framework for the financial services industry. These proposals are published in a White Paper which I have today laid before the House. Subject to the parliamentary timetable, I plan to introduce a Bill in the next Session for their implementation.
Modern technology and intense international competition are bringing about rapid changes in the financial services industry. The responsibility for responding effectively to these changes lies principally with the industry. The Government's task—in this sector as in others—is to create an environment in which it can do so. This is best done by allowing market forces to operate responsibly but without unnecessary constraints, in a way which promotes efficient and competitive business.
A prerequisite for an internationally competitive industry is a clear regulatory framework within which practitioners and customers can deal with confidence, and which safeguards the interests of investors. This regulatory framework must be capable of adjusting to changes in the shape of the markets, and of accommodating rather than stifling innovation.
This the proposals set out in the White Paper are designed to achieve. They will assist enforcement, deter fraud and malpractice, improve disclosure and lay down the principles on which business should be conducted. The proposals cover both a new regulatory framework and a new institutional structure through which it will work.
First, the regulatory framework will be based on new and comprehensive definitions of investment and of investment business. It will be an offence to carry on an investment business in the United Kingdom without authorisation. To obtain such authorisation, an investment business will have to show that it is fit and proper, and will be required to observe detailed rules for the conduct of business based on principles to be set out in the legislation. Breach of those rules will be subject to sanctions up to and including the withdrawal of the authorisation to trade.
There will be a number of important further changes. I intend to rationalise and update the legal provisions dealing with offer documents and the advertising of investments, first to make it clear what must be disclosed, and second to establish standard provisions on civil and criminal liability for omissions and mistakes. I also propose to liberalise some restrictions on the unit trust industry and to enable it, subject to appropriate safeguards, to offer a greater variety of schemes to the public. Commissions and other payments to intermediaries will be disclosed. As far as possible, the marketing of life assurance contracts will be treated in a manner similar to the marketing of other investments.
The institutional structure is designed to implement the new regulatory framework. It is based on my belief that the crucial tasks of authorising investment businesses and keeping high standards of business conduct among those so authorised can be discharged much more effectively by those closest to the market — practitioners and their customers—than by Government. Malpractices can be identified and dealt with more quickly by those people than by Government regulators.
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I therefore intend to build upon what is best in self-regulation. I shall propose legislation to confer on the Secretary of State the necessary powers to grant authorisation to investment businesses and to enable him to delegate regulatory responsibility, including the power of authorisation, to one or more bodies composed both of those who provide and those who use financial services. Before doing so, I shall require to be satisfied about the composition, constitution and proposed rules of these bodies, and I shall have power to withdraw delegated powers if such a body fails to continue to meet the criteria. Steps are already in train to set up the bodies. I hope that those concerned in the financial services industry will press ahead so that the structure is in place by the time the legislation is on the statute book.
The Government see great advantages in the system of self-regulation within a statutory framework. At the same time, we recognise that self-regulation should receive statutory backing only if there is proper accountability. The White Paper sets out the detailed means by which accountability of these bodies to Government and Parliament will be achieved. I shall highlight three particular statutory safeguards. First, there will be a right of appeal on authorisation and on penalties for breach of the rules to an independent tribunal to be appointed by the Secretary of State. Secondly, the Secretary of State will have the power, to be exercised on the advice of the Director General of Fair Trading, to revoke or amend rules which have anti-competitive effects. Thirdly, the Secretary of State will have various powers of appointment. I believe that our proposals combine the advantages of self-regulation within a statutory framework and proper accountability to Parliament.
I have today set out the Government's aims; our proposals for a new regulatory framework; and our proposals for a new institutional structure. The White Paper contains many details which the House will no doubt wish to study and then debate. I look forward to the contribution to be made by people both within and without the House, especially those with knowledge and experience in these matters. We have much benefited already from the advice of Professor Gower, of the Governor of the Bank of England, and of the groups chaired by Mr. Jacomb and Mr. Field.
The Government's proposals offer advantages to investors, industry and commerce, and the financial services industry itself. To the investor, our proposals offer more comprehensive protection against fraud or negligence, and better and fuller information on which to make investment decisions. To industry and commerce, they offer the prospect of keener and more innovative financial services and, therefore, of finance at cheaper rates. To the financial services industry, they offer a system administered by those familiar with the markets without unnecessary Government involvement. The high standards which we seek to promote will be in the interests of all.
Mr. John Smith: First, may I tell the Secretary of State about the areas in which there will be less controversy than others? Following the scandals of recent years in the City which led to the Gower investigation, it was clear that some action had to be taken to improve the inadequate protection offered by existing legislation, and we welcome the intention to strengthen legislation in respect of fraud and malpractice and to

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require greater disclosure and, I hope, higher standards. We also accept the desirability of a scheme of authorisation whereby there is control over those allowed to offer advice and services in investment. We shall study the White Paper and subsequent legislation with care to ensure that they reflect properly those widely shared aspirations.
Is the Secretary of State aware that the real concern in recent years has been about not only inadequate legislative provision but about the capacity for its enforcement? Too many scandals have occurred not just because the law has been weak but because there was neither the will nor the mechanism to ensure that it was properly enforced. Is the Secretary of State aware that, in succumbing so easily to the pressure for self-regulation from interested parties, he has missed a great opportunity to set up an independent and expert standing commission to supervise and enforce the new laws?
Is the Secretary of State aware that when such major new developments are afoot in the City, which may lead to enormous changes in practices, habits and business techniques and may affect standards unpredictably, it is an ideal time to make the running on behalf of the public interest, and the City's future, by appointing an independent and effective commission to supervise and enforce the new rules? Is he aware that such a commission would be able to enforce the law more expertly, effectively and independently than would the confused jumble of provisions that he has just announced, and that, as Professor Gower said, it could easily be designed to avoid the complexities of the United States model?
After one year's deliberation, can the Secretary of State explain more clearly the nature of the bodies to which he is delegating so much public responsibility? Why has he not yet decided whether there will be one body or two? Is it not true that he appears to be delegating not only enforcement but the initiative to set up and organise the new bodies? Is it not surprising that he says that he hopes the new structure will be in place in time for the legislation? Why does he not ensure that it is in place in time for the new legislation?
Despite the padding, circumlocution and waffling of the right hon. Gentleman's statement, is it not clear that, instead of seizing the opportunity to act boldly and decisively by supporting the new legislation with an independent commission at a crucial time in the City's development, he has ducked the issue by making no substantially effective change in enforcement? Is he aware that the impact of his retreat from public responsibility will be not only less effective protection for the public, but the possible weakening of the potential business effectiveness of the City in the climate of fierce international competition that lies ahead?
Mr. Tebbit: I thank the right hon. and learned Gentleman for emphasising those parts of the White Paper and the aims on which we generally agree. I agree that there have been major difficulties with law enforcement against fraud in the City. That is why we formed the permanent fraud investigation group, which reports to my right hon. and learned Friend the Attorney-General, on 1 January. That is also why we have asked Lord Roskill's
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committee to consider the way in which fraud trials should be conducted, and especially to consider the role of juries or assessors in such trials.
The major step forward that we have taken is to ensure that no one can trade in an investment business without authorisation. That is a step towards the prevention of fraud rather than the prosecution of fraud, and I am sure that we are as one in saying that we must prevent rather than prosecute.
The right hon. and learned Gentleman has a contempt for the City and its practitioners—
Mr. Smith: I did not say that.
Mr. Tebbit: That may be so, but the solution which he proposed is strongly opposed in the City, whereas my solution has wide support in the City among practitioners and users.
As to why the Government propose two bodies instead of one—
Mr. Smith: They do not.
Mr. Tebbit: The White Paper proposes two bodies. I have said that if it is decided that it would be better to operate with one body I should be happy seriously to consider that proposal.
However, the right hon. and learned Gentleman may well be aware that there is a historical difference between the way in which activities in the City have been regulated and the role of the Department of Trade and Industry on the one hand in relation to the insurance industry and unit trusts and on the other hand of the banks and other organisations in relation to other securities. If he thinks about it for a little longer, he may well conclude that it may be right to start off along the lines which the City itself has proposed.
Mr. Peter Hordern: Will my right hon. Friend confirm that the Government's major priority in all this is the protection of the public? Can he confirm that the self-regulating agency which he proposes to put forward will give adequate protection to the public either by the direct representation on that self-regulating agency of outside members, say, non-executives, or a supervisory body which may investigate faults or other matters brought to it by members of the public about practices in the City?
Mr. Tebbit: I agree entirely with my hon. Friend that the key in all this is the protection of the public. If the City is not seen to be a clean place in which to operate it will lose business. Thereby, gradually those who are practitioners will be losers as well. We look for efficiency, competitiveness, confidence by the investor and flexibility and vigorous enforcement against wrongdoers in the proposals which I put before the House.
In regard to the membership of the bodies, it is the intention that the members of the SIB and the MIB, the two bodies proposed, should include lay people and users of the services, as well as practitioners
Mr. Ian Wrigglesworth: Is the Minister aware that the development of a statutory framework for self-regulation in the City is to be welcomed? Can he explain why it has taken him so long to come to the conclusion that it should be one or two bodies? Why has he not accepted the representations of quite a broad spectrum of people, including the Financial Times, that there should be one statutory independent body regulating the City? At a time of the creation of more and

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more financial conglomerates, would not this make greater sense? Will he not, therefore, reconsider his decision and move in that direction, otherwise his proposals look very much like a limp hand in a velvet glove?
Mr. Tebbit: Perhaps the hon. Gentleman was not listening when I explained to the right hon. and learned Member for Monklands, East (Mr. Smith) the reasons which led to the interests in the City, practitioners and their customers and users proposing that there should be two bodies rather than one. It may well be that as time goes on there will be a change of view about this and that the two bodies might be merged. If that was the view which emerged, I would not oppose it. Equally, I do not think it would be appropriate at this stage for me to try to force down the necks of those who provide and use the services a solution which they do not want.
Mr. Anthony Beaumont-Dark: Is my right hon. Friend aware that we hope that the Bill will be given proper and mature consideration and will not be enforced before the changes come about? Is he aware that the Stock Exchange arrangement, which has led to rather a shambolic position, should not be repeated on the City as a whole? Will he agree that, wonderful and proper though the Bank of England is in the influence it should have on the City, not every institution should be subject only to its wishes? I hope that Parliament will reserve the right to the nomination of people and will not always have to accept what the Bank of England wishes because it has often been proved wrong on many things.
Mr. Tebbit: There will be proper and mature consideration of the Bill when it comes before the House. That is the way of the House on all occasions, as we all know so well from our experience in Committee—well, most of the time. When my hon. Friend reads the White Paper he will find that the chairman of the Securities and Investments Board will be appointed by the Secretary of State for Trade and Industry with the approval of the Governor of the Bank of England and the members will be appointed conversely by the Governor with the approval of the Secretary of State. It will be a joint operation. The Secretary of State will appoint the chairman and all the members of the Marketing of Investments Board.
Mr, John Ryman: I accept, of course, that the prime consideration is the protection of the investor, and I welcome the appointment of Lord Roskill and his committee to investigate fraud case trials, but is it not a scandal that for years crooks in the City of London have been getting away with it, although evidence has been forthcoming, because there has been a refusal to prosecute in cases which cry out for prosecution? Has this not given rise to great strength of feeling that the Government should act much more urgently? Is not the difficulty that the Minister finds himself in that the machinery he proposes must necessarily take a long time to set up and in the meantime many further serious criminal offences will be committed in the City of London without fear of prosecution, if the examples of recent years are followed?
Mr. Tebbit: I share the hon. Gentleman's concern about offences which are committed but where prosecution is not carried through to conviction. As the hon. Gentleman knows, many such frauds involve persons
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overseas who, as foreign nationals, are not unduly anxious to come to the Old Bailey to offer evidence. As he also knows, in many cases there have been difficulties about setting out extremely complicated facts in a way which juries can fully understand and the case goes on for a long time. I am sure that under the new system, where the rules for the conduct of business will be much cleaner, clearer and consistent across the whole market, it will not only be easier to see those who have offended, but also at a much earlier stage to prohibit from trading those whose practices, even if not regarded as criminal at the moment, are in contradiction to the code under which business should be carried out in the City.
Several Hon. Members rose—
Mr. Speaker: Order. I must have regard to the fact that there is to be another statement, a Standing Order No. 10 application, a ten-minute Bill and further business. I shall allow questions on this statement to go on for another 10 minutes. I hope in that time to be able to call everyone who wishes to ask a question.
Mr. Robert McCrindle: In welcoming the White Paper proposals as a good balance between the protection of the consumer and the encouragement of innovative forces in the City, may I express to my right hon. Friend one disappointment? If it is felt appropriate that the purchaser of a life assurance or investment contract should be protected, why should the protection not be extended to those who purchase motor car insurance, household insurance or insurance covering valuables, because the mis-arranging of such insurances can bring just as much hardship as the mis-arranging of life assurance or investment contracts?
Mr. Tebbit: I share entirely my hon. Friend's concern about the damage which can be done if such matters are badly or incompetently arranged. However, the Gower report and the White Paper relate to the investment and securities industry. The non-life aspects of insurance are not normally regarded as investments. Therefore, they are not covered in the White Paper.
Mr. Dennis Skinner: May we be told how the Bank of England could act as an independent adviser in the case, say, of Johnson Matthey when the bank has already offered £75 million in the rescue programme? Is the right hon. Gentleman aware that, in the light of the fraud that is occurring, the bank will be placed in an invidious position?
Why have the Government decided to allow a self-regulatory system to the casino economy—the City—but are insisting on trade unions being subjected to a legal straitjacket? Is it not a fact that, although the Conservatives came to power claiming that they would reduce the number of quangos, the Government are now setting up another one, to be headed by the right hon. Gentleman and to be overlorded by the iron lady with the plastic pound?
Mr. Tebbit: I should, first, inform the hon. Gentleman that I have not asked, and do not intend to ask, the bank for advice on the matter to which he has referred. Secondly, I am extremely grateful to him for raising the question of what one might call parallel treatment between the City and the trade union movement. Has he considered what would happen if the Secretary of State for Employment took him seriously? The Secretary of State

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would lay down the rules under which the trade union movement operated and would appoint the members of the TUC and the executives of the trade unions, and when trade unionists transgressed against the rules they would be prohibited from carrying on work as trade unionists, and if they did so despite that prohibition they would be sent to prison.
Mr. Michael Grylls: Is my right hon. Friend aware that most people who wish the City well and wish to see it continuing to be a successful part of the British economy will welcome the fact that in the regulation there is a minimum of Government involvement? As the power of the new City bodies will come from Parliament, through my right hon. Friend, how will Parliament be able to judge their success or failure? Will there be an annual report to Parliament from those bodies, for example?
Mr. Tebbit: The answer to the latter part of my hon. Friend's supplementary question is yes, the boards will report annually to the Secretary of State and those reports will be laid before Parliament. There will be accountability in other ways, as the Secretary of State will have power to require the amendment or withdrawal of the rules of the boards under certain circumstances, principally if they conflict with international obligations or if they are judged to be detrimental to competition and not justified in the interests of investor protection. Thus, there will be considerable parliamentary accountability.
I share my hon. Friend's view, as expressed earlier in his supplementary question, that it is better to have rather less Government involvement in the day-to-day regulation of these matters. The experience of most of us is that those in the City, the practitioners, are far quicker to detect the black sheep among their colleagues than perhaps are the Government.
Mr. Skinner: Black sheep indeed!
Mr. Tebbit: The hon. Member for Bolsover (Mr. Skinner) tempts me again. Trade unionists detect black sheep among their members, and that is why the NUM and many of its senior members are being sued in the courts by members of the NUM.
Mr. Dave Nellist: Is the right hon. Gentleman aware that every cloud has a silver lining and that the investment by the NUM of its funds in a bank in Liechtenstein has resulted in the union getting almost £1 million in profit, because the money was invested in dollar bonds rather than in sterling?
While that may have occurred by way of an historical accident, may we be told what effect the right hon. Gentleman's statement today will have on the activities of those companies in "the square mile" for which that is a daily occurrence and for which speculation against the pound is a way of life? I refer to ICI and the other multinationals, whose profits are paid for by ordinary working people. What effect will the right hon. Gentleman's statement have on that state of affairs?
Mr. Tebbit: It will not have much effect; and it is difficult to answer questions which are inspired by paranoia rather than by experience. I hope the hon. Gentleman can assure us that the NUM, which is so
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against speculation and windfall profits, will be donating the profit which it may have made, and to which the hon. Gentleman referred, to some worthy cause.
Mr. Richard Hickmet: Will my right hon. Friend confirm that, inasmuch as the day-to-day regulation will not affect the ability of the City to respond to innovation, competition and development, he will still retain powers in exceptional circumstances to appoint inspectors to investigate certain scandals which may take place in the City?
Mr. Tebbit: Yes, indeed; those powers will be unaffected.
Mr. Nigel Spearing: In view of the acknowledged technical nature of the prospective legislation, the need for confidence in the machinery and the fact that the Secretary of State said that it will require mature consideration, will the right hon. Gentleman consider the new public Bill procedure for the legislation?
Mr. Tebbit: I am not sure that I should do that on my feet. I hope that we shall have adequate debating time for the matter, and although, as I said, I am wedded to the basic structure—and, indeed, to much of the detail of the White Paper—equally, during the progress of the legislation through the House, and with the advice of many people outside it, we may discover better ways of doing some of what we propose to do than we see at present. I hope that the House will look at the legislation in that spirit. Certainly I shall.
Mr. Anthony Nelson: I join in giving a general welcome to the White Paper and to the thought which my right hon. Friend and his colleagues have clearly given to it. Is my right hon. Friend aware that there is a rich opportunity, before legislation is introduced, to gain some consensus on an all-party basis? If my right hon. Friend re-reads the report of the debate on the Gower report, he will find that a clear consensus emerged from that debate, a consensus which, on the basis of his statement, does not seem to be reflected in the decision to have two supervisory bodies rather than one. I welcome the fact that my right hon. Friend is open to suggestions on that. Will he bear in mind that the City institutions and interests which suggested that there should be two bodies rather than one do not necessarily have the protection of the investor but, rather, the protection of their own interests at heart?
Mr. Tebbit: I note carefully what my hon Friend says. It will be better if we can establish as much consensus as possible in this area, but it is not just consensus in the House that is needed. It is also consensus among the users and suppliers of the services. The principal area where the official Opposition and the Government may pull apart on these matters is on the question whether there should be a Government-operated statutory Stock Exchange Council-type of operation or whether it should be based principally on self-regulation within a statutory regulatory framework.
Mr. Hugh Dykes: I assure my right hon. Friend that the proposals will be widely welcomed, subject to further study of the White Paper. Is he confident, however, that the Stock Exchange, preoccupied with its own internal deregulation at the same time as the new regulatory structure is being established, will be able to do it in time and meet its target date, which has been

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agreed with the Government? Is he confident that the cost of the new structure will not be oppressive, either on practitioners or customers? Does he expect the Bill in the autumn of 1985 to include elements of the EEC's proposals on securities control?
Mr. Tebbit: I have not fully considered the matter to which my hon. Friend refers in the last part of his supplementary question, but I shall do so. As for the cost, it is certain that, whatever structure we have, the practitioners and users in the City will bear that cost, so they will have a strong interest in making sure that it is done as economically as possible.
The answer to my hon. Friend's point about the Stock Exchange is that I am still confident that it will meet the deadline. Indeed, it undertook to do so in the compact with my right hon. Friend the Member for Hertsmere (Mr. Parkinson).

London Regional Transport
4.20 pm
The Secretary of State for Transport (Mr. Nicholas Ridley): With permission, Mr. Speaker, I shall make a statement about the recent court judgment concerning the payment of grants to London Regional Transport by the Greater London council.
The Government took over responsibility for London Regional Transport on 29 June 1984, part way through the present financial year. Before we took over, the GLC had budgeted and precepted to pay grants to London Transport for the whole of 1984–85. Parliament therefore granted powers in section 49 of the London Regional Transport Act for the GLC to be directed to continue paying grants to LRT until the end of March 1985.

Accordingly, I made a direction on 29 June 1984, on the facts known to me at that time, requiring the GLC to pay a total of £281·3 million in grants to LRT in instalments up to the end of this financial year. The main factors which I had in mind in determining this figure included the GLC's decisions about revenue and capital grants to London Transport for 1984–85; LRT's financial needs for the remainder of the year, as assessed at that time; and the GLC's decision that LT should lease £27 million of assets, which imposed future liabilities on LRT. This was in accordance with the Government's intentions, as I made clear during the passage of the legislation.
The House will be aware that the direction was subsequently challenged by the GLC, and has recently been quashed by the High Court. It is clear from the judgment that the court took a different view of the way in which the powers under section 49 of the London Regional Transport Act should be exercised from that which I told Parliament the Government intended in taking the powers in the first place.
The effect of the judgment would be to reduce the money available to LRT by over £50 million at a very late stage in the financial year. A corresponding amount would accrue to the GLC. The Government regard this as contrary to the interests of ratepayers and LRT's passengers.
After studying the terms of the judgment, I have concluded that any new direction which could be made under the existing legislation either would not accomplish what was originally intended or would be vulnerable to further legal challenge, thus failing to resolve the damaging uncertainty which now exists over LRT's financial position for 1984–85 and beyond. Nor am I confident that an appeal would satisfactorily resolve the problems over the interpretation of section 49 which the judgment has brought to light.
In the circumstances, the Government consider that the matter can be settled only by the authority of Parliament. I shall shortly introduce new legislation to enable Parliament to determine once and for all the amount of grant to be paid to LRT by the GLC in 1984–85, and thereby ensure that the original purpose of section 49 of the London Regional Transport Act is carried out.
Mr. Peter Snape: Is the right hon. Gentleman aware that his proposal to use Parliament to avoid compliance with a High Court judgment is a constitutional outrage, that any such attempt to legislate will be strenuously and rigorously opposed by all those

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Members of the Opposition who happen to believe in the rule of law, that any Labour Minister who behaved in the same cavalier manner as the right hon. Gentleman would be pilloried, if not torn to pieces, by the whole of Fleet street and that any principal holder of ministerial office, after being condemned of illegality by a High Court judge, after telling blatant untruths in this House and after swindling the ratepayers of Greater London of about £50 million, ought formally to apologise to the House and tender his resignation?
The fact that the right hon. Gentleman, with typical bluff and bluster, proposes to act in the way that he has outlined in his statement means that he intends to use the Government's majority to force through retrospective legislation in order to flout the verdict of a court, to condone his own improper and illegal behaviour, to defy the traditions of this House and to earn the contempt and derision of all true democrats, who deplore his shameless arrogance and political chicanery. If the right hon. Gentleman had a shred of decency he would not be bothering the House with this appalling statement; he would have the courtesy to tender his resignation.
Mr. Ridley: The hon. Member for West Bromwich, East (Mr. Snape) has rather overreacted. It is clear that the court took a different view of the way in which the powers under section 49 of the Act should be exercised from that which the Government intended when taking the powers in the first place. When I told Parliament what section 49 meant, I really believed it to be true. If that was not the case, I should be misleading the House if I did not seek to put section 49 right so that it does mean what I said it meant.
Mr. John Maples: Does my right hon. Friend agree that it was made abundantly clear during the discussion of this clause in Committee that the unspent balance of moneys raised from the Government and from ratepayers for subsidising London's bus and tube services was to be paid over to LRT? That general principle was in no way dissented from at the time by any member of the Opposition. It would be an outrage to the ratepayers of London if the money raised from them for that purpose were to be applied by the GLC for any other purpose.
Mr. Ridley: My hon. Friend is quite right. I made the intentions of the Government quite clear. The fact that what I told Parliament does not appear to have been reflected in the court's interpretation of the legislation means—
Mr. Snape: It means that the Government were wrong.
Mr. Ridley: No, it does not mean that they were wrong. I said that the legislation does not mean what I told Parliament it did mean. Therefore, it is perfectly proper for me to put that error right in the way that I have suggested. May I underline my hon. Friend's perfectly reasonable statement that money taken from the ratepayers and passengers of London for the purpose of transport in London should be used for that purpose and not for any other. That is all that the Government seek to do.
Mr. Tony Banks: The Secretary of State has clearly revealed his total
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incompetence. He does not even understand his own legislation. Will he tell the House what is the true figure? Is it £50 million, £60 million or £73 million?
Mr. Ridley: The exact figure will be in the Bill. The time to discuss the precise way in which it is computed will be when we reach the legislation. When announcing the intention to legislate it is not the normal practice to discuss the details of a Bill, let alone complicated figures which will involve fairly complex argument, in order to explain to the hon. Member for Newham, North-West (Mr. Banks) what they mean.
Mr. Tim Eggar: Ratepayers in Enfield and elsewhere in Greater London paid rates on the understanding that they would be used for subsidising London Transport. Would it not be quite outrageous if the result of the interpretation of an Act, which was quite clearly expressed by my right hon. Friend, was that money could be spent by the Greater London council subsidising the women's committee, the police committee and other outrageous purposes for which the GLC tends to spend ratepayers' money?
Mr. Ridley: My hon. Friend is quite right. I find it extraordinay that the Opposition should seriously resist his proposition that money taken from his and other hon. Members' constituents who are London ratepayers should be used for a totally separate pupose from that for which it was raised.
Mr. Richard Tracey: Despite the huffing and puffing of Opposition Members, my right hon. Friend should be aware that the ratepayers of London welcome the action that he is to take. It is perfectly in line with the Government's intentions, as expressed on the Floor of the House and in Committee. Does my hon. Friend agree that this is just a last gasp attempt by this moribund GLC, before abolition, to frustrate the intention of the House and, indeed, that it is typical of the behaviour of the appointed members from the GLC on the LT board just before vesting day?
Mr. Ridley: I agree entirely with my hon. Friend. It was because of the extraordinary behaviour of the members of the board just before vesting day that we had to make this direction in rather a hurry. The principle must not be overturned by what has happened. What I said to the House about the meaning of the section is what we have to do. We are talking about large sums of money. It would be quite improper for this money, which has been taken from the ratepayers for one purpose, to be used for another.
Mr. Simon Hughes: Does the Secretary of State recall that during the Committee stage of the London Regional Transport Bill he resisted an amendment which would have prevented this problem? Does he also recall that normally the attitude on the Conservative Benches is that decisions of the court produce not uncertainty but certainty, and that that is the place where such matters ought to be resolved? Does the right hon. Gentleman accept, if he did not do so before, that this is the best illustration of the fact that when Governments and Secretaries of State seek to interfere more and more in the affairs of local authorities and local services they do not know what they are doing, and that the best remedy is to do what we are trying to do in Committee upstairs in order to prevent any Secretary of

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State from interfering in London affairs any more than happens at the moment? Will the Secretary of State please accept that we do not want any more of this kind of interference? He cannot get it right. He never has, and he never will.
Mr. Ridley: I am not sure to which amendment in Committee the hon. Gentleman is referring, but many of those amendments would have failed to take the money that should have been taken from the GLC and apply it for the purpose for which it was precepted by that authority. We had every right to appeal against the judgment if we had wished to. In order to shorten the period of uncertainty, and, indeed, to remove uncertainty about the figures, it is obviously preferable that the appeal should take the form of legislation, so that certainty can be made clear. We cannot have this important matter subject to further legal challenge. I do not believe for one moment that the hon. Gentleman can sustain his argument that this is interfering with the GLC. The intentions of Parliament in an Act have proved not to be met by the way in which the legislation was drafted, and the only remedy is to put the legislation right.
Mr. Michael Shersby: Is not the GLC effectively trying to prevent the ratepayers from benefiting from the investment that they made in LRT through the 1984–85 precept? Is that the situation that my right hon. Friend is describing?
Mr. Ridley: The sum of money is large—well over £50 million. If that sum is not paid over to LRT, fares will have to rise extremely high, further taxpayers' money will have to be provided or there will have to be an increase in the precept for next year in order to put right the gap which will appear in LRT's finances if we do nothing.
Mr. Nigel Spearing: Are not the perils of over-centralisation and the legislation related to it the real lesson of this sorry affair? Will the right hon. Gentleman use his excellent imagination to foresee the perils which await him if he persists with the legislation currently in Committee? Will he also agree that next year £69 million of ratepayers' money is to be paid for the GLC in respect of non-written-off debt? Will he take the opportunity in the forthcoming legislation to rectify that monstrous imposition on London's ratepayers?
Mr. Ridley: I can see no conceivable way in which the issue of centralisation or devolution arises on the statement that I have just made. The statement arises out of a piece of legislation to which the House gave its assent last year. Nor do I see how it is possible for me to take into account any other matter concerning the GLC, because all that I am dealing with is the judgment, which is the subject of this statement.
Mr. Harry Greenway: Will my right hon. Friend bear in mind that the GLC doubled fares and rates for Londoners in its first year of office and has since spent several million pounds on a completely spurious campaign, lying to pensioners and saying that they will lose their travel passes when the GLC is abolished, when the passes in question have since been guaranteed in law by the Government? Will my right hon. Friend guarantee that the GLC will not be allowed to get near London Transport, which it made such a mess of when it did?
Mr. Ridley: I give my hon. Friend the guarantee for which he asks. It is a somewhat sad prospect to have to
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go over the arguments of 1984 about the London Regional Transport Bill. That is what I regret about the need for this. All the fears, scares and rubbish that was talked at that time have been proved to be untrue. The only thing that has gone wrong is that the legislation needs amendment in the way that I have suggested.
Mr. Chris Smith: Does the Secretary of State expect the House to take his statement seriously? There is no damaging uncertainty at present; there is crystal clear certainty. The court has said clearly that the Government got it wrong, and the legislation is there to prove it. Will the right hon. Gentleman reflect on the fact that his statement has created extra uncertainty about the GLC's budget-making process for the forthcoming financial year? Does not his statement and the intended legislation make nonsense of the rate-capping legislation of his right hon. Friend the Secretary for the Environment and his attempts to set a rate limit for the GLC?
Mr. Ridley: No, Sir. There is at present in place no direction to the GLC, because the one that I made was quashed by the High Court. A new determination has to be made one way or another. Instead of making a new direction, I shall bring in a Bill which will have the amount of money named on the face of it.
Mr. Tony Marlow rose—
Mr. Ridley: I am sorry, I did not answer the hon. Gentleman's second point. I am in close touch with my right hon. Friend the Secretary of State for the Environment, and he is content with this legislation, which will be completely in accordance with what he is doing.
Mr. Marlow: Why is it that where there is a difference of opinion between the Government and a British court it is proper for the Government to bring before Parliament legislation favouring the Government's view rather than the court's view—I support that—yet when a European court disagrees with the Government it is impossible to bring forward legislation which the Government want, as we saw yesterday? Is it that Parliament can overrule British courts, but has no power when it comes to foreign courts?
Mr. Ridley: My hon. Friend tempts me on to ground on which it is beyond my competence to give him a full answer. I can tell him only that I believe that he is right to say that when a British court interprets an Act of Parliament in a way different from what Parliament was told, it is correct for Parliament to seek to use its sovereignty to change the law. There is a great difference between using sovereignty to change the law, and criticising the judiciary, which my hon. Friend will know is one thing that I have not done.
Mr. Jeremy Corbyn: Is not the Secretary of State proposing to indulge in a shabby little manoeuvre to condone his robbery of money from the GLC and the people of London? Is not his proposal, in the Bill that he will put through, yet another example of the dangers of centralising local government around people such as himself who do not even represent London constituencies and who have no understanding of the needs or operations of London Transport? Will not the proposals that he intends to bring forward create further chaos and confusion, which he will then use to blame the GLC, through his friends in the press?
Mr. Ridley: I cannot accept the implication of the hon. Gentleman's words, that the money belongs to the GLC. The GLC precepted the ratepayers of London for the express and explicit purpose of passing the money on to LRT. How it can then be said that because it rated the money it should not give it to LRT baffles me. The hon. Gentleman has not told us what he thinks the £50 million plus, the windfall to the GLC if the Government did not take this action, would and should be spent on. He seems to think that further burdens should be put upon the ratepayers to make good the shortfall and that the GLC should be left with a surplus which it could spend on anything that it liked.
Mr. Harry Cohen: Has not the court's decision shown that the Secretary of State is a law-breaker in this matter, and has not his statement today shown that he thinks he is above the law, even his own law? Is not the taking of the vendetta against the GLC into new retrospective legislation a constitutional disgrace? Has he not shown his incompetence and should he not now give the GLC back the money that he has robbed from it so that it can be used for the benefit of London ratepayers?
Mr. Ridley: I do not claim to be a lawyer, but I can at least identify that the hon. Gentleman knows even less about these matters than I do. The idea that it is wrong for Parliament, which is sovereign, to change the law is something that he ought to know about.

Coal Industry Dispute
4.38 pm
Mr. Dave Nellist: I hope that the Secretary of State for Transport, the real architect of the miners' strike, will stay and listen to this application.
In the light of the announcement made by my right hon. Friend the Leader of the Opposition regarding next Monday's debate, I seek 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 prolongation of the miners' strike."
That the matter is specific and important can be in no doubt. The provocation and prolongation of the dispute by the Government make it the longest and bitterest national dispute this century. It has arisen as a direct consequence of the Government's generalised attack on working people and their organisations and was predicted in the House in maiden speeches in the summer of 1983.
Throughout the dispute the Government have refused to justify their actions here in the House of Commons. Despite the fact that the matter has been debated daily in the media, in clubs, in pubs and on the estates, the one place held up as the epitome of democracy, the national debating chamber, in which no debate has taken place is here in the House of Commons.
The matter is urgent because today and every day that the Government refuse to withdraw their attack on over 100,000 jobs in and around the mining communities at least £20 million is wasted and 140,000 miners and their families suffer another day of the privation and starvation policies of the Government. By the end of this week, that daily total will have reached £100 million—sufficient to build in Coventry a large new general hospital and half a dozen new comprehensive schools, with enough small change left over for 1,000 new council houses. Eleven months of this dispute have destroyed those much needed facilities for 50 cities the size of Coventry.
The dispute should have urgent consideration so that the House can examine the role of certain individuals, such as Mr. David Hart, the adviser to the Prime Minister, who, in The Times on Saturday, said that the time for a negotiated settlement is past and that the Government should score a victory over Mr. Scargill. Some hon. Members may wish to raise also the role of Lord Chapple whose personal advice to the then Secretary of State for Energy, now the Chancellor of the Exchequer, clinched the appointment of Mr. Ian MacGregor to the National Coal Board.
If the Government do not concede and withdraw the hit-list of pit closures, then on Monday 11 February the Yorkshire and south-east regions of the Trades Union Congress will call for a one-day stoppage. If the House does not debate this issue, if the Government do not withdraw that pit closure list, the stoppage on Monday 11 February will receive wider support from the trade union movement, leading to more generalised strike action.
If the House is the national debating chamber, that you, Mr. Speaker, have so often said it is, in the light of the announcement by my right hon. Friend the Leader of the Opposition about the subject for debate next Monday, a Supply day, I ask that today's or tomorrow's business be suspended and that a debate on the miners' dispute be granted.
Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the Government's prolongation of the miners' strike".
I have listened with care to what the hon. Gentleman has said, but I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House, at least at a time when these talks are in progress.
Mr. Tony Benn: On a point of order, Mr. Speaker.
Relating to your ruling that you will not accept an application under Standing Order No. 10 while the talks are proceeding, I put it to you, Mr. Speaker, that that is a political, not a constitutional, point. As a matter of fact, I understand that the discussions that have taken place this morning are now over.
The point that I put to you, Mr. Speaker, is that Parliament is here to consider whether something is urgent, not whether a discussion in Parliament would assist one side or the other. I put it to you that if the view put forward is that if it is too early, it is hypothetical, if it is immediate, it is delicate, and if it is over, it is not urgent because it is too late, the judgment that you have given is that Parliament can never play a part in discussions.
There is nothing whatever in Erskine May, nor is there any precedent of any of your forebears, to say that Mr. Speaker takes into account what is happening outside Parliament in respect of its outturn, but only whether it is specific, urgent and should be a matter covered by Standing Orders.
Because the Government will not have a debate—and my right hon. Friends have now tried, with an unprecedented refusal in my knowledge of an application under Standing Order No. 10 from the Front Bench—everything points to your interpreting the rules of the House free from any interests, which of course you do not have, Mr. Speaker, in the outturn of the talks.
In those circumstances, Mr. Speaker, I beg you to consider very carefully whether it is right that you should be driven, by the dilemma in which you find yourself, into giving a political judgment about whether a debate would be "helpful" or "unhelpful" to negotiations in which the whole country is interested.
Therefore, on that point alone, Mr. Speaker I ask you to consider the ruling that you have given and the precedents for it, and to tell the House more clearly the basis on which you reach a judgment and whether it is now to be something unconnected with the House but more directly related to discussions or negotiations going on outside Parliament.
Mr. Douglas Hogg: Further to that point of order, Mr. Speaker. Would you advise the House, and in particular myself? Am I right in thinking that if the Opposition Front Bench wants to discuss this matter it can use an Opposition Supply day—the earliest is Monday next—to do just that?
Mr. Dennis Skinner: You will recall, Mr. Speaker, that when we had a discussion on this subject several days ago and I suggested that we should strip away the cold language and get down to the basics, you gave the
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clear impression that, if the matter were pressed by the Opposition Front Bench, there would be half a chance. Yesterday, an application was made by the Front Bench. It had, somewhat belatedly, joined the Campaign group and others who felt that it was necessary to have a debate. That application was turned down. Now you have turned down an application under Standing Order No. 10 because of talks. You have also held out the prospect that there are opportunities, as suggested by the hon. Member for Grantham (Mr. Hogg), for the Opposition to use one of their Supply days in order to have a debate, and you have to take that into consideration because it is a possibility.
You will also have heard today, Mr. Speaker, the Leader of the Opposition state in clear and unmistakable terms that, because of the Government's failure to deal with the economy properly and with the 14 per cent. interest rates and the fact that we have an iron lady with a plastic pound running the country, he would table a censure motion against the Government. It has crossed my mind, and it has probably crossed yours, Mr. Speaker, that that might well take place on Monday when the Opposition have a Supply day. Personally I should like the debate to take place sooner.
The important thing to remember, which I hope you will bear in mind, Mr. Speaker, is that there are conflicting issues for Supply days, and the issue of the economy is very important. Therefore, it is necessary for Mr. Speaker to use the opportunity that he has under Standing Order No. 10 to grant a debate which is absolutely necessary because of those other conflicting issues which have arisen.
Mr. Jeremy Corbyn: Further to that point of order, Mr. Speaker. I have been reading and listening carefully to all the rulings that you have given on the applications made under Standing Order No. 10. So far 24 applications have been made in respect of the miners' dispute, and you have been minded to grant only one of them during that period.
In view of your remarks last week and yesterday, Mr. Speaker, that you considered this an urgent and important matter and that you would consider it further as time went on and more applications were made, I wonder what plans you may now have in respect of any further applications that may be made under Standing Order No. 10.
As my hon. Friend the Member for Bolsover (Mr. Skinner) has pointed out, the debate next Monday is likely to be not on the coal dispute but on a different aspect of the country's economic problems. I believe—and I trust you will agree, Mr. Speaker—that the expenditure of £5·2 billion of public money by the Government on the mining dispute, without a vote in the House, and the use of Department of Health and Social Security regulations and the police and, perhaps more importantly, seriously and recently, the categorical refusal by the Secretary of State for Energy yesterday to answer questions about voltage reductions and the security of future power supplies in the country, mean that the House, of all places, must discuss the miners' dispute. This is not because we wish to demonstrate to the House once again our support for the miners, but so that Ministers can answer the serious points about which everybody outside the House is asking questions and talking. I do not believe that the House can go on blindfolding itself to the seriousness of the situation outside Parliament.
Mr. Speaker: I intended to go no further than what I said last week and yesterday—namely, that I think that we should debate this important matter when it is helpful to the situation. That is what I have said previously.
The House and the right hon. and hon. Gentlemen who have made applications under Standing Order No. 10 in the past have drawn attention to the importance of seeking a settlement to this extended and damaging strike. I hope that that is still the situation in the House. If that is interpreted as a political judgment, I am sorry; it was not so intended. It is simply that I thought that the House took the view that there is an appropriate moment to discuss this matter when it would be helpful to the resolution of the dispute. That is the position.
Mr. Skinner: Further to the point of order, Mr. Speaker.
Mr. Speaker: I do not think that a further point of order can arise from what I have just said.
Mr. Skinner: I wish to raise a separate matter, Mr. Speaker.
In taking the line that you have adopted over the past two or three days, you have mentioned, quite properly, that you would want a debate when it would be most helpful to the resolution of the dispute. I do not suggest for a moment, Mr. Speaker, that this line can create difficulties for you in future, but when the nation has been faced with conflicts in the past, industrial or otherwise, we have debated them, irrespective of whether our debates would resolve the issues. There is no better example than the fact that, during the Falklands war, we had several debates on that subject, and it cannot be denied that the debates took place before the conflict had ended.
Mr. Speaker: I have nothing to add to what I have said already.
Mr. Robert Maclennan: On a point of order, Mr. Speaker. It has become clear, in the course of exchanges about Standing Order No. 10 applications, that you have decided to depart from the formula which you have used on many occasions previously when you have decided to refuse a Standing Order No. 10 application, which is to refuse to give your reasons, as you have said you are instructed to do by the rules of the House.
I believe that the right hon. Member for Chesterfield (Mr. Benn) was correct when he said that by giving your ruling today you were taking a political decision by seeking to judge the helpfulness or otherwise of the debate. That matter has not normally fallen within your rulings or those of your predecessors. If such judgments have been made by you, Mr. Speaker, you have normally kept them to yourself. As there have been many other opportunities when the Labour Opposition could have raised the issue of the miners' dispute from the Opposition Front Bench, would it not be better, Mr. Speaker, to revert to your established rule not to give your reasons for refusal?
Mr. Speaker: That is very wise.

Severe Weather Payments
4.53 pm
Mr. Gordon Wilson: 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 refusal to grant fuel allowances to those in Scotland."
In the course of my brief remarks I shall seek to persuade you, Mr. Speaker, that it would be extremely helpful to 5 million people if the House could discuss the matter.
You will be aware, Mr. Speaker, that over the past two weeks or so there has been considerable comment, especially from Scottish Members, but from others as well, about the discriminatory nature of the existing system of severe weather allowances. The Department of Health and Social Security has given special allowances to those in the south of England who are affected by exceptionally cold weather. The trigger point for the allowances is 105 in Plymouth, whereas it is 129 in Aberdeen. In other words, there can be the same levels of temperature in different parts of the United Kingdom where the level in one area will attract supplementary benefit and heating allowances, whereas it will not in another. This discriminates effectively against those who live in colder climates.
The matter is specific because yesterday afternoon a statement was made by the DHSS—I gather that it was made informally—that no allowances were to be made to those in Scotland, notwithstanding the severe weather which it has encountered over the past 14 days. I gather also that a parliamentary answer will become available this afternoon that will confirm my information.
Those who have studied these matters will be well aware of the very snowy conditions in Scotland, especially in the Highlands, which have cut electricity supplies in many areas. In certain areas the temperature has been minus 22 degrees Celsius, which is extremely cold by any standards. Curling bonspeils, which are very rare events, are taking place because the ice on the lochs is sufficiently thick, due to the low temperatures, to support that sporting activity.
The matter is important because hundreds of thousands of people are affected adversely by the discriminatory actions of the DHSS. Up to 5,000 old people will die every year in Scotland because of insufficient money to buy adequate fuel to provide sufficient heat to maintain themselves at a living temperature.
No other subject has caused so much public concern in Scotland in recent weeks as the one that I am putting before you, Mr. Speaker. Scotland is being treated effectively as a second-class area. I ask you to consider adjourning the House, under Standing Order No. 10, to allow us to discuss this important matter. It is extremely urgent, because a good part of the winter is still before us.
Mr. Speaker: The hon. Member for Dundee, East (Mr. Wilson) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the severe weather payments which were made available to southern England last week which have been denied to those in Scotland this week, Scotland having suffered atrocious weather conditions in the past seven days".

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I have listened carefully to what the hon. Gentleman has said. I regret that I do not consider the matter which he has raised as appropriate for discussion under Standing Order No. 10. Therefore, I cannot submit his application to the House.

Protection of the Rights of the Elderly in Home Ownership
4.56 pm
Mr. Neil Thorne: I beg to move,
That leave be given to bring in a Bill to enable those who go into Part III Accommodation under the National Assistance Act 1948 to assign up to a half share in their freehold or long leasehold property to a companion who has been residing with them for not less than five years and to assign the remaining share of their freehold or long leasehold property to the local authority, the capital value of which share shall become an interest in the local authority old people's home in which the assignor is to reside.
In recent years we have been making major strides in introducing the pride and joy of home ownership to those in all walks of life. As a result, the percentage of owner-occupiers has increased from 52 per cent. in 1973 to 60 per cent. in 1983, and it continues to rise. Having spent a lifetime of care and thrift, it comes as something of a shock for the elderly to be deprived of their assets in the evening of their lives. This is a matter of concern to many who deal with the elderly, including Age Concern.
When the aged enter an old people's home, they are expected to make a contribution towards their keep in addition to the £30 or thereabouts that is deducted from their old-age pensions if they have assets exceeding £1,200. Those in that position will find that a sliding scale is applied which will consume their assets at a rate of 26 per cent. per annum. This is a much higher percentage than the one which was felt to be too high when it was taken up in a private notice question earlier this afternoon. The sliding scale moves to the full cost of staying in an old persons' home, which can be as much as £150 a week. Unless a spouse or child under 16 years of age is left at the previous principal residence of the person entering the home, this property can be included in the individual's assets. This leads in many instances to considerable anxiety and hardship, especially when the person left behind has been living in the premises and sharing the cost of upkeep for many years, and finds himself or herself thrown out by a local authority which is anxious to reduce the residual bill that is left for the ratepayers.
In my constituency, there were two sisters who lived together in a family house from 1934. They lived first with their parents and then they shared the costs of upkeep between themselves. Unfortunately, their parents left the property to the elder sister, who was 18 years the elder, on the understanding that she in turn would leave it to her younger sister. When the elder sister had to go into an old persons' home at the age of 84, the local authority applied pressure for the sale of the house and offered a bed-sitting room flat to the younger sister.
After considerable negotiations, the authority agreed to the purchase of a one-bedroomed flat over which it has a charge. It allows the younger sister to occupy the flat, but sends her bills quarterly to cover the balance of her elder sister's charges after receiving her old-age pension and occupational pension. Currently the bills exceed £3,000 after the balance between the sale of the home and the purchase of the flat has been taken into account. This is a very worrying factor for a retired lady of nearly 70 years of age without other means.
It is open to the local authority to waive these charges but, as a prudent authority over the past 20 years, it has little money to spare, especially in the light of the current

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rate support grant proposals. Apparently, if there is a shortfall in payment to a local authority old people's home, this is made good by the ratepayers. Those who cannot meet the full repayment in a private or charitable home have their payments made up by the taxpayer. That hardly encourages conscientious, caring local authorities to look after their elderly residents in these days of rate capping and manpower targets.
In 1984 the Government issued a consultative document on new regulations and guidance for assessing ability to pay charges for part III accommodation. That document was followed last Thursday week, on 17 January, with a local authority circular which, in paragraph 6, stated:
"Paragraphs 17 to 23 of the Memo of Guidance give advice to authorities as to some circumstances in which they should exercise discretion. But these are not the only circumstances in which it might be appropriate to do so. It would also be reasonable for example for an authority to exercise its discretion where a person who has been caring for the resident continues to live in the dwelling. Authorities should look at each case on its merits and decide, having regard to all the relevant circumstances, to what extent (if any) the value of a former dwelling should be reduced in the assessment."
My Bill will seek to allow by right all those entering old people's homes to assign up to a half share in their principal residence to a companion who resides with them for not less than five years. My Bill also seeks to permit those entering council old people's homes to purchase a share of up to a full proportion of the total value—for example, a one fortieth interest in a 40-place home. That will enable weekly charges to be reduced to a share of the running costs and will enable the occupier to benefit from any appreciation in the value of the property. Any shortfall
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in meeting the running costs out of pensions or other funds would be accumulated with interest and set off against the capital value on vacation of the premises, with the local authority repurchasing under a right of pre-emption at the district valuer's figure.
At the moment, many advisers recommend that their elderly clients should dispose of their assets before entering a home so that they can leave the bill to be met by the ratepayer. I believe that many would welcome the opportunity to purchase an interest to give themselves the dignity of home ownership throughout the remainder of their lives and avoid the present encouragement to dispose of their assets prematurely. Clearly, this would be of advantage not only to the elderly but to ratepayers and taxpayers.
Question put and agreed to.
Bill ordered to be brought in by Mr. Neil Thorne, Sir Gerard Vaughan, Dr. Michael Clark, Mr. Gerald Bowden, Mr. Bowen Wells and Mr. Michael Marshall.

Protection of the Rights of the Elderly in Home Ownership
  PROTECTION OF THE RIGHTS OF THE ELDERLY IN HOME OWNERSHIP
  Mr. Neil Thorne accordingly presented a Bill to enable those who go into Part III Accommodation under the National Assistance Act 1948 to assign up to a half share in their freehold or long leasehold property to a companion who has been residing with them for not less than five years and to assign the remaining share of their freehold or long leasehold property to the local authority, the capital value of which share shall become an interest in the local authority old peoples' home in which the assignor is to reside: And the same was read the First time; and ordered to be read a Second time upon Friday 1 March and to be printed. [Bill 65.]
Orders of the Day

  Representation of the People Bill
  Considered in Committee
  [MR. HAROLD WALKER in the Chair]
  Sir John Farr: On a point of order, Mr. Walker. How far do we intend to proceed in Committee today? Is the draft list of selections by the Chair the final list? Does that list allow for the new clauses that were tabled for consideration?
  The Chairman of Ways and Means: New clauses are normally considered at the end of the Committee proceedings. The selection list is provisional and extends as far as we might reasonably expect to go today. We hope that the hon. Member's wish to reach the new clauses is fulfilled by the end of our proceedings. I assure the hon. Member that we have not ruled out the selection of new clauses.
  Ordered,
  That the Bill be considered in the following order: Clauses 1 to 10; Schedule 1; Clauses 11 to 22; Schedule 2; Clause 23; Schedule 3; Clauses 24 to 27; New Clauses; New Schedules; and Schedule 4.—[Mr. Mellor.]

  Representation of the People Bill
    Clause 1

      EXTENSION OF PARLIAMENTARY FRANCHISE
      5.5 pm
      Dr. John Marek: I beg to move amendment No. 11, in page 2. line 12, leave out
      'or treated for the purposes of registration as resident'
      With this, I shall speak also to amendment No. 16, in page 2, leave out line 19.
      There is a certain amount of indecision in the Bill as it stands, and I hope later to give examples. As the first Member to move an amendment, I point out that the Bill is a long one, comprising 27 clauses and a number of schedules. As I am sure that we shall examine the Bill carefully, and word by word, I shall try to make progress and keep my remarks succinct at this stage. I hope that the Government will listen carefully to what I say. I hope that, if they are persuaded by some of my arguments and reasoning, they will be generous enough to admit that there is merit in some of the amendments and accept them. If they do not accept the amendments because they are incomplete, I hope that they will take the amendments and bring them forward again on Report as Government amendments.
      The amendments are not complete. I do not believe that it would be sufficient to leave amendments Nos 11 and 16 without adding extra words to them. The amendments seek to define a little more closely the conditions under which a person qualifies as an overseas elector. I believe that if a person moves from this country he should be registered as an overseas elector according to permanent residence when he was last resident in this country. A student can be registered at a university in London while his permanent residence is in another area; for example, in Northumberland. Students can properly establish residences in both places and appear on both registers at
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      the same time. After graduating, the student could go abroad for, say, 10 years. I believe that it would be wrong if he continued to be registered as an overseas voter in that area of London where his name is on the electoral register.
      Mr. Douglas Hogg: Perhaps the hon. Gentleman can help on this point. If his amendment is accepted, will it have the effect of precluding a person who was a service voter, but who has left the armed services, from having a vote?
      Dr. Marek: I am grateful to the hon. Gentleman for making that point. He anticipates what I was going to say. I said that the amendments were incomplete.
      This case need not be confined to students, but could include landlords and business men. A person may conduct a business in a particular town in a particular constituency, but live in another constituency not too far away. Although his permanent residence is somewhere else, that person could be registered in both places. It would be wrong, if that business man sold the business and said that he was going to work abroad for a number of years, for him to be registered for the place where he had his business. If that person returned, he would return to his home and not to where he had his business.
      As I understand the Bill, it allows people, such as students, those with jobs in different parts of the country, and others properly to register in more than one place. They would then be able to decide whether to register as an overseas voter for constituency A or B. That would be wrong. If they are to be treated as overseas voters, they should be registered for the place in this country of their last permanent residence.
      I agree that if the amendments were accepted without any addition voters such as service men would not be able to vote. That applies also to patients in mental and other hospitals. It would be wrong for me to insist that because the hospital was their last place of residence they should be registered for that hospital. For that reason, the amendments are not sufficient in themselves.
      I should like to refer the Committee to two documents. The first is Cmnd. 9140, "Representation of the People Acts". On page 26, paragraph 7 states:
      "The right to vote should be extended to British citizens resident abroad who have previously been registered as electors. The right should be exercised in respect of the constituency in which the elector was last resident before he or she left. Separate arrangements would have to be considered for young people who left the United Kingdom before they reached voting age."
      Perhaps it is a loose form of words, but the document states:
      "The right to vote should be exercised in respect of the constituency in which the elector was last resident."
      To me, that means where the elector lived, where his home was, and where he spent his evenings and slept. It does not mean the artificial words,
      "or treated for the purposes of registration as resident."
      The Government's reply to the first report from the Select Committee on Home Affairs sets out the Government's views. I hope that those views have not changed since they published that reply and that they will agree with me on that point.
      I should also like to refer the Committee to Home Office circular RPA 200. On page 8, under "Residence", it states that
      "on the one hand, a person is not to be registered for an address where he is staying temporarily on the qualifying date and, on

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      the other hand, a person is to be registered for his normal place of residence even though he may be temporarily absent from it on the qualifying date."
      Clearly, my amendments must be supplemented, perhaps on Report. The intention is that the person should be registered at his normal place of residence even though he may be temporarily absent. To continue the analogy, overseas electors should not be given the choice whether they are to be treated as electors for the place where they are ordinarily resident, or—there may be a safe Labour or Tory seat or some other consideration—to say, "I wish to be registered as an overseas voter for the seat where I had my business or where I was at university." He may not necessarily be resident at the university for three years; he may have been there for one year doing a diploma.
      Mr. A. J. Beith: Is not the hon. Gentleman's argument directed at the practice of multiple registration? Is not the evil against which he is now inveighing merely an extension of the choice available to those who are multiple registered to those who happen to be overseas at the time?
      Dr. Marek: I shall not comment on the hon. Gentleman's remarks at this stage, because I am sure that multiple registration will be discussed later. I am not seeking to argue that we should change the current practice of allowing students to register at two places. A student who spends 30 weeks a year at university can establish residence in that university. If he then spends the remaining 22 weeks of the year at his home, he can establish residence at his home.
      There is a distinction between that and what the hon. Gentleman invited me to consider. The distinction is that the overseas voter leaves both addresses at which he has been resident and moves abroad for five, six, seven or 10 years. His links with his registered address must necessarily become weaker as time passes. If the Committee decides that that person should be allowed an overseas vote, it should be allowed only for his normal place of residence — his home. That is partially recognised in Cmnd. 9140 and RPA 200 also talks about that.
      5.15 pm
      RPA 200 states:
      "The question of whether or not in borderline cases a man is to be regarded as resident is … one to be resolved 'on a commonsense jury basis … by the ordinary understanding of man in the use of ordinary words in the English language'."
      If decisions are to be made in that way, they will be much more difficult if we have the words,
      "or treated for the purposes of registration as resident".
      If those words are deleted, we would be saying that the person is "resident at that address". It would then be necessary to table further amendments to ensure that service voters, hospital patients and the other categories mentioned in RPA 200 could nevertheless be registered as overseas voters at their normal addresses.
      Precision is the necessary prerequisite for such a provision. We must know where we are. We do not want electoral registration officers to have to make value judgments, or to have these matters going through the courts, with arguments going backwards and forwards. We should legislate precisely. We can start by removing
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      the words that I have mentioned, and we could table further amendments to satisfy the conditions contained in RPA 200.
      Mr. Douglas Hogg: There are two reasons why the Committee should not accept the amendment. The first is the one that I raised in an intervention. In its present form, the amendment would undoubtedly prevent service voters who subsequently go abroad from having a vote. It would have the same effect on mental hospital patients. I do not doubt that it would be possible to build in a host of exemptions to take account of those difficulties, but I am against complicated legislation. I do not want to see the Bill further complicated, unless there is a pressing need.
      The second reason why the Committee should not support the amendment relates to the point made by the hon. Member for Berwick-upon-Tweed (Mr. Beith). The hon. Member for Wrexham (Dr. Marek) said that he does not like the consequences of multiple registration. However, once we accept the principle that, for example, students may have two residences for the purpose of an election address if they are resident in this country it is nonsense not to carry forward that principle to when they go abroad for the relevant period. It is inconsistent. The hon. Gentleman should strike at the basic problem or accept the consequences.
      Dr. Marek: Is the hon. Gentleman saying that a student undertaking a course at a university well away from his normal residence should be treated, during a period abroad, as an overseas voter entitled to a vote at the place of study, even if he has been there for only one year?
      Mr. Hogg: I am saying that if it is right for him to vote as a resident at the university, which is a fairly tenuous connection in any case, I do not think it a particular mischief for him to carry that address forward if he goes abroad. The problem lies more in multiple registration than in being abroad.
      Mr. Beith: I am glad that the hon. Member for Wrexham (Dr. Marek) tabled the amendment, as it highlights one of the several difficulties arising from multiple registration and the way in which the concept of residence for registration purposes has been diluted in recent years. It has become apparent from a number of cases in both England and Scotland that what used to be understood by residence no longer holds in relation to electoral registration. It does not mean that the person lived or slept at the residence on the night, as in the case of the census, or was merely temporarily absent. It is possible to claim a number of residences at one and the same time on very general grounds. A person registered in several places can then choose where to exercise his vote.
      The issue raised by the amendment is whether the person concerned should be able to exercise that choice from Tenerife, just as he can already exercise it from London, Liverpool or anywhere else in the United Kingdom. In other words, can he, as an overseas voter, exercise the same choice as he could within the United Kingdom? The amendment treats the symptom rather than the ailment. It is sometimes necessary to do that if the ailment cannot immediately be cured, but serious administrative difficulties arise. If we do not establish a procedure to check whether a person is resident where he

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      claims to be resident in the United Kingdom, how can we do so in respect of the limited number of overseas claims? That is the basic problem.
      As the problems of multiple registration will arise at several points in our consideration of the Bill, it is not without value that the Government have been required to consider them at this early stage. The idea that residence can be claimed and granted in respect of a large number of places strikes at the ordinary meaning of the word "residence", as the hon. Member for Wrexham pointed out. The use in the Bill of the phrase
      "treated for the purposes of registration as resident"
      underlines that problem.
      I doubt whether the amendment can be made workable, although it seems to me even more illogical, undesirable and unfair to allow a person resident abroad to choose between several constituencies than for that to be possible from a base within the United Kingdom.
      Mr. Peter Bruinvels: I find the amendments somewhat strange and confusing. I should have thought that both categories of electors should be treated in exactly the same way. It seems unfair, and indeed contrary to the Labour party's views, to seek to increase democracy by trying to ensure that everyone in this country can exercise the vote while seeking to deny people that right if they have to go abroad to work or study, although they may have played an active part in the electoral process in the past.
      I believe that the hon. Member for Wrexham (Dr. Marek) is more concerned about the practicalities of multiple registration. Certainly, one must always check very carefully against the electoral register to ensure that nobody votes more than once.
      Dr. Marek: The hon. Gentleman is indeed confused. I am certainly not seeking to deny any student, or indeed anyone else, the right to vote as an overseas elector. I am merely seeking to ensure that he is registered and casts his vote according to his normal residence, not some artificial residence with which he has no strong links.
      Mr. Bruinvels: A student registered both at his home address and at his university address may take one year of his course at the Sorbonne. The hon. Gentleman is surely not saying that such a person cannot choose the constituency in which he wishes to cast his vote. That would seem thoroughly unfair. I do not see why students should be treated differently from other people.
      As the hon. Member for Berwick-upon-Tweed (Mr. Beith) has said, we shall be discussing multiple registration at several points in our consideration of the Bill. The electoral registration officers will perform their duties. I am sure that the hon. Member for Wrexham is not seeking to cast aspersions on them. It seems thoroughly unfair that a person who goes overseas should not be able to cast his vote in the constituency of his choice. So long as he keeps in touch with the United Kingdom—he may still be paying rates and taxes here—he should have the right to vote. I strongly oppose the amendment.
      The Parliamentary Under-Secretary of State for the Home Department (Mr. David Mellor): I am glad to have the opportunity to reply to the first substantive debate in the Committee. It has been a well informed debate and I hope that it sets the scene for those to come in the several days of our consideration of this matter.
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      I will deal first with the effect of the amendment moved by the hon. Member for Wrexham (Dr. Marek) and then with the substantive point that he has raised, as that is clearly of more concern to him than drafting points. The effect of the amendment would be precisely that described by my hon. Friend the Member for Grantham (Mr. Hogg) in his formidable address. My hon. Friend's contribution was all the better for being short and he made the two points that needed to be made. I shall reply in the same vein but at rather greater length.
      The amendment would merely omit the provision whereby service voters are deemed to be resident at a particular address. Three years ago, voluntary patients were linked to that provision. If a person in either of those categories moved overseas the amendment would prevent his voting. I know that that is not the hon. Gentleman's intention, but that would be the effect of his amendment.
      The hon. Gentleman is really concerned to narrow the choice of people registered in more than one constituency. Our provisions would use the definition of residence contained in the 1983 Act. That definition does not make any distinction in quality between the two qualifications which may be acceptable to the electoral officers of the constituencies concerned. The electoral officer has regard to the guidance of the courts, which have established that a person is entitled to registration in respect of a particular address if there is a substantial degree of permanence.
      The hon. Member for Berwick-upon-Tweed (Mr. Beith) pursues a lonely but dignified crusade against multiple registration.
      Mr. Beith: It is not lonely.
      Mr. Mellor: I meant by reference to some of his other crusades. Nevertheless, it has been held that a substantial degree of permanence can attach to more than one residence at the same time. That is why, as my hon. Friend the Member for Grantham has explained, it is difficult to address that matter in the Bill. I should say in defence of the draftsman that a good deal of effort has been made to try to ensure that the provisions do not become an excuse for people to do more picking and choosing other than on the one matter that has already been exposed. The Bill has been carefully drafted to ensure that where someone, within the qualifying period, has been registered in subsequent registers in different constituencies, he may qualify as an overseas elector only in respect of the last constituency in which he was registered.
      It is recognised that some people may, within the seven-year period or whatever period the House may decide to be appropriate, have been registered in different constituencies in different years. That is taken care of. It is also carefully provided in clause 2 that a person may make an overseas elector's declaration only in respect of one constituency. If a person makes more than one declaration in a certain year, one for a first constituency and another for a second, the second declaration cancels the first. That is provided for by clause 2(5). Clause 2(4) provides that, if a person makes more than one declaration on the same day, both declarations are void.
      5.30 pm
      There is a difficulty if someone who wishes to qualify as an overseas elector is able to show that, when he was last registered in the United Kingdom, he was registered in two places. It is hard, within the definition of resident used throughout the 1983 consolidated statute which the

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      Bill follows, to determine which residence has the greater permanence. That is not a judgment which the statute gives us a basis for making. I hope that the hon. Member for Wrexham will agree that, even if we were to conclude that it was desirable to try to establish which of the two residences was the more permanent, it would not be a very worthwhile exercise.
      I take the hon. Gentleman's point. He has uncovered the only occasion on which someone qualified as an overseas elector has a choice as to which constituency he should vote in. In drafting the legislation, we were at pains to avoid giving someone the opportunity to elect in which constituency he wanted to vote. Manifestly, some constituencies are more attractive than others to the individual elector. As the hon. Gentleman has percipiently noticed, the only exception occurs when, on the last occasion that a person was registered in the United Kingdom, he was registered in more than one place. As several hon. Members have acknowledged, it is an inevitable corollary of the existence of multiple registration—with which one may or may not agree—that someone in that position who then moves overseas should have a choice.
      I hope that my explanation shows that we have thought about the problem and have sought to deal with the hon. Gentleman's point. However, I fear that I cannot offer him any hope that we could remove the option that exists in that narrow case.
      Dr. Marek: I am grateful to the Minister for having had the matter considered by his Department. I only wish that some way could be found to limit people's choice. The situation is clearly undesirable, and finding a solution would be better for everyone. This is not a political point.
      I hope that we shall be able to return to the substance of the amendments on Report if any new idea comes to mind. Meanwhile, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Mr. William Powell: I beg to move amendment No. 12, in page 2, line 14, leave out paragraph (c).
      The Chairman: With this it will be convenient to take the following amendments:
      No. 14, in page 2, line 14, leave out 'seven' and insert 'five'.
      No. 66, in page 2, line 14, leave out 'seven' and insert 'ten'.
      No. 69, in page 2, line 14, after 'seven', insert
      'or such other period, being not less than seven years as the Secretary of State may by order determine; and no order shall be made under this section unless a draft therefore has been laid before and approved by a resolution of each House of Parliament'.
      No. 30, in clause 3, page 5, line 8, leave out 'seven' and insert 'five'.
      Mr. Powell: This group of amendments deals with the first major area of principle with which the Bill is concerned. Essentially, the amendments offer the Committee a choice. The Bill stipulates a period of seven years as the cut-off point for residents overseas beyond which they would not qualify to vote in this country. The
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      official Opposition's amendment, No. 30 suggests five years. Amendment No. 66 suggests 10 years. The amendment in my name leaves the period at large.
      It might not be inappropriate for me to observe that it is only once in a generation that Parliament considers major extensions to the franchise. There have been a number of measures over the years, but the last major debates on the representation of the people occurred in the 1940s. The right hon. Member for Blaenau Gwent (Mr. Foot) is the only veteran of those days. It may be another generation before we reconsider the laws relating to our franchise.
      Clause 1 deals with an important issue of principle: who should qualify to vote in our elections? In making that choice, we must reflect on the fact that social conditions change over the decades. The social background to the debates of three decades or more ago was very different from that of today. First, it is plain that the population is much more mobile within our country. People move much more often than they used to. Secondly, it is much more likely that people will go abroad than used to be the case—allowing for the circumstances of the couple of years or so following the end of the second world war, when there were still substantial numbers of servicemen abroad. The number of British subjects working abroad at present may well run to a million or more, and they are to be found in every corner of the globe. Many of them—perhaps the great majority—
      Mr. Gerald Kaufman: How can the hon. Gentleman give a minimum figure of a million when on Second Reading the Secretary of State estimated half a million and when, in answer to a question that I put down, the Home Office admitted that that figure was only an estimate?
      Mr. Powell: As the right hon. Gentleman says, my figure is an estimate. I do not accept the estimate made by my right hon. and learned Friend the Home Secretary. My information, which has been drawn from a number of sources, suggests that the figure might be very much higher. At bottom one can only guess.
      Sir Edward Gardner: I have no doubt that my hon. Friend has seen "The Government Reply to the First Report from the Home Affairs Committee", in paragraph 2.8 of which the Government estimate that
      "of the roughly three million British citizens resident abroad perhaps 600,000 ar so are of voting age".
      Mr. Powell: As there are no accurate statistics, we have to guess. It is clear that conditions exist today which make it much more likely that British subjects will serve abroad for a period. We already make provision to enable Crown servants and British service men, abroad for a temporary period, to vote. Such provision should be extended to a much larger number of people.
      The cut-off point is a matter of judgment and my right hon. and learned Friend the Home Secretary has opted for seven years. The House is now being asked to consider a series of different judgments. We are debating not the principle of whether the franchise should be extended to British subjects who are resident overseas, but for what period during their absence they should qualify to be registered. We should remember that registration is the crucial element in determining who is able to vote. The franchise rests only with British subjects resident abroad who have registered to vote. Figures that have been made

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      available through the Library show that for France, which has a generous law towards its nationals who are resident abroad, although many qualify, few vote. There might be many reasons for that. Although some British subjects have left permanently and are therefore unlikely to want to register, many others have every intention of returning. The date of their return might be determined by a fixed contract. Although some might return after a fixed period of service, others have an open-ended contract and might return at any time.
      Information that I have been given through the European Assembly suggests that there might be 250,000 British subjects living in the European Community who would qualify for registration if they were so minded. However, a large proportion of them would be excluded by the seven-year rule. I know people for whom seven years would be too short but who have every intention of returning to and retain substantial links with Britain. I have in mind a man who works in Greece. He is the highest sterling earner in Greece and is able to contribute substantially to our balance of payments through shipping and insurance. His children are at school here and he has a house here on which he pays rates. However, the house is let, so he does not qualify because he is not resident here on the qualifying date. We should also consider those who go to the orient. People who serve companies that are based substantially in the far east have to undergo an extensive period of training to learn Japanese or Chinese, for example. We often hear that the business man who seeks a contract must be in China for 10 years before getting the slightest idea that there might be a contract going. Nevertheless, such people intend to return to Britain at a convenient time.
      Mr. Ivor Stanbrook: My hon. Friend seems to be arguing that, once a person who is registered in Britain goes abroad, he should have the privilege of having a share in choosing a Government in Britain although he has no property here, pays no rates, pays no taxes and makes no contribution to Britain. Is there not an argument for saying that people who are abroad in those circumstances and who do not retain their connection with Britain should be told that there is no representation without taxation?
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      Mr. Powell: There is such an argument but it is not necessarily convincing. The principle of no taxation without representation has not been imported into our law and it would be a bad principle to import. If my hon. Friend the Member for Orpington (Mr. Stanbrook) were appointed a Commissioner to the European Community and he served two terms there lasting eight years, he might be able to retain a residence in Britain which he did not let. He would be able to return to that residence and qualify for registration. He would be able to continue to register because he could afford a second home. The people who will be discriminated against are those who are unable to afford a second home, which is a prerequisite to registration.
      Mr. Douglas Hogg: Is my hon. Friend entirely right? I accept that someone who has a second home and who is resident here on the qualifying date has the franchise, but does he agree that it is not sufficient for that person to be here only during the night of the qualifying day? Must he not be resident in order to justify registration?
      Mr. Powell: My hon. Friend might have stated the law, but I should be extremely surprised if the practice of registration was not that a person qualified as a result of being resident purely on the qualifying date. My hon. Friend's argument is fascinating and arcane, but I believe that residence on the one day is all that is required. That is why it is not unknown for people who are staying with friends on the relevant night sometimes to find that they are on the electoral roll. The form refers to only one day, although occupiers are told that it can be filled in in advance.
      The amendments will set the pattern for the future. It may be a further generation before these matters are substantially reviewed. Although we may discuss whether the clause will stand part of the Bill, we are at present discussing the choice of four different periods — five years, seven years, 10 years and at large. The pace of social change is developing in such a way that we would be wise to opt for the longest period, that is, at large. Many people retain permanent connections in and intend to return to the United Kingdom. They would be excluded even under the seven-year rule. As we have allowed for the principle, it would be appropriate to take it to its full extent by eliminating paragraph (c), which my amendment seeks to do.
      Mr. Kaufman: I wish to speak to amendments Nos. 14 and 30. As the hon. Member for Corby (Mr. Powell) said, we are not debating the principle of the expatriate vote. The Opposition remain totally opposed to the clause, and on clause stand part my hon. Friend the Member for Knowsley, North (Mr. Kilroy-Silk) will explain why we oppose it. As the hon. Gentleman said, these amendments deal with the content of the clause rather than with the principle behind it.
      The hon. Gentleman advanced his case in a peculiar way. He admitted that he was providing what might be a massive franchise at a guess by offering the expatriate franchise at large. His reason for providing it was extremely dubious — that more British people travel abroad for longer periods now than was the case in previous generations and centuries. That is strange. The number of people who travelled from this country to colonise large parts of the world, which resulted in the British Empire and then the British Commonwealth, was larger in absolute numbers and far larger in proportionate numbers than those who travel abroad on short contracts now. There has been no change in the social circumstances. The change that could justify his amendment, were it to be justified, is the change in the methods of communication, which make it theoretically possible for a ballot paper to be sent to distant parts and returned. The reliability of a ballot paper reaching its destination and being returned on time must take account of the extremely dubious record on reliability of certain overseas post offices, but I do not wish to go into that now.
      Mr. Douglas Hogg: Does the right hon. Gentleman recognise a further difference, which is that the improvement in communications and in the media enables people resident abroad to follow and retain an interest in affairs in the United Kingdom to a greater extent than was previously possible?
      Mr. Kaufman: If the hon. Gentleman means that people resident abroad can gain through newspapers knowledge of what is taking place in the United Kingdom,

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      it depends on which newspaper they read. If he means that they obtain information via the electronic media, the coverage, for example, in Nepal of affairs in the United Kingdom is minimal, not necessarily representative and, therefore, proportionately satisfactory.
      Mr. Robert Maclennan: The right hon. Gentleman probably underestimates the effectiveness of electronic communications in conveying news, and the high standard of communications of the BBC world service abroad, which may even be higher than its service within the United Kingdom. When I travelled in the Punjab recently, I heard the results of a match between Brora Rangers and Keith Athletic. That is a remarkable piece of information which few Scottish newspapers carried.
      Mr. Kaufman: Presumably the hon. Gentleman would base the casting of his vote on such a consideration.
      The principle will be debated on clause stand part. I speak to amendments Nos. 14 and 30, which reduce the period from seven to five years. The Opposition believe that, if the Committee unwisely decides to endorse this principle, it is right to limit its scope.
      As the Bill stands with the seven-year period, the expatriate franchise could include two general elections and any intervening by-elections. As my hon. Friend the Member for Wrexham (Dr. Marek) pointed out, the link with this country of a person who is abroad grows weaker as the period of absence extends. A person who remains out of the United Kingdom for two general elections cannot claim the right to participate in displacing or endorsing a Government under which that person has not lived. Such a person has not paid that Government's taxes, and has not experienced that Government's policies at first hand. His connection with the United Kingdom will have grown tenuous, and will at best be second hand and gained from listening to whatever uncertain communications there may be on the BBC world service and from buying the overseas edition of The Times, the Daily Mail, or whatever.
      We have a constituency system of parliamentary elections. Under it a person votes not for a Government but for a Member of Parliament to represent him or her. An overseas voter who has not lived in the constituency in which he or she has a right to vote will not be in direct contact with the issues and problems of the constituency. As a parent, he will not have experienced the education system or been able to campaign about school closures. As a sick person he will not have used the National Health Service, been in hospital or been able to form an opinion about health provision. As a driver, he will not have used the roads or public transport and, therefore, cannot know about those issues. He will not have been a householder who has paid rates and, therefore cannot have an opinion about local government finance policy, the rate support grant policy and other matters which form the nexus of issues on which people base their vote.
      Mr. Beith: The same gentleman might have experienced the nationality of his children being threatened by legislation introduced by the Government, might have had his taxation substantially altered, favourably or unfavourably, and might have had the services of the British consulate removed from the place in which he lived.
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      Mr. Kaufman: He might even have been blown up by a British nuclear weapon, in which case the matter would not arise. Such a person will not have been able to play a direct part in the affairs of the constituency, even so limited a part as signing a petition, or the major part of being active in a political party, residents association, ratepayers association, the women's voluntary service, the scouts, ex-service men's associations, or any of the organisations that make up the web of community that exists in Britain and in which those who live outside the country cannot participate.
      Mr. Gerald Bermingham: Does my right hon. Friend agree that if a person who ordinarily resides abroad were permitted to vote in more than one general election, subsequent to the passing of the Bill, those accumulated votes could influence the outcome of a general election?
      Mr. Kaufman: That is true. The hon. Member for Leicester, East (Mr. Bruinvels) has a colleague who was elected with a majority of only seven votes at the general election. It would be perfectly possible in a general election, with the Government's estimate of an average of 800 such votes in each constituency, for a result to be swayed by those votes. In a narrowly contested general election, of which we have had three during the past 20 years, it may be possible for the Government to be changed as a result of the casting of such expatriate votes.
      What is more, it is extremely unlikely that someone who benefits from the expatriate franchise will have had personal contact with the candidates opposing the sitting Member of Parliament, although at some stage before he left the country, he may have met or corresponded with the Member. If this fancy franchise is to be invented, it should be limited to one statutory length Parliament, during part of which it is likely that the voter would have had a chance to live under the Government on whom he would be delivering a verdict, and during which he would have observed and experienced the services of the Member of Parliament for whom he would vote. An elector who has lived in Britain for part of the Parliament which will end with the general election in which he has an expatriate vote should have been able to shoulder the burden, if there was any, and to reap the benefit, should there be any, of the Government upon whom he will deliver a verdict. He should also have had the chance to meet the sitting Member of Parliament and to become involved, to some extent, in local issues. He will at least have paid some taxes.
      I do not know whether the gentleman who has done the country so much long-distance benefit from Greece has also been sending cheques regularly to the Treasury as part of his contribution to the nation's well-being; he will not have paid rates; he will not have paid domestic telephone bills; he will not have paid fuel charges; he will not have experienced all of the burdens upon which citizens have the right to express an opinion when they cast their votes in a general election.
      We believe that five years is a reasonably long time for anyone to be away from the country and yet have a definite intention of returning. We are dealing with the absence from the country of the entire family. If the rest of the family stays in Britain and is resident here, while the person applying for the vote is absent, the latter will almost

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      certainly retain the potential for a residential qualification. If he has residence, he retains vicariously, and possibly personally, all the obligations except the payment of income tax.
      Our amendment stretches the benefit in favour of the applicant, because it could allow him to vote in a by-election in which he would not know the would-be successor to the Member of Parliament who had vacated the seat, although he might know his opponents, if they had previously been candidates in an election when he was still resident in Britain. As by-elections have developed in recent years, they have concentrated much more on special rather than general issues, and on local as well as national issues. If we make it possible for him to vote in a by-election, we shall have extended the benefits of this dubious franchise as wide as they should go.
      To go beyond five years—the statutory length of a Parliament—would stretch the theoretical residential qualification to the point of mockery. The fact bears repeating that the British franchise is based not only upon the constituency but on residence, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, albeit in a different context. What makes this franchise fancier than any other fancy franchise that we have had for a long time—certainly since the abolition of the university vote—is that it is based not on residence but on option. That being so, it should not be a franchise at large, as proposed by the hon. Member for Corby, but it should be strictly limited to the length of one normal Parliament. The hon. Gentleman's amendment would allow someone a voice in the Government of the country without having experienced the effects of that Government.
      Our contention is that five years is the maximum for which any logical and democratic justification can be found for the expatriate franchise. That is why we shall ask the Committee to accept our amendment.
      Mr. Tim Rathbone: I am pleased to support the amendment moved by my hon. Friend the Member for Corby (Mr. Powell), which stands also in my name.
      The right hon. Member for Manchester, Gorton (Mr. Kaufman) seemed to position himself in an awkward corner as a small islander among the Socialist internationals. To try to attach importance to the size of the group whose enfranchising we are discussing is completely immaterial to the debate. As other hon. Members have said, that becomes more irrational as communications become easier. The communications aspect applies not only to the delivery of the vote, or the ability to vote—the ballot paper—through increasingly speedy mails, but to the ability of those who live abroad, sometimes very far away, to visit Britain regularly.
      I speak from personal experience. I lived in the United States of America for almost eight years, which, under the Bill as it stands, would disfranchise me in British elections. However, I had every intention of returning to Britain, as I did, and I visited Britain regularly — sometimes as many as three times a year. That is not a picture of someone losing his roots in or connections with Britain, or of someone experiencing vicariously what the country was going through during that period.
      Mr. Gary Waller: Does my hon. Friend not attach importance to the issue already raised by the right hon. Member for Manchester, Gorton (Mr. Kaufman)—that in this country we vote for candidates
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      in a single constituency, and that the longer the period that has elapsed, the less is the likelihood that the individual will have a close connection with the constituency, particularly as the information which he obtains about affairs in the constituency while he is abroad is likely to be small? I have much sympathy for the proposition that five years, rather than seven, would be appropriate, bearing in mind that that is approximately the length of one Parliament.
      Mr. Rathbone: I anticipated that point and will return to it in a moment.
      There is nothing peculiar in this country in voting for a candidate in a constituency. It may be called something different in other parts of the world, and almost always is, but in almost all electoral systems people vote for a candidate or, in some cases, a series of candidates from one geographical area.
      To take up another point raised by the right hon. Member for Gorton — representation being tied to taxation—we have all been brought up with, and I think abide by, the thesis of no taxation without representation. When that is turned on its head it becomes an incredibly peculiar statement, particularly from the Opposition. By taking that line the right hon. Gentleman is saying that only those who pay taxes should have the right to vote. Many people right now vote legally, straightforwardly and regularly, yet may not pay income tax, capital taxation, local taxes or even indirect taxes because of the narrowness of the way that VAT is drawn. [Interruption.] It is conceivable. The right hon. Gentleman may not have them in his constituency, but I have them in mine. If he ties the right to vote to having established that right through paying taxes, he is starting down a most uncomfortable route.
      Dr. Marek: Although the people to whom the hon. Member for Lewes (Mr. Rathbone) is referring may not pay taxes directly, every time they go to a shop they pay tax. More important, they place themselves under a liability to pay tax.
      Mr. Rathbone: The hon. Gentleman has raised a good point. His right hon. Friend the Member for Gorton did not make that point. It would be very difficult to measure when a person had made himself available to pay taxes to an extent sufficient to earn the vote. For instance, on that line of argument, every visitor to this country pays taxes when he makes purchases. Does he automatically have the right to vote? I do not think the right hon. Gentleman would argue that.
      Mr. Kevin Barron: The hon. Gentleman said that when he was living in America for eight years he visited this country regularly. Presumably on entering Heathrow he became eligible to pay tax indirectly. Can he tell me who does not pay tax in Britain? I am fascinated by the concept that somebody does not pay tax in some way.
      Mr. Rathbone: I have just deployed the argument. If we are referring to direct taxation, I can produce instances. If it is indirect taxation, many people are disfranchised, because they pay taxes from time to time on a visiting basis. On that line of argument they should be given the right to vote. What is marvellous about this discussion is that it illustrates so beautifully how complicated is the whole attempt to tie representation in any way to the

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      payment of taxes. That was the line that the right hon. Member for Gorton was pursuing. It should not bear any consideration by us.
      Mr. Stanbrook: My hon. Friend is asking that people who will live perhaps thousands of miles away from this country for the rest of their lives may take part in deciding what sort of Government we should have, even though they make no contribution to the welfare of the country. Surely that is the basic argument, apart from the argument about taxation. The basic question is; what are the people to whom my hon. Friend is referring contributing for the privilege of helping to determine the Government of the country?
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      Mr. Rathbone: It is difficult to measure. Opposition Members should not laugh, because it is a serious point. The fact that a person is living on the other side of the world does not mean that he is not contributing to the welfare of the country. Many of the people we are talking about are making a direct contribution — perhaps by payments to their families, by payments for educating their children, by a contribution to a pension plan or a retirement fund, or in innumerable other ways. They may also be making a contribution by way of improving exports to the countries in which they are living by developing contacts for future services and exports to those countries. Why should we apply such measurements only to people who are living abroad? Why not apply them to people living in this country? We would tread a very dangerous path if we were to start to try to qualify by behaviour someone's right to vote.
      Mr. Maclennan: The hon. Gentleman is reaching a point that I wanted to make. Once one starts weighing the contribution to the country, one is indeed in difficulty. Some of the hon. Gentleman's colleagues might say that those who have been unemployed and supported by the state for a certain time should be deprived of the vote.
      Mr. Rathbone: I very much doubt whether that was in the mind of any of my hon. Friends. It is a dishonourable suggestion. All sorts of qualifications — honourable, dishonourable or somewhere between the two — might be applied to individuals. Thank goodness, years ago we moved away from a property or any other qualitative qualification for the right to vote.
      On Second Reading I pointed out that other countries operate a reasonable system of establishment of a right to vote in perpetuity for citizens living abroad. There are six bases on which a French citizen can establish a right to vote—in the commune of birth, in the commune of last domicile, in the commune of last residence, in the commune where one of his antecedents is or has been registered, in the commune on the electoral register of which one of his children is registered, or in any commune of choice of more than 30,000 inhabitants. That is a broad spectrum under which a French citizen living abroad, for whatever period of time, can register his right to vote. That encourages the French citizen who is living abroad to participate in what is going on in his country and to vote accordingly.
      Mr. Ron Hayward: Does my hon. Friend not find it amazing, as the French people do, that
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      senior employees of Airbus Industrie, who are contributing to the general wealth of Europe — of Britain, France and Germany—and who are resident in Toulouse, are not able to vote because they have been resident as senior salesmen there for many years? It is a cause of some amazement to the French that British citizens in that position, helping the European export effort, are not able to vote in their own country.
      Mr. Rathbone: I am grateful to my hon. Friend for that pertinent illustration of the point that I was making, showing the contrast with the situation applying to French nationals. Parallels are often drawn between the constitutions of this country and those of France and the United States. Sometimes they are parallel, but in some respects they have diverged, and two of the three have more liberal ways of allowing their citizens to vote.
      The United States guarantees the constitutional right to vote to those who live outside the United States of America, subject to two conditions: first, proper registration within the person's state of residence; and, secondly, that the person has a valid United States of America passport, a national identity card or other national registration card. That is a timeless and basic right of United States of America citizens.
      One should look warily at the conclusion that a period of time is any illustration of the links that one has with one's country. There are those who have lived abroad for many years, perhaps even decades, who are extremely close to this country, who follow matters here and who visit and have relatives and interests in this country. Though they are incredibly tied to Britain, it is ludicrous that they should not have the right to vote here.
      There are those who have gone away for two years and who feel completely divorced from this country, who have no interest in what goes on here, who have re-established their families perhaps on the far side of the world and who never think about Britain, or, if they do, it is of no importance in their lives.
      I plead with the Home Secretary to reconsider the matter. It is, of course, his intent to try to strike an agreement with the Opposition on an important constitutional development which, as has been pointed out, comes once in a blue moon. In this part of this constitutional reform, a part which will affect so many people—though "many" is not the important quotient—it is for those who might have the right to vote if they did not have the time barrier to that voting that I ask his reconsideration.
      Mr. J. Enoch Powell: The hon. Member for Corby (Mr. Powell) was right to stress the fundamental importance of this debate, because it goes to the underlying principle of our representation. We are, after all, considering the constitution of the House, the manner in which hon. Members are elected to compose the House and, thereby, to decide the nature of the Government and, to some degree, to keep control over the policies and administration of the Government.
      Our representation in this House never has been a representation of all who are British citizens, wherever they may be in the world. As the hon. Member for Lewes (Mr. Rathbone) pointed out, that is an alternative approach which other democracies, such as France and the United States, have taken. That is not the principle on which this House is, or has been, constituted. It has been constituted

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      on the principle of geographic identity and representation, and the election of a person responsible for the representation of that constituency. It is, in a sense, a congress of constituencies.
      The Government find themselves in the difficulty of falling between the two alternative principles. They have moved away from the principle of geographical representation and have appeared to embrace the principle of citizenship. Yet they have settled down in a middle position, where the principle of citizenship is qualified by the length of last registration in a constituency in the United Kingdom. The anomaly of their position is amusingly illustrated in clause 2 (3) (b), which requires that the declarant must be a British citizen.
      Under our existing law, a citizen of the Irish Republic, if he is resident in a constituency in the United Kingdom, is a parliamentary elector in that constituency. The Government do not propose to say in the Bill that he has been registered in a constituency, that he has been away for only seven years and that therefore he can still vote in that constituency. They place citizenship as the deciding criterion of his qualification when he is not resident in the United Kingdom. That illustrates the anomaly and contradiction of attempting to combine a geographical representation, as we essentially have it in this House, with a citizenship representation of those living outside.
      Any effort to find a criterion which will satisfactorily identify persons not living in a constituency and who should help in deciding the outcome of an election in that constituency proves to be a failure. One criterion which has been quoted is that of intention, and we have been told, "Here are British citizens who lie abroad for the good of their country," as it used to be said of British ambassadors, "and, dear folk, they have the intention of returning home one day."
      Maybe they do, and maybe they do not. There is no means of ascertaining that or of foreseeing its fulfilment. And in any case, where should they then be registered? Should they be registered and able to vote in the constituency in which they were born and perhaps brought up—say a mining constituency in west Yorkshire—even though, owing to the course of their career and success in a commercial life, Torquay, Bournemouth, Eastbourne or some lush area in the home counties may be their intended place of eventual sojourn?
      Mr. Douglas Hogg: Perhaps the right hon. Gentleman is wrong to focus on the constituency in which the vote is to be cast. He should begin by asking whether it is just to deprive such a person of a vote. If the answer is that it is not just, it then becomes a matter of mechanics as to where the vote is cast.
      Mr. Powell: If the vote is given the mechanics must follow, but I do not accept any recognisable criterion of justice. We are concerned with the application of a system, and it is incompatible with the system on which this House is constituted that we should extend the franchise to British citizens wherever they may be in the world and whatever may be their relationship with this country. Still less satisfactory has been the criterion of the benefits which they confer on the home country. It would go ill with many of us if we had to explain to the registration officer the benefit that we confer on the United Kingdom before he would agree to register us at the address where we are resident. That illustrates the difficulty of arguing a case on
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      some preconceived principle of justice or fairness for those who have no local identification in this country to enjoy the franchise.
      6.30 pm
      The difficulty in which the Government find themselves is shared by the Opposition in endeavouring to modify the principle in the clause as it stands. It was ingenious, I admit, of the right hon. Member for Manchester, Gorton (Mr. Kaufman) to argue that five years is the length of a Parliament and that after five years, if a Parliament has run its full length, there will be another show on the road. However, on any logical consideration, five years is no more satisfactory than seven years as an arbitrary dividing line between those who are identifiable with a constituency by the simple fact that they live there, that their home is in that constituency and that they are part of the local community, and the alternative principle, towards which the Government have partially lurched, of conferring the franchise upon all citizens, wherever they may be. It seems to me that the right hon. Gentleman is on firmer ground in rejecting that principle when we come to consider the clause.
      My right hon. and hon. Friends and I believe that the new principle that we are trying partially to shoehorn into our constitution is not acceptable. Therefore, we shall oppose the Question, That the clause stand part of the Bill. However, as five years is, so to speak, a lesser evil than the seven years of the unsatisfactory arrangement in the clause as it stands, then five years be it, rather then seven, though there is little of a logical character to be urged in favour of that choice.
      Mr. Beith: A fascinating picture has been painted for us tonight, in particular by the Opposition Front Bench. It is the picture of the properly qualified voter, the person who reads a good newspaper and is familiar with the political events of this country, who follows closely in the electronic media, as they were described, the to-ings and fro-ings of British politics, who pays his taxes and rates, who knows, and has had personal contact with, the candidates standing in the constituency in which he intends to vote and who genuinely resides at the place in which he has an electoral qualification. Those are all the characteristics which, it is said, persons living abroad lack. Therefore, they are the reasons why they should not have the franchise extended to them for five years, seven years or for an indefinite period, as proposed at the start of this debate.
      All hon. Members know that if those were to be the relevant criteria we could challenge almost every voter who comes into a polling station. Indeed, there is a provision for party agents to be present in the polling stations and to challenge voters. If they could apply those criteria as well as the criteria which they can now apply, such as being the person one claims to be, they would have a field day. Very few voters in any of our parties would get over the threshold. Therefore, we begin with an unrealistic picture. It is unrealistic in this sense. I refer to the last of the qualifications that I mentioned. It assumes that a person is always genuinely resident in the place for which he has an electoral qualification.
      The point is that we are now debating not whether we should give the vote for five or seven years to persons who are working abroad, but whether we should extend the franchise to those who have been unable to maintain a residential qualification in this country by means of

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      ownership or occupation of property. We are talking about extending the franchise to many who are probably the less well off among those who are working abroad: those who have been unable to preserve their electoral rights in Britain by owning property and filling in forms relating to that property in the United Kingdom.
      As was pointed out earlier, those who are reasonably well off will probably have opted, for other reasons, to maintain a residence in this country and perhaps not to let it out, so as to be in a position to fill in annually the form that keeps them on the electoral register. As many hon. Members know, it is by no means necessary to complete the householder's form year after year in order to remain on the electoral register. The tendency is for names to remain on the register unless evidence is produced that they ought to be taken off it. Therefore, very many people who now live overseas, some of whom may suffer from the serious disadvantages mentioned by the right hon. Member for Manchester, Gorton (Mr. Kaufman)—that they have not read the overseas edition of The Times and have not paid their taxes—are qualified to vote because of their occupation of property in this country, while others do not qualify.
      It is to the generally less well endowed category, those who have been unable to preserve a residential qualification in this country, that the amendments to this clause are addressed. They include people who work for international institutions like the United Nations, the European Community, people in trading activities, missionaries and those who are engaged in low-paid service overseas, including an increasing number of manual workers. If there has been a social change in recent years, it is probably reflected by the increase in the number of manual workers who go, for example, to work for a number of years in the Gulf states, where work is available in the construction industry.
      Therefore, we are referring to a range of people, some of whom have votes and some of whom do not, entirely according to whether they have been able to maintain property in this country. There is no reason to assume, as some hon. Members who have criticised this proposal have assumed, that links with this country tend to diminish as time passes. I know of no basis for that assumption. Indeed, there is considerable evidence to suggest that those who are forced to be absent from this country for a longer period develop an increasing affection for, and sometimes a concern to return to, this country. There is no evidence to suggest that a period of absence from this country reduces involvement and commitment.
      I am very glad that tonight the right hon. Member for Gorton did not use the arguments relating to bank robbers who are resident in Spain—arguments which seemed to carry with them the underlying assumption that all of those who live abroad are tarred with the same brush and display some kind of basic disloyalty to this country. It may be that the right hon. Gentleman is saving those arguments for the debate on clause stand apart, but he has concentrated until now upon the more limited argument relating to qualification.
      The Government sought initially to exercise a judgment about the period for which it was reasonable to give an electoral qualification to those who had been unable to preserve one by having maintained a residence in this country. The Government decided upon seven years. If
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      newspaper reports are to be believed, there is reason to believe that the Government may be persuaded by the Labour party's argument that if we are to extend the franchise we should do so only for five years, not for seven, thus reducing the effect to the period of one Parliament and one general election. I am opposed to that reduction. I have put down an amendment stating that we should consider a period of 10 years. That period might be more widely accepted.
      I sympathise with the argument of the hon. Member for Corby (Mr. Powell) that there is no obvious reason for setting a time limit upon this qualification. I accept the view that the qualification can continue indefinitely. Indeed, there are a very large number of people who have looked for redress of what they consider to be an injustice in this legislation but who will not get it because they have already been working abroad for more than five or seven years and, in doing so, have been serving the interests of this country.
      There is something fundamentally ill-advised about bringing forward a legislative proposal that is designed to remedy an injustice, only to find that the proposal does not serve to remedy the grievance. The sense of injustice is perhaps greatest among those who have been working abroad for five, six, seven, eight, or 10 years, very many of whom are working in the interests of this country. If those people, by the limitations imposed by these amendments, do not get relief from injustice, what purpose have we served? That is why I am so critical of a limitation even to seven years. I am even more critical of a limitation to five years. I believe that we have aroused expectations. Indeed, the speech of the Secretary of State for the Home Department to the Conservative party conference helped to arouse the expectation that something would be done about what is felt to be a real grievance.
      It is certainly felt to be a grievance when set alongside the practice of so many other countries which rate their citizenship more highly than do we. British citizens working abroad feel that almost every other country in the world sets a greater store by the standing of its citizens working abroad and makes a more genuine assumption about their loyalty than do the British Government. That feeling will be even stronger and will not be assuaged if we give the impression that we are legislating to remove this grievance, and yet so limit the offer—in this case five years—that many will not benefit at all, while those who do benefit will be lucky if they get a vote at one general election.
      Charles Hargrove, better known as a former correspondent of The Times, but now the chairman of the British Conservative Association in France, makes the point in a letter which he has written to my right hon. Friend the leader of the Liberal party. He said:
      "The Government has at last acknowledged that voting rights should be attached to British citizenship but has nevertheless included a restriction that is justifiable neither in principle nor in practical politics, i.e., to limit the voting right to those who have been abroad for less than seven years—on the grounds that, beyond this time limit, a Briton's links with his mother country would have become too tenuous. We argue from direct personal experience that the facts belie this assumption. Loyalty to Britain, and the willingness to defend and promote British interests, cannot be determined by a fixed time limit."

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      I share his view and I think that it is a mistake for the House to arouse the expectation that the Bill will remedy a real sense of injustice and then so to limit that remedy that it does not prove to be a remedy at all.
      Mr. Douglas Hogg: The approach of the right hon. Members for South Down (Mr. Powell) and for Manchester, Gorton (Mr. Kaufman) to this matter is uncharacteristically narrow. The approach of the right hon. Member for South Down has essentially been to ask whether it is right that a person resident abroad should have a vote in a constituency from which he has long departed. Answering that question in the negative, he goes on to be critical of the general approach adopted by the Government. That is the wrong approach for the reason that I shall shortly mention. The first question to ask is whether it is right to deprive of a vote a British citizen who intends to return. If the answer is that it is not right to deprive such a person of a vote, we have a lesser question as to the place of voting.
      The Labour party, in this matter as in others, is extremely reluctant to see the franchise enlarged. Indeed, it is putting itself in the rather bizarre position, as has been described by the hon. Member for Berwick-upon-Tweed (Mr. Beith), of arguing in favour of something approaching a property, rate-paying, tax-paying, education—[Interruption.]—or residential qualification. The right hon. Members for South Down and for Gorton ignore the much broader consideration which is raised in the debate — the concept of loyalty, of allegiance, of affinity. That is a matter which the right hon. Member for South Down often comes to in other contexts — allegiance, affinity, loyalty or blood. All those justify the proposition that British citizens resident abroad have, prima facie, a right to vote.
      Mr. Kaufman: Does the hon. Gentleman regard it as a sign of loyalty to nip off to the Channel Islands or somewhere else to dodge tax?
      Mr. Hogg: I am glad that the right hon. Gentleman asked that question. I shall come to it later when the House deals with amendment No. 29 which he has tabled. I support amendment No. 29 because it is undesirable that people who have renounced their domicile of origin should have a vote. But that is a narrow point. I take his point in so far as it goes, but it does not go to the root of the matter. The root of the matter is allegiance and affinity. If a person has undiluted allegiance and affinity to Britain, prima facie he has a right to vote.
      Mr. Mark Fisher: Will the hon. Gentleman explain how he evaluates allegiance, loyalty and affinity? If he can define and judge whether somebody truly has loyalty and allegiance, he may carry more hon. Members with him, but I suspect that with such abstract concepts he will be hard put to say that he can identify loyalty in one man but not in another.
      6.45 pm
      Mr. Hogg: There are two answers to the question that the hon. Gentleman has fairly posed. The first is that if a person does not have the allegiance and affinity of which I have spoken he is not likely to want to cast a vote. In a sense, the casting of a vote is the manifestation of the affinity and allegiance. I accept that that is a subjective
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      judgment and the hon. Gentleman may take a different view, but I think that it is a view that will be shared by many hon. Members.
      In the end it comes to a question of balance. Where do we strike the balance in such matters? I would rather ensure that everybody who deserves a vote has a vote, even if it includes a few unworthy folk, rather than, in the desire to exclude all unworthy folk, exclude people who should, in all conscience, have a vote. I would rather err on the side of enlarging the franchise than on the side of restricting it. Those are the two answers that I would give to the hon. Gentleman.
      I have tabled amendments Nos. 66 and 69. Amendment No. 66 provides for the same term of 10 years as that proposed by the hon. Member for Berwick-upon-Tweed. There is no great magic in seven or 10 years, but because I am in favour of enlarging the period I go for 10 rather than seven or five years.
      Amendment No. 69 is a little more important because it gives my right hon. Friend the Secretary of State for the Home Department the power to alter the period. I envisage a power to extend what I hope will be a 10-year period to a longer period, subject to an affirmative resolution of the House. The justification for that is that in the course of time many of the fears that have been put forward in the debate will seem to be misplaced. People will come to realise the injustice of excluding people from the franchise. If that is the view, it is right that we should enlarge the period. As has been said by my hon. Friend the Member for Corby (Mr. Powell), it is rare that the House has a chance to discuss election matters of this kind. To find time for primary legislation to enlarge the period would be difficult. Therefore, I prefer to do it by way of delegated legislation subject to an affirmative resolution of the House.
      Mr. Fisher: By using the word "subjective" the hon. Gentleman gives away his case. He is making a value judgment about those abstract virtues which he suggests should be the qualification. The charm of the right to vote by a residential qualification is that no value judgment is made. If the hon. Gentleman has to make a value judgment, he puts himself in an impossible position. He can surely see the distinction between an objective test and a subjective value judgment.
      Mr. Hogg: All questions that deal with justice are in the end subjective in their character. What is just or unjust is essentially a subjective test. Absolute standards cannot be applied. I am asking the House to form a collective view, albeit subjective, as to what is just, and I have put forward my arguments.
      Mr. Bermingham: Does the hon. Gentleman agree that were amendment No. 69 to become law it would give the Secretary of State an awesome power to alter the voting pattern in Britain? He could shorten or lengthen the period depending on whether it was in his interests. That would make it a recipe for gerrymandering.
      Mr. Hogg: The hon. Gentleman does not understand the real purport of amendment No. 69. It deals only with the period relevant to the overseas voter. That is the only period that can be altered — in this case from seven years to whatever period might be desired. But it is subject to an affirmative resolution of the House, not a negative resolution. It must have the affirmative approval of the

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      House. That is a device to avoid the difficulty of bringing the matter back by way of primary legislation. If we rely on that, we shall never have the matter back in our lifetime.
      Mr. Bermingham: With great respect, the hon. Gentleman misses the point. If the amendment were to become part of the Bill the Secretary of State would be in a position, if he thought it in his interests to do so, to pass a resolution in order to enhance the period for the overseas voter. The Secretary of State tends to belong to the governing party which tends to command a majority in the House. Therefore, for purely political ends the Secretary of State could alter the period to his party's advantage, and that is something that we have never permitted.
      Mr. Hogg: As I would expect of the hon. Member for St. Helens, South (Mr. Bermingham), that is an ingenious argument, but, as I would also expect of him, it is wholly wrong, for this cogent reason. We cannot tell, for example, how many overseas voters there are.
      Mr. Robin Corbett: Have a guess.
      Mr. Hogg: Far less can we tell what are the political affiliations of overseas voters. I am sure that, being well advised, they are all Conservatives, but that may change in the course of time.
      The point I seek to make is that no Secretary of State can form a very clear view of the political affiliations of overseas voters. If we are indeed vexed with this question, we should be much more vexed with the position which enables the Prime Minister to call an election as and when the Prime Minister chooses. That is a much greater power in this context than any power that the Bill may give to the Secretary of State for the Home Department.
      Mr. Michael Foot: I am glad to have the opportunity to follow the hon. Member for Grantham (Mr. Hogg). I seek to reply first to the point that the hon. Gentleman made at the beginning of his remarks, when he said that the question—and he seemed to imply the sole question—that we should ask is whether it is unjust for individuals who are expatriates from the country to be denied the vote. He seemed to suggest that that was the sole matter that we had to decide and that that injustice should be remedied.
      I can understand that many thousands, maybe hundreds of thousands, of people serving this country perfectly well—and, of course retaining allegiance to this country—all over the world are in that position and feel that sense of grievance. It may be that sense of grievance partly which has given rise to the amendment, although I shall come to some more esoteric points in a moment. But it cannot be that that is the sole question to be decided. However much our sympathy may be for persons placed in that situation, it is the responsibility—not the right, but the duty—of the House of Commons to decide what would be the effect of applying that principle to the constitution of the country as it currently operates.
      The argument that has been put forward on this aspect—and the hon. Gentleman made no attempt to reply to it — is overwhelming. If the vote is afforded to expatriates, some advantage may be given in removing an injustice for some individuals, but serious injury will be
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      inflicted on the constitution. That has to be taken into account. Those matters must be accepted, or at least understood and argued in the House of Commons by hon. Members.
      I do not expect the hon. Member for Berwick-upon-Tweed (Mr. Beith) to apply his mind to these matters, because the Liberal party has long since abandoned any idea of sustaining the principle that we should uphold the doctrine that a Member of Parliament represents his constituency. Most hon. Members have considered that to be a very important principle. Indeed, I believe it is one of the principles that have enabled our democracy to be a better and more adult democracy in some respects than democracies of many other countries. I say that in no boasting or, I hope, chauvinistic spirit. However, we know that the Liberal party and, in latter days, catching up a little breathlessly, the Social Democratic alliance, have long since abandoned that principle on the high ground that it would suit their members to move a system of proportional representation. They have not concealed their view. Nobody can accuse them of that. But they have elevated it into the highest principle of all.
      On some occasions the leader of the Social Democrats, or the leader of the Liberals—I forget which, but I dare say that they are interchangeable in this respect, if not in others—has insisted that, after any election in which there was a balance, the most essential principle that would need to be settled beyond anything to deal with unemployment, the cost of living, foreign policy or nuclear weapons would be satisfying the demand of the Social Democrats and Liberals for proportional representation. Thus, the Social Democrats and the Liberals elevate this to a very high place. It cannot be placed higher. If that is the situation, we do not expect any sympathy from them.
      I was slightly surprised by the second reason advanced by the hon. Member for Berwick-upon-Tweed for wanting to tear up this part of the constitution. It was that high expectations on this subject were aroused at the Conservative party conference, and he thought that those expectations should be satisfied. It is the first time that I have ever heard a spokesman for the Liberal party say that we must satisfy that monstrous regiment of men and women who assemble at the Conservative party conference. I shall come to them in a moment because they are relevant to the debate. I do not expect for a moment that we shall have any support from the Liberal party or the latter-come-lately Social Democrats on the subject. A few years ago they were not so passionate about proportional representation and tearing up the relationship between the Member of Parliament and his constituency, but they are now. However, I shall leave them aside.
      I agree entirely with what was said by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman). The amendment that he has tabled is not, of course, even a second best; nor does he claim it to be so. He said that it is a modification of one of the worst parts of the Bill. It is, I suppose, one of the simplest axioms of our modern politics that any amendment tabled by my right hon. Friend is better than one tabled by the Home Secretary. In this case, I am sure that that is true. On that basis alone, I would be happy to go into the Lobby with my right hon. Friend, just as I am happy to accept his views on almost every subject. I do that in this case with slight reluctance, as he will understand, for the very arguments that he advanced. It is difficult to make anything resembling a silk purse out of this sow's ear of

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      a Bill. It cannot be done. My right hon. Friend can have no great expectation of success in that enterprise. If any Member could do it, my right hon. Friend could, but it cannot be done. I suppose that that is the worst part of a bad Bill.
      The hon. Member for Lewes (Mr. Rathbone), who supports the amendment, got into some very deep water. He said that the numbers do not count. The implication of the hon. Member for Grantham is that the numbers do not count. Under the present arrangements, if the numbers of people voting in a general election to decide the Government of a country were to be the equivalent of, say, half the total electorate, would anybody be fool enough to suggest that it would not matter if half of them paid taxes and half did not?
      The principle of the numbers is, therefore, very important. The numbers of those who are to be included in the Bill is important. We have not been given the answers yet, and we do not know whether we shall be advised of them. I know that an amendment has been tabled by my right hon. Friend the Member for Gorton which deals specifically with this matter. That amendment, as I understand it, will not allow the Government to go ahead with the Bill until they have given detailed evidence of the numbers involved. Of course we are entitled to know what the numbers are, because they could significantly alter the situation.
      The argument of the hon. Member for Grantham, that many people in the country do not pay taxes, is nonsense. The Bill proposes — and this is novel in our constitutional procedure, as far as I know—that people who do not pay taxes are deliberately to be given votes. If that principle is to be incorporated in our constitutional or electoral practice, it ought to have been properly discussed. According to the Liberal party, it was discussed at the Conservative party conference, and that is enough for the Liberal party. As long as it was discussed there and got a thumping vote, the Liberals support it.
      Mr. Beith: Will the right hon. Gentleman accept, as I did, that the Home Secretary appeared to be addressing himself at the time not to the Conservative party conference but to a far wider audience, and that the expectations that he aroused were not in that body but among those overseas who might obtain the vote? Should a person in this country who, by the very extent of his poverty, has had no income and therefore has paid no taxes for a period of time be deprived of the vote?
      7 pm
      Mr. Foot: I am not in favour of depriving anyone of the vote if he has residential qualifications in this country. If the hon. Gentleman is seeking to build the whole of his great fabric of change in the constitution on that slender basis, the edifice will collapse even quicker than the structure that he proposed in his previous argument, and that was pretty weak. The hon. Gentleman should think rather more carefully. We are talking about a considerable number of people in different parts of the world who will have the power to settle elections in this country and results in individual constituencies without having participated in any of the normal processes of electoral appeal.
      The hon. Member for Berwick-upon-Tweed has poured scorn on all the methods by which we, as humdrum candidates, try to put over our views—for example, the
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      reading of newspapers. I suppose that people are still entitled to read The Times if they want to do so and not to be jeered at by representatives of the Liberal party for engaging in such an extraordinary activity. I do not claim that I am always successful in elections, but the methods by which we decide them are pretty good. If the methods are to be changed, there must be good reasons for doing so.
      By considering these issues in Committee, I believe that we are illustrating our case even more clearly than if we were having a full discussion on the principle. That is often the result of detailed discussion on what the Government propose. It is a form of discussion which exposes their case all the more clearly. In this instance it has exposed the fact that there should have been proper discussion between the parties. I know that the Home Secretary mocks that view. I know also that he has the Select Committee up his sleeve, or something of that sort. However, we do not have government by Select Committees. Select Committees are not fitting substitutes for proper consultation between the parties. The hon. Member for Corby (Mr. Powell), who moved the amendment, said that there had been hardly any discussions or debates on Representation of the People Bills since the 1945 Parliament, of which I was a member. I think that there have been more debates than the hon. Gentleman recalls, but I take his point.
      It is true that this is a major Bill which involves an unspecified extension of the franchise in a way that we considered previously not to be right and which many of us still believe to be wrong in principle. If the Government wanted to go ahead with such a proposition, it was their duty to find the means whereby there could be proper and open discussion. I am not suggesting that there should have been secret talks, talks between the usual channels, or any hugger-muggery. The Government should have arranged for open discussions to take place. They are proposing to bring 500,000 or 1 million people into the franchise, whichever party they may vote for. Of course, we all have our guesses about that. There must be discussion with the other parties, even if the Liberal party does not want to attend. The Government should have made their proposal and we should have discussed it. If that had been done, we would have been able to consider these matters properly.
      The right hon. Member for South Down (Mr. Powell), who always raises these matters to the very highest plateau of moral integrity, suggested that the Government have merely misunderstood the situation. I wonder whether they do not understand it all too well. A simpler explanation of their behaviour is that they preferred not to have discussions with the Opposition. In taking that view, the opportunity for discussion is removed and discussion becomes superfluous. As I said on Second Reading, they could have arranged a Speaker's Conference. That would have allowed the issue to be brought out in the open, and people would then have been aware of what the Government were proposing. Perhaps a compromise could have been reached, but I would not have been in favour of it. I believe that the principle of expatriate votes is fundamentally wrong in our constitution. That is why we shall do our best to resist clause 1.
      I repeat that it is my view that the Bill was not introduced in a proper way. Presumably the Bill was discussed by the Cabinet. We are talking about the sort of Bill that is introduced only once in half a century, and I

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      suppose that the Bill might have been discussed even by the present Cabinet. When it was discussed, I am sure that the interests of the Conservative party were well taken into account. After all, it would have had its representative sitting with them. The spokesman, chairman or manager of Conservative Central Office, whatever he is called, is a Minister and he could have been present. I am sure that that precaution was taken. In this instance he might have plucked up courage and said a few words.
      I am sure that the Government received guidance. Even if that did not happen in open Cabinet in case it might sneak out 30 years later, I am sure that consultations took place with Conservative Central Office before the Government went ahead with the Bill. One can imagine Conservative Central Office saying, "It is all right with us, boys"—or girls, or whatever one chooses to say. "We think that you should go ahead. Do not worry. If you read the report of the Select Committee, you might find a few examples that can be used to bolster your case. Try to dress it up as if it is a real constitutional proposal." I do not believe that it is anything of the sort. If this part of the Bill is enacted, greater benefit will be brought to the Conservative party than to any other party. That is one of the reasons why the Government have decided to pursue it.
      Mr. Douglas Hogg: The right hon. Gentleman has been condemning the Government in robust terms and pouring scorn on the Select Committee's report. Has he forgotten that clause 1 is more restrictive than the enlargement of the franchise that is proposed in paragraph 52 of the Select Committee's report, and that two of the Labour Opposition's Front Bench home affairs spokesmen were parties to the Select Committee's recommendation?
      Mr. Foot: All the matters that the hon. Gentleman has raised were discussed on Second Reading. I shall be happy to debate them again now and to answer his questions. Events have illustrated the wisdom of what I and others have said.
      It is improper for a Government to say that a Select Committee should be designated as a substitute for proper consultation between the parties or as a substitute for a Speaker's Conference. One of the reasons why Speaker's Conferences have had authority is that they have not been used too often. When major changes have been proposed, there have been attempts by almost all Governments to try to reach sensible agreements. The Government are guilty of a gross dereliction of duty in not taking that course. That is why we should sling out the whole Bill if we have the chance to do so. However, I agree with my right hon. Friend the Member for Gorton that we should try to improve parts of it if we can.
      When we come to decide whether the clause should stand part of the Bill, we shall have the opportunity for a fuller debate. Let us take the opportunity to sling out the entire clause and to trim down the Bill to the clauses which can decently be presented to the House of Commons. If that is done, it will be a slim Bill.
      Sir Edward Gardner: I am glad to be able to take up some of the remarks of the right hon. Member for Blaenau Gwent (Mr. Foot). He always makes a compelling and engaging speech even though the arguments that he adduces are entirely unconvincing, as they have been
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      today. He joins the right hon. Member for South Down (Mr. Powell) in suggesting that there is no need in justice, logic or necessity to introduce the new right that will be created by clause 1, which will give those living abroad the right to vote in our elections.
      This measure is no novelty. It does no injury to the constitution. As the Committee will appreciate, we have this provision already. Already people living abroad are entitled by statute to vote in our general elections by proxy or by post. They are known as people with the right to service votes—members of the armed forces and their wives or husbands, members of the Diplomatic Service and the Crown service generally. A number of other people have the privilege of being able to decide by their vote at an election this country's future course and conduct.
      The clause seeks to extend that right in the name of justice to those people who are at present isolated from this country and frustrated in their desires to give guidance about the future conduct of the Government. Therefore, it seems to me, as I hope it seems to most hon. Members, that that principle, against which the right hon. Members for Blaenau Gwent and for South Down have been arguing—they say that that principle should not exist and that, if accepted, it will damage the constitution—should be upheld and welcomed by the Committee.
      Clause 1 and the amendments we are considering will extend the franchise to people who will thereby benefit. I should like to ask my right hon. and learned Friend the Home Secretary a question. Perhaps I am entering the realms of speculation and the imponderable, but it is a responsible question to which I hope I shall receive a reliable answer. The Government, in their reply to the recommendations of the Home Affairs Select Committee, suggested that about 3 million British citizens are living abroad and that about 600,000 of them would receive the vote because they had lived abroad for seven years. Can my right hon. and learned Friend assist the Committee by estimating how many British citizens will be enfranchised if the Bill's provisions come into force, first, for people living abroad for seven years and, secondly, for people living abroad for five years?
      We are really trying to decide whether we should shorten or lengthen the time a person may live abroad without disqualifying him or her from the privilege of having a vote. Opposition amendment No. 14 suggests a period of five years. I am not entirely convinced by the arguments of the right hon. Member for Manchester, Gorton (Mr. Kaufman) who suggested that the five-year period should be accepted because that is the statutory life of a Parliament. I do not believe that that is necessarily the yardstick that should be applied in deciding how long or how short the period should be.
      7.15 pm
      I hope that the right hon. Member for Blaenau Gwent accepts, in spite of the fact that he does not appear to put much value on the findings and recommendations of the Home Affairs Committee, that the Committee's recommendations, as with all good Select Committees, were based upon the consideration of a considerable quantity of evidence in testimony and documentary form. The Government, having considered the Committee's evidence and having concluded that that evidence could be acted upon, decided that the period during which a person could

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      remain abroad and retain the vote should be seven years. The Government may be right or they may be wrong—that is a judgment.
      As the Bill is drafted, the period is seven years. I shall not argue that that period is precisely right or wholly wrong or something that we should reconsider. One can play around with the figure and state, as in amendment No. 66, that it should be 10 years or state, as in another amendment, that there should be no limit, as my hon. Friends the Members for Corby (Mr. Powell) and for Lewes (Mr. Rathbone) have argued. One takes into account those good and respectable arguments. But it is all guesswork. No one can pretend—I certainly will not pretend on anyone's behalf — that that guesswork is reliable. We must come to some conclusion.
      I am opposed to those of my hon. Friends who believe that there should be no limit. I believe that there should be a restriction. At least for an experimental period, we could have a five-year or seven-year limit. I have two reasons for suggesting that the period should be five years. First, if the Government are prepared to compromise and to come down from a seven-year period to a five-year period, they will not breach any principle. Secondly, this is a constitutional Bill. When we discuss a constitutional instrument, it is essential that we should try, if possible, to have not just a majority in favour but a consensus. By accepting the Opposition's suggestion of five years, we have a better chance of obtaining a consensus than if we voted for seven years. If I may say so, because I know that my right hon. and learned Friend the Home Secretary cannot say this for himself, my right hon. and learned Friend will have been wise in the extreme in deciding, as I hope he will, to accept the five-year period. We badly need the Bill, and we need to remove all obstacles to its passage.
      Mr. Bermingham: This measure will extend the franchise, and I have never been in favour of extending the franchise. I shall give my reasons when the Committee considers whether the clause should stand part of the Bill. This is not the time to advance those arguments because we could range widely in discussing these matters.
      If we are to extend the franchise, we must fix a time limit, because there comes a time when a person who has gone abroad ceases to have any realistic contact with the United Kingdom.
      The argument has been advanced that there should be no limit. The hon. Gentleman who advanced it should consider for a moment the reality of what he was saying. The country receives many immigrants and it is one from which many people emigrate. In effect, he was saying that as years pass and more and more people go abroad we could reach the point when the number of people abroad entitled to vote for an unlimited period could well exceed 8 million.
      I am a strong supporter of Select Committees. When Select Committees make recommendations, they are what they are—advice arrived at from the evidence they have heard. They rely upon the Government replying to the recommendations and the House debating them. A Select Committee in no way believes that it can impose its rule upon the House. It merely gathers evidence and expresses opinions. It is against that background that we look at the work of Select Committees.
      The hon. and learned Member for Fylde (Sir E. Gardner) seemed to think that the number involved in
      210
      extending the franchise was about 600,000. I have studied the number of people who voted in the last general election. It was approximately 31·6 million, and 600,000 is 1·5 per cent. of that. If one then discounts that 1·5 per cent. by the average turn-out figure of approximately two thirds, one arrives at the figure that the overseas voting content will be approximately a 1 per cent. addition to the electorate. It has been known for 1 per cent. to decide general elections.
      I put that matter before the Committee because when I was exchanging views with the hon. Member for Grantham (Mr. Hogg) it seemed that he entirely missed the point. I ask the Committee to reject amendment No. 69 decisively because although I have great respect for the hon. Gentleman's powers of logic, occasionally, with great respect to him, he seems to miss the point. We shall soon begin to know the number of persons involved in the exercise because they will be recorded constituency by constituency as the votes are registered.
      In this day of modern science, it does not take too much ingenuity to work out how to poll those who are resident abroad and who seek to vote in our general elections. It would not be beyond the wit of the then Secretary of State to ascertain whether the total number of external electors—if I may put it that way—were of benefit to his or her party. It is against that background that I felt that this measure would put an intolerable strain upon the democratic political system. That is why I urge the Committee to reject amendment No. 69. It contains basic law. It puts a future Secretary of State in an almost intolerable position. When the matter is thought out logically, we can see that it is not one that we would wish on any Secretary of State.
      I similarly ask that amendment No. 66 be rejected because 10 years is too long, for all the reasons that have been advanced. If we have to accept the idea of external voting, five years seems a sensible compromise.
      Mr. Hayward: I was interested in the contributions of the right hon. Members for Blaenau Gwent (Mr. Foot) and for South Down (Mr. Powell) who, in essence, said that we should not make the change because this is the constitution as it stands. They were implying that the constitution is unchangeable. We should recognise, after reviewing these matters over the years, that change is necessary. Over many centuries we have made many valuable changes to the constitution, such as the enfranchisement of females. If we pursue the argument that we should not change the constitution, we would never have given women the vote. I am aware that there are those who hold the view that it was not a good idea.
      Circumstances change. As against 20 years ago, there are many people who do valuable work abroad on behalf of this country. The right hon. Member for Blaenau Gwent asked whether the figures were large or small. The figures are reasonable, and they are likely to grow. For that reason, we should make the change. As we enter into more and more agreements, whether they be industrial or commercial, or in terms of the United Nations or the EEC, more people will work abroad. For that reason, I support the clause which introduces the overseas franchise.
      I share the view expressed by my hon. Friends the Members for Corby (Mr. Powell) and for Lewes (Mr. Rathbone) that, as the periods of such international agreements become longer, it is important that people should be allowed to remain enfranchised in this country

      211
      for longer. Many people already work in industry in Europe and have been abroad for more than seven years. It is likely that they will be there for seven, 10 or 15 years. The right hon. Member for Manchester, Gorton (Mr. Kaufman) is not present, but what would happen if Ferranti in his constituency took money from the ESPRIT programme in the EEC, in association with Padua or Rome universities, and many of Ferranti's employees worked there for several years? They would be disfranchised. That is unacceptable. Having accepted the principle that we should enfranchise people who are resident overseas, we should accept it in full and not put a time limit on it.
      Mr. Maclennan: I support the amendment moved by the hon. Member for Corby (Mr. Powell). Before I give my reasons for doing so, I wish to defend the Home Secretary against the accusation that he proceeded improperly in arriving at his conclusion as to how the Bill should be constructed on this point.
      The right hon. Member for Blaenau Gwent (Mr. Foot) was, as usual, locked with the right hon. Member for South Down (Mr. Powell) in historical conservatism. He put forward the argument that because the Home Secretary had not followed the recommendations of the Speaker's Conference there was something improper about proceeding with this method of extending the franchise.
      I must remind the right hon. Member for Blaenau Gwent of how the Labour party, when in government, treated electoral conferences. He will recall that, because he was there. I was not a Minister at the time, but I was a member of the electoral conference. He will recall that an electoral conference in the 1960s proposed that the voting age should be reduced from 21 to 20. The Labour Government at that time properly took the view that that was inappropriate, and they rejected the recommendation of the Speaker's Conference. There was nothing sacrosanct about it.
      Lest the right hon. Gentleman should peddle the illusion that Speakers' Conferences are in some way more pure and less sullied by political consideration than Cabinet discussions or the proceedings of the Select Committee on Home Affairs, let me tell him of my experience at the hands of one of his colleagues when, at a second Speaker's Conference on electoral law, the issue of votes for holidaymakers was considered. I voted in favour of extending the franchise to holidaymakers. I was summoned by a right hon. colleague of the right hon. Gentleman to explain why I voted against—
      Mr. Foot: Bill Rodgers.
      Mr. Maclennan: If I am forced to divulge the identity, I shall tell the House that it was the then deputy leader of the Labour party who, on the instructions of a Cabinet Committee, summoned me to explain why I had voted against Labour party policy handed down by Transport house.
      It is nonsense for the right hon. Member for Blaenau Gwent now to don a white sheet and speak as though this were some great matter of principle. He is an honourable man who has been in the House long enough to beguile us with historical recollections, but his stance today is clearly humbug. What is the great principle whereby he opposes the extension of the franchise? He says that we need to know how many people will be involved. If he had been
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      more frank, he might have said that it depended upon how many more Conservative voters the Government would reap. The number can scarcely be regarded as a matter of principle, and is in any event incalculable.
      7.30 pm
      The hon. Member for South Down stood firm on conservative historical grounds—the constitution as it is and always should be. That cannot satisfy those of us who see British constitutional history as a process of development and change to reflect social and political changes. One of the most important political changes in the lifetime of most of the participants in this debate has been the extent to which British citizens now travel, live and work abroad, not just to serve their own narrow interests, but to serve their country's interests. They stay abroad for long periods, but they return from time to time and they are very familiar with what is going on here. As the hon. Member for Grantham (Mr. Hogg) pointed out, communications have also greatly improved in our lifetime. Residents abroad almost certainly have as sharp an awareness of the issues involved in a general election as many people resident in this country.
      In my judgment, residence is not as sound a principle on which to stand as the principle of justice. It has long been recognised in the United States and in France that a citizen's most important right is to seek to influence the complexion of the democratic Government of the country to which he belongs. I freely confess that my original thinking and that of my party on this was not dissimilar to that of the Home Secretary on Second Reading. We felt that there might be some diminution over time in the citizen's links with his home country and a consequent decline in interest in the outcome of elections. I thought that on balance that argument suggested the need for some time limit on the exercise of the right to vote, but that has been overborne in my mind by the wider view so eloquently expressed by the hon. Members for Corby and for Lewes (Mr. Rathbone) that citizenship should carry the right to vote.
      I hope that if the Committee divides on this issue, all Members will be permitted to vote freely, without the imposition of the usual party sanctions, and to exercise their individual judgment. I intend to vote for the amendment of the hon. Member for Corby. If that fails, I shall vote for the amendment tabled by my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) as second best. Indeed, my hon. Friend himself made it plain that he preferred the wider proposition of the hon. Member for Corby.
      We are unlikely to have the opportunity to change this law for a long time. The amendment tabled by the hon. Member for Grantham, which would allow alterations through secondary legislation subject to affirmative resolution, is thus deserving of favour if the amendment proposed by the hon. Member for Corby is not carried. Nevertheless, it is preferable to arrive at a conclusion today by means of the primary legislation before us. If the Home Secretary's mind has also been changed since he last spoke on this matter, I hope that it has moved in the same direction as my own.
      Mr. Bruinvels: On Second Reading I said that the Bill would give many more people the right to vote. In the past, British subjects resident overseas have been unfairly denied the franchise. The number involved is about

      213
      600,000, of whom 100,000 work in the European Community. I see no reason why those people should not have the right to vote.
      I was not surprised that the right hon. Member for Blaenau Gwent (Mr. Foot) opposed the change as I recall the boundary commission report which failed to appear until after the 1970 election. On the other hand, the right hon. Gentleman supported the abolition of the House of Lords, which I should have thought would be a fairly major constitutional change. His attitude seems to depend very much on the story and flavour of the day.
      The majority of people living overseas still pay taxes and they pay rates on homes in this country. As house owners, they are responsible people. I cannot see how the right hon. Member for Manchester, Gorton (Mr. Kaufman) can imply that they act irresponsibly. In my view, they are not tax exiles, and it is time that they had the right to vote. This is democracy at work and the whole Committee should support it. After all, the right to vote is one of the most important rights and privileges of a citizen. Ambassadors and senior diplomats based abroad have the right to vote, as do service men stationed abroad, and the system seems to work well. So what is everyone worried about now?
      The people involved, of course, must keep their names on the register. That has always concerned me, because, if they do not do that, they lose their connection with a particular constituency. If, however, they maintain their names on the register—and as house owners they should do so—they ought to be entitled to vote. Are they likely to return to Great Britain or Northern Ireland? That is the test. If the answer is yes, I cannot see why they should not be given the vote. There is no uncertainty in such a case; they have made their position clear.
      On 10 December, I said that people living abroad should be allowed to vote, but that seven years was a rather long period and I hoped that the period would be shorter. I refer hon. Members to column 815 of the Official Report. Clearly, I must be in favour of a five-year term. However, I also said that the list should be continually checked. The hon. Member for Berwick-upon-Tweed (Mr. Beith), who is not in the Chamber at the moment, maintained that a number of gentlemen living overseas have failed to have their names removed from the register. My right hon. and learned Friend the Home Secretary would agree with me that it is against the law for a person to keep his name on the register after he has left his house permanently. I believe that the law would be brought heavily to bear upon those who offend against electoral practices.
      As I have made plain, I favour amendment No. 14. I believe that five years is the right length of time. I have some sympathy with the right hon. Member for Gorton, because five years is about the length of time between one general election and another. Paragraph 2.7 of "The Government reply to the First Report from the Home Affairs Committee" suggests that, as time drags on, the link with the United Kingdom becomes more tenuous. Therefore, any absence of more than five years might well justify one in supporting the right hon. Gentleman's amendment. In any case, is anyone likely to keep a house for longer than five years? I doubt it.
      Throughout the five-year period, the resident abroad is likely to be represented by the same Member of Parliament. He is likely to come to this country for holidays, and it is likely that his salary will be paid here. He will have a real connection with the United Kingdom.
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      Those who work overseas but keep up their connections with the United Kingdom would strongly resent some of the allegations that have been made about them today. They are not rogues. They are promoting this country, improving business and increasing our exports. Of course, they must nominate their most recent address, and that will be made clear.
      What is wrong with a voice from abroad being heard in Britain? If someone has a contribution to make, let him make it.
      Mr. Barron: Will the hon. Gentleman give way?
      Mr. Bruinvels: I will give way for one moment only.
      Mr. Barron: I am most grateful to the hon. Gentleman, because he seems to be very knowledgeable about the situation. Can he tell us how many more people are likely to appear on the electoral register as a result of this measure?
      Mr. Bruinvels: I said at the beginning of my speech that 600,000 people would be likely to benefit — 100,000 of them in the EEC. The hon. Member for Rother Valley (Mr. Barron) seems to have been blinded by my scientific knowledge. I believe that up to 600,000 people will be involved. However, I shall enter one caveat, as the hon. Gentleman will hear later.
      I cannot support the amendment moved by my hon. Friend the Member for Corby (Mr. Powell). That amendment would lead to an infinity. There must be an acid test. The Committee would be shirking its duties and responsibilities if it were to vote for the amendment.
      My hon. Friend the Member for Grantham (Mr. Hogg) is now really my honourable friend, as he is no longer a Whip. [HON. MEMBERS: "Oh!"] He is keen that the voting right should last for no more than seven years. However, he has also put his name to amendment No. 66, which stipulates 10 years. I believe that both are wrong. The figure should be five. I agree with my hon. Friend the Member for Grantham that the measures should be passed by both Houses of Parliament, but I believe that it should be done now rather than later.
      The Bill is good news. I hope that British citizens resident overseas will now exercise their right. I am sure that they will.
      7.45 pm
      Mr. Stanbrook: If there were any logic or any consistency of approach in the Government's proposals, or even any simplicity — so that they were at least consistent with the range of our law on the subject—they would have some merit. However, they lack logic and consistency. So, with respect, do all the amendments.
      Our electoral roll consists of British subjects, Commonwealth citizens and citizens of the Irish Republic living in this country. The essential qualification is residence in this country. It does not matter that not all the voters are British citizens. It does not matter that many of them have their origins abroad.
      What happens when the Government propose to enlarge the franchise? They do not extend to those living overseas the franchise that I have described. They extend a right to vote to people who have British citizenship. That is a special category of nationality not shared by everyone registered here or everyone on the existing electoral roll. If we are to be consistent, these proposals should apply to

      215
      those who are entitled by reason of residence here to a vote, even though their origins may lie in the Republic of India or in Argentina.
      Equally, we could have said that the franchise should be restricted to British citizens, so excluding those who do not owe allegiance to Her Majesty. That solution would be consistent and logical. I believe that it would be right.
      My hon. Friend the Member for Grantham (Mr. Hogg) believes that votes are such a good thing that they should be given to as many people as possible, and that no one should be deprived of a vote—although clause 1 extends the right to vote. He believes that we should extend the right on principle.
      My second objection to the proposals is that the basis of the House is representation. We represent the people of our constituencies. We represent their interests, their desires, their thoughts and wishes, the way in which they want the country to be governed and even the day-to-day affairs that concern them. Such representation will not be possible when anyone on the electoral register of a constituency may be living in the south seas, and may have been living there for 10, 20, 30 40 or 50 years and may never have returned to the United Kingdom.
      I accept that one should not demand a price for the right to vote. However, the logic of the amendment moved by my hon. Friend the Member for Corby (Mr. Powell) is that people who have not contributed to the welfare of our country for years could be entitled to vote for representatives in Parliament. That is made possible by the way in which the amendment has been drawn.
      I believe that the proposals are wholly wrong in principle. The Home Secretary should reconsider the whole matter and introduce a proper Bill based on British citizenship as the qualification for the right to vote. I would support such a Bill.
      The Secretary of State for the Home Department (Mr. Leon Brittan): Before I deal directly with this group of amendments, perhaps the Committee will allow me to say something about our general approach to these matters. It was said at the beginning of the White Paper, to which the Bill broadly gives effect, that our stance has always been that
      "major legislation of this kind must be put forward only on the basis of the fullest possible consultation between the political parties represented in the House of Commons".
      Before presenting the White Paper we sought the views of all parties in the House informally on the Select Committee's major recommendations. The detail of the Bill has been worked out after the most scrupulous consultations with party officials and local authority associations. That does not mean that any one party can, or should, have a veto. There are central issues on which, as we said in the White Paper, our firm view is that legislation is essential. They are the extension of the franchise to people who live overseas, the extension of absent voting, especially for holiday makers, and the increase in the deposit. Those are the fundamental principles that are embodied in the Bill. Once they are accepted, there are many other important issues relating to how far and how fast to go in the implementation of those principles. Those issues are a matter of judgment rather than of principle. It is essential that we proceed with the greatest possible common agreement, or at least acquiescence, between the parties.
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      The matter was made clear on Second Reading when I said that we regarded our proposals on the franchise, for example, as a "sensible compromise" between those who oppose any extension in principle and those with whom the Government sympathise, who believe that the vote should be given to all British citizens throughout the world, no matter how long they have been away. On the question of the deposit, I said that we accepted that there is no figure that is clearly and absolutely right and can be defended against all other figures. I also said that we should listen with care to what was said.
      I hope the Committee acknowledges that I made it clear that it gave the Government no pleasure to introduce absent voting provisions in Great Britain which would not apply to Northern Ireland. It is in that spirit that, since Second Reading, I have engaged in further discussions in an attempt to secure for the Bill as much support as possible, or at least acquiescence, in all parts of the House. I think that my efforts have met with some success. That has inevitably meant that other parties will have to go along with some provisions, often fundamental ones, which they have hitherto found deeply distasteful. For the Government, it has meant a readiness to go less far in the Bill than we should have liked. However, we shall stick firmly to the principles to which I have referred and, in so doing, make some fundamental changes in our electoral system. It is on that basis that, today and in subsequent debates, the Government will recommend that the Committee accepts some of the amendments tabled by the right hon. Member for Manchester, Gorton (Mr, Kaufman).
      As to the amendments before the Committee, I propose to advise the Committee to accept the amendment that limits the qualification period for overseas electors to five years after departure, and further amendments to clauses 1 to 3.
      We have been presented with quite a menu of choices. Some say that we should not change something fundamental in our constitution and that the basis of residence, which has existed until now, should not be altered. The right hon. Members for Blaenau Gwent (Mr. Foot) and for South Down (Mr. Powell) have united on this matter, as they have on similar ones in the past. In an historical sense they are right. Residence has indeed been the basis for the franchise, but my hon. Friend the Member for Kingswood (Mr. Hayward) gave the complete answer to that argument. He said that our constitution has evolved constantly and that it is right to recognise profound social changes that have taken place. It is true that many people now go to live and work abroad for shorter or longer periods of time. Unlike in the past, they do not lose touch with Britain. They have family and friends here, they might have property and children at school here and they are often liable to the payment of rates and taxes. Hitherto, as long as they were abroad they lost the most essential tie, the right to vote. One of the purposes of the Bill is to put that right. It is high time that we did so, and it is essential to get the principle of doing so firmly on the statute book.
      Right hon. and hon. Members who oppose the change are right to argue that, if we are making such a fundamental change, it is reasonable to proceed at a pace which, if not acceptable to those who do not want such change, is at least tolerable to them. After all, they represent a substantial section of the population. It is for that reason, among others, that I do not agree with the recommendations advanced by my hon. Friends the

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      Members for Corby (Mr. Powell) and for Lewes (Mr. Rathbone), supported by the hon. Member for Caithness and Sutherland (Mr. Maclennan), to whom I am otherwise grateful for his defence of the method by which I have put these issues before the House.
      I do not agree with my hon. Friends the Members for Corby and for Lewes and the hon. Members for Caithness and Sutherland and for Berwick-upon-Tweed (Mr. Beith), who wished to go less far, but further than is provided for in the Bill or amendment No. 30, because I believe that, as the principle is new, it is right to proceed with caution and general acquiescence and because I accept the argument that there must come a point, although it will vary from person to person, at which a person's links are likely to have been attenuated substantially to the extent that it is unreasonable for that person to expect to enjoy the franchise. It is not right that the extension of the franchise should be indefinite.
      Any time limit is arbitrary and the length of time that it takes for links with the United Kingdom to be attenuated will vary according to individual circumstances. There is no right and magic period of time. I therefore listened to the enticing suggestion of my hon. Friend the Member for Grantham (Mr. Hogg) that I should take the power to bring before the House an order to vary the date that is agreed by the Committee. I do not shirk from the responsibility although it would not be mine alone—the House would have to approve any proposition that I put before it. However, I do not ask the Committee to go along with my hon. Friend's suggestion, as we are familar with the limited parliamentary procedures that the passage of such an order involves. Serious principles are involved and I should be unhappy if I or a successor had to make further changes by so cursory a parliamentary procedure.
      It is important that the principle be enshrined in the statute book. Although I do not believe in an indefinite period at the moment, I believe that, as time goes on, many of the objections that have been voiced against moving at all will be seen to be invalid. It is likely that a case for a further extension will be made out. Even those who are not convinced that we should move at all will be persuaded, when they see how the Bill works out in practice, that, far from not moving, we should move a great deal further. It is right to proceed on the basis of the maximum consensus or acquiescence obtainable. I therefore commend the five-year limit to the House.
      The Select Committee chaired by my hon. and learned Friend the Member for Fylde (Sir E. Gardner) played an important and crucial part in laying the foundations of the legislation. Although the right hon. Member for Blaenau Gwent has never been a friend of Select Committees, the House will regard his aspersions on them and the slighting way in which he spoke about them as unworthy of the House and the right hon. Gentleman.
      I owe my hon. and learned Friend an answer to his specific question about the numbers involved. An estimate of 600,000 people who would be entitled to vote under a seven-year provision appears in the White Paper. It might be thought that through simple arithmetic five-sevenths of 600,000 would produce the right figure for a five-year qualification. I am advised that the figure would probably be more than that because of the pattern of people going abroad and the period that they stay abroad. It is impossible to be absolutely precise, but the figure would be somewhat more than five-sevenths of 600,000.
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      I hope the Committee will accept that the spirit in which the Government are approaching the entire legislation is not confrontational. We are building on the Select Committee's report and listening to, but not always accepting, what is said by the other parties. Where we cannot accept what is said because of the basic principles that we wish to see enshrined in the legislation, we seek at least to accept in part and to render tolerable what may not always be acceptable.
      In that spirit, I ask the Committee to support the five-year proposition put forward by the right hon. Member for Gorton and not any other amendments that may be put to the vote.
      Mr. William Powell: During the past two and a half hours we have had a spirited debate. I am grateful to my right hon. and learned Friend the Home Secretary for the way in which he has shown the Government's approval of a principle which I sought to argue, even if he sought to put limits on it.
      Those of us who have argued for the amendments have been accused of wishing to tear up part of our constitution. Not for the first time, the House was treated to an eloquent defence of the constitution by the right hon. Members for Blaenau Gwent (Mr. Foot) and for South Down (Mr. Powell). The right hon. Member for South Down identified the clash of principle in the amendments. He said that we were a representational democracy, the basis for which was residence plus registration and identified the principle behind the amendments as one of citizenship plus registration. The right hon. Members' eloquent defence of the constitution was the most reactionary that the House has listened to since the days of the Rockingham Whigs.
      We live in an evolutionary democracy and the great radical, the right hon. Member for Blaenau Gwent, has been most active in seeking to secure a rapid evolution for our constitution. He is a student of both history and literature, and managed to make both Colonel Sibthorpe and the late Squire Thorne seem positively progressive.
      I am grateful to my right hon. and learned Friend for his support for the principle, but I shall ask the House to divide on the principle as I have laid it down. I accept many of the criticisms made by my hon. Friend the Member for Orpington (Mr. Stanbrook). In reality there is little difference in principle between us. However, those who stressed the representational basis of our democracy as being residence plus registration should remember that exactly the same representational principles are fundamental to the French and United States constitutions. Members of the House of Representatives and of the Senate in the United States and members of the National Assembly in France all represent individual constituencies elected on a single basis. In tabling these amendments we are not seeking to challenge that.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 20, Noes 381.

      Division No. 80]

      [8.4 pm

      AYES

      Alton, David

      Jackson, Robert

      Ashdown, Paddy

      Kirkwood, Archy

      Bruce, Malcolm

      Maclennan, Robert

      Carlile, Alexander (Montg'y)

      Meadowcroft, Michael

      Cartwright, John

      Prentice, Rt Hon Reg

      Freud, Clement

      Rathbone, Tim

      Hancock, Mr. Michael

      Robinson, G. (Coventry NW)

      Hayward, Robert

      Shersby, Michael

      Howells, Geraint

      Steel, Rt Hon David

      219

      Wallace, James

      Tellers for the Ayes:

      Wrigglesworth, Ian

      Mr. William Powell and

      Mr. A. J. Beith.

      NOES

      Adams, Allen (Paisley N)

      Dormand, Jack

      Adley, Robert

      Dorrell, Stephen

      Aitken, Jonathan

      Douglas, Dick

      Anderson, Donald

      Douglas-Hamilton, Lord J.

      Archer, Rt Hon Peter

      Dubs, Alfred

      Ashton, Joe

      Duffy, A. E. P.

      Atkins, Rt Hon Sir H.

      Dunwoody, Hon Mrs G.

      Atkins, Robert (South Ribble)

      Durant, Tony

      Atkinson, N. (Tottenham)

      Eadie, Alex

      Baker, Nicholas (N Dorset)

      Eastham, Ken

      Banks, Tony (Newham NW)

      Edwards, Rt Hon N. (P'broke)

      Barnett, Guy

      Emery, Sir Peter

      Barron, Kevin

      Fairbairn, Nicholas

      Beaumont-Dark, Anthony

      Farr, Sir John

      Beckett, Mrs Margaret

      Fatchett, Derek

      Beggs, Roy

      Favell, Anthony

      Bell, Stuart

      Field, Frank (Birkenhead)

      Bendall, Vivian

      Fisher, Mark

      Benn, Tony

      Flannery, Martin

      Bennett, A. (Dent'n & Red'sh)

      Fletcher, Alexander

      Bermingham, Gerald

      Fookes, Miss Janet

      Best, Keith

      Foot, Rt Hon Michael

      Blackburn, John

      Forman, Nigel

      Blair, Anthony

      Forrester, John

      Boscawen, Hon Robert

      Forsyth, Michael (Stirling)

      Bottomley, Peter

      Forsythe, Clifford (S Antrim)

      Bottomley, Mrs Virginia

      Forth, Eric

      Boyes, Roland

      Foster, Derek

      Braine, Rt Hon Sir Bernard

      Foulkes, George

      Brandon-Bravo, Martin

      Franks, Cecil

      Bray, Dr Jeremy

      Fraser, J. (Norwood)

      Bright, Graham

      Fraser, Peter (Angus East)

      Brittan, Rt Hon Leon

      Freeman, Roger

      Brooke, Hon Peter

      Gale, Roger

      Brown, Hugh D. (Proven)

      Galley, Roy

      Brown, Ron (E'burgh, Leith)

      Gardiner, George (Reigate)

      Bruinvels, Peter

      Gardner, Sir Edward (Fylde)

      Buchanan-Smith, Rt Hon A.

      Garel-Jones, Tristan

      Butcher, John

      George, Bruce

      Callaghan, Jim (Heyw'd & M)

      Glyn, Dr Alan

      Campbell, Ian

      Godman, Dr Norman

      Canavan, Dennis

      Golding, John

      Carlisle, Rt Hon M. (W'ton S)

      Goodlad, Alastair

      Carter-Jones, Lewis

      Gould, Bryan

      Carttiss, Michael

      Gourlay, Harry

      Cash, William

      Gower, Sir Raymond

      Clark, Dr David (S Shields)

      Griffiths, E. (B'y St Edm'ds)

      Clarke, Rt Hon K. (Rushcliffe)

      Griffiths, Peter (Portsm'th N)

      Clarke, Thomas

      Ground, Patrick

      Clay, Robert

      Grylls, Michael

      Clegg, Sir Walter

      Gummer, John Selwyn

      Clwyd, Mrs Ann

      Hamilton, James (M'well N)

      Cocks, Rt Hon M. (Bristol S.)

      Hamilton, W. W. (Central Fife)

      Cohen, Harry

      Hannam, John

      Concannon, Rt Hon J. D.

      Hargreaves, Kenneth

      Conway, Derek

      Harris, David

      Cook, Frank (Stockton North)

      Harrison, Rt Hon Walter

      Coombs, Simon

      Harvey, Robert

      Cope, John

      Haselhurst, Alan

      Corbett, Robin

      Havers, Rt Hon Sir Michael

      Corbyn, Jeremy

      Hayes, J.

      Cowans, Harry

      Hayhoe, Barney

      Cranborne, Viscount

      Haynes, Frank

      Crouch, David

      Heathcoat-Amory, David

      Crowther, Stan

      Heddle, John

      Cunliffe, Lawrence

      Henderson, Barry

      Cunningham, Dr John

      Heseltine, Rt Hon Michael

      Dalyell, Tam

      Hickmet, Richard

      Davies, Rt Hon Denzil (L'lli)

      Hicks, Robert

      Davies, Ronald (Caerphilly)

      Hind, Kenneth

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

      Hogg, Hon Douglas (Gr'th'm)

      Deakins, Eric

      Hogg, N. (C'nauld & Kilsyth)

      Dewar, Donald

      Holland, Sir Philip (Gedling)

      Dicks, Terry

      Holt, Richard

      Dixon, Donald

      Home Robertson, John

      220

      Hordern, Peter

      Merchant, Piers

      Howard, Michael

      Michie, William

      Howell, Rt Hon D. (G'ldford)

      Mikardo, Ian

      Hoyle, Douglas

      Miller, Hal (B'grove)

      Hughes, Robert (Aberdeen N)

      Mills, Iain (Meriden)

      Hughes, Roy (Newport East)

      Miscampbell, Norman

      Hughes, Sean (Knowsley S)

      Moate, Roger

      Hunt, John (Ravensbourne)

      Molyneaux, Rt Hon James

      Irving, Charles

      Monro, Sir Hector

      Janner, Hon Greville

      Montgomery, Sir Fergus

      John, Brynmor

      Morris, Rt Hon A. (W'shawe)

      Johnson Smith, Sir Geoffrey

      Morris, Rt Hon J. (Aberavon)

      Jones, Barry (Alyn & Deeside)

      Morrison, Hon C. (Devizes)

      Jones, Robert (W Herts)

      Mudd, David

      Jopling, Rt Hon Michael

      Neale, Gerrard

      Kaufman, Rt Hon Gerald

      Needham, Richard

      Kellett-Bowman, Mrs Elaine

      Nellist, David

      Key, Robert

      Neubert, Michael

      Kilroy-Silk, Robert

      Newton, Tony

      King, Rt Hon Tom

      Nicholls, Patrick

      Knight, Gregory (Derby N)

      Norris, Steven

      Knowles, Michael

      Oakes, Rt Hon Gordon

      Knox, David

      O'Brien, William

      Lamond, James

      O'Neill, Martin

      Latham, Michael

      Oppenheim, Rt Hon Mrs S.

      Lawler, Geoffrey

      Orme, Rt Hon Stanley

      Lawrence, Ivan

      Page, Richard (Herts SW)

      Leadbitter, Ted

      Paisley, Rev Ian

      Lee, John (Pendle)

      Patchett, Terry

      Leigh, Edward (Gainsbor'gh)

      Patten, Christopher (Bath)

      Leighton, Ronald

      Pawsey, James

      Lewis, Sir Kenneth (Stamf'd)

      Peacock, Mrs Elizabeth

      Lewis, Ron (Carlisle)

      Pendry, Tom

      Lewis, Terence (Worsley)

      Percival, Rt Hon Sir Ian

      Lightbown, David

      Pike, Peter

      Litherland, Robert

      Pollock, Alexander

      Lloyd, Ian (Havant)

      Portillo, Michael

      Lloyd, Peter, (Fareham)

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

      Lloyd, Tony (Stretford)

      Powley, John

      Lofthouse, Geoffrey

      Prescott, John

      Lord, Michael

      Price, Sir David

      Loyden, Edward

      Proctor, K. Harvey

      Luce, Richard

      Radice, Giles

      Lyell, Nicholas

      Raffan, Keith

      McCartney, Hugh

      Raison, Rt Hon Timothy

      McCrea, Rev William

      Randall, Stuart

      McCrindle, Robert

      Rees, Rt Hon M. (Leeds S)

      McCurley, Mrs Anna

      Rees, Rt Hon Peter (Dover)

      McCusker, Harold

      Renton, Tim

      McDonald, Dr Oonagh

      Richardson, Ms Jo

      Macfarlane, Neil

      Ridley, Rt Hon Nicholas

      McKay, Allen (Penistone)

      Rifkind, Malcolm

      MacKay, John (Argyll & Bute)

      Roberts, Allan (Bootle)

      McKelvey, William

      Robertson, George

      Mackenzie, Rt Hon Gregor

      Robinson, Mark (N'port W)

      Maclean, David John

      Robinson, P. (Belfast E)

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

      Roe, Mrs Marion

      McNamara, Kevin

      Rogers, Allan

      McQuarrie, Albert

      Ross, Wm. (Londonderry)

      McTaggart, Robert

      Rossi, Sir Hugh

      McWilliam, John

      Rost, Peter

      Madden, Max

      Rowe, Andrew

      Madel, David

      Rowlands, Ted

      Maginnis, Ken

      Rumbold, Mrs Angela

      Major, John

      Ryder, Richard

      Malins, Humfrey

      Sackville, Hon Thomas

      Malone, Gerald

      Sainsbury, Hon Timothy

      Marek, Dr John

      Sayeed, Jonathan

      Marland, Paul

      Sedgemore, Brian

      Marlow, Antony

      Shaw, Giles (Pudsey)

      Marshall, David (Shettleston)

      Shaw, Sir Michael (Scarb')

      Marshall, Michael (Arundel)

      Sheerman, Barry

      Mason, Rt Hon Roy

      Sheldon, Rt Hon R.

      Mather, Carol

      Shelton, William (Streatham)

      Maude, Hon Francis

      Shepherd, Colin (Hereford)

      Maxton, John

      Shore, Rt Hon Peter

      Maxwell-Hyslop, Robin

      Short, Ms Clare (Ladywood)

      Mayhew, Sir Patrick

      Silkin, Rt Hon J.

      Maynard, Miss Joan

      Silvester, Fred

      Mellor, David

      Sims, Roger

      221

      Skeet, T. H. H.

      Tinn, James

      Skinner, Dennis

      Torney, Tom

      Smith, C.(Isl'ton S & F'bury)

      Townsend, Cyril D. (B'heath)

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

      Tracey, Richard

      Snape, Peter

      Vaughan, Sir Gerard

      Soames, Hon Nicholas

      Viggers, Peter

      Soley, Clive

      Waldegrave, Hon William

      Spearing, Nigel

      Walden, George

      Speed, Keith

      Walker, Cecil (Belfast N)

      Spence, John

      Waller, Gary

      Spencer, Derek

      Walters, Dennis

      Spicer, Jim (W Dorset)

      Wardell, Gareth (Gower)

      Stanbrook, Ivor

      Wardle, C. (Bexhill)

      Stanley, John

      Wareing, Robert

      Steen, Anthony

      Watson, John

      Stern, Michael

      Watts, John

      Stevens, Lewis (Nuneaton)

      Weetch, Ken

      Stewart, Allan (Eastwood)

      Wells, Bowen (Hertford)

      Stewart, Andrew (Sherwood)

      Wells, Sir John (Maidstone)

      Stewart, Rt Hon D. (W Isles)

      Welsh, Michael

      Stewart, Ian (N Hertf'dshire)

      Wheeler, John

      Stott, Roger

      White, James

      Stradling Thomas, J.

      Whitfield, John

      Sumberg, David

      Wigley, Dafydd

      Tapsell, Sir Peter

      Wilkinson, John

      Taylor, Rt Hon John David

      Wilson, Gordon

      Taylor, John (Solihull)

      Winnick, David

      Taylor, Teddy (S'end E)

      Wolfson, Mark

      Thomas, Dafydd (Merioneth)

      Woodcock, Michael

      Thomas, Rt Hon Peter

      Yeo, Tim

      Thomas, Dr R. (Carmarthen)

      Young, David (Bolton SE)

      Thompson, Donald (Calder V)

      Young, Sir George (Acton)

      Thompson, J. (Wansbeck)

      Younger, Rt Hon George

      Thompson, Patrick (N'ich N)

      Thorne, Neil (Ilford S)

      Tellers for the Noes:

      Thorne, Stan (Preston)

      Mr. Ian Lang and

      Thornton, Malcolm

      Mr. Mark Lennox-Boyd.

      Thurnham, Peter

      Amendment proposed: No. 14, in page 2, line 14, leave out 'seven' and insert 'five'.—[Mr. Kaufman.]
      Question put, That the amendment be made:—
      The Committee divided: Ayes 382, Noes 21.

      Division No. 81]

      [8.18 pm

      AYES

      Adams, Allen (Paisley N)

      Brooke, Hon Peter

      Aitken, Jonathan

      Brown, Hugh D. (Provan)

      Alexander, Richard

      Brown, Ron (E'burgh, Leith)

      Anderson, Donald

      Bruinvels, Peter

      Archer, Rt Hon Peter

      Buchanan-Smith, Rt Hon A.

      Ashton, Joe

      Butcher, John

      Atkins, Rt Hon Sir H.

      Callaghan, Jim (Heyw'd & M)

      Atkins, Robert (South Ribble)

      Campbell, Ian

      Atkinson, N. (Tottenham)

      Canavan, Dennis

      Banks, Robert (Harrogate)

      Carlisle, Rt Hon M. (W'ton S)

      Banks, Tony (Newham NW)

      Carter-Jones, Lewis

      Barnett, Guy

      Cash, William

      Barron, Kevin

      Clark, Dr David (S Shields)

      Beaumont-Dark, Anthony

      Clarke, Rt Hon K. (Rushcliffe)

      Beckett, Mrs Margaret

      Clarke, Thomas

      Beggs, Roy

      Clay, Robert

      Bell, Stuart

      Clegg, Sir Walter

      Bendall, Vivian

      Clwyd, Mrs Ann

      Benn, Tony

      Cocks, Rt Hon M. (Bristol S.)

      Bennett, A. (Dent'n & Red'sh)

      Cohen, Harry

      Bermingham, Gerald

      Concannon, Rt Hon J. D.

      Best, Keith

      Conway, Derek

      Blackburn, John

      Cook, Frank (Stockton North)

      Blair, Anthony

      Coombs, Simon

      Boscawen, Hon Robert

      Cope, John

      Bottomley, Peter

      Corbyn, Jeremy

      Bottomley, Mrs Virginia

      Cowans, Harry

      Boyes, Roland

      Cranborne, Viscount

      Braine, Rt Hon Sir Bernard

      Crouch, David

      Brandon-Bravo, Martin

      Crowther, Stan

      Bray, Dr Jeremy

      Cunliffe, Lawrence

      Bright, Graham

      Cunningham, Dr John

      Brittan, Rt Hon Leon

      Dalyell, Tam

      222

      Davies, Rt Hon Denzil (L'lli)

      Howard, Michael

      Davies, Ronald (Caerphilly)

      Howell, Rt Hon D. (G'ldford)

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

      Hoyle, Douglas

      Deakins, Eric

      Hughes, Robert (Aberdeen N)

      Dewar, Donald

      Hughes, Roy (Newport East)

      Dicks, Terry

      Hughes, Sean (Knowsley S)

      Dixon, Donald

      Hunt, John (Ravensbourne)

      Dormand, Jack

      Irving, Charles

      Dorrell, Stephen

      Janner, Hon Greville

      Douglas, Dick

      John, Brynmor

      Douglas-Hamilton, Lord J.

      Johnson Smith, Sir Geoffrey

      Dubs, Alfred

      Jones, Barry (Alyn & Deeside)

      Duffy, A. E. P.

      Jones, Robert (W Herts)

      Dunwoody, Hon Mrs G.

      Jopling, Rt Hon Michael

      Durant, Tony

      Kaufman, Rt Hon Gerald

      Eastham, Ken

      Key, Robert

      Edwards, Rt Hon N. (P'broke)

      Kilroy-Silk, Robert

      Emery, Sir Peter

      King, Rt Hon Tom

      Evans, John (St. Helens N)

      Knight, Gregory (Derby N)

      Fairbairn, Nicholas

      Knowles, Michael

      Fatchett, Derek

      Knox, David

      Favell, Anthony

      Lamond, James

      Field, Frank (Birkenhead)

      Lang, Ian

      Fisher, Mark

      Latham, Michael

      Flannery, Martin

      Lawler, Geoffrey

      Fletcher, Alexander

      Lawrence, Ivan

      Fookes, Miss Janet

      Leadbitter, Ted

      Foot, Rt Hon Michael

      Lee, John (Pendle)

      Forman, Nigel

      Leigh, Edward (Gainsbor'gh)

      Forrester, John

      Leighton, Ronald

      Forsyth, Michael (Stirling)

      Lennox-Boyd, Hon Mark

      Forsythe, Clifford (S Antrim)

      Lewis, Sir Kenneth (Stamf'd)

      Foster, Derek

      Lewis, Ron (Carlisle)

      Foulkes, George

      Lewis, Terence (Worsley)

      Franks, Cecil

      Lightbown, David

      Fraser, J. (Norwood)

      Lilley, Peter

      Fraser, Peter (Angus East)

      Litherland, Robert

      Freeman, Roger

      Lloyd, Ian (Havant)

      Gale, Roger

      Lloyd, Peter, (Fareham)

      Galley, Roy

      Lloyd, Tony (Stretford)

      Gardiner, George (Reigate)

      Lofthouse, Geoffrey

      Gardner, Sir Edward (Fylde)

      Lord, Michael

      Garel-Jones, Tristan

      Loyden, Edward

      George, Bruce

      Luce, Richard

      Glyn, Dr Alan

      Lyell, Nicholas

      Godman, Dr Norman

      McCartney, Hugh

      Golding, John

      McCrea, Rev William

      Goodlad, Alastair

      McCrindle, Robert

      Gould, Bryan

      McCurley, Mrs Anna

      Gourlay, Harry

      McCusker, Harold

      Gower, Sir Raymond

      McDonald, Dr Oonagh

      Greenway, Harry

      Macfarlane, Neil

      Griffiths, E. (B'y St Edm'ds)

      McKay, Allen (Penistone)

      Griffiths, Peter (Portsm'th N)

      MacKay, John (Argyll & Bute)

      Ground, Patrick

      McKelvey, William

      Grylls, Michael

      Mackenzie, Rt Hon Gregor

      Hamilton, James (M'well N)

      Maclean, David John

      Hamilton, W. W. (Central Fife)

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

      Hannam, John

      McNamara, Kevin

      Hargreaves, Kenneth

      McQuarrie, Albert

      Harris, David

      McTaggart, Robert

      Harrison, Rt Hon Walter

      Madden, Max

      Harvey, Robert

      Madel, David

      Havers, Rt Hon Sir Michael

      Maginnis, Ken

      Hawkins, C. (High Peak)

      Major, John

      Hayes, J.

      Malins, Humfrey

      Hayhoe, Barney

      Malone, Gerald

      Haynes, Frank

      Marek, Dr John

      Heathcoat-Amory, David

      Marland, Paul

      Heddle, John

      Marlow, Antony

      Henderson, Barry

      Marshall, David (Shettleston)

      Heseltine, Rt Hon Michael

      Marshall, Michael (Arundel)

      Hickmet, Richard

      Mason, Rt Hon Roy

      Hicks, Robert

      Maude, Hon Francis

      Hogg, Hon Douglas (Gr'th'm)

      Maxton, John

      Hogg, N. (C'nauld & Kilsyth)

      Maxwell-Hyslop, Robin

      Holland, Sir Philip (Gedling)

      Mayhew, Sir Patrick

      Holt, Richard

      Maynard, Miss Joan

      Home Robertson, John

      Mellor, David

      Hordern, Peter

      Merchant, Piers

      223

      Michie, William

      Shelton, William (Streatham)

      Mikardo, Ian

      Shepherd, Colin (Hereford)

      Miller, Hal (B'grove)

      Shersby, Michael

      Mills, Iain (Meriden)

      Shore, Rt Hon Peter

      Miscampbell, Norman

      Short, Ms Clare (Ladywood)

      Moate, Roger

      Silkin, Rt Hon J.

      Molyneaux, Rt Hon James

      Silvester, Fred

      Monro, Sir Hector

      Sims, Roger

      Montgomery, Sir Fergus

      Skeet, T. H. H.

      Morris, Rt Hon A. (W'shawe)

      Skinner, Dennis

      Morris, Rt Hon J. (Aberavon)

      Smith, C.(Isl'ton S & F'bury)

      Morrison, Hon C. (Devizes)

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

      Mudd, David

      Smith, Tim (Beaconsfield)

      Neale, Gerrard

      Snape, Peter

      Needham, Richard

      Soames, Hon Nicholas

      Nellist, David

      Soley, Clive

      Nelson, Anthony

      Spearing, Nigel

      Neubert, Michael

      Speed, Keith

      Newton, Tony

      Spence, John

      Nicholls, Patrick

      Spencer, Derek

      Norris, Steven

      Spicer, Jim (W Dorset)

      Oakes, Rt Hon Gordon

      Stanley, John

      O'Brien, William

      Steen, Anthony

      O'Neill, Martin

      Stern, Michael

      Onslow, Cranley

      Stevens, Lewis (Nuneaton)

      Oppenheim, Phillip

      Stewart, Allan (Eastwood)

      Oppenheim, Rt Hon Mrs S.

      Stewart, Andrew (Sherwood)

      Orme, Rt Hon Stanley

      Stewart, Rt Hon D. (W Isles)

      Page, Richard (Herts SW)

      Stewart, Ian (N Hertf'dshire)

      Paisley, Rev Ian

      Stott, Roger

      Patchett, Terry

      Stradling Thomas, J.

      Patten, Christopher (Bath)

      Sumberg, David

      Pawsey, James

      Tapsell, Sir Peter

      Peacock, Mrs Elizabeth

      Taylor, Rt Hon John David

      Pendry, Tom

      Taylor, John (Solihull)

      Percival, Rt Hon Sir Ian

      Taylor, Teddy (S'end E)

      Pike, Peter

      Thomas, Dafydd (Merioneth)

      Pollock, Alexander

      Thomas, Rt Hon Peter

      Portillo, Michael

      Thomas, Dr R. (Carmarthen)

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

      Thompson, Donald (Calder V)

      Powley, John

      Thompson, J. (Wansbeck)

      Prentice, Rt Hon Reg

      Thompson, Patrick (N'ich N)

      Prescott, John

      Thorne, Neil (Ilford S)

      Price, Sir David

      Thorne, Stan (Preston)

      Proctor, K. Harvey

      Thornton, Malcolm

      Radice, Giles

      Thurnham, Peter

      Raffan, Keith

      Tinn, James

      Raison, Rt Hon Timothy

      Torney, Tom

      Randall, Stuart

      Townsend, Cyril D. (B'heath)

      Redmond, M.

      Tracey, Richard

      Rees, Rt Hon M. (Leeds S)

      Vaughan, Sir Gerard

      Rees, Rt Hon Peter (Dover)

      Viggers, Peter

      Renton, Tim

      Waldegrave, Hon William

      Richardson, Ms Jo

      Walden, George

      Ridley, Rt Hon Nicholas

      Walker, Cecil (Belfast N)

      Rifkind, Malcolm

      Waller, Gary

      Roberts, Allan (Bootle)

      Walters, Dennis

      Robertson, George

      Wardell, Gareth (Gower)

      Robinson, G. (Coventry NW)

      Wardle, C. (Bexhill)

      Robinson, Mark (N'port W)

      Wareing, Robert

      Robinson, P. (Belfast E)

      Watson, John

      Roe, Mrs Marion

      Watts, John

      Rogers, Allan

      Weetch, Ken

      Ross, Wm. (Londonderry)

      Wells, Bowen (Hertford)

      Rossi, Sir Hugh

      Wells, Sir John (Maidstone)

      Rost, Peter

      Welsh, Michael

      Rowe, Andrew

      Wheeler, John

      Rowlands, Ted

      White, James

      Rumbold, Mrs Angela

      Whitfield, John

      Ryder, Richard

      Wigley, Dafydd

      Sackville, Hon Thomas

      Wilkinson, John

      Sainsbury, Hon Timothy

      Wilson, Gordon

      Sayeed, Jonathan

      Winnick, David

      Sedgemore, Brian

      Wolfson, Mark

      Shaw, Giles (Pudsey)

      Woodcock, Michael

      Shaw, Sir Michael (Scarb')

      Yeo, Tim

      Sheerman, Barry

      Young, David (Bolton SE)

      Sheldon, Rt Hon R.

      Young, Sir George (Acton)

      224

      Younger, Rt Hon George

      Mr. Robin Corbett and

      Mr. John McWilliam.

      Tellers for the Ayes:

      NOES

      Alton, David

      Hughes, Simon (Southwark)

      Ashdown, Paddy

      Kellett-Bowman, Mrs Elaine

      Beith, A. J.

      Maclennan, Robert

      Bruce, Malcolm

      Meyer, Sir Anthony

      Carlile, Alexander (Montg'y)

      Rathbone, Tim

      Cartwright, John

      Steel, Rt Hon David

      Farr, Sir John

      Wallace, James

      Freud, Clement

      Wrigglesworth, Ian

      Gregory, Conal

      Hancock, Mr. Michael

      Tellers for the Noes:

      Haselhurst, Alan

      Mr. Michael Meadowcroft and

      Hind, Kenneth

      Mr. Archy Kirkwood.

      Howells, Geraint

      Question accordingly agreed to.
      Mr. Corbett: I beg to move amendment No. 24, in page 2, line 22, leave out subsection (4).
      The Chairman: It will be convenient for the Committee to discuss at the same time the following amendments:
      No. 25, in page 2, line 23, leave out paragraph (a).
      No. 67, in page 2, line 24, leave out 'seven' and insert 'ten'.
      No. 31, in clause 3, page 5, line 16, leave out subsection (5).
      Mr. Corbett: The purpose of amendments Nos. 24 and 31 is to remove the right of people who leave the United Kingdom as children from eventually qualifying for votes in elections to this Parliament.
      It is a nonsense for people who, for example, are taken by their parents to Australia, New Zealand, the United States, the Gulf States, to any part of Europe or wherever else in the world and who grow up in those countries and absorb their traditions and cultures to claim that they have a legitimate interest in voting to elect a Member of Parliament for a constituency in Britain which they can scarcely remember.
      My right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) earlier pointed out that elections under our system are for Members of individual constituencies. The overall votes are not put into a heap, counted and then Members allocated against the total number of votes cast for a party. That is an important distinction which most, if not all, hon. Members hold precious.
      There is a great difference between what is being proposed in the Bill and, for example, postal votes for holidaymakers. I wish to make it clear at the outset that we welcome the concept of postal votes for holidaymakers, remembering that they leave constituencies for a time and return to them because they live in them and are part of those communities.
      I was born in Australia. I left that country long before I was able to qualify to be on an electoral register there. However, under matching proposals in the Australian legislature, because I was born in that country, I might be told that I could vote for the equivalent of an MP for Fremantle in the sunshine state of Western Australia. Unhappily, I must confess to having no memory of Fremantle. I feel that it would be impertinent of me either to have the right to vote or to wish to cast a vote for a constituency in that fair city.

      225
      It cannot be right that people who have been taken, most likely by their parents, perhaps half a world away should, at a later stage, have a proper claim to a vote on the basis of having a genuine constituency interest.
      We shall later discuss amendments requiring those claiming votes, although they live overseas, to declare an intention to return to the United Kingdom. That is a straightforward request for those, for example, whose jobs take them abroad, whether or not they are on fixed contracts. As my right hon. Friend the Member for Gorton explained, it is easy to demonstrate their position on the basis of residential qualification here.
      That is not the case for those—we do not know the numbers—who, for whatever reason, decide to live permanently abroad. That does not apply only to those who retire abroad. There are others who prefer to live in sunnier climes or who have other reasons for living elsewhere. I do not criticise them in any way.
      As the Opposition pointed out when we debated the last amendment, it is stretching credulity enormously—not to question the feelings of such people towards the place of their birth; I readily confess to having such feelings about Australia—to accept that, having lived out of the country for many years, the links are strong enough for them to have the right to vote for Members of this House in named constituencies.
      As distinct from requiring people to demonstrate an intention to return—I hope that, when we debate that later, that requirement will commend itself to the Committee—giving the right to vote to younger people who may have been away from the United Kingdom for a long time and who may have no intention to return would, I submit, be out of step with what the Bill proposes in asking people to give a serious declaration of intent to return.
      The view of my hon. Friends and me is that only those UK citizens who reside here but who are abroad temporarily and who fully intend to return should be entitled to vote in our parliamentary elections. I invite the Government to share that view.
      Mr. Mellor: The hon. Member for Birmingham, Erdington (Mr. Corbett) is showing formidable virtuosity this evening. He stood before us announcing the largest victory in a Division that the Labour party has had to announce in many a long year. Before we got over the shock of that, he was at the Dispatch Box moving an amendment in words that made such compulsive listening that an unseen hand dragged me to my feet straightaway to accept it. I do not know what the hon. Gentleman proposes to do next. [Interruption.] Perhaps he should leave while he is ahead in the game.
      Mr. Kaufman: What about an Oxford degree?
      Mr. Mellor: Whether his name should be submitted for an honorary degree at Oxford university I leave to his Front Bench colleagues to consider. The right hon. Member for Manchester, Gorton (Mr. Kaufman) goaded me into making that observation, and I shall, if necessary, plead that in my defence.
      The Committee has approved arrangements by which adults who leave this country are entitled to vote in United Kingdom elections for a period of five years after they have last appeared on a register for a United Kingdom constituency, and they will vote in that constituency.
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      A genuine problem has always arisen about what to do with those children who leave the country with their parents but who within the five-year period attain voting age. It seemed logical to the Government that they, too, should qualify for the vote, just as they would if they had been living in Great Britain. However, severe practical difficulties arose about determining in which constituency they should vote. Should they qualify through their parents and be entitled to vote in the constituency in which their parents were registered, or should they qualify in relation to the constituency in which they had previously resided, which might be different from the constituency in which their parents had lived? Both of those alternatives contained practical drawbacks.
      Having regard to the importance which the Opposition attach to this amendment and to the very reasonable basis that my right hon. and learned Friend the Home Secretary gave in the previous debate for reaching an accommodation over matters of constitutional signifiance like the Representation of the People Bill, the best thing that I can do on behalf of the Government is to recommend to my hon. Friends that they should accept the amendment.
      Mr. James Wallace: As was seen by the size of the majority in the last Division, the old alliance, which has probably operated covertly for a long time, has been brought out into the open. This amendment is welcomed by my right hon. and hon. Friends.
      The hon. Member for Birmingham, Erdington (Mr. Corbett) put forward the valid reason that a person who went away from the United Kingdom as a young child would remember very little about the constituency in which he would be entitled to vote. The Minister referred to the practical difficulties. For example, if somebody went to the British consulate in, say, Chicago and claimed that his parents had been resident in a particular constituency it would be impossible to find out whether that was true. Although it would never cross the mind of any hon. Member, it might cross the mind of some of those who wished to disrupt our electoral proceedings that people could be sent en bloc to register as voters in a constituency that they thought they had some chance of winning. There would be no practical way of curbing such an abuse.
      For that reason, and other reasons that have been given, the amendment deserves our support.
      Amendment agreed to.
      8.45 pm
      Mr. Barron: I beg to move amendment No. 27, in page 2, line 33, at end add—
      '(5) The provisions of this section shall not come into operation until such time as the Secretary of State has laid before Parliament an estimate, country by country, of the numbers eligible to apply for qualification as an overseas elector under this section.'.
      No hon. Member has stated how many people will be eligible to vote when the franchise is widened by the acceptance of clause 1. I am amazed that during the Committee stage of a Bill that will introduce a major constitutional change in the electoral system of this country nobody has stated how it will work, how much it will cost and how many people will benefit from it. I should have thought that any reasonable, sensible Government would have regarded that as a priority when introducing a Bill of this kind.

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      There are differences of view about how many people will benefit from the extension of the franchise. On Second Reading the Home Secretary said that he believed about half a million people would benefit from the extension of the franchise. Earlier today we heard that 600,000 people would benefit from its extension. There are 250,000 members of the armed services serving abroad who are qualified to vote. That figure was given by the Home Office to the Select Committee on Home Affairs. The evidence was that 245,379 people were on the 1982 register. In its written evidence to the Select Committee on Home Affairs, the Home Office stated that 150,000 people living in Europe and 250,000 living elsewhere might be entitled to vote. That works out at an average of about 600 per constituency. The Home Office figures mean that about 400,000 people would benefit from the widening of the franchise. The more we look at the guesstimates relating to the widening of the franchise, the more intriguing the position becomes.
      Further evidence was submitted to the Select Committee on Home Affairs by the Social Democratic party. In page 147 of its written evidence it said that probably several million people would benefit from the widening of the franchise. However, when the Social Democratic party gave verbal evidence to the same Committee, its representative, Mr. Briggs, referred in page 162 to about 600,000 people. Therefore, the several million had dropped to 600,000 by the time the SDP appeared before the Select Committee on Home Affairs. But even the addition of 600,000 people represents about 1·5 per cent. on a countrywide basis. In those circumstances, a marginal seat could be put at risk. Hon. Members know that during a hard fought campaign at a general election, even 1 per cent. can influence the outcome. In those circumstances, that figure could have an effect upon the outcome of the election.
      Amendment No. 27 asks only for estimates to be made on a country by country basis before the Bill is passed. It is also relevant that the effect upon constituencies of such a widening of the franchise should be ascertained. Certain constituencies may have substantial numbers of voters of this kind. I refer to the recent report of the Boundary Commission that was implemented in 1983. We tried to create average constituencies containing electorates of 60,000 to 66,000. If there are to be 600,000 votes from abroad, or even more if certain people are to be believed, the figures must be ascertained. That should have been done in conjunction with the report of the Boundary Commission.
      I am not against the extension of the franchise in certain cases, but I am certainly against its extension by means of the Bill. It does not do justice to the British constitution. It is hurried and it is misconceived because it does not give to hon. Members all the facts that they need before they proceed further with the Bill.
      Mr. Mellor: I am not sure that the hon. Member for Rother Valley (Mr. Barron) is right to suggest that the proposal is vitiated by the fact that no one can with complete precision say how many people will benefit from it. After all, that is true of many of the changes in the franchise that have been proposed. It is certainly true of one that is not a matter of great controversy—holiday postal votes. Nobody knows quite how many people will
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      be away on holiday. It will depend on the time of year. No one will know the extent to which the franchise is widened by that.
      Mr. Kaufman rose—
      Mr. Mellor: I appreciate that the right hon. Gentleman will say that they are already on the register. That is fair enough. But we know that a substantial number of British people live and work overseas, some of whom—those who have been overseas for up to five years—will qualify for the vote. Except in certain countries where there is a particularly good reason for British citizens to make themselves known to the British embassy for reasons of public safety and other considerations, it is not a requirement that people should disclose to the British authorities, either within the country or anywhere else, where they are living. So there is no accurate way in which one can say how many British people are living in any particular country, whether a European country or further afield.
      However, we can give some estimates, and some have been given. The fact that those estimates are really guesstimates is not a fair criticism. It is just one of those facts which we must acknowledge is inevitable when, in a free society, we do not monitor where our citizens go, how long they stay there or where they live when they are there.
      There would be an abuse if people could emerge and claim that they were entitled to vote when that claim was not sustainable. We shall put requirements into the regulations that will ensure that a proper declaration has to be made before a consular official who will satisfy himself that the person who makes the claim is properly entitled to do so. Having submitted the form via the consular official, it will then go to the electoral registration officer, who, before admitting somebody on to the register, has to be satisfied.
      Not only do we not know how many people will be potentially enfranchised as a result of this, but we certainly do not know how many people will take up the offer. After all, unlike a vote for somebody who is resident in the United Kingdom, it will cost money. A sum of money will have to be paid in order to apply to be registered as an overseas voter. The only indicator that we have is the service vote where only 55 per cent. of the service men and their wives who are entitled to a service vote actually apply for it.
      For anyone to stand at the Dispatch Box or anywhere else in the Chamber and claim to be able to give an accurate figure of how many people will be enfranchised is an impossibility. I do not apologise for the fact that no Government could accept the amendment, consistent with wanting to do what we believe and hope that everyone, however reluctantly, accepts is a not unreasonable aspiration for any Government, in an era where an increasing number of our citizens, for perfectly valid reasons, will live and work abroad for some period in their lives. Therefore, I hope that the hon. Gentleman will not be too discomforted by the fact that I have not been able to give as good a reception to his amendment as that moved by the hon. Member for Birmingham, Erdington (Mr. Corbett). I hope that he will not feel that he has to press the amendment to the vote.
      Mr. Wallace: We cannot support the amendment. It would have been helpful if one could have had some idea

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      of the numbers concerned, but, even if we had had a global total, as far as I am aware there is no information available to any of our agenices abroad which could have told us how that would have affected the 650 constituencies that are represented in the House of Commons. The hon. Member for Rother Valley (Mr. Barron) was concerned with the effect that it could have in the constituencies. Even if we had a total figure, that would not give us any greater idea about the effect in individual constituencies.
      It is clear, as the hon. Gentleman said, that we have agreed to the extension of the franchise in principle in giving the limited right to vote to people who have been overseas for five years or less. If the Committee agrees to that in principle, it is not a matter of fundamental concern to us how many it will affect. If we believe that people should have the franchise, they should have it, be they 600, 6,000 or 600,000. There is nothing in the amendment which would help us.
      The Bill can become an Act without us knowing the figure. Only this particular clause would be inoperative until we had that figure, and even then the figure would be only a matter of interest. The Secretary of State would not have to wait for a positive resolution of the House of Commons to operate the clause once we have the figures. It might be of more than academic interest, but, none the less, it would be a waste of time. I do not believe that the amendment merits the support of the Committee.
      Mr. Barron: I accept that in some ways the amendment is badly worded, but I hope that the Committee realises that if the constitution is changed we should make sure that the effect of such a change does not create an imbalance in the electoral patterns of British constituencies.
      I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Question proposed, That the clause, as amended, stand part of the Bill.
      Mr. Robert Kilroy-Silk: As improved by Opposition amendments, the Bill will now allow British residents abroad to vote in British elections five years after they have left Britain provided that they make a declaration that they intend to return to the United Kingdom to take up permanent residence. The five-year limit, and the declaration, which will be moved as an amendment to clause 2, are clearly improvements in the Bill. But they still do not make it a desirable extension of the franchise. As my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) said, we are still opposed in principle to the extension of the franchise to British citizens living abroad.
      Our reasons for that opposition are not just that the Bill would give the vote to those who have emigrated, which it would and which is wrong, or that it extends the franchise to those British citizens who have left the country for tax reasons, which it would, and which is equally wrong. Nor, indeed, are we opposing it merely because it will give the vote to those who are fugitives from justice. It will, of course, and their numbers are not necessarily insubstantial. Clearly, it is and should be offensive to all hon. Members that such people should have the vote. It is indefensible that they should have the power to influence the outcome of elections in Britain when they have no commitment to Britain and no responsibility for the consequences or effects of their decisions.
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      Nor are we opposed in principle to the extension of the franchise merely because there are anomalies. There are anomalies. Clearly it is wrong that a British citizen should have committed an offence by failing to fill in the application to register whereas a resident living abroad has an option whether to register for the vote. We believe that that is wrong, and we oppose the extension of the franchise in that area, because we do not believe that those citizens living abroad who are making no financial contribution towards the maintenance of Britain should have any part to play in determining what Government shall be elected. Nor are we opposed merely because there are no sanctions for any false declarations made by British citizens living abroad. Those are all valid and important reasons why one should critically question, if not oppose, any such proposal substantially to enlarge the numbers of those eligible to vote in British elections. However, the main reason we oppose the amendment is that it offends against the basic principles of our democracy.
      Our constitution is based upon the notion of representative government in which single-Member individual constituencies elect single Members of Parliament and votes are cast by citizens, electors who live in the constituencies, and have a residential qualification in the constituencies. It is based upon the assumption that an elector carefully evaluates the candidate, his record and his views and has the opportunity, although he may not exercise it, to see, to meet, to question and to hear the candidate at public meetings. It is based upon the assumption that an elector, in exercising his right to vote and determining his choice of the competing candidates, will have regard to the issues in a locality in a local campaign and, indeed, in a national campaign.
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      None of that can happen if the elector resides abroad. He cannot have a proper or continuing relationship with his Member of Parliament. Although some hon. Members earlier in the debate suggested that such people can find out what is happening in this country by reference to British newspapers which are circulating abroad or by occasionally tuning in to the BBC world service, those are in no sense adequate substitutes for a long, continuing and thorough understanding and knowledge of British politics at a national level. They cannot provide an effective means for British citizens living abroad, sometimes in the most remote parts of the world, to have ready access to what is happening in the locality, in the community and in the constituency in which they are nominally registered or to knowledge of the Member of Parliament whom they are supposed to be able to hold to account and for whom they will be able to cast a vote for or against at any subsequent election. That kind of relationship or intimacy is not possible, yet it is crucial to our democracy and to our relationship with constituents and electors who are residing abroad and may have been so resident for a considerable time.
      Mr. Beith: If the hon. Gentleman thinks that those matters are essential, why does he believe that postal votes or proxy votes should be allowed to be exercised by persons resident abroad who have a property qualification in this country?
      Mr. Kilroy-Silk: I am establishing the principle, which I think most hon. Members have always acknowledged and accepted, but which in certain cases

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      may not be able to be policed. We all acknowledge that the hon. Gentleman and his party make a great play of the number of multiple registrations that occur. We know that they occur. There may be a good case for doing away with them. We recognise that in practice it is difficult to stop that practice, still less to police it. In no way am I trying to suggest that the kind of individuals to whom the hon. Gentleman refers should possess that right. I am realistic enough to acknowledge that there is no means by which one can prevent it. All those British citizens—and we are talking now about 600,000—were they to purchase property in the country and, quite misleadingly, fill in their electoral registration forms to suggest that they are resident permanently at the relevant time presumably could get away with it. One would not want to approve or endorse that, but I see no way at present in which one could police it.
      Mr. J. Enoch Powell: The hon. Gentleman was speaking as if the ownership of property in the constituency entitles the owner to be registered. Surely that is not the case. A registration which was claimed on grounds of ownership of property surely ought to be rejected by the registration officer. If I may say so, I think that underlay the intervention of the hon. Member for Berwick-upon-Tweed (Mr. Beith).
      Mr. Kilroy-Silk: The right hon. Member is quite right. This is based not on the ownership of property but on the register of residents at a particular time. That principle, which we believe is important, underlines our democracy, and therefore ought to be protected.
      If it be the case that those British citizens resident abroad cannot have a continuing understanding and knowledge of what is happening in a particular constituency over the period of a Parliament, even through the best efforts of the airmail editions of The Times or of the world service 24-hour broadcast, they cannot keep up with a campaign in a local election or a national election in which the issues arise on a daily basis and the campaign is fast-moving and changes daily.
      British citizens living abroad do not see the daily effect of the Government's policies. They do not feel the consequences of unemployment and the destruction of our major cities. They do not suffer the results of cuts in education, social services and health provision. They have not witnessed the destruction of our environment and the quality of our life. They do not participate in the daily dialogue and debate with their fellow citizens, which is so crucial in moulding and sustaining political attitudes and decisions on the way in which individuals will vote.
      That sort of knowledge and intimacy is impossible to acquire while living abroad. It is clear that it could not be sustained if, as the hon. Members for Corby (Mr. Powell) and for Lewes (Mr. Rathbone) suggest, British citizens resident abroad were able to vote in perpetuity in British elections. They advanced an extraordinary, indefensible and absurd suggestion in taking the opposite view and the Committee had the good sense to discard it.
      The arguments of principle against extending the franchise to British citizens resident abroad are powerful and compelling. The Government have not addressed themselves to the issue of principle. Instead, they have had a clear regard, as always, to their own narrow self-interest. Conservative Governments do nothing else.
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      They have a clear, conspicuous and deliberate regard for their own self-interest. Apart from the arguments of principle, that in itself is a good and sufficient reason for my right hon. and hon. Friends to vote against the clause this evening.
      Sir John Farr: It is regrettable that we are being asked to support the amendment. I did not find it possible to support that which it seeks when the Committee divided earlier. The hon. Member for Knowsley, North (Mr. Kilroy-Silk) has talked about British citizens resident abroad not being able to keep fully up to date with United Kingdom affairs. No one would expect the BBC to have the ability to enable them to do so. The occupants of the Opposition Front Bench have treated the BBC as a tuppenny affair of no account whatsoever, which provides a service that is not listened to abroad.
      Mr. Kilroy-Silk rose—
      Sir John Farr: No, I shall not give way to the hon. Gentleman. I have listened to him for quite a bit today and I shall not give way now. I shall be prepared to let him intervene in a moment.
      Mr. Kilroy-Silk: I have spoken only once in this debate.
      Sir John Farr: And that was for too long.
      Mr. Kilroy-Silk: I am grateful to the hon. Gentleman for allowing me to intervene. I wanted to correct what he has said. I am not critical of the BBC's world service. It is a service that I hold in high esteem. I listen to it a great deal and no doubt I shall listen to it when I leave this place tonight. I was taking up the comments of other hon. Members, who seem to think that the service provided by the BBC by means of its world service is sufficient to allow British citizens living abroad to know exactly what is happening in the constituencies in which they have a vote. It is clear that it is not. It is not intended to provide that information and it cannot be a substitute for living in a British constituency.
      Sir John Farr: I am grateful to the hon. Gentleman for making that clear. No one could suggest that an individual could base his opinions on British domestic politics, or on those of any other country, on the strength of a radio programme being broadcast from that country. However, the BBC's world service is an opinion-maker abroad. Its current affairs programmes are highly regarded and it is listened to avidly in every English-speaking country of the world, and in most non-English-speaking countries. I have taken the trouble, with a battery pocket radio, to listen to the BBC on the short wave in most countries of the world and the programmes have come over very well and clearly.
      Ex-British residents who are still British citizens but who have probably lost the vote in the United Kingdom still have their national daily newspaper sent out from time to time from London or wherever. They have their own local newspapers in Africa and Asia. Most of the countries within those continents are basically English-speaking. The media are delivered in English.
      The most important item of English news of which people in other countries are far more abreast than we in London is the state of the English football league. The second most important item is the state of English domestic politics—which party is favoured for election, which party is doing well and which is doing badly. I do

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      not accept that people who go to live abroad—perhaps earning valuable foreign currency for Britain—are out of touch with all that matters in Britain after as short a period as seven years.
      The position is even worse now because of the last series of Divisions. The seven-year period was bad enough, but it has been reduced to five years. That is a ridiculously short period. I agreed with what my hon. Friends the Members for Corby (Mr. Powell) and for Lewes (Mr. Rathbone) said about the privilege that should be automatically associated with a British passport holder — having the vote as long as he or she wishes to exercise it. My hon. Friends mentioned the fact that many of the people who went abroad earned valuable money for Britain and our balance of payments. My hon. Friends did not have time to mention one point, but I believe it is right for the Committee to bear this fact in mind. Many of those people who are living in African and Asian countries are agents for British invisible earnings. They are engaged largely in transmitting insurance to Lloyds and the London insurance market and in helping with the consignment and shipping of goods around the world and may not come to Britain for a number of years.
      I know people who are intensely proud of being British and who, in a calendar year, can earn a great deal directly for our balance of payments but have not been on an electoral register for 10 or 15 years. I do not believe that it is right for the Committee to say, "We shall reduce that period from seven years to five years so that anyone who has forgotten the events of the recent past in Britain will be disenfranchised." I believe, nevertheless, that five years is better than the previous position when people overseas did not receive the vote.
      I admire the memory of my hon. Friend the Under-Secretary of State. He may recall that, when corresponding with me in recent months about the proposed change in the legislation, he told me that seven years was the period during which a person would be entitled to vote in British elections after leaving the United Kingdom. In good faith I told my constituents who had gone abroad that the Government undertook to stipulate a seven-year period. I shall now have to explain—I do not know how to do so, because I did not vote with the Government last time—how a sudden shift of opinion after many years of deliberations can be justified in changing the period from seven years to five years.
      In addition to having a good memory, my hon. Friend the Under-Secretary of State is a sensible and balanced Minister. I hope that he will say that this measure will be undertaken for a trial five-year period and that, after that trial, the Government will introduce another Bill to abolish the provision altogether.
      Mr. Beith: I do not propose to add a great deal to what I said about the amendments, which also went to the heart of the issue of overseas voting. It is obvious that overseas voting has been a part of our electoral pattern for a long time for service voters and for others who work overseas but maintain their electoral qualifications in this country. They can do so, as was mentioned earlier, not merely by virtue of the ownership of property, to which I referred, but by the occupation of property or the claiming of residence. That is what it is all about. They can make that claim in respect of a parental home long after they have, for all normal purposes, ceased to reside there.
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      We have referred, and will refer again, to the wide way in which a residence is defined and interpreted in British electoral law. I make the point to underline the fact that many people who are already abroad exercise voting powers in the precise circumstances which the hon. Member for Knowsley, North thought unsuitable.
      9.15 pm
      There are arguments of principle against any departure from the notion that one must be resident in the country to exercise a vote in it. Those arguments have been set aside previously for similar reasons, but they exist, and the right hon. Member for South Down (Mr. Powell) pressed them. They do not outweigh the reasonable claim that citizens of this country, often serving its interests abroad, have to exercise an influence upon the Government who greatly affect their lives, as they affect the lives of those resident in the country.
      The justice of such a claim is recognised by most of the other democracies with which we deal. It is wrong to apply to those people some greater test of their ability to put a cross in the ballot paper than is applied to citizens here. Were such a test to be applied, many of them would pass it with flying colours and would demonstrate a greater awareness of and following of affairs in this country than is shown by many of our countrymen when they vote. That is not the issue.
      We are not seeking to apply an education test. It almost takes us back to the days when people could not vote in many southern states of America unless they passed an entremely partial test of knowledge of the American constitution, which was often applied more rigorously to those with a black skin than to those with a white one. We do not apply such a test. There is no reason why we should raise such a point in this context as an argument against extending the franchise.
      I do not believe that the Labour Front Bench is primarily motivated by an argument of principle. It has drawn the conclusion that two characteristics are possessed by many of those who live abroad and might wish to vote in this country. One of the suggestions that comes sometimes from the Front Bench, and sometimes from muttered interventions, is that such people are, by and large, disloyal and that by their decision not to live in this country they have forfeited their claim to any vote here. I dismiss that claim, but it is repeated. Earlier in the debate — for those who questioned it — there were cries of "Strasbourg votes" and other such terms of derision from hon. Members around me. I believe that there are those in the Labour party who choose to see residence abroad as a fundamental disloyalty to this country. That is nonsense.
      The second characteristic attributed to people living abroad is the likelihood that they will not vote in any large proportion for the Labour party. I have no idea whether that is so. The Labour party has no idea either. Were they even to follow the proportions of people within the United Kingdom, they will not vote in large numbers for the Labour party. They merely reflect trends in the United Kingdom.
      I fear that the Labour party's apprehension of how such votes will be cast has primarily motivated it tonight. That is not the basis upon which we should be arguing the matter. There are reasonable grounds for accepting the claim of people living abroad, who are often serving the

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      needs and interests of this country, to exercise voting rights here. I shall therefore support the inclusion of the clause in the Bill.
      Mr. William Powell: This is one of the clauses which was capable of improvement in Committee. It has been altered, but in my judgment it has been worsened as a result of the Committee's decision. No improvement has been secured — exactly the reverse. Nevertheless, a principle has been established for the first time which I hope will be capable of enlargement in the future. It is that British citizens resident abroad should be enabled to vote at our elections.
      The hon. Member for Knowsley, North (Mr. Kilroy-Silk) did neither himself nor the Labour party any service by the manner in which he chose to advance the case of the official Opposition, and I have no doubt that the hon. Member for Berwick-upon-Tweed (Mr. Beith) correctly analysed the motives behind that. It is absurd to dwell at such length on tax exiles, fugitives and emigres. The great majority of people who would qualify under this provision come into no such category. They are working abroad, usually for the good of this country and to its very substantial advantage. The emphasis placed on fugitives and the like in the weeks and months during which the Bill has been under public discussion is patently absurd. Virtually all fugitives would be disqualified in any event because of their previous criminal convictions. It is inconceivable that people who have emigrated should choose to register, let alone to vote in this country, and the same applies to tax exiles. It is utterly unjust to place so much emphasis on entirely negative factors.
      The hon. Member for Knowsley, North relied on what he described as two fundamental princples of British democracy — representational government and the intimacy between elector and candidate, which he said was essential to the working of our democracy. Representational government is in no way affected either by the original Bill or by the amendment that has now been passed. In other equally democratic sytems the principle that we have now begun to accept is already part of the law. No one would seriously challenge the quality of representational government in the French National Assembly because French citizens are entitled to vote even if they are resident abroad. Equally, no United States citizen would dream of suggesting that the quality of representational democracy—each member representing an identifiable geographical constituency — is in any sense diminished because nationals resident abroad are entitled to vote in United States elections. It is equally wrong to suggest that the quality of our representational democracy will be diminished as a result of the small step that we have taken today. On the contrary, it will be improved and for that, at least, I welcome the acceptance of the principle, even though it has been severely qualified by my right hon. and learned Friend the Home Secretary.
      As for the intimacy which the hon. Member for Knowsley, North regards as essential to our democracy, we would naturally like to have the most intimate possible democracy. The hon. Member for Rother Valley (Mr. Barron) suggested that even in the most intensely contested constituency contact between candidate and electors scarcely rose to more than 1 per cent. during the course of an election campaign. I believe that it is rather
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      more than that, but let no one deceive himself that it is possible for any candidate to become intimately involved with and known to every elector in the course of his campaign.
      At the time of an election, any register will contain the names of thousands of electors who have moved to other constituencies, often a great distance away. Is it seriously suggested that it is fundamental to our democracy that such people should travel hundreds of miles to follow the kind of campaign that may have characterised ancient Greece but which has very little coincidence with current democratic practice in this country?
      There are many imperfections in our system, and the existence of removed voters is one of the most severe. However, in laying so much emphasis on such matters, without appearing to realise how blemished and inaccurate his remarks were, the hon. Member for Knowsley, North was almost selling himself and his party short.
      Not only today, but on other occasions, the right hon. Member for Blaenau Gwent (Mr. Foot) has concentrated a great deal of gunfire on whether the Government have played fair over the method of consultation. The right hon. Gentleman and I seem to have one thing in common. In the past week, only one of our national newspapers has not brought to the attention of its readers the stories and suggestions made in all the other national newspapers. It may be that the right hon. Gentleman, like myself, reads only that one newspaper. We were therefore unaware of what was appearing in other sections of the press. Experience may have taught the right hon. Gentleman to doubt the quality of other newspapers. However, surely no one can be in any doubt about the fact that there have been substantial consultations between the Government and the Opposition about the form that the debate should take.
      I am very dissatisfied with the outcome. However, for the first time, we have enshrined a new principle in our law — a principle which will enable our constitution to evolve as it should, rather than to become static and ossified, surrounded by the carbuncles of history, which have no place in our evolving society. Because we have achieved that much, and because of the manner in which my right hon. and learned Friend presented his arguments in support of that principle, even though he went on to urge that it should be limited, I must, for all my disappointment, support the inclusion of the clause in the Bill.
      Mr. David Winnick: The essence of the remarks of the hon. Member for Corby (Mr. Powell) is clear. He does not want any distinction to be made between those who live here and those who live abroad. He believes that, however long someone has lived abroad, he should continue to have the vote here. Like the hon. Member for Berwick-upon-Tweed (Mr. Beith), the hon. Gentleman seriously distorted, in a malicious manner, the grounds of our opposition to the clause. They did not present our case fairly—but perhaps that was not to be expected.
      The hon. Member for Harborough (Sir J. Farr) said that the Bill is an improvement because at least it introduces the principle that people who do not live in this country should be able to vote. One could argue that the Bill is an improvement to the extent that the number of years has rightly been reduced from seven to five. However, that improvement does not deal with our basic objections to the clause.

      237
      Extending the right to vote to those not resident in this country is a major constitutional departure. Reference has been made to the Select Committee. I know that my right hon. Friend the Member for Blaenau Gwent (Mr. Foot), like myself, is not an enthusiastic admirer of Select Committees. I voted against the establishment of the new Select Committees. However, I am, I suppose, to some extent an opportunist in that, once the Select Committees had been established by an overwhelming majority, I decided that I might as well serve on one. I am serving on one now. I am sure that my right hon. Friend would be interested in the subject of its inquiries, which is the working of the special branch.
      Before I was a member of it, the Select Committee recommended, amongst other things, that the right to vote should be extended to those who live in EEC countries. It did not recommend that the right be extended as widely as the Government propose. What is so wrong is that people who are to be given the right to vote need not have any link with a constituency. It is not suggested that they should be paying income tax. It will indeed be representation without taxation. Nor is it suggested that people should own a property or be a tenant of a property in the constituency. There is absolutely no link. The case for introducing this new concept would be stronger if such qualifications were included.
      In a highly marginal constituency—
      Mr. Tristan Garel-Jones: Like the hon. Gentleman' s.
      9.30 pm
      Mr. Winnick: No, I am glad to say; but like several Conservative Members' constituencies where the majority is perhaps only a few hundred votes or less it is likely that the decision about who will be the Member of Parliament will be made by those who live abroad. That is quite wrong. People who have no link with a constituency and who do not pay taxes should not be able to determine who represents a constituency. Some unkind things have just been said about the majority of the hon. Member for Corby.
      Whatever might happen in other countries—the hon. Member for Corby has given some examples—there is an important link between residence and voting which should continue. Right hon. and hon. Members have referred to how the right to vote has been extended previously. The extension of the franchise to women has been mentioned. In all previous campaigns, especially with the extension of the franchise to women, there was tremendous pressure in the country. Indeed, we all know that some women suffered greatly in prisons as a result of campaigning for their right to vote. It is almost impossible to believe that that was only 70 years or so ago. The same was true for the campaign to remove property qualifications. I see no pressure to extend the right as it is now proposed.
      Mr. Foot: There was at the Conservative party conference.
      Mr. Winnick: That is quite likely. The right to vote is being extended purely for political gain. The Conservative party has concluded that more votes are to be gained in this way than in keeping the present position. If it had come to any other conclusion, we should not now be considering clause 1. It is unfortunate that the
      238
      Conservatives are using their majority, as they have on other issues, to advance their own cause. For those reasons and others which I and my right hon. and hon. Friends have explained, I believe that there is every reason for voting against clause 1.
      Dr. Marek: We live in a world of nation states and we vote to elect a Government so that we can be guided and have rules to enable us to live together. If certain people decide to leave one nation state to live in another, for whatever reason, there is no reason why they should be given a vote in the state that they have left.
      We have a representative form of government. Such a form of government is never perfect. We can argue whether we should have proportional representation or a first-past-the-post system. There are different ways of trying to achieve the aim, which is that every person should be able to vote on and in full knowledge of every issue. Clearly that is impossible. We must approximate, and so we have representatives.
      In deciding to whom we grant the franchise we must do the same. Should we grant it willy-nilly and to everyone who has been in the United Kingdom and leaves it? That end of the spectrum was suggested by the hon. Member for Corby (Mr. Powell). I vehemently oppose it. Should we decide not to grant the vote to anybody living abroad, even if a person has lived abroad for a couple of years in the service of the country, such as in the armed forces? Most hon. Members would agree that there should be provision for granting service men and women the vote. There is provision for other people such as members of the British Council and diplomats to vote, but there are injustices. People who work for the World Health Organisation do not get the vote if they leave the United Kingdom.
      Sir Raymond Gower: Why would the hon. Gentleman extend the vote to diplomats and the other people whom he classified but refrain from extending it to a person who works, for example, in the oil industry in the Gulf?
      Dr. Marek: The hon. Gentleman misheard me. At present the vote is extended to diplomats, who must make a declaration every year, whereas service voters can make one declaration which will run from year to year. The vote is already given to those people.
      However, the vote is not given to people who work abroad because of their employment or occupation. It is a grey area and we must draw a line where we think we can provide the best form of representation. I disagree with the clause. It is a better clause now because it gives people who have left the country only five years during which they can exercise their right to vote as opposed to seven years. But there is a blanket covering for anyone who leaves the country for five years to vote. The hon. Member for Caithness and Sutherland (Mr. Maclennan), in advocating an indefinite time, said that people abroad may return from time to time, but a person could return for a couple of weeks every year for 40 years. At least as of now they can do it for only five years. Nevertheless, that is not good enough.
      We have three options. We can extend the vote by this open method, which is the Government's choice. We can do it by insisting that people who move abroad have the vote in the country in which they live. That is certainly possible. The Select Committee's report gives a list of

      239
      countries where the right of vote is given. That point has not yet been made tonight. In Antigua, Bermuda, Australia, Barbados, Canada — some hon. Members mentioned the United States, but not Canada — Dominica, Grenada, Guyana, Jamaica, Mauritius, New Zealand, St. Lucia, St. Vincent, Surinam, and Trinidad and Tobago we have the right to vote.
      Mr. Stanbrook: All those countries are members of the British Commonwealth; they are states in which all citizens are British subjects. Does the hon. Gentleman agree that there is a difference between Commonwealth states and foreign states?
      Dr. Marek: I am talking about general principles, and the Government have chosen the first principle that I mentioned. The second way to tackle the problem is to allow people to vote in their country of residence. An EC committee considered that matter, but I do not know whether it has produced a report.
      The third way to tackle the problem is to limit the franchise to some categories of people, and to say that we will give the vote to people who go abroad, provided that they are in the armed services, in the Diplomatic Service, employees of the World Health Organisation, employees of a British company, or those in the service of, and connected with, British companies. We would not give the vote to those who go abroad simply to become tax exiles or—this has not been mentioned in the debate — as fugitives from British justice.
      Mr. Douglas Hogg: Has not the Opposition Front Bench tried to achieve that by amendment No. 29, which might be accepted? If it is accepted, it will have the effect of excluding tax exiles from the franchise.
      Dr. Marek: We have not yet reached that amendment, but I hope that it will be accepted by the House. It will go some way to solving the problem, but it will nevertheless be imperfect. I would prefer the vote to be given on a definite basis. Only those who go abroad for valid reasons should be allowed to vote here. Ideally, those who wish to vote in Britain should be liable to general taxation here. Why did not the Government think of that?
      My right hon. Friend the Member for Blaenau Gwent (Mr. Foot) said that the expatriate votes could make all the difference in a general election. Of the 16 memoranda included in the minutes of evidence to the Home Affairs Committee, No. 6 was submitted by the Conservative and Unionist Central Office, and No. 8 was submitted by the British Conservative Association in France. Conservative Members must realise who is interested in such matters. Memorandum No. 9 is a supplementary document from the British Conservative Association in France, and memorandum No. 11 was submitted by the British Conservative Association in Belgium. We should compare that with the one memorandum submitted by each of the other political parties.
      However impartial or objective one wishes to be, one cannot completely dissociate oneself from the political consideration of whether the change will benefit one party or another. I would not believe an hon. Member who said that he was being dispassionate and objective and that anything he said should be taken as the gospel truth.
      The Bill has been improved, but I still do not like it, and I shall vote against clause stand part.
      Mr. Mellor: We have been over this course before, but I was grateful to the hon. Member for Knowsley, North (Mr. Kilroy-Silk) for taking us on a tour of his speech in the House last December, which was a re-working of what he said in the debate on the White Paper last June.
      The surprising thing about the proposal is not that it has been made, but that it has taken so long for it to come before the House. Britain is a trading nation—a Labour Prime Minister once said that exporting is fun—and we all know that some people spend an increasing amount of time working overseas for Britain. As I said on Second Reading, the increase in overseas work knows no class barriers. One need only look at the people travelling on an aircraft to the Gulf to know that it has nothing to do with class. Therefore, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, it is a sign of the lack of self-confidence of the Labour party that its members should be so troubled by the proposal.
      9.45 pm
      The Government attach importance to obtaining as much consensus as possible for the proposal. We must also consider the practicalities involved in enabling the Bill to reach the statute book in a sensible timescale. For that reason, I unashamedly say to the those of my hon. Friends who are unhappy about the restriction of five years that this is an appropriate bite out of the problem. It may not be as much as they would wish, but it represents all that is reasonably practicable at this time. I am confident that after a general election, in which these arrangements will work well, it will be possible for the House of Commons to return to the issue in the next Parliament. I for one would be all in favour of the House doing so. I believe that the clause is a worthy part of the Bill and I commend it to the Committee.
      Question put, That the clause, as amended, stand part of the Bill:
      The Committee divided: Ayes 243, Noes 165.

      Division No. 82]

      [9.45 pm

      AYES

      Adley, Robert

      Cope, John

      Alexander, Richard

      Cranborne, Viscount

      Atkins, Rt Hon Sir H.

      Crouch, David

      Atkins, Robert (South Ribble)

      Dicks, Terry

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

      Dorrell, Stephen

      Baker, Nicholas (N Dorset)

      Douglas-Hamilton, Lord J.

      Banks, Robert (Harrogate)

      Edwards, Rt Hon N. (P'broke)

      Beaumont-Dark, Anthony

      Emery, Sir Peter

      Beith, A. J.

      Fairbairn, Nicholas

      Bendall, Vivian

      Favell, Anthony

      Best, Keith

      Fletcher, Alexander

      Boscawen, Hon Robert

      Fookes, Miss Janet

      Bottomley, Peter

      Forman, Nigel

      Braine, Rt Hon Sir Bernard

      Forsyth, Michael (Stirling)

      Brandon-Bravo, Martin

      Forth, Eric

      Brittan, Rt Hon Leon

      Fox, Marcus

      Brooke, Hon Peter

      Franks, Cecil

      Browne, John

      Fraser, Peter (Angus East)

      Bruce, Malcolm

      Freeman, Roger

      Bruinvels, Peter

      Freud, Clement

      Buchanan-Smith, Rt Hon A.

      Gale, Roger

      Butcher, John

      Galley, Roy

      Carlile, Alexander (Montg'y)

      Gardiner, George (Reigate)

      Carlisle, Rt Hon M. (W'ton S)

      Gardner, Sir Edward (Fylde)

      Carttiss, Michael

      Garel-Jones, Tristan

      Cartwright, John

      Glyn, Dr Alan

      Cash, William

      Goodlad, Alastair

      Chalker, Mrs Lynda

      Gower, Sir Raymond

      Clark, Dr Michael (Rochford)

      Greenway, Harry

      Clegg, Sir Walter

      Gregory, Conal

      Conway, Derek

      Griffiths, E. (B'y St Edm'ds)

      Coombs, Simon

      Griffiths, Peter (Portsm'th N)

      241

      Ground, Patrick

      Montgomery, Sir Fergus

      Grylls, Michael

      Morrison, Hon C. (Devizes)

      Hancock, Mr. Michael

      Moynihan, Hon C.

      Hannam, John

      Mudd, David

      Hargreaves, Kenneth

      Neale, Gerrard

      Harris, David

      Needham, Richard

      Harvey, Robert

      Nelson, Anthony

      Haselhurst, Alan

      Neubert, Michael

      Havers, Rt Hon Sir Michael

      Nicholls, Patrick

      Hawkins, C. (High Peak)

      Norris, Steven

      Hayes, J.

      Onslow, Cranley

      Hayhoe, Barney

      Oppenheim, Phillip

      Hayward, Robert

      Oppenheim, Rt Hon Mrs S.

      Heddle, John

      Page, Richard (Herts SW)

      Henderson, Barry

      Paisley, Rev Ian

      Heseltine, Rt Hon Michael

      Patten, Christopher (Bath)

      Hickmet, Richard

      Patten, John (Oxford)

      Hicks, Robert

      Pawsey, James

      Hind, Kenneth

      Peacock, Mrs Elizabeth

      Hogg, Hon Douglas (Gr'th'm)

      Percival, Rt Hon Sir Ian

      Holland, Sir Philip (Gedling)

      Pollock, Alexander

      Holt, Richard

      Portillo, Michael

      Hordern, Peter

      Powell, William (Corby)

      Howard, Michael

      Powley, John

      Howarth, Gerald (Cannock)

      Price, Sir David

      Howells, Geraint

      Proctor, K. Harvey

      Hughes, Simon (Southwark)

      Raffan, Keith

      Hunt, John (Ravensbourne)

      Raison, Rt Hon Timothy

      Jackson, Robert

      Rees, Rt Hon Peter (Dover)

      Jenkin, Rt Hon Patrick

      Renton, Tim

      Johnson Smith, Sir Geoffrey

      Rhys Williams, Sir Brandon

      Jones, Robert (W Herts)

      Ridley, Rt Hon Nicholas

      Jopling, Rt Hon Michael

      Rifkind, Malcolm

      Kellett-Bowman, Mrs Elaine

      Robinson, Mark (N'port W)

      Key, Robert

      Roe, Mrs Marion

      Kirkwood, Archy

      Rossi, Sir Hugh

      Knight, Gregory (Derby N)

      Rost, Peter

      Knowles, Michael

      Rowe, Andrew

      Knox, David

      Rumbold, Mrs Angela

      Latham, Michael

      Ryder, Richard

      Lawler, Geoffrey

      Sainsbury, Hon Timothy

      Lawrence, Ivan

      St. John-Stevas, Rt Hon N.

      Lee, John (Pendle)

      Sayeed, Jonathan

      Leigh, Edward (Gainsbor'gh)

      Shaw, Giles (Pudsey)

      Lennox-Boyd, Hon Mark

      Shaw, Sir Michael (Scarb')

      Lightbown, David

      Shelton, William (Streatham)

      Lilley, Peter

      Shepherd, Colin (Hereford)

      Lloyd, Ian (Havant)

      Shersby, Michael

      Lloyd, Peter, (Fareham)

      Sims, Roger

      Lord, Michael

      Skeet, T. H. H.

      Luce, Richard

      Smith, Tim (Beaconsfield)

      Lyell, Nicholas

      Soames, Hon Nicholas

      McCrea, Rev William

      Speed, Keith

      McCrindle, Robert

      Spence, John

      McCurley, Mrs Anna

      Spencer, Derek

      Macfarlane, Neil

      Spicer, Jim (W Dorset)

      MacKay, John (Argyll & Bute)

      Squire, Robin

      Maclean, David John

      Stanley, John

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

      Steen, Anthony

      McQuarrie, Albert

      Stern, Michael

      Madel, David

      Stevens, Lewis (Nuneaton)

      Major, John

      Stewart, Allan (Eastwood)

      Malins, Humfrey

      Stewart, Andrew (Sherwood)

      Malone, Gerald

      Stewart, Ian (N Hertf'dshire)

      Marland, Paul

      Stradling Thomas, J.

      Marlow, Antony

      Sumberg, David

      Marshall, Michael (Arundel)

      Tapsell, Sir Peter

      Mates, Michael

      Taylor, John (Solihull)

      Maude, Hon Francis

      Taylor, Teddy (S'end E)

      Maxwell-Hyslop, Robin

      Thomas, Rt Hon Peter

      Mayhew, Sir Patrick

      Thompson, Donald (Calder V)

      Meadowcroft, Michael

      Thompson, Patrick (N'ich N)

      Mellor, David

      Thorne, Neil (Ilford S)

      Merchant, Piers

      Thornton, Malcolm

      Meyer, Sir Anthony

      Thurnham, Peter

      Miller, Hal (B'grove)

      Townsend, Cyril D. (B'heath)

      Mills, Iain (Meriden)

      Tracey, Richard

      Miscampbell, Norman

      Trippier, David

      Moate, Roger

      Twinn, Dr Ian

      Monro, Sir Hector

      Vaughan, Sir Gerard

      242

      Viggers, Peter

      Wilkinson, John

      Waldegrave, Hon William

      Wolfson, Mark

      Walker, Bill (T'side N)

      Wood, Timothy

      Wallace, James

      Woodcock, Michael

      Waller, Gary

      Yeo, Tim

      Walters, Dennis

      Young, Sir George (Acton)

      Wardle, C. (Bexhill)

      Younger, Rt Hon George

      Watson, John

      Watts, John

      Tellers for the Ayes:

      Wells, Sir John (Maidstone)

      Mr. Ian Lang and

      Wheeler, John

      Mr. Tony Durant.

      Whitfield, John

      NOES

      Adams, Allen (Paisley N)

      Hamilton, W. W. (Central Fife)

      Anderson, Donald

      Hattersley, Rt Hon Roy

      Archer, Rt Hon Peter

      Haynes, Frank

      Ashton, Joe

      Heffer, Eric S.

      Atkinson, N. (Tottenham)

      Hogg, N. (C'nauld & Kilsyth)

      Banks, Tony (Newham NW)

      Home Robertson, John

      Barnett, Guy

      Hoyle, Douglas

      Barron, Kevin

      Hughes, Robert (Aberdeen N)

      Beckett, Mrs Margaret

      Hughes, Roy (Newport East)

      Beggs, Roy

      Hughes, Sean (Knowsley S)

      Bell, Stuart

      Janner, Hon Greville

      Benn, Tony

      John, Brynmor

      Bennett, A. (Dent'n & Red'sh)

      Jones, Barry (Alyn & Deeside)

      Bermingham, Gerald

      Kaufman, Rt Hon Gerald

      Blair, Anthony

      Kilroy-Silk, Robert

      Boothroyd, Miss Betty

      Kinnock, Rt Hon Neil

      Boyes, Roland

      Lamond, James

      Bray, Dr Jeremy

      Leadbitter, Ted

      Brown, Gordon (D'f'mline E)

      Leighton, Ronald

      Brown, Hugh D. (Provan)

      Lewis, Ron (Carlisle)

      Callaghan, Jim (Heyw'd & M)

      Lewis, Terence (Worsley)

      Campbell, Ian

      Lloyd, Tony (Stretford)

      Canavan, Dennis

      Lofthouse, Geoffrey

      Carter-Jones, Lewis

      Loyden, Edward

      Clark, Dr David (S Shields)

      McCartney, Hugh

      Clarke, Thomas

      McCusker, Harold

      Clay, Robert

      McDonald, Dr Oonagh

      Clwyd, Mrs Ann

      McKay, Allen (Penistone)

      Cocks, Rt Hon M. (Bristol S.)

      Mackenzie, Rt Hon Gregor

      Cohen, Harry

      McNamara, Kevin

      Concannon, Rt Hon J. D.

      Madden, Max

      Cook, Frank (Stockton North)

      Maginnis, Ken

      Cook, Robin F. (Livingston)

      Marek, Dr John

      Cowans, Harry

      Marshall, David (Shettleston)

      Crowther, Stan

      Mason, Rt Hon Roy

      Cunliffe, Lawrence

      Maxton, John

      Cunningham, Dr John

      Maynard, Miss Joan

      Dalyell, Tam

      Michie, William

      Davies, Ronald (Caerphilly)

      Mikardo, Ian

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

      Molyneaux, Rt Hon James

      Deakins, Eric

      Morris, Rt Hon A. (W'shawe)

      Dewar, Donald

      Morris, Rt Hon J. (Aberavon)

      Dixon, Donald

      Nellist, David

      Dormand, Jack

      Oakes, Rt Hon Gordon

      Douglas, Dick

      O'Brien, William

      Dubs, Alfred

      O'Neill, Martin

      Duffy, A. E. P.

      Patchett, Terry

      Dunwoody, Hon Mrs G.

      Pendry, Tom

      Eastham, Ken

      Pike, Peter

      Evans, John (St. Helens N)

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

      Farr, Sir John

      Prescott, John

      Fatchett, Derek

      Randall, Stuart

      Field, Frank (Birkenhead)

      Redmond, M.

      Fisher, Mark

      Rees, Rt Hon M. (Leeds S)

      Flannery, Martin

      Richardson, Ms Jo

      Foot, Rt Hon Michael

      Roberts, Allan (Bootle)

      Forrester, John

      Roberts, Ernest (Hackney N)

      Forsythe, Clifford (S Antrim)

      Robertson, George

      Foster, Derek

      Robinson, G. (Coventry NW)

      Foulkes, George

      Robinson, P. (Belfast E)

      Fraser, J. (Norwood)

      Rogers, Allan

      George, Bruce

      Ross, Wm. (Londonderry)

      Golding, John

      Rowlands, Ted

      Gould, Bryan

      Sedgemore, Brian

      Gourlay, Harry

      Sheerman, Barry

      Hamilton, James (M'well N)

      Sheldon, Rt Hon R.

      243

      Shore, Rt Hon Peter

      Thompson, J. (Wansbeck)

      Short, Ms Clare (Ladywood)

      Thorne, Stan (Preston)

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

      Tinn, James

      Silkin, Rt Hon J.

      Torney, Tom

      Skinner, Dennis

      Walker, Cecil (Belfast N)

      Smith, C.(Isl'ton S & F'bury)

      Wardell, Gareth (Gower)

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

      Wareing, Robert

      Smyth, Rev W. M. (Belfast S)

      Weetch, Ken

      Snape, Peter

      Welsh, Michael

      Soley, Clive

      White, James

      Spearing, Nigel

      Wigley, Dafydd

      Stanbrook, Ivor

      Wilson, Gordon

      Stewart, Rt Hon D. (W Isles)

      Winnick, David

      Stott, Roger

      Young, David (Bolton SE)

      Strang, Gavin

      Straw, Jack

      Tellers for the Noes:

      Taylor, Rt Hon John David

      Mr. Robin Corbett and

      Thomas, Dafydd (Merioneth)

      Mr. John McWilliam.

      Thomas, Dr R. (Carmarthen)

      Question accordingly agreed to.
      Clause 1, as amended, ordered to stand part of the Bill.
      It being Ten o'clock, THE CHAIRMAN left the Chair to report Progress and ask leave to sit again.
      Committee report Progress.

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Representation of the People Bill may be proceeded with, though opposed, until any hour.

  Business of the House
  The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): With permission, Mr. Speaker, I wish to make a statement about a rearrangement of business on Thursday. There will now be a debate on the Opposition censure motion, and the proposed debate on the Royal Air Force will be postponed until a later date.
  Mr. Peter Shore: The House will recognise that this is the second business statement that we have had in two days. Whether we shall have any further business statements during the week perhaps events alone will decide. I thank the right hon. Gentleman for conceding on Tuesday evening that which he denied on Monday afternoon.
  Mr. Biffen: Only the foolish optimism of the Opposition would determine the number of additional statements.
  Mr. A. J. Beith: has the rearrangement of Government business consequent upon the announcement in any way reduced the likelihood that an Opposition day will be available next week to discuss the miners' strike?
  Mr. Biffen: The topic for that day has not yet been announced.
  Mr. Andrew Rowe: In view of the importance of the change in business, is there any reasonable supposition that the Opposition will turn out for the debate in any worthwhile numbers?
  Mr. Biffen: That question should not be directed at me. In any case, I advise my hon. Friend not to be provocative.
  Mr. Tam Dalyell: As the debate on the RAF has been unavoidably postponed, would it not be wise to have a Government statement on the revelations of Mr. Duncan Campbell in the New Statesman?
  Mr. Speaker: Order. Questions on the business statement must be confined to what the Leader of the House has announced.
  Mr. Dalyell: It refers to RAF spy planes using Punta Pirenas and Hawker Hunters being sold to Chile for questionable reasons, and the urgency of this is that there have been strong complaints from both Chile and Argentina in relation to the Beagle channel and the matter should be cleared up one way or another. We had hoped to clear it up during the RAF debate, but it looks as though the Pinochet Government have been aided greatly by a British Government who have said that they would have nothing to do with juntas. Let us have the truth on this.
  Mr. Biffen: Such is the ingenuity of the hon. Gentleman that I am dumbfounded that he should not think that it could be contained within the terms of the Opposition censure motion.
  Mr. Robert Atkins: Bearing in mind the urgent decisions that need to be taken in regard to RAF matters on the new trainer and the next fighter for the RAF, will my right hon. Friend look closely at the urgent need for an RAF debate and arrange it as soon as he possibly can?
  Mr. Biffen: Most certainly.
  Mr. Dennis Skinner: Can the Leader of the House tell us to what extent the massive amount that has

  245
  been lost as a result of the miners' strike will have any bearing on the censure motion? Can he also give us an assurance that the iron lady with the plastic pound will be speaking?
  Mr. Biffen: I am sure, Mr. Speaker, that if the hon. Gentleman is able to catch your eye in the debate on Thursday he will be only too pleased to make then the point that he now trails.

  Representation of the People Bill
  Again considered in Committee.
  Representation of the People Bill
    Clause 2

      REGISTRATION OF BRITISH CITIZENS OVERSEAS
      Dr. Marek: I beg to move amendment No. 29, in page 3, line 22, at end insert—
      '(e) declares that he intends to return to the United Kingdom for permanent residence'.
      "I think it is clearly unjust that diplomats and Crown servants can have the right to vote but people who go abroad because of their occupation, service or employment with private companies or perhaps working for the World Health Organisation, do not have this right. We would like to see, if it is possible, the right to vote by proxy to be extended to those abroad because of their occupation, service or employment — citizens of the United Kingdom who have the intention to return."
      As hon. Members will realise, I have been reading from the minutes of evidence given to the Select Committee for Home Affairs in 1982. The witness, Mr. Mitchell, who gave that evidence upon examination by the Select Committee is the organisation and legal officer of the Conservative party.
      The Conservative party clearly believes that citizens of the United Kingdom should have the vote if they go abroad because of their occupation, service or employment and, indeed—and importantly for the amendment—have the intention to return. The amendment seeks to do precisely this. It is a way of ensuring that people claim a vote if they have the intention to come back to the United Kingdom at some time.
      As I said earlier in Committee, I do not believe that clause 1, which we have now passed, should have been passed because it is an open-ended clause and allows anybody to claim the vote whether he is a tax exile, a fugitive or properly going abroad because of his employment or service to the country. The amendment seeks to tighten this up so that such people will have to go to the consulate and sign a declaration. That declaration would have to be kept by the consular officials and passed on to the electoral registration officer in the constituency in which the vote would be cast.
      I refer the Committee to the memorandum submitted in evidence to the Select Committee on Home Affairs by the Society of Local Authority Chief Executives:
      "It would seem necessary for there to be some sort of annual renewal of registration through British embassies or consulates abroad, who would have the responsibility of checking the facts stated".
      In evidence, Mr. Jones, chief executive of Gillingham borough council, stated:
      "I think it depends really, Chairman, on how far you think these facts need to be verified. Personally, I would think they should be verified with considerable consideration, and I would prefer the consulate or embassy."
      While Mr. Jones may have been talking about slightly different matters, he was giving his opinion on whether people should be able to claim the vote because of their occupation or service. That applies to the amendment. The declaration must not be treated as something that anyone can sign in his back kitchen and send to the consulate or elsewhere. It should be a proper declaration that is given in at the consulate or some other appropriate place where its existence is duly noted.
      I hope that the Government will be persuaded by this moderate amendment. It is not designed to create a

      247
      watertight procedure, but I feel that my right hon. and hon. Friends would be considerably relieved if the Government were to accept the spirit of the amendment, redraft it and insert it in its redrafted form into the Bill.
      Mr. Mellor: I congratulate the hon. Member for Wrexham (Dr. Marek) on making his debut on the Opposition Front Bench. It was good to have the opportunity of hearing his oratory from rather closer quarters than it has been my privilege to enjoy before this evening.
      It is no part of the Government's case that as a matter of principle the franchise should be extended to Britons living overseas who have no intention of returning to the United Kingdom. We take no exception to a declaration which would set out in appropriate words that the individual concerned intended at some stage to return. We need to find the appropriate way of putting that on to the statute book. It is no criticism of the amendment that it may not be the best way of achieving what we want. Would the hon. Gentleman be satisfied with the undertaking that the Government would bring forward an amendment at a later stage that would have the same effect as the amendment which he has introduced this evening if he were to seek leave to withdraw the amendment?
      Mr. Douglas Hogg: If the phraseology of the subsection is to be redrafted, it is important that it is done in such a form that the purpose of the provision is achieved. It is rather an interesting subsection, which is designed to strike, I believe, at tax exiles. No tax exile — that is someone who wishes to arrange his capital affairs in such a way as to escape capital gains tax or capital transfer tax — would be able to sign the declaration. To do so would have the effect of causing the original domicile to be resumed. If someone wishes to achieve a foreign domicile they will not be able to sign the declaration. I agree with that because I do not see why tax exiles should have a vote in United Kingdom elections. When the declaration comes to be redrafted in accordance with the undertaking that has been given by my hon. Friend the Under-Secretary of State, I hope that steps will be taken to ensure that no tax exile can properly sign it.
      Mr. Bermingham: Perhaps it is appropriate, on the back of the amendment, to draw to the Government's attention amendment No. 28, which has not been called but which is in the same vein. I draw it to the Government's attention because the declaration needs to be signed in the United Kingdom so that it is enforceable in the United Kingdom. When someone signs the declaration to obtain the vote that is referred to in amendment No. 29, and if we are to have jurisdiction for the penalties that are subsequently to occur, jurisdiction must arise as a result of a decision of the Court of Appeal that the declaration has been signed here. The offence, if it turns out to be one, must be one that is committed here, and the courts here will have the jurisdiction to deal with the matter.
      When the Government come to redraft in accordance with their undertaking, it will need to be written into the amendment in its amended form that the undertaking is executed in the United Kingdom. I accept unreservedly that it would be ludicrous to say that those who are abroad and who seek to take advantage of clause 1 will all have
      248
      to come home to sign the declaration. That is why I suggested in amendment No. 28 that anyone who sought to apply for a continuation of his vote after 1 January 1986 had only to make a declaration in the United Kingdom. I did not attempt to impose upon those already living abroad and intending to return and take up the advantage offered by clause 1 the obligation of having to return to make the application. Although I stand by my overall position, I accept that those people should be able to make the declaration in the consulates in the country in which they are residents.
      The point at the heart of this matter is that those who intend to sign the declaration to keep their vote should do so after the Bill comes into law.
      10.15 pm
      Sir Raymond Gower: I should like to underline what my hon. Friend the Member for Grantham (Mr. Hogg) said and I hope that my hon. Friend the Under-Secretary of State will consider his point. The intention behind the amendment is much to the liking of both sides of the Committee. I hope that the hon. Member for Wrexham (Dr. Marek) will be prepared to take advantage of the offer made by my hon. Friend the Under-Secretary of State.
      Dr. Marek: I thank the Under-Secretary of State for his kind words. My appearance at the Dispatch Box was not too traumatic. I ask the hon. Gentleman to pay attention to what has been said about the amendment by hon. Members, including myself and the hon. Members for Vale of Glamorgan (Sir R. Gower) and for Grantham (Mr. Hogg). I believe that there is a strong measure of cross-party support for this measure. I should like the Committee to allow me to withdraw the amendment so that the Government can table a proper amendment on report. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Question proposed, That the clause stand part of the Bill.
      Mr. J. Enoch Powell: There has been much jubilation among Conservative Members at the acceptance of a major constitutional innovation in the form of clause 1 by a majority of rather less than half the Government's normal majority. The significance of that innovation was underlined by the Home Secretary in that umbrella speech of his, which was intended to foreshadow the agreements and concessions that might be made at later stages of the Bill's consideration. The right hon. and learned Gentleman said that he was friendly to the widest application of the principle, and regarded what is now contained in clause 1 as only an instalment of the eventual grant of the franchise in the United Kingdom to British citizens, as such, not resident in the United Kingdom.
      In the light of that statement, I draw to the Committee's attention that wicked little paragraph (3)(b) which states:
      "that the declarant is a British citizen".
      It would have been impossible for the Home Secretary to have said what he said—indeed, it probably would have been impossible for clause 1 to have been introduced at all—had it not been for the British Nationality Act 1981, which created such a thing as British citizenship—a status that is all but exclusively identified with connection with the United Kingdom.
      In past times, the qualification for the franchise in the United Kingdom was to be a British subject. Had that

      249
      condition still remained, it would have been impossible to assert the principle that a British subject, wherever resident in the world, should have the right to vote in the United Kingdom. The introduction of the narrower, national concept of "British citizen" made possible such a move and such a declaration from the Home Secretary.
      Of course, we have the relics of that former dispensation in our present franchise law which, as the hon. Member for Orpington (Mr. Stanbrook) reminded the Committee at an earlier stage, extends the vote not only to British citizens but to Commonwealth citizens and to citizens of the Irish Republic who, ever since 1920, we have been endeavouring to persuade ourselves are still really British subjects, only they have not woken up to this fact and are a bit slow to recognise it. Those three categories are still included in the franchise within the United Kingdom; but be it noted that, contrary to some incautious statements which have been made about the effect of the Bill during these debates, it is not any elector in this country who can go abroad and for five years retain the right to vote at elections in the United Kingdom—it is only an elector who is a British citizen who can go abroad and retain that right.
      Mr. Mellor: Quite right.
      Mr. Powell: The Parliamentary Under-Secretary says, "Quite right". Amen, say I; but we have revealed the thorn within the rose or, perhaps from another point of view, the silver lining behind the cloud for those of us who did not want clause 1. This is the beginning of a train of thought which will lead us to the conclusion that if it is to be the proposition that the British citizen is, as such, entitled to the franchise, then we will say that that, of necessity, applies inside as well as outside the United Kingdom. We have laid the foundation tonight of an erection which was not perhaps intended by some of the supporters of the clause, though it may not have been entirely absent from the ruminations of the Government and their advisers.
      We have laid the foundations for a reform of the law of the franchise in the United Kingdom whereby it will logically be restricted to British citizens, that being in all normal acceptance the meaning of "citizen"—a person who exclusively has the right of franchise, as well as the other appurtenances of citizenship, in his own country. So, be it noted, as they say, Sir Paul, as we part with clause 2, that that wicked little subsection 3(b) may point to the way to a reform in our franchise inside the United Kingdom which many have considered to be logical and which many have argued for over many years.
      It is a way that things have of happening—that what one has most desired comes from an unwelcome quarter. There is a Virgilian tag to that effect with which I shall not trouble the House—
      Mr. Michael Meadowcroft: Go on.
      Mr. Powell: All right, it is the one which starts "qua minime reris": "from a quarter from which you least expect it, namely, from the Greeks, shall salvation come." I hope that the hon. Member for Leeds, West (Mr. Meadowcroft) is willing to accept a spontaneous translation. It is a common experience that those of us who have sought the prevalence of an argument or a cause find the way to achieve it open from an unexpected and even disagreeable direction. I believe that may prove to be the case with sub-section 3(b) of the apparently innocent clause 2.
      Mr. Stanbrook: The purport of subsection 3(b)
      "that the declarant is a British citizen"
      is intended, presumably, to ensure that the person who claims the right to vote in United Kingdom elections is in fact a British citizen. One presumes that he will be able to prove that he is, but there is no provision in the Bill that he should so prove, and the only sanction against someone claiming to be a British citizen and who is not is in clause 11, which is the penalty clause.
      The essence of giving a vote to someone living abroad lies in the fact that there is no jurisdiction in British courts overseas, and therefore clause 11 is inoperative so long as the person involved remains overseas. Apparently, therefore, a person who declares that he is a British citizen cannot be challenged and his vote must be allowed even though the local British consul may have good reason to believe that the declaration is false. How on earth do the Government intend to get over that?
      Mr. Bermingham: I hope that the Minister will answer that point, which I stressed earlier. If the declaration is not made in the United Kingdom before the person goes abroad, our courts will have no jurisdiction and the penalties will be unenforceable. I concede that for a person who goes abroad and stays abroad there is a semi-deterrent in the knowledge that if he makes a false declaration he can be prosecuted if he ever returns to the United Kingdom. Nevertheless, if the penalties are to bite we must ensure that our courts have jurisdiction.
      Mr. Mellor: Extra-territoriality is created by paragraph 62 of schedule 3, so if the person returns within the jurisdiction he can be tried here as though the offence had been committed within the jurisdiction. If he does not return, that is a different matter, but that applies to a whole range of other offences.
      No one is under any obligation to accept a declaration if he does not believe it to be true. This applies equally to a British consul and to the electoral registration officer. If the officer believes that the assertion made is not true, he has complete discretion to refuse to enter the person's name on the register. It will thus be a matter for both officers to do their duty as they see it.
      On that basis, I commend clause 2 to the Committee.
      Question put and agreed to.
      Clause 2 ordered to stand part of the Bill.

    Clause 3

      EXTENSION OF FRANCHISE FOR EUROPEAN ASSEMBLY ELECTIONS
      Amendments made: No. 30, in page 5, line 8, leave out ''seven' and insert 'five'.
      No. 31, in page 5, line 16, leave out subsection (5).—[Mr. Kaufman.]
      Question proposed, That the clause, as amended, stand part of the Bill.
      Mr. Bermingham: We intend to oppose clause 3, as amended. It seems ludicrous to extend the right to vote in European elections to people resident in non-European countries. It is absurd to argue that people resident in, say, south America have an interest in European elections. I make no secret of my own view of the usefulness, or lack of it, of the European Parliament, but, leaving aside one's personal views on the whole European question, if we are

      251
      to be part of Europe the European Parliament should be elected by people resident within the European area. For that reason, I ask the Committee to oppose the clause.
      Question put, That the clause, as amended, stand part of the Bill:—
      The Committee divided: Ayes 233, Noes 169.

      Division No. 83]

      [10.29 pm

      AYES

      Atkins, Rt Hon Sir H.

      Hawkins, C. (High Peak)

      Atkins, Robert (South Ribble)

      Hayes, J.

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

      Hayhoe, Barney

      Banks, Robert (Harrogate)

      Hayward, Robert

      Beaumont-Dark, Anthony

      Heddle, John

      Beith, A. J.

      Henderson, Barry

      Bendall, Vivian

      Heseltine, Rt Hon Michael

      Best, Keith

      Hickmet, Richard

      Boscawen, Hon Robert

      Hicks, Robert

      Bottomley, Peter

      Higgins, Rt Hon Terence L.

      Brandon-Bravo, Martin

      Hind, Kenneth

      Brittan, Rt Hon Leon

      Hogg, Hon Douglas (Gr'th'm)

      Brooke, Hon Peter

      Holland, Sir Philip (Gedling)

      Bruce, Malcolm

      Holt, Richard

      Bruinvels, Peter

      Hordern, Peter

      Buchanan-Smith, Rt Hon A.

      Howard, Michael

      Butcher, John

      Howarth, Gerald (Cannock)

      Carlile, Alexander (Montg'y)

      Howells, Geraint

      Carlisle, Rt Hon M. (W'ton S)

      Hughes, Simon (Southwark)

      Carttiss, Michael

      Hunt, John (Ravensbourne)

      Cartwright, John

      Jackson, Robert

      Cash, William

      Jenkin, Rt Hon Patrick

      Chalker, Mrs Lynda

      Johnson Smith, Sir Geoffrey

      Clark, Dr Michael (Rochford)

      Jones, Robert (W Herts)

      Clegg, Sir Walter

      Jopling, Rt Hon Michael

      Conway, Derek

      Joseph, Rt Hon Sir Keith

      Coombs, Simon

      Kellett-Bowman, Mrs Elaine

      Cope, John

      Key, Robert

      Crouch, David

      Kirkwood, Archy

      Dicks, Terry

      Knight, Gregory (Derby N)

      Dorrell, Stephen

      Knowles, Michael

      Douglas-Hamilton, Lord J.

      Knox, David

      Durant, Tony

      Lang, Ian

      Edwards, Rt Hon N. (P'broke)

      Latham, Michael

      Emery, Sir Peter

      Lawler, Geoffrey

      Fairbairn, Nicholas

      Lawrence, Ivan

      Farr, Sir John

      Lee, John (Pendle)

      Favell, Anthony

      Leigh, Edward (Gainsbor'gh)

      Fookes, Miss Janet

      Lennox-Boyd, Hon Mark

      Forman, Nigel

      Lightbown, David

      Forsyth, Michael (Stirling)

      Lilley, Peter

      Forth, Eric

      Lord, Michael

      Fox, Marcus

      Luce, Richard

      Franks, Cecil

      McCrindle, Robert

      Fraser, Peter (Angus East)

      McCurley, Mrs Anna

      Freeman, Roger

      Macfarlane, Neil

      Gale, Roger

      MacKay, Andrew (Berkshire)

      Galley, Roy

      MacKay, John (Argyll & Bute)

      Gardiner, George (Reigate)

      Maclean, David John

      Gardner, Sir Edward (Fylde)

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

      Garel-Jones, Tristan

      McQuarrie, Albert

      Glyn, Dr Alan

      Madel, David

      Goodlad, Alastair

      Major, John

      Gower, Sir Raymond

      Malins, Humfrey

      Greenway, Harry

      Malone, Gerald

      Gregory, Conal

      Marland, Paul

      Griffiths, E. (B'y St Edm'ds)

      Marlow, Antony

      Griffiths, Peter (Portsm'th N)

      Marshall, Michael (Arundel)

      Ground, Patrick

      Mates, Michael

      Grylls, Michael

      Maxwell-Hyslop, Robin

      Hamilton, Hon A. (Epsom)

      Mayhew, Sir Patrick

      Hancock, Mr. Michael

      Meadowcroft, Michael

      Hannam, John

      Mellor, David

      Hargreaves, Kenneth

      Merchant, Piers

      Harris, David

      Meyer, Sir Anthony

      Haselhurst, Alan

      Miller, Hal (B'grove)

      Havers, Rt Hon Sir Michael

      Mills, Iain (Meriden)

      252

      Mills, Sir Peter (West Devon)

      Smith, Tim (Beaconsfield)

      Miscampbell, Norman

      Soames, Hon Nicholas

      Moate, Roger

      Speed, Keith

      Monro, Sir Hector

      Spence, John

      Montgomery, Sir Fergus

      Spencer, Derek

      Moynihan, Hon C.

      Spicer, Jim (W Dorset)

      Mudd, David

      Squire, Robin

      Neale, Gerrard

      Stanley, John

      Needham, Richard

      Steen, Anthony

      Nelson, Anthony

      Stern, Michael

      Newton, Tony

      Stevens, Lewis (Nuneaton)

      Nicholls, Patrick

      Stewart, Allan (Eastwood)

      Norris, Steven

      Stewart, Andrew (Sherwood)

      Onslow, Cranley

      Stewart, Ian (N Hertf'dshire)

      Oppenheim, Phillip

      Stradling Thomas, J.

      Oppenheim, Rt Hon Mrs S.

      Sumberg, David

      Page, Richard (Herts SW)

      Taylor, John (Solihull)

      Patten, Christopher (Bath)

      Taylor, Teddy (S'end E)

      Patten, John (Oxford)

      Thomas, Rt Hon Peter

      Pawsey, James

      Thompson, Donald (Calder V)

      Peacock, Mrs Elizabeth

      Thompson, Patrick (N'ich N)

      Percival, Rt Hon Sir Ian

      Thorne, Neil (Ilford S)

      Pollock, Alexander

      Thornton, Malcolm

      Portillo, Michael

      Thurnham, Peter

      Powell, William (Corby)

      Townsend, Cyril D. (B'heath)

      Powley, John

      Tracey, Richard

      Price, Sir David

      Trippier, David

      Proctor, K. Harvey

      Twinn, Dr Ian

      Raffan, Keith

      Vaughan, Sir Gerard

      Rees, Rt Hon Peter (Dover)

      Waddington, David

      Renton, Tim

      Waldegrave, Hon William

      Rhys Williams, Sir Brandon

      Walker, Bill (T'side N)

      Ridley, Rt Hon Nicholas

      Wallace, James

      Rifkind, Malcolm

      Waller, Gary

      Robinson, Mark (N'port W)

      Wardle, C. (Bexhill)

      Roe, Mrs Marion

      Watson, John

      Rossi, Sir Hugh

      Watts, John

      Rost, Peter

      Wells, Sir John (Maidstone)

      Rowe, Andrew

      Wheeler, John

      Rumbold, Mrs Angela

      Whitfield, John

      Ryder, Richard

      Wilkinson, John

      Sainsbury, Hon Timothy

      Wolfson, Mark

      St. John-Stevas, Rt Hon N.

      Wood, Timothy

      Sayeed, Jonathan

      Woodcock, Michael

      Shaw, Giles (Pudsey)

      Yeo, Tim

      Shaw, Sir Michael (Scarb')

      Young, Sir George (Acton)

      Shelton, William (Streatham)

      Younger, Rt Hon George

      Shepherd, Colin (Hereford)

      Shersby, Michael

      Tellers for the Ayes:

      Silvester, Fred

      Mr. Peter Lloyd and

      Sims, Roger

      Mr. Michael Neubert.

      Skeet, T. H. H.

      NOES

      Adams, Allen (Paisley N)

      Clwyd, Mrs Ann

      Anderson, Donald

      Cocks, Rt Hon M. (Bristol S.)

      Archer, Rt Hon Peter

      Cohen, Harry

      Ashton, Joe

      Concannon, Rt Hon J. D.

      Atkinson, N. (Tottenham)

      Cook, Frank (Stockton North)

      Banks, Tony (Newham NW)

      Cook, Robin F. (Livingston)

      Barnett, Guy

      Corbyn, Jeremy

      Barron, Kevin

      Cowans, Harry

      Beckett, Mrs Margaret

      Craigen, J. M.

      Beggs, Roy

      Crowther, Stan

      Bell, Stuart

      Cunliffe, Lawrence

      Benn, Tony

      Cunningham, Dr John

      Bennett, A. (Dent'n & Red'sh)

      Dalyell, Tam

      Bermingham, Gerald

      Davies, Ronald (Caerphilly)

      Blair, Anthony

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

      Boothroyd, Miss Betty

      Deakins, Eric

      Boyes, Roland

      Dewar, Donald

      Bray, Dr Jeremy

      Dixon, Donald

      Brown, Gordon (D'f'mline E)

      Dobson, Frank

      Brown, Hugh D. (Provan)

      Dormand, Jack

      Callaghan, Jim (Heyw'd & M)

      Douglas, Dick

      Campbell, Ian

      Dubs, Alfred

      Canavan, Dennis

      Duffy, A. E. P.

      Carter-Jones, Lewis

      Dunwoody, Hon Mrs G.

      Clark, Dr David (S Shields)

      Eadie, Alex

      Clarke, Thomas

      Eastham, Ken

      253

      Evans, John (St. Helens N)

      Molyneaux, Rt Hon James

      Fatchett, Derek

      Morris, Rt Hon A. (W'shawe)

      Faulds, Andrew

      Morris, Rt Hon J. (Aberavon)

      Field, Frank (Birkenhead)

      Nellist, David

      Fisher, Mark

      O'Brien, William

      Flannery, Martin

      O'Neill, Martin

      Foot, Rt Hon Michael

      Patchett, Terry

      Forrester, John

      Pendry, Tom

      Forsythe, Clifford (S Antrim)

      Pike, Peter

      Foster, Derek

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

      Foulkes, George

      Powell, William (Corby)

      Fraser, J. (Norwood)

      Prescott, John

      George, Bruce

      Radice, Giles

      Godman, Dr Norman

      Randall, Stuart

      Golding, John

      Redmond, M.

      Gould, Bryan

      Rees, Rt Hon M. (Leeds S)

      Gourlay, Harry

      Richardson, Ms Jo

      Hamilton, James (M'well N)

      Roberts, Allan (Bootle)

      Harrison, Rt Hon Walter

      Roberts, Ernest (Hackney N)

      Haynes, Frank

      Robertson, George

      Heffer, Eric S.

      Robinson, G. (Coventry NW)

      Hogg N. (C'nauld & Kilsyth)

      Rogers, Allan

      Home Robertson, John

      Ross, Wm. (Londonderry)

      Hoyle, Douglas

      Rowlands, Ted

      Hoyle, Robert (Aberdeen N)

      Sedgemore, Brian

      Hughes, Roy (Newport East)

      Sheerman, Barry

      Hughes, Sean (Knowsley S)

      Sheldon, Rt Hon R.

      Janner, Hon Greville

      Short, Ms Clare (Ladywood)

      John, Brynmor

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

      Jones, Barry (Alyn & Deeside)

      Silkin, Rt Hon J.

      Kaufman, Rt Hon Gerald

      Skinner, Dennis

      Kilroy-Silk, Robert

      Smith, C. (Isl'ton S & F'bury)

      Lambie, David

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

      Lamond, James

      Smyth, Rev W. M. (Belfast S)

      Leadbitter, Ted

      Snape, Peter

      Leighton, Ronald

      Soley, Clive

      Lewis, Ron (Carlisle)

      Spearing, Nigel

      Lewis. Terence (Worsley)

      Stanbrook, Ivor

      Litherland, Robert

      Stott, Roger

      Lloyd, Tony (Stretford)

      Strang, Gavin

      Lofthouse, Geoffrey

      Straw, Jack

      Loyden, Edward

      Taylor, Rt Hon John David

      McCartney, Hugh

      Thomas, Dafydd (Merioneth)

      McCusker, Harold

      Thompson, J. (Wansbeck)

      McDonald, Dr Oonagh

      Thorne, Stan (Preston)

      McKay, Allen (Penistone)

      Tinn, James

      McKelvey, William

      Walker, Cecil (Belfast N)

      Mackenzie, Rt Hon Gregor

      Wardell, Gareth (Gower)

      McNamara, Kevin

      Wareing, Robert

      McTaggart, Robert

      Welsh, Michael

      Madden, Max

      White, James

      Maginnis, Ken

      Wigley, Dafydd

      Marek, Dr John

      Williams, Rt Hon A.

      Marshall, David (Shettleston)

      Wilson, Gordon

      Mason, Rt Hon Roy

      Young, David (Bolton SE)

      Maxton, John

      Maynard, Miss Joan

      Tellers for the Noes:

      Michie, William

      Mr. John McWilliam and

      Mikardo, Ian

      Mr. Robin Corbett.

      Mitchell, Austin (G't Grimsby)

      Question accordingly agreed to.
      Clause 3, as amended, ordered to stand part of the Bill.
      Clause 4 ordered to stand part of the Bill.
      To report Progress and ask leave to sit again.—[Mr. Brittan.]
      Committee report Progress; to sit again tomorrow.

  M25 (Reigate-Leatherhead)
  Motion made, and Question proposed, That this House do now adjourn—[Mr. Lang.]
  10.42 pm
  Mr. George Gardiner: I wish to raise the matter of work on the Reigate-Leatherhead section of the M25, which, with the Leatherhead interchange and the section from Leatherhead to Wisley, constitutes a vital missing link in the orbital route round London, with long sections of completed motorway stretching either side of it. Within the unfinished stretch, work on the interchange is well advanced. Despite earlier difficulties, work is proceeding well between Leatherhead and Wisley. Work is furthest behind on the section between Reigate and Leatherhead.
  The contract for the latter section was given to Bovis-Birse, which since a management buy-out has become Birse-Farr. The consulting engineers are W. S. Atkins and Partners of Epsom.
  The completion of the section is of strategic importance for traffic movement in all of south-east England, and of acute environmental importance to Reigate, through the narrow streets of which the traffic thunders on its way between the eastbound M25 and the westbound A25, and to those who live along the A217 and A240 to the north, who suffer all the traffic that follows the signed route between the two open sections of the M25. Those who live by the A240, which is single carriageway south of Ewell, must suffer the passage of more vehicles each day than are carried by the six-lane M40. In Reigate and along the A217/240 this heavy traffic is increased during the summer as holiday traffic from the midlands and the west drives to and from the channel ports. My hon. Friend the Member for Epsom and Ewell (Mr. Hamilton) is as concerned for the welfare of his constituents as I am for mine.
  It was therefore with great anticipation that we awaited the promised completion and opening of the Reigate-Leatherhead section in the spring of this year. Imagine the dismay when we learnt last summer that the contractor had been granted a six-month extension until 25 August this year. That meant that our overloaded roads and overburdened communities had to endure the vibration, noise, fumes and danger from all that traffic through another summer.
  But worse was to come. No sooner were we through last summer and into autumn than Bovis-Birse announced that it was stopping all work on that section, pulling off all equipment and laying off men, for the six months which the construction industry defines as winter, from 21 October to 21 April. A six-month extension of contract time plus a six-month holiday from further work calls for an explanation.
  No satisfactory explanation has been given. The first excuse advanced was the wet spring of 1983, although one would have thought that some allowance was made for inclement weather when drawing up the contracts. That wet spring was followed by two good summers. However, I have my hon. Friend's assurance, in a letter to me dated 27 September 1983, that the weather was not a factor taken into account in granting the extension. The next excuse offered by Bovis-Birse was that the Department of Transport changed the specification for concrete used on motorways just before its programme for laying concrete

  255
  commenced. I would not criticise my hon. Friend for changing the specification to give greater durability to our motorways, and I do not question the fact that the necessary adjustment by the contractor would cost a little time—but as much as six months? The suggestion is not credible.
  Why was the contract extension granted? At this point, I must make it clear that this was not a decision of my hon. Friend or her colleagues. Under the Institution of Civil Engineers Conditions of Contract, fifth edition, it is the engineer appointed to supervise the works and administer the contract who is responsible for deciding whether an extension of contract time is appropriate, and for how long. Therefore, the decision was taken by W. S. Atkins, and my hon. Friend was informed of it later. It is all very fishy.
  It is hardly surprising that, when the cessation of work was announced soon after, it was suggested in my constituency that the extension of time owed more to cash flow problems at Bovis-Birse, and to the impending management buy-out, than to the weather or to concrete specifications, and even that a backhander might have been passed to the consulting engineers. I know enough of the repute of W. S. Atkins to discount that story, but the fact remains that no satisfactory explanation for an extension of as long as six months has ever been offered.
  Then there is the mystery surrounding the contractor's decision to cease all work during the winter months. I gather that, under the terms of his contract, he can do so, although my hon. Friend assured me in her letter of 27 September that it was open to the contractor to carry out winter concreting if he wished to do so. Senior officials of the Transport and General Workers Union tell me that they have never encountered a case of a contractor pulling all men off an unfinished site in winter. It is noteworthy that Fairclough, the contractor on the Leatherhead-Wisley section, has kept some men on the site throughout. The concrete could easily have been laid on the Reigate-Leatherhead section in November; indeed, only half a kilometre of road remains to be done. Meanwhile, other staff could have continued lesser work in preparation for full resumption.
  I do not doubt that Birse-Farr, as the contractor is now called, is within its contractual rights to cease all work for six months, just as it would incur no penalty if the road was not ready for handover before 25 August; and I accept that my hon. Friend has no power to order it to do otherwise. But Birse-Farr badly needs to win back some good will, and, although my hon. Friend has no power, she has influence. After all, the Government are the client, and my hon. Friend or whoever succeeds her will have further motorway contracts to place. If Birse-Farr is to secure any of those, it would be wise to turn in a better performance on this contract than it hitherto has; and the same goes for W. S. Atkins's supervision of it. I submit that if Birse-Farr gets men back on to this site well ahead of 21 April, if it starts concreting earlier weather permitting, and if it then works flat out, it will be possible to have the motorway open before the contract deadline of 21 August. I urge my hon. Friend to apply her utmost endeavours to that end.
  10.49 pm
  The Minister of State, Department of Transport (Mrs. Lynda Chalker): Before I deal with the particular inquiry of my hon. Friend the Member for Reigate (Mr. Gardiner) — and I thank him for bringing the issue before the House tonight—I should like to confirm that the M25 continues to be top priority in our road programme. I am pleased to say that we are well on course for achieving our target of opening the entire 122-mile orbital route by the end of 1986. Already we have 86 miles open to traffic and the remaining 36 miles are all under construction.
  I well understand the anxiety of my hon. Friend the Member for Reigate and of my hon. Friend the Member for Epsom and Ewell (Mr. Hamilton). The Leatherhead-Reigate section of the motorway, with which my hon. Friends are particularly concerned, is of vital importance to the whole of that southern ring of the M25. I share the disappointment felt in the constituency of my hon. Friend the Member for Reigate that the road will not be open sooner than August of this year. But there are some clear engineering and contractual reasons for the situation that he has described so clearly.
  It may be helpful if I start by explaining the contractual position. It is not one that comes before the House on more than the rare occasion. The contract for the Leatherhead-Reigate section was let in April 1983 to the Bovis-Birse joint venture, which was set up for that stretch of road. The intention was that the three contracts that would fill the gap between Wisley and Reigate should be ready to be opened together, or more or less together, in the spring of 1985.
  The Department's contracts for this type of work follow the conditions of contract laid down by the Institution of Civil Engineers, as my hon. Friend said. These conditions were established some 20 years ago, and have worked without problem in the intervening years in nearly all cases. But there is an integral part of the conditions which may not be well understood. It is that an independent and impartial engineer is appointed to supervise the works and administer the contract. W. S. Atkins and Partners, the consulting engineers, were appointed for this purpose for the Leatherhead-Reigate contract. This is in line with our policy that the responsibility for the supervision of the Department's larger road contracts should be undertaken independently of Government and thus in the private sector. I know that my hon. Friend welcomes the amount of work that is done in the private sector away from the Government machine.
  Clause 44 of the conditions lays down that an extension of time for the completion of the works should be granted to the contractor by the independent engineer if circumstances arise that the contractor was not aware of the time when he prepared his tender. Such circumstances could include exceptional adverse weather conditions, unforeseen ground conditions, changes in the design required by the engineer or the employer, or any other unforeseen circumstances. It is the engineer's responsiblity—and his alone—to decide whether an extension is appropriate and, if so, the period for which it may be granted after treating each case on its merits.
  In this case, the engineer, W. S. Atkins and Partners, granted extensions of time because of an unforeseen problem with piling to one of the structures and because as my hon. Friend said, of an improvement in the Department's specification for concrete roads.

  257
  This later change was introduced nationally as part of our continuing programme to improve the quality and durability of our roads. It will have long-term benefits by reducing traffic delays associated with future maintenance, and I am sure that it will be fully justified for such an important road as the M25. The extensions of time would not ordinarily have led to an eight-month delay in completion had it not been for the fact that the original contract was priced on the basis of summer concreting.
  This is not unusual, as contractors frequently cease concrete laying during the winter. The extensions, of necessity, carried the contract completion date beyond 21 October, which is the seasonal limit of summer concreting. This meant that the contractor was entitled to have sufficient extension to enable him to complete the work in the following summer season, which officially commences on 21 April. The new contract completion date, therefore, became 26 August 1985. My hon. Friend referred at one point to 25 August, but I understand that he agrees that in fact it is 26 August.
  The contractor is, therefore, entitled to take until 26 August 1985 to complete his work. It is for him to decide his own work programme to meet that completion date. However, if this new date were not met, liquidated damages would be payable.
  The firm—Bovis-Birse, now known as Birse-Farr—decided in November to cease all work for the winter and resume again in the spring. This is a decision that it is entitled to make under the contract, but I agree with my hon. Friend that it is most unreasonable.
  My hon. Friend is understandably concerned that the consultant is not required to refer requests for extensions of time to me in situations such as this. The consultant works closely with my officials, and he is keeping them advised of events. But I must re-emphasise that, within the terms of the contract, the decisions are those of the consultant, and it is for him to satisfy himself that the factors were outside the contractor's control when the consultants granted the extensions.
  My hon. Friend is aware from previous discussions that we have had that I have already ensured that my officials will remain in continued close contact with the consultant. Everything possible is being done to encourage the contractor, Birse-Farr, to press on as fast as possible with the work on this vitally important section of the M25 motorway.
  I fully appreciate that local residents who are anxiously awaiting the completion of the M25 will have found it difficult to understand why the contractor has chosen to close the site completely. However, having received the extension of time, he was exercising his right to take a management decision as to how the work should be completed within the contract period.
  The question has been asked why Bovis-Birse closed down in the winter, whereas the contractor on the nearby Wisley-Leatherhead section — Faircloughs — continued concreting well into December. I can only repeat that this is a matter for the management of the respective contractors to decide, bearing in mind that any work done during the winter months would not necessarily have a material effect on the completion of the works. In other words, there is work that may be done by a contractor who continues in the winter, but that will not necessarily speed up the end of the concrete paving that has to be laid in better weather.
  258
  As my hon. Friend now knows, we have no power to instruct the contractor to reopen the site. We might be able to induce him to do so by paying him what could be a substantial sum of money, but this would mean that budgets would be exceeded and, because of the difficulties associated with work in winter weather which I mentioned earlier, such additional payments as might be made would not necessarily represent value for money. Notwithstanding the priority that we give to the M25—I do not hesitate to re-emphasise that point — value for money must be achieved on every contract. I would not think it right to authorise additional expenditure on this contract which would inevitably be at the expense of other urgent road needs, particularly in view of the considerable uncertainties involved, and the use to which this money might be put.
  Although 21 April is the start of the summer concreting season, there is no reason why the contractor should not restart work on site before that date and my officials, through the consulting engineer, will be encouraging Birse-Farr to do so.
  My hon. Friend has made very clear his concern that the section of the motorway between Leatherhead and Reigate should be opened as soon as it is ready. The Leatherhead interchange is being completed ahead of contract and the Wisley to Leatherhead section will probably be ready prior to completion of the Leatherhead-Reigate section, so there should be no obstacle to opening the latter section immediately upon completion of work.
  I know that my hon. Friend has not been concerned with the related timings of the adjacent contracts, but for the sake of the record and for those who may read the report of our debate he will understand me when I say that if there should be a substantial difference between the opening dates of the two adjacent sections — Wisley to Leatherhead and Leatherhead to Reigate—there would be discussions with the local authorities involved. The last thing in the world that my hon. Friend and I want is that traffic that has travelled quite reasonably on the motorway should suddenly turn on to roads that were not built to take that type of traffic. It is against that eventuality that I must provide.
  I can assure my hon. Friend and the House that my Department is in no way complacent about the wider problem to which he has referred. As I said earlier, we attach very high priority to the completion of the M25, but we are concerned that the section between Wisley and Reigate should be completed as soon as possible. Existing traffic problems in Reigate, Ewell and other areas are badly affected by heavy goods vehicles and other orbital traffic. I well understand the disturbance, distress and inconvenience that this causes both to local residents and to the other road users. One of the reasons for building the M25 is to take traffic out of residential, shopping and commercial areas and we shall certainly do all in our power to see that the M25, in Surrey and the remainder of its length is completed as quickly as possible.
  I hope that my hon. Friend will realise from what I have said that we shall not let up in our efforts to get the contractors back on site as early as possible so that this section of the M25 can be completed as soon as possible. Only upon its completion will my hon. Friend realise with me why there is a need not only to get the job done as fast as possible but as thoroughly as possible and up to the specifications that the Department lays down so that the road shall have a proper life without interruption. I assure

  259
  my hon. Friend that we shall leave no stone unturned to make sure that the contractor has the M25 in his area open as soon as possible.
  260
  Question put and agreed to.
  Adjourned accordingly at three minutes past Eleven o' clock.

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

Second World War: Commemoration
The Lord Archbishop of York: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they intend to include representatives from the USSR and the Federal Republic of Germany in any celebrations to mark the 40th anniversary of the end of the Second World War in Europe.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, we are planning a national commemoration in this country and participation by our wartime and post-war allies is a factor we shall bear in mind when considering the form of that commemoration. As my right honourable friend the Prime Minister said in another place on 17th January, we shall expect many of the representatives in this country, either as ambassadors or high commissioners, to attend.
The Lord Archbishop of York: My Lords, may I thank the noble Lord for that Answer and welcome the fact that the Government are going to do something. May I press him by asking whether the Government are fully aware of the educational possibilities and also the possibilities for confirming peace which might be produced by some imaginative celebrations involving people from all the countries concerned in the war at various levels, including from the top level and Church leaders, as well as young people?
Lord Trefgarne: My Lords, I am sure that the most reverend Primate is right. We see the ceremonies that we plan to organise as being in the nature of a thanksgiving for the sacrifice that was offered during the World War and also for the nearly 40 years of peace which have followed.
Lord Elwyn-Jones: My Lords, can the noble Lord say how the termination of hostilities in the Far East will be celebrated? We should not overlook that equally important event.
Lord Trefgarne: My Lords, I certainly agree with the noble and learned Lord that we should not lose sight of the fact that there was the very considerable conflict in that part of the world at the same time. I think that we rather anticipate that these ceremonies should take into account the whole World War rather than two separate aspects of it.
Lord Airedale: My Lords, does the Minister agree that we do not want so much to emphasise
558
celebrations as remembrance, as we do on a particular Sunday every November? I think that the noble Lord was steering in that direction with his Answer.
Lord Trefgarne: My Lords, I am sure that the noble Lord is right. We most certainly agree.
Lady Saltoun: My Lords, in view of the fact that we gave thanks 40 years ago, does the noble Lord not think that we do too much celebrating of too many things too often?
Lord Trefgarne: My Lords, I think that the 40th anniversary of the ending of the Second World War is an important occasion and ought to be recognised in an appropriate way.

Nuclear Sites: Security
2.40 p.m.
Lord Hatch of Lusby: 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 rules of engagement issued by the Ministry of Defence to armed forces guarding nuclear installations take precedence over or are subordinate to Section 3 of the Criminal Law Act 1967.
Lord Trefgarne: My Lords, the rules of engagement issued to servicemen do not themselves constitute legal authorisation. They give guidance on the use of force based upon and consistent with the requirements of the law including, in England and Wales, Section 3 of the Criminal Law Act 1967.
Lord Hatch of Lusby: My Lords, the noble Lord will recall that on 14th January I asked him a similar Question. Is he aware—I am sure that he is—that Section 3 of the Criminal Law Act 1967 governs the use of force by members of Her Majesty's forces? What I am asking him now is whether the rules of engagement as issued to servicemen take precedence over the law or whether they are subordinate to it. According to all the published reports, those rules of engagement give the right to servicemen to shoot at unarmed civilians who are protesting and attempting to occupy nuclear installations. Which law takes precedence? Is it not the case—
Noble Lords: Order!
Lord Hatch of Lusby:—that if the Ministry of Defence has issued those rules of engagement despite the existing law—
Noble Lords: Order!
Lord Hatch of Lusby:—then it is an executive decision—a prerogative making of law by a department of state?
Lord Trefgarne: My Lords, the rules of engagement are of course confidential, so the noble Lord cannot be familiar with them. As I said on the earlier occasion

559
when he asked me about this matter, the criminal law applies to everybody, including servicemen.
Lord Cledwyn of Penrhos:. My Lords, this is admittedly a difficult area, but can the noble Lord say whether American servicemen defending non-nuclear equipment are in any way permitted to shoot at people they believe to be interfering with that equipment? I ask the question because this has appeared in several newspapers and I think it requires clarification.
Lord Trefgarne: My Lords, I can only again remind the noble Lord of the words I used on the earlier occasion when we discussed this matter; that is, that the rules of engagement permit the use of firearms only when life or vital national interests are threatened.
Lord Cledwyn of Penrhos: My Lords, is there any distinction between what a British serviceman is entitled to do and what an American serviceman is entitled to do in the same situation—that is, defending non-nuclear equipment?
Lord Trefgarne: No, my Lords, I am not aware of any distinction.
Lord Hatch of Lusby: My Lords—
Noble Lords: Order!
Lord Hatch of Lusby: My Lords, does the noble Lord recall that in answering a similar question on 14th January he made this statement in column 774 of Hansard:
"I can confirm that United States personnel involved in these duties are governed by exactly the same law as United Kingdom personnel"?
Is it the case that United States servicemen are entitled to shoot, on either nuclear or non-nuclear installations, against unarmed protesters? Do they come under the Visiting Forces Act, or do they come under Section 3 of the Criminal Law Act of 1967?
Lord Trefgarne: My Lords, the question of whether or not protesters are liable to be shot, as the noble Lord puts it, depends essentially, in fact, precisely, upon what they are doing.
Lord Hatch of Lusby: My Lords—
Noble Lords: Order!
Lord Hatch of Lusby: My Lords, that is not an answer to my question—
Noble Lords: Order!
Lord Hatch of Lusby: My Lords, do United States servicemen come under the same British law as British servicemen, or do they come under the Visiting Forces Act?
Noble Lords: Order!
Lord Trefgarne: My Lords, I am sorry to tell the noble Lord that I have not heard his question.
Lord Hatch of Lusby: My Lords, do American servicemen come under the Visiting Forces Act or under British law?
The Earl of Cork and Orrery: My Lords, I beg to move that the noble Lord be no more heard.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, the Question is that the noble Lord be no longer heard. As many as are of that opinion will say, "Content"?
Noble Lords: Content.
The Lord Chancellor: To the contrary, "Not-content"?
Noble Lords: Not-content.
The Lord Chancellor: Clear the Bar.
Lord Hatch of Lusby: My Lords, will the noble Lord answer my question?
The Lord Chancellor: My Lords, the Question has been put; the voices have been collected and I have ordered the Bar to be cleared.
2.48 p.m.
On Question, Whether the noble Lord be no longer heard?
Their Lordships divided: Contents, 103; Not-Contents, 59.

DIVISION NO. 1

CONTENTS

Airedale, L.

Gisborough, L.

Alexander of Tunis, E.

Glanusk, L.

Allerton, L.

Glenarthur, L.

Ampthill, L.

Harvington, L. [Teller.]

Auckland, L.

Holderness, L.

Avon, E.

Home of the Hirsel, L.

Belhaven and Stenton, L.

Hylton-Foster, B.

Beloff, L.

Inglewood, L.

Belstead, L.

Kaberry of Adel, L.

Boyd-Carpenter, L.

Kilmany, L.

Brabazon of Tara, L.

Kinloss, Ly.

Caithness, E.

Kinnaird, L.

Caldecote, V.

Kintore, E.

Campbell of Croy, L.

Lane-Fox, B.

Carnegy of Lour, B.

Lauderdale, E.

Cayzer, L.

Long, V.

Chelmsford, Bp.

Lothian, M.

Constantine of Stanmore, L.

Lucas of Chilworth, L.

Cork and Orrery, E. [Teller.]

Macleod of Borve, B.

Cottesloe, L.

Mar, C.

Cromartie, E.

Margadale, L.

Cullen of Ashbourne, L.

Marley, L.

De Freyne, L.

Masham of Ilton, B.

Denham, L.

Maude of Stratford-upon-Avon, L.

Denning, L.

Derwent, L.

Maybray-King, L.

Duncan-Sandys, L.

Melville, V.

Eccles, V.

Mersey, V.

Effingham, E.

Middleton, L.

Ellenborough, L.

Milne, L.

Elliot of Harwood, B.

Milverton, L.

Elton, L.

Molson, L.

Faithfull, B.

Montagu of Beaulieu, L.

Ferrers, E.

Mottistone, L.

Fraser of Kilmorack, L.

Mowbray and Stourton, L.

Gainford, L.

Munster, E.

561

Noel-Buxton, L.

Sandys, L.

Norfolk, D.

Seebohm, L.

Northbourne, L.

Skelmersdale, L.

Norwich, Bp.

Smith, L.

Nugent of Guildford, L.

Stamp, L.

O'Brien of Lothbury, L.

Strathclyde, L.

O'Neill of the Maine, L.

Sudeley, L.

Orkney, E.

Terrington, L.

Polwarth, L.

Thorneycroft, L.

Porritt, L.

Tranmire, L.

Portland, D.

Trenchard, V.

Reilly, L.

Trumpington, B.

Rochdale, V.

Vaux of Harrowden, L.

Rodney, L.

Vivian, L.

St. Aldwyn, E.

Westbury, L.

Saltoun, Ly.

York, Abp.

NOT-CONTENTS

Ardwick, L.

Howie of Troon, L.

Avebury, L.

Hutchinson of Lullington, L.

Blyton, L.

Jacques, L.

Bottomley, L.

Jeger, B.

Briginshaw, L.

Kearton, L.

Brockway, L.

Leatherland, L.

Bruce of Donington, L.

Melchett, L.

Buckmaster, V.

Molloy, L.

Caradon, L.

Monson, L.

Carmichael of Kelvingrove, L.

Moran, L.

Cledwyn of Penrhos, L.

Nicol, B.

Collison, L.

Oram, L.

David, B. [Teller.]

Ponsonby of Shulbrede, L. [Teller.]

Davies of Leek, L.

Dean of Beswick, L.

Prys-Davies, L.

Donaldson of Kingsbridge, L.

Rea, L.

Elwyn-Jones, L.

Roberthall, L.

Energlyn, L.

Ross of Marnock, L.

Ennals, L.

Rugby, L.

Ewart-Biggs, B.

Sefton of Garston, L.

Falkland, V.

Shinwell, L.

Fisher of Rednal, B.

Simon of Glaisdale, L.

Foot, L.

Stallard, L.

Gaitskell, B.

Stewart of Fulham, L.

Gallacher, L.

Stoddart of Swindon, L.

Galpern, L.

Underhill, L.

Gregson, L.

Wallace of Coslany, L.

Grey, E.

Walston, L.

Hatch of Lusby, L.

Whaddon, L.

Heycock, L.

Wilson of Langside, L.

Resolved in the affirmative, and Motion agreed to accordingly.

London Regional Transport: Services
2.56 p.m.
Lord Underhill: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what are the levels of bus and Underground services (in bus and train miles) provided by London Regional Transport, whether LRT have any proposals for reducing their services and, if so, for what reasons.
Lord Brabazon of Tara: My Lords, LRT's annual business plan, published in December, indicates that LRT propose to increase Underground service levels slightly, from 29.4 million train miles this year to 29.5 million next year, and to reduce total bus mileage by 2 per cent, from 170 million to 167 million bus miles. The increase in Underground train mileage is accounted for by the opening of the Heathrow Terminal 4 extension to the Piccadilly line, and by
562
other improvements to the system. The decrease in bus mileage is broadly in line with the expected decline in demand for bus services of 2½ per cent.
Lord Underhill: My Lords, I thank the Minister for that information. Is it not correct that, as from 2nd February, London Regional Transport are proposing to cut or cancel some 40 bus services? Would he not agree that it is rather foolish for any undertaking not to match their services to demand bearing in mind that paragraph 24 of the annual business plan of London Regional Transport states that the demand for services in the current year was 16 per cent. above 1983, the reasons given being the fares policy and the introduction of the travelcard? Does not paragraph 13 of the same report say that the increase in bus usage was 10 per cent. and the increase in Underground usage 20 per cent, according to London Regional Transport's own figures?
Lord Brabazon of Tara: My Lords, it is true that LRT have announced a substantial number of bus service changes with effect from 2nd February. Where demand has proved insufficient to justify a continued service reductions are being made, but new services are also being introduced where demand has been identified. This represents a sensible adjustment of service provision to match changes in demand.
Lord Shinwell: My Lords, would the noble Lord not agree that efficient transport for London and its surburbs is of the utmost importance? Is he not aware that communications to enable people to get to work and to business, and to arrive home at a reasonable time, are essential from a morale point of view, and that if one interferes with communications in any state or form it is detrimental to our trading arrangements, and that we cannot afford? Can we have an assurance that there will be no reduction in London Transport services or interference in its efficiency unless this is utterly essential in the interests of the nation?
Lord Brabazon of Tara: My Lords, I quite agree with the noble Lord that an efficient system of transport for London is absolutely essential. As I have said, there is to be a small increase in the provision of Underground services and a small reduction in the provision of bus services, but only where the supply has to meet the demand.
Lord Avebury: My Lords, can the Minister say whether any of the reduction in bus mileage is attributable to the cancellation of services which are affected by violence against drivers and conductors, and whether the Government are satisfied with the measures that have been taken, following representations made by the trade unions concerning this problem, to combat the threat to the lives and limbs of bus drivers and conductors, and, indeed, of Underground staff?
Lord Brabazon of Tara: My Lords, so far as I know, no reductions in bus services have been caused for that reason. I can perhaps remind the noble Lord that I am answering an Unstarred Question from my noble friend Lord Belhaven and Stenton on precisely that subject tomorrow evening.
Lord Wallace of Coslany: My Lords, will the noble Lord say what constitutes demand and what constitutes service? On what basis is lack of demand or increased demand decided?
Lord Brabazon of Tara: My Lords, the reasons for change in demand have been the increase in car ownership and shifts of population. I do not have the figure with me, but I believe that the population of London as a whole has fallen by some 10 per cent. over recent years.
Lord Sefton of Garston: My Lords, surely that was not the question. The question was: what were the criteria for determining demand? Do the Government know? If they do not know those criteria, will they make sure that they are told?
Lord Brabazon of Tara: My Lords, the decision to provide the services rests with London Regional Transport. Obviously they look into the situation as best they can to try to meet supply and demand.
Lord Sefton of Garston: My Lords, so in effect the Members of this Chamber can take it that the control of the supply of services in London is no longer in the hands of any elected representatives?
Lord Brabazon of Tara: No, my Lords. The overall responsibility for London Regional Transport rests with the Government—my right honourable friend the Secretary of State—but, as with all nationalised industries, the day-to-day management rests with the board.
Lord Underhill: My Lords, my noble friend Lord Wallace asked: what is demand? Would the noble Lord agree that if a service to a hospital—Claybury; service number 275—is cancelled on a Sunday, then naturally demand is cancelled because nobody can travel on it?
Lord Brabazon of Tara: My Lords, I am afraid that I have no details of that particular service. All I can say is that I shall make sure that London Regional Transport are aware of the noble Lord's concern.

Soil Survey: Future Funding
3.2 p.m.
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on the future of the Soil Survey of England and Wales.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, over the past 12 years the Ministry of Agriculture has funded the work of the Soil Survey at a total cost of approximately £12 million, and we have recently considered what resources should be made available for future work in this area. My right honourable friend announced on 12th January that, while there
564
will be no change in the funding of the survey in 1985–86, the Ministry's commission will be set at half the present level in 1986–87. This is intended to give the survey and the Agricultural and Food Research Council an opportunity to explore the possibility of alternative sources of income for future years.
Lord Gainford: My Lords, I thank my noble friend the Minister for that reply. In a Written Answer to an honourable Member in another place about the Soil Survey, the Minister mentioned the publication of maps at a scale of 1:250,000, which is four miles to the inch. Considering the varied geological features of this country, could not Her Majesty's Government encourage those concerned to produce survey maps at a larger scale?
Lord Belstead: My Lords, survey information at greater detail may well be required by a wide range of organisations, and this should offer potential for future funding through commissioned opportunities.
Lord Collison: My Lords, is not the noble Lord the Minister aware that his reply will give cause for concern to many people, not only those in research? This is because the work of the survey team is of such importance in classifying the soil. Surely it helps in agriculture to ensure that the right crop goes into the right kind of soil. It also helps the environmentalists and those who are concerned with planning, including the local authorities. Would he not agree that it would be disappointing to learn that this help is not going to continue in the longer term? Would he not agree that, in view of the importance of the work which is being done by the survey team, it should be allowed to continue, with help, into the more distant future?
Lord Belstead: My Lords, I agree entirely with the noble Lord, Lord Collison, that a number of organisations, both private and public, make use of survey information: for instance, the water industry, civil engineering and indeed nature conservation. This suggests that scope exists for generating income to cover future operations.
Lord Gallacher: My Lords, will the Minister not agree that to be thinking in terms of halving the level of the subsidy in 1986–87 will, unless alternative sources of funding are found, have a very serious effect on the value of the Soil Survey as such? Will he not further agree that this may well coincide with some of the toughest decisions which the Ministry of Agriculture has to take regarding the future of land use in this country, stemming directly from reviews by the European Community of support prices for agriculture?
Lord Belstead: My Lords, may I make it clear that we feel this is an area which ought to be commissioned by those who use the work of the survey? I in no way disagree, on behalf of the Government, with the fact that there are many organisations which are closely interested in the work of the survey. After 1986–87, obviously the Ministry of Agriculture could be a future customer, but no mass funding has actually been committed from that date onwards.
Lord Walston: My Lords, in view of the emphasis which is now being placed on the movement of agriculture from solely food production to the general realm of environmental protection, can the Minister assure us that this move will not be jeopardised in any way as a result of the curtailment of the Soil Survey financing?
Lord Belstead: My Lords, I see no reason why there should be that jeopardy. I have visited the Soil Survey, and I was shown work which is done for environmental organisations. If that work is of value, as I believe it is, I would envisage that it will be funded in the future.
Earl Ferrers: My Lords, can my noble friend say, in the absence of any private funding of the Soil Survey, what percentage of the staff of the Soil Survey would find their employment curtailed?
Lord Belstead: My Lords, that is a matter for the Agricultural and Food Research Council.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Gowrie will, with the leave of the House, repeat in the form of a Statement an Answer to a Private Notice Question in another place on interest rates. This will be followed by my noble friend Lord Lucas of Chilworth, who, with the leave of the House, will repeat a Statement on financial services; and this will be followed by my noble friend Lord Brabazon of Tara, who, again with the leave of the House, will repeat a Statement on London Regional Transport: High Court judgment.
It may be for the convenience of the House if I announce that the Committee stage of the Insolvency Bill will be adjourned at approximately 7.30 p.m. for a short period, and that during this adjournment the Tyne and Wear Metro (Rateable Values) Order 1984 will be taken.

Dangerous Vessels Bill [H.L.]
Report received.

Insolvency Bill [H.L.]
3.8 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Lucas of Chilworth.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Unqualified persons not to act as insolvency practitioners]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 1:
Page 1, line 15, leave out ("a") and insert ("an insolvent").
The noble Lord said: This amendment relates to a person acting as an insolvency practitioner in relation to an insolvent company, by acting as its liquidator, administrator or administrative receiver, and the whole purpose of this amendment is to allow solvent companies to be liquidated without fuss or the involvement of an insolvency practitioner.
The definition of "insolvency" which appears in Amendment No. 2 is taken from Clause 82(8) of the Bill. The possible abuse of insolvent liquidations starting off as fake solvent liquidations is, as your Lordships' Committee will know, fully covered in Clause 67 of the Bill. This is a comparatively non-controversial amendment and I hope that the noble Lord will be able to accept it. I beg to move.
Lord Lucas of Chilworth: I am grateful to the noble Lord, Lord Bruce of Donington, for introducing the amendment. I had understood, however, that he was intending at this stage to speak also to Amendment No. 2. I imagine, therefore, that his outline has in fact included Amendment No. 2, though he did not formally say so?
Lord Bruce of Donington: I must apologise for that. I wish to make it clear that I was speaking to both Amendments Nos. 1 and 2 together.
Amendment No. 2: Page 1, line 17, at end insert ("and a company is insolvent for these purposes if its assets are for the time being insufficient for the payment of its debts and other liabilities.").
Lord Lucas of Chilworth: I regret to tell the noble Lord that I am unable to accept either of these two amendments. The Committee will be aware that one of the principal aims of the Bill is to overcome the concern expressed over the manner in which some insolvent estates have been administered in the past. At present, almost anyone can act as liquidator of a company or trustee of an individual. Being unqualified in an accountancy or legal profession, or being even a convicted criminal, holds no bar to these offices. It is proposed that in future any person who acts as an insolvency practitioner must be qualified to act in accordance with the provisions contained in the Bill.
The proposed amendments, if adopted, would have the effect of limiting the definition of insolvency practitioners to those acting only in relation to insolvent companies. On the face of it, this may appear to be quite reasonable as not all companies are insolvent when they go into liquidation or receivership and the procedure then may seem to be simpler. But that is not in fact so. First, the assets, which may be substantial, need to be administered by someone subject to the safeguards, such as bonding, that will be incorporated in the new licensing system. Secondly, there is no rigid distinction between solvent and insolvent liquidations. In particular, in the case of a member's voluntary winding-up, closer inspection of the company's financial position may show it to be insolvent and, indeed, in Clause 67 we have made

567
improved provision for the liquidator's duties when this becomes apparent to him. It would be very inconvenient if at that stage a new and qualified liquidator had to be brought in. Additionally, an unqualified person might fail to recognise the financial position and fail to ensure that the liquidation became a creditor's voluntary winding-up, which is provided for in Clause 67.
There is a final point, and that relates to administrators. An administration order can be made by the court in respect of a company which is still able to pay its debts, but which the court is satisfied will become unable to do so. Such a company would not come within the definition of "insolvency" in the proposed second amendment because its assets would, at the time, be sufficient for the payment of its debts and liabilities. Accordingly, an unqualified person could be appointed administrator. Subsequently, if the company becomes insolvent and unable to pay its debts—as was the prospect when the court made the administration order—a qualified insolvency practitioner would then have to be appointed as administrator. During the period between the administration order and the new appointment, the assets of the company would have been under the control of an unqualified person with the resulting risk to creditors and their shareholders.
I have spoken at some length in explaining our objection to both of these amendments. I hope that with that explanation, which is for the general protection of creditors, the noble Lord will agree to withdraw his two amendments.
Lord Denning: I hope that your Lordships will not accept this amendment. Whether it is a liquidator, an administrator or an administrator's receiver, you need a man with expertise—such as the expertise of a chartered accountant or a solicitor—to conduct the work and to do it properly, no matter whether the company is solvent or insolvent. Therefore, I hope that the amendment will not be pressed.
3.15 p.m.
Lord Bruce of Donington: I am most grateful for the explanation which has been given by the noble Lord and, oddly enough, for the support which has been given to the noble Lord by the noble and learned Lord, Lord Denning. Perhaps I was bending over backwards to ensure that the accountancy professions did not get a monopoly of these winding-ups and I rather sought to give the noble Lord a way out if he decided that, on the whole, solvent companies ought to be exempt from this provision. After all, last year there were 3,772 members' voluntary liquidations that went through quite successfully.
As your Lordships' Committee is probably aware, there has to be a declaration of solvency before there is a member's voluntary winding-up. I was most anxious that the professions should not be seeking to enforce a monopoly when no monopoly was strictly necessary. The noble Lord has indicated that he wishes the monopoly to be retained and, of course, as the noble and learned Lord, Lord Denning, has indicated, it is very desirable frequently, even in a member's
568
voluntary winding-up of a company, particularly in view of the fact that the state may change between the initial stage and the later stage. Perhaps it is better after all to have approved practitioners involved. I am most grateful to the noble Lord and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 2 not moved.]
Clause 1 agreed to.
Clause 2 [Qualification of insolvency practitioners]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 3:
Page 2, line 40, leave out ("or an associate of his").
The noble Lord said: Amendment No. 3 seeks to eliminate from the Bill at line 40 on page 2 the words, "or an associate of his", because the associate is referred to twice. It can produce some very bizarre results because this is a criminal clause and it ought to be drawn with very great care. Some of the results that might accrue from this may be stated as follows. For example, a cleaning lady of a firm of insolvent practitioners may have divorced her husband 20 years ago. If the person works for the particular company involved, then the partner could not act as its receiver. Again, an insolvency practitioner would be disqualified from acting as a trustee, whether he knew of the relevant facts or not, if the divorced former husband of a granddaughter of his owed any money to the common law wife of the bankrupt's grandfather. That would tend to be a little bizarre, and I cannot help feeling that when this part of the Bill was originally drawn possibly these very wide concepts had not been taken fully into account. I beg to move.
Lord Lucas of Chilworth: I am sure that the Committee will recognise that it is desirable that the public should have trust in those who handle insolvencies, and the proposed Clause 2 provides that a person is not qualified to act as an insolvency practitioner unless he has a certificate issued under Clause 3 authorising him to act. However, that is not sufficient in itself. It is also essential that there are provisions to prohibit persons who are closely connected with a debtor or a company from acting as an insolvency practitioner. Accordingly, Clause 2 provides that a person is not qualified to act as an insolvency practitioner in relation to a particular person if he or an associate of his (and I am sure the noble Lord accepts that "he" also means "she") is an associate of that person or is connected with that person in one way or another.
The word "associate" is of course defined at length in Clause 200, and it includes such persons as husbands, wives, relatives, partners, employers and employees. The effect of the proposed amendment to omit the words "or an associate of his" from Clause 2 would be to reduce the area covered by the net cast by the clause and ensure that the relationship between a practitioner's associates and the bankrupt company and its associates did not disqualify the practitioner from acting. For example, the amendment would allow a practitioner to act as trustee in the bankruptcy of the wife of his employee. That employee might well

569
be the senior manager of the insolvency practice, and clearly this would be undesirable.
While we are anxious to ensure that the new provisions work to protect the interests of the creditor and the shareholder, we are aware from early consultation with both the accountancy and the legal professions that they are concerned as to the complexity and range of relationships and persons caught by the provision—not, I have to confess, that any of those bodies has proposed such a bizarre relationship as that advanced by the noble Lord, Lord Bruce of Donington. But those bodies are particularly concerned that their members will inadvertently render themselves liable to criminal penalties.
We acknowledge that concern and the view of the noble Lord opposite. I think that the proper action this afternoon would be for me to give the Committee an assurance that we shall review the position to see whether it can be made simpler while at the same time preserving the basic principle that insolvency practitioners must not act when they have a conflict of interests. That must be quite clearly shown to them so that there is, as it were, a self-regulatory process. I am quite happy to give that assurance. If the noble Lord, Lord Bruce, or, indeed, the noble Lord, Lord Prys-Davies, can help us in our further consideration, I should be most grateful to both of them.
Lord Lloyd of Kilgerran: The Minister has said that he will give an assurance to look at this matter again. I wonder whether, at the same time, he would look at the definition of an "associate" in Clause 200. I was in two minds about what to do about this amendment, but I was extremely alarmed to see that the definition of the word "associate" takes up a page and a half in Clause 200. I should have thought that the Minister might also think that a revision of Clause 200 might be a useful exercise to undertake at this stage.
Lord Prys-Davies: I am not, and I shall never be, a replacement or a substitute for my noble friend Lord Mishcon; and I appreciate that this is a very important Bill. But I shall do the best I can to support my noble friend Lord Bruce, although I am sure that that support will be inadequate. Like the noble Lord, Lord Lloyd of Kilgerran, I am very concerned about the definition of "associate" in Clause 200. We very much agree with the Minister that an insolvency practitioner should be, and should be seen to be, an independent party, because he has to act impartially in the interests of creditors.
However, I am in difficulty (and it may be due to my own inadequacy) in understanding Clause 200(8). Who is a relative by virtue of this definition? It seems to me that it is at least a person descending from each of the four grandparents. But that is not the end of the matter because the subsection goes on to speak of an individual's brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant. A lineal descendant could descend from the eight grandparents. Is that the intention? Therefore, I should be very grateful if the Minister could deal with the meaning of "lineal descendant" as well as what he describes (although not necessarily all of us would concede this) as the bizarre example which my noble friend Lord Bruce has given to the Committee.
Lord Lucas of Chilworth: Notwithstanding the opening remarks of the noble Lord, Lord Prys-Davies, I am quite sure that the Committee will enjoy the benefit of his experience over a wide field. The noble Lord will of course understand that I have not been, and have never been, involved in the legal profession, and this afternoon I do not propose to debate with him the lineal descent point which he has outlined. Nor, I must confess, have I come prepared to debate Clause 200, which seemed to me to be about three or four days away from us this afternoon. However, as both the noble Lord, Lord Lloyd of Kilgerran, and the noble Lord opposite have made the point quite forcefully, I add to my earlier assurance a second assurance that at the same time we shall have a look at Clause 200 so that when we reach it we can find a larger measure of agreement than is obvious this afternoon.
Lord Lloyd of Kilgerran: I should like to thank the Minister for that assurance.
Lord Bruce of Donington: I am grateful to the noble Lord. It was, of course, quite clear from the moment that this amendment was tabled that Clause 200 would be involved in this, because Clause 200 is the definition clause and any reference to an "associate" in this particular clause of the Bill would automatically draw one's mind to Clause 200.
I invite the Committee's attention to the fact that the definition in subsection (8), to which my noble friend has referred, applies in its duality. As the word "associate" is repeated twice it means that, although subsection (8) applies to the first "associate", it also applies in detail to every component of the second "associate". Quite clearly that must be wrong. For what it is worth, my own view—and I am not a lawyer—is that the noble Lord and his department tried to tie this up too tightly. They determined that they would include in the statute every conceivable word and every conceivable subsection that would make it absolutely impossible for a liquidator or receiver who was connected to the subject of the winding-up, however remotely, to act.
I cannot help feeling that there must be another way. I hope that the noble Lord will address himself to that problem. In view of his assurance, which is in quite categorical terms, I myself, and speaking for my noble friends on this side of the Committee, am quite willing to leave this matter to the Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.30 p.m.
On Question, Whether Clause 2 shall stand part of the Bill?
Lord Bruce of Donington: Now that we have got the amendments on this particular section of the Bill out of the way, I wonder whether between now and the Report stage, the noble Lord can give consideration to other matters. Can he give consideration to including within this clause minors and people of unsound mind? Will he consider giving that some specific recommendation?

571
Can he also give consideration to the position of individuals who have been convicted at any time of an offence involving serious fraud and whether they should be entitled to act as insolvency practitioners? It may be argued that this is already covered within Clause 4(1)(a), but it is a matter on which we on this side of the Committee would welcome clarification at the Report stage, or, if the Government felt inclined to put down an amendment for the Report stage covering these two particular points, it might be of advantage to the further progress of the Bill.
Lord Lucas of Chilworth: Since an insolvency practitioner will be required to be licensed generally under the Bill it would seem odd were a person who had been convicted of a serious fraud to find himself able to meet the fitness to practise conditions that would apply in the case of a licence. I would suspect that there is provision to debar minors and those people of unsound mind, although I understand that the law is not absolutely clear on this latter point. However, I shall be quite happy, in the consideration of the detailed point which I have undertaken to give, to consider the wider points.
Clause 2 agreed to.
Clauses 3 and 4 agreed to.
Schedule 1 [The Tribunal]:
Lord Lucas of Chilworth Lord Lucas of Chilworth moved Amendment No. 4:
Page 156, line 10, leave out ("in") and insert ("of").
The noble Lord said: I beg to move Amendment No. 4. This amendment corrects a minor printing error which has crept into paragraph 1(1)(a) of Schedule 1 to the Bill. The Lord President's title should be "the Lord President of the Court of Session" rather than "in Session" as presently printed. I beg to move.
On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
Clause 5 and 6 agreed to.
Clause 7 [Automatic disqualification in certain cases of directors of companies going into liquidation]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 5:
Page 4, line 37, after ("Act") insert ("or in respect of a company which may be wound up under Part XXI of the 1985 Act").
The noble Lord said: I beg leave to move the amendment standing in my name. It is desired to put into this particular subsection of Clause 7 words which bring companies which are overseas companies into the ambit of the Bill. Rogues may well use Jersey or other overseas companies to avoid risk of disqualification. It is our view that the sanction ought to extend to all companies wherever formed which trade in the United Kingdom and are therefore likely to be compulsorily wound up there.
If the noble Lord looks at page 410 of the Companies (Consolidation) (Consequential Provisions) Act, as it will soon be, he will find there the provisions relating to winding up of unregistered
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companies. It was thought that the inclusion of these words would achieve the purpose we have in mind. There are companies which trade in the United Kingdom, which attract creditors in the United Kingdom, which incur indebtedness in the United Kingdom, which are nevertheless registered outside, and it might be a good thing if these were brought into the ambit of the particular clause that we are now discussing.
I have no firm views as to the exact wording of this. If the noble Lord and his advisers think that it is completely unnecessary, I am prepared to accept the position. It is in essence a probing amendment, and I should be obliged if I could have the noble Lord's attitude towards it. I beg to move.
Lord Lucas of Chilworth: I do not think that this amendment is in fact necessary. The clause applies when an unregistered company is wound up if it is unable to pay its debts—that is in subsection (5)(b)—or if the court is of the opinion that it is just and equitable that the company should be wound up.
So far as concerns a company registered outside the United Kingdom but trading in the United Kingdom under the circumstances which the noble Lord has described, that company, if it were to be wound up, would be wound up as an unregistered company. Therefore I believe that there is an adequate provision.
Lord Bruce of Donington: The noble Lord has been advised on this point and I have heard his reply. I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Brabazon of Tara: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Interest Rates
3.39 p.m.
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie): My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer to a Private Notice Question being given in another place by my right honourable friend the Chancellor of the Exchequer. The Statement reads as follows:
"At noon yesterday, following a rise in market interest rates, one of the clearing banks raised its base rate from 12 to 14 per cent. The Bank of England raised its dealing rates by a corresponding amount when it dealt in the bill market at 12.15 p.m. The other clearing banks followed within the next hour or so.
"Yesterday afternoon, I gave evidence on these and related matters at considerable length to the Select Committee on the Treasury and Civil Service, which I understand will be reporting to the House shortly".
My Lords, that concludes my right honourable friend's Statement.
Lord Stoddart of Swindon: My Lords, I should like to thank the noble Earl for repeating the Statement which was made by the Chancellor of the Exchequer in reply to a Private Notice Question in the other place. Does the noble Earl agree that the Statement is not very forthcoming, bearing in mind the seriousness of the position? Is he aware that the recent savage increases in the interest rate, culminating in the 2 per cent. increase yesterday, have sent shock waves throughout the City and the financial markets causing uncertainty and convulsions throughout all our national institutions? That is the seriousness of the matter.
Can the noble Earl tell the House what is the Government's policy on the value of the pound abroad? Is it still that it should float freely or do recent events indicate a radical change in policy? Can he also inform the House what the Government believe to be the correct value of the pound against other currencies? Is it 1 dollar 10 cents, 1 dollar 11 cents, 1 dollar 20 cents against the dollar or what figure? How far are the Government prepared to go in raising interest rates to defend the Government's perceived true value of the pound? Is the figure 14 per cent., which we now have; is it 15 per cent., which we could have tomorrow, or is it 18 per cent. or 20 per cent? What is the figure? Just how high will the Government allow interest rates to go?
Can the noble Earl tell the House, because this is so important, what effect these interest rate rises will have on industry? Is it not likely that industry will stop investing and is that not serious for the country? Is it not likely that these high interest rates will stop the Chancellor's much-vaunted economic recovery in its tracks and also reduce his room for manoeuvre in the forthcoming Budget? Finally, do not the Government deserve the deepest censure for their handling of the economy to date in allowing over-reliance on oil revenues to undermine Britain's manufacturing base, and with it the long-term interests of this country?
Lord Ezra: My Lords, I should like to say that the Private Notice Question was asked by a member of the Alliance in another place. May I reiterate the points raised by the noble Lord, Lord Stoddart of Swindon, in drawing attention to the seriousness of this situation? We are concerned that the answer to this PNQ was given in such laconic terms.
If one considers the movement of interest rates in this country over the past year or so one finds that it is quite staggering. Having been raised to 12 per cent. in the middle of last year, it came down to 9.5 per cent. by the end of the year, then moved up steadily in the course of this year, which is still relatively young, to no less than 14 per cent. The question I should like to raise, in view of the fact that one of the major objectives of economic policy in this country must be the regeneration of industry, is on the basis of these violent moves in interest rates how can we expect that to occur?
Related to that question is the way in which the Government are reacting to movements in the value of the currency. We were told right up to the last minute that this was merely a market phenomenon and that the Government wished to keep their hands off. Then we were told that the Government wished to intervene
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to make sure that currency did not fall too low and they felt it was too low now. Thus there were these precipitate rises in interest rates.
As a second question, we have to ask whether there is no other way in which the Government can seek to ensure that we have a more stable currency without juggling about with the interest rates. It seems that a situation which could have been prepared for, bearing in mind our dependence upon our oil wealth, was not prepared for. This situation, which might have been anticipated, seems to take the Government completely by surprise. The result of it is that the measures taken to introduce stability into the currency have in turn led to a serious situation for industry.
If we continue in this manner with wildly fluctuating currency values and wildly fluctuating interest rates, we shall surely as an economy be seriously harmed. I should welcome the comments of the noble Earl on those matters.
The Earl of Gowrie: My Lords, as with rather different language both noble Lords on the Front Benches opposite effectively asked me the same questions, perhaps the House will allow me to try to answer them together.
Of course industry does not welcome, any more than anyone welcomes, increases in interest rates; but what counts is the aggregate of those increases overall over a period of time. In this context, I commend the wise words of the director of the CBI, Sir Terence Beckett, as reported in The Times this morning. He said that the base rate rise was no help to industry and had no internal justification. But:
"steps have to be made to combat international speculation against sterling in the short term."
In reply to the noble Lord, Lord Stoddart of Swindon, may I say that there is no target for the exchange rate. However, both noble Lords asked me how this squares with the Government's view of the markets. There is a world of difference between allowing markets to determine the general level of a currency and reacting to short-term speculative pressures. All governments have to react to movements in sterling and this has been particularly true of the past 10 or 15 years when the financial interactions of the Western world have been particularly close. What matters really is the result of these reactions in aggregate over time.
We have reacted to give very strong signals to the money markets that there is no slacking whatsoever by this Government on our counter-inflationary policies or targets. Any remarks which would indicate that there was any slacking on these targets would have an adverse effect.
Lord Shinwell: My Lords, now that the Front Benches have had their say, perhaps we Back-Benchers may be permitted to ask a question or two.
The Statement repeated by the Minister which has been made in another place was very short. It was particularly brief in the context of the euphoria which we have heard for several weeks about cutting down taxes in the next Budget. Regarding the important situation in which the pound had found itself there was nothing to worry about. In fact, the country was on the

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road to the creation of a new kind of society supported by the noble Earl, Lord Stockton, who tried to give it a bit of a boost. I regret that he is not present. Are we to understand that there is something wrong with the pound? Were we not always told that to retain the value of sterling was of fundamental importance?
I have been reading the press. What we are getting from the press media, if they are truthful—and it has been said that the only truth one gets from the press is the date of publication—is that they have been talking about a financial crisis. What is to happen? Is the country in a terrible mess? What has gone wrong? Is it just a matter of a drop in oil prices? Were we not aware that something of the kind would happen? Have we no strength when the OPEC meets and discusses the price of the oil, be it crude oil or light oil?
The Government should now become a little bit ashamed of themselves. But do not get me in a hurry; we are entitled to express an opinion about our resources. We are concerned about our taxes, we are concerned about our cost of living, and we are concerned about a variety of other matters affecting our livelihoods. And we are concerned about the nation and the various facets of the nation. Now is the time to speak out. We are not going to be content with a number of short Statements as we have had from the Minister. We know the Minister is very capable—perhaps sometimes too capable. Some day when he is too capable, we will discover how clever he is.
Anyway, let us leave him for the moment. The point is that we are not going to be content with Statements of this kind. In fact, this calls for a debate. I have no right to ask for a debate, but my comrades on the Front Bench have much more authority than I possess and I am not wishing to intervene in regard to that authority. They may think that this is an occasion when we should ask for a full-blooded debate; and, by the way, not the kind of debate that we had the other day on the economic situation when I had to listen for four or five hours to a succession of the platitudes that I have heard for the last 20 years in your Lordships' House. The television experiment was all right. But what a collection of speeches! I was horrified when I listened to them. I could speak them all, by heart, almost every one from both sides of the House. I have heard them so often. There was not a fresh idea. Nobody had one.
The noble Earl, Lord Stockton, tried to introduce one; but his also is beginning to fade a bit. And who discovered that? The press have discovered it. A few weeks ago he was a star performer. Look at the papers now! Look at the Daily Telegraph—the Telegraph, of all papers which, as everyone knows, is a Tory propaganda sheet.
My Lords, something has got to be done and the way to deal with the situation is to have a debate on the financial position of our country at the present time and on what is the remedy. Is there a remedy? If there is one, tell us what it is. If there is not a remedy, we have got to put up with it.
The Earl of Gowrie: My Lords, as to the brevity of my right honourable friend's Statement, I can do no
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more in this House than repeat what he said. But it is only fair to my right honourable friend to say that he gave a very detailed, publicly broadcast statement yesterday precisely on these issues. My right honourable friend's stern counter-inflationary policy applies to rhetoric as well as to money.
On the question that the noble Lord, Lord Shinwell, put to me directly—I am glad that he is lending his great weight and influence to pressures to reduce taxation; and I heartily agree with him there—as to whether the country was in a crisis over this issue, we certainly believe that anxieties over sterling have been enormously overdone, as has been the emphasis on potential oil price developments. To read some market comment, one would think that this country was a one-commodity economy; whereas the fact of the matter—which the whole world, not least the intelligent men who run the money markets can see—is that oil accounts for only 5 per cent. of our national output and 8½ per cent. of tax revenues. So that even if one got to the wholly surreal position of a zero value on this important commodity, the territory affected would be only 5 per cent. and 8½ per cent. respectively.
It is understandable as part of our tradition that the Opposition would "have a go" on the devaluation of sterling and the measures that the Government have had to take to react to it, as have all governments. But I do not think that even the sternest critics of the present Government are hurling the same kinds of criticism against the Swiss or the West Germans, let alone the French. But, in fact, since this Government came into office, the Swiss franc has fallen 35 per cent. against the dollar, the deutschmark has fallen by 40 per cent. and sterling by 46 per cent. So that the European economies are all agreed that part of the difficulty is what seems to us to be a gross overvaluation by markets of the dollar. The fact that the world's reserve currency is now the major trading currency in the world gives difficulties for other currencies as well as our own.
We have been much more sharply anxious about whether the world markets—perhaps as a result of listening to some debates in your Lordships' House and elsewhere—might be suspicious as to whether the Government would be relaxing their counter-inflationary targets; and we have taken these measures to give a very sharp reply to those suggestions.
Lord Bruce-Gardyne: My Lords, in the light of the question of the noble Lord, Lord Stoddart of Swindon, can my noble friend tell us which national institutions have gone "into convulsions" since mid-day yesterday? And is it not the fact that the underlying situation today, with very low external borrowings and a much lower rate of inflation, is fundamentally different from previous so-called sterling crises of the past; and that, in view of the Government's assurance that they are determined to persevere with the elimination of inflation, there is very good reason to expect that sterling will re-establish its status fairly rapidly?
The Earl of Gowrie: My Lords, I am grateful to my noble friend for giving me the chance to remind the House that the noble Lord, Lord Stoddart, supported

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the last Labour Government, who went bankrupt and had to go cap in hand to the IMF. By contrast, as my noble friend has reminded us, we have paid off huge tranches of accumulated debt, brought down inflation substantially, and have seen sustained growth for four years in a row. The present response is proof that we are continuing to keep up the counter-inflationary pressure without which, over time, that sustained growth would be threatened.
Lord Dean of Beswick: My Lords, bearing in mind that one of the major areas of conflict at this point in time is that between Her Majesty's Government and the local authorities, with the shameful rate-capping legislation, may I ask the noble Earl the Minister what effect the dramatic increases in borrowing rates referred to in his last two announcements will have on the amount that local authorities have to repay on their loan debt charges? I have in mind that, as I understand it, today's announcement will mean that in order to cope with the situation the City of Birmingham, for instance, may well have to find a sum of £20 million, without any extra spending; and that Leeds may have to find about £14 million to £15 million, without extra spending. Can the noble Earl give an undertaking that, if that is the case, it will be taken into account in the rate-capping process?
The Earl of Gowrie: My Lords, I must say that after what seems to me like year after year of repetition of simple truths it seems quite extraordinary that the noble Lord could assume that local authorities could behave as if they occupied a different economy from the national economy, particularly in view of the fact that more than 50 per cent. of local authority money is supplied by central taxpayers. Just as the Government have to react to events which they do not welcome and which they think are over-estimated in intensity externally, so, I am afraid, there is no way that one can protect local authorities from the same consequences. But I am sure that if we all keep our heads and our nerves and keep our counter-inflationary policies—policies which Governments of both parties have laid emphasis upon when they have been in office—there is no reason over the longer term why these immediate movements in the money market should be too disruptive.
Lord Dean of Beswick: My Lords—
The Earl of Gowrie: My Lords, I do consider that I answered it in terms. I said that we could not insulate local authorities from other factors operating in the national economy.
Viscount Eccles: My Lords, having lived for the best part of the last three months in or around New York, I should like to ask my noble friend whether he is aware how they look at sterling from that end. First of all, they say that the dollar has risen against all currencies but a little more against sterling than against the other major currencies. When they ask why that is it always comes down to the miners' strike. They are not interested in interest rates; they are not very much interested in petrol prices; but what they are interested in is that we should settle the miners' strike so that the responsibility for the industry is
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returned to the National Coal Board. If my noble friend can assure us that that is coming fairly soon, he will see a big change in the sterling rate.
The Earl of Gowrie: My Lords, I congratulate my noble friend on his return from honeymoon in New York and I hope that that honeymoon was not bedevilled by too much economic debate. It is indeed the case that the world outside is watching our country carefully in respect of our sorting out our internal affairs. As my noble friend is well aware, whether it is on counter-inflationary issues or on issues of who manages great nationalised industries, the Government have made their position clear and are keeping the pressure up. I am glad to say that in this respect they seem to be going in the right direction.
Lord Ross of Marnock: My Lords, as I understood the Statement, it consisted purely of what the banks have done in reacting to a situation. We have not heard a word of what the Government have done or of what they are going to do in this situation or in respect of the consequences to industry. There is a complacency being shown that is really frightening.
The Earl of Gowrie: My Lords, I would say to the noble Lord, Lord Ross, that in my respectful judgment it would be extremely complacent if the Government behaved as if there were no consequences to the national economy of these speculative movements in the money markets. That is why, as I said earlier, all Governments have to react to them, and we have done so. We are confident that the underlying situation is sound and that therefore our reaction will have the right results.
Lord Stallard: My Lords, may I say to the noble Earl that his replies this afternoon will be of little comfort to the millions of unemployed out there who are worried about the possibility even in the remote future of finding work? They will be of little comfort to the thousands of millions of home owners who are very concerned about the effects on their mortgages or to those people who are genuinely concerned, as was the noble Viscount who has just come back from America, about the Government's inability to settle the miners' dispute.
May I remind him of what was said by my noble friend who spoke from these Front Benches and by the noble Lord who spoke from the Alliance Benches on the question of manufacturing industry? He will recall that in the debate last week a number of Members made the point about the decimation and destruction of our manufacturing industry. Is not what we are witnessing now a direct reflection of that Government policy—the decimation of manufacturing industry and the impression, rightly or wrongly, given abroad throughout the world that we are now simply a one-commodity economy—oil—and no more? That is not destined to bring investment into our industry. Will the noble Earl answer those points rather than try to make petty party points?
The Earl of Gowrie: My Lords, I am not aware of having made any points which would have been resoundingly endorsed by Central Office, but the

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miners are settling the miners' dispute and, since it is their industry, surely that is the right way forward.
As to the view that Britain is a one—commodity economy, as I have said, the facts of the matter wholly disprove this and the Government do not behave as if it were. I am confident, however, that our reactions to short—term and erratic speculative pressure have been the right ones and I hope that, in the interests of the whole country, for which the noble Lord himself was appealing, and not least because of the concern that we all feel about unemployed people and their prospect of jobs, we shall leave it at that.
Lord Diamond: My Lords, why does the noble Earl keep on referring to short—term speculative pressures, when the pound has been coming down, if one looks at the graph, almost in a straight line from the time when it was at $2.40 to the time today when it is $1.11? How on earth can the noble Earl reconcile that with the true situation? How on earth can he reconcile the facts with what his noble friend Lord Eccles has just said about the miners' strike? Of course the miners' strike has done enormous damage to the economy of this country, but why should sterling suddenly shoot downwards—not even fall, but shoot downwards—when the miners' strike looks like being settled? Why does he take comfort from the noble Lord, Lord Bruce—Gardyne, who suggests to him that it is purely temporary and that the pound is likely to go up? Does he recollect that another noble Lord—I am grateful for his attention—asked him a similar question only a short time ago, with the same result, and the net result has been that the pound has gone down since then? When will the Government take their responsibilities in this field seriously?
The Earl of Gowrie: The noble Lord, Lord Diamond, has asked me a serious question and I will give him a serious answer. The fact of the matter is that I remember many people, not least supporters of the noble Lord, Lord Diamond, and many supporters of the Government, complaining fiercely at the way money markets—erratically, as it turned out, and those were the words I used—over-valued the pound when it was standing at $2·40. It is very difficult to establish what precisely the right rate is. There are some factors in the money markets' movements against sterling which are wholly outside the Government's control. Some, like our own counter-inflationary policy and interest rate policy, are within our control and we have reacted accordingly.
Lord Stoddart of Swindon: My Lords, the noble Earl castigated my noble friend Lord Dean of Beswick for not understanding simple truths. I thought that that was rather unkind. Is it not one of the simple truths at the moment that real interest rates, after yesterday's rise, are the highest they have been in the United Kingdom for 150 years? Is not that a simple truth that really ought to worry the Government?
Is he aware that we perfectly well understand the short-term difficulties that he describes, but I would ask: how short is "short-term"? If he has a term in mind can he tell us when interest rates are likely to drop? That, I am sure, is a question that many
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industrialists, including Sir Terence Beckett, and certainly many local authorities and house owners will be asking.
The Chancellor, as I am sure the noble Earl would agree, did not give answers to these vital questions in his evidence to the Select Committee yesterday. Indeed, would the noble Earl not agree that the Chancellor's performance was hesitant and that he had no idea where this country was going? Is it not a real and proper condemnation of this Government to say that they simply do not have any proper objectives in view and they are allowing the economy to run them instead of themselves running the economy, in spite of the fact that over the last five years, unlike the last Labour Government, referred to by the noble Lord, Lord Bruce-Gardyne, this Government have had $13,000 million a year of extra revenue from the North Sea—something that in fact they have not taken proper advantage of and indeed have dissipated in a virtual economic rake's progress?
The Earl of Gowrie: My Lords, that statement is untrue on so many points that it is very difficult to answer it in a question and answer session. But may I say that the Government have never hesitated to make their policy wholly clear. It is sustained growth with low inflation. That, as I pointed out to your Lordships in a recent debate, has in fact been achieved by the Government over a period of four years. It is not sufficient to rest policy on that central objective, but it is quite impossible to achieve other objectives without holding to that central objective: and Government after Government in this country, regardless of their political disposition, have learned that the hard way.
As for the question of historical rates of interest, of course these are far too high, and I made it clear in my earlier remarks that we believe the anxieties about sterling which have generated these very high rates of interest are greatly overdone. I would point out to the noble Lord. Lord Stoddart of Swindon, that, in fact, in recent months and over the last two years interest rates in America have been at an historical high as well. We are living in a very different world from the world that we all grew up in—a world in which there are very large sums of money moving electronically and short-term around the money markets of the world. We have to react to this but we cannot be conditioned by it, and in our central policies we are not being conditioned by this.
Lord Mackie of Benshie: My Lords, is the noble Earl aware that the German deutschmark has been performing relatively better in the rise of the dollar and yet their interest rates are way below ours? Is this not significant, and should the Government not be considering what the West Germans are doing which we are not doing, when they manage to hold interest rates down to a reasonable figure for their industry?
The Earl of Gowrie: My Lords, I agree with a great deal of that. The Germans have been running a lower rate of inflation than we have, and that is one of the reasons why we give such emphasis to this policy. Nevertheless, while acknowledging admiringly that truism about the German economy, I would point out to the noble Lord and the House that the

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deutschmark—even the mighty deutschmark!—has devalued by 40 per cent. against the dollar since 1979. Our figure is 46 per cent. So the difference is not too great.
Viscount Caldecote: My Lords, will my noble friend not agree that one of the factors putting pressure on the sterling exchange rate is the fact that pay increases in industry are running ahead of increases in productivity, and that one of the greatest contributions that noble Lords opposite could make would be to encourage their trade union friends not to ask for pay rises above increases in productivity, so restoring greater confidence in industry and making it more competitive?
The Earl of Gowrie: My Lords, I am grateful to my noble friend. It is indeed the case that a factor in the lower German inflation rate has been a lower level of pay increases overall. I would also point out, particularly in respect of the remarks made by the noble Lord, Lord Dean of Beswick, that American real wages over the last three or four years have been falling, or have kept level-pegging, and that this is a major factor in their better performance on unemployment than our own.
Lord Diamond: My Lords, owing to the total inadequacy of the noble Earl's right honourable friend's Statement and to the inadequacy of the noble Earl's replies, and, indeed, to the inappropriateness of this kind of exchange for dealing with this most serious situation, we shall certainly be pressing through the usual channels for a full debate in the Government's time.
The Earl of Gowrie: My Lords, that is the noble Lord's right, and I shall be delighted to engage in debate with him if the House wishes me to do so. But the fact of the matter is that after spelling out what seems to me to be fairly widely agreed (indeed, they might be criticised for being simplistic) facts of life about the modern international economy, I do not accept the criticisms that he has made.

Financial Services
4.14 p.m.
Lord Lucas of Chilworth: My Lords, it might be for the convenience of the House if, with the permission of the House, I repeat a Statement on financial services which is now being made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a statement about the Government's proposals to establish a new regulatory framework for the financial services industry. These proposals are published in a White Paper which I have today laid before the House and, subject to the parliamentary timetable, I plan to introduce a Bill in the next Session for their implementation.
"Modern technology and intense international competition are bringing about rapid changes in the financial services industry. The responsibility for
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responding effectively to these changes lies principally with the industry. The Government's task—in this sector as in others—is to create an environment in which it can do so. This is best done by allowing market forces to operate responsibly but without unnecessary constraints, in a way which promotes efficient and competitive business.
"A prerequisite for an internationally competitive industry is a clear regulatory framework within which practitioners and customers can deal with confidence, and which safeguards the interests of investors. This regulatory framework must be capable of adjusting to changes in the shape of the markets, and of accommodating rather than stifling innovation.
"This, the proposals set out in the White Paper are designed to achieve. They will assist enforcement, deter fraud and malpractice, improve disclosure and lay down the principles on which business should be conducted. The proposals cover both a new regulatory framework and a new institutional structure through which it will work.
"First, the regulatory framework. This will be based on new and comprehensive definitions of investment and of investment business. It will be an offence to carry on an investment business in the United Kingdom without authorisation. To obtain such authorisation, an investment business will have to show it is fit and proper and will be required to observe detailed rules for the conduct of business based on principles to be set out in the legislation. Breach of these rules will be subject to sanctions up to and including the withdrawal of the authorisation to trade. There will be a number of important further changes. I intend to rationalise and update the legal provisions dealing with offer documents and the advertising of investments, first to make clear what must be disclosed and second to establish standard provisions on civil and criminal liability for omissions and mistakes. I also propose to liberalise some restrictions on the unit trust industry and enable it, subject to appropriate safeguards, to offer a greater variety of schemes to the public. Commissions and other payments to intermediaries will be disclosed. As far as is possible, the marketing of life assurance contracts will be treated in a manner similar to the marketing of other investments.
"I now turn to the institutional structure designed to implement the new regulatory framework. It is based on my belief that the crucial tasks of authorising investment businesses and keeping high standards of business conduct amongst those so authorised can be discharged much more effectively by those closest to the market—practitioners and their customers—rather than by Government. Malpractices can be identified and dealt with more quickly by these people than by Government regulators.
"I therefore intend to build upon what is best in self-regulation. I shall propose legislation to confer on the Secretary of State the necessary powers to grant authorisation to investment businesses; but also to enable him to delegate regulatory responsibility, including the power of authorisation,

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to one or more bodies composed both of those who provide and those who use financial services. Before doing so I shall be required to be satisfied on the composition, constitution and proposed rules of these bodies and I will have power to withdraw delegated powers in the event that such a body fails to continue to meet the criteria. Steps are already in train to set up the bodies. I hope that those concerned in the financial services industry will press ahead, so that the structure is in place by the time the legislation is on the statute book.
"The Government see great advantages in the system of self-regulation within a statutory framework. At the same time we recognise that self-regulation should receive statutory backing only if there is proper accountability. The White Paper sets out the detailed means by which accountability of these bodies to Government and Parliament will be achieved.
"I would highlight three particular statutory safeguards. First, there will be a right of appeal on authorisation and on penalties for breach of the rules to an independent tribunal to be appointed by the Secretary of State. Secondly, the Secretary of State will have the power, to be exercised on the advice of the Director General of Fair Trading, to revoke or amend rules which have anti-competitive effects. Thirdly, the Secretary of State will have various powers of appointment. I believe our proposals combine the advantages of self-regulation within a statutory framework and proper accountability to Parliament.
"I have today set out the Government's aims; our proposals for a new regulatory framework; and our proposals for a new institutional structure. The White Paper contains many details which the House will no doubt wish to study and then debate. I look forward to the contribution to be made by those both within and without the House especially those with knowledge and experience in these matters. We have much benefited already from the advice of Professor Gower; the Governor of the Bank of England; and of the groups chaired by Mr. Jacomb and Mr. Field.
"The Government's proposals offer advantages to investors, to industry and commerce, and to the financial services industry itself. To the investor, our proposals offer more comprehensive protection against fraud or negligence, and better and fuller information on which to make investment decisions. To industry and commerce they offer the prospect of keener and more innovative financial services and therefore of finance at cheaper rates. To the financial services industry, they offer a system administered by those familiar with the markets and without unnecessary Government involvement. The high standards which we seek to promote will be in the interests of all".
My Lords, that concludes the Statement.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord for the doubtless painstaking reading of this very long Statement. It is noteworthy that, whereas the former Statement about
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interest rates was announced to your Lordships' House and in another place with arrogant brevity, this particular Statement, if I may say so, errs slightly on the side of being unnecessarily voluble. We shall indeed read with interest the White Paper. We would take it that it is probably only slightly longer than the Statement that has been made this afternoon because it goes into such detail. Indeed, it may be said that if Her Majesty's Government paid half as much attention to the needs of manufacturing industry as the detailed consideration that they lavish on their friends the financial institutions and the City, the country might possibly be in a much better position.
We have in the Statement the customary genuflection to allowing market forces to operate responsibly but without unnecessary constraints. There is of course a slight contradiction here in a way because the basic philosophy of the party opposite is to allow market forces to operate without restraint, without tiresome Government regulations, and so on. So quite plainly they have had second thoughts about that.
The Statement itself of course arises from the original withdrawing by Act of Parliament of the action that was being brought by the Director General of Fair Trading, since when there has been a good deal of cogitation in the City; there has been the consideration of the Gower Report; and what we are now told is that the Government themselves have determined a clear regulatory framework, even though the form of that, according to the Statement, has not yet been decided.
We note with some interest that the Government intend to rationalise and up-date the legal provisions dealing with offer documents and the advertising of investments. Well, it comes a bit late, after the grossly excessive advertising of the British Telecom issue for which the Government had to seek special legislation in order to carry it out. I take it that the Government will make it quite clear to the institutions and to other offerers of shares that the kind of behaviour for which they themselves were responsible in the pushing of BT will not be tolerated so far as ordinary investment and ordinary offers in the United Kingdom are concerned.
We note further that the Government consider that their proposals will deter fraud, and that the regulations will cover these matters and will make the detection and prevention of fraud much easier. We shall be very interested when we see the document just how that is proposed to be done because it is quite clear, if I may say so with respect to the noble Lord, that the view is widely held in the City of London itself that the Government themselves are responsible because they do not permit the fraud squads in the country to have resources that are really adequate; fraud goes undetected precisely because of the economies of the Government on that side. Moreover, as is well known and is discussed quite frequently in the City, the technical resources available to the Director of Public Prosecutions are grossly inadequate to deal with the load of actual fraud that is taking place at the present time upon which no action is being taken whatsoever, either on grounds of excessive complication, as in the case of the sanctions busting which became too complicated, or because it is too

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small in relation to the resources that must be devoted to it.
We shall applaud any efforts that are made by the Government and incorporated in the structure to enable investors to have better protection and to have more information. We shall know when we see the White Paper itself what kind of balance has been struck between the self-regulatory aspect of the matter and the regulatory framework, the statutory framework, within which it will operate. The Statement of course gives no clue of that; it merely consists of a reiteration of the original intentions that were expressed at the time of the Second Reading of the Bill to exempt the Stock Exchange from the legal proceedings that were being brought against it at the time. One hopes therefore that we shall have more information.
Lord Taylor of Gryfe: My Lords, from these Benches we wish to thank the Minister for the interesting and informative Statement that has been read to the House this afternoon. We very much look forward to the generalities of the Statement being translated into legislation which will enable us to debate it in some detail. But may I say from these Benches that we welcome the assurances contained in this document and I am quite sure that the City will welcome it. I do not adopt a snide or sneering attitude to the City because of the substantial contributions which it makes to our invisible exports and because of its importance as an international financial centre. If we do not provide the rules and regulations to make it an effective and credible international financial centre we shall suffer as a country.
I welcome particularly the assurances of paragraph 4 that the White Paper will set out how we will assist enforcement, deter fraud and malpractice, improve disclosure and lay down the principles on which business can be conducted. I welcome the nice balance that has been achieved in the Statement between the powers of self-regulation and the continuing oversight and authority of the Minister.
We have avoided the strict legalistic arrangements of the SEC with a system that lays great responsibility on the people who practise in the City, and its financial institutions, and at the same time we have the oversight of the Minister, who has powers to withdraw their licence to operate—which would mean the termination of their existence as practitioners.
I would welcome some advice in respect of the statement that,
"the marketing of life assurance contracts will be treated in a manner similar to the marketing of other investments".
At present, the insurance industry is fairly well regulated in its practices and general operations by the Department of Trade and Industry. What additional supervisory responsibilities will now be assumed in the life assurance industry?
As I have said, it is important that there should be a balance, and paragraph 8 of the Statement states:
"we recognise that self-regulation should receive statutory backing only if there is proper accountability".
This is the price that the City will have to pay for self-regulation and the freedom which that enjoins; that it will be accountable.
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I welcome also not only the continued involvement of the Minister as the supervisor of all these operations but the continued interest of the Office of Fair Trading as a protection against monopolistic practices. It will be recalled that this Statement derives from the threat by the Office of Fair Trading made about a year ago to refer the Stock Exchange and its practices to the Monopolies Commission. It is probably a good thing that the Secretary of State will continue to have the advice and guidance of the Director of Fair Trading. That is a very useful provision.
In general, the assurance that provision gives to the small investor and the recognition of his interests as a consumer, if you like, of the services of the Stock Exchange are also covered. In the last analysis, the City of London will have to prove its ability to operate within the terms of this Statement. It will survive by the integrity of the men and women who work there and by the credibility of its institutions. This Statement places on the City and on the people who work in the City a vast responsibility for ensuring that London continues to be highly regarded as an international financial centre.
4.32 p.m.
Lord Lucas of Chilworth: My Lords, I am grateful—yes, I am grateful—to both the noble Lord, Lord Bruce of Donington, and the noble Lord, Lord Taylor of Gryfe, for their reception of the Statement I have just repeated. I find the noble Lord, Lord Bruce of Donington, extremely difficult to please; would that I could please him more often. He complains on the one hand that my noble friend the Chancellor of the Duchy of Lancaster is too brief, and he complains on the other that I was too painstaking in my reading of the Statement. It was a complex Statement and I believed that it should be read carefully, not only for the benefit of noble Lords who have knowledge of these matters but also for the benefit of those outside your Lordships' House who may wish to read about the Government's intentions.
The noble Lord, Lord Bruce of Donington, was unfair in drawing a comparison between industry and "friends in the City". We have friends outside the City also who wish to and will benefit from these regulations. They are the hundreds of thousands of people who used their own money and are using their own money to buy shares, particularly in the companies for which they work. The measures set out in the White Paper will help them in making the right judgments. There are many people who are currently moving into the area commonly known as wider share ownership who, deservedly, need more protection than hitherto. That is what the White Paper will provide.
I do not know whether the noble Lord, Lord Bruce of Donington, meant to confuse the House or himself with the comments he made concerning advertising. He knows full well that the reference in the Statement is to do with misleading advertising and not with the actual volume of advertising. The noble Lord also spent some time talking about British Telecom. BT had a full prospectus. It was a success in selling shares to that wider ownership to which I have referred.
The noble Lord spoke also about fraud and asked specifically what the Government are going to do. The

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fraud investigation group has now been set up; it was established earlier this month. It will enable the Fraud Squad to work closely with the Director of Public Prosecutions and with the Department of Trade and Industry's inspectors. That is a further measure of the steps we intend to take.
The noble Lord, Lord Taylor of Gryfe, with his very great knowledge of the City (and is it not odd how frequently I find myself answering both noble Lords?) has my gratitude for his reception of this Statement. I agree with him that the proposals in the White Paper to be enacted in legislation will be acceptable to the City. The City is prepared to accept responsibility for its own actions and, incidentally, to foot the bill for them. This is very important.
I do not disagree with the noble Lord at all when he reminds us of the extremely large and very valuable contribution the City makes to the economic wellbeing and prosperity of our country. It is necessary that the City's endeavours are seen to be as fair as possible within the regulatory framework proposed. That will lead to greater confidence throughout the world in maintaining London as the world centre of financial activity.
The noble Lord, Lord Taylor, asked particularly about assurance. The Government have paid regard to the steps taken by the life assurance industry to develop licensing. To some extent, those proposals were drawn up to deal with the marketing issues to which the White Paper is addressed. It will be a matter for the industry itself to deal with the organising committee in deciding the best way of restructuring, so that the industry will fall in line with the Marketing of Investments Board's proposals. It is in general terms expected that life assurance, pension funds and so on will be treated in the same way as any other investment. I believe that I have covered the main points which have arisen from this exchange.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that in asking one simple question I hope I shall not be charged by the noble Lord, Lord Bruce of Donington, with arrogant brevity? At least one element of that charge cannot be attributed to the noble Lord, Lord Bruce of Donington, himself. Is my noble friend aware that many people will consider that this announcement is particularly well timed, as, first, an indication of the Government's concern to preserve and develop the economically immensely important—never more important—activities of the City of London, and, secondly, as an encouragement to the hundreds of thousands of people who will, it is hoped, become shareholders in public companies for the first time and who will require rather more guidance through the complexities of investment than did the smaller number of more sophisticated investors in the past?
Lord Lucas of Chilworth: My Lords, I am grateful to my noble friend Lord Boyd-Carpenter for his question. I of course endorse his sentiments on the preservation and development of city financial institutions. It is very important that these financial services and other service industries are developed, because they are continuing to take a large share of our
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overseas business, so making their contribution to our balance of payments.
In my response to the noble Lord, Lord Bruce of Donington, I referred to the new shareholder. It is interesting that, while we have been at pains over some years to protect buyers from faulty or unsafe goods, and so on, the Government now feel it proper that they should move into the area of finance. Many more people are taking an interest in investment and need very much more protection; indeed, not only protection but help. We believe that the provisions in the White Paper will enable the securities and insurance industries to provide both guidance which is easily understood and the framework for regulation which is necessary to protect people moving into the market perhaps for the first time.

London Regional Transport: High Court Judgment
4.41 p.m.
Lord Brabazon of Tara: My Lords, with the leave of the House. I will now repeat a Statement being made in the other place by my right honourable friend the Secretary of State for Transport. The Statement reads:
"With permission, Mr. Speaker, I shall make a statement about the recent court judgment concerning the payment of grants to London Regional Transport by the Greater London Council.
"The Government took over responsibility for London Regional Transport on 29th June 1984, part way through the present financial year. Before we took over, the GLC had budgeted and precepted to pay grants to London Transport for the whole of 1984–85. Parliament therefore granted powers in Section 49 of the London Regional Transport Act for the GLC to be directed to continue paying grants to LRT until the end of March 1985.
"Accordingly I made a direction on 29th June 1984, on the facts known to me at that time, requiring the GLC to pay a total of £281.3 million in grants to LRT in instalments up to the end of this financial year. The main factors which I had in mind in determining this figure included the GLC's decisions about revenue and capital grants to London Transport for 1984–85; LRT's financial needs for the remainder of the year, as assessed at that time; and the GLC's decision that LT should lease £27 million of assets, which imposed future liabilities on LRT. This was in accordance with the Government's intentions, as I made clear during the passage of the legislation.
"The House will be aware that the direction was subsequently challenged by the GLC and has recently been quashed by the High Court. It is clear from the judgment that the court took a different view of the way in which the powers under Section 49 of the London Regional Transport Act should be exercised from that which I told Parliament that the Government intended in taking the powers in the first place.
"The effect of the judgment would be to reduce the money available to LRT by over £50 million at

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a very late stage in the financial year. A corresponding amount would accrue to the GLC. The Government regard this as contrary to the interests of ratepayers and LRT's passengers.
"After studying the terms of the judgment, I have concluded that any new direction which could be made under the existing legislation either would not accomplish what was originally intended or would be vulnerable to further legal challenge, thus failing to resolve the damaging uncertainty which now exists over LRT's financial position for 1984–85 and beyond. Nor am I confident that an appeal would satisfactorily resolve the problems over the interpretation of Section 49 which the judgment has brought to light.
"In the circumstances the Government consider that the matter can only be settled by the authority of Parliament. I shall shortly introduce new legislation to enable Parliament to determine once and for all the amount of grant to be paid to LRT by the GLC in 1984–85, and thereby ensure that the original purpose of Section 49 of the London Regional Transport Act is carried out".
My Lords, that concludes the Statement.
Lord Underhill: My Lords, I wish to thank the noble Lord for repeating the Statement made in another place. Noble Lords will have noticed that in the fourth paragraph the Statement says:
"the court took a different view of the way in which the powers … should be exercised".
That does not give a full account of the position revealed in the court hearing on 11th January.
In his judgment Mr. Justice McNeill said that the Secretary of State had exceeded his statutory authority, had wrongfully asked for £10.2 million too much in his original demand, and, although this sum had been paid by the GLC, had wrongfully failed to deduct it from his demand. In addition, he said that the Minister had wrongly included in the demand the sum of £20.8 million for future London Regional Transport leasing repayments which were not covered by the relevant section of the Act. Additionally, a further sum in the demand arose from mistaken assessment of the possible performance of LRT because money which the GLC had contracted to keep down fares had not been used for that purpose.
The ruling of the court was that the Secretary of State's action was "unlawfully, irrationally and procedurally improper". I say nothing more about that. The judge added that it was not reasonable to expect the GLC to pay the demand at the expense of other services.
It would appear that there were three alternatives facing the Government. The first was to accept the situation and confirm the lower demand on the basis of the judgment—but, of course, that might have led to fare increases unless they were prepared to guarantee increased grant. Secondly, there could have been an appeal against the judgment, but obviously the Government lawyers did not want that despite the fact that on a number of occasions the Secretary of State, and the Minister of State in the Committee stage of the Local Government Bill, emphasised that no comment could be made on the matter because it was the
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intention to appeal. But an appeal would have been protracted and could have upset the Government's intended timetable on rate-capping.
The third alternative was to introduce new legislation. It is made clear in the statement that that is what the Government intend to do. Is this not retrospective legislation? The demand was required to be made at the end of June. The Statement makes it clear that it was made on 29th June 1984. The demand will be reckoned as from June, which was the date on which LRT took over its responsibilities for the remainder of the financial year.
The judge also said that the GLC had a legitimate expectation that it would be consulted about the demand but that that had not happened. I ask the Minister why the GLC was not consulted. What undertakings will be given about this type of consultation for the future? When will the legislation be introduced? What will be the expected timetable for the legislation?
What will be the position of the GLC budget? It would appear obvious that it cannot proceed with its budget with the substantial figure of at least £50 million, and possibly as much as £73 million, unresolved. Will the GLC's inability to prepare a budget because that significant sum is left unresolved affect rate-capping (which includes the GLC), the order for which the Government are to introduce tomorrow?
Lord Diamond: My Lords, we on these Benches would like to record our gratitude to the Minister for repeating this Statement. The Minister will be glad to know that I have no questions to ask beyond those which have already been put so well by the noble Lord who has just spoken. We on these Benches take the view that a Minister acts in good faith until the contrary is proved, that he acted in good faith in the actions he took and thought that he was carrying out the will of Parliament. It appears that he was not carrying out the will of Parliament and therefore the matter must be clarified. I am most grateful to him and to the Government for the decision they have taken to reintroduce this matter to Parliament so that all these issues and allegations can be fully debated and fully discussed in both Houses. To my mind, that is the proper way of carrying on.
However, I should be grateful if the noble Lord the Minister would, if he can at this stage, indicate what view the Government take about the possibility of retrospective legislation. That is indeed a most important matter of principle. Obviously it can well be argued that the Government are not capable of tracking back where Parliament has passed a law which is capable—in the Government's view, because they are not appealing—of one interpretation only. Therefore I should be grateful for a fuller explanation of that aspect of the matter.
Lord Brabazon of Tara: My Lords, I should like to thank the noble Lords, Lord Underhill and Lord Diamond, for their reception of the Statement. I shall try to answer some of the questions which have arisen. The noble Lord, Lord Underhill, asked about overturning the court's decision, or about the fact that we did not agree with the court's decision. Perhaps I

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may expand slightly on our view on that. After studying the judgment, it was clear to us that the courts take a different view of the way in which the powers under Section 49 of the LRT Act should be exercised from that which we intended in taking the powers in the first place. The Government are not criticising the court's decision or attempting to overturn it. On the basis of the court's judgment we have simply decided that it would be in the best interests of passengers, ratepayers and taxpayers to clarify the legislation rather than to make a new direction under the existing legislative provision.
On the question of appeal, it is quite true to say that my right honourable friend the Secretary of State gave notice of his intention to appeal when the judgment was delivered. That is quite correct. However, the first priority must be to give certainty to LRT and GLC about the grant to be paid in respect of 1984–5. Having carefully studied the High Court judgment, the Secretary of State concluded that an appeal might still leave problems over the interpretation of the existing legislation and that in the circumstances the right course was to clarify the legislation. It is the only course which will give much-needed certainty about LRT and GLC's financial position.
The noble Lord, Lord Underhill, and the noble Lord, Lord Diamond, asked about retrospective legislation. I can assure noble Lords that the Bill will not be retrospective. The GLC will not be asked to pay more than it would have had to under the original direction.
I am afraid that that is all I can say on the matter at the moment. As noble Lords know, the Bill will be coming out very soon—"Very soon" is the answer to Lord Underhill's question as to when. Until that happens, I really cannot expand on it any further.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that people listening to the Statement and the comments upon it will have to come to the conclusion that both the courts and the Government are acting in an exemplary way? It is very good. It is important that they are not trying to patch up this difference of interpretation: they are going to bring in new legislation. That is very good and it is an example that I hope people will follow. But I was a little bit puzzled at the last sentence about the retrospective element. I should hate the principle of retrospection to be brought in here. I think retrospective legislation is bad and unfair. Although this may have elements in it which would perhaps justify a certain element of retrospection, I hope the Government will forgo that for the benefit of the higher principle of not having retrospective legislation.
Perhaps my noble friend can put me right: he seemed to say that in his view it is not retrospective, yet he then seemed to say that the decision that they came to when they were interpreting their own Act was that the amount the GLC would be asked to pay would be the same. If the position is that they are asked to pay back the same amount, then that would be retrospective. I think we ought to get that clear, because it would be very sad if this very excellent example of how the courts and governments can work
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were spoiled by infringing a principle which has nothing whatever to do with it but which is deeply held in many parts of both Houses.
Lord Brabazon of Tara: My Lords, I thank my noble friend Lord Harmar-Nicholls for his remarks. May I try to clarify what I said about retrospection? As I said, we shall have to wait to see what the Bill says. However, I can assure the House that the Bill will not go beyond what the GLC were originally given notice that they might be required to pay in relation to Section 49 of the LRT Act.
Lord McIntosh of Haringey: My Lords, will the noble Lord accept that his answer is quite inadequate from the point of view of the Controller of Finance of the Greater London Council, who has to advise his members as to the likely outturn, in financial terms, of the financial year 1984–5—and that forms a major part of the consideration of the following year's Budget?
The noble Lord will correct me if I am wrong—I ask him whether I am wrong—but as I understand it, the position is that, as of January 11th, the GLC thought it had not got to pay this money and the proposal is that, when and if this Bill is passed, it will again have to pay the money which it had considered as part of its reserves. Will the noble Lord not accept that this is a most unsatisfactory situation and that his answer about retrospection is not adequate for that purpose?
Lord Brabazon of Tara: My Lords, I should say that by our bringing in this Bill, the GLC's anxieties will be settled a great deal more quickly than they would have been had we gone to appeal, with all the procedure in the courts that goes with that.
Lord Diamond: My Lords, of course we endorse that. I have already indicated that we on these Benches certainly endorse the attitude the Government have taken. But I must press the noble Lord a little further on the question of retrospective legislation, as indeed he has been pressed by those on the Benches behind him. Does not the noble Lord realise that, although Parliament can do a great deal, it cannot bail the Government out on every mistake they make? If the Government have made a mistake and have been supported by Parliament, and the court has drawn attention to that mistake, the law is the law as the judge has decided. That covers the period up to the date when the new legislation is brought in or becomes effective. In those circumstances, how can the Government possibly justify coming to Parliament with a proposal which is flatly in contradiction with what the judge has decided was the law of the land at the time the judge was asked to make the decision?
Lord Brabazon of Tara: I would generally agree with the noble Lord, Lord Diamond, about retrospective legislation. However, as I said, we should otherwise have had to go to appeal. By bringing in this Bill, we shall clarify the situation a great deal quicker than we should have done if we had gone to appeal.
Lord Underhill: My Lords, I shall not press the matter further but of course the Government had a fourth way out. They could themselves have made a

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grant to LRT to cover the difference if they thought there was need for it. But will the Minister consider this point though he may not be in a position to answer? The orders for rate capping are to be laid tomorrow. These will include the GLC. If the GLC cannot complete its budget because this substantial sum is still unresolved, will the Government give serious consideration to withdrawing the order?
Lord Brabazon of Tara: My Lords, I can assure the noble Lord, Lord Underhill, that my right honourable friend the Secretary of State for the Environment will be taking into account all the relevant factors, including this proposed legislation, in arriving at a decision on the limitations of the GLC's rates next year.

Insolvency Bill [H.L.]
5 p.m.
House again in Committee on Clause 7.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 6:
Page 5, line 2, leave out ("shall") and insert ("may if it is satisfied that that person's conduct makes him unfit to be concerned in the management of a company").
The noble Lord said: This is the first of a series of detailed amendments to Clause 7 of the Bill as it now stands. Amendment No. 6 right the way through to Amendment No. 14 seek to amend the more objectionable features of Clause 7 in detail, while leaving the main framework of the existing clause intact.
Amendment No. 7: Page 5, line 5, leave out from ("day") to end of line 9.
Amendment No. 8: Page 5, line 14, leave out from ("voluntarily;") to end of line 18.
Amendment No. 9: Page 5, line 21, after ("order") insert ("or for such further period as the court may allow if application to annul under subsection (5) of this section has been made").
Amendment No. 10: Page 5, line 37, leave out paragraph (c) and insert—
("(c) that the evidence or basis upon which a provisional disqualification order was made was erroneous or inadequate;").
Amendment No. 11: Page 5, line 43, at end insert ("or that it would be just and equitable so to do").
Amendment No. 12: Page 5, line 44, leave out subsection (6).
Amendment No. 13: Page 6, line 20, after ("receiver") insert ("or any creditor").
Amendment No. 14: Page 6, line 21, at end insert ("or may appear by his solicitor or counsel and evidence may be given for the purposes of this subsection by affidavit if the court so permits.").
I should perhaps inform your Lordships' Committee that there are later amendments, notably Amendments Nos. 15 and 16, which will assail the whole structure of Clause 7 from top to bottom and will provide perhaps a convenient opportunity for many noble Lords who feel strongly on these matters to offer their views to the Government.
Amendment No. 15: Leave out Clause 7 and insert the following new clause:
Disqualification in certain cases.
("7.—(1) This section applies in circumstances where—

(a) at the time when a resolution to wind up a company is passed, the company is unable to pay its debts or is insolvent (as defined in subsection (2) below); or

(b) a winding-up order has been made by the court.

(2) For the purposes of subsection (1) above a company is insolvent when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up.
(3) Where subsection (1) above applies—

(a) the Secretary of State or the Director General of Fair Trading; or

(b) the liquidator or a creditor,

may apply jointly or severally to the court for a disqualification order, or a declaration (or both), in respect of any director or shadow director at that time.
(4) Any application made under subsection (3)(b) above must be obtained with the leave of the court.
(5) No director or shadow director shall be the subject of any application for a disqualification order under subsection (3) above unless he held the office of director within the period of two years prior to the date of the resolution or winding-up order referred to in subsection (1) above.
(6) On an application under subsection (3) above the court may—

(a) order that a director or shadow director be disqualified from acting in such a capacity in any company for such period as the court may decide; or

(b) declare the extent to which each director or shadow director is personally liable for all or any of the debts or other liabilities of the company,

or both.
(7) In determining whether to make a disqualification order or a declaration, under subsection (6) above, the court shall consider whether—

(a) the director or shadow director knew, or in the circumstances ought reasonably to have known, that the business of the company of which he was director was carried on with intent to defraud the creditors of the company or for any fraudulent purpose;

(b) the directors have failed to keep proper books of account within the meaning of sections 221 and 222 of the 1985 Act; or

(c) the director or shadow director knew or in the circumstances ought reasonably to have known that the company of which he was director had no reasonable prospect of avoiding going into insolvent liquidation.

(8) For the purposes of this section, the director or shadow director shall not be liable if the court is satisfied that that person took any steps reasonably open to him with a view to minimising the potential loss to the company's creditors.
(9) Section 630 of the 1985 Act (responsibility of individuals for company's fraudulent trading) shall apply without prejudice to any section of this Act.
(10) Where a court makes a declaration under subsection (6)(b) above or section 630 of the 1985 Act that a director or shadow director is to be personally responsible, without limitation of liability, for all or any of the debts or other liabilities of a company, then, whether or not an application for a disqualification order is made by any person, the Court may, if it thinks fit, also make a disqualification order against the person to whom the declaration relates.
(11) The costs of any successful application under subsection (3) above shall be borne by the Crown in the event of there being insufficient funds from the assets of the company after all creditors have been paid and all liabilities discharged".)
Amendment No. 16: Leave out Clause 7 and insert the following new clause—
("Disqualification and liability of directors.
7.—(1) This section applies in circumstances where—

(a) there is a resolution to wind up a company; or

(b) a winding up order has been made by the court.

(2) For the purposes of this section—

(a) the directors of the company shall be individually and collectively responsible for the management of the company and the manner in which its business is conducted;

(b) "relevant date" means the date upon which the resolution referred to in subsection (1)(a) is passed or as the case may be, the date upon which the winding up order referred to in subsection (1)(b) is made.

(3) Where this section applies, the Secretary of State, the Director General of Fair Trading, the Official Receiver, the liquidator or, with the leave of the court, any other person may apply to the court for an order in respect of any person named in the application that such person shall—

(a) be disqualified for such period not exceeding five years as the court may decide from holding office as a director of any company, and

(b) be personally liable for all or any of the debts or other liabilities of the company.

(4) No application may be brought under this section later than one year after the relevant date.
(5) No person shall be the subject of any order under this section of this Act, unless he held the office of director, or acted in the capacity of director at any time during a period of one year prior to the relevant date.
(6) In determining whether an order should be made under this section against any person named in the said application, the court shall first be satisfied that immediately prior to the relevant date the assets of the company were insufficient for the payment of its debts and other liabilities at their due date for payment and that any one or more of the following circumstances applied namely—

(a) the person knew, or in the circumstances ought reasonably to have known, that the business of the company concerned was carried on with intent to defraud the creditors of the company or for any fraudulent purpose, or

(b) the person, by false pretences or by means of any other fraud, induced any other person to give credit to the company, or

(c) the company failed to present management accounts or financial statements, at regular intervals appropriate to the business, which revealed (to the directors) the state of its trading operations and its financial position, or

(d) the person knew or in the circumstances ought reasonably to have known that the company concerned had no reasonable prospect of meeting its liabilities as they fell due.

(7) Notwithstanding that the court may be satisfied as to any of the matters described in subsection (6), no order shall be made against a person if it is shown to the satisfaction of the court that he took such steps as were reasonably open to him to minimise or prevent potential losses to the company's creditors.").
However, dealing with the detailed points on Clause 7, your Lordships' Committee will recall that the present Bill provides in Clause 7(2):
"Subject to subsection (3) below, immediately upon making the winding-up order the court shall (without any application having been made) make a provisional disqualification order against every person appearing to the court to have been a director of the company on the relevant day".
The amendment, instead of making the issue of a provisional disqualification order mandatory in terms of "shall", seeks to substitute the words:
"the court may if it is satisfied that that person's conduct makes him unfit to be concerned in the management of a company",
and then continues with a reference to the making of the provisional order.
This is a very important question, involving assessment of a principle as to whether it is right that any person should be subject to the imposition of what clearly is a very serious disability by the courts that is completely mandatory, the only way of reversing it being for that person to prove himself innocent of any kind of offence, or alleged offence, that may have been sufficient reason, at any rate in some people's mind, for the granting of the provisional disqualification order.
Lord Mottistone: Do I understand that the noble Lord is speaking to these amendments separately from Amendments Nos. 15 and 16? The only embarrassment, from the point of view of the time of the Committee, is that the speech that the noble Lord has just delivered, which I entirely support, is going to be a part—a major and important part—of the speeches that I, and, I suspect, other noble Lords will make when speaking to Amendment No. 16. I quite see the point of what the noble Lord is doing. Is there not some way, however, of avoiding using up the time of the Committee in running over the same ground more than once?
Lord Bruce of Donington: I am most indebted to the noble Lord. My intention, where I have referred in detail to some of these matters on intermediate amendments, is to refrain from duplicating those remarks when it comes to discussion on Amendments Nos. 15 and 16, in the hope that noble Lords will be able to express their views freely without being inhibited by any repetition on my part. I shall of course reserve the right, in moving Amendment No. 15, to refer briefly to some of the matters that will not be covered in detail in the arguments that I now adduce. But the noble Lord may rest assured—I have already given the noble Lord the assurance—that, in this matter, I shall endeavour to expedite the progress of the Bill as much as is conceivably possible.
Lord Mottistone: That is fine. There is one small point. I quite understand what the noble Lord wants to do. The only difficulty for the rest of us is that if we adopt the same inhibition, we shall naturally want to preserve our ammunition for our own main amendment which, in the case of myself and some of my colleagues and noble friends, is Amendment No. 16. We shall therefore feel inhibited from supporting the noble Lord, Lord Bruce of Donington, in an amendment such as that to which he is now speaking, even though we may think it a jolly good amendment. That is the complication. We do not want to waste our time, although we may well like what he is saying. I have not studied the other amendments, but on that now under discussion the noble Lord is depriving himself of a certain amount of support if all of us play the game in the way that I think he suggests.
Lord Bruce of Donington: My views on this Bill are well known. I regard it as a completely non—party issue. Although there may be certain questions of vital principle to which all of us should give attention, I do not regard it as necessary for me on this Bill to adopt a posture of adversary politics to which I am accustomed and which, of course, is correct within a democratic assembly. I shall endeavour to be as brief as possible, but there may be some considerations that noble Lords care to bear in mind when they come to consider the rather wider amendments.
I wonder whether it has occurred to the Government, when drafting a subsection of this kind, the extent of the considerable disabilities that will immediately fall upon any director to whom the full rigour of this clause will be directed, especially of course a completely innocent director—one, who, in the event, and before the time limit expires, does eventually succeed in persuading the court that a provisional order should not have been made against him at all. An innocent director, who has acted in a totally responsible manner, at some personal expense, is automatically disqualified. How long is it going to take him to set aside the order? It could take months. He will need to consult a solicitor, and briefing the solicitor in detail will take several hours. He will certainly have to get a solicitor to brief counsel, as a solicitor has no right of audience in the High Court. He will need to attend one conference, and perhaps two conferences, with counsel. He will need to swear an affidavit prepared by his solicitors. He will need to attend court to give evidence if necessary.

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Even though he goes through all that process—it can be still more complicated than that—he is going to embark, and will have to embark, on considerable expense to prove himself innocent. From our standpoint, sitting on these Benches, and I am sure from the point of view of quite a number of your Lordships sitting on other Benches, this is not really a tolerable position.
For example, if the clause were not amended to give the court complete discretion, who knows what precedents this would create for application in other spheres? A director, aside from his possibly privileged position in relation to other members of society, possibly has a higher standard of life, though not invariably so; and possibly it is an agreeable profession compared with many others in which the citizens of our country are engaged. All these things should mean that he is treated just like anybody else. I do not like a citizen of our country being in that position. I do not like his being put under the disability, at considerable cost, of having to overturn what is, under this particular subsection, a mandatory responsibility for the court to enforce. I beg to move.
Lord Boyd-Carpenter: This is an important amendment, as the noble Lord said, and one on the merits of which I am bound to say that I have some sympathy with him. I am bound to say also that I welcome very much the concern which he has shown, which is not always shown from those Benches, for that persecuted class of humanity, the directors of public companies. But I rise really to question the procedure—
Lord Bruce of Donington: Will the noble Lord forgive me for interrupting? I am most grateful to him. If I may say so, it is not only a question of directors of public companies. Indeed, as I think will emerge later, most of the directors likely to be involved in this are in fact directors of smaller companies and private companies. It is very rarely that precedents of this kind are going to be brought to bear in connection with a large, public liability company.
Lord Boyd-Carpenter: I am particularly obliged to the noble Lord, because that indicates that the width of his benevolence and human sympathy is even wider than appeared at first sight; and that is a very agreeable element to introduce into this discussion.
I rise simply to question the procedure which we are following. My noble friend Lord Mottistone referred to the fact that there are two amendments on the Marshalled List—Amendments Nos. 15 and 16—which propose the complete deletion of Clause 7 and its substitution by another clause. Meanwhile, we are embarked on a series of 10 amendments to Clause 7 as it stands. Should either Amendment No. 15 or Amendment No. 16 be successful, any labour which we have put into Amendments Nos. 6 to 14 will be wasted, whether those amendments have been successful or unsuccessful.
I wonder whether the noble Lord, Lord Bruce of Donington, has considered this. His suggestion of holding back relevant arguments on Amendments Nos. 15 and 16 because he has used them on Nos. 6 to 14 is going to make for very ragged debate, even if in
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fact the noble Lord's self-control is strong enough to enable him to carry out that suggestion. Some of us who have studied the noble Lord's dialectical skills may have reservations about that. Would it not have been better not to have moved any of these amendments, Nos. 6 to 14, at this stage, but to have awaited the outcome of Amendments Nos. 15 and 16 to see if Clause 7 remains in the Bill? If the outcome—I have no idea what the outcome will be—is that it remains in the Bill, it would then be open to the noble Lord to move all these amendments to Clause 7 on Report, on the basis that he was moving them to a clause which really was in the Bill. As it is, we may be wasting a lot of very valuable time, to no point whatever.
5.15 p.m.
Lord Bruce of Donington: I am most grateful to the noble Lord, Lord Boyd-Carpenter, for pointing out a solution to the problem which really I ought to have thought of myself. I must apologise to the Committee for not having thought more constructively about this. It seems to me that the suggestion put forward by the noble Lord, Lord Boyd-Carpenter, is the most sensible one in all the circumstances; and on the basis, which I believe to be true, that if I do not move the amendments in Committee it will be possible, within the rules of order, within the rules of your Lordships' House, to move them on Report, then I think that is a much better solution to the problem and I am perfectly willing to fall in with it. Is it in order if I do that? I am just seeking advice as to whether that is in fact possible on the Report stage, if I have not moved the amendments in Committee.
I am very happy to accommodate myself to the suggestion of the noble Lord, Lord Boyd-Carpenter. I shall therefore postpone moving any of the Amendments Nos. 6, 7, 8, 9, 10, 11, 12, 13 or 14. That may also make for the expedition of our proceedings and entitle me to the undying gratitude of the Government Chief Whip.
Viscount Colville of Culross: Before the noble Lord sits down, I should like to say that it occurs to me that another possibility would be that, if Clause 7 remains in the Bill after the subsequent major clauses have been discussed, there is always the possibility of recommitting Clause 7 as it stands, which might give us a full discussion on all the points in the noble Lord's amendments.
Lord Bruce of Donington: Yes. The noble Lord, Lord Boyd-Carpenter, has brought forward a suggestion, and that possibility did occur to me. However, I thought that, in view of the very important issues which were going to be raised today and the number of contributions which were likely to come from your Lordships in all parts of the Committee, it might be wise to allow a lapse of time between the Committee stage and the Report stage, so that mature reflection could take place based on the contributions which I hope will fall from the lips of noble Lords and which I shall then be able to take into account over a rather more protracted period of time, as I should like to do in order to study them thoroughly.
The Deputy Chairman of Committees (Lord Jacques): We have to take this in two parts. First of all, Amendment No. 6 has been moved, but the noble Lord, Lord Bruce, has given an intimation that he wishes to withdraw the amendment. Is it your Lordships' pleasure that this amendment be withdrawn?
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees: The noble Lord has also given notice that he does not propose to move Amendments Nos. 7 to 14 inclusive.
[Amendments Nos. 7 to 14 not moved.]
The Deputy Chairman of Committees: We therefore go to Amendment No. 15.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 15:
[Printed earlier: col. 593.]
The noble Lord said: I have already given at least one reason why I do not agree with the whole structure and emphasis of the existing Clause 7: first, because it makes the decision of the court mandatory over a very wide area; and, secondly, because it places the onus of proof on the presumed guilty to prove themselves innocent. I do not like this, for reasons which I have already expressed. It seems to me that the clause, in its existing form, is going to inhibit people coming forward as non-executive directors or administrators—whatever they may be—in order to assist companies in difficulties if they feel that they are going to be subject, or are in danger of being subject, to a provisional disqualification. That is the reason why this clause has been drafted in its present form.
One cannot help feeling that the reason why the existing clause has been drafted in a way that throws the onus on the director himself to prove his innocence is that the Government themselves are reluctant, first, to apply the existing law; and, secondly, to involve the Official Receiver in the normal responsibilities attaching to his office.
It is as though the Government have thrown their hands up in the air and said, "Well, there are all these offences that are taking place"—and I am bound to say that they take place on a daily basis—"and if we were going to prosecute and pursue all the suspected cases of misfeasance by directors—and indeed fraud by directors or wrongful trading by directors—it would involve us in a very considerable sum of money. It would involve masses of actions against individual directors that would cost the state a great deal of money. Therefore, it is by far best to adopt a blanket measure which says, 'right, if you were the director of a company which goes into compulsory liquidation you are for the hatchet, and it is up to you to hack your way out of the situation' ". I do not think that that is a very good way of going about it.
Over the past few years there have been cases in which prosecutions have taken place under Section 332 of the Companies Act 1948. That is the particular section which has been in existence for a long time and it enables the state to bring prosecutions against fraudulent directors. The trouble is that these prosecutions have not been pursued very rigorously,
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partly because of the Fraud Squad itself being undermanned and partly also as a result of the Fraud Squad establishment itself not containing sufficient people of professional accounting investigation skills. Also, similar considerations apply to the office of the Director of Public Prosecutions which—and I think that I speak within the knowledge of the Committee—is miserably understaffed to deal with the tremendous responsibilities that accrue to the director under the various Acts.
In 1976 only 13 persons were proceeded against; in 1977 there were 2; in 1978, there were 4; in 1979, there were 16; in 1980, there were 22; in 1981, there were 37; in 1982, there were 40; and in 1983, there were 40. These must represent a very small proportion of those directors in the country who have been engaged in fraudulent or at any rate highly dubious activities and in wrongful trading even within the definitions to which we are accustomed.
It cannot be too heavily emphasised that the bulk of the British public companies do not suffer from this disability. It is very rare that large public companies—PLCs—go into liquidation. Quite clearly the whole drift of this Bill regarding the disqualification of directors is fundamentally concerned with those very well publicised instances of directors who put their own companies into liquidation and who have a pally liquidator who will sell them the business at a very small price, distribute the small amount of funds available to the creditors and then repeat the practice over and over again. That is quite true, and it has been dealt with to some extent already in the Bill by requiring liquidators to be specially qualified people under the Act. But that is what the Bill is really concerned with—the smaller and medium-sized companies.
As your Lordships will be aware, a large number of the smaller and medium-sized companies have gone into liquidation. In fact, in 1984 there were 1,671, mainly concerned with building construction, textiles, clothing, engineering, furniture, upholstery, food, agriculture, chemicals and wholesale and retail outlets. But one could not include within their number any of the large PLCs which I am happy to see have featured among the 500 most successful companies in Europe, of which no less than 222 are British. We are dealing with the smaller people.
What bothers me is that it is the small firms which get into difficulties for quite bona fide reasons. They get themselves into difficulties possibly because of external events. Noble Lords must face it—and I do not want to make this a too controversial point and underline it, but it is a fact—that the high rate of exchange in 1980–81 of 2.40 dollars inflicted very grievous injury on many medium-sized and small firms in the country; and, of course, some of those firms are less equipped to withstand economic recession in comparison with other firms. It is also quite true that many of these firms can benefit by having the help of either consultants or non-executive directors who have had some experience of finance and industry, and some may possibly have more extensive experience in marketing or even in production engineering and the close alliance that has to be established between production engineering and design.
All those services can very often be provided—not necessarily on a full-time basis, but that is sometimes so—by a non-executive director. Very often the services of these consultants (by whatever name they are called) are sought when the proprietors of the firm, the directors of the small and medium-sized firms, suddenly apprehend that they are going to get into difficulties and they seek help from outside. It has very often been the case that consultants—management consultants, non-executive directors or whatever they may be—have succeeded in aiding the full-time and possibly more technical directors or owners of the company in producing a turn-round.
It has been the policy not only of the Institute of Management but also of the CBI and other very distinguished organisations in the country (including that to which I have the honour to belong) that this tendency should be encouraged and that increasingly more advice should be sought along these lines. Therefore, nothing should be done to discourage that.
5.30 p.m.
My own view—and other noble Lords who have far more experience than I in other fields will no doubt be able to elaborate in an even more authoritative way on this matter—is that the clause as it now stands will act as an inhibitor. One of the subsections in the new Clause 7, which I am moving—and it is similarly dealt with, although not in precisely the same words, in the amendment standing in the name of the noble Lord, Lord Benson—says that:
"In determining whether to make a disqualification order … the court shall consider whether—
(b) the directors have failed to keep proper books of account within the meaning of sections 221 and 222 of the 1985 Act".
I am particularly concerned about the insertion of this subsection. Of one thing I am quite certain: even though the issue by the court of a disqualification order should be the court's own voluntary decision—that is, it should be a positive decision rather than a mandatory one—it should take into account certain factors that are specified in subsection (7) of the new clause. Included in these is the keeping of proper books of account.
As I indicated briefly on Second Reading, as a result of the experience that I have had in investigating cases of alleged fraud in liquidations, it appears that one of the principal reasons for the failure of medium and small companies, outside cases of direct fraud, which are already covered, is that they failed to keep proper books of account. I have met that time and time again.
Unfortunately, the prosecutions which have taken place under Section 222 of the new Act, which corresponds to Section 147 of the 1948 Act and Section 12 of the 1976 Act, have been very few indeed. No proceedings were taken in 1979; two were taken in 1980; six in 1981; 10 in 1982; and 18 in 1983. In fact, the requirements to keep proper books of account have been laid down since 1948. They are very simple requirements relating only to the keeping of the barest possible details concerning everyday transactions. There is nothing complicated about them. The company merely has to keep a record as distinct from the accounting superstructure on which it is erected.
In my view, failure to keep proper books of account has been responsible for a very large number of businesses failing and going into liquidation. I hope that your Lordships may be constrained to agree with me, because I know that the view is held quite widely in the accountancy profession that, where a company has not kept proper books of account within the simple requirements of the Act, which has been on the statute book for well over 30 years, that ought to be a ground for a disqualification by the court after it has taken a factor of that kind into account.
I shall leave the remainder of the arguments in support of the clause to other noble Lords who have had experience in this field and who feel very strongly about the matter. One reason why this new clause has been tabled is that Amendment No. 7 seeks to take out of the existing clause that part which allows the court to assume that a disgruntled creditor or a person ill-disposed towards a director only has to name someone in a petition for a compulsory winding-up, whether it is true or false, and that automatically becomes grounds for the issue of a provisional disqualification, This particular feature, which is set out on page 5, lines 5 to 9 of the Bill, is quite absent in new Clause 7.
I hope that the amendment that stands in my name will command the support of noble Lords; but, if it does not (possibly because of its origins, and I am not noted for being non-controversial in your Lordships' House), I should be very glad to commend Amendment No. 16 to the Committee. I beg to move.
Lord Lucas of Chilworth: As the change in the order in which we shall proceed has been agreed by the Committee, perhaps I may intervene at this stage. At the outset I should like to say that I am quite willing to accept that the Government may not have got this clause completely right. It is controversial. That controversy has been broadcast around your Lordships' House and in other places over the past 10 days to a fortnight. Therefore, I should like noble Lords to appreciate that I accept that, not as a charge but as a simple statement.
In order that the Government may best benefit from this debate, I think it would be helpful if, alongside the general objection of the noble Lord, Lord Bruce, to the clause—and I listened carefully to him and should like to respond to him when I have heard all the arguments that will be adduced this evening—I give our general reason for including the clause in the Bill.
We wish to prevent the continued abuse of limited liability and, very importantly, we wish to encourage directors to take a closer interest in the financial affairs of their companies and to take prompt action when problems arise. The Cork Report, at page 407, paragraph 1808, recognised this problem and said:
"To provide proper safeguards to the general public, the law must also provide that those whose conduct has shown them to be unfitted to manage the affairs of a company with limited liability shall, for a specified period, be prohibited from doing so. It is desirable that restraints of this kind should apply as much to the director of an insolvent company as they apply to the individual who has become insolvent".
An individual insolvent who makes a voluntary arrangement with his creditors suffers none of the disabilities of the bankrupt, but the individual who is made bankrupt by the court is disqualified from being

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a director of a company until he has obtained his discharge. On the other hand, a director is treated no differently whether the creditor agrees to the company being wound up voluntarily or whether it is wound up compulsorily by the court. We believe that this is wrong and that there should be a distinction, one effect of which will be to encourage directors to take prompt action when difficulties arise. That is why subsection (3)(b) provides that no provisional disqualification order is made against the directors if the company is being wound up voluntarily or has had an administration order made in respect of it.
The second and main reason why we believe there should be a distinction and why we have introduced automatic disqualification following a compulsory winding up order is this. A company whose financial difficulties are allowed to grow to the stage where the interest of creditors requires the court to intervene to ensure an orderly winding up when other procedures exist for reorganising or winding up the company at the initiative of those controlling it at an earlier stage has clearly been run in a way which reflects badly on those controllers and raises the question of their fitness to act as directors. This is not, as has been claimed, a reversal of the burden of proof and contrary to the concept of justice.
The process of automatic disqualification is a two-stage procedure in which the making of the winding up order raises a prima facie case against the directors. They are not, as some have argued, deemed guilty and required to prove in one stage that they are innocent, in isolation. I do not myself care in fact for this terminology of "guilt" and "innocence". We are talking all the time in this section of the Bill of an unfitness; of a prima facie case demonstrating an unfitness to proceed with the job of being a director. We are not dealing with a criminal matter, but just with the question of fitness.
Directors are able to refute a prima facie case against them by satisfying the court that they meet the criteria for relief set out in the clause. They will be better able to demonstrate that they can meet those criteria than the Official Receiver would be able to demonstrate that they cannot. Such a two—stage procedure for determining liability is a well established technique in English law. I would refer your Lordships to the means of proving carelessness in actions for negligence, which will be familiar to noble Lords and to noble and learned Lords as the doctrine of res ipsa loquitur. The person then has to disprove carelessness to escape liability. There is an analogous procedure under Section 11(1) of the Civil Evidence Act whereby a connection on a criminal charge can be introduced as evidence into civil proceedings, and once admitted the effect is that the defendant has to displace the presumptions raised against him by the fact of connection.
The advantages of making the disqualification automatic are certainty, simplicity and swiftness. It is certain because every director or potential director knows the course of events which will follow should his company go into compulsory liquidation, and he also knows what avenues of relief are open to him. The procedure will be simple. There are no long drawn out
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court hearings to determine whether or not the order should be made. Finally, it is quick. It prevents unnecessary loss being suffered by creditors of his other companies through his continued unfitness to manage or be a director of those other companies.
5.45 p.m.
When the Government's proposals were first published in the White Paper they were criticised as being too harsh, and amendments were made to take account of the concern expressed without destroying the concept which lies behind the clause. First, to avoid the stigma (if that is what it is) of having a disqualification order made against a director who is, if fact, competent, we provided in subsection (2) that the court would only make a provisional disqualification order against those persons named in the petition. By subsection (3)(b) the court is prevented from making a provisional order against those named if, when the winding up petition was presented, the company was being wound up voluntarily or an administration order was in force. This was to encourage directors to take action (perhaps some may say that such action may be at a very late stage) in an endeavour to minimise the loss suffered by creditors.
Subsection (4) provides for the provisional order to have no effect for three months. This will enable the court to hear applications from persons claiming relief under subsection (5). Grounds (a) and (d) are straight-forward. Ground (b), which allows relief to the person who joined the board of the company for the first time during the three months before the relevant day, is designed to safeguard the director who joins the board as part of a rescue operation as a so-called company doctor, or perhaps as the nominee of an institutional investor.
If I may digress, I agree with the noble Lord, Lord Bruce of Donington, that persons in either of those two roles do indeed have a most valuable contribution to make to industry, to commerce, and to many companies which find themselves in difficulties.
Three months may appear to be a short time. Perhaps it is too short; but we wish to encourage people to consider carefully before they join a board, whether it is in the capacity of a "doctor" or as a non-executive director, because, in our eyes, whatever prefix you put before the word "director" the responsibilities are exactly the same. We feel therefore that this would provide encouragement for these people being invited to join a company to consider carefully whether the company's activities are, and will continue to be, viable. Professional directors, if I may use that expression, should be well able to acquaint themselves properly, certainly before they join the company or most exactly in three months of their joining.
Paragraph (c), together with subsection (6), grants relief where the court is satisfied that for three months before the relevant day and up to the petition being presented the applicant not only acted in the best interests of the creditors but also, within that three-month period, served notice on his fellow directors that the company should seek either an administrative order or that the company should be wound up voluntarily. This will protect what I perhaps might

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describe as the caring director who cannot persuade his fellow directors to take the action he would like, or the action which might minimise the loss to creditors, and who, rather than resign his position, sees it more proper and to the benefit of the company and his creditors that he should stay on the board to protect those interests.
To obtain relief the applicant is required to set down the application within 28 days of the making of the provisional order, arid a copy of the application setting out the grounds for relief will have to be served on the Official Receiver or, in Scotland, the Secretary of State. It is proposed to provide in the rules that the Official Receiver will either endorse the application "not opposed" or report to the court the grounds for his opposition to relief if, from the information available to him at the time, he is of the opinion that the grounds on which the relief is sought are not correct. The Official Receiver, in turn, will be restricted to reporting on the facts set down in that application for annulment, and therefore there will be cases where an unfit person avoids automatic disqualification. However, in those circumstances the Official Receiver would be able to make an application for a disqualification order under Clause 9, notwithstanding that relief had been granted earlier under the provisional disqualification provisions.
Finally, having outlined the purposes behind the clause and what we aimed to achieve by it, I repeat that it is possible that the Bill does not provide sufficient grounds for relief in any case. There may be, for example, grounds for granting relief to a person who can satisfy the court that there were good reasons; perhaps an enforced hospitalisation where he was incommunicado might be a valid reason; perhaps he had not received a copy of the statutory demand or the petition; perhaps he did not have access to the company's financial records for some reason or another. There could be a person—I should find it difficult to believe—continuing to serve on a board who was quite unaware that his fellow directors were perpetrating a fraud. If any of those cases applied, there would not be the automatic disqualification from holding directorships on other boards because there is provision in the Bill for that director to apply for leave to act.
That outlines the Government's reasoning behind the amendment. I reiterate that our views are not set firmly in concrete, that I myself and my colleagues who are dealing with this Bill in another place, are not rigid in any way about what we have set down. I see this evening as the opportunity—in the light of the amendments, Amendments Nos. 15 and 16, that are set down, and of the views that have been expressed to me personally—for those in the Committee who wish to do so to put forward a different view or perhaps an alternative.
I shall look forward with great interest and much concentration—that I promise—to hearing what noble Lords have to say. Perhaps the Committee will allow me to respond at the end. But I repeat that in no way am I sitting down rigid and inattentive.
Lord Benson: Under the procedures of the Committee, I ask leave to speak to Amendment No. 16, which is all part of the same subject, and on that
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basis I now speak to that amendment. Its object is to substitute one simple, intelligible clause for the existing Clauses 7, 8, 9, 10, 11 and 12. There are many defects in those clauses, but I intend now to stress probably the first six of them.
The first arises under Clause 7. I still do not understand what is the intention of that clause. If it is designed to force directors to go into voluntary rather than compulsory liquidation, it is a sledgehammer to crack a nut. But the more offensive part of it is that to achieve its purpose it puts the director under threat of losing his livelihood. That is the offensive part of the clause, if that is its intention.
If that is not the intention of the clause, and we take it as it stands, it is offensive for other reasons. It imposes compulsory and immediate disqualification and all the obloquy which falls upon a director as a consequence. The director then, within 28 days, has to prove his innocence at his own expense.
I know it will be urged that that is not proof of guilt, but ordinary individuals such as myself and ordinary directors will regard it as conviction without trial. I believe it is contrary to what the ordinary man in the street understands as natural justice. I do not intend to develop this subject any further. I dare say that the clause in its present form is repugnant and I hope that it will be withdrawn in due course.
The second point is that what these clauses are attempting to do is to impose sanctions when a company goes into liquidation and does not pay its creditors in full and, in addition, to stop wrongful trading. It does not really matter whether a company goes into voluntary or compulsory liquidation. It is still necessary to deal with the situation when creditors are not paid in full. I suggest therefore that the confusion between voluntary liquidation and compulsory liquidation which appears here and there in the six clauses should be removed and that the provisions should apply whatever form of liquidation is adopted.
The third objection to the Bill is based on the same premise that what we are dealing with is failure to pay debts on liquidation and wrongful trading. But there are two standards of behaviour imposed upon the directors.
Under Clause 9(1)(c) the director's conduct must have been such as to make him unfit to be a director. There is no definition of unfitness and that leaves the matter at large. The second standard of behaviour is under Clause 11 and that is so complex that I cannot attempt to précis it for the Committee. My point is that it is unreasonable to have two different standards of behaviour to achieve the same purpose. What is even more unsatisfactory is that there are different penalties under the two different forms of behaviour.
The fourth point is that under Clause 11 it is apparently open to directors of the same company to arrive at different conclusions at the prospect of insolvent winding up. Under those conditions, it is not clear whose view is to prevail or by what standards one view is to be preferred to another.
The fifth objection is that all the clauses are extremely complex and tortuous. I am glad to see that in the recent Oxford Dictionary the word "gobbledygook" has been brought in. The definition

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of "gobbledygook" is "unintelligible jargon". I suggest that there is a great deal of gobbledygook in these clauses which ought to be removed so that directors and the public at large may really know what is intended.
But the final objection is compelling. So long as these complicated, inconsistent clauses remain I can say without risk of contradiction that it will not be possible to recruit the quality of director which is needed for the conduct of British commerce and industry, particularly in companies which are going through a difficult patch and which need to recruit directors with special skills to bring them back to prosperity. It would be a strange result if this Bill and the subsequent Act prevented the recruitment of the high quality directors necessary.
Those are just some of the objections to the clauses in their present form. I should like to suggest some of the advantages that would flow if the concept in Amendment No. 16 is adopted. I know many of your Lordships may find deficiencies in the wording, and there are possibly warts. All I suggest is that the concept is sound and what it attempts to do is, first, to remove simply and clearly the difference between compulsory and voluntary liquidation. Secondly, in legislation dealing with directors, I suggest that it is imperative to say what they can and cannot do so that they know where they stand. It must be put absolutely simply before them.
6 p.m.
All directors, all boards of directors, are entitled to make errors of judgment. We all do that every day of the week upon one scale or another. What I suggest boards of directors should not be allowed to do is, first, to conduct their business fraudulently, and, secondly, to conduct it recklessly or irresponsibly. What the amendment to which I am speaking attempts to do, I hope fairly successfully, is to express that perfectly straightforwardly and clearly.
The third point I should like to suggest is that we must deal with wrongful trading—a point on which the Cork Committee laid great stress. With I hope the same clarity, the amending clause to which I am speaking makes it clear that wrongful trading, be it fraudulent trading or irresponsible trading, will attract severe sanctions on the directors concerned.
There is a fault to which I should like to draw particular attention. If one looks at Clause 7(2)(a) of the amendment to which I am speaking, one will see that it makes clear that directors are collectively responsible for the business which they are running. I do not think that the Government will be able to restructure these clauses unless they make up their mind what are the responsibilities of directors.
I have had the misery of attending the obsequies of a very large number of companies. On the day in question what happens, I am sad to say, is that there are piteous cries from the non-executive directors, who say, "I'm not responsible. How could I know what was happening? Nobody told me." The refrain is then picked up by the functional directors and one hears exclamations like, "I'm not responsible. I was only the sales director. How could I know what was
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happening?" The fact is that the main responsibility, of course, rests with the chairman and the managing director; but the whole responsibility rests collectively on the board: I think that that has got to be made clear.
May I direct attention to one other clause of the amendment? It is very short and I attach the most enormous importance to it. I will read it because it is so short. It is Clause 7(6)(c) and it says:
"the company failed to present management accounts or financial statements, at regular intervals appropriate to the business, which revealed (to the directors) the state of its trading operations and its financial position".
If your Lordships cared to make an inquiry as to the reasons for the insolvencies which have taken place in the last 15 years, beginning with Rolls-Royce and ending recently with Johnson Matthey, I think that you would find that one of the major features, if not the sole feature, which caused the insolvency was that the directors collectively did not have in front of them clear statements of what was happening to the business so that they could take steps and avoiding action in time. I commend those two points very strongly to this Committee in the hope that they will meet an answering and sympathetic chord.
The last advantage that I claim for the amendment to which I speak is simply that, in that form, it is clear what directors may do and I do not think that it will deter the recruitment of directors of adequate quality, particularly in those cases where they are needed when a company is going through a very bad patch. We shall listen in due course with great attention to the revisions to the clauses which the Government have in mind.
Lord Seebohm: I have put my name down in support of the amendments that have been sponsored by the noble Lord, Lord Benson, not because I object to the Bill as a whole but because I think it is high time that we had something like this to protect the ordinary creditors in business. The noble Lord, Lord Benson, himself has immense experience in the currency field and also as a director of companies. I do not propose to repeat the, I think, very convincing arguments that he has made to show that some amendments are certainly necessary to this Bill and particularly to Clause 7, which practically all businessmen in your Lordships' House will find, in some ways at least, objectionable.
I speak as one who has been chairman of a number of companies and who has naturally made a number of directors' appointments when I have been chairman. The reasons for appointing directors are various—some are appointed because they have special technical knowledge. Not necessarily does one want to have them assisting in the management of the company. Others in my case—and generally when I have been in an international company—have been people who knew all about the international markets. Again, they would not necessarily be expert on financial matters from the point of view of the company. Therefore, I think that we are putting some very onerous burdens on directors and I would say therefore that one must perhaps look to see if one can give them some protection at the same time.
The noble Lord, Lord Benson, has mentioned something which I myself believe to be very

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important: that is that companies just must produce at regular intervals meaningful accounts which can be looked at by all the directors. I would say myself that this certainly should be quarterly. A lot of people would say (and probably rightly) that they should appear at less than that interval—monthly; but there is a growing tendency in businesses to have a two-tier system nowadays. I was chairman of a board which had a two-tier system. The top tier met, generally speaking, quarterly. Therefore, I say that there should be, if possible, a legal requirement anyway that accounts (which need not be audited) should be produced and presented to the directors at least every quarter.
There is another matter which disturbs me very much. In recent years auditors, in qualifying accounts, apart from reporting that they present a true and fair situation of the affairs of the company, add on the words, "as a going concern". This is a warning order. It means that the company is not completely liquid; in other words, that all its liabilities could be paid off in liquid assets. It means that there are fixed assets which may well be of a very specialised nature, properly valued in the balance-sheet—because that is what they cost, less depreciation—but, in the case of a liquidation, would be valueless because nobody else wants them. They are specialist assets.
In this case sometimes when a liquidator is appointed it is in fact the liquidator who makes the concern insolvent. It is not the directors because the directors have a properly-produced and valued balance-sheet. I welcome very much in this particular case the end of this Bill which produces the principle of an administrator who can look after a company, particularly in this position, to see whether in fact it should not be continued in order to preserve what is very probably a specialist situation. This is nothing new. In fact, it has been operating in South Africa for years and years. When I operated there we found it of great use to appoint what we called in those days a judicial manager, who was able to freeze the creditors and carry on the business; and very often (in the medium businesses, anyway) he succeeded in pulling them round. I think that I can say that I agree entirely with what the noble Lord, Lord Benson, has said and with pretty well everything that the noble Lord, Lord Bruce of Donington, has said. I shall not say any more than that; but I believe that this matter must be looked at very carefully. I do not believe that Clause 7 will do as it stands.
Lord Denning: Not as a man who has had any practice in business but just as a lawyer, may I say that I have considerable sympathy with the approach of the Government to this clause; but, on the other hand, I have even more sympathy with the fact of leaving it out altogether at this stage. This is because the principle underlying Clause 7, as it stands, is that there is to be automatic disqualification of a director on a compulsory winding up order being made. It goes through the report a good deal that, in a way, the framers of it assume that when a compulsory winding up order is made it gives rise to a suspicion of misconduct or dishonesty in regard to the directors concerned. The report says in paragraph 628:
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"Under our proposals, the making of a compulsory winding up order will be reserved for the comparatively few serious cases. These include cases where those responsible for conducting the company's affairs are suspected of having been guilty of dishonesty or other serious misconduct in relation to the company, and where their conduct requires investigation, as well as cases where the insolvency is a matter of legitimate public concern".
So the report proceeds on the basis that when there is a compulsory winding up order there is something suspicious, and indeed wrong, in the conduct of the directors; and that is why they proceed on the principle that if there is dishonesty or suspicion of wrong doing that is a prima facie case against them and the director concerned must be called upon to prove his innocence. That is how they view the burden of proof.
I would suggest that that is wrong. A compulsory winding up order can be made if a company is unable to pay its debts or if it is just inequitable that it should not. It does not follow in the least, certainly, that all the directors have been guilty of any misconduct in any way at all. So I would suggest that automatic disqualification straightaway is wrong in principle, and it is wrong in principle to presume that upon a compulsory winding up order being made the directors have been guilty in same way. The burden should be the other way, and that is why, in these amendments which are being put forward, it is said: "Do not let it be automatic. Let there be an application made to the court for the judge to consider because automatic disqualification puts the burden entirely on the man concerned".
Of course I can see the arguments on the other side. I can see what the committee were concerned about. We must remember that directors have no particular qualifications. With the great public companies, as I have said before, they are a self-perpetuating oligarchy. No doubt they hardly ever get into trouble. But what we are concerned with more is the small private company, the one-man company—maybe himself or his wife. The committee thought that if the man is made bankrupt he is automatically disqualified if he is carrying on a personal business; he is automatically disqualified from being even a director of a company. In our little town there is a man—quite a humble man—who carries on, first, a taxi business in his own name, and then he has a business which hires out cars in the name of a company. Then he has another apparent interest in yet another company. If his personal business fails and he is made bankrupt, he is disqualified from being a director of those companies; but if one of the companies fails and is wound-up, he is not disqualified from going on.
The underlying theme throughout the Cork Report was indeed the bringing of them together in this way, and I will read what their recommendation was at page 446:
"the introduction of a simplified and flexible court procedure for the administration of the affairs of insolvent debtors, with a view to ensuring that the more severe process, namely, bankruptcy in the case of an individual or compulsory winding up for a company, is restricted to serious cases where misconduct exists or is suspected, and that other less serious cases are dealt with by a process of liquidation of assets, or … under a debts arrangement order".
So they are saying that in severe cases there should be compulsory winding up and in less severe cases there should be a liquidation of assets.

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The underlying theme behind much of this thought is that there must now be a new system of an administrator. An administrator will be appointed by the company or the court when the company is on the verge of liquidation. The aim throughout these proposals seems to be that instead of compulsory liquidation the company should go into voluntary liquidation or have an administrator appointed. I do not know whether that is a satisfactory solution. It seems to me that, on the whole, Clause 7 has two great defects. It is wrong to impose automatic disqualification, which should only be on the order of the court; and it is wrong to put the burden of proof on the director concerned. So I would support the amendments, or one of them.
6.15 p.m.
Lord Harmar-Nicholls: If I understand parliamentary language, my noble friend on the Front Bench has made it clear that the Government are not satisfied with Clause 7, either. He has made it perfectly clear, I think, with the words that he used, that they are prepared to look at this again and to take into account what has been said. If that is the message that he intended to give, I should like him to know that, from some experience connected with small companies, if the eventual Bill does not convey the message which is contained in subsection (7)—the last subsection in Amendment No. 16—it will not be satisfactory to me and I do not think it will be doing true justice. Subsection (7) in Amendment No. 16 says
"Notwithstanding that the court may be satisfied as to any of the matters described in subsection (6)"—
this is the important part—
"no order shall be made against a person if it is shown to the satisfaction of the court that he took such steps as were reasonably open to him to minimise or prevent potential losses to the company's creditors".
If that is not the principle which is enshrined in the Bill when it becomes part of the statute, I do not think it will be satisfactory. Those words sum up what we ought to aim at.
I was a little disturbed at the distinction made by my noble friend between what he called an order and a provisional order. I was interested that he should say that the prefix in front of "director" does not matter. He said that whether he was an executive or a non-executive director, the prefix was not important: it is the fact that they are directors. I would say exactly the same with the order, in terms of the effect it would have upon any individual's reputation and his general standing. Whether the order is an order or a provisional order it would be devastating, and I do not believe that an order, whether in a provisional form or in any other form, ought to be inflicted upon any individual until the court itself has decided that all the circumstances surrounding whatever a man has done in the years he has been a director have been taken fully and properly into account.
The automatic decision is no good, and the suggestion that a provisional order may be mitigated to some extent I do not think is satisfactory. I was in the Isle of Man recently in connection with the Commonwealth Parliamentary Association, and we were told about Witch's Hill. Apparently, in medieval
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times it only required one person to say "She's a witch!" and automatically, because that charge had been made by one person, the accused woman was taken to the top of the hill and put into a barrel which had spikes inside it. Then the barrel was rolled down the hill and, apparently, when it got to the bottom, if the person was still alive she was adjudged to be a witch because she had survived, but if she was dead then she was declared innocent and not a witch.
I believe that this mandatory clause, as it stands at present, would be equivalent to the witch's barrel, and I do not think it would be either natural or even intellectual justice. I hope that the language that my noble friend has used means that they will look at this again and will make of this Bill a good and necessary Bill, and one that is a just Bill to those individuals who are concerned with running businesses in this country, whether large or small. I hope it will contain the spirit of subsection (7) in Amendment No. 16. Anything less than that I do not think would be good enough.
Lord Marsh: I think that the problem with this clause and with some of the following clauses is not that it is in need of looking at again and reconsidering; in many cases, it is fundamentally wrong in its aims. I certainly hope that the Committee will see fit to support Amendment No. 16, although Amendment No. 15 moved by the noble Lord, Lord Bruce of Donington, would also be an improvement.
It is wrong, because it is aimed at the wrong target. I think that the Government, quite understandably, are deeply concerned at the attitude of directors who are either consciously fraudulent or grossly irresponsible, and one can make a very strong case of criticism of the authorities in not using the powers already at their disposal in many of those cases. As the noble Lord, Lord Benson, said, the words of the Bill tend to use a blunderbuss to crack what is a very specific problem. But it is not only that some of the shot will go to the side and perhaps injure odd individuals; I think that the Bill as drafted could have an extremely damaging effect upon smaller, start-up companies.
The noble Lord, Lord Lucas, mentioned this and referred to it on Second Reading when he was talking of the three months' exclusion and said: "Surely, within three months it is possible for a director to examine the evidence before him and to decide whether or not the company is in a healthy position". If a director takes on the responsibilities of a company, it ought to take him far less than three months to establish the situation that the company is in, and I agree with the noble Lord, Lord Lucas.
But the problem is not simply defining the condition of the company; it is then deciding what one should do about that situation. Should one at that stage immediately pull the rug, with all that that implies for people inside and outside the company who are already at considerable risk, or should one seek to save it? That is one of the damaging aspects of the Bill as drafted, because it is possible then to examine the situation of the company and to determine—frequently, fairly easily—what the problems are.
In small companies the problems are very frequently those of cash-flow and lack of experience. In great public companies that is unacceptable, but in

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many small, start-up companies, which subsequently become big companies by definition, they frequently lack experience, they are under-capitalised, they make mistakes, and possibly their overheads are far too high for the likely revenues. All those things can be identified quickly.
Cost reduction is not something that can always be achieved quickly, and therefore over and over again people in companies of this size find themselves with two conflicting desires: one is to achieve more money by cash or by credit, and the other is to achieve more time. Frequently, they need more time to achieve more credit or more cash. It is not easy, if a company is in difficulties, to go to a bank and ask for another couple of million pounds. One has to show that steps are being taken in that direction. At the very moment when the directors of a company decide to make a fight, to see whether they can save the company and the jobs, avoid redundancy payments, and secure the creditors they continue to exacerbate the situation.
I have been a member of the boards of public companies and private companies. One private company of which I became chairman was in a very serious financial situation. It took some three months before we could eventually get the additional funding needed and that proved insufficient, because we could not get the costs down rapidly enough. It took nine months before we managed to obtain a complete restructuring of the company. One of my colleagues said to me some time afterwards: "At least, now when we see the light at the end of the tunnel we know that it is not Kenneth Cork tearing down towards us in his car." While that company is not out of all its problems, it can now meet all its creditors, it can give stability to its labour force, and it has every chance of being a highly profitable company.
My fear is that as the Bill stands no director in his right mind would take risks of that sort and the tendency would be to pull the rug much more early. That would be damaging to many companies after they have overcome the initial difficulties, after they have run all the risks and after they have had, as the amendment rightly demands, the responsibility of having to say that they could not reasonably have been expected to know that there was no reasonable prospect of meeting the company's liabilities. That is a judgment that they have to make. If the company falls, they will very rightly be held to account, but if they take that risk they have to be very clear that they believe they can justify the actions which they have taken. My fear is that under the present Bill as it stands they will not take that risk and the country will be poorer for it.
Lord Meston: Your Lordships' Committee has to consider the rival attractions of three versions of Clause 7 and I would respectfully say that the Government's flexible attitude is welcome. Your Lordships have stated the objections and I shall not repeat them, but there is one risk upon which your Lordships have not touched and that is the risk that Clause 7 in its present form could be used by the unscrupulous as a blackmail weapon. The other defect of Clause 7 in its present form is that it deals only with the compulsory liquidation. The Government say that that is a deliberate omission to encourage voluntary
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liquidation, but I question that. In the real world the directors of small companies simply do not have the resources or the inclination to go to so-called company doctors or even to consult their accountants for the necessary advice.
One other objection that I shall briefly mention—it is an important one, if a little mundane—is really a logistic and administrative objection. If one keeps the figures simple, and if there are 10,000 liquidations a year of companies, each of which has two directors, then there are at least 20,000 potentially disqualified directors every year. If 75 per cent. of those feel that they are able to apply to be exonerated under the terms of Clause 7 as at present drafted, there will be something like 15,000 applications a year.
In each of those the official receiver will have to consider the application on its merits and, even if the official receiver decides that he will not oppose the application, the court will have to give some consideration to the application on its merits, which will sometimes involve quite a detailed analysis of the state of the company in its dying period and a detailed analysis of the state of mind of each individual director of that company. Our Companies Court and our county courts are simply not equipped for that sudden burden of work, and even if the Government had adopted the Cork recommendations for a separate insolvency court, the position would be no better.
The thrust of Clause 7 in any of these versions is a protection of the public interest, but I suggest that it is not in the public interest to impose such a disproportionate burden on the courts and such a disproportionate burden of expense and effort on the truly innocent director. There are much better mechanisms than Clause 7 in its present form for bringing the truly delinquent director to the attention of the appropriate authorities, to be dealt with by the courts, and I therefore seek to support Amendment No. 15.
Viscount Colville of Culross: I wonder whether I may ask my noble friend Lord Lucas a little about the logic of this part of the Bill, because I believe that it has a distinct bearing on the question of automatic disqualification under Clause 7. It is good to see that in subsequent clauses in this Bill the Government are, indeed, taking the question of disqualification very seriously. For instance, having introduced, most admirably in my view, the concept of wrongful trading in Clause 11, they then provide that the court can disqualify on an individual basis any person who is responsible for that wrongful trading.
In addition to wrongful trading, Clause 12 provides for disqualification for the even more serious offence of fraudulent trading, which is the subject of Section 630 of the new Companies Act. Then, as my noble friend has already pointed out, in Clause 9 we have provisions whereby further disqualification orders may be made in somewhat vague circumstances; perhaps, for instance, where people have behaved in such ways as are described in Section 626 of the Act, which involve all kinds of offences by directors and officers of companies created in the course of a liquidation, whether it is voluntary or compulsory.
6.30 p.m.
All those kinds of disqualifications are aimed at persons who have been identified as being at fault individually, to a greater or lesser extent. The disadvantage of doing it that way inevitably means that the courts will have to come to a conclusion about the individual fault of the person and that may mean that the disqualification does not happen immediately. The person will be able to continue as a director of other companies—perhaps not behaving any better in that capacity—for a substantial period of time before the court finally disqualifies him.
Then we come to the provisions of Clause 7 which apply only to the compulsory windings up. As many noble Lords have said and have explained from wide experience, the directors who are involved in those companies may by no means necessarily be individually at fault at all. There is no reason why, if the matter was to be adjudged—there is a provision for it to be adjudged—they should end up by being disqualified after the three months because they would be exonerated. Yet the illogicality is that, where there is no primary implication of fault, they are immediately disqualified, while where the cases are matters of serious dereliction of duty—involving fraud, wrongful trading and so on—they may go on being directors for a substantial period of time until, as a result of an individual application by the receiver, the Secretary of State or somebody of a similar basis, and upon a proper adjudication by the court, they are found to be unfit to be directors and are disqualified. I cannot understand the logic of this.
It seems to me that the automatic disqualification is exactly the wrong solution for the people who have not yet been determined to be in dereliction of their duties as a director. Yet it comes at the forefront of this whole provision and reverses, as noble Lords have said, the burden of proof. I do not understand the logic of the way in which this part is laid out. I very much approve of the individual basis upon which some of the later provisions for disqualification are approached—by an application by the receiver or somebody else, and by an adjudication by the court—even if it does take some time. I can not see how that stands with the provisions of Clause 7 as it stands at the moment.
Lord Templeman: As a former practitioner in the Companies Court, perhaps I may draw attention to the very great step that is made in this Bill. There is already legislation and material for dealing with fraudulent persons, and for the first time this Bill attempts to put limitations on incompetent directors. The whole object of Clause 7, as I understand it, is to protect creditors from incompetent directors. The reason that they need protection is that towards the twilight end of a company's existence it is really trading, although it may not know it, on the creditors' money. It is accepted by both the Government and those who moved amendments that we need to move into the area in which incompetent directors can be disqualified and also will possibly have to pay towards the company's liabilities. That obtains from both the amendments and the Government's original proposals. So the principle is apparently acceptable.
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The question is: what are the steps to be taken to prove that a director has been incompetent?
In Clause 7, as the Government have laid it down, the crucial provision is subsection (6), which provides:
"The court shall not annul a provisional disqualification order … unless it is also satisfied that, within the period of three months ending with the relevant day"—
that is 28 days before there is a presentation of a petition for compulsory winding-up—
"the person against whom the order was made gave to the other directors of the company … notice of his opinion",
in effect, that they ought to go into voluntary liquidation.
As the Minister said, the object of Clause 7 and of subsection (6) in particular is this. A company often goes into compulsory liquidation because the directors are ignorant and incompetent. They are not fraudulent. They do not realise in time what is happening; and when they do realise they stand there petrified until some creditor does not get paid, issues a writ, gets judgment and then presents his petition. This clause will mean that whenever a director is with a company it will be his duty to see whether the company has reasonable prospects of surviving. If he thinks it does, he will do nothing. If he is proved to be wrong, I do not see why he should not be disqualified. If he is right, there is no problem.
Your Lordships' Committee will observe that by subsection (6) the director is safeguarded if, within the period of four months before a compulsory winding-up petition, ending with one month, he gives a notice saying that the company ought to be wound up voluntarily. Normally he will not have to give the notice because if he has formed that view, the company will go into voluntary liquidation. So this clause is saying to directors, "We do not accuse you of fraud, but you must, out of fairness to the creditors, consider from time to time whether the company reasonably has a prospect of going on. If it has not, you must not wait until a creditor comes along and we get all the cost, the expense and the delay of the court; you must act at once and you must act at once by putting the company into voluntary liquidation".
In voluntary liquidation there is less expense to the state. The voluntary liquidation is controlled by the creditors. It is said in the Cork Report, and the Government accept it, that, generally speaking, it is desirable that a company should be wound up at the behest of the creditors, rather than by the company. If your Lordships' Committee rejects Clause 7 as at present set down, it will be rejecting the opportunity to point the finger at directors and give them instructions that they must from time to time consider the position of the company, saying that if they wish to avoid being deprived of the privilege of being a director of any company, they must act in time under subsection (6).
At the same time perhaps I may draw attention to the second requirement of Clause 7, which is in subsection (5)(c). First of all, if a director wishes to avoid automatic disqualification, he must come along and show that he has given a notice under subsection (6). But then in addition he must show that he has acted for a requisite period,
"in a manner which, in the circumstances, was in the best interests of the company's creditors".

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If that subsection stands, there has to be an application by the director and he will presumably put in an affidavit. The official receiver will presumably also have to put in the facts. Of course, a well meaning director will probably be content to rely on his own affidavit and on what the official receiver puts in. But one must recognise—we have frequently come across it in the courts—that the most obstinate director is the most ignorant. It is the obstinate director who will come along and attempt to prove under subsection (5)(c); he will say that he wants to cross-examine the official receiver; that it was all the fault of his bank manager; and he will extend the proceedings ad infinitum.
I wonder whether the Government would consider deleting subsection (5)(c) and making subsection (6) the sole requirement for a director who wishes to show that he is not automatically to be disqualified. He will come along with his notice, prove that he was in favour of the company going into voluntary liquidation, and show that he failed to prevail with his other directors. That ought to be a complete defence to automatic disqualification. It will not cost the court any time. It will not cost the impecunious company any money. It will be automatic.
If a director does come along with such a notice, he is not automatically absolved. He is absolved from automatic disqualification, but he can still be caught under Clauses 9 and 11 if he has done something really rather wrong. I suggest to the Government and to the Committee that there is no defence in subsection (7). And if it be said that, shorn of subsection (5)(c) how unfair it is that there should be automatic disqualification, then I should answer this: I would say to the noble Lord who said that there was no fault that there is always fault.
If a director does not recognise within one month of a winding up petition being presented that there is something wrong with his company, then he is either fraudulent or so ignorant that he ought not to remain a director. That is why disqualification ought to be automatic. The director does not have to put the company right; all he has to do is recognise that the dangers are dangers not to him (because of the limited liability) but to the creditors. He ought then to put the company into voluntary liquidation.
If he does not put the company into voluntary liquidation, and if within a mere month there comes rattling through the company's door a winding up petition, how can he turn round and exclaim, "How surprised I am! I have been a director of this company for months (or years). I know that I have responsibilities. But to my very great surprise, I thought everything was fine, but here is a winding up petition which will result in the court making a compulsory order".
I would say that if a director does not within a year suspect that a company is in a rocky position and does not take advice accordingly, without necessarily going into liquidation—because he ought to have a feeling about how his company is progressing—and then does not know what the situation is within a month, then to my mind his incompetence has been proved and he should be automatically disqualified. His defence
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would be, "I did consider the matter. I did come to the right conclusion. I served a notice under subsection (6), but my directors would not tolerate it".
I shall now say á few words about Clauses 9 and 11—
Lord Marsh: Before the noble and learned Lord does so, on the point concerning the serving of a notice on fellow directors, does he not believe that in those circumstances the director concerned would have no alternative but to resign immediately, and that the company would in reality find itself in liquidation forthwith as a result of that?
Lord Templeman: A company does not go into liquidation because a director resigns; that is the answer to the noble Lord's question. A company can go into liquidation only if there is a resolution of the creditors at a meeting properly called, or if there is an order of the court under the presentation.
That question takes away from my main argument that there is merit in subsection (7). To the argument that it is unfair to have automatic disqualification I point the finger at every director who gets within a month of the presentation of a compulsory winding up order and has the impudence to turn round and say "I didn't know. I thought that everything in the garden was lovely". Either he knew and the company should have gone into voluntary liquidation, or he ought to have known. There can be no escape from that.
Turning to Clause 9, this provides for the disqualification of unfit directors. It has this difficulty: it requires the official receiver, the Secretary of State, or the liquidator or former liquidator of a company, to take action. Mostly, the companies concerned have no money, or they would not be the subject of compulsory liquidation. No liquidator could take proceedings unless he was financed by the creditors, and it is doubtful whether they would finance him. I wonder whether Clause 9 is necessary when, Under Clause 11, there is a procedure whereby a director who has been guilty of carrying on a company that has no reasonable prospect of success can be made liable personally and can also be disqualified. I suggest to the Government that Clause 11 by itself is quite sufficient.
There is an incentive in Clause 11 for a liquidator to take proceedings because under that clause a defaulting director can be made personally liable. Therefore, so long as the defaulting director is worth powder and shot, and even if he is not, then proceedings can be brought against him under Clause 11.
There is one point on which I would like some clarification. Clause 11 provides in subsection (1) that the court,
"may, if it thinks it proper to do so, declare that person to be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company".
I am not sure whether that is intended to saddle a defaulting director with all the debts.
Take this case: a company is £100,000 in the red. A director comes along and the court comes to the conclusion that that director has been to blame. But perhaps he has not been to blame for the whole loss; perhaps others have been more responsible for it than

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he has been. Perhaps he came into the company at a later stage. Under this subsection, is it competent for a judge to say, "I consider that you ought to be made personally liable, but in all the circumstances, and having heard all the evidence, the limit of your liability ought to be £10,000", or that it ought to be £20,000, or whatever? In other words, can the court temper the wind to the shorn lamb? Directors' incompetence and bad habits vary from company to company and from director to director. I should like to suggest that the court be given discretion and that it should not be, as it appears to be in Clause 11, all or nothing.
6.45 p.m.
My second observation on Clause 11 is to question whether subsection (4)(b) should not be deleted. I take the point raised by my noble friend Lord Benson, when he said it was unfair that there should be two standards applied to two different directors. There is the standard in subsection (4)(a) that the director will be expected to use the general skill and experience which, in effect, directors ought generally to employ. That is the objective test. I suggest that subsection (4)(b) should be deleted and that as between, for example, one director who is a skilled accountant and ought to have known better and a bookmaker who perhaps did not, it could be left to the judge under Clause 11(1) to say at his discretion. "I consider that one director, in all the circumstances, ought to be liable for all the debts, but that the other director I should make liable only for a particular sum". Those are the only suggestions I make.
So far as the amendments are concerned, the test in Clause 11 as it stands for the liability of a director is that he knew or ought to have concluded that there was no reasonable prospect of the company not going into insolvent liquidation. I can see that that is a test which the court can satisfy; it can make up its mind. Some of the tests laid down in the amendments—I will not go into detail—talk about being just and equitable and introduce various phrases which are much more vague than the existing wording.
One does not want to saddle the court. Under Clause 11 it will be difficult enough anyway. The test must be fairly sure; otherwise the work of the Companies Court will be taken up in litigation and long arguments about the precise meaning of the expressions in the Bill. There ought to be some simple test. If I may say so, the test which the Government are proposing in subsection (2) seems to be near the point. No doubt this matter can be looked at again, because it is very important that if liability is to be visited on a director, then the test on which that director is to be judged by the court should be certain. I say no more.
Lord Harmar-Nicholls: On the basis of the noble and learned Lord's own example of where it has been adjudged that one director ought to be made liable for the whole of the debt because of his particular discrepancies is he suggesting that the other directors should then be automatically discharged under the clause as it now stands? Under those circumstances would not the noble and learned Lord agree that the situation ought to be either provisional or permanent?
Lord Templeman: With great respect, that is a confusion of thought. Clause 7 is the clause which concerns automatic disqualification, and Clause 7 has nothing to do with the differences between one director and another. Clause 7 says this: whether you are an accountant or a bookmaker, or whatever you know, if you take on the responsibilities of a director and you do not know within a month of a compulsory order that that company is on the rocks, then either you are fraudulent or you are incompetent—probably incompetent. Therefore it is not under Clause 7 that one needs to differentiate among directors. All directors ought to know in how sorry a state a company is within a month of its being killed off by the Companies Court. If they do not, they have no right to be directors.
Clause 11 is entirely different. It fixes personal liability. Under Clause 11 it is very important to know the difference between directors and to see those who are more culpable than others. But in my submission the issue does not arise under Clause 7 which starts with the principle that no director should be surprised if a winding-up petition arrives on his desk.
Lord McIntosh of Haringey: Faced with the serried ranks of solicitors, barristers, accountants and others with experience of big business, I quail, and I particularly quail after hearing the noble and learned Lord and feeling myself held with his glittering eye. However, perhaps I may be permitted a very short story. I am the kind of person who your Lordships are all talking about. I am the director of small private companies. If I may be permitted to say something personal from this Dispatch Box, perhaps it may bring some of this discussion to a personal level.
For 20 years I have run a private company of which I am the major shareholder, which I hasten to say is in no danger whatsoever of insolvency and which has provided advice to other companies on marketing matters. A couple of years ago my company provided advice to a group of people who proposed to form a company. When the advice was favourable and this looked like a good prospect, they asked me whether I would join the board of the company. It seemed to me that I had a duty to put my money where my mouth was and to take some continuing responsibility for the professional advice that I had been giving. I hasten to say that I have not received a penny from my directorship of this company.
At the same time it is relevant I think that the active directors of the company have been rushing around like mad, buying machinery and making arrangements for the production and marketing of their product, and they have failed in several more than just technical respects in terms of financial reporting. I have written a letter to the secretary of the company which has been drafted for me by my legal advisers in the light of this Insolvency Bill among other things.
I must say that when I first saw Clause 7 of the Bill and the complexity of the letter that I had to write in order to protect my position, I realised that if the Bill had been on the statute book a year ago when I became a director of this company, I should simply never have become involved at all. If anything like Clause 7 is enacted as part of this legislation, I shall immediately resign from the directorship of the company.

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My experience may not seem relevant to many other noble Lords. It may be that the contribution that I make to this company is very minor. But the point that has been made, notably by the noble Lord, Lord Marsh, about the importance of having outside directors with particular experience which cannot be available to the executive directors is relevant here and I believe supports the case for either Amendment No. 15 or Amendment No. 16.
Lord Taylor of Gryfe: Time is moving on, and I wonder whether the Minister will be a little forthcoming about his attitude to the matters that have been raised. He indicated at the outset that he was prepared to be less rigid than is normally the case. The case against the clause has been well and truly stated. Quite apart from what has been said in the debate in this Committee, he must, I am sure, take cognisance of the considerable representations that have been made by bodies such as the CBI, the Institute of Chartered Accountants, the Law Society, and so on. With all that weight of opinion which is critical of Clause 7, perhaps he could indicate to the Committee that in the light of this afternoon's discussion he is prepared to look at the matter again and thereby avoid the necessity of voting. We all share the concern of the noble Lord to do something about the situation. If he were to act accordingly, I think that it would be with the consensus and support of the Committee.
Lord Mottistone: I should briefly like to add to the discussion. My name is on Amendment No. 16. I think that it is fair to say to my noble friend Lord Lucas that except for the noble and learned Lord on the Cross-Benches who spoke one from last, with whom I do not agree a bit from practical experience, I think that all of us have made it quite clear that the general tenor of Amendments Nos. 15 and 16 is much more what we would want to see.
My reason for that is that I think that there are three things which need to be done when a company is in difficulty. The first is to save the position of the creditors if one possibly can. The second is to make sure that the existing directors, when they are working into trouble, do not inadvertently and expeditiously go into voluntary liquidation so as to escape trouble, but try to fight the battle as well as they possibly can for so long as they possibly can. The third thing is that, if they find somebody expert to assist them in this battle to survive, they can get a decent chap and he is not put off.
I think that all noble Lords who have spoken—and I believe some who have not—would agree that those are the three priorities behind which Clauses 7 to 12 need to be constructed. I do not think that those clauses, as they are at the moment, are constructed with those priorities. There are other priorities of which my noble friend gave us a thought when he spoke earlier. I think that the noble Lord, Lord Benson, when moving Amendment No. 16 was working on the best lines that we have heard so far. I do not believe that any of the amendments are perfect and they will require re-writing.
However, when my noble friend Lord Lucas spoke earlier, he said that this part of the Bill was not cast in
622
stone and that the Government would look at it in the light of this debate. I do not think that that is quite good enough. If he cannot say something more than that—for instance, "I have heard what noble Lords have said and we shall give serious thought to this with the intention of putting down on Report a Government amendment that embodies the thoughts of this debate"—I would recommend to my noble friend Lord Benson (if I may so describe him as I am supporting this amendment with him) to go to a Division on Amendment No. 16. I think that there is enough thought in the Committee to support it. I hope very much that my noble friend the Minister will be able to give us the undertaking that I have indicated.
Earl De La Warr: I should like to support my noble friend Lord Mottistone in what he has just said. The reason is this. I am quite sure that my noble friend Lord Lucas will find himself in considerable difficulty with his department. He has shown himself to be commendably understanding of our point of view; but we cannot possibly run the risk that we withdraw the amendment and he comes up with something which the department has written for him and which is totally inadequate, when we might then find it very difficult under the rules of this House to return to the matter. Therefore, I agree with my noble friend Lord Mottistone that we must ask him to be specific when he comes to reply now.
7 p.m.
Lord Noel-Buxton: I wholeheartedly agree with my noble friends who have just spoken. My difficulty is something of a procedural one, too. I have yet another alternative to Clause 7, which is really its deletion, and an amended Clause 9. But, I suppose strictly speaking that I should only speak on whether Clause 7 shall stand part of the Bill. I do not really want to oppose that—though I do not want the clause to stand part—if my noble friend Lord Lucas would assure me that the Government will satisfy what I understand to be the feeling of the Committee, which is that Clause 7, as drafted, will not do.
Lord Lucas of Chilworth: We have had a very long, deep, serious and to me most instructive debate this evening over what is probably one of the most important parts of the Bill before us. With due respect to the noble Lord, Lord Benson, and others, may I separate the two issues—that of disqualification and that of wrongful trading—because I believe that most of this afternoon or this evening we have concerned ourselves with the aspect of disqualification.
I believe that the noble Lord, Lord Bruce of Donington, will commend me for doing this: I have abandoned my brief. I want to respond as I see the situation not as an accountant or a lawyer but as a businessman. Perhaps at the end of my response I shall say how I see it as a member of the Government.
The first situation which I think I have failed to describe accurately is the description which we are going to attach to a director whose company is compulsorily wound up without his having taken any action other than to sit and watch it happen. We are not saying that he is a criminal. We are not necessarily

623
saying he is grossly incompetent, a cheat, a fraudster. What we are saying is that his company of which he was a director—perhaps one of many—has been wound up; creditors have become tired of hearing the same story; he is unable to meet the company's liabilities; a petition has been made, the court has granted a petition and the official receiver—the state—has had to come to attend to the affairs of the company. There is a prima facie case here that that director was not fit. I believe that this is exactly what the noble and learned Lord, Lord Templeman, said. It is here that we start with a company going "bust" and somebody else having to come in compulsorily to wind it up. The directors have done nothing; they have sat around. As at that moment a director cannot be fit to be a director and there follows an automatic disqualification.
We have set down in the Bill quite specific grounds that enable him to seek relief. I accept that it may be the wish of some members of the Committee to enlarge those grounds of relief. I have no quarrel with that. That would be one of the areas which I should be content to take away with the real intention—if I may address that to my noble friend Lord Mottistone—of meeting the objections that the Committee have made. However, I have to start with this presumption: that because the company has gone into compulsory liquidation there is a prima facie case of the directors not being fit. They have other opportunities in which to demonstrate their fitness. They are set down in the Bill.
The noble and learned Lord, Lord Templeman, drew attention to the appropriate subsection in the Bill. He read it out. May I add to what he said? He did not underline the other alternative which is available to a director who sees his company going into difficulties. This director wants to avoid a liquidation of the company. He certainly wants to avoid a compulsory wind-up. He wants also to avoid rushing headlong into a voluntary wind-up. He thinks there is a slender chance of a rescue. He has the other procedure open to him which is that of applying to the court for an administrator. It may well be that were the court to grant that administration order, that director may be required by the administrator to resign the directorship. Almost undoubtedly that administrator would take over as the chief executive. But if an administrator is appointed the administrator enjoys the benefit of a 12 months' moratorium. The effect of that order is to bring about a complete moratorium on creditors' rights for 12 months.
I think this answers the point made by the noble Lord, Lord Marsh, when he said, "Here is a situation that has arisen. The great problem is to decide what to do about it". Frankly, I agree with him in the way that he saw the problem. I think he said his solution was to talk to the creditors in confidence and seek their support. They may not give him support. He said that it is not always a question of just obtaining money.
Lord Marsh: I hesitate to interrupt the noble Lord and I am grateful to him. That is a misunderstanding. It was certainly not my suggestion that if a company was in serious difficulties you should call all the creditors together and ask what to do next. I think that would be self-fulfilling very rapidly.
Lord Lucas of Chilworth: Perhaps I wrongly inferred that. If the noble Lord will forgive me, I shall certainly read exactly what he said. He said that very frequently what one wants is time. If one does apply for the administrator procedure one receives time: it is a period of 12 months. If there is not a pull-round in 12 months I fear that there is little that anybody could do.
I was upset that the noble Lord, Lord Benson, should find the provisions of Clause 7 offensive. He said, "Here is a disqualification, compulsory and immediate". It is a provisional disqualification. There is a fundamental difference because there are the grounds set out in the Bill for setting it aside. I believe that the procedures, if one applies for those specific forms of relief, are not going to be so time-consuming or, indeed, costly. The concept in this Amendment No. 16 of what directors can and cannot do, I can accept. I acknowledge exactly what the noble Lord said with regard to the individual and the collective responsibility of directors. Again, in the case that he raised, the noble Lord, Lord McIntosh of Haringey took an individual director's view of the state of that company. He advised the company that they were buying machinery with abandon, or words to that effect. He saw trouble looming and took the right and proper action to protect himself. He could, of course, had he wished to stay with the company, have taken other action.
The noble Lord, Lord Seebohm, suggested a provision to the effect that meaningful accounts should be a statutory requirement. That is another point to which I would be happy to give serious consideration. However, I suggest with some seriousness that an opposing lobby may well say, "Oh, dear—yet further burdens being imposed in law on a small company!" The noble and learned Lord, Lord Denning, had, I thought, some sympathy for the general intent of the Government in the Bill. The noble and learned Lord said, however, that he had more sympathy for leaving out the clause altogether because he did not like automaticity. It was wrong, he said, that there should be a presumption of guilt. I find it quite extraordinary that the noble and learned Lord should use that term. We are not presuming a guilt of any kind. I return to my opening remarks. What we are saying is that where there is a prima facie case because the company has collapsed and because the court is seeking a compulsory wind up, there is ground to suppose that there has been an element of unfitness of the director.
I noted what my noble friend Lord Harmar-Nicholls had to say about Amendment No. 16 in regard to Clause 7. There are, however, a number of problems in a technical sense. I do not think that it would help the Committee if I outlined them here. I followed my noble friend Lord Colville of Culross through his earlier remarks about wrongful trading being a separate issue, about fraud being a separate issue, and also about the issues contained in the Companies Act. My noble friend said that disqualification is delayed. He asked me specifically what is the logic in Clause 7 as it stands.
The logic is that if a company fails by virtue of a compulsory wind up, if no steps have been taken either by administrative procedure or by voluntary wind up,

625
or through the individual action that the director himself can take, if the court has had to step in and if the company has failed, there is a degree of unfitness of the directors who, at that time, were directing the company which led to that situation. It would seem to me, therefore, that it would logically follow that it would be in the best interests of the creditors of other companies in which that man may be a director if he were provisionally disqualified. He can then go for relief in the way that I have described. That is a perfectly logical way of dealing with the problem that we currently face.
I have, I think, dealt with the points made by the noble and learned Lord, Lord Templeman, in the earlier part of his remarks. In response to his suggestion that we might delete subsection (5)(c) and rest on subsection (6), I would be most happy to consider that to see where it might lead us elsewhere. He also put suggestions in relation to Clause 11. We can consider those suggestions arising from the stage that we reach in our wider consideration, particularly the subsection (4) element.
7.15 p.m.
As to the test of liability on a director, yes, I agree. The noble and learned Lord, while criticising and commenting adversely on what the Government have put down, has provided us with some real suggestions that I can take away. I hope that my noble friends, Lord Mottistone and Lord Noel-Buxton are not going to take the action that they have partially suggested. If we were to do so, I believe that we would not be able, in your Lordships' House, to do properly that which, on the one hand, we want to do—that is to get this Bill right—and, on the other, to do our duty as a revising chamber, because we should leave, in my view, a great mishmash to go down the corridor.
I gave an assurance in my opening remarks. I have told the Committee how I think we could take advantage of this debate and the suggestions that have been made. I make a further offer to any noble Lord who wishes to talk with me and with my officials on this matter, or indeed with the Parliamentary Under—Secretary in my department, before further drafting is considered. That offer is open. I shall be very pleased if noble Lords take advantage of it. I ask the noble Lord, Lord Bruce, and the noble Lord, Lord Benson, if they will withdraw their amendments on the assurances I have given.
Viscount Caldecote: My noble friend Lord Lucas is very persuasive. I understand the important point that he has made about the prima facie incompetence of a director of an insolvent company. However, with great regret, I do not believe that my noble friend has gone far enough to satisfy those of us who support the amendment moved by the noble Lord, Lord Benson. I have no wish to protect incompetent, irresponsible and idle directors, but I believe that the point is covered adequately in the amendment that I hope the noble Lord, Lord Benson, will press.
It is also right, as other noble Lords have made clear, to encourage and not to deter responsible directors to join and to remain with ailing companies, to do their best to bring those companies through their difficulties and to restore them to health. We have seen this in
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hundreds of cases in Investors in Industry, where we have investments in thousands of small companies. This is important if the necessary risk taking and innovation are to take place in the economy of this country.
With great regret, I do not think that my noble friend Lord Lucas has given sufficient weight to that very important point. I hope very much that the noble Lord, Lord Benson, will press his amendment. In fact, I encourage him to do so. It is a great improvement, even though it may need further amendment at a later stage, perhaps, to strengthen it or to improve it in other ways.
Lord Bruce of Donington: I have listened to the observations that have been made by so many of your Lordships on the vexed questions raised by Clause 7 and, indeed, my own suggested amendment to it. I must confess that I am a little apprehensive about the absolute certainty with which the noble and learned Lord, Lord Templeman, approached the subject, more particularly in view of the fact that the noble and learned Lord, Lord Denning, was not quite as definite as he.
If we were moving in an area of certainty of legal interpretation—there are very often conflicting views from the Bench, even in the Companies Division, on various interpretations of the law—we should probably be all right. But my experience has been—I have listened in person to many judgments which have been delivered by noble and learned Lords—that matters are not always quite as certain as they appear. In this particular clause we are dealing with what is essentially the best commercial judgment, sometimes intuitive, of people who are not themselves of the precise mind of the law but are administrators or entrepreneurs—people who are accustomed to taking risks, people who have to balance judgments very finely indeed. Sometimes the pros and cons of taking one particular course of action are very closely balanced. So although I think that the noble and learned Lord, Lord Templeman, moved essentially in support of the clause as it stands, I myself remain very considerably in dissent.
Perhaps I may draw your Lordships' Committee's particular attention to one ground for automatic suspension that is in the Bill. It is from line 5 onwards, to line 9. It says:
"for the purposes of this subsection the court may assume that every person who in accordance with the rules is named in the petition as having been a director … on a particular day was such a director on that day".
I cannot help thinking, on reflection, that many of your Lordships will not disagree with the concept of this particular part of the clause as a blackmailer's charter, because as soon as he gets a petition the petitioner may say to the director or the person concerned, "Pay out of your own pocket or I will get you disqualified and put you to the cost of getting yourself disqualified". The person who is named in the petition may not have been a director at all, according to these five lines of subsection (2).
It is true enough that he may ultimately rehabilitate himself, because he will undoubtedly be able to prove in court that he was not in fact a director. But consider

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all the trouble and hassle that he is being put to in order to establish this. Why should he, for the sake of legal tidiness, be put to this personal endeavour, and why should he have the expense of it? It is all very well to say, "Well, if in 28 days he cannot do this, why shouldn't he be held to be unfit?" You need only two days of being dubbed as provisionally disqualified in the City of London to have your reputation ruined. It takes only 48 hours for that to happen; it does not take 28 days. I think that possibly sometimes one is a little sheltered from the impression and the social and other consequences which would eventuate if a person was provisionally disqualified. People do not always make these fine differences between "provisional" and "disqualified". They say, "It's sufficient; therefore there must be something wrong with this chap".
I do not like the clause. There is one thing I want to make quite clear. I am very much impressed by, and warmly appreciate, the co-operative attitude in this matter of the noble Lord, Lord Lucas of Chilworth. I am bound to say, as one who has had talks with him, sometimes unofficially, over a large number of days, that he has invariably shown himself very sensitive indeed to the various misgivings which have emanated from various parts of your Lordships' Committee. I deeply appreciate that, and I trust that through the remaining stages of the Bill this co-operative attitude, in what is essentially a non-party matter, will continue.
At the appropriate time I shall ask the Committee's permission to withdraw Amendment No. 15, but at the same time, as and when Amendment No. 16 is put to your Lordships, I shall most certainly support it. Bearing in mind the goodwill that has been shown to the noble Lord by not only noble Lords but also the Committee, I think it would be a better way of proceeding if Amendment No. 16 were now incorporated in the Bill, in Committee, and then the noble Lord and the Government, after further consultation, can seek to amend that on Report—in other words, the onus is put the other way around—so that finally we can get at what we want. I sincerely hope that that will commend itself to the noble Lord. In the meantime, I ask the leave of the Committee to withdraw Amendment No. 15.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Murton of Lindisfarne): We now come to Amendment No. 16. Lord Benson.
Lord Lucas of Chilworth: I wonder whether the noble Lord, Lord Benson, will forgive me—
Lord Ponsonby of Shulbrede: The amendment must first be moved; it has not been moved yet.
Lord Benson Lord Benson moved Amendment No. 16:
[Printed earlier: col. 594.]
The noble Lord said: I beg to move the amendment standing in my name.
Lord Lucas of Chilworth: I apologise to the Committee for being a little premature. I wonder whether the noble Lord, Lord Benson, will allow me
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just a moment or two. I am grateful to the noble Lord, Lord Bruce of Donington, for the kind remarks he has just made. I forbore during our earlier discussion from spending very much time on Amendment No. 16, tabled by the noble Lord, Lord Benson, and I do not want to do that now. Since I last spoke, and while sitting on the Bench and listening, and considering what has been said, I have been wondering whether I may invite the noble Lord, Lord Benson, to withdraw his amendment on the grounds that not only would I take back those matters of which I have spoken, but I would give an undertaking to take back the entire clause as it stands and see what we can do.
It is quite clear to me that noble Lords have not been persuaded as to the detailed points that I have offered. I believe that, were we to adopt the suggestion of the noble Lord, Lord Bruce of Donington, and amend this, we should be in a very unhappy state, because the amendment by the noble Lord, Lord Benson, goes over two separate issues which I do not believe could be conveniently separated by amending his amendment. The noble Lord will at Report stage have procedurally all the opportunities that he has today if I or my colleagues fail to satisfy him.
Lord Benson: I have listened intently, but I am not quite clear about what the noble Lord, Lord Lucas of Chilworth, wants me to do. Does he wish me not to divide the Committee on the amendment? Sadly, I cannot do that. I listened with immense care and attention to what the noble Lord, Lord Lucas, said and I made it clear to him outside the confines of this House that I did not want to press the matter to a Division if it were possible not to do so. But there was not the ring of conviction in what he said to the Committee which would allow me to feel that he was going to comply with the clear expression of opinion as I hear it from the members of the Committee. Under those conditions I feel that the Committee must divide.
7.31 p.m.
On Question, Whether the said Amendment (No. 16) shall be agreed to?
Their Lordships divided: Contents, 95; Not-Contents, 47.

DIVISION NO. 2

CONTENTS

Airedale, L.

Craigmyle, L.

Alexander of Tunis, E.

David, B.

Attlee, E.

Davidson, V.

Aylesford, E.

Dean of Beswick, L.

Benson, L. [Teller.]

De La Warr, E.

Boyd-Carpenter, L.

Diamond, L.

Brockway, L.

Elwyn-Jones, L.

Brooks of Tremorfa, L.

Evans of Claughton, L.

Bruce of Donington, L.

Foot, L.

Buckinghamshire, E.

Gallacher, L.

Caldecote, V.

Galpern, L.

Carmichael of Kelvingrove, L.

Gisborough, L.

Chelwood, L.

Graham of Edmonton, L.

Cledwyn of Penrhos, L.

Greenhill of Harrow, L.

Collison, L.

Greenway, L.

Colville of Culross, V.

Grey, E.

Craigavon, V.

Hampton, L.

629

Hanworth, V.

Mountevans, L.

Harmar-Nicholls, L.

Munster, E.

Harris of Greenwich, L.

Napier and Ettrick, L.

Hayter, L.

Noel-Buxton, L.

Henderson of Brompton, L.

Northfield, L.

Hooson, L.

Ogmore, L.

Houghton of Sowerby, L.

Oram, L.

Hylton-Foster, B.

Pender, L.

Inglewood, L.

Perry of Walton, L.

Ingrow, L.

Pitt of Hampstead, L.

Jeger, B.

Polwarth, L.

John-Mackie, L.

Ponsonby of Shulbrede, L.

Kagan, L.

Prys-Davies, L.

Kilbracken, L.

Rochester, L.

Kilmarnock, L.

Rodney, L.

Kinloss, Ly.

Seebohm, L. [Teller.]

Kintore, E.

Selkirk, E.

Lauderdale, E.

Simon, V.

Lock, L.

Stewart of Fulham, L.

McGregor of Durris, L.

Stoddart of Swindon, L.

McIntosh of Haringey, L.

Strathclyde, L.

McNair, L.

Taylor of Gryfe, L.

Mar, C.

Teynham, L.

Marsh, L.

Underhill, L.

Merrivale, L.

Vaux of Harrowden, L.

Meston, L.

Whaddon, L.

Milne, L.

White, B.

Milner of Leeds, L.

Wilson of Langside, L.

Monson, L.

Winstanley, L.

Montgomery of Alamein, V.

Winterbottom, L.

Mottistone, L.

NOT-CONTENTS

Auckland, L.

Lothian, M.

Avon, E.

Lucas of Chilworth, L.

Bauer, L.

Margadale, L.

Belstead, L.

Marley, L.

Brabazon of Tara, L.

Mersey, V.

Brookeborough, V.

Middleton, L.

Broxbourne, L.

Molson, L.

Caithness, E.

Morris, L.

Cameron of Lochbroom, L.

Murton of Lindisfarne, L.

Campbell of Alloway, L.

Orkney, E.

Coleraine, L.

Portland, D.

Denham, L. [Teller.]

Renton, L.

Elton, L.

Rochdale, V.

Faithfull, B.

St. Aldwyn, E.

Ferrier, L.

Skelmersdale, L.

Glanusk, L.

Stodart of Leaston, L.

Gray of Contin, L.

Templeman, L.

Hailsham of Saint Marylebone, L.

Teviot, L.

Tranmire, L.

Henley, L.

Trefgarne, L.

Holderness, L.

Trumpington, B.

Kilmany, L.

Ullswater, V.

Lane-Fox, B.

Vickers, B.

Long, V. [Teller.]

Whitelaw, V.

Resolved in the affirmative, and amendment agreed to accordingly.
Lord Skelmersdale: I think that this might be an appropriate moment to break. I beg to move that the House do now resume.
Moved, That the House do now resume.—(Lord Skelmersdale.)
Lord Ponsonby of Shulbrede: Before the House resumes, can the noble Lord perhaps give an indication that we shall not return to this business before 8.40 p.m.?
Lord Denham: Eight-forty p.m. is absolutely right.
On Question, Motion agreed to.
House resumed.

Tyne and Wear Metro (Rateable Values) Order 1984
7.42 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (The Earl of Avon)The Parliamentary Under-Secretary of State, Department of the Environment (The Earl of Avon) rose to move, That the order laid before the House on 12th December 1984 be approved. [6th Report from the Joint Committee.]
The noble Earl said: My Lords, it may be helpful to the House if I briefly explain the background to this order. The powers required to set up the Tyne and Wear Metropolitan Railway—the Metro—were provided in the Tyneside Metropolitan Railway Act 1973. The Tyne and Wear Passenger Transport Act 1979 made various additional provisions which included those necessary to rate the Metro by statutory formula. It is not possible for land occupied by the operational premises of the Tyne and Wear Passenger Transport Executive to be rated in the normal way. And in any case, since the Metro crosses four of the five rating districts in Tyne and Wear, some method of attributing a value to the elements in each district was needed. Section 7 of the 1979 Act therefore provides that the rateable value of the operational land and premises—the Metro system itself—in each rating area is to be determined by a statutory instrument made by the Secretary of State, after consultation with the interested parties.
The statutory formula aims to achieve a rateable value for the undertaking as a whole which is as fair as possible. This means it attempts to produce a rate burden as close as possible to what might have been expected if the system had been capable of being rated normally. In order to achieve such a result we have involved closely the passenger transport executive, the county and the five rating districts. I am happy to say that all these parties are content with the order before us today.
The Tyne and Wear Metro opened in August 1980 and was extended gradually until it became fully operational in March 1984. Separately rateable offices and other buildings have been assessed in the normal way, but we felt it right to wait until the network became fully operational before introducing the statutory formula method of fixing its rate burden for the future. It has been agreed between all the interested parties that passenger mileages travelled should form the basic method for assessing the total cumulo value of the Metro. We now have a sufficiently firm estimate of the mileages travelled on the completed system to bring this order forward.
Perhaps I may briefly take your Lordships through the detail of the order. It sets out, first, a method of ascertaining an annual cumulo value for the whole of the Metro's operational network; and, secondly, a method of dividing this total between the four rating districts in which the Metro operates, to give a rateable value in each area. Each district will then levy its own rate poundage on this notional rateable value. All these aspects have been the subject of detailed consultations between my department and the Valuation Office of the Inland Revenue, the passenger transport executive and the county and rating authorities.
The initial total rateable value, known as the cumulo value, has been based on a comparison with a notional rateable value for the London Underground network, in relation to the passenger mileages travelled on each system. The basic comparison takes account of the rate poundages payable in each London borough in calculating LRT's notional rateable value. It is also adjusted for differences in 1973–74 rateable values, reflecting rent levels in London and in Tyne and Wear at the date of the "tone" of the list, since the cumulo value must be set at the "tone" of the valuation list drawn up at the last revaluation; that is, at 1973 prices. The calculation is based on an estimated total passenger mileage for the Metro in its first year of full operation—1984–85—of 174 million passenger miles to be travelled. Using the appropriate figures for travel on LRT, the initial cumulo value proposed is £193,000.
Like other values fixed by statutory formula, the cumulo value of the Metro will be varied each year to take account of reductions or increases in the value of the system as measured by passenger mileage travelled. The order proposes that 50 per cent. of any change in passenger miles travelled from the initial figure of 174 million miles will be reflected in the cumulo value in the next year but one. The apparently complicated formula—it sounds complicated to me as well—in paragraph 2(2)(c) multiplies the initial cumulo value of £193,000 by a factor giving changes in the mileages travelled; your Lordships will rapidly see that 174/348 reduces easily to ½
No rates have yet been paid on the Metro's operational network, although the first section opened in August 1980. The county, the PTE and the districts have agreed that the initial payment of rates from 1st February to 31st March 1985 should reflect a payment in respect of rates to those authorities in whose areas it has been operating. The initial cumulo value of £2,514,000 also reflects the fact that rates will be levied only for the last two months of the year; that is, one-sixth of the rating year.
The district councils have agreed that the cumulo value should be divided between the four areas in which the Metro operates according to the passenger mileages travelled in each of these four districts. The apportionment of the initial sum is set out in paragraph 3(a).
Finally, paragraph 4 of the order ensures that the matters determined by the order can be effected without the procedures for proposals and appeals appropriate to changes in valuation by normal method. It also enables the valuation officer to ensure that the annual adjustments required by paragraph 2(2)(b) and (c) may take effect immediately on 1st April each year. This is a of particular importance in 1985, when the substantial initial cumulo, effective for only two months, should be reduced to £193,000 and apportioned to the districts accordingly.
Before presenting the order to the House we have consulted very thoroughly those parties directly interested—the PTE, the county and the five districts in Tyne and Wear—and also their local authority associations. This draft order represents the outcome of those discussions and I commend it to the House.
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With that brief explanation I hope that I can persuade the House to accept this order. My Lords, I beg to move.
Moved, That the order laid before the House on 12th December 1984 be approved.—(The Earl of Avon.)
7.49 p.m.
Lord Graham of Edmonton: My Lords, the noble Earl, Lord Avon, will find no opposition to this order from this side of the House, even if there was a convention that orders were opposed if they were not either understood or supported. The convention aside, I was going to press the Minister on the first part of the order where it says:
"after consultation with those associations of local authorities or of persons carrying on undertakings appearing to him to be concerned".
More than once—and I think wisely—the Minister in effect stressed that, outwith what I would call the larger, more dramatic dimensions of the future of the authority, there has been both consultation and agreement on the complicated formula which is contained in the order. For that I am certainly very grateful.
More than once the Minister stressed that the basis of the order in the future would rest upon mileages travelled. In other words, the future reapportionments will depend to some extent upon the uses and methods of the local people on Tyneside. I was born on Tyneside and I have travelled on the Metro fairly recently, and I share some of the pride which everyone who is associated with Tyneside must feel at that event. Nevertheless, what we have with the order is the opportunity to press the Minister on the further consequences.
When one turns to page 2 one sees in the first line item (c):
"for any rate period beginning on or after 1st April 1986".
On or after 1st April 1986 a great deal is likely to happen which can be affected by the wording in this order. The Minister knows that he and his colleagues are pressing on with two pieces of legislation. The first is the Local Government Bill which is in Committee in another place, and the other is the Transport Bill which we have yet to have presented to us, but which I understand is likely to be presented in another place within a matter of two or three weeks.
I know that this is not directly the responsibility of the Minister but he is a member of the Government. In the Standing Committee on the Local Government Bill (the seventh sitting on 17th January at col. 455), his governmental colleague, the Minister of State, Department of Transport, Mrs. Chalker, said:
"When I am looking for export business for transport industries I always point to the Tyne and Wear Metro—it is a firstclass piece of engineering. I also point to its cost because there is no way in which one should not be honest about the way an organisation is running. But the basic engineering is very good indeed. It is a fine example of British engineering."
The Minister must be aware of the extreme anxiety which exists not merely among the politicians on Tyneside but among the millions of passengers and users of the Metro at what is likely to happen if the Minister and his colleagues have their way.

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Both Bills will have a severe bearing on the matter. For instance, if the abolition Bill becomes an Act the Secretary of State, a colleague of the Minister answering tonight, will take to himself the power—and after that power has been taken away from the existing metropolitan authority—the right, the duty and the obligation to set the rate for the first three years. The Minister will be aware that this is not an idle power. It is put in there in order that the Secretary of State can control the amounts of money which will be spent by the new authority.
The Secretary of State is well aware, as the House must be aware, of the importance of the Metro to the people of Tyne and Wear. Tyne and Wear has only 49 per cent. of a car-owning population. It is the lowest car-owning population in any county in the country. There are more people who rely upon the use of public transport and the Metro on Tyne and Wear than in any other comparable part of the country. Seven million journeys are made every week.
They are not made merely by the Metro but by buses, trains, and ferries. The transport system on Tyne and Wear is the best form of integrated transport that this country has had. With an investment of more than £280 million over the past 10 years it is the greatest single—and most successful—transport investment not merely of the decade but for many years before.
We have something which is successful and which is expanding; something which is constantly looking for better ways to serve its community. I am told by the people who have been in touch with me and have been alerted by this order—not opposing the order, but asking me to support it—to make sure that the Ministers and others are well aware of their anxieties.
Their basic anxiety stems not merely from the inability of placemen and placewomen of a future Minister to understand the problems of the area as well as they do; but it also runs along the lines of what the Minister and his colleagues intend to do with the Transport Bill. We know that the Transport Bill is going to deregulate local bus services, enabling commercial operators to register and operate services where and when they wish for commercial reasons without regard to the needs of the community.
That means that the integrated transport system, of which I know the Minister is proud as well as everyone else, will be put at risk. The question must be asked: why? Operators will operate buses in parallel, when the Metro was organised in such a way as to make sure that the maximum and most efficient use was made of every service.
Operators will decide that they will start at six in the morning and end at six at night. The unprofitable parts of the day will not be serviced. The peak hours will be a heyday, and after that ordinary people will have to fend for themselves. All of that is based on a system which was tried out in Hereford and which has been laughed at not only by the people of Hereford but by other people who are looking at the possible consequences. There will be a diminution of the service in an area which desperately needs stability.
Tyneside is one of those areas which has a greater unemployment rate than many. The mobility of workers and those seeking work has been augmented
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inestimably by the success of the Tyne and Wear Metro. Over the next period—that is 1985—when these two great measures come before this House and the other place they will be argued over (I use the term they will be fought over); but the Minister at the beginning of the year, not as a result of this order but in other ways, has an opportunity to say to his Governmental colleagues, "Is it not possible to think again?"
I argue the case for the Tyne and Wear Metro, and clearly that cannot be separated from other major national considerations, but I say to the Minister that he has an opportunity to take back to his colleagues the concern which has been expressed to me not only by politicians but also by other users. At the moment there is one authority, the Tyne and Wear authority, making the laws, rules and regulations concerning things, but people are fearful that in the future there will be separate small authorities which will be responsible for trying to maintain the same level of service, the same level of safety, the same level of fares, etc. People are very worried about this.
So far as we are concerned on this side of the House we shall not oppose the order, but we are fearful of the future. The pride of Tyneside and Wearside has risen out of their ability to persuade the noble Earl's Government and former Labour Governments to provide the money and the service. Therefore, it would be a tragedy if after 1986 the service was to disintegrate, passenger mileage was to go down, and the rates which are affected by this order had to be adjusted, all, so far as we are concerned, to no avail.
The Earl of Avon: My Lords, I am grateful to the noble Lord, Lord Graham, for welcoming this order. I, too, have seen the Metro, have been very impressed by it and, indeed, have been shown how it works. I assure him, and add to the pledges of my honourable friend the Minister of Transport, Mrs. Chalker, by saying that we are looking forward to a successful and expanding Metro system. In no way do we expect that the abolition next year will have anything but a beneficial effect on the railway.
I understand that, under deregulation, the executive will have a role in promoting the co-operative arrangements between operators, including the co-ordination of time-tabling and through ticketing. I am sure that my right honourable friend the Secretary of State for Transport, in setting precept limits for the new joint board, will take full account of the various needs for expenditure in the different areas. It will be for the joint board, as the new transport authority, to decide on the allocation. I am sure there will not be a diminution, but I hope that the Tyne and Wear Metro will continue to prosper.
The noble Lord asked me what will happen after 1st April 1985 and in future years. In this case the cumulo value will be apportioned according to the proportion of the total passenger miles travelled on the Metro in each district in the appropriate period. The apportionment for 1985–86 will be based on the PTE's estimate of miles travelled in each district in 1984–85. In future years it will be the figure certified by the PTE as having been travelled in the last year but one.

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I hope that that clarifies the point that the noble Lord asked. I commend this order.
On Question, Motion agreed to.
Lord Skelmersdale: My Lords, I beg to move that the House do now adjourn during pleasure until 8.40 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.3 until 8.40 p.m.]

Insolvency Bill [H.L.]
House again in Committee.
New Clause 7 agreed to.
Clause 8 [Duty of court to disqualify in certain cases of directors of companies in liquidation]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 17:
Page 7, line 11, leave out ("shall") and insert ("may, if it is satisfied that the person's conduct makes him unfit to be concerned in the management of a company,").
The noble Lord said: I beg to move Amendment No. 17, which stands in my name. It will be noted that at line 11, in the paragraph that follows Clause 8(2)(b), the amendment seeks to remove the mandatory element on the making of a disqualification order and to substitute:
"may, if it is satisfied that the person's conduct makes him unfit to be concerned in the management of a company".
This is an inevitable conclusion which follows the passing of Amendment No. 16 relating to Clause 7. There may be some technical overlap between the two clauses, but the amendment I am now moving is thoroughly in accord with the intentions of Amendment No. 16, which your Lordships have passed. In order to eliminate the mandatory aspect of the disqualification order and make it more a matter for the discretion of the courts, I beg to move.
Lord Lucas of Chilworth: The events of a short while ago have thrown me, anyway, into a certain amount of confusion. My understanding is that this amendment is unnecessary because it would only be applicable if the court had made a provisional disqualification order. Since the Committee adopted the version of Clause 7 proposed by the noble Lord, Lord Benson, which does not provide for this provisional disqualification order, what is before us now becomes unnecessary. That is my understanding of the position at the moment. I think that the best I can offer the Committee is that, if they will accept that that is the understanding which I now have, if I find that my understanding is not totally correct then, of course, we shall find a means to bring it back at a later stage.
Lord Bruce of Donington: I immediately accept the noble Lord's explanation and his undertaking, and ask leave to withdraw the amendment.
Amendment by leave, withdrawn.
8.45 p.m.
Lord Benson Lord Benson moved Amendment No. 18:
Leave out Clause 8 and insert the following new clause:
("Costs
8. The costs of any sucessful application under section 7 to disqualify a person, or where it is determined by the court that the person is personally liable for all or any of the debts, shall be borne by the Crown in the event of there being insufficient funds from the assets of the company concerned, after all creditors have been paid and all liabilities discharged.").
The noble Lord said: I beg to move Amendment No. 18, which stands in my name and in the names of other noble Lords. I am in some difficulty in not quite realising how the procedures work, because the intention of the new Clause 7—the amendment which the Committee accepted—was to replace the whole of the then existing Clauses 8, 9, 10, 11 and 12. This amendment was tabled on the assumption that Amendment No. 16 was agreed to, and I should like to speak to it to get on record what it is about.
The point is that when creditors are not paid in full, the liquidator should not spend the creditor's money in pursuing the delinquent directors. It is suggested that the cost of pursuing delinquency is essentially a matter for the state and not the creditors, and that the cost should properly be born by the Government. I suggest to the Committee that this has merit in justice and common sense, because if the application is made by the Secretary of State or the Official Receiver the cost is automatically borne by the state. Where it is borne by the liquidator, the person best knowing what should be done, then the cost has to be borne by the creditors. The point of this amendment is to suggest that the cost of pursuing delinquent directors should rest on the Government. I beg to move.
Lord Bruce of Donington: We on this side of the Committee accept the reasons that have been given by the noble Lord, Lord Benson. It is quite unnecessary for me to repeat anything that he has said. We entirely concur.
Lord Meston: We on these Benches would also agree with the idea that it would be wrong for past creditors to pay for the protection of possible future creditors. The wider public interest involved makes it proper that the public purse should bear the costs where necessary in the circumstances envisaged by this new clause. For those reasons, we support this amendment.
Lord Lucas of Chilworth: Again, I am in some little difficulty, in that we are talking about successful applications under the new Clause 7. As far as the cost of any application is concerned, subsection (11) provides for the costs of the successful applicant to be borne by the Crown and not only that but the Crown itself would be unable to recover its costs until all the creditors had been paid in full and liabilities discharged. This goes far beyond any benefits available under legal aid. I think that I should have had some sympathy with the provision had it been restricted to applications for a disqualification order, because that is effectively the position today.
If this provision requires the taxpayer to provide a free debt collecting service for the creditors of a company, one effect of adopting the amendment would be, I think, that if a company had a deficiency

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of, say, £50,000 and the court made the directors liable for only £10,000, the Crown would not be able to cover its costs. I do not believe that that is reasonable or fair. I do not believe, in all seriousness, that would be totally acceptable to your Lordships.
I think that I should have to give further consideration to this question of costs in the light of the detail which flows from the new clause of the noble Lord, Lord Benson. I would invite him in the light of that to withdraw his amendment while I give serious consideration to the implication that his new Clause 7 has for this element of the Bill.
Lord Benson: That would be entirely acceptable to me and I beg leave to withdraw the amendment standing in my name.
Amendment, by leave, withdrawn.
Clause 8 agreed to.
Lord Denham: I am of course in the hands of the Committee, and it was agreed through the usual channels that we should carry through with this Bill tonight until we reached the end of Clause 10. I do understand that there is a great deal of difficulty with the new Clause 7 as to how the other amendments until the end of Clause 10 are affected. Unless any noble Lord disagrees—and I shall sit down and give any noble Lord who wishes the opportunity to do so—I suggest to the Committee that we should resume the House and adjourn the Committee stage at this point. But I should welcome suggestions on this point from any other side of the Committee.
Lord Bruce of Donington: We on this side understand that it would be quite desirable, for administrative reasons, to allow a reappraisal of the situation to take place in some detail before we continue further with the Bill. We on this side think that the suggestion put forward by the Government Chief Whip is a most sensible one and, for our part, are disposed to agree with him.
Lord Taylor of Gryfe: I should like to support the suggestion, from these Benches. Obviously the carrying of the amendment has a whole lot of repercussions on the Bill—not only in relation to cost but in relation to other aspects of the Bill—and it would be wise for the Committee to think over the full implications regarding the Bill and to adjourn now. I support the suggestion.
Lord Denham: I should like to make it quite clear that I am not looking at other aspects of the Bill. It is just the question that I think it would be wrong for the Committee to be discussing amendments when the full implications of the previous amendment are not understood, and with absolutely no commitment at all about how we proceed from now on. Of course there will be talks with the usual channels. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Valerie Mary Hill and Alan Monk (Marriage Enabling) Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.

Brunei and Maldives Bill [H.L.]
Returned from the Commons agreed to.
House adjourned at seven minutes before nine o'clock.

  TELEVISION PROGRAMMES: RELATED ADVERTISEMENTS
  TELEVISION PROGRAMMES: RELATED ADVERTISEMENTS
  HOMELESS PEOPLE: LONDON
  HOMELESS PEOPLE: LONDON
  LIVESTOCK: WELFARE
  LIVESTOCK: WELFARE
  BUCKHUNT LICENCE: OBSERVANCE OF CONDITIONS
  BUCKHUNT LICENCE: OBSERVANCE OF CONDITIONS
  SCHOOL-LEAVERS: QUALIFICATIONS
  SCHOOL-LEAVERS: QUALIFICATIONS