Sitting of 12 June 1986

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    TEIGNMOUTH QUAY COMPANY BILL (By Order)
      SOUTH YORKSHIRE LIGHT RAIL TRANSIT BILL (By Order)
        BEXLEY LONDON BOROUGH COUNCIL BILL (By Order)

          SHOREHAM PORT AUTHORITY BILL (By Order)
          Orders for Second reading read.
          To be read a Second time upon Thursday 19 June.

    MILFORD HAVEN PORT AUTHORITY BILL (By Order)
    Order read for resuming adjourned debate on Question [18 February], That the Bill be now read a Second time.
    Debate to be resumed Thursday 19 June.

Oral Answers to Questions
  AGRICULTURE, FISHERIES AND FOOD

    S. and W. Berisford
    Mr. Livseyasked the Minister of Agriculture, Fisheries and Food if he will make a statement on the takeover bids for S. and W. Berisford and the likely effect on British sugar beet growers.
    The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John Selwyn Gummer)My right hon. Friend the Secretary of State for Trade and Industry announced on 20 May that he had decided to refer to the Monopolies and Mergers Commission proposed acquisitions of S. and W. Berisford by Hillsdown Holdings and Tate and Lyle in accordance with the recommendation of the Director General of Fair Trading. The commission's investigations will include consideration of the likely effect on British sugar beet growers.
    Mr. Livsey: While welcoming the fact that the proposed acquisition has been referred to the Monopolies and Mergers Commission, may I ask whether the Minister agrees that the sugar industry is far too important to be the subject of such a takeover? Would it not be in the best interests of the industry if it rescued itself, and also for a management buy-out to be considered as the best possible solution for sugar beet growers and those who work in the industry?
    Mr. Gummer: I do not think that the series of parts in the hon. Gentleman's supplementary hang together. It is necessary that we look at the effect of any purchase in the
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    context of the interests of the country as a whole, and especially those concerned in the sugar industry. That is what we are doing.
    Sir William Clark: Does my right hon. Friend agree that the finance margin for refining beet sugar is much higher than the margin for cane sugar, which is very low? Does he further agree that that could possibly activate against the interests of the ACP countries?
    Mr. Gummer: I am sure that my hon. Friend is right. The narrowness of the refining margin causes considerable concern, because without a proper refining capacity in this country the ACOP countries would find it impossible to obtain a market for their cane, which would be a disaster. That is why we have been pressing the European Commission to hold a full investigation, and we are pleased that it will now do so.
    Mr. Spearing: Is it not true that a Monopolies Commission investigation could reveal that, given proper safeguards for monopolies, this acquisition could provide an opportunity for all the interests of beet producers and refiners as well as cane producers in the Commonwealth and cane workers in this country to be combined to provide a stable, domestically-owned sugar industry that would provide employment and markets for all concerned?
    Mr. Gummer: That is no doubt the case that Tate and Lyle will put before the commission. However, there are now two investigations — one by the Monopolies and Mergers Commission and the other by the European Commission, which is looking into the margin.
    Mr. Andy Stewart: Will my right hon. Friend reassure my constituents and others who grow sugar beet that if Ferruzzi, the Italian company, makes a further bid he will support his colleagues by referring that to the Monopolies and Mergers Commission also?
    Mr. Gummer: The Office of Fair Trading is currently considering whether Ferruzzi's holding in Berisford constitutes a material influence resulting in a merger that would qualify, at the moment, for a reference to the Monopolies and Mergers Commission under the Fair Trading Act 1973.
    Mr. Torney: Is the hon. Gentleman aware that takeovers usually mean unemployment for workers in the company taken over? Will he therefore consider making representations to try to ensure that workers do not lose jobs, especially in view of the tremendous workless total in this country?
    Mr. Gummer: In the first place, I do not think that is truthful. One must look for security of employment in an industry, and that security is sometimes advanced by takeovers and sometimes not. The hon. Gentleman must not let his political dogma get in the way of the facts. We must adopt the best possible solution across the board, and that is why we have established an impartial. investigation. The hon. Gentleman wants to prejudge the impartial investigation, which is a typical Socialist attitude.

    Set-aside Schemes
    Mr. Baldryasked the Minister of Agriculture, Fisheries and Food what consideration Her Majesty's Government are giving to agricultural set-aside schemes.
    The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): In the cereals sector, the Government are actively considering ideas for a Communitywide voluntary set-aside scheme. The Government are also studying the Commission's proposals for set-aside in its socio-structural package.
    Mr. Baldry: Does my right hon. Friend agree that at a time when we are seeking to tackle surpluses, the advantage of set-aside schemes is that they enable us much more accurately to determine which land shall be taken out of production, and thus ensure a fairly comprehensive countryside policy in any one area? When does my right hon. Friend expect that his Ministry will be coming to conclusions on both his and the Community's schemes, which are under discussion?
    Mr. Jopling: I believe that my hon. Friend is right in his analysis. We are working on the criteria that the scheme should be voluntary, Communitywide and cost effective, and should provide an alternative for those producers who are least able to cope with a restrictive price policy. We are anxious to start discussions as soon as possible.
    Mr. John: Would not a set-aside policy be more easily achieved if we had a parallel farm woodlands policy? Does the Minister agree, on the question of surplus cereal production, that it is estimated that about 14 to 15 per cent. of cereal land in Britain will have to be taken out of production?
    Mr. Jopling: I would not accept those figures, because much depends on the degree to which the Community is successful in bringing the production of food closer to the level of consumption. We must consider, in respect of the scheme, the overall problem of land use, including the potential of a greater incidence of the growing of trees.
    Mr. Hunter: Will my right hon. Friend take this opportunity again to clarify his position on the control of cereal surpluses? Does he still believe that price control is the best and only practical way to control production, or is he seriously considering alternative and additional methods?
    Mr. Jopling: I know that my hon. Friend has heard me say on a number of occasion how I believe we should deal with the current surplus in cereals. I remind him of the Commission's estimate that if we do nothing we could find ourselves with 80 million tonnes of surplus grain in the Community by 1991. My view is that a package of measures is necessary. It would not be practical politics to deal with the matter with one device alone, such as price control. We must use the devices of price, set-aside and intervention standards. I have been saying this in the House for about six or nine months. I believe that price must be at the forefront of the package.
    Mr. Maxwell-Hyslop: Will my right hon. Friend bear in mind that while set-aside has its definite advantages, we do not want that to prolong the excessive use of fertilisers, which run off into rivers and into the public water supply from the land that is not set aside? In other words, we want to achieve a situation in which we do not get maximum production from the acreage that is not set aside.
    Mr. Jopling: My hon. Friend did not use the word nitrates, but I suspect that he had it in mind. We are conscious of the dangers of the excessive use of nitrogen
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    in encouraging plant growth. For that reason we are carrying out a careful study of the problem. I hope that we will be able to see the conclusions of that before very long. We should be careful about introducing steps to prevent the use of methods of producing high yields which hold back farmers within the Community, whereas their competitors in the rest of the world are free to use every device which leads to greater efficiency. That would be a dangerous step.

    EC Budget (Price Agreement)
    Mr. Geraint Howellsasked the Minister of Agriculture, Fisheries and Food what is his latest estimate of the likely effect of the European Community agriculture price agreement on the European Economic Community budget.
    Mr. Jopling: The Commission has estimated that the agriculture price agreement for 1986–87 will reduce Community expenditure by 320 million ecu in 1986 and by 457 million ecu in 1987. At the same time, the Council agreed to cuts in the Community financing of intervention which will save an additional 300 million ecu a year.
    Mr. Howells: I am grateful to the Minister for his reply. Does he agree that now is the opportune time to reform the way in which we market our surpluses within Europe, instead of selling beef to the Russians at a giveaway price? What plans has his Department put forward to the Commission to try to improve the situation?
    Mr. Jopling: Over the years we have tried—this was probably true of the previous Government also — to argue in favour of policies which prevented these huge, unmarketable, unwanted and uneatable surpluses from being built up. That seems to be the right policy. As the hon. Gentleman knows, we have been extremely unhappy about the special sales, which are directed, for instance with butter and other products, at countries such as the Soviet Union.
    Mr. Marlow: Is there not a simple way of solving the Community's financial problems? Is the Community not like any other organisation or person? Should it not say to itself at the beginning of each year that there is only a certain amount of money to spend on agriculture? If, perchance and sadly, it should go above that level of expenditure, could it not pass the hat round to those countries that spend the most money? If it needed surplus cash, could it not take it pro rata on the basis of where the money was spent? Would that not be a fair and sensible solution?
    Mr. Jopling: If it came to what was a fair and sensible solution, my hon. Friend would probably scrap the whole Community. Of course, that is not the policy of the majority of hon. Members or of the Government. We have a financial guideline, as my hon. Friend knows perfectly well. In this year's price-fixing the financial guideline has been a major influence on the successful outcome of that price fixing process.
    Mr. John: Does the Minister agree that the CAP budget for this year will be £800 million more than last year, despite what the Minister said is being saved? Even that is not a full statement of the problem. Ministers have sought to hide expenditure of between £300 million and £900 million this year and bury it in next year's accounts.

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    We are talking therefore about between £1,000 million and £1,700 million more expenditure. The Agriculture Ministers are doing that to try to hide the poverty of their approach to the real problems of the CAP.
    Mr. Jopling: The hon. Gentleman will recall that price fixing this year did respect the financial guideline. As he was shown, exceptional circumstances, in the view of the Commission, have led to a supplementary budget to be produced above the guideline, on the ground of the fall in the level of the United States dollar and the consequent increase in the amount of money which the Community needs to complete the programme.

    Horses and Ponies (Slaughtering Policy)
    Mr. Greenwayasked the Minister of Agriculture, Fisheries and Food if he will make a statement on his policy towards the slaughter of horses and ponies for the purpose of carcase exports.
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): We consider that the welfare of horses and ponies should be protected at the point of slaughter in all circumstances.
    Mr. Greenway: Does my hon. Friend agree that the existence of only five EEC-approved slaughterhouses for horses and ponies is not sufficient, and that the conditions at the lairages at them are, in many cases, disgraceful? In one case they amounted to only a muddy field where horses and ponies were kept for many days before being slaughtered. Will she look into the fact that horses and ponies are being forced to travel long distances, over many days, in unsatisfactory conditions, without food, water or exercise before slaughter? Will she look into the fact that RSPCA Inspector Rankin was forced out of the Southall horse market the other day when he said that horses being sold there were too thin for riding?
    Mrs. Fenner: On my hon. Friend's latter point, another RSPCA inspector attended the market on 4 June. I would not wish my hon. Friend to think that there was not an RSPCA inspector there. I take his point about fewer abattoirs meaning, obviously, a longer journey for horses. Horses in transit are protected by transit legislation. I have often reiterated to my hon. Friend that local authorities are empowered to enforce controls. Evidence of offences should be reported to local authorities. The Farm Animal Welfare Council is reviewing the welfare of all livestock in transit, including horses and ponies. Following the FAWC's report on the welfare of redmeat animals, including horses, at the time of slaughter, the Government have proposed a number of changes to legislation to provide further protection for all animals for slaughter.
    Mr. Bermingham: Does the hon. Lady agree that the problem is that there is an inadequate number of inspectors, that local authorities seem reluctant to prosecute and that legislation is not sufficiently penal? A decent method of slaughter of horses — many of us would object to their slaughter in any event—can be secured only through proper inspection, proper enforcement and proper punishment for offences when the law is so openly flouted.
    Mrs. FennerLocal authorities have not made the point that they arc not able to enforce the law as it stands. As
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    I pointed out, offences have to be drawn quickly to their attention. I understand that a local authority is promoting a Bill to give additional powers to deal with stray horses.
    Mr. Dickens: Is my hon. Friend aware that the French actually eat our horses and ponies as steaks? Has she considered that if we stopped eating their frogs and snails, they might consider not eating our horses and ponies?
    Mrs. Fenner: I note my hon. Friend's objection to, horsemeat as a diet. I think that, by and large, that view is shared by a large number of people in this country, but I would not like to speak on behalf of those who eat grenouilles and escargots.
    Mr. Randall: Is the hon. Lady satisfied that the problems found by the FAWC within slaughterhouses have been properly and satisfactorily dealt with? Is she satisfied that slaughtering methods and procedures used for horses are no less humane than those used for cattle, pigs and other animals?
    Mrs. Fenner: We have received the FAWC's report and have proposed a number of changes to legislation, which are now up for consultation — it will take a while because legislation is required — to provide further protection for all animals. The FAWC considered in particular horses and ponies at slaughter as well as all other redmeat animals.

    Food Surpluses
    Mr. Proctorasked the Minister of Agriculture, Fisheries and Food if he is satisfied with current measures to reduce European Economic Community food surpluses.
    Mr. Gummer: In 1984 the Council agreed milk quotas; in 1985 important reforms of the wine regime were adopted; the price-fixing agreement this year included further steps in tackling the milk and cereals surpluses; and the Council is committeed to taking decisions on beef support later this year. We intend to keep up this steady programme of reform. There is a great deal more to be done.
    Mr. Proctor: Has my right hon. Friend seen early-day motion 918 in the names of my hon. Friend the Member for Southend, East (Mr. Taylor) and other hon. Members concerning a new EEC subsidy for feeding butter to cows? What is my right hon. Friend's attitude to that? Will he confirm that £75 million a week is spent by the Community on disposing of surpluses?
    Mr. Gummer: I have watched carefully the considerable efforts that my hon. Friend the Member for Southend, East (Mr. Taylor) puts into ensuring that we never miss some of the sillier things that happen in the European Community. Our purpose is to reduce the supply of goods so that they are more nearly in line with needs. We shall continue to press for that.
    Mr. Deakins: As substantial price reductions are really the only effective alternative to quotas, which the Minister does not like, why are he and his Department so complacent about the impact of recent currency changes in the EEC which have meant that this year a number of farmers in countries in the Community will receive increases in their cereal prices?
    Mr. Gummer: I do not think that the Department is in any way complacent. We have said that the effects of the

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    package this time have meant a considerable cut in the price that will be received for cereals. It is not the method we would have used or for which we shall continue to press. However, we are honourable and honest enough to say that a great deal has been achieved.
    Mr. Kenneth Carlisle: Does my right hon. Friend agree that any system we introduce to confront the problem of surpluses must be simple and practical, and that in order to achieve that it is best to consult those who are involved in agriculture? In that respect, will he consider producing a Green Paper on the various methods by which we could reduce surpluses?
    Mr. Gummer: I am not sure that in those circumstances a Green Paper would be the right way to go about it. However, I agree with my hon. Friend that there is no way in which we can reduce the surpluses unless we do so with the support and help of the agriculture community. Sometimes I wonder whether the Oposition realise that people in the agriculture community need proper incomes as much as do those elesewhere.
    Mr. Home Robertson: Will the Minister accept that his policies have caused the maximum disruption in the industry that he has just been talking about, while having the minimum effect on surpluses? As the Minister is the proud custodian of all these vast stocks of cereals, beef, dairy produce and so on, will he try, by looking after them properly, to ensure that someone gets the benefit of these stocks in due course? How about starting by ensuring that good quality cereals in intervention stores are kept separate from the uneatable stuff about which his right hon. Friend the Minister was talking?
    Mr. Gummer: The answer to the hon. Gentleman's first question is no. The answer to his second question is that it is our purpose to keep the stocks in the form which makes them most saleable.
    Mr. John Carlisle: Will my right hon. Friend accept that the delay and confusion over the announcement of the method of collecting the co-responsibility levy on cereals is causing great concern in agriculture? Will he also accept that the draft recommendations from Brussels are totally unworkable and very much favour the farm feed process, against the country compounder? The trade is anxious that the settlement should be made well before the harvest, so that it knows where it is.
    Mr. Gummer: I am sure that my hon. Friend is right in saying that a delay in the decision is extremely difficult for the trade. As the rest of his question goes on to suggest, it is also important that we get the management arrangement correct. Our problem is that we are pushing for the most sensible and simple method which we can have in a co-responsibility levy, which is not the system we would have chosen. Therefore, I think my hon. Friend will agree that it is our job to ensure in that management committee decision that it is, ultimately, the best system for Britain.
    Mr. Meadowcroft: The Minister will be aware of the concern about food contamination following the Chernobyl disaster. Can he tell us——
    Mr. Speaker: Order. There is a later question on that.
    Mr. Meadowcroft: I wanted to ask about the effects that Chernobyl is expected to have on EEC food surpluses.
    Mr. Gummer: I think that the hon. Gentleman is getting his question in early in case we do not reach it. We are not currently in a position to assess the effect of the Chernobyl disaster on European surpluses.

    Food and Wine Surpluses
    Teddy Taylorasked the Minister of Agriculture, Fisheries and Food what was the total sum spent by the European Economic Community on the storage and disposal of food and wine surpluses in the most recent 12-month period for which figures are available, expressed in pounds sterling; and what was the comparable total five years previously.
    Mr. Gummer: Expenditure by the European Community in 1985 on the storage and disposal of products in structural surplus, that is cereals, sugar, milk products, beef and wine, was about £7·3 billion. The comparable figure for 1980 was about £4·7 billion, or, if inflation is taken into account, £6·8 billion.
    Mr. Taylor: Is it not a criminal waste of public funds that £150 million is now being spent by the Common Market every week on dumping, disposing of or destroying food surpluses? Is that expenditure not a shameful insult to every health authority and school authority, and to the old-age pensioners and unemployed of Britain, who could use the money much better?
    Mr. Gummer: It is certainly not a sensible way to spend money. It is the Government's purpose to ensure that surpluses are pulled down while farm incomes are at least protected and that we are able to have what ought to be the triumph of agriculture, which is that we are able to feed our people, not turned into the sadness of agriculture because there is too much.
    Mr. John: When the Minister's right hon. Friend says that Mr. Adriesson has estimated that in five years' time cereal surpluses will rise to 80 million tonnes, which is a fivefold increase on their present size, does he not think that this time the Agriculture Council should do other than mull over generalities and get down to solving the problem?
    Mr. Gummer: The hon. Gentleman must accept that that is what would happen if we did nothing, and that the Agriculture Council has already done a great deal, but nothing like enough. I am, therefore, pleased to note his support for the measures that we are trying to take and trying to get the Council to take to ensure that we achieve solutions. The fact is that the CAP, like the previous system in this country, was based on the principle that the major problem was a shortage of food. Contrary to everything that the experts say, we now have a world in which we have too much food. Changing the system is not the easiest thing in the world.
    Mr. Harris: May I press my right hon. Friend a little further on cereal surpluses? Does he agree that the only test of a successful policy is whether a small amount goes into intervention? Will he confirm that the prospects for the coming year are that a larger amount will go into intervention?
    Mr. Gummer: I would not wish to make any prognostication about how much will go into intervention. The fact is that China, India and other countries which used to need our food surpluses are now exporting food.

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    In those circumstances, it is a scandal that we have more and more intervention stores and grain, and we must change that.

    Common Agricultural Policy
    Mr. Thurnhamasked the Minister of Agriculture, Fisheries and Food what recent representations he has received about reform of the common agricultural policy.
    Mr. Jopling: My hon. Friend will not be surprised to know that I receive many representations from individuals and organisations about the common agricultural policy.
    Mr. Thurnham: Is my right hon. Friend aware that what Bob Geldof raised last year——
    Mr. Campbell-Savours: Sir Robert Geldof——
    Mr. Thurnham: —the EEC wastes each week in dumping and destroying food? Why cannot British pensioners have British butter at 15p a pound, instead of it being given to the Russians? Now that the Russians have poisoned their meat produce with radiation, should they not pay a proper price for our meat?
    Mr. Jopling: The latest Commission proposal, which we have only just received, suggests, disappointingly on the Commission's figures, that the revised scheme for butter disposal would deal with only about 30,000 tonnes of butter in the Community as a whole. We have not yet had proper discussions of the proposal in Brussels, and we need to have a number of points clarified before we can take a final view on how to react.
    Mr. Kirkwood: Will the Government take careful account of the importance of less-favoured area status within the CAP in terms of any future reform? Will they look carefully at the extensive extension granted recently in West Germany and consider similar proposals for extentions in other areas, such as Scotland?
    Mr. Jopling: The hon. Gentleman will recall that only about a year ago we were able to achieve the great success of enlarging the less-favoured areas in the United Kingdom, which brought about 28,000 additional farms into less-favoured area status. That has been most warmly received by the industry. Regarding the recently agreed German extension, the hon. Gentleman will recall that it was carried out under the guidelines laid down by the Commission and the Council. We are considering the possibility of further adjustments to our areas with this status and we are at present working towards that possibility.
    Sir John Farr: Does my right hon. Friend agree that in any reform of the CAP we should aim for a modest surplus to be produced at home by British farmers, and that the best way of controlling that surplus is by pressing on wih the set-aside programme, which will provide farmers with a working income at less than the present great cost of storing the surpluses produced?
    Mr. Jopling: I am extremely grateful to my hon. Friend for his warm support of our ideas on the set-aside programme. They are gaining support. I am particularly interested to hear that the German Government are proposing a pilot scheme along these lines in Lower Saxony. My hon. Friend is absolutely right in saying that we should aim at a modest surplus, so that the chances of food shortages are reduced to a negligible level.
    Mr. John: As the right hon. Gentleman is basking in the support of the hon. Member for Harborough (Sir J. Farr) for the set-aside programme, may we have some details rather than general statements about how and in what form the set-aside programme will work? At column 245 of the report of our previous Agriculture Questions on 8 May the Minister appeared to say that the cause of surpluses was bad management and that no change in the principles of the CAP was necessary. Is that still his view? If so, is that how he will approach his presidency of the Council of Agriculture Ministers?
    Mr. Jopling: Yes, most certainly. I have taken the view, as have Labour Ministers before me, that the principles of the common agricultural policy, in endeavouring to ensure that there are adequate supplies of food at reasonable prices for the housewife while providing a fair return for the farmer, are good principles to start with. The tragic mistake was the way in which the Council of Agriculture Ministers, over the years, but especially during the early 1980s, despite British protestations, has reached for the cheque book whenever there have been difficulties. It has allowed massive price increases, which could lead only to huge food surpluses and the ultimate bankruptcy of the Community. The inadequacies of management, which ignored British advice, have led us into the present mess.

    Agricultural Land Use
    Mr. Phillip Oppenheimasked the Minister of Agriculture, Fisheries and Food whether the Department is considering the publication of a White Paper on the future of agricultural land use.
    Mr. Jopling: No, but my Department has commissioned, or is involved in, a number of studies into future agricultural land use. I expect that the results of these studies will be made widely available to enable informed discussions to take place on this important issue.
    Mr. Oppenheim: Is my right hon. Friend aware that one of the greatest problems facing agriculture is the sense of uncertainty and the lack of direction? The publication of a Government White Paper would at least have the effect of pointing farmers in the right direction and at the same time might have the effect of scotching some of the more ridiculous alternative land use schemes, such as Government subsidies for growing trees, which are phenomally expensive?
    Mr. Jopling: My hon. Friend will recall that for many years there have been Government subsidies to encourage people to grow trees. I am sorry to hear that he believes that is a mistake. I perfectly understand and agree with him about the vital future importance of land use. However, I remain to be convinced that the correct way to proceed is to produce a White Paper. Let me give him one example. In the last six months of this year we shall be discussing a new beef regime. Neither I nor anyone in the Community or the House has any idea of the outcome of the discussion. It would be very difficult to produce a White Paper with that imponderable taken into account.
    Mr. Campbell-Savours: Should not a White Paper be announced to disclose the Government's intention to carry out a study into the effects of acid rainfall on agricultural land use? As last year, 150,000 people died of cancer, and as we know that coal-fired power stations are emitting carcinogenic material by the tonne every day of the week,

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    do not the Government have a duty to discover whether any of that carcinogenic material is making its way into the food chain? Should not the Government, especially the Minister's Department, address that issue?
    Mr. Jopling: The hon. Gentleman knows that we regularly monitor food health and safety. Food is becoming safer as time goes by. That is certainly the case with regard to radioactive material. The hon. Gentleman has drawn our attention to this difficult area. He requests a White Paper on acid rain, another on cancer and another on emissions from power stations. There is no end to it.
    Mr. Coombs: Despite the obvious attractions of a White Paper and the consultation process, will my right hon. Friend take an early opportunity to tell the British people that there is no question of large numbers of golf courses being sought as the solution to this problem? Will he assure the House that, if we are to have trees, they will be British trees such as the oak, the ash and the beach and not the anonymous conifers of Scandinavia and North America?
    Mr. Jopling: My hon. Friend will recall that we recently announced a broad-leaved policy for woodlands, which was most warmly received. My hon. Friend should address his question about golf courses to my hon. Friend the Minister with responsibility for sport.
    Mr. Home Robertson: How can there be the informed discussion to which the Minister referred against the background of cuts which the Government have made in the Soil Survey for England and Wales and the Macaulay Institute, which does the same work in Scotland? For how much longer will the Minister shirk his responsibility for giving the industry the guidance that it needs to readjust the pattern of production and supply? If he is thinking about some form of set-aside scheme, will he give the House some answers and stop trying to duck questions, as he did in answer to my hon. Friend the Member for Pontypridd (Mr. John)?
    Mr. Jopling: There is no question of ducking questions. I have explained clearly our views on set-aside. I have explained them in the Community, and they are becoming more recognised. I do not understand what all this has to do with the Soil Survey.
    Mr. Home Robertson: That says it all.

    Set-aside Schemes
    Mr. Lathamasked the Minister of Agriculture, Fisheries and Food what recent discussions he has held with the president of the National Farmers Union regarding a set-aside scheme for dealing with agricultural surpluses.
    Mr. Jopling: I and my officials hold frequent discussions with representatives of the NFU on all aspects of the support system for cereals.
    Mr. Latham: Rather than just going back 200 years to "Turnip" Townsend and fallow fields in a four-course rotation, will my right hon. Friend look carefully at the NFU's brand new document on tree production? Does it not contain a good deal of common sense?
    Mr. Jopling: Yes. I believe that, for some time now, the NFU has recognised the importance of increasing
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    woodland on farms. I very much look forward to studying its document more carefully. The fallowing of land is an ancient and honourable way of land management.

    Surplus Food Stocks
    Mr. Canavanasked the Minister of Agriculture, Fisheries and Food what is the total amount and value of surplus food stocks (a) in the United Kingdom and (b) in the entire European Economic Community.
    Mr. Gummer: A note setting out the volume of intervention stocks in the United Kingdom and the Community is deposited in the Library of the House and is updated monthly. The value of these intervention stocks, which include some non-food stocks, is estimated to be £1,371 million in the United Kingdom and £6,197 million in the Community as a whole.
    Mr. Canavan: For how much longer will the Government tolerate the absolute obscenity of millions of tonnes of food rotting away in the Common Market while millions of people in the Third world face the risk of death by starvation? As the Government have given some belated recognition to Bob Geldof——
    Mr. Campbell-Savours: Sir Bob Geldof.
    Mr. Canavan: —is it not time that they gave more recognition to what the man had to say about releasing some of the surplus food to help hungry people in Africa?
    Mr. Gummer: I wish that the hon. Gentleman, whose views on the need to help hungry people I share, would just read what Oxfam and other organisations say. They say that it is not surplus food but financial aid that is needed, otherwise indigenous agriculture will be driven out and there will be no possibility of building an agricultural future for those countries. The hon. Gentleman must not allow his opposition to the Common Market to do down the underdeveloped countries.

    Food and Drink Industries (Treaty of Rome)
    Mrs. McCurleyasked the Minister of Agriculture, Fisheries and Food what estimate his Department has made of the effect of the new article 100A of the Treaty of Rome on the interests of the food and drink industries.
    Mrs. Fenner: This article, which will apply after ratification of the single European Act by all member states, contains new provisions for adoption of Community measures in the internal market. In particular, the Council will act by qualified majority rather than by unanimity. I cannot predict what effect this change will have on the nature or number of the measures adopted.
    Mrs. McCurley: I am grateful to my hon. Friend for that reply. Will she continue to ensure that there are no unnecessary restrictions on the export of foodstuffs to the EEC while we are considering our internal legislative policies?
    Mrs. Fenner: I can assure my hon. Friend that we shall continue to play a full part in the negotiations for harmonisation of food standards and ensure that the interests of our food industry are taken into account in working towards a harmonised market.

    Freezer Vessel Licences
    Mr. Randallasked the Minister of Agriculture, Fisheries and Food when he intends to publish the outcome of his Department's study into freezer vessel licences for pelagic fishing.
    Mr. Gummer: I hope that it will be possible to make an anouncement in the near future.
    Mr. Randall: Is the Minister aware that the inordinate delay in publishing the findings of his review has seriously impeded investment in, and the restructuring of, the British fleet? Will he tell the House whether he agrees, in principle, that the use of freezers in pelagic fishing could result in considerable improvements in efficiency and cost-effectiveness? Does he agree that the early construction of new freezer vessels could provide much needed orders for our very hard-pressed shipbuilding industry?
    Mr. Gummer: I think it is very important that the British fishing industry should make the most of the opportunities that it has under the common fisheries policy and which are much to its advantage. That is why I want to get the right answer, and that is why we are seeking an answer. I hope that I can give the hon. Gentleman a reply soon.

  PRIME MINISTER

    Engagements
    Ql. Mr. Pavittasked the Prime Minister if she will list her official engagements for Thursday 12 June.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in this House I shall be having further meetings later today.
    Mr. Pavitt: Is the Prime Minister totally unaware of the deep anger among nurses over the fact that, for the second year running, she has overturned the review body award and short-changed them by giving them only nine months' instead of 12 months' pay? Is she also aware that the injustice of giving the managers back pay until February has infuriated doctors and nurses alike? Ward sisters have now got £800 less than the review body decided they should have. When the Prime Minister replies to the Royal College of Nursing's letter of 28 May, will she take into account the grave shortages in acute nursing facilities and the low morale? Will she take the decision back to the Cabinet and not give the House a lot of statistics about national numbers, past comparisons and the inflation rate?
    The Prime Minister: The hon. Gentleman is aware that nurses have had a far better deal under this Government than ever they had under the Labour Government. A ward sister to whom the hon. Gentleman refers is now, on the top of her scale, receiving £2,000 a year more than she would have done had the 1979 rate, which appertained when his Government were in power, merely been increased by inflation. Our record on that is excellent.
    With regard to the pay of National Health Service general managers, the new rates of pay which operated from 1 February related to the 1985–86 pay year for
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    general managers. The hon. Gentleman is aware that many general managers had jobs with tenure and they have had to give up that tenure to take the management jobs.
    Sir Paul Bryan: Reverting to my right hon. Friend's answer of last Tuesday on the question whether Rolls-Royce required Government support, is she aware that last week Cathay Pacific Airways ordered two Boeing 747 400s, with an option on seven more?
    Cathay Pacific, when deciding upon the engines for that plane, having considered Pratt and Whitney, GEC and all the rest, finally came down in favour of the new Rolls-Royce RB21 1 524 D4D. Is it not a promising start for the engine to have a company of this standing as its launch company, and should it not bring orders for many years to come?
    The Prime Minister: I am delighted to hear of the order won by Rolls-Royce, on the merits of this engine. It is very good news indeed and it highlights the company's export record. Rolls-Royce is used to exporting. Last year Rolls-Royce engine sales to the United States were worth £435 million.
    Mr. Shore: The Prime Minister will know that this morning a state of emergency was declared in South Africa. In the light of these latest and grave events, and the sombre report of the Eminent Persons Group, is it not now plain to the Prime Minister that her stance at Nassau last October was totally misjudged? Political progress against apartheid cannot be made without effective and concerted economic pressure against South Africa. Detailed measures need urgent consideration with Commonwealth partners. The House and the Commonwealth are entitled to know from the Prime Minister now whether she accepts the principle of economic sanctions against South Africa.
    The Prime Minister: We have just received the group's report and we are studying it carefully. Time is needed for all concerned, including the South African Government, to consider the report. I shall be meeting the two co chairmen later today. We must not close the door on future negotiations. The group's report recognised that it was not its task to make specific proposals about measures. Therefore, we shall be in touch with our Commonwealth partners, our European partners and our economic summit partners to discuss this report.
    Mr. Shore: That is an equivocal, and, for the right hon. Lady, a surprisingly unclear and indefinite response to what was a unanimous report by a group that spent six months, at her personal request, studying events in South Africa.
    The Prime Minister: We have just received the report.
    Mr. Shore: We have indeed just had the report, but it has been available to almost everybody for the past 48 hours. The Prime Minister has had plenty of time to consider, not so much the detail of what we need to do, but the principle of the matter. Will she now remove her veto on economic sanctions, on which she has previously insisted?
    The Prime Minister: The right hon. Gentleman is complaining because we are to consider the report carefully with our partners before we reach our conclusions. He knows full well that the report says:
    "we are not determining the nature or extent of any measures which might be adopted, or their effectiveness".

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    The report has taken a long time to compile and we are grateful to the group that has undertaken the task. I shall be seeing its members later. I am not aware that the phrase "economic sanctions" appears in the conclusions.
    Mr. Shore: I have one final point to put to the Prime Minister, because she is equivocating. The word "sanctions" has been used by the leading members of the Eminent Persons Group. I quote directly from paragraph 352 of its report, which says:
    "We are convinced that the South African Government is concerned about the adoption of effective economic measures against it."
    If that is not equivalent to sanctions, I do not know what is.
    The Prime Minister: I have read out what the report says, which is:
    "we are not determining the nature or extent of any measures which might be adopted, or their effectiveness".
    The right hon. Gentleman is complaining because we shall take great care in considering the report and in consulting both the Commonwealth and our economic partners. I shall quote what a spokesman of the Labour Government, of which the right hon. Member was a member, said in December 1977, after Soweto was debated in the United Nations. He said:
    "We voted against"—
    economic sanctions against South Africa—
    "together with France, West Germany, the USA and some other Western countries, because we do not agree that the far-reaching economic measures which the resolution calls for would produce the changes in South Africa which we would all wish to see."—[Official Report, 16 January 1978; Vol. 942, c. 9.]
    Mr. Hunter: My right hon. Friend has made much of the sentiment "the lady's not for turning". May we take it that she will not turn aside from her view that the further isolation of the South African Government and the imposition of sanctions, while they will achieve many things, will not help the creation of a more just and equitable society in South Africa?
    The Prime Minister: Of course we want a more just and equitable society in South Africa and we condemn apartheid. We still believe that we must not close the door on future negotiations and that the group's basic approach of promoting dialogue and a suspension of violence remains correct. Of course, we shall consider this distinguished report carefully, and consider it with our European partners, our Commonwealth partners and with the seven industrialised nations. I am sure that my hon. Friends will agree that that is the right way to go about it, before dashing into premature conclusions.
    Dr. Owen: Can the Prime Minister promise the House that when President Reagan applies economic sanctions against South Africa she will not turn round and follow suit? When will she lead world opinion instead of being led by the nose? In the light of the state of emergency that was declared today in South Africa, will she tell us now that she will be ready to stop direct intercontinental flights to South Africa?
    The Prime Minister: The right hon. Gentleman is well aware that those flights are conducted under legal contract. There are specific legal obligations in those contracts, which cannot suddenly be abrogated. I note that in an article in The Sunday Times on 24 March 1985 the right hon. Gentleman said:
    "Total, or even selective trade sanctions, will not succeed."
    Mr. Baldry: Does my right hon. Friend agree that it is time that Northern Ireland said yes to something? The SDLP vetoed the Assembly and the Unionists have vetoed the Anglo-Irish accord. Is it not time that Northern Ireland said yes to something and then tried to seek a solution to its problems? Northern Ireland should not always look to Westminster for a new initiative, because we have rather run out of initiatives and out of patience with the people of Northern Ireland, who sabotage everything that we try to do.
    The Prime Minister: I appreciate what my hon. Friend has said. As he knows, my right hon. Friend the Secretary of State for Northern Ireland will make a statement later today. In the meantime, the invitation to the Unionists stands. We invite them to come and discuss how to get devolved government and to discuss the future of the Assembly. It is also open to them to come to discuss the future arrangements about the conduct of Northern Ireland legislation in the House. I hope that one day they will take up that offer.
    Mr. J. Enoch Powell: Will the Prime Minister invite her security advisers to study with great care the implicit timetable behind the outrages and attempted outrages for which the perpetrators have just been convicted? Will she compare those with the successive stages of negotiation between Her Majesty's Government and the Governments of the United States and the Irish Republic?
    The Prime Minister: I shall deal separately with the two parts of the right hon. Gentleman's question. Of course security advisers will learn any lessons that are to be learnt. It is their duty to do so. They go to great lengths to try to protect us and they do a supremely good job. I totally reject the latter half of the right hon. Gentleman's question.
    Mr. Patchettasked the Prime Minister if she will list her official engagements for Thursday 12 June.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some time ago.
    Mr. Patchett: Does the Prime Minister accept that the uprating by 10p per week of child benefit is an insult to the many families who depend upon it? Is that not another example of the Government's callous indifference to those that have not?
    The Prime Minister: No. Child benefit is at just about the right level. The hon. Gentleman fails to observe that the money for child benefit often has to come from the very families to which it goes. There are of course increased amounts under supplementary benefit. In so far as the hon. Gentleman refers to supplementary child benefit, the increase is low because inflation is low—lower than ever his Government had it.
    Mr. Craigenasked the Prime Minister if she will list her official engagements for Thursday 12 June.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Craigen: When it comes to the crunch, is the Prime Minister prepared to break the Commonwealth rather than back stronger concerted measures to break the pattern of apartheid in South Africa?
    The Prime Minister: I have said that we shall be consulting the Commonwealth, I think at the beginning of

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    August, when the seven Heads of Government come to London for that purpose, and I shall be seeing the two cochairmen of the Eminent Persons Group later this afternoon.
    Mr. Jesselasked the Prime Minister if she will list her official engagements for Thursday 12 June.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Jessel: As it is only the Conservative party which is united, with a strong and clear defence policy for the defence of Britain, is it not a danger to our country that unilateral nuclear disarmament is supported not only by the Labour party but by live out of every six Liberal candidates, over which they are deeply split with the right hon. Member for Plymouth, Devonport (Dr. Owen)? Is this not a total abuse of the word "alliance", which should now be dropped?
    The Prime Minister: Yes, Mr. Speaker. I wholly agree with my hon. Friend that only the Conservative party and
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    the Government have a defence policy which is based on British interests and not on trying to reconcile irreconcilable views.
    Mr. Allen Adamsasked the Prime Minister if she will list her official engagements for Thursday 12 June.
    he Prime MinisterI refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Adams: Is the right hon. Lady aware that many parts of Rolls-Royce aero-engines are made in my constituency at Millington and that there is deep concern about the company's future in Glasgow, particularly its capacity to produce in the west of Scotland? Will she ask her Ministers to seek assurances from the directors of the company that they will keep a presence in Glasgow?
    The Prime Minister: I shall, of course, pass on the hon. Gentleman's request, and I am sure he will appreciate that the likelihood of the company maintaining a presence in Scotland is the greater the more orders Rolls-Royce wins. It appears to be being very successful on design and merit.

Business of the House
3.30 pm
Mr. Peter Shore: May I ask the Leader of the House whether he will state the business for next week?
The Lord Privy Seal and Leader of the House of Commons (Mr. Biffen): Yes, Sir. The business for next week will be as follows:
MONDAY I6 JUNE—Opposition Day (15th Allotted Day) (1st Part). Until seven o'clock there will be a debate on an Opposition motion entitled "The crisis in big city hospitals".
Afterwards progress on remaining stages of the European Communities (Amendment) Bill.
TUESDAY I7 JUNE — Opposition Day (16th Allotted Day). There will be a debate on South Africa on an Opposition motion.
Afterwards there will be a debate on EC Document 9360/84 as amended by EC Document 5752/86 relating to EC proposals on the marketing and testing of medicinal products.
WEDNESDAY I8 JUNE—There will be a debate on Foreign affairs on a motion for the Adjournment of the House.
THURDSAY I9 JUNE— Motions on Northern Ireland orders and consolidation measures. Details will be given in the Official Report.
FRIDAY 20 JUNE—There will be a debate on the arts on a motion for the Adjournment of the House.
MONDAY 23 JUNE—Until seven o'clock, opposition Day (11th Allotted Day) (2nd Part). There will be a debate on a motion in the name of the leader of the Liberal party. the subject for debate to be announced.
Second Reading of the Rate Support Grants Bill.
Debate on Tuesday 17 June:
Relevant documents

(a) 9630/84

Marketing and testing of medicinal products.

(b) 5752186

Marketing and testing of medicinal products.

Relevant reports of European Legislation Committee

(a) HC 5-viii (1984–85), para 1 and HC 21-xix ( 1985–86), para 1

(b) HC 21-xix (1985–86), para 1

Northern Ireland orders to be debated on Thursday 19 June:
Northern Ireland Assembly (Dissolution) Order.
Northern Ireland Act 1974 (Interim Period Extension)
Order.
Northern Ireland (Emergency Provisions) Act 1978 (Continuance) ( No. 2) Order.
Consolidation Measures:
The Company Securities (Insider Dealing) (Northern Ireland) Order.
The Companies (Northern Ireland) Order.
The Business Names ( Northern Ireland) Order.
The Companies Consolidation (Consequential Provisions) (Northern Ireland) Order.
Mr. Shore: We are grateful for the full day's debate on foreign affairs on Wednesday, but the Opposition believe that it is essential that the House should have the earliest possible opportunity to debate separately the report of the Eminent Persons Group on the crisis in South Africa and that is why we have given Opposition time next Tuesday.
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Will the Lord Privy Seal arrange for an early statement on the Eminent Persons Group report so that the debate can be fully focused upon the Government's response and future policy?
Secondly, in view of the exceptional constitutional importance of the European Communities (Amendment) Bill, with its further reductions of the powers of this Parliament and the removal of the unanimity rule as accepted in the Luxembourg compromise from a large part of the Treaty of Rome, will the right hon. Gentleman make it plain that there will be a further day's debate and that there will be no attempt to bulldoze through all its stages on Monday night?
Thirdly, the right hon. Gentleman replied favourably last week to the pressure from my right hon. Friend the Leader of the Opposition for a debate on the crisis in the tin mining industry and the effects of mine closures on communities in Cornwall. Can he now say whether time for that debate will be included in his next business statement?
Fourthly, the right hon. Gentleman will know of the widespread disappointment caused by the findings of the Lord Chancellor's consultation paper on family courts. The report's tone was certainly very negative. When will the House have an opportunity to debate that report?
Finally, on the important question of the restitution of private Members' time following the disgraceful manoeuvres that led to the loss of last Friday's business, can the Leader of the House now make that positive response that he referred to in my exchanges with him last Tuesday?
Mr. Biffen: I shall respond to those questions in reverse order. I am glad to say that, following discussions through the usual channels, I shall arrange for a motion to be tabled providing for private Members' notices of motion to take precedence over Government business until 7 pm one evening, and for a ballot to be held for those notices.
Perhaps the question of the Lord Chancellor's report can be examined through the usual channels.
I confirm that it is our intention that there should be a debate on the tin industry in the near future. However, I cannot give the guarantee sought by the right hon. Gentleman.
We shall have to see what progress we make with the European Communities (Amendment) Bill next week. But I quite understand the importance of the right hon. Gentleman's point.
Finally, I appreciate the co-operation that has been given to ensure that a full day's debate on South Africa can take place early next week. I shall draw the attention of my right hon. and learned Friend the Foreign Secretary to the question about the possibility of a statement.
Sir Anthony Grant: Is my right hon. Friend aware that the whole House would very much welcome a debate on defence in the not too distant future? Presumably that opportunity will be afforded by the Liberal party on Monday, but should it absent-mindedly forget to provide it, will it be possible to have another debate, or to raise such issues in the foreign affairs debate on Thursday? Does my right hon. Friend realise that there is so much confusion in Cambridgeshire between the Liberals, the SDP and the Labour party that we do not know whether we are a nuclear-free zone. It is very worrying.
Mr. Biffen: My hon. Friend is perfectly correct to say that during the next few weeks there will be several occasions when defence can be debated in the House, and not least during the debate on the defence White Paper. I believe that on that occasion, nemesis will be awaiting the respective parties of the alliance.
Mr. A. J. Beith: Is the Leader of the House aware of the very large number of university teachers who have come to the House today because they are concerned about the future of higher education? Will he find an opportunity in Government time to enable the Secretary of State for Education and Science to make a statement on his policies towards that sector of education and give him the chance to offer some new hope to an area that is of great concern to the future of our country?
Mr. Biffen: My right hon. Friend the Secretary of State has made the most excellent start in disseminating hope and confidence. I shall draw his attention to the fact that the Liberal party believes that a statement from him on the subject of higher education might add to that. We shall have to see how we go.
Mr. Derek Conway: Will my right hon. Friend give an undertaking that the much exercised usual channels will do their best to bring together the Liberal and Social Democratic parties so that they use their day, on Monday 23 June, to debate defence policies? We could then examine in detail the so-called Commission defence report which was published yesterday, and question those hon. Members involved, if they manage to turn up, on paragraph 55, which urges Parliament to look 10 years ahead to new technology in preparing for defence, while paragraph 67 conveniently ducks the issue of an independent nuclear deterrent for Britain until after the next general election.
Mr. Biffen: The usual channels have proven and enviable powers, but it may be stretching them somewhat to suppose that they can secure what my hon. Friend wants from the two component parties of the alliance. But it would be more revealing if the Liberal party did not choose to debate defence on Monday 23 June than if it did.
Mr. Jack Ashley: Is the right hon. Gentleman aware that from today advertisements are being placed in newspapers up and down the country by disabled ex-service men who believe that they were disabled as a result of negligence while performing noncombatant duties? Those advertisements warn potential recruits to the armed force that they lose the right to sue for damages when they join the forces. They disclose facts and tell the truth, and I take it that the Leader of the House is in favour of disclosing the facts and telling the truth. As this dispute is escalating and we want service men to have those rights, may we have a debate next week?
Mr. Biffen: 'The right hon. Gentleman's dedication in this matter is well known and acknowledged. I will certainly draw the attention of my right hon. Friend the Secretary of State for Defence to the point that he makes, but I am afraid that I must disappoint him by saying that I cannot alter the order of business already established for next week.
Mr. Michael Shersby: Will my right hon. Friend try to find time as soon as possible for a debate on the reform of the rating system based on the Green Paper "Planning for Local Government"?
Mr. Biffen: It is a matter of great significance which I am sure will detain the House at some point, and maybe in the not too far distant future, hut, having a great sense of realism at this point of the parliamentary calendar, I must say to my hon. Friend t hat no provision is made for it next week and I doubt that it will be the week after.
Mr. Nigel Spearing: Has the Leader of the House read the display advertisement concerning the European Single Act on page 3 of The Guardian today? Is he aware that it is subscribed to by many of his hon. Friends, and by Lord Stoddard and Mr. Douglas Jay? In view of the fact that the Foreign Secretary has described some similar statements as constitutional fantasy, will he assure the House that there will be ample time for the House to decide whether the facts in the advertisement measure up to the description of the Foreign Secretary?
Mr. Biffen: I am sure that the hon. Gentleman will appreciate that for me there are other newspapers whose page 3 takes priority over that of The Guardian. I of course recognise the importance of the point that he makes, and obviously it will be germane to the debates that we shall be having next week.
Sir Eldon Griffiths: Now that the court has reached its conclusion about the Brighton bomber and those others who sought to destroy innocent people across our country, will my right hon. Friend invite the Home Secretary to make a statement to the House about the police operation that led to the successful conviction of these persons, first, so that the House can express its congratulations to the police service on having achieved this victory against terrorism, and, secondly, so that we may consider maturely what further measures and resources may be required to ensure the proper protection of our citizens against terrorism?
May I also ask my right hon. Friend to negotiate with those on the Liberal Benches in respect of next Monday's business so that before 7 o'clock the Liberal sector of the alliance can offer us its policy and after 7 o'clock we may hear the different story from the other part of the alliance?
Mr. Biffen: I associate myself most warmly with the tribute that my hon. Friend has paid to the police concerning their role in the detection of the bombers. I note the point that he makes about the need for an adequate level of resources for this work. I think that I had better leave it there and say to him that I will, of course, refer his request for a statement to my right hon. Friend the Home Secretary.
I must admit that, as we move into the witching season of June and July, it is fascinating to dwell upon the irrelevances that are presented by the Liberal and Social Democratic alliance, particularly as their differences become the more acute and the more inflamed. I am sure that we will all have an entertaining time thinking about what they might have done and then thinking how poor and lacklustre is the performance against what could have been.
Mr. Donald Coleman: May I remind the Leader of the House again of the Association of University Teachers lobby of the House today? Will he arrange for a debate on the funding of the University of Wales? If that is not possible on the Floor of the House, could it be held in the Welsh Grand Committee?
Mr. Biffen: I take note of what the hon. Gentleman says. I realise only too well that it is a topic of great concern in the Principality, and I will refer his suggestion to my right hon. Friend the Secretary of State for Wales.
Mr. Robin Maxwell-Hyslop: Will my right hon. Friend ensure that the report of the Select Committee on Trade and Industry on the collapse of the tin industry, the Government's response to it and the Committee's observations on the Government's response are debated before the decision concerning the application by South Crofty, Pendarves and Wheal Jane is taken and announced rather than after the event? That is very important if Parliament is to perform its proper role.
Mr. Biffen: As my hon. Friend knows, I have indicated that I hope and expect there to be a debate on the tin industry in the fairly near future. I hope that he will excuse me from making a commitment as precise as he would wish.
Mr. Robert Parry: Has the Leader of the House seen early-day motion No. 919 concerning the Iran-Iraq war?
[That this House welcomes the observation of 10th June as the International Day of Action to stop the Iran-Iraq war; supports the resolutions carried at the recent Non-Governmental Organisation International Conference at Geneva to end the war; notes that the war has continued longer than World War II with the loss of more than a half a million people killed, the violation of international laws and the use of chemical weapons; commends the efforts of the United Nations, the non-aligned movement and the Islamic Conference to resolve the conflict; and calls upon Her Majesty's Government to use its influence at the United Nations and within the Council of Ministers to call for an immediate cease fire, the release of all prisoners of war and to emphasise on the occasion of the International Day of the Child the need for the protection of children of both countries, and to make particular use of the World Congress devoted to the International Year of Peace to he held in Copenhagen in October to promote the above-mentioned aims.]
May the House have an early debate on how we can initiate a ceasefire, hearing in mind the appalling loss of life on both sides, especially among children, in that war?
Mr. Biffen: The hon. Gentleman could take advantage of Wednesday's debate on foreign affairs, which will provide him with a better opportunity than any other to deploy his arguments.
Mr. Peter Viggers: If, following the request by the right hon. Member for Stoke-on-Trent, South (Mr. Ashley), there should be a debate on the conditions of service for armed forces personnel, will my right hon. Friend bear in mind that the right hon. Gentleman has been less than fair to the current excellent conditions of service for those in the armed forces, especially as they can be compensated for injury whether or not they have been negligent in any act that caused the damage?
Mr. Ashley: That is not true—it is quite wrong.
Mr. Biffen: I note and appreciate the point made by my hon. Friend. Doubtless it could be considered if we were to have such a debate.
Mr. Dave Nellist: Is there any prospect of an early debate on electoral law, during which
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we could consider early-day motion No. 943 headed "Bradford North and Conservative financial support for non-Conservative candidates."?
[That this House notes the touching concern of the Chairman of the Conservative Party for the selection of candidates by members of the Labour Party to fight the next General Election; wonders if such concern will again be translated into financial support for non-Conservative candidates, as with the late Lord St. Oswald, former Vice-Chairman of Mid-Yorkshire Conservative Association, and the Conservative candidate for Yorkshire West, in the first election to the European Parliament, who paid £2,500 of the election expenses of Ben Ford to stand as an independent in the 1983 General Election in Bradford North; and considers that the almost unprecedented unity of hysteria between the Chairman of the Conservative Party and the leader writers of the 11th June editions of The Guardian, Daily Mail, Sun, Daily Telegraph, Daily Express and Today, in opposing Labour's democratic choice of Mr. Pat Wall to. fight Bradford North at the next General Election, shows that if that decision worries the establishment that much, it must he good for working people and their families]
Might we not then have an explanation, from someone sufficiently high in the Tory party, about why the late Lord St. Oswald paid £2,500 of the electoral expenses of an independent to stand against the official Tory candidate?
Mr. Biffen: I feel unbriefed fully to deal with that point. May I suggest that, at least as an initiation into the subject, the hon. Gentleman raises the matter with the Home Office during Question Time?
Mr. Peter Bruinvels: When will the House have a debate on the negative approach of Labour local authorities to unemployment, especially that of Leicester, which seems to take great delight in showing how many people are unemployed while carefully forgetting the number of people who have found work? Should not the House have an opportunity to correct the balance and show that under this Conservative Government many people have found work, and that the position is not quite the lies and untruths that the Labour party would have us believe?
Mr. Biffen: Every Thursday I begin to feel that Leicester is carved on my heart. I cannot offer an early prospect of Government time for such a debate, but my hon. Friend may wish to take the opportunity provided by Adjournment debates. However, I know that by raising the matter with me he ensures that the folk in Leicester truly appreciate that the position is as he so graphically describes it.
Mr. Greville Janner: In spite of the unhappy juxtaposition of this question with that which has just been asked, I shall ignore the idiotic approach to the problems of the people of Leicester, where in parts of my constituency they face 60 per cent. unemployment.
May I ask the right hon. Gentleman, as he no doubt expected me to do, what has been the result of the investigation into the Nazi criminal activities of Dr. Kurt Waldheim and whether we are to have a statement about that before the debate on Wednesday? If the Foreign Office is considering United Kingdom representation at Dr. Waldheim's inauguration, on the same ground as the Prime Minister has sent a disgraceful message of congratulation—that it is normal so to do—perhaps the

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right hon. Gentleman will bear in mind the very great regret felt on both sides of the House at the presence of United Kingdom representation at the inauguration of Chancellor Hitler in Germany in 1934?
Mr. Biffen: When I behold the sartorial elegance of the hon. and learned Gentleman, I realise that he represents gentrified Leicester and that my hon. Friend the Member for Leicester, East (Mr. Bruinvels) represents working Leicester. I think that the hon. and learned Gentleman might best hold his attention for the Adjournment debate on Friday in the name of the right hon. Member for Brent, East (Mr. Freeson), which I think will touch on the subjects that he has raised.
Mr. Derek Spencer: Is my right hon. Friend aware of the misgiving that there is in many quarters, and not only in Leicester, about the political bias that is shown by various officers in local government? The Lewisham council has said only recently that it will employ senior officers only if they are wedded to the Labour party. Is my right hon. Friend aware also that the treasurer of Leicester city council, only a short time before the local authority elections, printed a letter in the Leicester Mercury seeking to explain and justify an 80 per cent. rate increase, and that he has added insult to injury by seeking to justify his original letter? Can my right hon. Friend tell us when we can expect some early legislation to prevent various areas of local government destroying themselves?
Mr. Biffen: I do not know what three Leicesters in a row means in the parliamentary jackpot. I have taken careful note of what my hon. and learned Friend has said. I put it in the context of a request for legislation, and I shall see that it is conveyed to my right hon. Friend the Secretary of State for the Environment.
Mr. Nicholas Soames: Will my right hon. Friend make time available for the House to debate the excellent report from the Public Accounts Committee on the torpedo programme and the other procurement scandal, apart from Nimrod, that lurks within the Ministry of Defence? At the end of the day it is likely that the Tigerfish torpedo will cost even more money than the Nimrod programme. May we have an early debate on this vital waste of taxpayers' money.
Mr. Biffen: Perfectly properly, my hon. Friend raises a matter of major public concern. He will know that there is a recognised convention for responding to and debating PAC reports. I shall make investigations to ascertain when such a debate can be made available.
Mr. Michael Latham: When Hansard appears tomorrow, will my right hon. Friend read the exchanges that took place during Question Time today on agriculture? Great concern was expressed by Conservative Members about the prospects of agriculture and the need for drastic policy changes in the year ahead. Is it not time that the House debated this issue properly?
Mr. Biffen: I had the privilege of being in my place and hearing my hon. Friend's most formidable question. I recognise that there is much interest in the present state of British agriculture and an interest in what the future may hold. I shall refer my hon. Friend's remarks to my right hon. Friend the Minister of Agriculture, Fisheries and Food, with the prospects of possibly having a debate.
Mr. David Sumberg: In the context of a call for a defence debate, may we have a debate on the
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ridiculous concept of the nuclear-free zone, especially as the Labour-controlled council of Bury has now declared my constituency to be a nuclear-free zone? Does my right hon. Friend accept that such a debate would give us an opportunity to condemn this wasteful and misleading statement in so far as it relates to my constituency?
Mr. Biffen: I am sure that my hon. Friend will be reassured to know that reasonably soon we shall be having a debate on the defence White Paper. I hope that he will then have the opportunity to make the pertinent point that he has put before us.
Mr. Ivor Stanbrook: I think that everyone agrees that the present arrangements for considering Northern Ireland business in the House are inadequate. As the Government have now decided to abolish the only public forum for the expression of opinion in Northern Ireland, is there not an obligation on the Government to produce proposals for the more adequate consideration of Northern Ireland business in this place? Surely the Government should not rest upon the rather spurious and misleading invitation to Northern Ireland's political leaders to make approaches themselves. Is it not the Government's responsibility, having put Northern Ireland in this position, to bring forward proposals?
Mr. Biffen: My hon. Friend will appreciate that I cannot anticipate the statement that my right hon. Friend will make shortly. However, I remind him that the Assembly had no legislative role and, therefore, the lawmaking factors remain unaffected by any changes that might take place in the Assembly.
Mr. Richard Holt: I reinforce the remarks of my hon. Friend the Member for Orpington (Mr. Stanbrook). Is it not time that the House had an opportunity to debate the internal affairs of our country, as the American Congress has? Perhaps we would then have an opportunity to say to the Americans, "It is not your cheap conscience money we want; it is an extradition treaty."
Mr. Biffen: Discussion of the extradition treaty could be reasonably pursued in the foreign affairs debate on Wednesday. I assure my hon. Friend that the existing structures provide plenty of opportunities for making points about the Province as well as the foreign affairs aspects.
Mr. Michael Forsyth: Will my right hon. Friend find time for the House to debate, as a matter of urgency, the activities of the Animal Liberation Front and other so-called animal rights groups which, according to articles in the Daily Express, are involved in creating cells in constituencies to carry out attacks on property and individuals, representing a serious threat to public order?
Mr. Biffen: My hon. Friend has raised a legitimate point. I suggest that, in the first instance, it might be an appropriate subject for an Adjournment debate.
Mr. Geoffrey Dickens: In view of the serious statement made by the Leader of the Opposition when he was in India about removing our immigration controls — the two Acts which we have introduced—and, ever-mindful that the Labour party granted two amnesties for illegal immigrants, much to the distaste of those who had entered

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the United Kingdom legally, will my right hon. Friend make time for a debate on that subject so that we can ask some awkward questions?
Mr. Biffen: I underline the importance of what my hon. Friend has said. It relates to a topic which is of major concern to the British public. There is no provision for a debate next week. I am sure that my hon. Friend realises the difficulties of providing time at this stage of the year, but I shall bear in mind what he has said.
Mr. David Harris: I underline the pleas made by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) and by the right hon. Member for Bethnal Green and Stepney (Mr. Shore) on the tin crisis and the urgent need for a debate. I know that the Leader of the House does not want to be tied down to a precise date, but, when he considers the need for an urgent debate, will he bear in mind the fact that the Government have published their response to the Select Committee's report? More importantly, a shadow hangs over the far west of Cornwall, especially in the area I represent, as a result of the dire news about Geevor.
Mr. Biffen: I appreciate the point that my hon. Friend has made. I appreciate it all the more because, although his constituency is acutely affected by what is happening, he put it temperately. I cannot go beyond what I have already said. I shall look at the matter as sympathetically as I can.
Mr. Alan Williams: I am glad that, however reluctantly and truculently, the Government have decided to restore last week's hijacked private Members' day. Does the right hon. Gentleman recollect that last Friday was not only a Labour Back-Bench day but specifically the day of my hon. Friend the Member for Linlithgow (Mr. Dalyell)? [HON. MEMBERS: "No".] It was indeed. He won the ballot to bring a matter before the House last Friday. If there is to be a new ballot, will the Leader of the House recognise that there is, at best, only a one in two chance that it will be a Labour Back Bencher who wins it and a less than one in 500 chance that it will be my hon. Friend the Member for Linlithgow? Will the right hon. Gentleman confirm that a motion reinstating the lost private Members' business can reinstate the ballot that has already taken place? If that is so — believe that it is —will the right hon. Gentleman give an assurance that the motion will be so worded? If he will not,
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may we have an assurance from the Government Chief Whip, who so destructively and maladroitly organised last week's filibuster, that on this occasion he will exercise his Machiavellian powers to ensure that he keeps Conservative Members out of the ballot?
Mr. Biffen: I am disappointed at that somewhat less than generous riposte. Careful thought went into the wording of my response to the right hon. Member for Bethnal Green and Stepney (Mr. Shore). I do not think that there will be any advantage in my going beyond what I have already said.
Mr. Cecil Franks: On a point of order, Mr. Speaker. It may have escaped the attention of the right hon. Member for Swansea, West (Mr. Williams), although I am sure that it did not escape yours, that three motions were tabled for debate last Friday. Apparently, the hon. Member for Linlithgow (Mr. Dalyell) gave his speech, albeit to members of the press in a Committee Room upstairs. May I suggest that the motion standing in the name of the hon. Member who held second place should be reinstated? Perhaps I should declare a personal interest, as that motion stood in my name.
Mr. Speaker: That is not a matter for me. I assure the whole House that the ballot will be conducted fairly.
Mr. Williams: Further to the point of order, Mr. Speaker. I am afraid that the Leader of the House, rather coyly and calculatedly, failed to answer the procedural point that was raised. I suggest, therefore, that it is a point for the Chair to consider. Will you confirm, Sir, that the motion, which is unusual, to restore the lost private Members' day could procedurally and legitimately reinstate the last ballot?
Mr. Speaker: Any motion that is tabled will say what it intends. I am not omniscient. I do not know what the motion will say.
Mr. Williams: But can it?
Mr. Speaker: It could. if it is tabled in that form.
Mr. Andrew Faulds: On a point of order, Mr. Speaker. Is it not unfair that the Leader of the House should be required to comment on an incorrect hypothesis? Is it not a fact that the hon. Member for Littleborough and Saddleworth (Mr. Dickens) made a totally incorrect assessment of what my right hon. Friend the Leader of the Opposition said in India?
Mr. Speaker: I do not know.

Northern Ireland Assembly
4.2 pm
The Secretary of State for Northern Ireland (Mr. Tom King): With permission, Mr. Speaker, I wish to make a statement about the Northern Ireland Assembly.
Under the Northern Ireland Act 1982 the present Assembly has two functions. The first is to consider and report on how a devolved Northern Ireland Administration should be formed. Secondly, the Act requires the Assembly to monitor and report on the policies and activities of the Northern Ireland Departments.
The task of making proposals on devolution was undoubtedly made much more difficult by the regrettable decision of members of the SDLP not to take their seats. The Assembly has not been able to come forward with agreed proposals and there is no present prospect of that occurring. As for the monitoring of the Northern Ireland Departments, the Assembly suspended this work on 5 December. In spite of clear warnings about the threat that this action would pose to the continuation of the Assembly, the Unionist parties have not been prepared to resume this function. As a result, the Alliance party withdrew from the Assembly since it believed that there was no longer any useful role to be played.
On 13 March the Assembly formally resolved not to carry out its monitoring functions, to wind up the Devolution Report Committee, and merely to meet one afternoon a week for a debate on aspects of the Anglo-Irish agreement.
The position, therefore, is that the present Assembly, charged under the Northern Ireland Act 1982 with two important functions, is now discharging neither. As long ago as last December in this House, I warned that if the Assembly continued the suspension of its scrutiny role for long, questions about its future would inevitably arise; and on I May and 19 May I repeated this warning. On 27 May I invited the leaders of the main parties in the Assembly to discuss with me the position of the present Assembly. The leaders of the two main Unionist parties refused even to talk about it. I regret that I have therefore had to reach my decision without hearing their views.
The decision I have now taken is to lay an order today for the Assembly's dissolution under the powers in section 5(1) of the Northern Ireland Act 1982. This order will come before the House for debate under the affirmative procedure. In taking this step I would make the following points. The present Assembly would in any case reach the end of its normal life on 20 October. There would then automatically within six weeks be fresh elections for a new Assembly. The effect of this order is not to abolish the legal basis for an Assembly but simply to dissolve the present Assembly and to leave open the date for a new election for a fresh Assembly.
I wish to emphasise to the House that dissolution of the present Assembly in no way conflicts with our desire for devolved government, nor our commitment to the Anglo-Irish agreement. Devolution remains the Government's preferred option, and I hope that we may see a future Assembly playing a responsible and valuable role in the Province. The sooner that happens, the better.
Meanwhile, the Government remain ready to discuss with all the constitutional parties in Northern Ireland the best way forward. In particular, I would urge the Unionist
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parties to return to this House to argue their case and to take up the offer of my right hon. Friend the Prime Minister to discuss with her the four matters proposed: namely, devolution and the possibility of a round table conference; the future of the Assembly; arrangements for handling Northern Ireland business at Westminster; and new means of consultation between the Government and Unionist leaders.
Only if we are prepared to talk together and discuss these matters can we hope fully to play our separate but complementary roles in building a better future for the people of Northern Ireland.
Mr. Peter Archer: Does the right hon. Gentleman appreciate that his statement will hardly burst on the world as a surprise and will occasion neither joy nor regret? The Assembly was
"A maid whom there were none to praise
And very few to love".
As there was no one left who both attended and used it for the purpose for which it was established, it is only seemly that it should be laid to rest in peace, and on another occasion we can pay tribute to those who at least tried.
Does the right hon. Gentleman appreciate that missing from his statement is any positive proposal either for the immediate future or for the longer term? As he reminded us, the Assembly, when it functioned, played a role in scrutinising the Northern Ireland policies that came before the House. Has he now grasped that that role must be assumed more effectively by the House? Will he consider how to make greater use of the Northern Ireland Committee? Can he persuade the Government's business managers to treat Northern Ireland business less contemptuously an to arrange debates at less bleak hours?
More importantly, does the right hon. Gentleman understand that the people of Northern Ireland will see his statement as pronouncing the obsequies on yet another institution which they were once told offered hope? Where are they now to turn for that?
Will there not be those who seek to represent the expiry of the Assembly as a consequence of the Anglo-Irish agreement? The people of Northern Ireland will consider it worth the price if the agreement makes a measurable contribution to their livelihoods, environment, community services and civil liberties. If those benefits are seen to arise from discussions and co-operation between North and South, Catholic and Protestant, may not the people themselves denounce the bickerings of their politicians?
When the House debates the matter more fully, will the Secretary of State, if he can, give an account of the positive side of the balance sheet, or, if not, give an indication of how long we must wait? If people cry for bread and they are given a stone, can we be surprised if they turn in despair to the demagogues, the bullies and the witch doctors?
Mr. King: It is true that my statement can hardly come as a surprise, because I gave the clearest warnings that, if the Assembly did not discharge the functions for which it was set up, its continuation would obviously be brought into question. That is precisely what has happened.
It would be unfortunate if it were not recognised that I regard this very much as a lost opportunity because—certainly in respect of the scrutiny role—there is no

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doubt that the Assembly and its various committees were doing some useful work. I especially regret that the decision was made to discontinue those responsibilities.
The right hon. and learned Gentleman spoke about the way in which Northern Ireland business is handled in the House. The Government have made clear their readiness to sit down and talk. The Government are often accused of not having enough consultation. I hope that we can sit down with all parties in the House, and with those who ought to be here and are not present in the numbers that they should be, to discuss ways in which we might meet those concerns.
I must correct the right hon. and learned Gentleman in one important aspect. I was in no sense pronouncing obsequies on the Assembly. I was making it clear that this Assembly is no longer fulfilling a useful function, but I hope that it will be possible to see a new Assembly which can move forward on a new basis.
Mr. Julian Amery: I hope that I shall not embarrass my right hon. Friend by expressing my support for the decision he has just announced. Would he be gracious enough to acknowledge that a number of his right hon. and hon. Friends kept the House up late at night warning that the Assembly would not work? In saying, "We told you so," may I express the hope that he and his colleagues will pay rather more attention to our views on Northern Ireland policy than they have hitherto?
Mr. King: I hope that I can assure my right hon. Friend that I shall contain my embarrassment at that expression of support. I shall, of course, wish to take his views fully into account with the respect that I know he would wish to receive.
Mr. J. Enoch Powell: Is the right hon. Gentleman aware that in 1982 the two main Unionist parties, as they were then represented in the I-louse. opposed the legislation establishing this Assembly with all the resources that parliamentary procedure admitted? Will he acknowledge that the judgment of those Conservative Members who supported us in our endeavour to prevent that mistake being made has been validated by the statement he has now found it necessary to make?
Mr. King: I do not agree with the right hon. Gentleman. precisely for the reasons I gave in part of my answer to the right hon. and learned Member for Warley, West (Mr. Archer). I think that the Assembly proved that it could discharge a useful role. It is important that people in Northern Ireland should feel that they have much more of an immediate say in the administration of the Province. I say that as somebody who, under the present structure, exercises a degree of power and authority which, in a democracy, raises difficult issues. I would much rather see a situation in which there was greater authority and responsibility for those in the Province. It is unfortunate that the actions of some members of the Unionist parties have prevented the Assembly from discharging its proper functions, but I hope that we will see a day when that can be done.
Sir John Biggs-Davison: Since the abolition of the Northern Ireland Parliament we have had about as many short-lived successive assemblies as in the French revolution. May I ask whether Her Majesty's
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Government will now declare a moratorium on assemblies and on political initiatives, including the Intergovernmental Conference, and concentrate on the conduct of parliamentary business as befits a Province of the United Kingdom and the good government, administration and local government of Northern Ireland?
Mr. King: My hon. Friend would not necessarily expect me to agree with all that he has said. However, I welcome the fact that he is prepared to express his view s and argue for them, and I welcome the opportunity, which I have from time to time, to discuss them with him. I hope that he will join me in urging everybody who is interested in the affairs of the Province to come forward and have the confidence to argue their views as well. That must be the right approach, and I hope that the House will support me on that.
Mr. Ian Gow: Does my right hon. Friend accept the paradox between his announcement of the suspension, if not the death, of the Assembly, one of the principal tasks of which was to present proposals for devolution for the Province, and the passage in his statement in which he said that the preferred choice of the Government was still devolution? Would he acknowledge that, even if that is the preferred solution of the Government today, he will not exclude from his consideration the fact that we should govern Northern Ireland in the way in which we govern other parts of this kingdom?
Mr. King: That begs many questions which need considerably more discussion. Obviously we would seek to govern Northern Ireland as fairly, equally and impartially as we seek to govern every part of the United Kingdom. However, to suggest that that involves total harmonisation of every structure of government flies in the face of experience and practice of the present situation. What it does emphasise—I say this fairly to my hon. Friend and I pay tribute to him because I know that he disagrees with the policies we have recently pursued and honourably took the course that he did in the matter — is that he is prepared to stand up and argue his views. Above all, at present we need people in Northern Ireland who are prepared to have the courage to argue their case in debate and not to fly from this Chamber. They should be prepared to come here and argue for what they believe is the best way forward. That is what I hope to see, and I know that my hon. Friend will support me on that.
Mr. John Hume: I can hardly shed any tears over the Secretary of State's announcement today, which is long overdue. I simply repeat our willingness as a party to accept his invitation to sit down and discuss with the Unionist parties devolution or any other matter pertaining to peace and stability in Northern Ireland. Since Unionists in Northern Ireland seem to fear the future more than anything else, the SDLP would welcome the opportunity to talk to them and explain and set out in detail its strategy and view of the future. We would like to hear from them what in that strategy in any way threatens the people they represent and we would also like to hear, for a change, their view of the future.
Mr. King: I am grateful to the hon. Gentleman for his comments. He will have noted in my statement my regret about the previous attitude of the SDLP. Perhaps part of the reason for the statement today goes back to the failure

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of his party to take part at that time. Therefore, it is certainly an advance in the sense that there might by an opportunity for all the constitutional parties in Northern Ireland to be prepared to sit down and talk constructively.
To cover a point that perhaps I did not answer in the question of my hon. Friend the Member for Eastbourne (Mr. Gow), that is perhaps part of the reason why it is worth making a further attempt to try to achieve devolved government.
Sir Adam Butler: Does my right hon. Friend accept, from my experience as a Minister on the receiving end, that the Assembly did some valuable work in fulfilling its scrutinising role? Does he also agree that perhaps the main lesson from the demise of the Assembly is that if there are those who refuse to participate in the constitutional processes available to them, it serves only to give heart and encouragement to the men of violence? As long as the Unionists continue their boycott on similar lines, they will not only do no good to themselves but will push the peaceful resolution of the Northern Ireland problem further away.
Mr. King: I am grateful to my right hon. Friend, especially with his experience of Northern Ireland, for the tribute he paid to the work done by the Assembly in its scrutinising role. It was a great pity that it chose to discontinue that role. I certainly agree that if a vacuum is left because of people's inability to sit down and discuss the problems frankly and openly and try to find a way forward, traditional to our parliamentary democracy, by argument and debate, it will be a dangerous vacuum into which others may walk.
Mr. Stephen Ross: Is the Secretary of State aware that, unlike many Conservative Members who have spoken so far, we share his disappointment at the demise of the Assembly but think that in the circumstances he has taken the right decision? Is he further aware that we share his hope that we will see a new devolved Assembly with all parties of good will serving in it? That is the only way in which the economy of the people of Northern Ireland can he put on better lines. Is not now the time to set up a parliamentary tier between this House and Dublin?
Mr. King: I am grateful to the hon. Gentleman for his opening comments. Some hon. Members seek no initiative, but to preserve the status quo. I find it unsatisfactory to have nothing between the Secretary of State and local authorities, the powers of which are not much in excess of a parish council. [Interruption.] That problem may be tackled in a number of different ways. I make no apology to the House for repeating that what is true, above all, is that we shall not begin to find the best solution unless people are prepared to sit down and talk the problem through. The present position is not a long-term solution. I regret the announcement that I have had to make today, but I hope it may provide the opportunity for discussions to start soon on a better way for the people of Northern Ireland to have more say in the administration of the Province. We are certainly willing to consider ways in which there could be a better interchange with the Republic.
Mr. Michael McNair-Wilson: Bearing in mind that the chance of the Assembly being revived in the near future is small, is this not the ideal moment to set up
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the Royal Commission, which should perhaps have been set up in 1980, to consider the structure of local government in Northern Ireland? When considering that, will my right hon. Friend also bear in mind that local government in Northern Ireland has always been unequal when compared with the rest of the United Kingdom, and that that way forward would not be obstructed by the road block created by politicians who refuse to get together?
Mr. King: At present I have no proposals for that particular approach. I would rather see direct discussions taking place. I appreciate that my hon. Friend has once again made a constructive proposal in an attempt to see a way forward in this matter. That must be the right approach. There is a range of different ways. Although I am not instinctively inclined to his suggestion, I recognise that it is a serious proposition.
Mr. Alfred Dubs: While I understand the reasons for the Secretary of State's statement this afternoon, may I urge him to resist as forcibly as possible the blandishments of Conservative Members below the Gangway, that a do-nothing policy is best for Northern Ireland? What does he intend to do about the Anglo-Irish parliamentary tier? We have raised that matter on many occasions and time and again the Government have said that it is a matter for the House. The right hon. Gentleman knows, and we know, that it not possible for us to make any progress unless he backs that proposal. I urge him to do so and to give us a date when we can get on with the task of establishing the parliamentary tier, which is part of the agreement and is a desirable feature of the relationships between Britain and both parts of Ireland.
Mr. King: I have never regarded any comment from my hon. Friend the Member for Newbury (Mr. McNair-Wilson) as a blandishment. His serious interest in these matters could never be described as such. I know that the hon. Gentleman does not want me to give this answer, but the parliamentary tier must be a matter for the House to consider. I know that my right hon. Friend the Leader of the House has made that position clear.
Viscount Cranborne: Does my right hon. Friend accept that the spirit in which the Assembly was introduced to the House was the same spirit in which the Anglo-Irish agreement was introduced? Is there any guarantee that the agreement will not suffer the same fate as the Assembly? Is not a more sensible approach—this has been suggested to my right hon. Friend several times this afternoon — to pursue parliamentary forms of government in Northern Ireland? In that context, will he consider setting up or advising the setting up of a Northern Ireland Grand Committee?
Mr. King: I see no similarity between those two items. These matters can be looked at seriously. We have made clear our willingness to consider the arrangements in the House, but we must also consider the administration of government in the Province. It is a great fallacy to assume that one can simply change the arrangements in this House in isolation, without also considering the arrangements for administration in the Province. At present very little lies between Ministers in the Northern Ireland Office and councils, most of which sadly are not meeting, and which have little more power than parish councils. We must consider the totality of the problem.
Mr. Robert Parry: Does the Secretary of State believe that the statement today will help to reduce violence in the Province, bearing in mind that we are now fast approaching the marching season?
Mr. King: It is widely recognised in the Province, and by many responsible politicians, that, sadly, the present Assembly is no longer discharging a useful function and that it is not helpful in present circumstances. Many of those who believe in devolution and the concept of an Assembly think that the state of the present Assembly is a positive blockage to considering the form of a new and effective Assembly and how it could work. I hope that that will be recognised. I see no reason why the absence of the Assembly should lead to an increase in tension, especially as it was about to go into recess for the summer.
Mr. Nicholas Budgen: Will my right hon. Friend undertake to issue a White Paper so that the House may be reassured that the aggressive English liberals in both the Northern Ireland Office and the Foreign Office will not attempt a similar expensive, dangerous and destabilising experiment, at any rate within the next decade?
Mr. King: I am grateful to my hon. Friend for the typically unpejorative way in which he puts his question. I do not want to issue a White Paper now, precisely because I want first to hear the views of those most involved. Rather than trying to lay down the matter in tablets of stone at this stage, I should like to talk to people and hear their views. In the absence of any contribution from those who have been elected to represent the people in the Province and in their continuing refusal to express any views whatever on behalf of their constituents, we may have to consider a step such as that suggested by my hon. Friend.
Mr. David Winnick: Is not the fallacy of the argument advanced by many Conservative Members today that Northern Ireland is just like any other part of the United Kingdom? Was not the signing of the Anglo-Irish agreement a recognition by the Government that Northern Ireland is indeed different? It is about time that Conservative Members recognised that position. If the Unionists continue their present tactics of obstruction, boycotting the House, and so on, will not many people come to the same sort of conclusion as that illustrated in the question by the hon. Member for Banbury (Mr. Baldry) to the Prime Minister today — namely, that many people will get so fed up with Northern Ireland and its problems and with the refusal of politicians to accept any possible agreement that they will shrug off the problem and conclude, on balance, that there is no positive role for Britain to play?
Mr. King: That would be a tragic and defeatist approach to the genuine problems that exist in Northern Ireland and a betrayal of all those who live there, who are part of the United Kingdom and who are entitled to good government. Obviously, all parts of the United Kingdom are not identical. The many areas, while all being part of the United Kingdom, are different. The arrangements in the House for handling Scottish affairs are different and the arrangements in Northern Ireland are different. I make no apology for emphasising that point.
Sir Eldon Griffiths: I agree with my right hon. Friend that a properly elected democratic
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Assembly is an essential part of the local government of the Province, but may I ask for his assurance that it is in the best interests of the Union that until civil peace is restored in Northern Ireland, there can be no devolution of responsibility for the enforcement of the law, the administration of justice and the upholding of internal security?
Mr. King: I should like to make it absolutely clear that we support the point made by my hon. Friend. There could clearly be no question of devolution on those matters unless there was a considerable basis of confidence, perhaps at an earlier stage with experience of devolved administration in other areas more traditionally associated with devolved government.
Mr. Merlyn Rees: In the face of a divided Northern Ireland, where 2,500 people have died and more than 30,000 have been injured by the violence and where the Northern Ireland (Emergency Provisions) Act has been in force for 10 or 12 years, does the Secretary of State accept that to continue to talk about devolution is a pipe dream and, equally, to talk about integration is also a pipe dream? If both sides in Northern Ireland will not sit down and talk with the Secretary of State—I wish that they would— they should be asked to sit down together without hon. Members being present and, if nothing results from that—which is likely—we should completely reassess our policy towards Northern Ireland. Perhaps only that thought will concentrate the minds of people in the Province.
Mr. King: The House respects the right hon. Gentleman's considerable experience on these matters. I listened carefully to his comments. He has had experience along this path and knows the difficulties that exist. It might be fair to say that the concentration of minds to which he referred at the end of his question, has followed in part after the Anglo-Irish agreement. In the coming months it might be possible to see more interest in the idea of sitting down and talking.
It is true that those matters upon which agreement could be reached would be removed, and the Anglo-Irish agreement would cease to operate on those points. There is, therefore, clearly an interest among those parties opposed to the Anglo-Irish agreement to see whether certain matters can be removed from the ambit of the agreement.
Mr. James Prior: Is my right hon. Friend aware that for those of us who have a deep and abiding commitment to all the people of Northern Ireland, this afternoon's announcement must come as a disappointment? Is he further aware that others, like myself, do not believe that integration is the answer to the problem? In the United Kingdom's interests there must be devolved government some time in Northern Ireland, if not now. The SDLP more than any other party, which has achieved significant success through the Anglo-Irish agreement, should play its part by helping to bring about an Assembly in Northern Ireland. That would be a great advantage to the unionists, because the more the Assembly could do, the less the Anglo-Irish agreement would have to operate. Does that not afford some way forward? Is it not right that the House should always seek some way forward to resolve a problem which is not new, which will not go away, and which it is our duty to solve?
Mr. King: I am grateful for my right hon. Friend's comments. I share the feeling of sadness at the necessity of having to make the announcement today. I understand that the concept that he launched was well worth pursuing and had shown merit. It was a tragedy that the SDLP did not take part, and that posed difficulties. I know that the hon. Member for Foyle (Mr. Hurne) understands why my right hon. Friend the Member for Waveney (Mr. Prior) made the comments that he did. I hope that the idea launched by my right hon. Friend will be carried forward in a new form in future.
Several hon. Members rose——
Mr. Speaker: Order. I appreciate the interest of the House in these matters. However, there is pressing business to come. I shall allow questions to continue for another seven minutes, after which we must proceed to the next business. I hope that by then all hon. Members will have been called—if they speak briefly.
Mr. Jerry Hayes: Does my right hon. Friend agree that it is regrettable that the House has heard some distasteful crowing about his announcement this afternoon? People should be looking to the future. Perhaps this drastic measure—which will be debated on another day — might concentrate the minds of all parties in Northern Ireland and force them to sit down and negotiate. That is the only way to keep the peace in the Province.
Mr. King: It is clear that we must make progress. The danger is that people talk in slogans — perhaps I am guilty of this also—about devolution or integration, and they do not consider the problem as a whole — the relationship of this House with the Province and the problems of the Province's administration. We must consider the totality of these problems and find a basis on which we can go forward which will command the widest possible acceptance among people in the Province. We know the difficulties. We realise that so far that has been unachievable. The House must try to find the correct approach. I will try to do that.
Mr. Patrick Nicholls: Does my right hon. Friend accept that by raising even now the spectre of devolution at some future date, he is turning his face away from the only lesson that can be learnt from the inevitable demise of the Assembly—that devolution in Northern Ireland will never work? It will never work because neither the minority community nor a United Kingdom Government will accept that the ballot box in Northern Ireland will always, for the foreseeable future, produce a Unionist majority. Faced with those inevitable facts, can he say whether there is a realistic way forward, other than the integration, on suitable terms, of the Province into the local government and parliamentary structure?
Mr. King: My hon. Friend glides easily with a wave of the wand from the problems of achieving devolution to integration, as if that was immediately achievable on some acceptable basis. He greatly underestimates the problems that that would pose. I have made it clear, and my right hon. Friend the Prime Minister has made it clear to the Unionist leaders, that, while we remain committed to the principle of devolution, we are also prepared to consider the ways in which Northern Ireland business is handled in this House. These matters require serious discussion. I
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hope that my hon. Friend the Member for Teignbridge (Mr. Nicholls) will lend his shoulder to the wheel and try to get people to join in these discussions.
Mr. John Mark Taylor: Does my right hon. Friend agree that if Northern Ireland is to be governed in the same way as the rest of the United Kingdom, as many Unionists would urge, one of the first requirements must be to have county councils or a provincial council? Does he accept that he has now abolished the elected Assembly which could have adopted that role? If he were to use the introduction of county councils or provincial government as a point of departure, what guarantee is there that everyone will sit in the chamber?
Mr. King: That is the point that I was making. My hon. Friend has understood the point that the present Assembly comes to the end of its life on 20 October, at the end of its four-year term. However, it has ceased to discharge the functions for which it was set up. There is no question but that the Assembly could have moved on in the direction that my hon. Friend has mentioned. I hope that we can have discussions to discover whether it is possible to move in any way along the lines that my hon. Friend has described.
Mr. John Stokes: Will my right hon. Friend be assured that, in spite of the natural and inevitable impatience in England about affairs in Ireland, many English people hold the Province in great esteem? They remember its wonderful contribution in both world wars. The English people wish it well. I believe that our best efforts must be directed towards improving parliamentary and local government in the Province, not to have too many new initiatives here.
Mr. King: Everyone who has had the honour to serve in Northern Ireland would share the comments made by my hon. Friend at the start of his question. Our recognition and appreciation of the quality of the overwhelming majority of the people in the Province is completely unquestioned. That is why we are so committed to trying to find the most acceptable way in which to proceed and to give the people of Northern Ireland as substantial a say as we can in their administration.
Mr. Michael Brown: Does my right hon. Friend agree that whatever our views on the Northern Ireland Assembly previously, the most important conclusion that any hon. Member representing Northern Ireland should draw from today's announcement is that, whatever their views and however aggrieved they may feel, this is now the central forum for political debate?
Mr. King: One of the comments that may be made about my statement today is that the Government are in some way seeking to choke or close off channels of communication and expression. That charge falls flat when one sees the Benches opposite and realises that one of the most important channels open to anyone in this United Kingdom is this Chamber. Nevertheless, the House is completely neglected and unused by the overwhelming majority of Unionist Members. 'They are abusing district councils at the same time. They are failing to use the channels that are available to them. I very much agree with my hon. Friend.
Mr. Kenneth Carlisle: Does my right hon. Friend agree that the failure of the Assembly is to be regretted, because it provided a local forum in Northern Ireland where the various parties could try to resolve their differences? Does he also agree that no actions or words in this House can thrust peace on Northern Ireland? Does he accept that peace can be achieved in the Province only if all parties there genuinely wish to talk and reach some accord on future life and prosperity there?
Mr. King: I very much agree with my hon. Friend. There is no doubt that if we are to find a way forward, the people in the Province and their representatives will have to be prepared to come forward and make their contribution.
Mr. Neil Hamilton: Is if not clear from the SDLP's attitude to the Assembly and a comparison of that attitude with its attitude to the Anglo-Irish agreement that it is prepared to support Government initiatives only when it calculates that they are likely to weaken the Union? That should be enough to make us view with suspicion any initiatives that it supports. Did not my hon. Friend the Member for Teignbridge (Mr. Nicholls) put his finger on the central point about experience in Ulster in the past 16 years? The attempt to reconcile two irreconcilable opposites merely by talking will never succeed. The time has come to allay Unionist fears by moving towards proper integration of the Province, ceasing to govern it as a colonial dependency and treating it properly as part of the United Kingdom.
Mr. King: I am not sure that an agreement which gets the British Government and the Government of the Republic of Ireland to sign an undertaking which was originally given in this House, concerning the rights of the Unionist majority in Northern Ireland, represents consent to the right to dominate. Membership of the United Kingdom is an important safeguard. I do not regard that agreement as weakening the Union in any way. As for integration, I do not have much to add to what I have already said. I am anxious to deal with affairs in the House, and especially to get hon. Members to focus on the real problem of administration in the Province.
Mr. William Cash: Does my right hon. Friend agree that the most important thing is to take the politics of Ireland off the streets and into the debating chamber? I have consistently advocated a Select Committee. That would help. Will my right hon. Friend consider it? In such a forum, members of the SDLP, Unionists and others who represent the rest of the United Kingdom could, in a proper constitutional framework, scrutinise legislation in a calm atmosphere, which would, I hope, enable progress to be made.
Mr. King: I am interested in that suggestion. The right hon. Member for South Down (Mr. Powell) made just such a one in the debate on the appropriation order earlier this week. I confirm that that is the type of matter that my right hon. Friend the Prime Minister said we would be prepared to discuss.
Mr. Peter Bruinvels: I accept that the Assembly has been used improperly. It has been used as a political platform against the Anglo-Irish agreement. I have some sympathy with that, but will my right hon. Friend consider the role of the Democratic Unionist party, which has threatened to take politics on to the streets rather than pursue genuine debate? Will he consider the £2·5 million that it costs to run the Assembly? Could it not be better used helping the economy and providing jobs to encourage the people of Northern Ireland who want to remain part of the United Kingdom?
Mr. King: The Democratic Unionists must answer for their own utterances, but I hope that everybody will show responsibility at a time when problems can easily arise in Northern Ireland. One cannot sit back and do nothing if expenditure is being incurred when none of the functions for which it is authorised are being performed. Bearing in mind the state of the Northern Ireland economy, there are several areas where the money could be much better used.
Mr. Stuart Bell: Does not the fact that the Assembly is now to be dissolved and there is no progress towards devolution mean that there is an added burden on the Anglo-Irish agreement? Does the right hon. Gentleman agree that, under article 10 of that agreement, there will be a responsibility to promote co-operation between the two parts of Ireland, so there is an additional responsibility on the agreement? Does he also agree that it ill behoves those who do not come to the House to presume that, by their actions in Northern Ireland and laying the Assembly to rest, they can somehow achieve back door integration? Will he confirm that there is nothing mutually exclusive about the Anglo-Irish agreement and round table talks on the future of Northern Ireland without preconditions?
Mr. King: I believe that talks without preconditions must be the way forward. I am grateful to the hon. Gentleman for making that clear. One component of the Anglo-Irish agreement is the opportunity for the minority to be able to advance its views. In no circumstances was the Anglo-Irish agreement intended to supplant the opportunity for the majority view to be taken into account. The present tragedy is that the majority representatives have chosen to switch themselves off.

Leyland Bus
4.47 pm
Mr. D. N. Campbell-Savours: As the House is aware, when the Government feel unable to make a statement on a matter of national importance and urgency, hon. Members have the right to apply for a private notice question. This morning, British Leyland made an announcement to its work force, and it was not possible, for obvious reasons, for the Government to make a statement. I felt that it would be wrong to apply for a private notice question, although the matter is most urgent, because of the tragic circumstances that have befallen the Channon family and because the Secretary of State would have been required to answer the private notice question if you, Mr. Speaker, had granted it.
I therefore beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing an important and specific matter, that should have urgent consideration. It is specific because it relates to the affairs of Leyland Bus and important because it concerns a large manufacturing company with nearly 3,000 employees at three locations in the United Kingdom — Lowestoft, Farringdon, near Preston, and Workington.
The matter is urgent, as I have already described. At midday today, British Leyland announced that the company will no longer be known as British Leyland plc but as Rover Group plc. BL will no longer exist. The Leyland name will be retained for commercial vehicle interests only. Through its advisers, Hill Samuel, BL today informed the three parties which have expressed interest in acquiring Leyland Bus that it is inviting offers from them for the entire business on the basis of a tender procedure. We should debate the issue because we need to know whether it is a sealed bid basis.
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Tenders are to be delivered to Hill Samuel by 26 June, after which time the BL board will consider them and submit a recommendation to the Government, as the majority shareholder, as soon as possible. The three prospective purchasers are Aveling Barford, the Laird Group and Leyland Bus management consortium.
It is also proposed to establish Leyland Bus as a registered limited company with its own business before any sale. That has not been known hitherto. The company aims to keep the current parts business intact. It is planned to achieve that by selling to the purchaser of Leyland Bus an interest in Leyland parts. The effect will be to leave the loss-making Leyland Bus group free-standing without any support from Leyland parts operations. It means that what remains will be ripe for asset stripping. I earnestly implore you, Mr. Speaker, to allow those matters to be raised under Standing Order No. 10.
Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"The statement today made by British Leyland about the future of Leyland Bus."
I have listened carefully to what the hon. Gentleman has said, but I regret that I do not consider the matter that he has raised as appropriate for discussion under Standing Order No. 10, and therefore I cannot submit his application to the House.

BALLOT FOR NOTICES OF MOTIONS FOR MONDAY 7 JULY
Members successful in the ballot were:

Mr. Kenneth Carlisle

Mr. Robert Kilroy-Silk

Mr. Robert McCrindle

BILL PRESENTED
  RATE SUPPORT GRANT
  Mr. Secretary Ridley, supported by Mr. Secretary Edwards, Mr. William Waldegrave and Mr. Norman Lamont, presented a Bill to validate certain block grant determinations already approved by the House of Commons; and to clarify and amend the law relating to rate support grants: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 177.]
Orders of the Day
  Financial Services Bill
  As amended (in the Standing Committee), further considered.
  Financial Services Bill
    New Clause 12

      JURISDICTION AS RESPECTS ACTIONS CONCERNING DESIGNATED AGENCY ETC.
      '(1) Proceedings arising out of any act or omission (or proposed act or omission) of a designated agency, transferee body or the competent authority in the discharge or purported discharge of any of its functions under this Act may be brought in the High Court or the Court of Session.
      (2) At the end of Schedule 5 to the Civil Jurisdiction and Judgments Act 1982 (exclusion of certain proceedings from the provisions of Schedule 4 to that Act which determine whether the courts in each part of the United Kingdom have jurisdiction in proceedings) there shall be inserted—
      "Proceedings concerning financial services agencies
      10. Such proceedings as are mentioned in section [Jurisdiction as respects actions concerning designated agency etc.] of the Financial Services Act 1986.".'. — [Mr. Howard.]
      Brought up, and read the First time.
      4.50 pm
      The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard): I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker (Mr. Harold Walker): With this it will be convenient also to discuss the following Government amendments Nos. 27 to 31, and 88 to 92.
      Amendment No. 175, in page 142, line 35, at end insert—
      '(7) If the agency is a limited company incorporated in England. it must establish a place of business in Scotland or take such other steps as will render it amenable to the jurisdiction of the Scottish Courts'.
      Government amendments Nos. 182 and 231.
      Mr. Howard: A number of hon. Members have written to me about points which were raised by the Law Society of Scotland concerning the Bill. I am grateful to the society for the detailed consideration which it has given the Bill. The Government have always made it clear that the Bill would take account of the differences between the English and the Scottish financial and legal systems and that amendments would be tabled to fulfil this commitment.
      The new clause is designed to remove doubts as to whether actions could be brought against a designated agency, transferee body or competent authority in a part of the United Kingdom in which it did not have a place of business, or a registered office. There was particular doubt about whether any such organisation could be subjected to the jurisdiction of the Scottish courts. The Government have decided to bring forward this new clause which makes it clear that action against the relevant bodies may be brought in the courts in any part of the United Kingdom.
      The other amendments are mainly technical and designed to bring certain of the provisions in the Bill into line with the procedures and terminology used in the Scottish legal system.
      The aims behind the amendment tabled in the names of the right hon. and learned Member for Monklands,

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      East (Mr. Smith) and the hon. Member for Dagenham (Mr. Gould) are I believe already achieved by the Government new clause.
      Mr. Alex Fletcher: Will my hon. and learned Friend confirm that it has always been the intention of the Department and its Ministers — even before his tenure of office — to ensure that the differences in Scottish law are catered for in the legislation?
      Mr. Howard: No one will know better than my hon. Friend that that is the case. We owe much to my hon. Friend for his achievements in respect of this legislation. I am happy to confirm that the intention was always as he stated it to be.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 13

      OFFERS OF SHORT-DATED DEBENTURES
      'As respects debentures which, under the terms of issue, must be repaid within less than one year of the date of issue—

      (a) section 79(2) of the Companies Act 1985 (offer of debentures of oversea company deemed not to be an offer to the public if made to professional investor) shall apply for the purposes of Chapter I of Part III of that Act as well as for those of Chapter II of that Part; and

      (b) section 371(2) of the Companies Act (Northern Ireland) 1960 (corresponding provisions for Northern Ireland) shall apply for the purposes of Part If of that Act as well as for those of Part XI.'. —[Mr. Howard.]

      Brought up, and read the First time.
      Mr. Howard: I beg to move, that the clause be read a Second time.
      Mr. Deputy Speaker: With this it will be convenient to take Government admendments Nos. 270 and 277.
      Mr. Howard: The amendments may appear rather technical but could have significant advantages for United Kingdom companies.
      The new clause will give United Kingdom companies the same freedom to issue sterling commercial paper as foreign companies currently enjoy under section 79(2) of the Companies Act 1985 and the corresponding Northern Ireland provision, and will facilitate the development of a new United Kingdom financial market in sterling commercial paper.
      SCP is a form of short-term negotiable debt which companies can issue as an alternative to bank borrowing. There is a flourishing market in the USA in the equivalent dollar. The development of a United Kingdom instruments market will give companies greater financial flexibility and be a welcome addition to the array of services provided by the City. My right hon. Friend the Chancellor of the Exchequer announced on 29 April that the Banking Act 1979 obstacles to issuing SCP would be relaxed, and that this amendment would be brought forward to extend the benefit of section 79(2) of the Companies Act to United Kingdom companies.
      SCP will be issued in minimum denominations of £500,000, and the market will effectively be limited to professionals. The requirement to issue a prospectus is thus inappropriate and unnecessary. Section 79(2) of the Companies Act already exempts offers to professionals by foreign companies but gives no comparable relief to
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      United Kingdom issuers. The new clause will rectify this anomaly and place United Kingdom issuers on the same footing.
      Mr. Bryan Gould: I found the Minister's explanation interesting. We shall certainly watch with interest the development of the market for commercial paper. Will the Minister say a word about the rather unusual timing arrangements that are effected by amendments Nos. 270 and 277?
      Mr. Howard: It is intended that these provisions should take affect immediately the legislation is on the statute book. We do not wish any delay if the new market is established and that is the reason behind the amendments to which the hon. Gentleman referred.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New clause 15

      DISCLOSURE OF INFORMATION UNDER ENACTMENTS RELATING TO FAIR TRADING, INSURANCE AND COMPANIES
      'The enactments mentioned in Schedule [Disclosure of information] to this Act shall have effect with the amendments there specified (which relate to the circumstances in which information obtained under those enactments may be disclosed).'—[Mr. Howard.]
      Brought up, and read the First time.
      Mr. Howard: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: With this it will be convenient to take Government amendments Nos. 246 to 250 and 274, 275 and 278.
      Mr. Howard: The clause and the associated group of amendments relates to the disclosure of information obtained under the Bill or under various existing statutes I shall not detain the House with an exhaustive account of these provisions, but I shall confine myself to outlining some of the main provisions.
      Our first aim is to permit financial and company regulators to share information while retaining appropriate protection against undesirable disclosure. We announced on Second Reading that we would bring forward amendments to this end. Amendments to the Banking Act 1979 will be tabled in another place, but our proposals to amend the Insurance Companies Act 1982 and the Companies Act 1985 are set out in this new schedule. It will be possible for information which is restricted under those two Acts to be disclosed in almost any of the circumstances in which information under the Bill may be disclosed by virtue of the gateways set out in clause 149. That will include assisting not only the various regulators under the Bill, but also, for example, the Bank of England and certain overseas regulators.
      Information obtained by inspectors appointed under the Companies Act 1985 is not restricted information. That Act expressly permits its disclosure in certain circumstances, but the amendment makes express provision to remove uncertainty about its disclosure in other circumstances. The amendments provide that persons appointed as inspectors may give any information acquired during their investigations to the Secretary of State, and the Secretary of State may direct them to do so. Once the information is in the hands of the Secretary of

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      State, he may disclose in any of the circumstances in which information which is restricted under the Companies Act may be disclosed. This will remove doubt as to whether the Secretary of State may disclose information or unpublished inspectors' reports in circumstances where it is clearly desirable that he should be able to do so.
      That is the effect of the provisions in relation to financial and companies regulation. The sharing of information is not intended to extend fully to authorities concerned with other matters, but special provision is required for competition purposes. I shall explain that and other specialised aspects of the clause and associated amendments if asked by any hon. Member.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New clause 16

      PENALTIES FOR FAILURE TO CO-OPERATE WITH S. I47 INVESTIGATIONS
      '(1) If any person —

      (a) refuses to comply with any request under subsection (3) of section 147 above; or

      (b) refuses to answer any question put to him by the inspectors appointed under that section with respect to any matter relevant for establishing whether or not any suspected contravention has occurred,

      the inspectors may certify that fact in writing to the court and the court may inquire into the case.
      (2) If, after hearing any witness who may be produced against or on behalf of the alleged offender and any statement which may be offered in defence, the court is satisfied that he did without reasonable excuse refuse to comply with such a request, the court may—

      (a) punish him in like manner as if he had been guilty of contempt of the court; or

      (b) direct that the Secretary of State may exercise his powers under this section in respect of him;

      and the court may give a direction under paragraph (b) above notwithstanding that the offender is not within the jurisdiction of the court if the court is satisfied that he was notified of his right to appear before the court and of the powers available under this section.
      (3) Where the court gives a direction under subsection (2) (b) above in respect of an authorised person the Secretary of State may serve a notice on him—

      (a) cancelling any authorisation of his to carry on investment business after the expiry of a specified period after the service of the notice;

      (b) disqualifying him from becoming authorised to carry on investment business after the expiry of that period;

      (c) restricting any authorisation of his in respect of investment business during that period to the Performance of contracts entered into before the notice comes into force;

      (d) prohibiting him from entering into transactions of a specified kind or entering into them except in specified circumstances or to a specified extent;

      (e) prohibiting him from soliciting business from persons of a specified kind or otherwise than from such persons; or

      (f) prohibiting him from carrying on business in a specified manner r otherwise than in a specified manner.

      (4) The period specified in such a notice as is mentioned in paragraphs (a) to (c) of subsection (3) above shall be such period as appears to the Secretary of State reasonable to enable the person on whom it is served to complete the performance of the contracts in question and to terminate such of them as are of a continuing nature.
      (5) Where the court gives a direction under subsection (2) (b) above in the case of an unauthorised person the Secretary
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      of State may direct that any authorised person who knowingly transacts investment business of a specified kind, or in specified circumstances or to a specified extent, with or on behalf of that unauthorised person shall be treated as having contravened rules made under Chapter V of Part I of this Act or, in the case of a person who is an authorised person by virtue of his membership of a recognised self-regulating organisation or recognised professional body, the rules of that organisation or body.
      (6) A person shall not be treated for the purposes of subsection (2) above as having a reasonable excuse for refusing to comply with a request in a case where the contravention or suspected contravention being investigated relates to dealing by him on the instructions or for the account of another person, by reason that at the time of the refusal—

      (a) he did not know the identity of that other person; or

      (b) he was subject to the law of a country or territory outside the United Kingdom which prohibited him from disclosing information relating to the dealing without the consent of that other person, if he might have btained that consent or obtained exemption from that law.

      (7) A notice served on a person under subsection (3) above may be revoked at any time by the Secretary of State by serving a revocation notice on him; and the Secretary of State shall revoke such a notice if it appears to him that he has agreed to comply with the request in question.
      (8) The revocation of such a notice as is mentioned in subsection (3)(a) above shall not have the effect of reviving the authorisation cancelled by the notice, except where the person would (apart from the notice) at the time of the revocation be an authorised person by virtue of his membership of a recognised self-regulating organisation or recognised professional body; but nothing in this subsection shall be construed as preventing any person who has been subject to such a notice from again becoming authorised after the revocation of the notice.
      (9) If it appears to the Secretary of State—

      (a) that a person on whom he serves a notice under subsection (3) above is an authorised person by virtue of an authorisation granted by a designated agency or by virtue of membership of a recognised self-regulating organisation or recognised professional body; or

      (b) that a person on whom he serves a revocation notice under subsection (7) above was such an authorised person at the time that the notice which is being revoked was served,

      he shall serve a copy of the notice on that agency, organisation or body.
      (10) The functions to which section 96 above applies shall include the functions of the Secretary of State under this section but any transfer of those functions shall be subject to a reservation that they are to be exercisable by him concurrently with the designated agency and so as to be exercisable by the agency subject to such conditions or restrictions as the Secretary of State may from time to time impose.'.—[Mr. Howard]
      Brought up, and read the First time.
      5 pm
      Mr. Howard: I beg to move, That the new clause be read a Second time.
      Mr. Deputy Speaker: With this, it will be convenient to take Government amendment No. 245.
      Mr. Howard: I undertook to my hon. Friend the Member for Suffolk, South (Mr. Yeo) to consider how to amend the Bill to enable pressure to be applied, within the proper limits of United Kingdom jurisdiction, to dispose offshore intermediaries to co-operate with investigations into suspected insider dealing on United Kingdom markets. This new clause fulfils that undertaking. If an offshore intermediary refuses to co-operate with an inspector, the inspector may refer the matter to the court.

      527
      If the court is satisfied that there is no reasonable excuse for the refusal, it may direct that the Secretary of State may use his powers.
      These powers take two forms, depending on whether or not the intermediary is authorised in this country. If the intermediary is not authorised, the Secretary of State may direct that authorised businesses shall not transact specified kinds of business for it. Thus, its access to United Kingdom markets may be restricted or completely cut off. Contraventions of the direction will be a regulatory offence. If the intermediary is authorised, the Secretary of State may serve a notice applying a range of sanctions from restrictions on its business to de-authorisation.
      I should say a few words about "reasonable excuses". Not knowing the identity of a principal will not be regarded as a "reasonable excuse". Nor will the existence of banking secrecy laws if the person might have obtained a waiver. The defence is intentionally drawn narrowly. The limit of the knowledge which it would be reasonable to expect a person to have will be taken into account in exercising the power. But the clause is based on the premise that if an overseas bank could know the identity of the principal behind a transaction on a United Kingdom market, who may have committed a criminal offence, but chooses not to find out, then it is reasonable for that bank to have restrictions imposed on its United Kingdom activities.
      Given the importance of this matter, I should add a few words about the way in which we propose to exercise this power. I have already explained that we propose to use it against intermediaries who have participated in transactions which have taken place in our markets without putting themselves in a position where they can give us the necessary assistance to ensure that such transactions are properly policed. Therefore, there is a close connection between our jurisdiction and what we propose to do.
      However, it has to be admitted that this clause can be operated so as to attach legal consequences to failure to answer inquiries abroad. Because of this aspect of the matter we propose to exercise this power with great care, moderation and restraint as indeed the Government have always argued should be done in these kind of circumstances. In particular, where arrangements are in place to ensure that the information we need can be obtained by other means through the co-operation of the relevant foreign authorities, we shall always resort to those means. It may be that the clause can be further refined to build in these necessary considerations. This is one of the matters that I shall be considering in this context.
      The new clause should prove a worthwhile addition to the powers of the investigators, and I commend it to the House.
      Mr. Gould: This is one of those welcome occasions when it is appropriate to congratulate the Minister on his response to an expression of opinion in Committee. It is perhaps foolish to be too sanguine in advance, until we see how the clause works out in practice. We have here a determined and fair response to the Committee's concern.
      It may be as well to remind the House just what the Committee was worried about. The Minister rightly referred to the views expressed by the hon. Member for Suffolk, South (Mr. Yeo), in which he was strongly supported by the Labour party. Nothing that has happened since the Committee sat has reduced our concern—indeed, the news from New York heightens it
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      —about the press reports and other evidence that insider dealing, which had been a criminal offence since 1980, had nevertheless continued to grow in scope. It has particularly flourished in the context of major takeover bids. There were reports current when the Committee was sitting of professional advisers to major companies who were parties to bids and using their insider knowledge to set themselves up and provide nominee shareholders and overseas companies, and then traded the shares of the companies to which they were advisers and of which they had insider knowledge.
      In Committee, it emerged that the Bill as drafted was inadequate to deal with such problems. The danger that we had to face, and which particularly worried the hon. Member for Suffolk, South, was that, as a consequence of the Committee's deliberations, it had become clear that the range of measures proposed as the Bill then stood was inadequate and that, in a sense, those who were engaged in this practice might be encouraged to believe that they could proceed without fear of any sanction.
      The measure contained in the new clause is an earnest of the Government's seriousness of purpose. I wish the provisions of the new clause well, and we shall watch it to see how well it works in practice. I fear that I cannot be absolutely confident that it will plug every loophole or be a total solution, but it is a substantial step forward. It is welcome to see that the Securities and Investments Board has concurrent jurisdiction in this matter, and that goes well in tandem with the other changes brought about in Committee, those giving the power to prosecute and investigate unauthorised persons.
      I conclude on the happy note of congratulating the Minister on introducing the new clause.
      Mr. William Cash: In respect of recognised professional bodies and the implications of this clause for them, I am hound to draw attention to the fact that the word "accountant" is used, but quite rightly without any definition that would necessarily confine the description to members of the chartered bodies concerned. This also happens in new clause 15. This is a matter of great importance and was considered in the evidence given in the early part of this century — in the 1930s — by the Institute of Chartered Accountants. My great-uncle gave evidence to the House of Commons on this very question. The conclusion was that in the course of the hearing, it had become clear that the word "accountant" by itself was almost meaningless. The description accompanying it was all-important, yet it was impossible to define what was covered by the word "accountancy".
      Persons other than those who are members of the chartered bodies—for example, the Society of Company and Commercial Accountants — have a grave concern about the provisions that will apply to them. Therefore, although most of the provisions refer to recognised professional bodies, arrangements will have to be made to ensure that those who are members of other accountancy bodies are not precluded simply because they are not chartered. It will be necessary to return to this matter at a later stage, but I wanted to make the reference in connection with this clause.
      Mr. Anthony Nelson: I congratulate my hon. and learned Friend the Minster, on moving the new clause, and I welcome its content. The House owes a debt. of gratitude to my hon. Friend, the Member for Suffolk,

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      South (Mr. Yeo). He cannot be here this afternoon, because he is in the Committee debating the Finance Bill I know that he would want it recorded that he took a close interest in this matter, and introduced the relevant amendment in Committee.
      I welcome the extension, provided for in the new clause, of the proposals in the Bill to deal in a tougher fashion with insider dealing, which is a great mischief that is more rife than is currently recognised. It is exceedingly difficult to detect and even more difficult to prosecute and convict for. Recent events, such as those highlighted by the hon. Member for Dagenham (Mr. Gould) in the United States, and, particularly, in the indictment of Mr. Levine, a former senior executive of Drexel Burnham, give one great cause for concern about the way in which offshore mediums are being used to cover up insider dealings.
      My hon. and learned Friend the Minister will know that I wrote to him about this matter recently, because it came to my attention that there is a special agreement between the Swiss banks and the Securities and Exchange Commission in the United States with the express intention of trying to release information on suspected cases of insider dealing. That seemed to be of relevance to the United Kingdom in the new financial climate in which we shall be operating.
      In Committee, we debated the difficulties of investigating or proving insider dealing where an offshore account or medium is used. Therefore, I drew to the attention of my hon. and learned Friend Agreement 16 between the Swiss Bankers Association and the Swiss banks generally, which was a gentleman's agreement relating to the handling of requests from the Securities and Exchange Commission in the United States for information on insider dealing and share transactions in the United States. There is no legal obligation for customers of a Swiss bank to signify their agreement to this clause, but if they fail to do so, the bank concerned may thereafter refuse to conduct security transactions with America for the client. If the SEC wishes to obtain information, its first recourse is to the police department of Switzerland, which, if it considers that there is prima facie evidence of insider trading, may approach the Swiss bank concerned to seek the disclosure of information under the terms of this agreement. In the last resort it is also possible, by invoking the provisions of this agreement, to freeze the assets of a customer with a Swiss bank account who is suspected of engaging in such activities, which are criminal activities here and in the United States.
      We have some provisions under the companies legislation and now in the Financial Services Bill, as amended by this new clause, to limit the extent to which insider dealing will take place and to make investigations in a more incisive way. We shall have to look again at this problem if the incidence of insider trading continues to grow. I understand that the Council of Europe, which includes the Swiss, has made some progress in drawing up a convention which will seek to tackle the problem of insider dealing as part of a false market. I understand that the Government are trying to strengthen their contacts to develop exchanges of information with regulatory authorities overseas.
      In his written reply my hon. and learned Friend the Minister was good enough to say that we may well have to look at this again. For the time being he feels that this
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      agreement may be of limited application to us. I hope that in his reply to this short debate on the new clause he will tell us that he will keep an open mind about ways in which at a supranational level we can investigate more incisively and productively than we have done in the past the mediums being used for these pernicious and criminal activities, which are a fraud perpetrated on all investors.
      Mr. Howard: I am grateful to the hon. Member for Dagenham (Mr. Gould) and my hon. Friend the Member for Chichester (Mr. Nelson) for the welcome that they have given the new clause. It is an earnest of our intentions to be serious about this pernicious abuse. I can give my hon. Friend the assurance that he seeks and tell him that we shall keep a close watch to see whether anything further that needs to be done can be done. I listened carefully to my hon. Friend the Member for Stafford (Mr. Cash) and I shall consider whether there is anything I can usefully add to what he already knows of my views on this matter.
      Question put and agreed to.
      Clause read a Second time and added to the Bill.

    New Clause 4

      REGISTER OF PERSONS EMPLOYED IN BUYING, SELLING OR ADVISING ON RIGHTS UNDER CONTRACTS OF INSURANCE, ETC
      '(1) The Secretary of State shall keep a register of individuals who appear to him to be employed or proposing to become employed in connection with buying, selling or advising on:—

      (a) rights under contracts of insurance falling within paragraph 10 of Schedule 1: and

      (b) units in collective investment schemes.

      (2) An application for entry on the register shall contain or be accompanied by such information as the Secretary of State may reasonably require for the purposes of determining whether to make a direction in respect of the applicant under section 54 of this Act, and such information shall, if the Secretary of State so requires, be in such form or verified in such manner as he may specify.
      (3) An entry in respect of a person in the register under this section shall include particulars of any direction made by the Secretary of State in respect of that person under section 54 of this Act and of any consent for that person's employment given by the Secretary of State./
      (4) The Secretary of State may make regulations requiring authorised persons to give him forthwith notice of such events in relation to individuals employed by them as mentioned in subsection (1) as are specified in the regulations and such information in respect of those events as is so specified.
      (5) The Secretary of State may make regulations requiring authorised persons to furnish him at such times or in respect of such periods as arc specified in the regulations with such information in relation to individuals employed by them as mentioned in subsection (1) as is so specified.
      (6) Regulations under this section may require information to be given in a specified form and to be verified in a specified manner.
      (7) The information contained in the entries included in the register kept under this section shall be open to inspection and the Secretary of State may publish the information contained in those entries in any form he thinks appropriate and may offer copies of any such information for sale.
      (8) The register kept by the Secretary of State under section 89(1)(e) of this Act need not include entries in respect of persons included in the register kept under this section unless the direction under section 54 (by virtue of which section 89(1) (e) applies) relates to or includes a kind of investment business other than that mentioned in subsection (1).
      (9)It shall be the duty of an authorised person and an exempt representative to take reasonable care not to employ

      531
      or continue to employ as mentioned in subsection (1) above any individual in respect of whom there is no entry in the register kept under this section.
      (10) In this section references to employment include references to employment otherwise than under a contract of service, and references to buying and selling are to be construed in accordance with paragraph 23 of Schedule 1.'. —[Sir William Clark.]
      Brought up, and read the First time.
      5.15 pm
      Sir William Clark: I beg to move, That the clause be read a Second time.
      This new clause seeks to establish a comprehensive register of all those employed or proposing to become employed in selling or advising on life assurance or collective investment schemes such as unit trusts. If we have a central register and if it became necessary to take from someone the authorisation to do those things, it would he extremely easy. Companies that advise on investment matters, such as insurance companies, building societies and the like, would themselves keep registers of those employees who were allowed to give advice to the general public. It is said that a central register would be exorbitantly costly, but I am not sure that I accept that point. Obviously, there would be no cost to the taxpayer because there would be a registration fee to cover the administrative costs and that fee would be paid by the applicable investment organisation.
      Clause 4(9) is the main part of the new clause and its powers parallel clause 54 in the Bill. A person who has given bad advice will be taken to task by his or her employer. The employer may decide that that person is no longer capable or competent to give advice. However, that prohibition would apply only in that company or organisation. If the person left the company and was employed somewhere else, he could start giving advice again. Companies are worried about that, because it may put employers in an impossible position. That is because employers would probably treat similar cases in different ways. One employer may tell his employee not to make the same mistake again. Obviously, an insurance company or building society would take upon itself the responsibility for the bad advice or the misadvice that had been given, whether wittingly or unwittingly.
      How many misdemeanours have to be committed before authorisation is removed from an organisation? I am sure my hon. and learned Friend the Minister has addressed his mind to that because it seems ridiculous to penalise a company when it is an individual who is at fault. Somehow, there must be a blacklist. How does one compile a blacklist if there is not some sort of central register?
      Mr. Paddy Ashdown: I am listening carefully to the hon. Member's argument. I am not clear whether he is proposing a requirement for entry to the register. Will it be an objective test of competence, or does he propose that entry to the register is purely on the gift of the company or, indeed, of the Secretary of State? I should like the hon. Gentleman to expand on how one is placed on the register and what it means in terms of competence. Will there be an objective standard by which entries will be judged?
      Sir William Clark: Of course there will be some test of competence. I am sure the hon. Member for Yeovil (Mr. Ashdown) appreciates that Back Benchers do not have the
      532
      facilities of parliamentary draftsmen, and for that reason it is possible that there is some ambiguity in the new clause. I am speaking about the spirit of the new clause. I realise, and I am sure my hon. and learned Friend the Minister realises, that the Marketing of Investments Board Organising Committee advocated a central register. I also realise that the National Consumer Council is against the new clause, but that council is against it for the wrong reasons. It thinks that a central register would give credence to anybody on that register. However, if there is a test of competence for entrants to the register, there is no difficulty.
      The Building Societies Association is against a register. The British Insurance Association agrees with it but has some reservations about the test of competence. I declare an interest because I am a consultant to the Life Insurance Association. It has 12,000 members working on the ground and is avidly in favour of the new clause and some sort of registration so that a blacklist can be identified immediately.
      If one can believe the leaks in the press over the past few days I am certain that at the top of the Minister's reply notes there is the word "Resist." If he resists, I should like him to give me the assurance that it is the Government's opinion that the Bill, as drafted, will be sufficient to protect the general public from blacklisted investment advisers and that immediately such persons would not be able to give advice anywhere. If he is certain that the Bill will do that, can he give me the assurance that if in future we find it is essential to have some sort of central register because the Act is not working and there are loopholes in it about non-registration, he will not only keep it under review, but will change the legislation? That would be necessary in order to protect the investments of many people.
      Mr. Gould: I listened with considerable interest to the hon. Member for Croydon, South (Sir W. Clark) and I had a great deal of sympathy for what he had to say about the new clause. It is worth recalling that the industry set up a consultative group, I think embracing virtually every body known to the industry, long before the Financial Services Bill hove into sight. That consultative group had gone a long way towards the proposal for the establishment of a register or licensing system.
      The Government then appointed MIBOC, a practitioner-based body which considered the whole issue and produced an extremely well thought out set of proposals which were duly modified, following extensive consultation with the industry. We then had the situation, which is unfortunate to say the least, in which the Government, having set up a body to obtain the industry's advice, then refused to accept it. Indeed, that has been overridden, so far as one can tell, by the advice of their civil servants, but, perhaps more significantly, by the representations made to it by that familiar combination of banks and building societies and other powerful institutions——
      Mr. Howard: And consumer bodies.
      Mr. Gould: I shall mention them in a moment. The Minister would do well if he could make the claim, without blushing, that it was the Consumers Association which had weighed with him rather than the banks and the building societies on this issue.

      533
      It is yet one further regrettable instance of how on so many occasions the major financial institutions, particularly the banks, tend to come along at the last moment and express a view which is then adopted by the Government contrary to the views and evidence of most other people.
      Mr. Tim Smith: That is an unrealistic assessment of the situation. The hon. Gentleman may be right about the banks and building societies, but he needs to recognise that in relation to MIBOC many other financial institutions had a vested interest in the scheme. Perhaps we should set those two up against each other and look at what the consumer bodies, who are supposed to represent investors, have to say about it.
      Mr. Could: I am content to accept the hon. Gentleman's endorsement of my point about banks and building societies. On MIBOC, I draw his attention to the fact that the Government set it up to provide them with exactly the advice that they are now rejecting.
      So far as one can judge from the Minister's public pronouncements on these matters, the major argument against the MIBOC proposal and against the register seems to be that of cost. Of course, investor protection costs money. If the argument about cost were thought to be overriding, we would not be legislating at all. The Financial Services Bill will cost money. To provide essential protection to the consumers—to investors who buy life insurance policies—will cost money. There is no question about that. However, the sum of money involved can be made to seem extremely large only by multiplying it by 200,000 or 300,000, because that is the number of people involved in selling life insurance. Per head the cost is marginal. As a proportion of the total cost of putting a salesman into the business of selling, the cost of putting him on the register and providing him with a course enabling him to pass a test of competence is so marginal as not to worry anybody. That seems a small price to pay for an essential and entirely desirable element of consumer protection.
      Without the register, the Government, the Secretary of State, and eventually the Securities and Investments Board, will have to rely for virtually their only weapon, apart from the general processes of authorisation. on the power provided by clause 54 — the disqualification power. I am encouraged at least to hear from Sir Kenneth Berrill that he intends to exercise that power rigorously. But even he could not conceal his disappointment at the Minister's announcement that registration is not to be proceeded with.
      The difficulty with the clause 54 power— this is an analogy drawn to my attention by a spokesman for the industry; I do not claim authorship —is that it is rather like abolishing the concept of the driving licence and saying that we can deal with any problems that arise by prosecuting those who are thought to have committed offences of dangerous driving. The difficulty with that is that people tend to be hurt in traffic accidents, just as they will be hurt if they are buying life assurance and other investments from people who have not been required to establish in some way their competence and probity.
      It is not to denigrate the industry unduly to point out that higher standards of competence and probity are desperately needed in this area. It is very much to the
      534
      industry's credit that it recognises that that is the case. It is most unfortunate that the Government, through a failure of will or for whatever reason, have failed to accept the advice which has been tendered to them.
      I conclude by echoing the appeal of the hon. Member for Croydon, South to the Minister. If he does not proceed with this, will he at least undertake to watch this area extremely closely? If he feels, as he may well be forced to conclude after a year or so, that higher standards and some test of competence is required, will he then be prepared to review the situation within a short period?
      Mr. Robert McCrindle: I have long held the view that true investor protection requires not only authorisation of the principal but also some form of licensing or registration of the individual acting on behalf of his principal. It is not sufficient to assume that the company to be authorised under the Bill will at all times be able to control the activities of its salesmen, yet that is what really matters to the customer.
      The ideal system may well contain a basic test of competence, to which my hon. Friend the Member for Croydon, South (Sir W. Clark) and the hon. Member for Yeovil (Mr. Ashdown) referred. It is sometimes thought that a basic test of competence is unnecessary, yet it is within my experience that the ability to differentiate between different types of life assurance policy is not always present among those who purport to advise an individual on what is arguably one of the more important financial transactions of his lifetime.
      It is surely also not expecting too much that some knowledge of personal taxation should be available to the customer through the individual who will either be an insurance company representative or an independent intermediary. It is surely not too much to expect that the company representative will have a full knowledge of his company's range of products and that an independent intermediary will have an understanding of what is available on the market. Such a basic test of competence is something to which we should be wholly attracted.
      Allied to that there should be, as the new clause suggests, a register and a black list for periodical publication. My fear is that one without the other will present an unbalanced aspect of investor protection. If I have a concern about the new clause as proposed, it is that it seems to propose that the Secretary of State should have a considerable involvement in the creation and the keeping of the register. However, it does not make it clear who, in his ideal situation, would be the provider of a competence test.
      Whether or not the new clause is acceptable to the Minister, I suggest that the obvious candidate to apply such a test of competence must surely be either the SIB, into which MIBOC will have been subsumed when the legislation becomes fully operative, or the self-regulating organisation.
      Therefore, I submit to my hon. and learned Friend the Minister that if the new clause is not acceptable as it stands because it involves the Secretary of State in collating and publishing information, perhaps the message should go out from the Minister that over a few years SROs will be urged to introduce such a licensing or registration system by themselves as they become more able to run a test of competence on their own account.
      If the Minister were prepared to back such a progressive introduction of such a scheme, he would have

      535
      widespread support, including, perhaps, as the Government understand it a little more, some of the consumer organisations which do not appear to like the idea so far put forward, almost entirely due to the cost. I have some reason to believe that the estimate of the cost of introducing such a system has been considerably exaggerated. Only yesterday, I had a conversation with a prospective member of an SRO, who expressed the opinion that there should be no great difficulty or cost in the progressive introduction of a test of competence allied to a system of registration or licensing.
      5.30 pm
      Those who have so far objected, apart from the consumer interest groups, are the building societies, the direct sales forces and the banks. I do not wish to cast aspersions on the sales forces of the banks or on the direct sales life assurance companies, which have served the public well during the past few years, but I am a little worried to discover that the building societies seem to be so vehement in their opposition to the idea of a test of competence because other legislation still going through Parliament will authorise them to move much more effectively and actively into life assurance and general insurance than has been the case. There are no prizes for guessing that they are already active in recruitment, and I have no doubt that many of the people whom they will recruit will be extremely estimable.
      However, without a test of competence, and remembering that building societies cannot be expected to have the experience in insurance that we expect and know them to have in mortgages, they might be guilty of recruiting some people who would he incapable of giving the advice that a consumer has a right to expect. I hope that my hon. and learned Friend the Minister will not be too influenced by institutions such as the building societies—rather, I hope, the reverse. I hope that he will accept my point that, especially in the case of the building societies, there is a strong argument for extending the consumer protection that underlies the legislation.
      I remain convinced that the prospect of an individual losing his licence, or losing his right to practice and to sell life assurance, would be a salutary discipline. I also believe that a representative of an authorised company who is not registered or licensed gives less than full investor protection. I appreciate that the legislation allows for the provision of a blacklist. I know that only yesterday Sir Kenneth Berrill. the chairman of the SIB, said that the clause would not be dormant, but would be fully acitivated under his leadership of the SIB. That is all very well, but a blacklist alone without a registration or licensing system — I hope that the Minister will forgive me for so describing it—is a little like closing the door after the deed is done.
      The idea suggested by my hon. Friend the Member for Croydon, South in his new clause, which regrettably, if press reports are to be believed, the Minister will he resisting, overlooks the fundamentally important aspect that it is good to have a blacklist. Few of us who have anything to do with insurance would wish to resist it, but a blacklist alone without a reasonable test of competence and a reasonable implication of probity on the part of the individual does not go far enough.
      The new clause may be the wrong method of protecting the consumer because it seems to bypass the SROs. I am sure that that could be put right in a way that would be
      536
      acceptable to my hon. Friend the Member for Croydon, South. The SROs should be charged to introduce a competence test and to create a register progressively over a period of three to five years. I hope that when my hon. and learned Friend the Minister replies he will say whether my suggestion, subject to its being a system under which the cost would be kept to the minimun, strikes a chord of response in him. I sincerely hope that it does. I approve of a blacklist to protect investors, but not one which stands alone. The blacklist should complement what in my judgment is a much more important aspect of investor protection.
      Mr. Ashdown: Not for the first time, I agreed with almost every point made by the hon. Member for Brentwood and Ongar (Mr. McCrindle) on insurance matters. However, I wish to expand upon some of them.
      I am grateful to the hon. Member for Croydon, South (Sir W. Clark), who moved the new clause, for saying that the principle enshrined in it was important, not necessarily its drafting or the words, because it falls significantly short of what I had wished to see, especially in relation to competence. A register that does not include, as an essential part, a test of competence which is objective and industrywide rather than established by the firm could mislead people instead of safeguarding them. I shall return to that matter later.
      In Committee, we discussed basic principles at some length. One basic principle in the Bill to which the Minister agreed is now enshrined in an amendment. It is the concept of tapering safeguards so that those who are most competent — who are at the top of the profession — would require fewer safeguards. The rule of caveat emptor would apply more precisely to them than to those at the bottom, most vulnerable end of the sector who have less knowledge and less competence in making judgments.
      No one in the entire area where we seek safeguards for investors who have little knowledge of affairs can be more easily misled than the people with whom insurance salesmen frequently deal. As we said in Committee, insurance salesmen conduct business not in offices but frequently in the comfortable and disarming environment of people's homes.
      If the Minister is to carry through the basic principle of tapering safeguards, it is essential that we afford those people greater safeguards about the advice that they will receive about competence and honesty than we do to others. The principle of the new clause is an important piece of armoury in that balance of safeguards. In the sale of insurance to private individuals, I have a strong suspicion that more damage is done through incompetence than through venality or dishonesty. I have no doubt that dishonest people exist in the insurance industry as they do in any other especially one which deals in such an environment and has such a large work force. However, I suggest that the number is small. There is not much evidence to suggest that that is the major problem. Incompetence probably does more damage in this area than in any other.
      If the Government introduced a blacklist, even if such a thing could exist without a register alongside it — I have practical doubts on that matter — they could at least in some measure deal with the problem of dishonesty, but they could not cope with the problem of incompetence., which in my judgment and that of others does much more damage.

      537
      Recently, there have been suggestions that one way of getting round this problem and coping with it in terms of establishing a level of competence would be to set up a test of competency after 18 months. That is a sensible suggestion, and I was worried to see that it was dropped from the latest MIBOC draft proposals. As the hon Member for Croydon, South and the hon. Member for Dagenham (Mr. Gould) said, it was dropped because of the cost that might be involved. A cost of £10 per insurance salesman was predicted. That may sound a lot, but, as the hon. Member for Dagenham said, it is as nothing compared with the costinvolved—in a typical case, 20 per cent. of premiums — in administration and commission for every individual during the entire term of the policy. Ten pounds is nothing, not even in relation to a handful of people who take out insurances, let alone in relation to the number of insurances that could be sold by salesmen during one month, let alone a year. That is a small price to pay for what will be a significant and. because the people concerned are most vulnerable, essential safeguard.
      I listened with interest to the Minister's reply to the hon. Member for Dagenham about why he had rejected MIBOC's and SIB's proposals. He asked us to believe that he rejected them because of the excellent work and suggestions made to him by the Consumers Association. His rejection had nothing to do with the banks and the other large, powerful organisations which recommended that course to him. At present we shall put aside unreasonable and inelegant suspicions on this matter.
      It is a matter of some confusion to us that the Minister has not accepted other recommendations put forward by the Consumer Association. He says with sincerity and with his hand on his heart that the Consumers Association has argued the case against this most powerfully and that he has listened to most of it.
      I ask the Minister to re-examine what the consumer associations have said. The National Consumer Council said that it did not want such a register for one reason — it could mislead the public on the matter of competence. The hon. Member for Croydon, South made it clear that he wishes a test of competence to become an essential element of such a register. The NCC's objection must fail if the register shows that the membership has such a level of competence, for the public would not be misled in the way that the NCC feared.
      The Consumers Association also told the Minister that it was opposed to a register. I ask the Minister to consider that carefully, because the Consumers Association says that it would be preferable to ban cold calling than to have a register. I agree with that. If the Minister agrees with the second part of the recommendation, does he also agree with the first? I am prepared to give way to the Minister in the hope that he will answer my question. If the Minister will tell the House that he is prepared to introduce a complete ban on cold calling, we may not need such a register. The Consumers Association made its recommendation on that basis.
      One is left with the inelegant suspicion that in this, as in so much else, the Minister was moved more by the power of the banks and those who have the most financial clout than by the Consumers Association. I hope that the Minister, will answer the Consumers Association's request for a ban on cold calling.
      538
      If the Minister, for reasons of drafting or other reasons, will not accept the new clause, I hope that he will look closely at the matter and will make recommendations to solve this problem. If he will not do that, will he make a clear declaration to the House that he will keep this important matter under close review?
      Mr. Cash: I raised the matter of competence many times in Committee, tabling a series of amendments to the schedules to introduce the concept of competence and of the qualifications of members of SROs. I expect that that matter will continue to be debated on later amendments.
      With respect to my hon. Friend the Member for Croydon, South (Sir W. Clark), may I say that the clause appears to have attracted an unusual amount of opposition. The Office of Fair Trading, the Consumers Association, the Linked Life Assurance Group, the Committee of London and Scottish Bankers, which has contacted me on the matter, the Pearl Assurance Group, the Co-operative Insurance Society, the Royal Liver Friendly Society, the Building Societies Association and the National Consumer Council have all appeared to take exception to the provisions. In view of the weight of opinion, and despite my hon. Friend's arguments, I do not believe that the new clause should be accepted.
      The chairman of the Chief Executive Officers' Committee of London and Scottish Bankers, Mr. Philip Wilkinson, said:
      "We are in favour of a list of rogue salesmen, but not of a huge index of reputable ones. This extra layer of bureaucracy proposed by the Board would only serve to create unnecessary cost with no discernible benefit … Our member banks are already highly selective in their recruitment and require rigorous standards to be met before allowing staff to advise the public on any financial matter. There are at least 50,000 staff involved, from time to time, in marketing and advising on life assurance and unit trusts, often as an integral part of a wider advisory service."
      Mr. McCrindle: Can my hon. Friend say whether any of the many objectors to the new clause objected also to my suggestion that the task should be given to the SROs, and that a register and some form of licensing should be introduced progressively? There is no sign that they would object to that.
      Mr. Cash: I listened with interest to my hon. Friend. He and I are ad idem on the test of competence, and we were together on that point in Committee. From the synopsis that I have of those organisations' views, I do not know whether they said other things too. The Committee of London and Scottish Bankers made its position perfectly clear. It stated:
      "The costs of registering them individually is likely to be over £2 million with an ongoing compliance cost of £1 million annually, a cost which would have to be borne by customers eventually."
      The banks support high standards of competence and probity——
      5.45 pm
      Mr. Ashdown: The hon. Gentleman said that one reason why he opposes the new clause is that the cost would have to be borne by the customer. Surely that is the case with all regulations. Costs are always borne eventually by the investor—the customer. If that is to be the reason for opposing the new clause, it must be a reason for opposing everything else.
      Mr. Cash: We might also have to pay the cost of having an alliance in due course. Costs occur in all matters; the

      539
      point made by the Committee of London and Scottish Bankers is fair and reasonable, and I fully support it. The sheer diversity of the methods of selling life assurance and unit trusts is a good reason for not having a universal register.
      Mr. Howard: I am grateful to my hon. Friend the Member for Stafford (Mr. Cash) for his support. He has correctly anticipated my position in relation to the new clause moved by my hon. Friend the Member for Croydon, South (Sir W. Clark).
      The hon. Members for Dagenham (Mr. Gould) and for Yeovil (Mr. Ashdown) have adopted a curious approach to our discussions both yesterday evening and this afternoon. They select what they regard as the basis upon which I reach decisions in these matters, and, on that false premise, mount an argument which diverges ever more rapidly from reality. I could put up with the fact that they credit me with having no independent judgment, but I must object when they select people to whom they say I listen on such matters, and ignore the fact that representations come from other bodies which are less easy for them to attack. In reaching my decisions, I pay careful attention to everything that is said, and, at the end of the day, I make my independent judgment on the basis of those representations.
      Bearing in mind, as one does in considering such suggestions, the existing powers in the Bill which will give substantial control over individuals employed by investment businesses, my judgment is that the suggestions put forward in the new clause are unnecessary and expensive. As the hon. Member for Yeovil said—it was not his most original thought—cost must be taken into account and all regulation is expensive. Although that is true, it does not relieve us of the responsibility of assessing the value of every proposal as against its cost. I sought to do that in relation to the proposals and, measured against that criterion, the proposals are found wanting.
      As those making representations on the proposals put forward by MIBOC said, there is a danger that the competence test could mislead. It was intended to be a basic test. There was a real danger that salesmen who had acquired that basic qualification could present it as a basis for advising consumers on matters far exceeding the competence to which the certificate testified. It would be rather like referring everyone who wished to travel to Crewe to obtain a ticket to Watford Junction.
      Of course it is right, as several hon. Members have pointed out, that clause 54 provides for a blacklist. We have already heard what has been said by Sir Kenneth Berrill about the way in which the powers in clause 54 are to be exercised. Indeed, I welcome his remarks. Clause 54 is intended to provide a real safeguard for the investor, and no doubt it will do so. My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) mentioned the possibility of a register and a competence test being administered by SROs. There is no reason why they should not, if they think it appropriate, have a register for the businesses that they authorise or have a competence test. But for the reasons advanced, I believe that it is unnecessary to have a statutory central register with a statutory competence test.
      I can give the assurance sought by my hon. Friend the Member for Croydon, South. Of course we shall continue to keep the matter under close review. If evidence materialises to show that our judgment needs to be revised,
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      we shall not close our eyes to it. However, on the evidence so far presented, I must invite the House to reject the new clause.
      Sir William Clark: I am grateful to my hon. and learned Friend the Minister for his remarks. I think that the debate on this important subject has been worth while. However, I hope that my hon. and learned Friend did not think that I in any way implied that any undue pressure had been brought to bear on him. I regret the accusations that have been made to the effect that that might be so. I am delighted that my hon. and learned Friend has accepted that there could or might be evidence to the contrary, and that, if there is, he will keep the matter under close review. He has indicated that if the Bill, as drafted, is found to be inadequate, he will alter it to give the investor the necessary protection. Given that assurance by my hon. and learned Friend, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.

    New clause 14

      TAKEOVER PANEL
      '(1) The Secretary of State shall supervise the functions of the Takeover Panel in formulating publishing and applying the rules of the Takeover Code, and shall himself have power to make, modify and enforce the rules of the Takeover Code, either directly or through the agency of the Takeover Panel.
      (2) The rules of the Takeover Code shall take effect as if they were made by the Secretary of State under this Act.
      (3) The Secretary of State may exercise any of the functions described in this section notwithstanding that any or all of the persons affected by the exercise of such functions are not authorised persons for the purposes of this Act.
      (4) An authorised person who contravenes rules made or described under this section shall be treated as having contravened rules made under Chapter V of Part I of this Act or, in the case of a person who is an authorised person by virtue of his membership of a recognised self-regulating organisation or recognised professional body, as having contravened the rules of that organisation or body.
      (5) A person other than an authorised person who contravenes rules made or described under this section shall be guilty of an offence and liable—

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

      (b) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or both.'.—[Mr. Gould.]

      Brought up, and read the First time.
      Mr. Gould: I beg to move, That the clause be read a Second time.
      The Bill regulates the very wide area of virtually all the investment business conducted in the City. But it is, to say the least, odd and unfortunate that we are not dealing with one of the matters that has put the City into the headlines in recent weeks. I refer to the merger mania that has broken out in the City, which now involves billions of pounds and virtually all our major firms.
      The Bill is basically concerned with setting up a Securities and Investments Board to provide a structure of authorisation for investment business. But partly as a result of amendments in Committee, the SIB now deals with issues well beyond the scope of authorisation. For example, it deals with unauthorised persons and the investigation of insider dealing. It is, after all, entitled the Securities and Investment Board, and is not just concerned with investments. Its role as a securities authority should

      541
      incline the Minister and the House towards believing that it should accept some responsibility in the sphere of takeover bids.
      That view is advanced and supported by Professor Gower in his seminal report on the whole question of City regulation and administration. It is not as though the need for such rules is unrecognised. The need for rules to regulate procedures in takeover bids was recognised by the City itself as long ago as 1968, when it felt that it was very much under pressure, and it introduced for the first time the takeover code.
      It is appropriate to pay tribute to the work of the takeover code and of the panel that administers it. The question is not essentially the content of the rules but increasingly, and more pressingly, whether the voluntary arrangements underpinning those rules suffice. We face a new situation, and that is why we have this Bill. The City will now be dominated by huge, powerful new players, by new techniques in financing, and by grand takeover bids which this year already total, I believe, about £20 billion. Thus, the sums involved are massive. Yet apparently, judging from the Bill, we are not yet prepared to subject that one aspect of the City to statutory rules.
      The Takeover Panel and the rules of the takeover code will no longer be sufficient to keep control of the increasingly difficult situation. The crucial question is what will happen if the clear rules of the takeover code are breached. What sanctions will follow? What will happen to those in breach? We have a recent example. Only yesterday it was reported that in the context of Dixons' bid for Woolworth, the merchant bank Rothschild was severely rapped over the knuckles by the Takeover Panel for what was described as permitting a materially deficient profit forecast in the exchange of information relevant to that takeover battle. But having rapped the bank over the knuckles, what does the Takeover Panel do?
      One assumes that Rothschild is jealous of its reputation and that it will respond. One assumes that it did not welcome being rapped over the knuckles and that it will make an excuse, or will not repeat the mistake. However, what happens if those involved do not care so much about their reputation, are prepared to take such reprimands and to toss them aside, accepting them as the price for obtaining a lot of money? What would happen if Rothschild and other prominent and reputable City institutions were rapped over the knuckles so frequently because their practices were so endemic that standards fell so low that nobody took any notice of being rapped over the knuckles? We have seen that happen,in the City before under a regime of voluntary and self-regulation. In a rapidly changing period when huge sums of money are involved, new techniques are being introduced and huge new players are getting in on the act, how can a voluntary code keep control?
      Further evidence for that concern can be found in an article published in The Sunday Times by the financial journalist Ivan Fallon. He says:
      "In bid after hid these days there is evidence that a merchant bank shamelessly uses its fund management side to support its side in the battle, sometimes getting it to add to its holding, more often persuading it to vote its shares the right way. There are so many instances of odd purchases made by a merchant bank, on behalf of clients who
      542
      presumably never know how their money is being used, at key times in takeover bids that it seems to me the rules are being breached almost weekly."
      I do not say that that paints an accurate picture in every respect, but it is sufficiently accurate to worry many Opposition Members, and it should worry the Minister too.
      Recently, the Takeover Panel issued its own rules on Chinese walls to ensure that the practice described by that journalist does not occur during takeover bids. It is excellent that they should be published, but unlike the rules published by the SIB under the Bill the rules on Chinese walls have no effect. There is no sanction attached to them and no statutory back-up. The SIB issues its rules on Chinese walls, and, side by side, the Takeover Panel issues its rules for a similar purpose. It could hardly be argued that the rules issued by the Takeover Panel are less important than those of the SIB, as they deal with an extremely important aspect of City operations. Yet the Takeover Panel's rules lack that sanction or statutory authority.
      6 pm
      I believe that the clear and sensible solution to the problem is to do as Professor Gower originally recommended — to bring the Takeover Panel and therefore the rules of the takeover code within the framework created by the Bill. I believe that there is considerable support in the City for this view, and the Government have indicated their willingness to contemplate the solution. I am disappointed, to say the least, that apparently the Government have thought about it and decided to do nothing. I hope that, even at this late stage, they will take the opportunity to do something about an area that is going to be increasingly difficult to control. If they do not do something, I believe that we shall he storing up a disaster for the future.
      Mr. Fletcher: I am grateful to the hon. Member for Dagenham (Mr. Gould) for bringing this point before the House even, as he himself said in his closing remarks, at this late stage. It is unlikely that there will be any other new clauses or amendments as important as this proposal, but it would be quite wrong for the Bill to go further without the House at least expressing some views on the role of the Takeover Panel.
      I should like to take this opportunity to express my appreciation—if it will not damage him too much—of the masterful way in which the hon. Member for Dagenham has handled his brief on the Bill and, indeed, on a previous occasion on the Insolvency Bill on which I had the pleasure of working with him. Having said that, I do not go all the way with the proposal that he has placed before the House, for reasons that I shall describe briefly.
      It is hard to imagine that the panel can stand still while everything else in the City moves. Indeed, everything else moves with great speed. Yet it appears to be the considered view of the panel, to the best of my knowledge, that it can go on as it has done for some years, while everything else toughens up in terms of the regulation and overall practices of the City.
      I agree with the hon. Member for Dagenham that the panel has worked well over the years, but it cannot continue to work with club rules while all around there is a much higher degree of professionalism and, of course, a much higher degree of competition requiring tougher

      543
      and more professional regulations. These are, indeed, the criteria on which Government policy and the Bill are based.
      The panel has made no case of which I am aware as to why its activities should be an exception to the general rule and policy underlying the Government's approach to the City. Although the panel may not have changed its view about its role in the new City regime, I think that important parts of the City and industry would disagree with the panel in that respect. Even in the past few months, I believe that there has been some change in the operation of many practitioners in the City. I know that the SIB has enough on its plate to keep it going for some time, as has my hon. and learned Friend the Minister.
      While I am making what are probably the last remarks that I shall make on the Bill perhaps I may say that my hon. and learned Friend has done an excellent job in piloting the Bill through the House. He is not to blame for all its inadequacies. He has done a fine job. While he has been doing that, I have gone back to working for a living. I have been at the receiving end of regulatory decision-making of one kind or another, and it has been rather tough at times. I will spare the House my experiences of the last few months in this respect.
      I ask my hon. and learned Friend not to leave this final stone unturned, even if I did when I was in the Department. I do not wish to see the panel in a regulatory straitjacket. I think that if the proposal of the hon. Member for Dagenham were accepted, that would be the case. I should like to see a more professional and representative body than exists in the City at present. I believe that the executive should be stronger and have more authority. The executive and the panel should be comprised not simply of City practitioners sitting in judgment on themselves—indeed, that is a remark that I have heard frequently from City practitioners— but of the users of financial services — the victims of their decisions. The users, of course, are industrial and commercial businesses and the managers of those businesses, to whom the club rules of the panel are often something of a mystery. I know how anguished and frustrated they feel about some of the decisions that are made and the time that it can take to get any action following a decision.
      Again, I agree with the hon. Member for Dagenham in wondering what will happen if, as the competitive climate in the City grows, merchant banks and others—perhaps not the old guard or the sort of firms that we are used to in the City, but newcomers and big international players —are less likely to accept the club rules or the sort of ticking off that the panel gives in the hot situations that exist, particularly over mergers.
      My hon. and learned Friend will be delighted to hear that I have no proposal for legislation. In fact, I have no idea how the problem might be tackled at this late stage, except to suggest—this is nothing new or original, but it is worth while—a short, sharp, independent review of the panel's role and, most important, its authority.
      The panel plays a critical role in the City. I believe that it will be well worth while to re-examine this, particularly if its credibility is to be maintained as we move into this highly competitive situation in financial markets and services.
      My hon. and learned Friend will recall that, at the beginning of this legislative process, he was under some pressure to include Lloyd's in the Bill. I think that he
      544
      handled that extremely well and responsibly by appointing someone to examine Lloyd's in relation to legislation and the changes that the Government propose. That is naturally a bigger and more complicated task than examination of the panel. However, I believe that it would be better for the Department to hold an independent reexamination of the panel rather than to wait for a year or so, when things may have started to crumble. This is an area where a little foresight now might save a lot of trouble in a few months' time.
      Mr. Ian Wrigglesworth: I agree very much with what the hon. Member for Edinburgh, Central (Mr. Fletcher) has said about the panel and the need for it not to carry on as it is and has been doing, although, like him, I believe that it has done a very good job. Times are changing. Indeed, they have already changed in recent months, and, as everybody knows, they will change ever more later this year and next year.
      I do not think that the proposal in the new clause would put the Takeover Panel in a straitjacket. I am sure that the members of the SIB would not regard it as a straitjacket into which all the SROs must fit, conform and be restricted. Indeed, the system will not work if it operated in a rigid and inflexible manner. Therefore, the hon. Gentleman's conclusion is wrong. A review would only cause confusion in a situation that is already confused, and create great uncertainty. It is quite unnecessary when a solution is available such as that contained in the new clause.
      I support the proposal embodied in the new clause because the future responsibilities of the panel will be considerably greater and more important than at present. With the number of takeover bids now occuring and the changed behaviour to which the panel and the Director General of Fair Trading have already referred, we have had a taste of what is likely to happen after the big bang takes place. Life will become rougher and tougher in the City, so the Takeover Panel needs to be within the net of the regulatory framework, not out on a limb, if it is to perform its critical, central function.
      It is because the role of the panel is so critical that it should be contained within the new regulatory framework. In a sense, it is almost a vote of no confidence in the new framework if the panel is not contained within it. It is such an important part of the regulation of the City that to be outside the new framework would reflect badly and also confuse many people about the ability of the new regime to operate effectively. For the credibility of the new system and for the effectiveness of the future work of the panel, it must be included within the SIB's remit. It would be an anomaly were it to float free. There is great danger that there will be not only overlap and confusion but conflict between the bodies responsible for that area. Putting the panel within the ambit of the SIB would help to avoid such confusion and potential conflict.
      I hope that the Minister will not close the door completely on the proposal. I hope that, even at this late stage, it is possible for him to give some hope that this very important body will be seen to be part of the new framework, that it will come under the SIB and will form part of what everyone in this House — despite our various views—hopes will be a successful system of City regulation when the big bang comes.
      Mr. D. N. Campbell-Savours: I intend to be very brief. I had experience last year of abuse by one

      545
      company representing Scottish and Newcastle Breweries during the battle for the takeover of Matthew Brown Breweries— a major brewer in my constituency and in Blackburn. I hope that the Minister will take on board the comments of hon. Members about the great need for some form of regulatory control, especially to cover the operations of merchant banks involved in takeover decisions in advising their clients and securing shares on their behalf.
      6.15 pm
      I wish to draw attention to the Scottish and Newcastle takeover of Matthew Brown. When the abuse took place in the stock exchange on the afternoon of 11 December, I immediately came to the House to table an early-day motion to protect the interests of my constituents. In the new environment envisaged in the new clause, I believe that the early-day motion would have led to action against the companies concerned. The motion tells the story. It states:
      "That this House condemns the highly irregular activity and questionable practice of Scottish and Newcastle Breweries on the London Stock Exchange who at 3.30 p.m. on Wednesday 11th December extended their deadline for acceptances of the Scottish and Newcastle's offer for Matthew Brown's shares; recognises that by 3.30 p.m., the original deadline set by Scottish and Newcastle in their own offer document, the attempt to take over Matthew Brown had failed, with the acquisition of only 47 per cent. of Matthew Brown's shares; expresses profound concern over the fact that by subterfuge and with the use of irregularity Scottish and Newcastle secured a further 3 per cent. of Matthew Brown shares by 5 o'clock at which time they claimed control; welcomes the decision to convene the full City takeover panel on Thursday 12th December to carry out an inquiry into Scottish and Newcastle's activities; and believes that Scottish and Newcastle's predatory acquisition of Matthew Brown is to be condemned by all those who believe in fair dealing and fair play."
      I returned to the House to table the motion because I was advised by certain persons that it was important to make as much noise as possible to ensure that no decisions were ducked. I secured a number of interviews in the national media, including breakfast television, to provide publicity for the case prior to the Takeover Panel examining the matter in the City at 10 o'clock the following morning.
      I stayed up until 3 am. Indeed, I remember telephoning my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) at 2 am on a matter relating to Lloyd's—and he was in bed. I was advised that it was important to make as much noise as possible to ensure that the panel dealt with the matter in a reasonable way and that no one could secure the takeover by what I described in my motion as "irregularity."
      What would have happened if the new clause had, in fact, been in legislation? I understand that the merchant banks advising Scottish and Newcastle would have found themselves in difficulty. They might have been in contravention of rules, which might have led to proceedings. If that had happened, I am sure they would have advised Scottish and Newcastle, prior to the 3.30 pm deadline, not to enter into such questionable activity. That would have avoided all the difficulty and hassle that I, a number of my hon. Friends and others experienced during the night of 11 December.
      I hope that the Minister will take on board my comments about that incident, and also those of my hon.
      546
      Friend the Member for Dagenham (Mr. Gould) about other incidents. There is a great deal of public concern. People want to feel sure that the rules are being complied with in every way. The Minister, by accepting the new clause, will have the opportunity to achieve precisely that.
      Mr. Howard: First, I thank my hon. Friend the Member for Edinburgh, Central (Mr. Fletcher) for his kind remarks during his contribution. I have paid tribute to him for his responsibility for the Bill and I am happy to join in the tribute which he paid to the hon. Member for Dagenham (Mr. Gould).
      The hon. Member for Dagenham referred to the Government's original attitude to the issue that is taken up by the new clause. I remind the House that the White Paper on financial services stated that the panel had been
      "a good example of self-regulation working in an important area of the securities market in the United Kingdom. The Government wish it to continue to do so. If practitioners and users of the securities market felt that statutory backing would be helpful, the Government would be willing to consider it."
      Following the publication of the White paper, we received representations from various bodies on this issue. Some favoured a degree of statutory backing, but many were opposed to it. The panel itself, on which many City organisations are represented, argued against statutory backing, as did the Governor of the Bank of England. In the light of the advice that we received, having approached the matter with an entirely open mind, as stated in the White Paper, the Government decided not to include provisions in the Bill on the regulation of takeovers. We believed, and continue to believe—our belief appears to be shared by most hon. Members who have contributed to this short debate—that the panel is doing a good job in regulating takeovers on a non-statutory basis and that it enjoys the support of the City. We announced our decision when the Bill was published in December and we have received no representations that the decision should he reversed.
      Experience indicates that the conduct of takeovers is an area which is best left, as far as possible, to self-regulation rather than statutory provision. The City code on takeovers and mergers, and its administration by the panel, compares favourably with the more legalistic approach that is adopted in the United States. There are few in the City, or in industry and commerce, who would wish to move towards the American model if we can possibly avoid it.
      I would argue that all the examples which have been cited by Opposition Members during the course of their observations strengthen the Government's case rather than detract from it. They have not been able to point to any example of anyone flouting the takeover panel. There may have been instances where, in the view of the panel, the code has been breached, but in those instances the panel has so ruled and the panel's decision has been accepted. As for the example cited by the hon. Member for Workington (Mr. Campbell-Savours), I would not care to speculate on the extent to which his experience on breakfast television may have influenced the decision of the panel. The fact is that the panel came to a decision which even the hon. Gentleman recognises was the right one to make.
      Mr. Campbell-Savours: What about the financial advisers? What happened to them?
      Mr. Howard: The point is that no attempt has been made to flout any decision of the panel. The panel's decisions have been respected.
      The hon. Member for Dagenham posed a hypothetical question and asked what might happen if a decision of the panel were to be flouted. I face that question and address it. The Bill already contains powers which could be used to support the takeover code. There are wide-ranging powers to make conduct of business rules for authorised businesses in part 1, chapter V and it would be possible to require authorised businesses acting for participants in the hid to conduct themselves in ways which would support the code. Under part IV, obligations could be placed on listed companies. Clause 138 in part V enables the conduct of offers to be regulated. There would also be an indirect impact even on unauthorised offerers or offerees because clause 52 severely limits the circumstances in which investment advertisements can be issued by someone who is not authorised.
      I suggest that the Takeover Panel is doing a good job and that there is every reason to suppose that it will continue to do so. I listened carefully to what was said by my hon. Friend the Member for Edinburgh, Central but I cannot go along with his argument that there is a need for a review of the sort for which he asked. I believe that there are powers in the Bill which could be used to support the code if necessary. It is on that basis that I invite the House to reject the new clause.
      Mr. Gould: I am grateful to the hon. Member for Edinburgh, Central (Mr. Fletcher) for his kind personal remarks and for his support in principle of the new clause. I understand his reluctance to commit himself to the detail of it. I am grateful also to my hon. Friend the Member for Workington (Mr. Campbell-Savours) and to the hon. Member for Stockton, South (Mr. Wrigglesworth) for their support for the new clause.
      I cannot welcome the Minister's response in the same terms. By relying upon the views expressed to him by practitioners and users of the takeover code, he was applying the wrong test. His obligation was to apply the test which he has adopted in other instances, that of the public interest and the proper regulation of the City. The Minister should not confine himself to those who in one respect or another have a vested interest in the situation as it exists.
      I think that the Minister missed the point of the example stated by my hon. Friend the Member for Workington. We believe that one of the beneficial consequences of effective regulation is that it has a prophylactic effect and deters the breaking of rules. That is not the same as coming along ex post facto, assuming that one is lucky enough to detect what has gone wrong and who was responsible, to issue a stern warning and no more. We want a proper system of rules, proper sanctions and proper penalties so that people are deterred from breach. What worries so many of us is the vast volume of breach that is taking place, which is largely undetected and unpunished.
      For all these reasons I fear that I cannot be satisfied——
      Mr. Campbell-Savours: Is this not an area to which the next Labour Government will have to return with new legislation? There are clear deficiencies, and it seems that the Government have no desire to deal with them.
      Mr. Gould: My hon. Friend is right. Irrespective of the colour of the next Government — I have a firm view about that which, I am glad to say, is shared by all commentators and opinion polls, which is that there will be a Labour Government—that Administration will be obliged to legislate in this area. The developments that will take place will demand nothing less. For all these reasons feel that we must press the matter to a Division.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 113, Noes 215.

      Division No. 221]

      [6.26pm

      AYES

      Adams, Allen (Paisley N)

      Kirkwood, Archy

      Alton, David

      Leadbitter, Ted

      Archer, Rt Hon Peter

      Leighton, Ronald

      Ashdown, Paddy

      Lewis, Terence (Worsley)

      Atkinson, N. (Tottenham)

      McCartney, Hugh

      Banks, Tony (Newham NW)

      McDonald, Dr Oonagh

      Barron, Kevin

      McKay, Allen (Penistone)

      Bell, Stuart

      McNamara, Kevin

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

      Madden, Max

      Blair, Anthony

      Meadowcroft, Michael

      Boyes, Roland

      Mikardo, Ian

      Bruce, Malcolm

      Millan, Rt Hon Bruce

      Caborn, Richard

      Mitchell, Austin (G't Grimsby)

      Callaghan, Rt Hon J.

      Nellist, David

      Callaghan, Jim (Heyw'd & M)

      Orme, Rt Hon Stanley

      Campbell-Savours, Dale

      Owen, Rt Hon Dr David

      Canavan, Dennis

      Park, George

      Carter-Jones, Lewis

      Parry, Robert

      Clarke, Thomas

      Pendry, Tom

      Clay, Robert

      Pike, Peter

      Clelland, David Gordon

      Powell, Raymond (Ogmore)

      Cocks, Rt Hon M. (Bristol S)

      Prescott, John

      Cohen, Harry

      Radice, Giles

      Coleman, Donald

      Randall, Stuart

      Cook, Frank (Stockton North)

      Redmond, Martin

      Cook, Robin F. (Livingston)

      Rees, Rt Hon M. (Leeds S)

      Corbyn, Jeremy

      Roberts, Allan (Bootle)

      Crowther, Stan

      Roberts, Ernest (Hackney N)

      Cunningham, Dr John

      Robertson, George

      Davies, Ronald (Caerphilly)

      Robinson, G. (Coventry NW)

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

      Rogers, Allan

      Deakins, Eric

      Rowlands, Ted

      Dewar, Donald

      Sedgemore, Brian

      Dormand, Jack

      Sheerman, Barry

      Dubs, Alfred

      Sheldon, Rt Hon R.

      Eastham, Ken

      Shore, Rt Hon Peter

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

      Short, Ms Clare (Ladywood)

      Fatchett, Derek

      Silkin, Rt Hon J.

      Faulds, Andrew

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

      Fields, T. (L'pool Broad Gn)

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

      Fisher, Mark

      Snape, Peter

      Foot, Rt Hon Michael

      Soley, Clive

      Foulkes, George

      Spearing, Nigel

      Freeson, Rt Hon Reginald

      Steel, Rt Hon David

      Freud, Clement

      Stewart, Rt Hon D. (W Isles)

      Garrett, W. E.

      Straw, Jack

      George, Bruce

      Thomas, Dr R. (Carmarthen)

      Godman, Dr Norman

      Tinn, James

      Gould, Bryan

      Wareing, Robert

      Hamilton, James (M'well N)

      Williams, Rt Hon A.

      Hamilton, W. W. (Fife Central)

      Wilson, Gordon

      Hancock, Michael

      Winnick, David

      Haynes, Frank

      Woodall, Alec

      Hogg, N. (C'nauld & Kilsyth)

      Wrigglesworth, Ian

      Holland, Stuart (Vauxhall)

      Hoyle, Douglas

      Tellers for the Ayes:

      Janner, Hon Greville

      Mr. John McWilliam and Mr. Don Dixon.

      Kaufman, Rt Hon Gerald

      Kennedy, Charles

      NOES

      Alexander, Richard

      Ancram, Michael

      Alison, Rt Hon Michael

      Ashby, David

      Amess, David

      Aspinwall, Jack

      549

      Atkinson, David (B'm'th E)

      Griffiths, Peter (Portsm'th N)

      Baker, Nicholas (Dorset N)

      Ground, Patrick

      Baldry, Tony

      Grylls, Michael

      Banks, Robert (Harrogate)

      Gummer, Rt Hon John S

      Bellingham, Henry

      Hamilton, Hon A. (Epsom)

      Benyon, William

      Hamilton, Neil (Tatton)

      Best, Keith

      Hampson, Dr Keith

      Bevan, David Gilroy

      Hannam, John

      Biffen, Rt Hon John

      Hargreaves, Kenneth

      Biggs-Davison, Sir John

      Harris, David

      Blackburn, John

      Harvey, Robert

      Blaker, Rt Hon Sir Peter

      Haselhurst, Alan

      Body, Sir Richard

      Hawkins, C. (High Peak)

      Boscawen, Hon Robert

      Hawkins, Sir Paul (N'folk SW)

      Bottomley, Mrs Virginia

      Hayward, Robert

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

      Heathcoat-Amory, David

      Bowden, Gerald (Dulwich)

      Henderson, Barry

      Braine, Rt Hon Sir Bernard

      Heseltine, Rt Hon Michael

      Brandon-Bravo, Martin

      Hickmet, Richard

      Bright, Graham

      Hicks, Robert

      Brinton, Tim

      Higgins, Rt Hon Terence L.

      Brooke, Hon Peter

      Hill, James

      Brown, M. (Brigg & Cl'thpes)

      Hind, Kenneth

      Browne, John

      Hirst, Michael

      Bruinvels, Peter

      Hogg, Hon Douglas (Gr'th'm)

      Bryan, Sir Paul

      Holland, Sir Philip (Gedling)

      Budgen, Nick

      Holt, Richard

      Burt, Alistair

      Hordern, Sir Peter

      Butcher, John

      Howard, Michael

      Butler, Rt Hon Sir Adam

      Howell, Rt Hon D. (G'ldford)

      Butterfill, John

      Hunter, Andrew

      Carlisle, John (Luton N)

      Jenkin, Rt Hon Patrick

      Carlisle, Kenneth (Lincoln)

      Jessel, Toby

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

      Johnson Smith, Sir Geoffrey

      Carttiss, Michael

      Jones, Robert (Herts W)

      Chapman, Sydney

      Kershaw, Sir Anthony

      Chope, Christopher

      Key, Robert

      Churchill, W. S.

      Knight, Greg (Derby N)

      Clark, Dr Michael (Rochford)

      Knowles, Michael

      Clark, Sir W. (Croydon S)

      Lamont, Norman

      Clarke, Rt Hon K. (Rushcliffe)

      Lang, Ian

      Clegg, Sir Walter

      Latham, Michael

      Colvin, Michael

      Lawler, Geoffrey

      Conway, Derek

      Lawrence, Ivan

      Coombs, Simon

      Lawson, Rt Hon Nigel

      Cope, John

      Lennox-Boyd, Hon Mark

      Couchman, James

      Lester, Jim

      Cranborne, Viscount

      Lightbown, David

      Crouch, David

      Lilley, Peter

      Currie, Mrs Edwina

      Lord, Michael

      Dickens, Geoffrey

      McCrindle, Robert

      Dicks, Terry

      McCurley, Mrs Anna

      Douglas-Hamilton, Lord J.

      MacGregor, Rt Hon John

      Dunn, Robert

      MacKay, John (Argyll & Bute)

      Durant, Tony

      Maclean, David John

      Edwards, Rt Hon N. (P'broke)

      McNair-Wilson, M. (N'bury)

      Emery, Sir Peter

      Major, John

      Evennett, David

      Marlow, Antony

      Fairbairn, Nicholas

      Mates, Michael

      Fallon, Michael

      Mather, Carol

      Farr, Sir John

      Maude, Hon Francis

      Finsberg, Sir Geoffrey

      Maxwell-Hyslop, Robin

      Fletcher, Alexander

      Meyer, Sir Anthony

      Forman, Nigel

      Miller, Hal (B'grove)

      Forsyth, Michael (Stirling)

      Moate, Roger

      Forth, Eric

      Moynihan, Hon C.

      Fowler, Rt Hon Norman

      Nelson, Anthony

      Fox, Marcus

      Newton, Tony

      Franks, Cecil

      Norris, Steven

      Fraser, Peter (Angus East)

      Onslow, Cranley

      Freeman, Roger

      Osborn, Sir John

      Galley, Roy

      Ottaway, Richard

      Gardner, Sir Edward (Fylde)

      Page, Sir John (Harrow W)

      Garel-Jones, Tristan

      Patten, J. (Oxf W & Abgdn)

      Goodhart, Sir Philip

      Pawsey, James

      Gorst, John

      Percival, Rt Hon Sir Ian

      Gow, Ian

      Powell, William (Corby)

      Grant, Sir Anthony

      Proctor, K. Harvey

      Greenway, Harry

      Rhodes James, Robert

      Griffiths, Sir Eldon

      Rhys Williams, Sir Brandon

      550

      Ridsdale, Sir Julian

      Twinn, Dr Ian

      Rossi, Sir Hugh

      van Straubenzee, Sir W.

      Rowe, Andrew

      Viggers, Peter

      Sainsbury, Hon Timothy

      Waddington, David

      Sayeed, Jonathan

      Wakeham, Rt Hon John

      Shelton, William (Streatham)

      Walden, George

      Sims, Roger

      Walker, Bill (T'side N)

      Skeet, Sir Trevor

      Waller, Gary

      Smith, Tim (Beaconsfield)

      Ward, John

      Soames, Hon Nicholas

      Wardle, C. (Bexhill)

      Spencer, Derek

      Watts, John

      Spicer, Jim (Dorset W)

      Wells, Bowen (Hertford)

      Squire, Robin

      Wells, Sir John (Maidstone)

      Stanbrook, Ivor

      Whitfield, John

      Steen, Anthony

      Whitney, Raymond

      Stern, Michael

      Wiggin, Jerry

      Stevens, Lewis (Nuneaton)

      Wilkinson, John

      Stewart, Allan (Eastwood)

      Winterton, Mrs Ann

      Stewart, Andrew (Sherwood)

      Wolfson, Mark

      Taylor, John (Solihull)

      Wood, Timothy

      Taylor, Teddy (S'end E)

      Yeo, Tim

      Temple-Morris, Peter

      Younger, Rt Hon George

      Thomas, Rt Hon Peter

      Thompson, Donald (Calder V)

      Tellers for the Noes:

      Thompson, Patrick (N'ich N)

      Mr. Peter Lloyd and Mr. Gerald Malone.

      Thorne, Neil (Ilford S)

      Thornton, Malcolm

      Question accordingly negatived.

    Clause 1

      INVESTMENTS AND INVESTMENT BUSINESS
      Mr. Howard: I beg to move amendment No. 2. in page 2, line 3, leave out from 'Schedule' to 'shall' in line 9 and insert
      'and is not excluded by Part III of that Schedule.
      (3) For the purposes of this Act a person carries on investment business in the United Kingdom if he—

      (a) carries on investment business from a permanent place of business in the United Kingdom; or

      (b) by way of business engages in the United Kingdom in any activity which falls within any paragraph in Part II of that Schedule and is not excluded by Part III or IIIA of that Schedule.

      (4) Part I to IIIA of that Schedule'.
      Mr. Deputy Speaker (Mr. Ernest Armstrong): With this it will he convenient to take Government amendment No. 19 and the amendments thereto: (a), line 7, at end insert
      'or with a person who, by reason of the number of occasions he enters into transactions of the kind in question, the consideration involved in those transactions or the circumstances in which they are entered into, may reasonably be taken to understand the risks involved'.
      (b),line 10, after 'exempted person', insert
      `or a person who may reasonably be taken to understand the risks involved'.

      (c),line 15, leave out 'authorised person or exempted'.

      (d). line 16, leave out 'the authorised'.

      (e), line 16, leave out from 'person' to end of line 17.

      Mr. Howard: When we discussed this subject in Committee some suggestions were made that the territorial scope of clause 1 was in some respects too broad and that there was a risk that if unamended the provisions of the Bill might drive away business from overseas which is very valuable to the balance of payments and which is not done with ordinary investors in this country. I undertook at that stage to consult and to bring forward amendments excluding from the scope of the Bill certain transactions entered into by overseas businesses. The amendments are the fruit of that consultation.

      551
      The amendments are designed to deal with two types of business. The first, which is covered by paragraph 22A of schedule 1, concerns business done here by an overseas person—that is, a person without a permanent place of investment business in the United Kingdom — with or through a qualified person. By "qualified person", I mean either an authorised person whose ordinary business involves transactions of the kind in question or an exempted person doing business in respect of which he is exempt. When the transaction is done with or through an authorised person, that person will be sufficiently expert to understand the risks involved in dealing with an overseas person who is not subject to the Bill. If he is acting for a client, it will be for the authorised person to look after his client and to have regard to his client's circumstances.
      The provision allowing transactions to be effected through an exempted person would also allow overseas persons to use the facilities of a recognised investment exchange without obtaining authorisation.
      The second type of business with which I was concerned was the sort of business where the overseas person made no effort to solicit business in the United Kingdom from unauthorised persons. This is the purpose of paragraph 22B. The effect of this paragraph will be to exclude from the definition of investment business certain activities undertaken by an overseas person. The exclusion will apply where the activity is engaged in either on the unsolicited initiative of a person in the United Kingdom or where the overseas person's client or customer is a person on whom he is permitted to cold-call or to whom he is permitted to send advertisements under the regulations to be made under the Bill. It is likely that these regulations will allow cold calling on and the sending of advertisements to professional and business investors and existing clients. I believe that that exclusion will meet the objectives underlying the amendments put forward by my hon. Friend the Member for Croydon, South.
      The provisions in the amendment would, I believe, meet most of the concerns which have been expressed about undermining the protection that the Bill will afford to investors. However, I would welcome comments on the extent to which they achieve the desired effect. This is a complex matter on which our deliberations are greatly assisted by the representations that we receive from interested parties. I believe that, overall, our proposals strike about the right balance, but I am prepared to consider further adjustments of the balance if a case can be made for them.
      Amendment agreed to.

    Schedule 1

      INVESTMENTS AND INVESTMENT BUSINESS
      Amendments made: No. 3, in page 130, line 14, at end insert
      ', industrial and provident societies or credit unions'.
      No. 4, in page 131, line 17, at end insert
      'or in respect of two or more different investments falling within paragraph 3 above and issued by the same person.'.
      No. 5, in page 131, line 19, after 'in', insert 'or securities of'.—[Mr. Howard.]
      Mr. Howard: I beg to move amendment No. 6, in page 132, leave out lines 30 to 39 and insert—
      552

      (a) the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or infirmity;

      (b) no benefits are payable under the contract on a death (other than a death due to accident) unless it occurs within ten years of the date on which the life of the person in question was first insured under the contract or before that person attains a specified age not exceeding seventy years;

      (c)the contract has no surrender value or the consideration consists of a single premium and the surrender value does not exceed that premium: and

      (d)the contract does not make provision for its conversion or extension in a manner that would result in its ceasing to comply with paragraphs (a), (b) and (e) above.

      (2) Where the provisions of a contract of insurance are such that the effecting and carrying out of the contract—

      (a) constitutes both long term business within the meaning of the Insurance Companies Act 1982 and general business within the meaning of that Act; or

      (b)by virtue of section 1(3) of that Act constitutes long term business notwithstanding the inclusion of subsidiary general business provisions,

      references in this paragraph to rights and benefits under the contract are references only to such rights and benefits as are attributable to the provisions of the contract relating to long term business.'.
      The intention behind paragraph 10 of schedule 1 is to exclude from the definition of "investments" long-term insurance contracts whose sole purpose is protection against risk. However, the precise dividing line between those contracts which have an investment element and those which do not is obviously a somewhat difficult one to draw, given the complexities of the insurance market, and for that reason I was happy to acknowledge in Committee that we might not initially have got it exactly right in all respects. I promised, however, to consider the matter further, with a view to tabling appropriate amendments to the Bill on Report and I have now done that. The wording of the amendment reflects the result of extensive and wide-ranging consultations with a variety of interested parties, in an attempt to draw as accurate and as precise a dividing line as may be possible. The broad effect of the changes is to allow a slightly wider class of pure protection insurance contracts to qualify for exclusion but the exemption is of course, intended not to be available for any contract that would normally be regarded as an investment.
      Mr. Tim Smith: On 30 January I moved in Committee an amendment that was similar to the Government amendment. I am grateful to my hon. and learned Friend the Under-Secretary of State for the consultation that the Government undertook with interested parties on this matter. Those who have commented to me on the Government amendment have said that they are satisfied with the changes that the Government have made, and they are therefore duly grateful.
      Amendment agreed to.
      Mr. Ashdown: I beg to move amendment No. 7, in page 132, line 46, at end insert—
      '(11A) Real property of any type or description, except residential property, wherever situated and whether or not subject to encumbrances.'.
      The purpose of the amendment s to bring investment in non-domestic property within the meaning and the terms of the Bill—property relating to office buildings, shops, factories, agricultural land, and so on. The amendment closely follows on the proposals and recommendations put to me by the National Association

      553
      of Pension Funds. However, we have deliberately excluded residential property because we have no wish to draw every estate agent in the land within the ambit of the Bill.
      I do not pretend for one moment that this is a perfect solution. It is a balanced one which nevertheless is useful because it goes some way, in a sensible and reasonable way, towards recognising the type of investment decisions that can be taken and their impact in relation to property, without drawing in domestic property.
      The word "real" in the amendment is well understood. The National Association of Pension Funds advised us that it was normally used in the trade and its lawyers said that it was appropriate. It may well be that it is not the right term to use, in which case we shall be more than happy to accept an amendment. The principle is what is important.
      6.45 pm
      The pension funds have vast amounts of money invested in property. The Government have calculated that they have about £12 billion invested in property. According to the NAPF's 1984 survey, 10 per cent. of its portfolios are in that category. In the 1970s the investment in property was much higher — about 20 per cent. of portfolios. The percentage has now dropped, for reasons that we can well understand — for example, lower inflation and the recession in rental growth. That position could easily be reversed if inflation were to increase, as some say it might, if there were a rise in property prices, or if the Government simply stopped issuing index-linked bonds.
      Whatever the case in the future, at present substantial proportions of the portfolios of pension funds are invested in property. Few of those funds have their own property departments. They therefore rely heavily on agents of one sort or another for management and advice on acquisition and disposal. There is potential for severe conflicts of interest between clients of the same firm and between agents and the firms and their clients. The Royal Institution of Chartered Surveyors attempts, and in many cases does a good job, to regulate the market. I understand that on a number of occasions pension funds nevertheless have had to seek redress through the courts against property agents for breaches of duty under the law of agency.
      I have no doubt that every vested interest will oppose the amendment, and I suppose that one can understand that. I suggest that there is no reason why, given the impact and importance of decisions in this respect, conflicts of interest here should be treated differently from conflicts of interest anywhere else. The acquisition by larger conglomerates of some of the firms involved may lead to the wholy inconsistent position in the future in which one service offered by a conglomerate is regualated and another—on property advice—is not. There could be the stupid situation in which pension fund trustees meet a number of advisers sitting around the same table — say, an adviser on United Kingdom securities, an adviser on international securities and an adviser on property—some of whom are regulated and therefore fall under the Bill's provisions, but the property adviser escapes those provisions. We wish to bring that aspect within the scope of the Bill.
      554
      The exclusion of this provision from the legislation would be more understandable if property investment had not created problems in the past, but we know that that is not so. The early 1970s were marked by what one Conservative Prime Minister referred to as the "unacceptable face of capitalism"—directly, I recall, in relation to property investment.
      Mr. Tim Smith: It was in relation to Lonrho.
      Mr. Ashdown: I stand corrected, but it was certainly part of the same era. Without doubt, problems have been created in the past with respect to the law of agency. Without doubt, the scandal of the secondary banking crisis in the 1970s was created because of problems of property valuation.
      Our purpose is to bring such investment advice within the scope of the legislation and to prevent such a thing happening in the future. If the Under-Secretary of State intends resisting the amendment, we shall want to know that he will be ready and willing to extend the Bill's scope under the powers given in, for instance, clause 2, should such problems again arise.
      Mr. Howard: By the exercise of characteristically tortuous logic, the hon. Member for Yeovil (Mr. Ashdown) has passed from the identification of inaccurate reasons why I come to the decisions which I do to an identification of the vested interests which he suspects will oppose any amendment which he tables and which will accordingly doom that amendment. It is an interesting sign of the degree of accuracy with which his party approaches these matters. Any allegation may be made as long as it corresponds to a certain period, if it relates to the right era, and it does not matter whether it is inaccurate in every other respect. However, the general principle underlying the definition of investments in the Bill is that it excludes physical property which a potential purchaser can inspect and which passes under his direct control on purchase.
      A person wishing to buy a building can have it surveyed and establish its physical condition, the cost of any essential repairs and the likely maintenance costs. Once he has purchased it, he will he able directly to influence at least that part of its value which relates to its structural condition. This distinguishes real property from investments as defined in the Bill, where the purchaser acquires rights, directly or indirectly, in underlying assets which he generally cannot inspect or control.
      Two arguments have been advanced for including real property within the scope of the Bill. The first is that for large fund managers, such as insurance company and pension fund managers. property is an alternative store of value to investments as defined in the Bill, and that it should therefore be regulated in a similar fashion. The second is that property is frequently promoted and purchased as an "investment" in the sense of an asset which it is hoped to sell subsequently at a profit. But the problem with both these arguments is that they do not present a case for drawing the line at real property. Fund managers have other stores of value available, such as works of art. A wide range of things — for instance, stamps or limited edition porcelain plates — are promoted on the basis that they will rise in value, and are bought in that expectation, or at least that hope. It would be wholly impracticable to extend the scope of the Bill to cover all those areas.

      555
      Moreover, to include real property within the definition of investments would greatly increase, to no clear advantage, the range of businesses to which the Bill would apply. For instance, even with an exclusion for residential property, the mainstream activities of a large number of estate agents and property management agents and solicitors who undertake commercial conveyancing would be brought within the Bill's scope. What would be the benefit of doing so? To what sort of rules should they be subject? Clearly, rules drawn up to cover, for instance, the management of a portfolio of shares would be wholly inappropriate to the management of an office block as such.
      I believe that what has been called the touch-and-see principle is the right one to adopt when defining investments. The provisions of the Bill are inappropriate for physical objects and real property which pass under the direct control of the purchaser. I urge the House to reject the amendment.
      Mr. Ashdown: The opening of the Minister's speech, in which he sought to play the person not the argument, was rather typical of the rest of it because I was very dissatisfied with that. He failed to recognise the scale of the problem and sought to relate it to the same kind of area as, for example, advice on works of art when he knows that, by the Government's own figures, £12 billion is currently invested in pension funds in property. The scale is wholly different.
      It seems that the Minister has considerably underestimated the seriousness of this problem—in terms of scale, of the damage done to the probity of the City and to the economy in a previous age, and of the effect and possibility of its happening again. I found his remarks offensive in the early stages and downright complacent in the latter part of the speech. In the light of his reply, I am tempted to call a vote on this amendment. I shall not do so for one reason only. There is pressure on time and we are being asked to move things forward. I accede to that because I may want to call a vote later in the interests of the business of the House.
      We have put down a marker, and in the future we shall probably have good cause to remind the Minister, or some other person who holds his position, of it so that we can say that the complacency he has shown in this matter will be called into account later.
      Amendment negatived.
      Amendments made: No. 8, in page 133, line 21, leave out 'a' and insert 'an authorised'.
      No. 19, in page 135, line 23, at end insert—

    'PART IIIA
      ADDITIONAL EXCLUSIONS FOR PERSONS WITHOUT PERMANENT PLACE OF BUSINESS IN UNITED KINGDOM

        Transactions with or through authorised or exempted persons
        22A. —(1) Paragraph 12 above does not apply to any transaction by a person not falling within section 1(3)(a) of this Act ("an overseas person") with or through —

        (a) an authorised person whose ordinary business involves transactions of the kind in question;

        (b) an exempted person acting in the course of business in respect of which he is exempt.

        (2) Paragraph 13 above does not apply if the arrangements are made by an overseas person with, or the offer or agreement to make them is made by him to or with, an authorised person or an exempted person and the arrangements are with a view to the authorised person or exempted person entering into a transaction which is within
        556
        the ordinary business of the authorised person or, as the case may he, a transaction in respect of which the exempted person is exempt.

        Unsolicited or legitimately solicited transactions etc. with or for other persons
        22B. — (1) Paragraph 12 above does not apply to any transaction entered into by an overseas person as principal with, or as agent for, a person in the United Kingdom, paragraphs 13, 14 and 15 above do not apply to any offer made by an overseas person to or agreement made by him with a person in the United Kingdom and paragraph 15 above does not apply to any advice giver by an overseas person to a person in the United Kingdom it' the transaction, offer, agreement or advice is the result of —

        (a) an approach made to the overseas person by or on behalf of the person in the United Kingdom which either has not been in any way solicited by the overseas person or has been solicited by him in a way which has not contravened section 51 or 52 of this Act; or

        (b) an approach made by the overseas person which has not contravened either of sections.

        (2) Where the transaction is entered into by the overseas person as agent for a person in the United Kingdom, Subparagraph (1) above applies only if—

        (a) the other party is outside the United Kingdom; or

        (b) the other party is in the United Kingdom and the transaction is the result of such an approach by the other party as is mentioned in sub-paragraph (1)(a) above or of such an approach as is mentioned in sub-paragraph (1)(b) above.'. —[Mr. Howard.]

        Mr. Bruce Millan: I beg to move amendment No. 20, in page 135, line 23, at end insert—
        '22A Paragraphs 12, 13 and 15 anything done in connection with the purchase or sale of a business, or the assets of a business, offered for sale as a single entity.'.
        Mr. Deputy Speaker: With this it will be convenient also to consider the following amendments: No. 21, in page 135, line 23, at end insert—
        '22B Paragraphs 12, 13 and 15 above do not apply to anything done by a body incorporate in relation to the internal organisation of its own funds.'.
        No. 22, in page 135, line 23, it end insert—
        '22C Paragraphs 12 and 15 above do not apply to anything done by a company in relation to reconstruction of its own capital, except in a case where such reconstruction involves activities falling within paragraph 13 above.'.
        No. 24, in page 136, line 6 at end insert—
        '(3A) Advice given to a company in relation to the activities mentioned in subparagraph (3) above shall not be regarded as investment advice for the purposes of this schedule.'.
        Mr. Millan: I shall make it clear immediately that these four amendments are probing amendments because I want to have some clarification about schedule 1.
        The first amendment deals with the
        "purchase or sale of a business, or the assets of a business, offered for sale as a single entity."
        I know that in Committee the Minister said that this matter is excluded from the definition of investment in the Bill. However, to me and to professional people outside it is not at all clear where or how this matter is excluded in the Bill. It seems that some clarification is required. If the Minister can point to the words or passage in the Bill which deal with that item and satisfy us that it is adequately dealt with, fair enough. However, as far as I can see it is not currently dealt with explicitly in the Bill
        The other three amendments deal with advice on corporate finance given to companies. The Minister will know that the accountancy bodies have been rather concerned about which elements of corporate finance advice are caught by the Bill and which are excluded. That

        557
        is not clear at present. There is a misprint in amendment No. 21 because I have in mind a body corporate, not a "body incorporate" as is printed on the Amendment Paper. Since I am complaining about the lack of clarity elsewhere I feel that I should make that clear.
        There have been discussions between the Departments and the accountancy bodies on this matter and I have seen a letter written on 19 May from the Department. However, far from clarifying the position, the letter, if anything, makes it less clear than I had understood it to be. Obviously there is a need for some clarification, and that can be done only by an amendment to the Bill. It would obviously be undesirable for the Bill to reach the statute book with some doubt as to exactly what the schedule covers. It must be in everyone's interest that that should be put right before the Bill becomes an Act.
        Amendment No. 21 deals with the body corporate in relation to the internal organisation of its own funds. I am thinking specifically of whether advice in relation to that would be covered as investment advice in the schedule. I think that there would be a case for saying that it should not be covered because one is not dealing with an outside party which is being invited to invest. One is dealing with the internal organisation of the company's own funds. Of course, in itself that may involve a certain amount of investment advice on changing investments or financing arrangements and so on. I do not have a particular view as to whether that should be excluded. My amendment would say that it should be but, as I have said, it is a probing amendment. I am simply saying that we should know whether it is excluded or not. That is the important element in the amendment. There are arguments on both sides.
        Amendment No. 22 deals with the capital reconstruction of a company. There are different circumstances, whether it is a capital reconstruction which involves further investment from outside and further calls on shareholders, or whether it is capital reconstruction which does not involve that. Again, it is not covered exclusively in the schedule to the Bill and it is not clear to many professional people whether that is covered or not. In some circumstances investment advice in relation to capital reconstruction, should be covered by the Bill, and in others it should not. I do not want to be dogmatic about where the dividing line should be, if, indeed, there should be a dividing line at all. Accountants and other people involved in professional advice must know whether a particular activity is covered by the Bill.
        7 pm
        Amendment No. 24 deals with what is already an exclusion in the Bill. Schedule 1 paragraph 23(3) relates to the issue by a company of its shares, which is not regarded as falling within the schedule. That does not make clear the position of advice in relation to the issue by a company of its shares. That is not mentioned specifically in the schedule. It may be that, although the issue by a company of its shares is excluded, advice in relation to that is not excluded. Again, there are arguments on both sides about whether the matter should be included or excluded. My point is that there must be clarity so that professional advisers know exactly how they are placed in relation to the legislation.
        558
        I have chosen only three examples of matters involving advice on corporate finance. Many other matters may arise which are not dealt with clearly in the Bill. The way in which schedule 1 is drafted makes it extraordinarily difficult to table amendments which one can be reasonably confident will have the effect that one intends. I tabled the three amendments in order to ask the Minister for clarification or at least an undertaking that the matter will be reconsidered in the other place. Then we can be reasonably confident that when the Bill reaches the statute book we have it right, and those who will he involved will know what their responsibilities are.
        Mr. Tim Smith: I support the right hon. Member for Glasgow, Govan (Mr. Millan). His amendment No. 20 has the same object as my amendment No. 1, which was not selected for debate. The White Paper stated clearly:
        "Investments' will be defined to exclude … business, or the assets of a business, offered for sale as a single entity".
        It would be helpful to hear what progress my hon. and learned Friend the Minister has been able to make towards incorporating such a provision in the Bill.
        I know of the letter to which the right hon. Gentleman referred because I have seen a copy of it. It was intended to be helpful and to be a clarification, but it illustrated the complexities of the problem of corporate financial advice. That has been highlighted further by the fact that the Association of Corporate Treasurers has now written to many hon. Members saying that it has recently been suggested that its activities may be covered by the Bill. We are a long way from the original object of the Bill if it covers corporate treasury work, and I understand that the advice of the Department is that it does. Within a group there may be a subsidiary company with a minority holding, so I can see how that may be the case. If that is so, we are a long way from the original object of protecting domestic investors. Anything that can be done to clarify the Bill's ambit as precisely as possible before it becomes law cannot be other than the best possible course of action.
        Mr. Howard: I shall do my best to respond to the entirely reasonable requests of the right hon. Member for Glasgow, Govan (Mr. Millan) and my hon. Friend the Member for Beaconsfield (Mr. Smith) for further clarification of the points that they raised. I shall endeavour to provide a degree of further clarification or, failing that, to say how we propose to set about the task of providing further clarification.
        I can offer the right hon. Gentleman some reassurance on two points regarding amendment No. 20. First, the sale of the assets of a business will not normally constitute an investment activity, so a person whose business it was to arrange the transfer of assets, such as plant and machinery, from one proprietor to another would not be caught by the Bill. Secondly, the Bill would not catch a privately arranged sale by shareholders of their shares to a new proprietor or proprietors. However, the Bill as drafted would catch someone who advises on such transactions by way of business or is a transfer agent whose business is to arrange sales of the shares of small companies with few shareholders — often members of the same family — to new proprietors.
        We are sympathetic to the idea of excluding such activities from the scope of the Bill, but the difficulty comes when one starts to try to define the transactions to be excluded. It would, for instance, be possible to provide an exclusion when a transfer agent advises on or arranges

        559
        the sale by one person of the entire issued share capital of a company, or virtually the entire capital because there must always he two shareholders in a limited company, to another person. But that would be of limited use. Frequently, there will be more than one person on one or other side of the transaction, and the transaction may not involve all the shares, either because those wanting to sell do not own all the shares or because they want to retain an interest in the company, which they may, after all, have founded.
        If one tries to accommodate such transactions a number of other questions quickly arise. Should there be a limit on the number of people involved on each side of the transaction, and if so, what should it be? Should it be a requirement that the people on one side were connected to each other in some way, and if so, how? What should be the minimum proportion of shares that would have to be transferred for the exclusion to apply? I hope that the whole House will agree that these are not easy questions to answer.
        Obviously, there is no point in providing an exclusion if it is so limited as to be of no value to advisers and transfer agents. Equally, we must avoid opening up unacceptable loopholes. The references in the right hon. Gentleman's amendments to the sale of a "business" are not apt to the sale of shares in a business, and the amendment does not answer the important questions I have mentioned. But we have certainly not ruled out amendments to deal with the point, and I would welcome any suggestions as to how they might be framed so as to achieve a satisfactory balance between two objectives that conflict to some extent. If a satisfactory definition can he found, the Government would certainly be prepared to bring forward amendments in another place.
        The remaining amendments deal with the position under the Bill of corporate treasurers and advisers on corporate finance. It might he helpful if I deal with them separately.
        In addition to what has been said today, I have received some representations about the impact of the Bill on corporate treasurers. I accept that the present exclusion in schedule 1 for own-account dealings may not deal adequately with the problem of transactions undertaken by a company with or for another company in the same group. There may also be problems when a corporate treasurer deals with professional and business investors overseas. I propose to consider what needs to be done to deal with these problems, and the Government will bring forward amendments in another place.
        The term "corporate finance" is broad and rather vague. It includes activities which are clearly within, and ought to be within, the definition of investment business, as well as activities which are outside that definition and others which fall close to the borderline. It may be possible to exclude from the definition certain restricted categories of corporate finance advice, such as the particular activity identified in amendment No. 24 of advising a company on the issue of its shares. I would be very willing to consider any other proposals which might help to clarify the boundary of investment business without opening up unacceptable loopholes. But I should repeat that some of the activities of the larger corporate finance advisers are clearly within the scope of the Bill, and I would not be prepared to exclude them completely.
        Mr. Millan: The Minister has just told us that this is a difficult problem and that he does not have the answers to some of my points——
        Mr. Howard: Yet.
        Mr. Millan: I am not entirely confident from his speech whether he ever will have the answers to these particular problems. I am sure that the professional bodies outside will want to read his speech carefully. It is clear that some amendments to the schedule will be required, and it is unsatisfactory for the House that we do not have them at this stage. Obviously, it is not possible to judge what the amendments are likely to be and whether they will be acceptable because we shall not nave an opportunity to see them.
        Mr. Gould: Does my right hon. Friend share my surprise that, given that the Bill had its genesis some time ago and was foreshadowed by a substantial report, we still have not had answers to these important questions?
        Mr. Millan: It is surprising because one would have thought that these questions would have had to be answered before the Bill was drafted beyond its preliminary stage. The Bill should explain what it covers, what an investment is and what is investment advice. Everything else in the Bill depends on such definitions.
        This is the core of the Bill. Although these amendments may appear to be technical, we are dealing with the definition of matters upon which the whole Bill hangs. The professional bodies, will, as I have said, wish to consider what the Minister has said and I hope that there will be further discussions. I admit that these problems are difficult and I am in no way minimising the difficulties of producing the correct definitions.
        I accept the Minister's point that we do not wish to have exclusions in the schedule which would allow loopholes. I would certainly support that. I have made the point, and the Minister accepted this, that there must be further amendments. I hope that the discussions which will no doubt take place, will eventually produce a reasonably satisfactory and comprehensive solution. In the meantime, I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.
        Amendments made: No. 23, in page 136, line 1, after 'shares', insert 'or share warrants'.
        No. 25, in page 136, line 8, leave out first 'and'.
        No. 26, in page 136, line 9, at end insert—
        'and "share warrants" means any investment which falls within paragraph 4 above and relates to shares in the company concerned.'—[Mr. Howard]

    Clause 6

      INJUNCTIONS AND RESTITUTIONS ORDERS
      Amendments made: No. 27, in page 4, line 33, after 'injunction', insert
      'or, in Scotland, an interdict'.
      No. 28, in page 4, line 42, after 'below', insert—
      'or, in relation to Scotland, under subsection (4A) below'.
      No. 29, in page 5, line 20, at end insert—
      '(4A) The court may under this subsection order the person concerned to pay to the applicant such sum as appears to the court to be just having regard to the considerations mentioned in paragraphs (a) to (c) of subsection (4) above.'.
      No. 30, in page 5, line 22, after '(4)', insert 'or (4A)'.
      No. 31, in page 5, line 41, leave out subsection (8)—[Mr. Howard.]

    Schedule 2

      REQUIREMENTS FOR RECOGNITION OF SELF-REGULATING ORGANISATION
      Amendments made: No. 32, in page 137, line 32, after 'agency', insert 'a transferee body'.
      Mr. Howard: I beg to move amendment No. 33, in page 137, line 42, at end insert—
      '(2) The arrangements shall not be regarded as satisfying the requirements of this paragraph unless the persons responsible for those matters include a sufficient number of persons who are independent of the organisation and its members.'.
      As I said when this paragraph was discussed in Committee, I entirely accept the need for effective independent representation on governing bodies of recognised self-regulating organisations so as to ensure that proper account is taken of the interests of users and of the general public. The Bill is intended to ensure such representation. It was suggested in Committee that the requirement ought to be spelt out more explicitly in the Bill, and I undertook to consider that. The amendment reflects that consideration, and I commend it to the House.
      Mr. Gould: The Opposition recognise that the element of independence is spelt out in the amendment. That is desirable and welcome. However, we must register our slight disappointment at the use of the word "sufficient". It seems to be a meaningless word in the context, and we would have preferred a word such as "substantial" or "significant", which might have made more sense to the judges if ever they were required to decide upon the matter.
      Mr. Ashdown: To reinforce the point, I recall during the Committee debating the matter at some length with the Minister. We finally extracted from him, with the pain of extracting an elephant's tooth, in relation to the SIB the words a "significant proportion". Why can the SIB have a "significant proportion" whereas for the SRO it is reduced to a "sufficient proportion"? Will the Minister tell us what the difference is in numerical terms between "significant" and "sufficient"? What does "sufficient" mean? "Sufficient" is a weak and almost meaningless word for a very important matter.
      Mr. Howard: It would defeat the object of the terms used in these clauses if they were capable of being reduced to a specific arithmetical quantity in the way suggested by the hon. Member for Yeovil (Mr. Ashdown). I have introduced the amendment in its present terms to accord the maximum flexibility while meeting the objective which was common to both sides in the Standing Committee.
      Amendment agreed to.

    Clause 11

      REVOCATION OF RECOGNITION
      Amendment made: No. 34, in page 8, line 14, leave out
      'of its obligations under this Act';
      and insert
      'obligation to which it is subject by virtue of this Act'—[Mr. Howard.]

    Clause 12

      COMPLIANCE ORDERS
      Amendments made: No. 35, in page 9. line 24, at beginning insert '(a)'.
      No. 36, in page 9, line 26, after 'organisations' insert
      '; or

      (b) that a recognised organisation has failed to comply with any obligation to which it is subject by virtue of this Act,'.

      No. 37, in page 9, line 29, leave out from first 'that' to 'is' in line 32 and insert —
      'subsection (3) of section 10 or the requirement in question is not satisfied or, as the case may be, that the organisation has failed to comply with the obligation in question it may order the organisation to take such steps as the court directs for securing that that subsection or requirement is satisfied or that that obligation'.
      No. 38, in page 9, line 35, leave out clause 13. —[Mr. Howard.]

    Clause 14

      NOTIFICATION REQUIREMENTS
      Mr. Howard: I beg to move Government amendment No. 39, in page 10, leave out lines 13 to 45 and insert—
      '14—(l) The Secretary of State may make regulations requiring a recognised organisation to give him forthwith notice of the occurrence of such events relating to the organisation or its members as are specified in the regulations and such information in respect of those events as is so specified.
      (2)The Secretary of State may make regulations requiring a recognised organisation to furnish him at such times or in respect of such periods as are specified in the regulations with such information relating to the organisation or its members as is so specified.
      (3)The notices and information required to be given or furnished under the foregoing provisions of this section shall be such as the Secretary of State may reasonably require for the exercise of his functions under this Act.
      (4)Regulations under the foregoing provisions of this section may require information to be given in a specified form and to be verified in a specified manner.'.
      Mr. Deputy Speaker: With this it will be convenient also to consider Government amendments Nos. 40, 41, 61, 62, 126, 160, 191 and 192.
      Mr. Howard: These are largely technical amendments. Self-regulating organisations will need to provide a wide variety of information to the Secretary of State or designated agency. Clause 14 and other provisions specify some of this information in great detail by leaving other elements to be prescribed in regulations.
      On reflection, we feel that it would be preferable to have a genuine regulation-making power under the Bill so that the requirements can be more easily adapted to changing circumstances. We have also concluded that the Secretary of State or designated agency might need recognised investment exchanges and clearing houses to notify information other than that specified in subsections (1) and (2) of clause 39. Amendment No. 61 therefore gives a similar regulation-making power to that given in the case of self-regulating organisations.
      Amendment agreed to.
      Amendments made: No. 40, in page 11, line 1, after 'notice', insert
      'or information required to be given or furnished'.
      No. 41, in page 11, line 11, after insert ',or of regulations under,'.
      No. 42, in page 11, line 11, leave out from 'offence' to end of line 15. —[Mr. Howard.]

    Clause 19

      REVOCATION OF RECOGNITION
      Amendment 'made: No. 43, in page 13, line 15, leave out
      'of its obligations under this Act'
      and insert—
      'obligation to which it is subject by virtue of this Act.'—[Mr. Howard.]

    Clause 20
      NOTIFICATION REQUIREMENTS
      Amendment made: No. 44, in page 14, line 4, leave out from 'offence' to end of line 7. —[Mr. Howard]
    Clause 22

      REGISTERED FRIENDLY SOCIETIES
      Amendments made: No. 45, in page 14, line 21, after 'registered', insert
      'within the meaning of that Act'.
      No. 46, in page 14, line 22, leave out 'under that Act'.
      No. 47, in page 14, line 32, after 'registered', insert 'or deemed to be registered'. —Mr. Howard.]

    Clause 23

      OPERATORS OF RECOGNISED SCHEMES
      Amendments made: No. 48, in page 15, line 2, after 'operator', insert 'or trustee'.
      No. 49, in page 15, line 4, after 'operating', insert 'or acting as trustees in relation to'. —[Mr. Howard]

    Clause 26

      GRANT AND REFUSAL OF AUTHORISATION
      7.15 pm
      Mr. Ashdown: I beg to move amendment No. 50, in page 16, line 5, at beginning insert
      'Subject to subsection (2A) below,'.
      Mr. Deputy Speaker: With this it will be convenient to consider amendment 51, in page 16, line 10, at end insert—
      '(2A) The Secretary of State may refuse the application if he considers that it is unnecessary having regard to the existence of one or more self-regulating organisations which are concerned with investment business of a kind with which the applicant is concerned and which have been or are likely to be recognised under section 10 above.'.
      Mr. Ashdown: The purpose of amendments Nos. 50 and 51 is to give a reserve power to refuse direct registration should the Secretary of State wish to do that.
      Many hon. Members will recognise—this point arose in Committee and it has been a subject for discussion elsewhere — that there is a danger of too much direct registration with the SIB. If that were to happen, the SIB would be swamped and its effectiveness would be undermined. It might even be possible for a group of would-be members of any SRO deliberately to undermine
      564
      that SRO by seeking direct registration with the SIB. The amendment copes with that by allowing the Secretary of State the powers to refuse direct registration or to delegate those powers in the case of an existing SRO.
      As the Bill stands, it is possible for members of an SRO who found the rules too onerous or too rigidly enforced or who found the fees too high to remove themselves from the SRO and either apply to another SRO or to seek direct registration with an SIB. That could destroy the SRO concerned. It would also negate the whole principle of self-regulation because people would be able to apply to the superior body for direct registration and so undermine the effectiveness of the SRO.
      That is the basis of amendment No. 50 and that is the danger which the amendment addresses. The power that we seek is sensible and is essentially a reserve power.
      Mr. Tim Smith: Is the SIB seeking this power?
      Mr. Ashdown: I am not aware whether the SIB is seeking this power. However, that is a rational judgment. The dangers that I have outlined which may confront us in future make a case for the power. I know that other hon. Members will agree with that.
      Mr. Nelson: I have a measure of sympathy for the intent behind the amendment, as I made clear in Committee. I fear that the regime may be thwarted by people who, for a variety of reasons, apply to the designated agency instead of the SRO. The latter is the desirable course and maintains the integrity of the system of regime supervision as foreseen in the White Paper.
      My hon. and learned Friend the Minister, in Committee, appeared to state that the cost and rules of either the Secretary of State or the SIB as designated agency might be so onerous as to provide a substantial disincentive for anyone to seek authorisation by that route. That needs repetition on Report. That is the major point of resistance to the amendments.
      I am worried that people may treat an application for SIB authorisation as a court of appeal against refusal by an SRO to grant an authorisation. In some circumstances, many operators in the market may feel that the higher cost of attaining authorisation from the SIB is well worth while because they do not have to be subject to the day-to-day monitoring which certain SROs will and should impose. Those who seek protection under the framework as designated should be given sufficient reassurance to allow the amendments to be dropped, or my hon. Friend the Minister should later accept something along these lines.
      Mr. Gould: This is a matter which we also argued in Committee. We have some sympathy with the amendment, for the reasons that have already been given.
      There is a danger that the Securities and Investments Board's structure will be rendered unworkable because individuals, who are perhaps professional people, whose professional bodies do not seek recognition are obliged to seek authorisation or because some of the very large institutions decide that it is the simpler means of getting authorisation, preferring it to joining three or four SROs. I remain of the view that it would be worth while as a precautionary measure to have a reserve power such as this.
      I suspect that the Minister, having heard these arguments before, will not be persuaded by hearing them

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      again. I nevertheless hope that he will recognise the danger and that he does not live to regret overlooking this opportunity.
      Mr. Howard: The hon. Member for Dagenham (Mr. Gould) says that, having failed to be persuaded by these arguments in Committee, it is unlikely that I shall be persuaded by them this evening. He is correct.
      I am sure that most businesses will choose to become authorised through membership of an SRO. These bodies form the cornerstone of practitioner-based regulation. They will be close to the market place and best placed to adapt the requirements for investor protection into rules which are relevant and practical for the investment activity with which they are concerned. Their familiarity with the needs of the investment businesses that they regulate will help them to devise effective monitoring and enforcement arrangements which do not impose unnecessary burdens on the businesses.
      I am confident that most businesses will regard SRO authorisation as the most practicable route for them. In addition, it may well be found that the cost of direct authorisation is higher than that chargeable for SRO membership and that control by an inevitably remoter body will be less efficient for a business.
      Why should a power of the sort described in the amendment be contemplated to back up the attractions of SRO membership? I believe that any coercion over the route by which a business may choose to become authorised is inappropriate. SROs will be private bodies, exercising powers over their membership by the contractual agreement between them. If powers are taken which could in effect be used to direct individual businesses to apply to join SROs, the status of those bodies cannot help but be changed. I do not believe that they should be forced to consider and, if fit and proper, to admit to membership applicants who do not want to become members.
      Mr. Campbell-Savours: Does not the Minister understand that the amendment proposes only a reserve power? It is not imposing anything. Can he not see it in those terms?
      Mr. Howard: I am suggesting that the exercise of that power would be inappropriate. If one takes the view that the exercise of such a power would be inappropriate—I am setting out the reasons—there is no call even for a reserve power. The conflict to which I have referred would inevitably be a cause for friction, and the success of self-regulation depends on voluntary acceptance of the spirit as well as the letter of the rules. An unwilling member is unlikely to have that sort of attitude.
      Equally, the business may feel that an SRO is not the right body to regulate its activities, that its charges are excessive or that its rule book or methods present problems for the business's activities. Why should the agency be able to upset the business's commercial judgment and force it to apply to an SRO?
      I realise that there is concern among some conglomerates that they may have to join several SROs for various aspects of their business and that this will be costly and bureaucratic. The proposals from the SIB for the creation of a lead regulator which would be responsible for handling overall financial surveillance should be adequate
      566
      to minimise duplication of effort and over-bureaucracy. Even conglomerates should find SRO membership a convenient route for authorisation.
      I do not believe that large numbers of businesses will want to seek direct authorisation, but even if they did I do not agree that they would swamp the agency or that the system could not work, although the agency would have to take on more staff to consider applications and to monitor businesses thereafter. By building up its resources, and with practitioners on the board and staff, the agency would be able to cope. I hope and expect that most businesses will join SROs, but if they do not the system that we are proposing is flexible enough to deal with them. The amendment would remove the right of a business to choose how to get its authorisation. We should preserve that freedom of choice, and I invite the House to reject the amendment.
      Mr. Ashdown: I must again express some sadness at the Minister's reply. He said, rather revealingly, that the arguments that had been put to him had not persuaded him to change his mind. We know that no powerful bodies are behind the arguments and that they must stand by themselves.
      I am grateful to the hon. Member for Chichester (Mr. Nelson) for his properly qualified support and to the hon. Member for Dagenham (Mr. Gould) for his support. The hon. Member for Dagenham said — the Minister admitted it — that conglomerates might be required to register with three or four SROs. That will put cost burdens on them. The direct registration procedure might prove less expensive and less bureaucratically onerous.
      The Minister said that he believed that most businesses would regard SROs as their appropriate route for authorisation. I agree. I envisage most businesses taking that route. As the hon. Member for Workington (Mr. Campbell-Savours) said, we are suggesting a reserve power. Firms might well choose a different route.
      The Minister has set his face against the amendment. He ended with a curious statement — he said that we would remove a right and force businesses. That is not what we intend. We are suggesting a reserve power for use in exceptional circumstances. By rejecting the amendment, the Minister has left open the possibility of a chain of events which may cause him to change his mind.
      Amendment negatived.
      Mr. Howard: I beg to move amendment No. 52, in page 16, line 15, leave out 'exempt' and insert 'appointed'.
      Mr. Deputy Speaker: With this it may be convenient to consider Government amendments Nos. 64 to 68, 70, 71, 76, 84 to 86, 162 to 164, 193 and 262.
      Mr. Howard: In reply to a similar amendment which was proposed in Committee by my hon. Friend the Member for Beaconsfield (Mr. Smith), I accepted that the phrase "exempt representative" might not be the best one to use in relation to the people covered by clause 41 in so far as it tended to suggest that they were not to be subject to the Bill's provisions at all. This is not, of course, the case. Since the conduct of an exempt representative is treated under clause 41 as the conduct of his principal for the purposes mentioned in the clause, the exempt representative would have to comply with whatever provisions of the Bill or rules and regulations made under

      567
      it as would have applied to his principal. The only exemption is from the requirement separately to become authorised.
      Nevertheless, I am aware that the phrase has tended to give rise to an understandable misconception regarding the precise status of the persons covered by clause 41, and I accordingly undertook in Committee to consider an alternative expression that might convey a rather clearer indication of that status. The phrase "appointed representative" was proposed by my hon. Friend the Member for Beaconsfield and is, I believe, the one that best achieves that objective.
      Amendment agreed to.

    Clause 30

      AUTHORISATION IN OTHER MEMBER STATE
      Mr. Howard: I beg to move amendment No. 53, in page 19, line 13, after 'question', insert '(a)'.
      Mr. Deputy Speaker: With this it may be convenient to consider Government amendments Nos. 54 to 56 and 170.
      7.30 pm
      Mr. Howard: The purpose of these amendments is to remove some of the uncertainty about the circumstances in which the provisions of the clause conferring authorisation on certain member state nationals have effect.
      I should recall at the outset that clause 30 reflects an existing right under the EEC treaty. The central principle is that a national of any member state is allowed under the treaty to provide services in any member state without being made subject to restrictions which cannot be justified on the basis of certain principles. The ones which are relevant are that the requirements must be objectively necessary and proportionate to the ends to be achieved and that requirements must not duplicate requirements in the member state of establishment which provide substantially the same safeguards. In other words, the law must take account of the safeguards afforded by other member states. That is why clause 30 confers authorisation on persons authorised in other member states whose authorisation procedures provide safeguards equivalent to those provided under the Bill.
      The application of this last principle means that the clause must apply whenever, as a matter of fact, there is equivalence between the regimes in question—a matter which can ultimately be decided only by the courts. However, I accept that such a provision could give rise to unwelcome uncertainty, and the purpose of these amendments is to reduce this uncertainty.
      The first area of uncertainty concerns harmonised regimes such as exist in the case of life insurance. The whole purpose of harmonised regimes is to allow the products in question to be sold throughout the Community, regardless of their member state of origin. The purpose of the new subsection (3)(d) is to make it clear that the authorisation conferred by the clause applies to a person who is authorised in another member state under a harmonised regime. By virtue of the new subsection (5), to take advantage of this authorisation a person must possess a certificate issued by his home
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      authorities confirming that the relevant provisions of the law in that state conform to the relevant harmonisation directive.
      The second leg of the main amendment provides for the Secretary of State to issue a certificate to the effect that the provisions of the law of another member state satisfy the equivalence criterion. The existence of such a certificate would be conclusive proof that the equivalence criterion was satisfied and that a person authorised under the relevant provisions was authorised in the United Kingdom. The power to issue such a certificate would not be transferable to the designated agency. In view of the international implications of the exercise of the power I think that it should he reserved to the Secretary of State.
      The amendments would not remove all the uncertainty about clause 30. For the reasons I have explained, the absence of a certificate issued by the Secretary of State could not be conclusive proof' that the equivalence requirement was not satisfied. A person authorised under some other provisions might still be authorised under clause 30 to carry on investment business in the United Kingdom. This possibility must be kept open if we are to comply with our Community obligations. However, I believe that the amendments would have the effect of clarifying considerably the application of clause 30.
      Because of this remaining uncertainty, and to meet some of the concern expressed in Committee, we have provided that the notice required under clause 31 must be given at least seven days before a person authorised by virtue of clause 30 begins to carry on investment business in the United Kingdom. This will allow the Secretary of State or designated agency time to consider the notice and to seek an injunction restraining the person from carrying on investment business if he or it believes that the person is not in fact authorised under clause 30, or to use the intervention powers if the notice suggests that the person is intending to carry on investment activities not covered by his home state authorisation and it would not be in the interests of investors to allow him to do so.
      Mr. Gould: We welcome these amendments, but the Minister will recall that one of the matters arising under clause 30 which concerned the Committee was that the clause appeared, at least on our reading, to be wider in effect than was actually required by our EEC treaty obligations. The Minister will recall that we were exercised by the example of a person authorised to act as art insurance broker in Greece who thereby authorised to act for all investment business purposes in this country. Will the Minister confirm that he has studied that question but has decided to do nothing about it?
      Mr. Howard: After I studied that question, I came to the conclusion that it was not appropriate to take action, for the reasons I expressed when the matter was debated in Committee.
      Amendment agreed to.
      Amendment made: No. 54, in page 19, line 18, at end insert
      '; or

      (b) satisfy the conditions laid down by a Community instrument for the co-ordination or approximation of the laws, regulations or administrative provisions of member States relating to the carrying on of investment business or investment business of the relevant kind.

      (4) A certificate issued by the Secretary of State and for the time being in force to the effect that the provisions of the law

      569
      of a member state comply with the requirements of subsection (3)(a) above, either as respects all investment business or as respects investment business of a particular kind, shall be conclusive evidence of that matter but the absence or revocation of such a certificate shall not he regarded as indicating that those requirements are not complied with.
      (5) This section shall not apply to a person by virtue of paragraph (b) of subsection (3) above unless the authority by which he is authorised to carry on the investment business in question certifies that he is authorised to do so under a law which complies with the requirements of that paragraph.'. —[Mr. Howard.]

    Clause 31

      NOTICE OF COMMENCEMENT OF BUSINESS
      Amendments made: No. 55, in page 19, line 20, after 'unless,' insert
      'not less than seven days'.
      No. 56, in page 19, line 39, at end insert—
      '(2A) A notice by a person claiming to be authorised by virtue of subsection (3)(b) of section 30 above shall be accompanied by a copy of the certificate required by subsection (5) of that section.'.;[Mr. Howard.]

    Clause 36

      GRANT AND REVOCATION OF RECOGNITION
      Amendments made: No. 57, in page 23, line 17, leave out
      'of its obligations under this Act'
      and insert—
      'obligation to which it is subject by virtue of this Act'.
      No. 58, in page 23, line 24, leave out from 'requirements' to 'there' in line 26 and insert—
      'and obligations referred to in subsection (7) above as it has effect in relation to the requirements and obligations'. —[Mr. Howard.]

    Clause 38

      GRANT AND REVOCATION OF RECOGNITION
      Amendments made: No. 59, in page 24, leave out line 42 and insert—
      'obligation to which it is subject by virtue of this Act:'.
      No. 60, in page 25, line 6, leave out from 'requirements' to 'there' in line 8 and insert—
      'and obligations referred to in subsection (7) above as it has effect in relation to the requirements and obligations'. —[Mr. Howard.]

    Clause 39

      NOTIFICATION REQUIREMENTS
      Amendments made: No. 61, in page 25, line 9, after '39' insert —
      '(lA) The Secretary of State may make regulations requiring a recognised investment exchange or recognised clearing house to give him forthwith notice of the occurrence of such events relating to the exchange or clearing house as are specified in the regulations and such information in respect of those events as is so specified.
      (1B) The Secretary of State may make regulations requiring a recognised investment exchange or recognised clearing house to give him forthwith notice of the occurrence of periods as are specified in the regulations with such information relating to the exchange or clearing house as is so specified.
      (1C) The notices and information required to be given or furnished under the foregoing provisions of this section shall be such as the Secretary of State may reasonably require for the exercise of his functions under this Act.
      570
      (1D) Regulations under the foregoing provisions of this section may require information to be given in a specified form and to be verified in a specified manner.'.
      No. 62, in page 25, line 22, leave out 'this section' and insert—
      'subsection (1) or (2) above'. —[Mr. Howard.]

    Clause 40

      LLOYD'S
      Mr. Gould: I beg to move amendment No. 63, in page 25, line 28, leave out clause 40.
      In Committee we had a thorough debate on whether Lloyd's should be within the Bill. I have no intention of rehearsing fully all the arguments which were expressed on that occasion. It is important that the House, the City and the public should have an opportunity to hear the issue ventilated once more so that it may be judged on its merits. For that reason, we tabled our amendment and we are delighted it has been selected.
      The fundamental point is that Lloyd's is deliberately excluded from the Bill. The Bill regulates investment business. As such business is carried out at Lloyd's, by normal principles it should therefore be within the Bill. Clause 40 makes a specific exclusion in favour of Lloyd's and that is the starting point of the argument. In my view, the onus should be on those who drafted the measure rather than on those who have argued that, based on the general principle, Lloyd's should be within the Bill.
      At first sight, most people would be surprised that Lloyd's has been singled out for this special treatment. If one asks the public or those in the City which institution cried out most for regulation, I am sure the answer would be Lloyd's. Lloyd's has been the source of outrageous scandals and has caused much public concern. Lloyd's is the epitome of self-regulation, and therefore the epitome of what can go wrong. On the face of it, Lloyd's is an odd candidate for special treatment.
      Other institutions — the stock exchange or the Eurobond market— which could legitimately state that they have a clean record and have done well over recent years, could ask why they are being picked upon. Such protestations are rejected, and I believe that is correct. But it is curious that Lloyd's, which cannot assert such a good record—it has a spotty and blemished record—should receive special treatment.
      One of the arguments advanced in favour of this special treatment is that Lloyd's is already regulated as an insurance business by the Department of Trade and Industry. Almost every other institution covered by the Finance Bill is regulated by some other agency. That is true of the friendly societies, the building societies, the insurance companies and the professionals.
      It is argued that Lloyd's is covered by the Lloyd's Act 1982 and that is why it is excluded from the Bill. The 1982 Act was simply an assertion of self-regulation. We have now decided that self-regulation, especially in the light of all that has happened in the City since 1982, is no longer enough. It does not produce acceptable results and cannot be relied upon. Why is self-regulation allowed to stand for Lloyd's when it is clear that it is inadequate?
      It is also argued that because Lloyd's, since the beginning of 1983, has put its house in order, it should not be criticised for defalcations and other offences which were committed before that date. We were able to detail many

      571
      aspects of Lloyd's record since 1983 which led us to have little confidence in the view that Lloyd's had learnt anything about the dangers of self-regulation.
      I do not propose to dwell on those matters, because most hon. Members will be familiar with them. However, there is the whole question of Lloyd's failure to regulate in the case of the PCW syndicate and its attitude to those of its members who suffered substantial losses in consequence of the fraud and theft and the trading pattern which ensued due to those frauds and thefts. Lloyd's has frustrated and obstructed its members and investors from pursuing legitimate remedies.
      Mr. John Butterfill: We touched on this yesterday, but I would like to stress again that I have no personal interest in Lloyd's. The hon. Gentleman is again making assertions for which there seem to be no firm foundations. I understand that Lloyd's has made proposals to deal with the fraud element in the PCW syndicate. The subject of the dispute between Lloyd's and some of its names concerns the subsequent management of the syndicate and whether that management was prudent or rash—underwriting risky business—thereby creating further losses for those names. That is quite different, and the hon. Gentleman is surely misleading the House when he suggests that Lloyd's was responsible for both aspects.
      Mr. Gould: It may be that the hon. Gentleman's almost unique position—a Conservative Back Bencher with no links with Lloyd's — has led him to be more than credulous in these matters. What he has described is a device used by Lloyd's to escape its responsibilities. It is true that Lloyd's has attempted to draw a line after 1982. It has argued that all that happened before that date was theft and fraud, but that all that happened after that was due to ordinary trading losses. The fact is that those trading losses were incurred because the crooks chose to underwrite business with no regard for the long-term consequencies. All they were interested in doing was maximising the short-term premium income so that they could cover their tracks and give themselves time to get away — and that is what happened. The PCW names have been pursuing their claim and have met nothing but obstruction from Lloyd's.
      Mr. Buttertill rose——
      Mr. Gould: I shall not give way again because we had a substantial debate on this in Committee.
      I remind the House of a matter of immediate and central significance. Lloyd's, in its preparedness to frustrate a decent and honourable solution of the PCW affair, went to the length of deliberately misleading the hon. Member for Edinburgh, Central (Mr. Fletcher) when he was a Minister at the Department of Trade and Industry, to the extent that he was induced to come to the House and tell us a deliberate—not on his part—lie. I say that advisedly. He was given facts and figures that must have been known by those who gave them to him to be false and were subsequently demonstrated to be false.
      For those who are looking puzzled, I remind the House that the statement made by the hon. Member for Edinburgh, Central concerned a number of those who were alleged to have passed the solvency test among those who were names in the PCW syndicate. That does not
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      build confidence in the reliability and honour of Lloyd's or in its sense of responsibility, or show that it has learnt any lessons as a consequence of its unfortunate experience.
      I could go on. I could refer to the argument with the Inland Revenue, which had to insist that a whole series of activities by Lloyd's members were designed specifically to avoid tax and could not be tolerated. I could point to the circumstances and reasons for the resignation of the then chief executive, appointed by the Governor of the Bank of England to clean up Lloyd's. In other words, there are many signs that, after 1983, Lloyd's is still not to be trusted to look after its own affairs.
      The one remaining argument and explanation as to why Lloyd's should be excluded from the Bill, contrary to all the general principles that have been laid down, is the one that the Under-Secretary who will reply to the debate advanced in Committee: the admittedly unusual feature that investors in Lloyd's— its members or names— are a section of the investing public whose interests are, in some senses, in direct conflict with those of another section of the public—the policyholders. While accepting that in any conflict between the interests of the investors and those of policyholders, it must he the latter that prevail—to do it justice, that has always been Lloyd's policy, quite rightly — it cannot be argued that the price of meeting and protecting the interests of policyholders is necessary that investors at Lloyd's must have their affairs dealt with at a standard lower than and different from that accepted and recognised as appropriate throughout every other part of the City. I cannot believe that that argument would be seriously supported or advanced by the members of Lloyd's Council or Lloyd's.
      True to my undertaking that I would not rehearse at length the arguments that I put in Committee, I hope that I have conveyed enough to suggest that we still believe—if anything, our belief is strengthened by these events—that it is an outrage, a scandal and a dereliction of duty that Lloyd's should be excluded from the Bill. Lloyd's remains the last bastion of private privilege in the City—the last private fiefdom. Unless it is brought within the Bill, it will be impossible to take the Bill seriously.
      Mr. Nicholas Baker: I have not had the privilege of hearing the arguments rehearsed in Committee by the hon. Member for Dagenham (Mr. Gould), but he has been extremely selective in the points that he. admittedly briefly, has put for why Lloyd's should be included in the Bill. The major point that he keeps reiterating is that members of Lloyd's are investors, and that, as I know very well because I declare my interest as a member, is exactly what members of Lloyd's are not. Investors are people who deposit a sum of money and usually get someone else to deal with their money on their behalf, hoping that their investment will increase in that way. Members of Lloyd's are not like that. They are actively engaged in trading, and the fact that some of them take rather less interest in monitoring their trade and ask fewer questions than they should have done, is well known. However, it does not alter the fact that, for tax and in reality, they are traders and not investors.
      7.45 pm
      Mr. Gould: I intervene to save the hon. Gentleman further embarrassment. If he will take the trouble to read the speech made by the Under-Secretary in Committee, he will see the clearest possible, and extremely helpful,

      573
      exposition of the three respects in which the business undertaken at Lloyd's by Lloyd's underwriters and by the Lloyd's Council is investment business within the definition of the Bill.
      Mr. Baker: I am answering the point as to whether members of Lloyd's are investors, and they are not. My hon. Friend has a certain view, but the purpose of the Bill is to protect investors. That was the title of the papers by Professor Gower that originally were the background for the Bill.
      Mr. Ashdown: If the hon. Gentleman will not accept the opinion of the Under-Secretary on this matter, perhaps he will be prepared to comment on the remarks of his hon. Friend the Member for Wiltshire, North (Mr. Needham) who complained vigorously in the papers because he was clearly informed that this was a safe investment. Is it not odd that the hon. Member should be out of kilter not only with the Minister but with one of his hon. Friends?
      Mr. Baker: If my hon. Friend said that, he was wrong. I am talking about what an investor is. He is someone who in principle is not doing what a member of Lloyd's is doing.
      Those who joined as members of Lloyd's, as I did, post 1982, had every reason for concern about the risks that they took, which are completely different to those taken by investors. They have had the confidence to join because of the provisions of the 1982 Act. I have not heard the hon. Member for Dagenham present any case to the House, although he may have done so in Committee, to show in which respects the powers given to the Lloyd's Council by the 1982 Act are deficient, or how the exercise of those powers has been deficient. He has quoted a number of incidents, most of which do not relate to whether the 1982 Act was sufficient for the governance of Lloyd's.
      I took confidence. I have another interest to declare because I was one of the promoters of the 1982 Bill. I had at that stage no interest in Lloyd's, but I felt that, in helping to promote the Bill, I was doing something that would give a new framework for the governance of Lloyd's, and that is what we have. In doing that, we had the support of the Committee chaired expertly and successfully by the hon. Member for Oldham, West (Mr. Meacher). He did an extremely good job to see that the rules that Lloyd's would have to apply were tightly defined.
      The Lloyds Act 1982 does not offer protection that is any less than members of Lloyd's or the public would derive if Lloyd's were within the ambit of the Bill. If that later turns out to be the case, there will be other opportunities to legislate. There is a good argument for allowing the 1982 Lloyd's Act to do what it was intended to do and to govern in a self-regulating manner those who work in and are members of Lloyd's. It would he wrong and inappropriate for Lloyd's to be brought within the ambit of the Bill.
      Mr. Ashdown: It is with some chagrin and no great enthusiasm that I have to tell the hon. Member for Dagenham (Mr. Gould) that while I share his deep anxiety about the way in which Lloyd's is run, and have listened to him putting his impressive case both eloquently and powerfully in Committee and in this debate, I shall not join him tonight in the Lobby.
      Mr. Campbell-Savours: Who is under pressure from the large institutions now?
      Mr. Ashdown: The hon. Member for Workington (Mr. Campbell-Savours) talks about big city institutions. I shall happily give way to him if he would like to name one big city institution that would be prepared to put any kind of pressure on me. I shall be delighted to hear of it and perhaps I shall be knocking on its door tomorrow.
      Mr. Campbell-Savours: Perhaps the hon. Gentleman will tell us if my accusation is correct. Is it not true that a number of very senior people in the Liberal party are members of Lloyd's? Would he like me to give their names?
      Mr. Ashdown: I can assure the hon. Member for Workington that if that is the case I do not know either the number or the names. As I recall, the hon. Member who is the adviser to the Leader of the Opposition is also a member of Lloyd's. I cannot remember his name but I believe that the hon. Member for Dagenham (Mr. Gould) knows perfectly well who I am talking about and no doubt Government Members know as well. If the hon. Member for Workington is unaware of the name he ought to make himself aware of it fairly fast before he casts aspersions on others. As far as I know, not one of my hon. Friends is in that position.
      The reason I say, with some lack of enthusiasm, that I will not be able to go through the Lobbies with the hon. Member for Dagenham and his right hon. and hon. Friends is not akin to the rather tortuous and theological reasons put forward by the hon. Member for Dorset, North (Mr. Baker) or indeed for the equally tortuous and theological reasons that will be put forward by the Minister if his reply is anything like last time. My reason is quite simply that I do not believe an appropriate way to deal with the problems of Lloyd's is by bringing Lloyd's within the scope of the Bill.
      I do not differ in a single word from the hon. Member for Dagenham in the way that he outlined those problems and their impact on the probity of the whole City. I differ from his opinion on the matter because we would be better advised to deal with the problem that he has so carefully outlined by directly amending the Lloyds Act 1982. That would be better than to bring Lloyd's within the ambit of the Bill.
      Having said that, it is incumbent on me to say how I wish to see that done. We all know that the Neill inquiry is currently sitting, and I moved an amendment in Committee which sought to give a sort of year's grace until we saw what Neill recommended. The answers that the Neill inquiry should provide are not about whether to do something but about what needs to be done. I have no doubt that something needs to be done, and if the Neill inquiry were to say that nothing should be done, it may well be that it would be right to vote with the hon. Member for Dagenham, because to do nothing about that problem will give rise to considerable difficulties.
      I wish to see the problems of Lloyd's resolved through five separate forms of change in policy and that could be done under the Lloyd's Act 1982. We need to tackle directly the reinsurance system and we will have to introduce some system of licensing for reinsurance. There needs to be closer monitoring of the agencies, and that monitoring should include the power of spot checks. There also needs to be closer monitoring of the funds, especially

      575
      the personal reserve funds, so that those can be not just checked on 31 December but audited on an efficient basis throughout the year. We need to tackle the problem of conflict of interests, recognising that in the PCW scandal the underwriter not only wrote the reinsurances but managed the company that employed them.
      Mr. McCrindle: If the hon. Gentleman sees as one of the solutions to what he poses as the Lloyd's dilemma as the licensing of reinsurers, what steps would he take to license those many reinsurers who are outside these shores?
      Mr. Ashdown: The hon. Member for Brentwood and Ongar (Mr. McCrindle) has asked a fair question. I did not go into that kind of detail because I did not think it was appropriate. However, he asked the question and I shall give him a reply. It would not be difficult for those people in reputable companies in places like the United States, Canada and Australia to have reciprocal agreements which would ensure that those licences were effective. In such cases as offshore reinsurance houses which are not directly licenced there ought to be some kind of authority required to use those agencies for reinsurance. It would be proper and appropriate for auditors to report back and reassure those people who have placed money through Lloyd's in that sector that the reinsurances have been carried out correctly.
      It is important to cope with the conflicts of interest that I have discussed, and vitally important that the Secretary of State should be able to appoint. and be accountable in the House for, the chief executive of Lloyd's. Those are the things that should be done, and for that reason I support the sentiment of the hon. Member for Dagenham, but bringing Lloyd's into the ambit of this Bill would create a special new dimension of problem for the SIB in its early days and create a situation which would be cumbersome and difficult to manage. Of course it would not swamp the SIB, but it would certainly inhibit the formation in the SIB of the kind of action which would be effective to control the market place. That will be difficult enough to do within the time frame anyway.
      Mr. Gould: I am puzzled by the hon. Gentleman's last point. Does he not expect that we are asking the SIB to rely upon SROs which do not yet exist? Why should Lloyd's, which proclaims that it has a wonderful record of self-regulation, pose such a problem to the SIB?
      Mr. Ashdown: The hon. Member for Dagenham has carried out his research carefully and well and has been deeply immersed in this subject for some time. No doubt he has spoken to Sir Kenneth Berrill on this very matter. Of course we should not accept Sir Kenneth Berrill's word as the last word on the subject, but the hon. Gentleman may know as well as I do that Sir Kenneth has said that to take on Lloyd's would overstretch the capacity of the SIB precisely because the SIB's main task is to get the other SROs off the ground within the time frame that is available. Sir Kenneth Berrill is a reasonable judge of these matters and I am impressed by his arguments.
      It is not just a matter of taking over an existing SRO in the case of Lloyd's, but a matter of taking over a malfunctioning inefficient SRO that is not fulfilling its opportunities and its rules effectively. That will overstretch the resources available to the SIB. I share the description of Lloyd's given by the hon. Member for Dagenham, and
      576
      I share his concern about the damage that that has created. I have to depart from him on my point about waiting for the Neill inquiry report and then properly and appropriate amending the Lloyds Act 1982. That is the better way to bring about the reforms that he and I agree are essential.
      Mr. Brian Sedgemore: I do not intend to detain the House by rehearsing the arguments that were put forward in Committee. I can help the hon. Member for Yeovil (Mr. Ashdown) and the House reporting the main conclusions of the Neill inquiry. First of all, I should like to say how we reached those conclusions. When this Bill was introduced into Parliament, there was the threat of a Back-Bench revolt by some Government Members and the Neill inquiry was set up to buy time and to buy them off. Sir Patrick Neill has effectively concluded his inquiry and has reported that he believes there are a number of aspects about the situation at Lloyd's that need to be cleared up. He is not sure whether or not changes will be required to the Lloyds Act 1982.
      Sir Patrick has also reported that he does not believe that it would be appropriate to bring Lloyd's within the ambit of the Financial Services Bill or to bring it under the aegis of the Securities and Investments Board. Nor does he believe that it would be appropriate for any other body to be put over the existing Lloyd's machinery.
      Sir Patrick was in effect asked to carry out a political task by the British establishment. He has performed that political task. He has reported to tie British establishment and the British establishment is grateful. I understand that it will not be long before Sir Patrick reports the findings to the Minister who will then be able to come to the House and question me about them.
      Mr. Nicholas Baker: The hon. Gentleman is obviously a member of the British establishment. Could he let me have a copy of the report?
      8 pm
      Mr. Sedgemore: The hon. Gentleman is one of those with whom I sympathise. He is out in the cold and in order to find out what is going on in the British establishment one literally needs contacts in the highest places. What I have just told the hon. Gentleman is the truth. I hope that the report will not be too long delayed. There are a number of hon. Members in the House who know those facts and I hope that it will not be too long before the Minister is informed. Then we can have a fuller discussion about the individual points which Sir Patrick has raised.
      Mr. Baker: The Minister apparently is not part of the British establishment.
      Mr. Sedgemore: That may well be right. This Minister is not part of the British establishment, as I understand it.
      I realised that this was the kind of report that Sir Patrick was going to produce when I was going through the questions of one of the witnesses who was being questioned by the Neill committee This does not contain the report, but Mr. Dennis Allport who, as everybody knows, is one of the members of the Committee, seemed to me, in asking a rather elongated question, to give expression to all the kind of worries that Labour Members have.

      577
      I simply read out that one question that Mr. Allport asked of the witness at the hearing who gave me the papers and to whom I have spoken on a number of occasions. Mr. Allport said:
      "If you set up a body, say, along the lines of the SIB to overview Lloyd's, that would involve a degree of much more stringent control. Do you not think that that might detract from some of the strengths of Lloyd's, namely its flexibility and the fact that it works? I readily accept there have been some awful scandals and real nonsenses, but they are the sort of headline grabbing stuff. During that period, though, nevertheless the balance of payments of this country has been greatly enhanced by the fact that Lloyd's exists at all. Despite all that has happened, it has a very big reputation still, and still does a very significant amount of business. If in fact you brought in over Lloyd's some regulatory agency of the type that you are mentioning, what arc your views as to the extent to which that could undermine the way Lloyd's do business?"
      I find that statement by Mr. Dennis Allport deeply disturbing, because he begins by saying that he does not want stringent control and that is bizarre. He goes on to draw a fantastic logical non sequitur which is that somehow if one has more stringent control by putting a body over Lloyd's, that would damage the balance of payments. That, as I put to one of the top members of the British establishment yesterday, is simply nonsense. Nobody in his right mind could make that assertion. What he is really saying is, "Yes, we have had a number of scandals and we are a hit upset about those, but let us forget all that and let's get on with the Lloyd's Act 1982."
      The only other point that I want to make is simply that my hon. Friend the Member for Dagenham (Mr. Gould) was right. I am not worried about the Stock Exchange because I constantly contrast what I believe to be the integrity of the people who run the Stock Exchange with what is happening among those who are fairly near and at, or were at, the top of Lloyd's, and a number of them are still fairly near the top of the Lloyd's tree. It is difficult for the public and Parliament to trust them. On Second Reading I outlined some of the difficulties of trust that had occurred — I do not want to go through that again — over Sir Peter Green, a past chairman of Lloyd's, in relation to the case of Unimar. When I submitted some evidence to Sir Patrick Neill I raised that issue with him. I said that it had all been going on for seven years and that seems to be too long to find out the truth of what happened.
      I was able to produce in the House papers which suggested, I put it no higher, that there was a prima facie case of serious dishonesty in this case. I picked up my Sunday Telegraph, which is not a paper that I usually read, but I am told that its news reporting is accurate—I am told that it is another establishment paper—and I saw an article by Christopher Elliott which said that the Department of Trade and Industry had completed its report on Unimar. It says here that there were serious criticisms of Sir Peter Green and senior members of Lloyd's — that is the same argument that we are adducing in this Bill—and that the report is going to the Director of Public Prosecutions.
      I am happy to tell the House that a Minister at the Department of Trade and Industry, whom I thank, said, in answer to a question from me asking him to publish the report, that he will do so as soon as possible. I congratulate
      578
      him on that. The Attorney-General has said that he now has that report into Minet Holdings plc and WMD underwriting agency and he is considering what goes on.
      Labour Members are concerned with many other things which we have set out before. We are deeply disturbed at the kind of attitudes developed by the kind of people at the top of Lloyd's who have been running that particular part of the City. Of all the bodies which one might exclude on that one ground alone, it is extraordinary that Lloyd's should be the one that is excluded. Something must be done either about the Lloyd's Act or about changing it.
      I have just been talking about Unimar and the seven-year delay. It is right to ask how one licenses the reinsurers when they are set up offshore. How would that have been done in the Bellew Parry Raven case? Those companies were set up in Bermuda by Bermudan lawyers who were the directors and shareholders. It is virtually impossible. But those companies were founded in 1970 and it is now 1986 — 16 years on. My understanding is that Lloyd's has asked its solicitors to draw up charges against the people involved. It will be another two or three years before those charges have been heard. There will be an appeal and that will take another year. The papers may go to the Director of Public Prosecutions and we shall be in the 1990s before we know anything about what went on.
      What is the purpose of having a regulatory organisation when it can take 20 years before we can draw the appropriate lessons from what went on. Of course it is nonsense. Of course it is a scandal. Of course it is unsatisfactory.
      Mr. Butterfill: I had not intended to speak on this issue, but I shall do so briefly simply to say that I am rather surprised at the Opposition's attitude on this. The relevant point here is that the general public should he protected by legislation. That is the purpose of the Bill. Lloyd's is impacting most upon the general public amongst those who take out insurance.
      All that Labour Members have done is to say that there have been one, two, three or possibly four bad apples in Lloyd's. Of course, there are in any organisation, but the really important point that the House should consider, and the message that I hope will go out from the House if we have any concern for the standing of the City, its wellbeing and Britain's overseas earnings, is that no person who has taken up insurance with Lloyd's has lost any money as a result of any of the scandals. All insured persons have had their claims met in full. That is what is important for the insurance industry and for those who use the British insurance industry from overseas to understand. There is no risk to them. There have been a few bad apples, but the overriding important thing is that the public has not been prejudiced in any way.
      Mr. Campbell-Savours: The hon. Member for Bournemouth, West (Mr. Butterfill) has got it all wrong. There are 25,000 investors in Lloyd's and they are named in a book that I have in my office. Of the investors, 99·9 per cent. recurring regard themselves as investors. Apart from those who are politically motivated, the investors look to the House of Commons to provide adequate investor protection arrangements to cover their interests. That is why the Labour party, without the support of the Liberal party, has for sometime relentlessly pressed for the inclusion of Lloyd's in the financial legislation.
      Mr. Butterfill: Can the hon. Gentleman name one of them? Apart from the PCW syndicate, who has asked for the legislation?
      Mr. Campbell-Savours: The problem is that many Lloyd's investors speak of their affairs in confidence. I have seen correspondence to and from hon. Members expressing anxiety about arrangements in Lloyd's. I do not intend to identify the hon. Members involved. If the hon. Gentleman has done his homework, he will have seen the correspondence. There are hon. Members present tonight who have also seen that correspondence. We all know that there is anxiety among investors.
      It is crucial that we take action in that area. The framework of the legislation is the way forward.
      The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): I address my opening remarks to my hon. Friend the Member for Dorset, North (Mr. Baker), because I would not wish him to leave the debate with the impression that there is something between us as regards the definition of the mainstream business of Lloyd's. Of course the mainstream business of Lloyd's is insurance and the underwriting of risks. My hon. Friend may not have benefited from the advantage of participating in our long debates on Lloyd's in Committee and may not be fully aware of clause 67, which says, to paraphrase a well-known American songwriter, "It ain't what you do, it's the way that you do it."
      It is the way in which Lloyd's conducts its business, not so much the product in which it trades, that can be defined as a collective investment scheme. That may be regarded as a somewhat semantic point, but it is worth emphasising because I would not wish my hon. Friend to think that Ministers suffer under some misapprehension as to the type of product in which Lloyd's trades.
      It is no surprise that the amendment should have been moved. It concerns one of the major differences across the Floor of the House. As hon. Members will know, the Neill inquiry is well under way; Sir Patrick and his colleagues have been at work for some months. They have received many written submissions and are taking oral evidence. We look forward to their report.
      I digress briefly to remark on the interesting and incredible observation made by the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore). He tried to tempt us to give some details of the preliminary findings of the Neill inquiry's investigations.
      Mr. Sedgemore: The Minister has got it wrong.
      Mr. Butcher: I can only assume that that is why the hon. Gentleman made his speech in the terms that he did.
      Sir Patrick was originally asked to present his conclusions by the summer. The Neill inquiry has received a considerable volume of written material and is in the midst of taking oral evidence. It is unlikely that it will have completed taking that evidence before the middle of July. Where the hon. Gentleman gets the idea that a report is simmering away to which he has exclusive access, I do not know. Nor do my officials in the Department have any idea of the report's conclusions.
      Mr. Sedgemore: I shall tell the Minister at the back of the Chair afterwards. I shall give him the person's name.
      Mr. Butcher: I would be grateful to the hon. Gentleman, but he has made a career of making this sort of observation. I refer him not only to the need to make
      580
      those observations in public when it is desirable, but to put evidence to the Director of Public Prosecutions, which he has not done in the past, in a manner that will help him to bring prosecutions rather than divert his energies from serious investigations to chase the hares which the hon. Gentleman starts running. To pursue the investigations may he counter-productive. I refer to a letter written to the hon. Gentleman by the fraud investigator which he chose to make public.
      8.15 pm
      The Neill inquiry will need time to consider the substantial body of evidence. It is essential that it has the opportunity to analyse the issues thoroughly. Because of that, the inquiry said, and we have agreed, that we should not expect its report until the autumn. As we originally announced, it will then be published.
      On Second Reading and in Committee, we debated Lloyd's at length. The Government's case remains that, although we are well aware of the problems that have arisen at Lloyd's, it has, as recently as 1982, set up its new regulatory structure. It is not right to condemn that newly reformed structure now. We set up the Neill inquiry to consider whether the system set up to protect the interests of members of Lloyd's provides comparable protection to the system we shall set up under the Bill for investors in general. Until we have Sir Patrick's conclusion, it would be wrong to proceed further.
      I remind the House that in December, before the Neill inquiry was set up, the Prime minister said that we were watching events at Lloyd's closely and would not hesitate to take whatever legislative or other action was necessary. We have set up an inquiry and expressed our will to act should our consideration of the conclusions of the inquiry show that to be necessary.
      Against that background, the Opposition's repeated demand to apply the Bill to Lloyd's is unjust and unwise. It is unjust because, having set up the Neill inquiry, we must allow it to do its work and not pre-empt its conclusions. Deleting clause 40 amounts to that, because it would subject underwriting agents of Lloyd's to a new and separate regime from that in the Lloyd's Act. It is unwise because, as we explanied at some length in Committee, the Bill is not a suitable instrument for the protection of members of Lloyd's.
      It might help the House if I briefly deployed elements of that case again. The Bill is about the protection of investors. The business of Lloyd's is complex, and the legislation governing it must have regard to two factors: first, the protection of the members of Lloyd's as investors in insurance business; but, secondly, and more importantly, the protection of the ordinary holders of Lloyd's insurance policies. The paramount public interest is to ensure that insurers meet their liabilities, and in that Lloyd's has been singularly successful.
      Those two aims — investor and policyholder protection— must often conflict. A we I-known example of the conflict which lies at the heart of Lloyd's is the principle of unlimited liability, or the ultimate punt as it has been called by some commentators. The unlimited liability of members of Lloyd's to meet claims is an important protection for policyholders, but it is hard to appreciate it as a measure of investor protection for the members of Lloyd's. The regulation of Lloyd's must be carefully balanced between those two antagonistic aims. Simply throwing the activities of Lloyd's into the Financial

      581
      Services Bill, as the amendment proposes, will not achieve that balance. A special regime to integrate the two systems would be required to achieve that balance.
      We have drawn attention to the length and complexity of schedule 8, which achieves that balance with long-term insurance companies where investor protection on marketing matters covered by the Bill must be balanced with the regulation of solvency under the Insurance Companies Acts by my Department. The schedule is long and complex, but it deals with a far simpler problem, not least because in the case of long-term insurance companies the investors and policyholders whom we are trying to protect are the same people. At Lloyd's they are not.
      I hope that the House will therefore wait for the report of the Neill inquiry before reaching any conclusions. I appreciate that the hon. Member for Hackney, South and Shoreditch will probably say that he wrote half of it. I hope that the House will also accept that this Bill is not the appropriate vehicle for regulating Lloyd's, and I advise hon. Members to reject the amendment.
      Mr. Campbell-Savours: On a point of order, Mr. Deputy Speaker. Before any Division, will you enlighten the House about the position of those hon. Members who are members of Lloyd's and who wish to vote?
      Mr. Deputy Speaker (Sir Paul Dean): I remind the House of a ruling given by Mr. Speaker on this very point at an earlier stage, namely, that this is a matter of public policy, and every hon. Member is entitled to exercise his vote.
      Mr. Gould: I shall be brief. The Minister is to be congratulated in that his argument that we must wait for the Neill report before addressing the question whether Lloyd's should come within the terms of the Bill is a magnificent example of back to front reasoning. The one point on which I agreed with him was that this remains an issue that divides the two sides of the House. I regret that we shall not have the support of the Liberals in the Lobby, but we shall give effect to the divide that separates us on this issue by pressing the amendment to a Division.
      Question put, That the amendment be made:
      The House divided: Ayes 42, Noes 164.

      Division No. 222]

      [8.20 pm

      AYES

      Archer, Rt Hon Peter

      Holland, Stuart (Vauxhall)

      Atkinson, N. (Tottenham)

      Hoyle, Douglas

      Banks, Tony (Newham NW)

      Hughes, Dr Mark (Durham)

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

      Leighton, Ronald

      Campbell-Savours, Dale

      Lewis, Terence (Worsley)

      Carter-Jones, Lewis

      McDonald, Dr Oonagh

      Cocks, Rt Hon M. (Bristol S)

      Madden, Max

      Cohen, Harry

      Millan, Rt Hon Bruce

      Cook, Frank (Stockton North)

      Nellist, David

      Cook, Robin F. (Livingston)

      Orme, Rt Hon Stanley

      Crowther, Stan

      Pike, Peter

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

      Roberts, Allan (Bootle)

      Deakins, Eric

      Robinson, G. (Coventry NW)

      Dewar, Donald

      Sheerman, Barry

      Dormand, Jack

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

      Faulds, Andrew

      Spearing, Nigel

      Field, Frank (Birkenhead)

      Stewart, Rt Hon D. (W Isles)

      Fisher, Mark

      Wilson, Gordon

      Foster, Derek

      Winnick, David

      Freeson, Rt Hon Reginald

      Gould, Bryan

      Tellers for the Ayes:

      Haynes, Frank

      Mr. Allen McKay and Mr. John McWilliam.

      Hogg, N. (C'nauld & Kilsyth)

      582

      NOES

      Amess, David

      Hickmet, Richard

      Ancram, Michael

      Hill, James

      Ashby, David

      Hind, Kenneth

      Aspinwall, Jack

      Hirst, Michael

      Atkinson, David (B'm'th E)

      Hogg, Hon Douglas (Gr'th'm)

      Baker, Nicholas (Dorset N)

      Holt, Richard

      Baldry, Tony

      Howard, Michael

      Bellingham, Henry

      Hunter, Andrew

      Benyon, William

      Jenkin, Rt Hon Patrick

      Bevan, David Gilroy

      Jessel, Toby

      Biggs-Davison, Sir John

      Jones, Robert (Herts W)

      Blackburn, John

      Joseph, Rt Hon Sir Keith

      Blaker, Rt Hon Sir Peter

      Key, Robert

      Boscawen, Hon Robert

      King, Rt Hon Tom

      Bottomley, Peter

      Knight, Greg (Derby N)

      Bottomley, Mrs Virginia

      Knowles, Michael

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

      Lang, Ian

      Bowden, Gerald (Dulwich)

      Lawler, Geoffrey

      Brandon-Bravo, Martin

      Lawrence, Ivan

      Bright, Graham

      Leigh, Edward (Gainsbor'gh)

      Brinton, Tim

      Lester, Jim

      Brooke, Hon Peter

      Lightbown, David

      Brown, M. (Brigg & Cl"thpes)

      Lilley, Peter

      Browne, John

      Lloyd, Peter (Fareham)

      Bruinvels, Peter

      McCrindle, Robert

      Budgen, Nick

      MacKay, John (Argyll & Bute)

      Burt, Alistair

      McNair-Wilson, M. (N'bury)

      Butcher, John

      Major, John

      Butler, Rt Hon Sir Adam

      Malone, Gerald

      Butterfill, John

      Marlow, Antony

      Carlisle, John (Luton N)

      Mather, Carol

      Carttiss, Michael

      Maxwell-Hyslop, Robin

      Cash, William

      Meyer, Sir Anthony

      Chapman, Sydney

      Miller, Hal (B'grove)

      Chope, Christopher

      Mitchell, David (Hants NW)

      Churchill, W. S.

      Montgomery, Sir Fergus

      Clark, Dr Michael (Rochford)

      Nelson, Anthony

      Clark, Sir W. (Croydon S)

      Newton, Tony

      Clegg, Sir Walter

      Osborn, Sir John

      Conway, Derek

      Ottaway, Richard

      Coombs, Simon

      Page, Sir John (Harrow W)

      Cope, John

      Percival, Rt Hon Sir Ian

      Corrie, John

      Powell, William (Corby)

      Couchman, James

      Proctor, K. Harvey

      Cranborne, Viscount

      Rhodes James, Robert

      Crouch, David

      Ridsdale, Sir Julian

      Currie, Mrs Edwina

      Rossi, Sir Hugh

      Dicks, Terry

      Rowe, Andrew

      Douglas-Hamilton, Lord J.

      Sayeed, Jonathan

      Dunn, Robert

      Shelton, William (Streatham)

      Emery, Sir Peter

      Shepherd, Colin (Hereford)

      Evennett, David

      Shepherd, Richard (Aldridge)

      Fallon, Michael

      Sims, Roger

      Fletcher, Alexander

      Skeet, Sir Trevor

      Forman, Nigel

      Smith, Tim (Beaconsfield)

      Forsyth, Michael (Stirling)

      Spencer, Derek

      Forth, Eric

      Spicer, Jim (Dorset W)

      Fox, Marcus

      Steen, Anthony

      Fraser, Peter (Angus East)

      Stern, Michael

      Freeman, Roger

      Stevens, Lewis (Nuneaton)

      Galley, Roy

      Stewart, Allan (Eastwood)

      Gardner, Sir Edward (Fylde)

      Stewart, Andrew (Sherwood)

      Garel-Jones, Tristan

      Taylor, John (Solihull)

      Glyn, Dr Alan

      Taylor, Teddy (S'end E)

      Goodhart, Sir Philip

      Temple-Morris, Peter

      Gorst, John

      Thomas, Rt Hon Peter

      Greenway, Harry

      Thompson, Donald (Calder V)

      Griffiths, Sir Eldon

      Thompson, Patrick (N'ich N)

      Griffiths, Peter (Portsm'th N)

      Thorne, Neil (Ilford S)

      Gummer, Rt Hon John S

      Thornton, Malcolm

      Hamilton, Hon A. (Epsom)

      Thurnham, Peter

      Hamilton, Neil (Tatton)

      Twinn, Dr Ian

      Hampson, Dr Keith

      van Straubenzee, Sir W.

      Hargreaves, Kenneth

      Viggers, Peter

      Harris, David

      Waller, Gary

      Harvey, Robert

      Ward, John

      Hawkins, C. (High Peak)

      Wardle, C. (Bexhill)

      Hayward, Robert

      Watts, John

      Heathcoat-Amory, David

      Wells, Bowen (Hertford)

      583

      Whitfield, John

      Yeo, Tim

      Wiggin, Jerry

      Wilkinson, John

      Tellers for the Noes:

      Winterton, Mrs Ann

      Mr. Mark Lennox-Boyd and

      Wolfson, Mark

      Mr. Tim Sainsbury.

      Wood, Timothy

      Question accordingly negatived.

    Clause 41

      EXEMPT REPRESENTATIVES
      Amendments made: No. 64, in page 25, line 33, leave out 'exempt' and insert 'appointed'.
      No. 65, in page 25, line 36, leave out 'exempt' and insert 'appointed'.
      No. 66, in page 26, line 7, leave out 'exempt' and insert 'appointed'.
      No. 67, in page 26, line 16, leave out 'exempt' and insert 'appointed'.
      No. 68, in page 26, line 27, leave out 'exempt' and insert 'appointed'. —[Mr. Howard.]
      8.30 pm
      Mr. Nelson: I beg to move amendment No. 69, in page 26, line 29, at end insert—
      '(5A) The regulations made for the purpose of this section shall make provision to require exempt representatives to inform any person whom they procure to enter into an investment agreement that the cost or premiums payable under each individual agreement will be the same whether that agreement be entered into through the exempt representative or any authorised person.'.
      The amendment seeks to extend the disclosure requirements on company representatives of insurance and life assurance agreements. In so doing, it seeks to extend the principle of equivalence, about which much has been said in Committee and prior to the introduction of the Bill.
      Clause 41, which deals with exempt representatives, was the subject of a good deal of debate in Committee. It was in that debate that a number of Members, particularly Conservative Members, drew attention to their continuing concern about product bias and company bias and in particular the large number of representations that they had received from many independent intermediaries as well as others involved in the sale of life assurance agreements involving investment about the prejudicial impact of the clause and the other arrangements that were being made to try to ensure more adequate standards of disclosure.
      As a result of acceptance by my hon. and learned Friend of some of the disquiet felt, he played, I believe, an important and instrumental part in urging MIBOC to come forward with a document on how it saw the arrangements for the supervision and the status of the various people who would be involved in these activities.
      The document was published in April and, despite some misgivings of practitioners and commentators, has received a broad degree of support for what was proposed. This applies in particular to its conclusion that should be a polarisation imposed regarding the activities of company representatives and independent intermediaries by which the traditional role and activities of the tied agent who might represent a number of different companies would be ended. There would be only two sorts of practitioner in the
      584
      market and, potentially, knocking on Aunt Agatha's door — the company representative and the independent intermediary.
      It was also proposed in the document that disclosure provisions on commission should attach to the categories of salesmen and representatives They would be required to say that the commission they would be receiving fell within a commissions agreement that it was hoped— it still is hoped — to establish between the various life companies operating in this sphere with company representatives. They would have to declare the actual commission in comparison with the commissions agreement; that is, if it were more than the commissions agreement, they would have to state the amount cif commission that they were receiving and compare it with the amount of commission under the commissions agreement if it had been established.
      In making these proposals. MIBOC drew attention, I think rightly, to the fundamental difference in status between a company representatives and an independent intermediary. The latter is unambiguously a representative of the company, owes no allegiance to anyone other than the company and is overtly out to sell its investment products and life insurance products while the independent intermediary by his very nature is an agent of the investing member of the public and is in a quite different position from the company representative. Many of the disclosure provisions and other requirements placed upon these two categories flow from that fundamental difference. I think that this is well put in the document and is widely accepted.
      The document proposals have gone quite a long way to alleviate some of the deeply felt fears of independent intermediaries about the extent to which they would be placed in a prejudicial position in the market place, in particular by having to declare a commission, whereas those who were company representatives would have no similar requirement placed upon them. It is exceedingly difficult for a member of the public who has never before been subject of any such approaches or sales tactics to know that there is any difference in status of the people who knock at their door trying to sell them exactly the same investment product. However, it is important to establish this difference for the purposes of supervision and proper regulation of the market.
      It was feared by independent intermediaries that the requirement on them to declare their commission without a similar requirement on company representatives would be a serious negative sales factor and might deter many people from placing their investment for life assurance through independent intermedianes because it will be felt that a better deal will be done by going to the company direct or dealing through an employee or company representative of the life assurance company concerned.
      Concern was also expressed by independent inter-mediaries and many Members of Parliament prior to Committee consideration of the Bill about the principle of equivalence. This principle should be cherished, and we should be careful not to introduce into the market place different requirements on categories of people selling exactly the same product.
      Since the publication of the MIBOC document, there have been expressions of concern as to whether there will be a commissions agreement at all. It is feared that insufficent agreement will be reached among the principal companies involved; that, if there is an agreement, many

      585
      people will fall outside it, or that it will not be written into the rules of the SRO or insisted upon by the SIB so that to all intents and purposes there will be no commissions agreement.
      If that is so, one of the fundamental points behind the MIBOC proposals falls away, and we are left again with a prejudicial position for independent intermediaries in the market place. They will still be required to disclose their commission whereas the company representatives, in the absence of a commissions agreement, will have to declare the commission, but in their case it will be a very small amount. The remuneration that they receive may be a variety of other benefits — salary, bonus or a cheap mortgage that they receive from their company. Therefore, the commission that they have to declare will be very small. Yet that position will be quite unrepresentative for members of the investing public because the cost to them of entering into the agreement, whether through the company representative or an independent intermediary, will be exactly the same.
      Like other hon. Members, I have received a great deal of representation from those affected, both during the Committee stage and subsequently. There might be a case for an amendment along the lines of that which I have tabled, which seeks to place a duty on exempt representatives to notify investors that the cost of entering into an investment agreement, by way of premium or cost involved, will be exactly the same whether they do it through a company representative, direct with the company concerned or through an independent intermediary.
      The advantage of the amendment is that it extends the principle of equivalence, it does not blemish the integrity of MIBOC proposals and, last but not least, it is even more important if no commissions agreement is established. If the amendment were accepted, I hope that it would not be read by the companies as an alternative to a commissions agreement — the amendment is an addition to that. Basically, under the present proposals an independent intermediary must declare his commission, while a company representative does not have to do so, but say only that it falls within certain minimum standards agreed in the industry. Under the amendment, he would have to say that the commission that he received fell within that standard, but must point out to the public that from whomever they buy their investment agreement, it will cost them exactly the same. Therefore, all practitioners in the market will be obliged to point out to the public that while they are rightly declaring the commission, it will not be cheaper to buy that investment agreement through anyone else. By having a statutory or some other firm duty placed upon them so to declare, we will substantially overcome the negative sales factor about which many independent intermediaries still complain, despite the production of this document.
      I hope that my hon. and learned Friend the Minister will favourably consider my amendment. I ask him to say to what extent he considers the commissions agreement, according to latest information, to be likely or unlikely, and to what extent he feels, even if he is unable to accede in law to the amendment — I claim no rectitude of drafting — there may be other means of achieving the same purpose. The purpose can surely be unobjectionable as it will seek in large measure to rectify a wrong and a
      586
      grievance that are still felt by many people who offer members of the public an important service that should not be prejudiced in the way that I fear it otherwise will be.
      Sir Peter Blaker: I have no financial interest in the amendment, but my son is a finance broker and I am grateful to him for stimulating me into taking an interest in this important matter. I entirely support my hon. Friend the Member for Chichester (Mr. Nelson). I wish to make one or two supplementary points.
      I welcome the proposal for polarisation in the latest MIBOC document — it is a useful step forward. However, I believe that those proposals, or whatever arrangements may be made, could go further in the directions of consumer protection and fair competition. My hon. Friend has described the proposals as they differentiate between independent intermediaries and company representatives on the matter of disclosure. I believe that they are not fair as between those two groups.
      I have had the benefit of discussions with MIBOC, to which I pay tribute as it has been extremely helpful in clarifying for me the position. It has confirmed that there is still a great deal of anguish among the independent intermediaries. Even if a commissions agreement is made — I endorse wht my hon. Friend said about the importance of that — as things now stand I do not believe that the present proposals will be satisfactory.
      8.45 pm
      I believe that equivalence can be achieved on the lines of the principle contained in the amendment, even if its exact wording may not be precisely right. What objections can be made to our proposal? A distinction is made between independent intermediaries and company representatives in respect of the law of agency. I accept that their positions are different, but that is beside the point—it need not prevent us from ensuring that better information is provided to the consumer and that there is a fairer system of competition between the two parts of the industry.
      The second objection to complete equivalence between the two parts of the industry is contained in paragraph 77 of the latest MIBOC document. That shows that there are practical considerations that make that difficult. Very often the commission earned by the company representative is on an entirely different basis from that earned by the independent intermediary. That is a valid point.
      My hon. Friend and I are trying to bypass that problem. We are focusing not on commission earned but on charges, costs or premiums. Those charges, costs or premiums are the same to the client whatever channel may be used to make the contract.
      I have three letters from leading life companies on that point. One is from Allied Dunbar, which states:
      "I confirm that none of the charges under our policies are geared to the introducing source."
      Another, from Royal Life Insurance, states:
      "the charges levied on my Unit Linked products are defined at the outset and are irrespective of the source of the introduction to the company he it on independent intermediary, a company sales person or a direct enquiry."
      This is true also of with-profits policies. Another letter from Legal and General (Unit Assurance) Limited is on similar lines. We have the opportunity to obtain real equivalence by taking advantage of that fact.
      I wish to say a little more about the question of a commissions agreement. When my hon. and learned

      587
      Friend replies I hope that he will tell us what he feels are the prospects for obtaining such an agreement. MIBOC says that I cannot assume that there will be such an agreement. Many of those who were concerned about the matter during the Bill's Committee stage assumed that there was certain to be such an agreement.
      One reason why we cannot be sure that there will be an agreement is that it will depend not on the independent intermediaries, who will be directly affected by whether or not there is an agreement, but on the decision of the life companies. furthermore, MIBOC says that it would feel it essential, if there is to be an agreement, that it should be supported by the vast majority of the life companies. But their interests may not be the same as those of the independent intermediaries. Incidentally, they will be members of different SROs so there will not be a common membership.
      In recent years there has been a trend towards more and more direct sales, and it is quite legitimate for the life companies to aim for that. However, we would be wrong to create an artificial disadvantage for the independent intermediaries. That is really what is presently proposed. I am all in favour of fair competition, and so are the independent intermediaries with whom I have discussed the matter, but I believe that it would be wrong to have an artificial bias against the independent intermediaries.
      The chairman of the MIBOC is the chairman of one of the principal life companies which concentrates on direct sales. He has had a distinguished and successful career and I make no criticism of him. I merely say that it will be unfortunate, bearing that in mind, if there is seen to be a lack of equivalence and a bias against independent intermediaries. It is important in that context that there should be real equivalence. Justice must be done and it must be seen by everyone concerned, including independent intermediaries, to be done.
      We have raised two problems which it is important should be resolved. We have the question whether there will be a commissions agreement and there must be real equivalence between the two sides of the industry. When my hon. and learned Friend the Minister replies, I hope that he will give us some reassurance about the probability of there being an agreement. I hope also that he will be able to give us an undertaking that he will do what he can to ensure that there is proper equivalence either in the Bill itself, or by the use of the powers which are available to him under the Bill.
      Mr. McCrindle: I shall take a very few minutes of the time of the House to add my voice to those of my hon. Friend the Member for Chichester (Mr. Nelson) and my right hon. Friend the Member for Blackpool, South (Sir P. Blaker) in support of the amendments.
      During the rather lengthy passage of the Bill through the House, much time has rightly been spent on investor protection. A good deal of attention has been paid also to creating a fair and competitive atmosphere within which different agencies and different types of person will have an equal opportunity of selling to the public. This approach to equivalence is justified and the amendment turns our attention yet again to this subject.
      There is a good deal of confusion in the public mind, and probably in the minds of a number of Members, about commission and how it is paid. For example, there is an assumption that it must be cheaper to purchase product A direct from the company which produces it rather than
      588
      by buying the same product through an independent intermediary. The aim of the amendment is to make it a requirement that it is communicated to the prospective purchaser that that is not so. It is the gross premium which is important, because that is what the purchaser of the policy will pay irrespective of the agency through which he purchases it, and in all instances it will be precisely the same. To require that some statement to that effect be made comes a great deal closer to the equivalence of which I have spoken.
      Not surprisingly, there may be a tendency among insurance company representatives who are attempting to sell their products by approaching the public direct to imply, or even sometimes to state out of ignorance, that the price of the product is not always the same. I do not think that those representatives should be able to take advantage of being able to make statements of that sort. If the amendment were to be added to the Bill, they would be unable to do so.
      A good deal of time was spent in Committee discussing disclosure, and I think that the Committee was wise to spend its time in that way. I have always been mildly sceptical about the use to which information on the commissions payable on a policy would be made, or could be made, by the prospective purchaser of a policy. Nevertheless, that element of disclosure is being required, and I accept that.
      This is an appropriate juncture to ask, as my right hon. Friend the Member for Blackpool, South has done, about the present status of the proposed industry agreement on commissions. The House will recall that the idea is that, if such an agreement can be reached and if an independent intermediary is not receiving more than the commission laid down within the agreement, specific disclosure will not be required. The assumption that there is something inevitable about the commission's agreement must be heavily discounted. The House will remember the register of life assurance commissions. That was a voluntary effort and the result was something on broadly the same lines as that which we are discussing when we talk about an industry agreement.
      ROLAC was brought to life. but it limped for a long time. Even when it saw the light of day, many companies refused to become members of it Let us assume that there are 150 companies on the British market. If no more than 30 of them were to come together to form a commissions agreement, does my hon. and learned Friend think that that would be acceptable? Is these a minimum level below which he would consider it would not be worth referring to such an agreement as an industry agreement? If it is impossible for the appropriate SRO to bring together a sufficient number of companies to create an agreement, could the SIB step in and require the SRO to take further steps, or could it take steps itself to create a commission's agreement?
      We must contemplate the possibility that ultimately there will be no agreement and on possibility of reaching one. In the circumstances, we an entitled to know tonight, as we come close to the end of the consideration of the Bill in this place, just what would happen in the circumstances that I have outlined. Would we revert to no obligatory disclosure, which is the present position, or would there be, through some clause or subsection which I have overlooked, an automatic requirement for full disclosure, which is not the compromise that the MIBOC presented? It was wise of my hon. Friend the Member for Chichester

      589
      to move the amendment and I hope that it will be added to the Bill. If that is not possible for some reason, I hope that my hon. and learned Friend the Minister will address himself to some of the important considerations to which I have referred.
      Mr. Howard: My right hon. and hon. Friends have done the House a service in giving us the opportunity to discuss the important issue of the regulation of insurance intermediaries under the Bill. I hope that they will not press the amendment to a Division because, as I shall explain, it suffers from a number of defects. Nonetheless, I hope that I can offer them some comfort on the substance of it.
      I am grateful to my right hon. and hon. Friends for the welcome which they gave to the MIBOC document. I take this opportunity of paying tribute to the MIBOC for responding so effectively and so quickly to the request which I made of it in Committee. I made that request at a time when it was anticipated that Report and Third Reading might take place at a rather earlier stage than they have. The MIBOC responded most energetically to my request and I am happy to have this opportunity of paying tribute to it.
      Mr. Gould: As I do not propose to make any substantive contribution to the debate, I wish to associate the Opposition with the tribute which the Minister has paid to the MIBOC.
      Mr. Howard: I am grateful to the hon. Gentleman.
      I shall explain briefly some of the problems with the amendment. Clause 41 is a general clause, the main point of which is to put appointed representatives—that is, essentially self-employed persons working for an authorised business under a contract for services—in the same position as employees of an authorised business. We expect that the majority of people who will become appointed representatives will be insurance and unit trust salesmen, but it is a clause of general application and representatives will be appointed outside the area of insurance.
      9 pm
      If one considers that point one can see a real problem with the amendment. There may be all sorts of investment agreements that those appointed representatives may lead their customer into, and the cost or premiums payable could be very different if the same agreements were sold by authorised businesses. I am sure that the House would not want to require appointed representatives to make an untrue statement. There may indeed be no way in which the appointed representative could know what cost or premiums were payable under investment agreements offered by authorised businesses.
      Apart from being in one sense too general for its purpose, the amendment is in another sense too specific. It relates only to appointed representatives. It would have no implications for salesmen employed directly by insurance companies. Yet I am sure that my right hon. and hon. Friends would agree that if there is merit in the proposal they are making, it should apply, to use MIBOC's jargon, to all company representatives, whether employed or self-employed. Depending on the particular
      590
      wording of the statement to be made, there might even be a case for requiring independent intermediaries to make an equivalent statement.
      Turning to the substance of the amendment, the issue of the rules to regulate insurance intermediaries, whether independent or company representatives, raises some difficult questions and has aroused a good deal of comment from interested parties. I expect that we shall have a fuller discussion on those questions when we come to the Government amendments to schedule 6, nos. 176 and 177, which were prompted by the useful discussion we had in Committee on the subject. However, let me make it clear that I consider it important that the different rules which are applied to the different functions of insurance broking and representing an insurance company do not in practice give one or the other an unfair competitive advantage in the market place. That was the basic point that underlines the observations made by my right hon. and hon. Friends.
      It has been suggested that that could happen because company representatives might suggest that they do not receive commission and might imply that the customer thereby gets a better deal by acting through them. A representative who did this would, I suggest, have to be very careful not to commit a breach of the conduct of business rules, or even a criminal offence, by misleading the consumer.
      My right hon. and hon. Friends have made an interesting proposal on the sort of statement company representatives should make. It is a proposal which I shall want to reflect on further and doubtless MIBOC shall want to do so also. As the comments I made earlier on the amendment suggest, this is a difficult area on which to draw up rules. As I understand it, although premiums of on policies are now generally the same whether policies are bought through company representatives or independent intermediaries—that point was made by my right hon. Friend the Member for Blackpool, South (Sir P. Blaker) —there is no guarantee that this is always the case or that it will continue to be so.
      One would have to consider what sort of statement might be made when the premiums paid differed depending on the particular sales outlet. One would also want to consider whether companies might seek to get round a rule of this sort by changing the premiums they charged to favour their preferred sales outlet. In the case of companies which specialised either in selling through independent intermediaries or company representatives, a comparison might be drawn up which could be misleading to the consumer. On the other hand, it is Government policy to leave companies' pricing policies to market forces and for them not to be Government controlled.
      At first sight, the ideas of my right hon. and hon. Friends seem interesting, and I shall want to have them pursued. MIBOC is at the moment drawing up conduct of business rules on which it will be consulting. I shall ask it to consider whether there is a case for a rule to meet the concerns of hon. Members. May I stress that detailed rules of this sort are for the board to make. We in this House are unlikely to arrive at formulae in which practitioners will be unable to find loopholes.
      My right hon. and hon. Friends raised the likelihood of a commissions agreement. My right hon. Friend the Member for Blackpool, South asked what the chances were of a voluntary commissions agreement for independent intermediaries. In the White Paper on

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      financial services, the Government clearly envisaged that, subject to the competition regime, there could be such an agreement, with disclosure by reference to it. Since then, MIBOC has considered the issue and has concluded that disclosure that commission is within a voluntary industry agreement is of more use to the investor than full disclosure, since under the latter the investor would not have a clear idea whether his agent was receiving more commission on a particular policy than was generally the case on competing policies.
      We expect that the SRO for insurance companies and unit trusts will include a commissions agreement as a part of its rules, although members of the SRO would be free not to abide by the agreement. For those who did, disclosure would be by reference to it, and for those who did not full disclosure would be made. The Life Assurance and Unit Trust Regulatory Organisation—LAUTRO— which as hon. Members may know is seeking to become the self-regulating organisation in this area, has plans for such a system. In this it has the support of the majority of the life offices, which have already come together in the Registry of Life Assurance Commissions, with a view to establishing a voluntary commissions agreement.
      Companies representing about 80 per cent. of the market have given their support to ROLAC. Apart from their concern for the impact of excessive competition in commissions on the impartiality of intermediaries' advice, they are also, of course, concerned by its impact on their finances. That concern would be shared by all insurance companies. We have grounds to expect that there will be a considerable incentive for those companies to enter into the type of agreement desired by all my right hon. and hon. Friends who have spoken. I hope that the totality of the matters to which I have referred will give a good deal of comfort to my colleagues. In those circumstances, I hope that my hon. Friend the Member for Chichester (Mr. Nelson) is prepared to withdraw the amendment.
      Mr. Nelson: I am obliged to my hon. and learned Friend the Under-Secretary of State for his important and helpful response. I was especially pleased that lie emphasised at the beginning of his remarks the importance that he attaches, as do many of us, to the principle of equivalence. if he attaches importance to that principle and holds it paramount, as he appeared to do, I hope that, by inviting the MIBOC to consider this matter again, a way can be found to redress what some of us perceive to be a continuing problem.
      My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) asked what will happen if there is no agreement. That question was not fully answered. If there is no commissions agreement, the basis of the polarisation proposal falls away. If there is no commissions agreement, there is no basis on which company representatives have to make a meaningful declaration. The principle is therefore substantially undermined.
      Although I share the hope that there are sufficient incentives and time to reach such an agreement, we must bear in mind that it may not be reached, or it may not be reached adequately. In either event, there are urgent and compelling reasons for the MIBOC to consider writing into its rules and proposals a provision along the lines of the amendment. I take it that the endorsement in principle, rather than in drafting, that my hon. and learned Friend has given to the amendment will be taken fully into
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      account. I have no doubt that we shall return to the matter in the later stages of the Bill. Many of us will keep a watching brief on that aspect.
      I think that we have been given sufficient reassurances to allow me to withdraw the amendment. My hon. and learned Friend has responded fully and helpfully to the initiative. Therefore, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Amendments made: No. 70, in page 26, line 30, leave out 'exempt' and insert 'appointed'.
      No. 71, in page 26, line 37, leave out 'exempt' and insert 'appointed'.—[Mr. Butcher.]

    Clause 42

      MISCELLANEOUS P:EMPTIONS
      Amendments made: No. 72, in page 27, line 7, at end insert—
      '(cc) the Accountant of Court when acting in the exercise of his functions in connection with the consignation or deposite of sums of money;'.
      No. 73, in page 27, line 17, at end insert—
      '(gg) a sheriff clerk when acting in the exercise of his functions in connection with the consignation or deposit of sums of money;'. —[Mr. Butcher.]
      Mr. Tim Smith: I beg to move amendment No. 74, in page 27, line 32, at end insert—
      '(k) a person acting as an authorised insolvency practitioner within the meaning of section 3 or section 5 of the Insolvency Act 1985.'
      The amendment would add to the list of various people referred to in clause 42. The White Paper said that the functions of insolvency practitioners would be a type of activity that did not require authorisation to be obtained. It said that insolvency practitioners were
      "often obliged … to dispose of investments included among the assets under their control. They will be required to be licensed under the Insolvency Bill now before Parliament."
      That is now the Insolvency Act 1985. The implication was that the legislation would regulate the activities of insolvency practitioners.
      I raised this matter in Standing Committee with my hon. and learned Friend the Under-Secretary of State. He said that the matter was still being considered. What progress has been made in formulatting an exception which could be introduced by the Government?
      Mr. Butcher: I am grateful to my hon. Friend the Member for Beaconsfield (Mr. Smith) for raising this issue. I shall take this opportunity to explain some of the complexities of the points he has raised.
      There are two main situations we need to consider. First, there is the position of an insolvency practitioner who is acting as liquidator or administrator for a company which is not an investment business but which may have to dispose of assets which include investments. In such a case the liquidator or administrator is in the same position as the former directors. Therefore he would be covered by the exemptions for selling investments as a principal and would not normally need to be authorised.
      Secondly, there is the position of an insolvency practitioner who is concerned with the winding up of an authorised investment business. That is a much more complicated issue and I am still considering the implications for the Bill of the various provisions of the Insolvency Act 1985 and the numerous problems which

      593
      will arise if an authorised business has to be wound up. The position of insolvency practitioners has to be considered in this context. If the investment business is a company and the regulator decides to allow its authorisation to continue in order to be able to continue to use its intervention powers to protect investors, once again the liquidator or administrator will be in much the same position as the former directors and, like them, will not be required to be personally authorised.
      If the business concerned is a partnership or sole trader, the position is more complicated. If investment business is to be continued—for example, to complete outstanding commitments — is it right to exclude the insolvency practitioner concerned from the authorisation requirement? Such a practitioner may have no relevant experience. We need to consider those points further and will, if necessary, table amendments in another place.
      With those comments, I hope that my hon. Friend the Member for Beaconsfield will feel that it would be timely to withdraw his amendment.
      Mr. Tim Smith: This is the first time we have had a full explanation of the difficulties. It is helpful and it will be read with interest by those outside. On that basis, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 44

      MISLEADING STATEMENTS AND PRACTICES
      Amendment made: No. 75, in page 28, line 27, at end insert —
      '(2A) In proceedings brought against any person for an offence under subsection (2) above it shall be a defence for him to prove that he reasonably believed that his act or conduct would not create an impression that was false or misleading as to the matters mentioned in that subsection.'. —[Mr. Howard.]

    Clause 45
      CONDUCT OF BUSINESS RULES
      Amendment made: No. 76, in page 29, line 32, leave out 'exempt' and insert 'appointed'. —[Mr. Howard.]
    Clause 47

      CANCELLATION RULES
      Amendment proposed: No. 77, in page 31, line 25, after '(2)', insert
      'Without prejudice to the generality of subsection (1) above,'.
      Mr. Deputy SpeakerWith this it will be convenient to consider Government amendment No. 78.
      Mr. Cash: I have had a communication from the Committee of London and Scottish Bankers with regard to the proposals contained in these amendments, with particular respect to the question of clients' money. Clause 50 provides for the Secretary of State to make regulations with regard to clients' money. It is a matter upon which the committee has written to the Minister in the past and I would particularly like to hear what he has to say because the banks feel that they will be placed in an invidious position if clause 50 is enacted without amendment.
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      The banks' difficulties arise from the uncertain state of the law in relation to the operation of trust accounts, including clients' accounts. I believe that there are many complicated legal matters which arise in that context, which I do not think it would be helpful to go into. I believe that at this stage the Minister is in full possession of the facts and, if he is not, I am sure that during the course of the proceedings in another place this matter could be looked into and a suitable opportunity taken to put things right.
      The banks are seriously concerned that the bank holding the clients' account in an authorised firm could be held liable if the firm does not conduct the account in accordance with the rules, and losses result to its clients.
      The banks seek statutory protection on the same lines as they already enjoy in respect of solicitors' clients' accounts. I understand that, although a letter has been written to the Department in respect of this matter, the Department has not yet replied. The indications are that the answer will be in the negative. I understand that if the Department does not produce a satisfactory outcome to this question, it is highly probable—indeed certain—that the committee will press the matter vigorously in another place.
      Mr. Howard: I have heard with great interest what my hon. Friend the Member for Stafford (Mr. Cash) has said on this matter. The representations to which he referred are being carefully considered. That is why no reply has yet been forthcoming from the Department to those who made the representations. Clearly, if the Department is persuaded by those representations, we shall introduce an amendment in another place. I understand the import of my hon. Friend's remarks to be that if we do not, others will, and we must look forward to the outcome of any debate in the other place with interest and expectation.
      Amendment agreed to.

    Clause 50

      CLIENTS' MONEY
      Amendments made: No. 78, in page 34, line 1 leave out
      'Regulations under this section may in particular' and insert
      'Without prejudice to the generality of subsection (1) above, regulations under this section may'.
      No. 79, in page 34, line 17, leave out 'and interest thereon'.
      No. 83, in page 34, line 27, leave out from 'retention' to end of line 28 and insert
      ', to such extent and in such cases as may be specified in regulations, of so much of clients' money as represents interest.'. —[Mr. Howard.]
      9.15 pm
      Mr. Tim Smith: On a point of order, Mr. Deputy Speaker. I rose to speak when you called amendment No. 79.
      Mr. Deputy Speaker: I am extremely sorry, but I did not notice the hon. Gentleman. If he stood up, I apologise to him. We have now moved on to amendment No. 80, which is in his name.
      Mr. Smith: I beg to move amendment No. 80, in page 34, line 18, leave out 'audited by an auditor' and insert 'examined by an accountant'.
      Mr. Deputy Speaker: With this it will be convenient to take the following amendments: No. 81, in page 34. line 20, leave out 'auditor' and insert 'accountant'.
      No. 82, in page 34, line 23, after 'whether', insert 'in his opinion'.
      Mr. Smith: I was a little concerned about the cavalier way in which the Government dealt with amendment No.79, because it reversed an amendment made in Committee following a Division in which I was supported by my hon. Friend the Member for Chicester (Mr. Nelson). As the majority of the Committee wanted three words included in the Bill and as amendment No. 79 deletes them, some explanation would have been welcome. It is not worth making a great fuss about this, but a little explanation would have been pleasant.
      I do not want to say much on amendment No. 80, because the Minister was very helpful on this matter in Committee. He said that he was sympathic to the three points contained in the three amendments. I hope that his sympathy may be converted into acceptance of them.
      Mr. Cash: The word "accountant" is an expression which does not necessarily refer to a chartered accountant. I have already made that point and I do not want to labour it, but at this stage it is important to put it on the record again.
      Mr. Howard: I hope that my hon. Friend the Member for Stafford (Mr. Cash) will forgive me if I do not repeat the reply which I gave to the point which he raised earlier.
      Regarding the first point raised by my hon. Friend the Member for Beaconsfield (Mr. Smith), amendments Nos. 79 and 83, to which he referred, sought to incorporate into clause 50 more satisfactorily the amendment passed in Committee. We have always intended that Clause 50 should allow regulations to be made concerning interest on clients' money. That would include requiring accounts and records in respect of that interest to be kept. We accept that there is room for clarification and that has been done in two ways.
      Firstly, as part of the general tidying up of rule-making powers in part V, we have made it clear that the list of powers in subsection (2) is without prejudice to the generality of subsection (1). Secondly, the new formulation of subsection (2)(f) makes it clear that the phrase "clients' money" embraces interest. Generally, regulations under clause 50 will, therefore, clearly be capable of being made in respect of interest. In view of this approach the amendment to subsection (2)(d) is unnecessary. That is why amendment No. 79 removes the change made in Committee at my hon. Friend's behest.
      My hon. Friend is correct, regarding amendments Nos. 80, 81 and 82, in reminding the House that I expressed my sympathy for his argument in Committee and I am happy to——
      Mr. Cash: Does my hon. and learned Friend take the point that the words "in his opinion" which are contained in those amendments would be going over the top in almost any circumstances? We could not have a matter of such importance being determined as a matter of law by the "opinion". I am sure that my hon. and learned Friend understands what the wording "in his opinion" means, and that he would find it unacceptable.
      Mr. Howard: I hope that my hon. Friend is referring to the amendments that we have excised from the Bill and not
      596
      to the amendments to which I have referred and which the Government are prepared to accept. If that is the case, and I believe that it is, I confirm that I am happy to accept the amendments.
      Amendment agreed to.
      Amendments made: No. 81, in page 34, line 20, leave out 'auditor' and insert 'accountant'.
      No. 82, in page 34, line 23, after 'whether'. insert 'in his opinion'.
      No. 83, in page 34, line 27, leave out from 'retention' to end of line 28 and insert
      ', to such extent and in such cases as may be specified in regulations, of so much of clients' money as represents interest.'.—[Mr. Howard.]

    Clause 51

      UNSOLICITED CALLS
      Amendments made: No. 84, in page 35, line 34, leave out 'exempt' and insert 'appointed'
      No. 85, in page 35, line 37, leave out 'exempt' anti insert —[Mr.Howard.]

    Clause 54
      EMPLOYMENT OF PROHIBITED PERSONS
      Amendment made: No. 86, in page 40, line 35, leave out 'exempt' and insert 'appointed' —[Mr. Howard.]
    Clause 55

      PUBLIC STATEMENT AS TO PERSON'S MISCONDUCT
      Amendment made: No. 87, in page 41, line 21, at end insert —
      '(5) Where a case is not required to be referred to the Tribunal by a person on whom a notice is served under this section the Secretary of State shall, at the expiration of the period within which such a requirement can be made, give that person written notice that the statement is or is not to be published; and if it is to be published the Secretary of State shall after publication send a copy of it to that person and to any person on whom a copy of he notice under subsection (2) above was served.'. —[Mr. Howard.]

    Clause 56

      INJUNCTIONS AND RESTITUTION ORDERS.
      Amendments made:No 88, in page 42, line 1, after `injunction', insert 'or, in Scotland, an interdict'.
      No. 89, in page 42, line 14, after 'below', insert
      'or, in relation to Scotland, under sub-section (4A) below'.
      No. 90, in page 42, line 31, at end insert —
      '(4A) The court may under this subsection order the person concerned to pay to the applicant such sum as appears to the court to be just having regard to the considerations mentioned in paragraphs (a) to (c) of subsection (4) above.'.
      No. 91, in page 42, line 33, after '(4)', insert '(4A)'.
      No. 92, in page 43, line 5, leave out subsection (8). — [Mr. Howard]

    Clause 65

      NOTICES
      Amendment made,No. 93, in page 46, line 39, at end insert—
      '; and any such notice may, if the Secretary of State thinks fit, include a statement of the reasons for which the prohibition or requirement was imposed, rescinded or varied.'. —[Mr. Howard]

    Clause 67

      INTERPRETATION
      Amendments made: No. 94, in page 47, line 37, leave out from 'provide' to 'for' in line 38.
      No. 95, in page 47, line 40, after 'property', insert 'in question'.
      No. 96, in page 47, line 42, leave out from 'unless' to 'the' in line 43.
      No. 97, in page 48, line 25. leave out from 'arrangements' to 'of' in line 27 and insert—
      'under which the rights or interests of the participants are investments falling within paragraph 5'.
      No. 98, in page 48, line 41, after 'by', insert 'or on behalf of'.
      No. 99, in page 49, line 2, leave out 'its management of those funds' and insert 'the management of those funds by or on behalf of that body'.
      No. 100, in page 49, line 5, leave out from 'in' to end of line 12 and insert —
      'or securities of that body which—

      (i) the participants are entitled to have redeemed or repurchased by, or out of funds provided by, that body; or

      (ii) the body ensures can be sold by the participants on an investment exchange at a price related to the value of the property to which they relate:.

      No. 101, in page 49, line 12, at end insert—
      ' "trustee", in relation to a unit trust scheme, means the person holding the property in question on trust for the participants and, in relation to a collective investment scheme constituted under the law of a country or territory outside the United Kingdom, means any person who (whether or not under a trust) is entrusted with the custody of the property in question—[Mr. Howard.]

    Clause 68

      RESTRICTIONS ON PROMOTION
      Amendments made: No. 102, in page 49, line 25, after 'issued', insert 'in the United Kingdom'.
      No. 103, in page 49, line 31, leave out 'any person' and insert
      'or procure any person in the United Kingdom'.
      No. 104, in page 49, line 35, leave out from 'apply' to end of line 36 and insert
      'if the advertisement is issued to or the person mentioned in paragraph (b) of that subsection is—'.
      No. 105, in page 49, line 37, leave out 'to'.
      No. 106, in page 49, line 38, leave out 'to'.
      No. 107, in page 50, line 1, leave out 'an advertisement issued or to advice given' and insert 'anything done'.
      No. 108, in page 50, line 6, at end insert—
      '(4) For the purposes of this section an advertisement issued outside the United Kingdom shall be treated as issued in the United Kingdom if it is made available to persons in the United Kingdom otherwise than in a newspaper, journal, magazine or other periodical publication published and circulating principally outside the United Kingdom.'. —[Mr. Howard.]

    Clause 69
      APPLICATIONS FOR AUTHORISATION
      Amendment made: No. 109, in page 50, line 19, leave out subsection (3).
    Clause 70

      AUTHORISATION ORDERS
      Amendments made: No. 110, in page 50, line 35, leave out 'and a copy of the trust deed'.
      No. 111, in page 50, line 37, after 'if, insert '(a)'.
      No. 112, in page 50, line 40, at end insert
      ;and

      (b) he has been furnished with a copy of the trust deed and a cerficate signed by a solicitor to the effect that it complies with such of those requirements as relate to its contents.'.

      No. 113, in page 51, line 6, leave out 'and'.
      No. 114, in page 51, line 7, at end insert
      'and, if the manager is incorporated in another member State, the scheme must not be one which satisfies the requirements prescribed for the purposes of section 78 below.'.
      No. 115, in page 51, line 10, after 'by', insert 'or under'.
      No. 116, in page 51, line 11, after 'by', insert 'or under'.
      No. 117, in page 51, line 22, leave out 'a stock' and insert 'an investment'. —[Mr. Howard.]

    Clause 71
      REVOCATION OF AUTHORISATION
      Amendment made: No. 118, in page 51, line 37, at end insert 'or potential participants'. —[Mr. Howard.]
    Clause 72

      REPRESENTATIONS AGAINST REFUSAL OR REVOCATION
      Amendment made: No. 119, in page 52, line 25, after 'give', insert—
      'the applicants or, as the case may be'.—[Mr. Howard.]

    Clause 73

      CONSTITUTION AND MANAGEMENT
      Amendments made: No. 120, in page 52, line 41, after 'rights', insert 'and obligations'.
      No. 121, in page 53, line 10, leave out 'of the manager of the scheme' and insert
      'exercisable in relation to the scheme'.
      No. 122, page 53, line 20, leave out from 'but' to `independently' in line 21 and insert
      'regulations under this section shall be binding on the manager, trustee and participants'.
      No. 123, in page 53, line 22, at end insert —
      '(3A) Regulations under this section shall not impose limits on the remuneration payable to the manager of a scheme.'. —[Mr. Howard.]

    Clause 74

      ALTERATION OF SCHEMES AND CHANGES OF MANAGER OR TRUSTEE
      Amendments made: No. 124 in page 53, line 30, after `alteration', insert
      involving a change in the trust deed'.
      No. 125, in page 53, line 32, leave out 'alteration will not affect the compliance of the scheme' and insert

      599
      'change will not affect the compliance of the deed'.
      No. 126, in page 54. line 11, leave out subsection (4). —[Mr. Howard.]

    Clause 75

      RESTRICTIONS ON ACTIVITIES OF MANAGER
      Amendments made: No. 127, in page 54, line 22, leave out from '(ii)' to 'body' in line 25 and insert
      'an open-ended investment company or any other'.
      No. 128, in page 54, line 28, after `by', insert 'or on behalf of.
      No. 129, in page 54, line 28, at end insert
      '; or

      (iii) any other collective investment scheme under which the contributions of the participants and the profits or income out of which payments are to he made to them are pooled; —[Mr. Howard.]

    Clause 79

      SCHEMES AUTHORISED IN DESIGNATED COUNTRIES OR TERRITORIES
      Amendments made: No. 130, in page 57, line 16, leave out from 'is' to end of line 18 and insert
      'of a class specified by the order.'.
      No. 131, in page 57, leave out lines 34 to 37 and insert —

      '(a) shall contain the address of a place in the United Kingdom for the service on the operator of notices or other documents required or authorised to be served on him under this Act; and

      (b) shall contain or be accompanied by such information and documents as may be prescribed.'.

      No. 132, in page 57, line 45, at end insert—
      '(6A) Section 77 above shall have effect in relation to a scheme recognised under this section as it has effect in relation to an authorised unit trust scheme, taking references to the manager as references to the operator; and regulations made by virtue of this subsection may make provision whereby compliance with any requirements imposed by or under the law of a country or territory designated under this section is treated as compliance with any requirement of the regulations.' —[Mr. Howard.]

    Clause 80

      OTHER OVERSEAS SCHEMES
      Amendments made: No. 133, in page 58, line 9, leave out paragraph (b) and insert

      '(b) does not satisfy the requirements mentioned in section 78(1) above and in relation to which there is no relevant order under section 79(1) above'.

      No. 134, in page 58, line 17, leave out from '(3)' to `must' in line 18 and insert
      'Subject to subsection (3A) below, the operator and the trustee, if any,'.
      No. 135, in page 58, line 22, after 'by', insert 'or associated with.'
      No. 136, in page 58, line 24, leave out paragraph (b).
      No. 137, in page 58, line 29, at end insert—
      '(3A) Subsection (3) above does not apply to an operator or trustee who is an authorised person and not prohibited from acting as operator or trustee, as the case may be, by or under rules under section 45 above, by or under the rules of any recognised self-regulating organisation of which he is a member or by any prohibition imposed under section 60 above.'.
      No. 138, in page 58, line 30, leave out from '(4)' to 'and' in line 31 and insert—
      'If the operator is not an authorised person he must have a representative in the United Kingdom who is an authorised person and has power to act generally for the operator'.
      No. 139, in page 58, line 42, leave out 'a stock' and insert `an investment'.
      No. 140, in page 59, line 2, leave out from 'section' to '; and' in line 4.
      No. 141, in page 59, line 5, 2, at end insert—
      ', taking references to the manager as references to the operator'.
      No. 142, in page 59, line 6, leave out subsection (8).
      No. 142A, in page 59, line 15, leave out from first 'operator' to second `the' in line 16 and insert—
      'and with the omission of the requirement relating to the solicitor's certificate; and if the operator or trustee of any such scheme is to be replaced the operator, as the case may be, the trustee or, in either case'.
      No. 143, in page 59, line 18, leave out subsection (10) and insert—
      `(10) Section 77 above shall have effect in relation to a scheme recognised under this section as it has effect in relation to an authorised unit trust scheme, taking references to the manager as references to the operator.'. —[Mr. Howard.]

    Clause 81

      INVESTIGATIONS
      Amendment proposed: No. 144, in page 59, line 26, after `operator', insert `or trustee'. —[Mr. Howard.]
      Mr. Deputy Speaker: With this it may be convenient to discuss Government amendments Nos. 145 to 148.
      Mr. Cash: I have one question in regard to legal privilege in proceedings in the High Court. I notice that clause 81(5) may require a lawyer to furnish the name and address of his client. I do not wish to make a great deal of this but it raises matters which may prove to be worth pursuing in another place. My hon. and learned Friend the Minister will be familiar with the problems that arise. I understand, however, that my hon. Friend the Under-Secretary of State is to reply. Hi: is nevertheless a friend. I should be grateful if he could examine this matter in due course and perhaps drop me a note about it. It raises matters concerning the disclosure of information about clients.
      Mr. Butcher: I am the only non-lawyer spokesman on the Front Benches. I shall loot into my hon. Friend's anxiety and write to him. En the aftermath of that correspondence, we will no doubt be able to decide whether we should take further action in another place.
      Amendment agreed to.
      Amendments made: No. 145, in page 59, line 29, leave out from `operator' to end of lire 31 and insert
      'or trustee of, any other collective investment scheme,'.
      No. 146, in page 59, line 38, after second 'or, inser—
      'or of the manager, trustee or operator of,'.
      No. 147, in page 59, line 42, leave out
      'Section 433(2) and sections 434 to 437 of the Companies Act 1985'
      and insert—
      `Sections 434 to 436 of the Companies Act 1985 (production of documents and evidence to inspectors)'.
      No. 148, in page 60, line 10, at end insert—
      `(5) A person shall not under t us section be required to disclose any information or produce any document which he would be entitled to refuse to disclose or produce on grounds, of legal professional privilege in proceedings in the High Court or on grounds of confidentiality as between client and professional legal adviser in proceedings in the Court of Session except that a lawyer may Ire required to furnish the name and address of his client.

      601
      (6) Where a person claims a lien on a document its production under this section shall be without prejudice to the lien.
      (7) Nothing in this section shall require a person carrying on the business of banking to disclose any information or produce any document relating to the affairs of a customer unless—

      (a) the customer is a person who the inspector has reason to believe may be able to give information relevant to the investigation; and

      (b) the Secretary of State is satisfied that the disclosure or production is necessary for the purposes of the investigation.

      (8) An inspector appointed under this section may, and if so directed by the Secretary of State shall, make interim reports to the Secretary of State and on the conclusion of his investigation shall make a final report to him.'. — [Mr. Howard.]

    Schedule 4

      THE FINANCIAL SERVICES TRIBUNAL
      Amendments made: No. 149, in page 140, line 1, leave out 'and' and insert—
      ', for the awarding of costs (or, in Scotland, expenses) and for'.
      No. 150, in page 140, line 2, at end insert—
      '(2) The Tribunal may appoint counsel or a solicitor to assist it in proceedings before the Tribunal.'. — [Mr. Howard.]

    Clause 84

      REFERENCES TO THE TRIBUNAL
      Amendments made: No. 151, in page 61, line 23, leave out 'or 54(4)' and insert',54(4) or 55(2)'.
      No. 152, in page 61, line 27, leave out
      'or to give the direction'
      and insert
      ', give the direction or publish the statement'.
      No. 153, in page 61, line 28, at end insert—
      '(2A) The Secretary of State need not refer a matter to the Tribunal at the request of the person on whom a notice is served under section 65 above if—

      (a) that matter is the refusal of an application for the rescission or variation of a prohibition or requirement and within the period mentioned in subsection (1) above he—

      (i) decides to grant the application; and

      (ii) gives written notice of his decision to that person; or

      (b) that matter is the imposition or variation of a prohibition or requirement, being a prohibition, requirement or variation which has not yet taken effect, and within the period mentioned in subsection (1) above and before the prohibition, requirement or variation takes effect he—

      (i) decides to rescind the prohibition or requirement or decides not to make the variation; and

      (ii) gives written notice of his decision to that person.'.

      No. 154, in page 61, leave out lines 35 to 40 and insert
      'and at any time within the period mentioned in subsection (1) above the Secretary of State serves a new notice on that person in substitution for that previously served, then if the substituted notice complies with subsection (4) below, subsection (1) above shall have effect in relation to the substituted notice instead of the original notice and as if the period there mentioned were twenty-eight days after the date of service of the original notice or fourteen days after the date of service of the substituted notice, whichever ends later'.
      No. 155, in page 62, line 2, leave out 'may propose' and insert
      'complies with this subsection if it proposes'.
      No. 156, in page 62, line 7, leave out 'may propose' and insert
      'complies with this subsection if it proposes'.
      No. 157, in page 62, line 10, leave out subsection (5). —[Mr. Howard.]

    Clause 87

      WITHDRAWAL OF REFERENCES
      Amendments made: No. 158, in page 63, line 27, leave out from 'under' to end of line 30 and insert
      'any of the provisions mentioned in subsection (1)(a) of section 84 if he—

      (a) decides as mentioned in subsection (2)(a) or (2A) (a)(i) or (b)(i) of that section; and

      (b) gives such a notice as is mentioned in subsection (2) (b) or (2A)(a)(ii) or (b)(ii) of that section;

      but a reference shall not be withdrawn by virtue of such a decision and notice as are mentioned in paragraph (b) of subsection (2A) unless the decision is made and the notice is given before the prohibition, requirement or variation has taken effect.'
      No. 159, in page 63, line 44, leave out 'or 33' and insert 33 or 55'. —[Mr. Howard.]

    Clause 89
      REGISTER OF AUTHORISED PERSONS AND RECOGNISED ORGANISATIONS ETC.
      Amendment made: No. 160, in page 65, line 12, leave out third 'the' and insert `any'. —[Mr. Howard.]
    Clause 91
      POWER TO CALL FOR INFORMATION
      Amendment made: No. 161, in page 67, line 29, leave out 'this section' and insert 'subsection (1) above'. —[Mr. Howard.]
    Clause 92

      INVESTIGATION POWERS
      Amendments made: No. 162, in page 67, line 41, leave out 'exempt' and insert 'appointed'.
      No. 163, in page 69, line 7, leave out 'exempt' and insert 'appointed'.
      No. 164, in page 69, line 17, leave out 'exempt' and insert 'appointed'. —[Mr. Howard.]

    Clause 96

      POWER TO TRANSFER FUNCTIONS TO DESIGNATED AGENCY
      Amendment proposed: No. 165, in page 71, line 41, leave out
      'the Securities and Investment Board'
      and insert
      'a body corporate has been established which'. — [Mr. Howard.]
      Mr. Deputy Speaker: With this it may be convenient toconsider the following: Government amendment No. 166.
      Amendment No. 167, in page 72, line 5, at end insert

      603
      '(1A) Upon the making of an order under subsection (1) above, the Securities and Investments Board shall cease to be a limited company and shall become a statutory body created under this Act.',
      Government amendments Nos. 168, 169, 171 to 173, 213, 253, 255, 256 and 258.
      Mr. Gould: It may be as well to give you the opportunity to pause for breath, Mr. Deputy Speaker. I should like to speak in support of amendment No. 167.
      The Government amendments in this group give effect to the solution at which the Committee arrived on the central issue of the Bill—the status and functions of the SIB. It is fair and proper to recognise that the Committee achieved a great deal in this respect. We named the board which had hitherto hidden coyly behind the description of "designated agency" and we increased its powers in respect of its ability to impose rule changes, to prosecute, to investigate unauthorised persons, to deal with matters such as insider dealing and even in regard to obtaining a warrant for powers of search.
      None of that could have been achieved without the support, and often direction, of Conservative members of the Committee. It was an excellent example of a Committee working towards a constructive common purpose. It is perhaps not surprising that the paths of the two sides of the House diverge here as we regret, even now, that, for current ideological reasons, the Government have not been able to bring themselves to give the SIB proper status in the Bill. The Government will not accept that this is the obvious solution and that it has been adopted by virtually every other leading capital market in the Western world. The bulk of City opinion now accepts that it is a solution that is desirable, or at least inevitable. This solution would have enabled the Committee and the House to avoid many of the problems which have preoccupied us throughout our deliberations.
      9.30 pm
      I agree wholeheartedly with the arguments advanced some months ago by the Financial Times in a leading article, when it expressed the view that if we had begun with a statutory commission we could have spent our time making sure that it operated with proper flexibility and sensitivity, instead of starting at the other end with a body which was not propery constituted and did not have adequate powers. Consequently, we have had to spend our time attempting to increase those powers.
      This evening we have had a short debate on the powers of the Securities and Investments Board which direct applicants to go to the appropriate self-regulating organisation. That board may have been more appropriate and commended itself to the Government and their supporters if we had begun with the clear understanding that the SIB, bearing in mind its delicate relationship with the SROs, was to be the dominant partner.
      The Government's failure in this respect leaves the Bill inadequate to deal with its purpose. The Bill, and the Government's thinking which underpins it, simply do not grasp the scale of the change which will overcome the City. Many of the old safeguards over institutions are being swept away. Huge new conglomerates with powerful new players, enormous financial power—much more power than anything previously seen — will muscle into the City. Those people will be used to playing to the whistle, and it is vital that they are in no doubt as to who will blow the whistle, in what circumstances and with what effect.
      604
      The City will become a place of intense competition. The new, immensely powerful institutions will be competing with each other for a limited volume of business. When we have to endure an inevitable bear market, there will be a great deal of blood on the carpet. It will be at that moment that corners will be cut and rules broken. The structure of the Bill will be put to the test and, as it stands at the moment, it is inadequate to meet that test.
      At present, we are asked to support a structure in which a private company supervises arrange of self-regulating organisations, most of which have no experience or resources to undertake this ask, and some of the organisations do not even exist. It is a complicated structure—a delicate balance which, in general terms, we have supported. It is asking too much to place all the weight on the self-regulating organisations when, at the apex of the structure, there is nothing more substantial than a private company, limited by guarantees.
      The fact that we have a Securities and Investments Board which needs a special dispnesation to drop the word "limited" from its title gives the wrong message to people in the City. It is a wrong psychological simile. It is a typically muddled British compromise. It shows that we have not yet grasped the scale of the task and duty that we face. It signals to those who operate in the City that we have not taken the problem seriously.
      Mr. Cash rose——
      Mr. Gould: No, I will not give way; I am about to finish.
      The City, without a proper regulatory authority at the heart of the system, will be at a disadvantage in comparison with other financial markets. That is the prime reason why, when we come to Third Reading, we shall be obliged to vote against the Bill. It is the same reason which will oblige us to legislate again on the matter when we return to government.
      Mr. Campbell-Savours: I wish to speak briefly to add my support to the comments of my hon. Friend the Member for Dagenham (Mr. Gould). I feel extremely strongly about this matter, and I think that the Minister has totally misread public opinion. The Minister does not understand that the British put lie will never stomach a private policing operation in the City of London. A private company, no different from Securicor, will be responsible for policing City institutions.
      We know that the measure of that organisation will come in the crisis in the City. All the signs are that the big bang will provide for excesses that the country will expect the City and its institutions to root out. The problem is that when the British people find out that it is impossible to root out these things, perhaps even with a publicly instituted form of control commission, they will blame whatever private arrangements have been made for City policing.
      The Minister has it within his power, even at this late stage, to accept this amendment. As I understand it, it simply provides that he retains the right to substitute the limited company that is provides for in the Bill with some form of statutory body. This is reasonable proposition. It gives the Minister the opportunity, without further legislation, to change the very nature of the structure that is being set up today. If he dons not, he will find that, within a year or two, he will be standing at the Dispatch

      605
      Box defending, or perhaps even the converse, attacking what has gone on in the City. He will be defending a private policing arrangement that has been set up to monitor the City, but that the public are unable to understand. He has it within his power, and he would be sensible, in his conduct of the debate, to take on board the comments that have been made by me and by my hon. Friend the Member for Dagenham.
      Mr. Nelson: Unlike Labour Members, I believe that my hon. and learned Friend the Under-Secretary of State has moved in compliance with the wishes expressed by both sides in Committee and has come forward with proposals that will be durable and will enjoy the respect of the investing public. It is important that we seek to make the legislation work so that it can do what is intended. In seeking to achieve that objective, it is important that the SIB should have statutory recognition, the powers to investigate, to bring prosecutions in certain circumstances, to change the rules, if necessary, in the self-regulatory bodies, and to enjoy immunity, all of which have been conferred on it by the Bill.
      The amendments moved in Committee were argued against because the SIB will be a private sector body, but they are extensive and important powers in terms of investor protection. As the SIB can enjoy the benefits of being a private sector body, not being subject to the public sector borrowing requirement, the state panoply of regulation, and so on. we may have the best of both worlds. Even if Labour Members suspect that we have not, it is at least worth a serious try.
      I pay tribute to my hon. and learned Friend the Minister for the objective and sincere way in which he has sought to understand the objectives of those of us who have moved amendments. Without becoming entrenched, he has responded democratically and pragmatically to the interests of investors and of good and effective legislation. For those reasons, I warmly welcome the Government's amendments.
      Mr. Howard: I am grateful to my hon. Friend the Member for Chichester (Mr. Nelson) for his observations and I am delighted that I have been able to identify a solution to the problem on which we spent so much time in committee. We recognised the legitimate concerns expressed during our proceedings upstairs by my hon Friends the Members for Chichester and for Beaconsfield (Mr. Smith), and others. We have still managed to retain the flexibility and effectiveness that are so crucial to the concept that we have sought to put in place in the regulatory structure.
      It is uncharacteristically intellectually feeble of the hon. Member for Dagenham (Mr. Gould) to have failed to face up to the real difficulties that would flow in terms of restraints on public spending and borrowing, which would have inhibited the creation of an effective regulatory body. He has mouthed from beginning to end of our consideration of this matter the phrase "statutory commission" without ever coming clean and explaining precisely what it is that he had in mind.
      At the risk of introducing a note of controversy into our deliberations, I have to say that I utterly reject any accusations of dogma or doctrine by the hon. Member for Dagenham. I accuse him of failing to face the central issues
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      at the heart of this discussion. I am delighted to have arrived at a solution which meets the legitimate concerns of my hon. Friends.
      Mr. Gould: I am listening with fascination to the Minister's diatribe. Presumably this embraces every other statutory body which this Government and other Governments have created in Britain, and applies to every other statutory body fulfilling precisely these functions in every capital market in the world in which Britain is competing.
      Mr. Howard: It will not do for the hon. Gentleman to attempt to sidestep the argument in that way. We are considering a specific solution to a specific problem, and we have devised what I think is the most effective solution to that problem. I hope and expect that it will work. On that basis I commend the amendment to the House.
      Amendment agreed to.
      Amendments made: No. 166, in page 72, line 5, at end insert—
      '(1A) The body to which functions are transferred by the first order made under subsection (1) above shall be the body known as The Securities and Investments Board Limited if it appears to the Secretary of State that it is able and willing to discharge them, that the requirements mentioned in paragraph (b) of that subsection are satisfied in the case of that body and that he is not precluded from making the order by the subsequent provisions of this section or Chapter XII of this Part of this Act.'.
      No. 168, in page 72, line 7, leave out 'the' and insert 'a'.
      No. 169, in page 72, line 10, leave out 'subsections (4) and (5)' and insert 'subsection (4)'.
      No. 170, in page 72, line 14, at end inser—
      '(aa) Section 30(4); '.
      No. 171, in page 72, line 17, leave out '79(1) or 81' and insert 'or 79(1)'.
      No. 172, in page 72, line 19, leave out subsection (5).
      No. 173, in page 72, line 41, at end insert
      'and any transfer of a function under section 81, 92 or 93 shall be subject to such a reservation.'.—[Mr. Howard.]

    Schedule 6

      PRINCIPLES APPLICABLE TO DESIGNATED AGENCY'S RULES AND REGULATIONS
      Mr. Howard: I beg to move, in page 143, line 17, at end insert—
      'including information as to any commissions or other inducements received or receivable from a third party in connection with any such transaction.'.
      Mr. Speaker: With this, it will be convenient to take Government amendment No. 177.
      Mr. Butterfill: In Standing Committee when we discussed the problems that arise from disclosure, our main preoccupation was with disclosure of commission. I and the hon. Member for Dagenham (Mr. Gould) voiced doubts in Committee that commissions were not the only things about which we ought to be concerned. We made the point that we ought to ensure that the public knew the totality of costs being charged to an insurance policy, and how these could affect the interests of a policyholder. We made it clear in that debate that it could be confusing or even misleading to focus exclusively on commission because insurance companies selling in a direct way might well incur substantial marketing costs through such things as television advertising and advertising in newspapers, and that all such costs would be loaded on to the policies.

      607
      We felt that there was a need for something more than mere disclosure of commission, and for that reason I tabled an amendment which was supported by a large number of my hon. Friends, and a similar amendment was tabled by the hon. Member for Dagenham which was supported by a number of his hon. Friends. It became quite clear in Committee that we enjoyed the support of my hon. and learned Friend the Minister, who undertook to consider the matter in detail and to bring forward an amendment at this stage. I am pleased to say that my hon. and learned Friend has been as good as his word and has brought forward two amendments which substantially meet the anxieties expressed in Standing Committee.
      When these matters were discussed in Standing Committee I made it clear that I did not think it was right for us to try to lay down the detailed rules, but that we should merely lay down the ground rules. I am pleased to see that that is exactly what my hon. and learned Friend the Minister has done in his amendments.
      9.45 pm
      However, we must consider the amendments in the light of the proposals that have now been published by MIBOC for the regulation of salesmen and the general regulation of the marketing of life assurance and unit trusts which is contained in its latest document, "Life Assurance and Unit Trusts and the Investor", published in April this year.
      Here we have some difficulty. First, I must say that I congratulate MIBOC on the way in which it met many of the other concerns of the Committee. In some cases it has met them most ingeniously, and, indeed, improved upon some of the suggestions that were made in Committee. But in the one area of disclosure it has failed to meet the concerns that were expressed in Committee. It is worth illustrating that by reference to some correspondence which I have had on the subject.
      First, can we identify those areas where further disclosure ought to be available? Information should be available about what proportion of the payments for a premium will go towards the company's costs, which we have already identified, and what proportion will be invested on behalf of the policy holder.
      Secondly, we should know what effective rate of interest is being offered by the insurance company in the case of the amount that will accumulate towards a given sum. In every other form of investment there is an indication of the interest which is being paid, but that is not done by insurance companies.
      My concerns on this matter are not unique. Indeed, I have had a large number of letters from not only members of the public who are concerned in these matters, but also people throughout the insurance industry, not just one section of the industry, but a wide cross-section. For example, I have had correspondence from people engaged in computer systems relating to the analysis of policies. I have had letters from people who are involved in the marketing of insurance policies. I have had letters from people who are actuaries, engaged in the insurance industry. It may be worth quoting from some of the letters that I have received.
      Let me read a letter that I have received from one of the leading Scottish companies involved in the personal and corporate financial services sector which is relevant to the view that we should take of the MIBOC document. It says:
      "Dear Mr. Butterfill, We among others, forwarded our comments on the consultative document published by MIBOC earlier in the year. On that occasion there was time
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      for a consultation; on this occasion, time is short, and I therefore hope that our observations on the latest document will assist you in appraisal.
      Members of the standing committee are to be congratulated for grasping so quickly the complex subject and not allowing the wool to be pr lied over their eyes by an industry expert on this practice. We were particularly impressed by the insistence on the disclosure of all marketing and administrative charges within a product, not just the commission.
      The vested interests represented on the Board will continue to water down your proposals if possible. Perhaps there should be a statutory requirement for, at least, provision of estimated surrender values bas( d on industry — standard assumptions."
      I am pleased to say that that aspect has been largely met.
      The letter went on:
      "We still feel that the con mission system is the root cause of the industry's problems. but perhaps full disclosure of charges will persuade the industry to modify an indefensible system.
      We still feel that MIBOC is still trying to fudge the issue. If it is possible to come up with a means of product disclosure for with-profits policies, then it is possible to devise a method of commissions disclosure for company representatives as well as independent intermediaries. The battle over polarisation appears to have been won, however, although the definition of 'introducer' is a puss bledoophole that should be plugged.
      We thank you for helping to clean up such a rotten mess. Yours sincerely."
      That puts it more strongly and colourfully than I would have put it, but it shows that many of those in the insurance industry are unhappy with the latest MIBOC proposals.
      That letter was fairly typical of much of the correspondence that I received It is worth quoting the view of the National Consumer Council. On 5 June it wrote to me saying:
      "On 21 April SIB and MIBOC published their response to issues raised during Committee, Stage on disclosure of commissions and charges and the status of salesmen. We welcome the proposal that those selling life assurance or unit trusts will have to be either independent intermediaries or company representatives (restricted to the selling of the products of one company or group). However, we do not believe that SIB-MIBOC proposals for the disclosure of commissions and charges go far enough. It is our view that there should be full disclosure of commissions by independent intermediaries whether or not there is an industry agreement on maximum commissions. We also feel that consumers purchasing policies from company representatives should be made aware of the amount of. heir premiums which are absorbed by selling costs. These are, in effect, a charge on the policy and should be included in the disclosure of charges, surrender values etc. so that consumers are able to assess the value for money of the investment they arc being offered."
      That is the point made in the amendments of my hon. and learned Friend the Minister.
      All the controversy has provoked a quite extraordinary response from the Association of British Insurers, which produced u news sheet that I believe has been sent to the vast majority of hon. Members, Much of it is concerned with rubbishing the comments that I and other hon. Members made in Committee. It is worth taking up some of the points that it makes in the news sheet. It claims that we have unfairly stated its position and that as regards the right to share in profits there is some definition, because it is written into the articles of association of most insurance companies.
      Earlier, I said that I had received correspondence from members of the actuarial profession. I have with me a letter that I received from a consulting actuary who is also

      609
      a research fellow in actuarial studies at one of our leading universities. In his letter, he points out that that claim by the insurance companies is somewhat spurious. At the risk of boring the House, I shall quote from his letter. He writes:
      "Around about the beginning of this century with-profits premium rates were approximately 10 per cent. higher than the equivalent non-profit rates. This with-profits policyholder was this taking a chance that he would get approximately 10 per cent. less than he was paying for. In practice, his reward for taking this chance was that he would get a little more than he paid for in the form of bonuses. Bonus additions were expected to form 10–20 per cent. of his final policy proceeds. This seems quite a sensible system really.
      Since then, interest rates have increased dramatically. The result is that non-profit premium rates have reduced substantially over that period. On the other hand, for a given sum assured, with-profit rates have stayed fairly constant. The bonus rates have risen substantially to take up the slack. The result is that at present under a typical policy only approximately 40 per cent. or 50 per cent. of the eventual proceeds are guaranteed; the rest is bonuses. This has the advantage of being admirably flexible. For example, it allows the life offices to invest heavily in equities which they probably could not do under the old system.
      However, one of the side-effects of this has been to increase substantially the share of the premiums which ends with the insurance company's shareholders. As I explained at our meeting, for a typical proprietary office, the surplus declared at each valuation might be split in the ratio 90 per cent. to policyholders and 10 per cent. to the shareholders. The ratio is fixed for each company. At the start of the century approximately 20 per cent. of a typical policy's proceeds consisted of bonuses which had been declared out of surplus. It may be seen that, at that time, the shareholders' share of the total policy proceeds was approximately 22 per cent. ie. 10 per cent. of the 20 per cent. Under present conditions the shareholders might expect to receive approximately 6 per cent. of the policy proceeds, ie 10 per cent. of 60 per cent. 60 per cent. is the part of the policy proceeds which has emerged as surplus over the term, of a typical policy under current conditions."
      This means that the return to the shareholders has trebled over that period.
      "The position is further complicated by the type of valuation method required (a net premium valuation at an artificially low rate of interest which would tend. in general, to increase the proportion attributable to shareholders.)"
      The Association of British insurers and MIBOC are saying that what we asked for by way of detailed disclosure is not reasonable, cannot be done at fair cost and would be confusing to the investor. All I can do is to say that some members of the industry—the better members—are already doing substantially what we ask.
      I invite hon. Members to look at what the Scottish Amicable does at present. This is one of the better insurance companies with which, I am pleased to say, I have a policy. The Scottish Amicable booklet gives a bar chart entitled "What happens to your premiums". On that bar chart are shown the proportions as to commission, expenses and taxation. All this could be reasonably done by most members of the industry. Indeed, this example could be improved upon. I offer it as a model, and hope that my hon. and learned Friend will urge it upon MIBOC.
      Mr. Howard: My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) began by paying tribute to MIBOC and congratulating it on its latest document. Given those remarks, I confess that I was disappointed that he did not dissociate himself more robustly from the remarks of his correspondent who went on to accuse MIBOC of fudging the issue. I do not believe
      610
      that MIBOC has fudged the issue. It is committed to full disclosure of charges wherever possible. It believes that disclosure of expenses on with-profits policies is not practicable. I have no doubt that, if it can be shown that such disclosure is practicable, MIBOC will carefully consider the matter and fully explore the material that has been made available to my hon. Friend.
      However, the bar chart to which my hon. Friend referred, and which he held up for the edification of the House, if it is the same bar chart that he showed to me earlier, refers to the proportion of profits, expenses and so on in relation of the whole of the fund of the insurance company concerned and not to any particular policy. That is, of course, an entirely different matter.
      Mr. Butterfill: I am grateful to my hon. and learned Friend for pointing that out. I said that it was not entirely what I had hoped for, but that it gave an illustration of what could be done. I agree that it relates to the whole of the fund and that is its deficiency. Nevertheless, I am advised that a similar bar chart could be done for each product.
      Mr. Howard: It does not follow from the fact that one has a bar chart for the fund as a whole that it can be done for particular policies. To say that one does not entirely meet the other leaves a fairly wide gap in the argument.
      Schedule 6, as improved by the amendment, is deliberately flexible. It speaks in terms of the rules making proper provision. What proper provision is at any one time must take account of what is practicable at that time. Systems for allocation costs within insurance companies may well change and develop. What is not immediately practicable may later become so. There is, therefore, some scope for evolution in this area. Even if MIBOC is not capable fully of responding to my hon. Friend's concerns in its initial rules, it may be possible in the years ahead, as methods improve and one can identify the breakdown of premiums in the way that my hon. Friend would like to see, for the rules to be changed subsequently.
      I commend schedule 6 as amended to the House, as conferring the flexibility that I think is needed and proper to provide the requisite degree of consumer protection in this area.
      Amendment agreed to.
      Amendment made: No. 177, in page 143, line 20, at end insert —
      `6A. The conduct of business rules, or those rules and rules under section 47 of this Act, must make proper provision for requiring an authorised person who in the course of carrying on investment business enters or offers to enter into a transaction in respect of an investment with any person, or gives any person advice about such a transaction, to give that person such information as to the nature of the investment and the financial implications of the transaction as will enable him to make an informed decision.'.
      It being Ten o'clock, further consideration of the Bill stood adjourned.

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Financial Services Bill may he proceeded with, though opposed, until any hour. —[Mr. Durant.]

    Financial Services Bill
    As amended (in the Standing Committee), again considered.
    Mr. Howard: I beg to move amendment No. 178, in page 143, line 31, at end insert—
    'Classes of investors
    10. The conduct of business rules and other rules and regulations made under Chapter V of Part I of this Act must take proper account of the fact that provisions that arc appropriate for regulating the conduct of business in relation to some classes of investors may not (by reason of their knowledge, experience or otherwise) be appropriate in relation to others.'
    This amendment has been proposed in order to add a new principle to schedule 6 to the Bill. This would enable the Secretary of State to refuse to transfer rule-making functions to an agency if he did not consider that the rules made by the agency took proper account of the fact that different provisions are appropriate for the regulation of the conduct of business in respect of different classes of investors. Different provisions are needed depending on the characteristics of different investors.
    This addition to schedule 6 provides a clear signpost to the designated agency to draw up its rules and regulations so as to reflect the differing skills, knowledge, resources and experience of different investors. The rules should, therefore, be flexible in the means by which they ensure adequate investor protection and the orderly conduct of the market. The variable should be not the entitlement to investor protection but the means whereby it is secured.
    I am well aware of the concern that has been expressed in the City and elsewhere that the weight of regulation may drive business overseas. I do not share that pessimism. Certain basic safeguards, such as honesty and fair dealing, should apply to all investment business and are essential if the United Kingdom is to maintain and, indeed, enhance its position as one of the world's leading financial centres. At the same time, we fully recognise the dangers of overregulation. That is why the regulatory framework encourages practitioner-based regulation through the recognised self-regulating organisations and professional bodies.
    By virtue of clause 162, the Bill already enables different rules to be made for different cases. The new principle introduced in this amendment requires that the Secretary of State be satisfied that the designated agency has paid proper regard to the different means by which appropriate investor protection can be provided in respect of different categories of investor. For example, some categories of business or professional investor will not need the full panoply of the rules to protect their interests. The House will know that the draft rules which the Securities and Investments Board has been publishing during recent months already distinguish between what are defined as business investors and other investors, a category which will include the less sophisticated, private investor.
    I welcome that approach. The principle to be incorporated in schedule 6 should, therefore, offer reassurance to those who have been concerned lest this approach might not be followed in future.
    Mr. Gould: We accept that there are different categories of investors who possibly need different levels or mechanisms to protect their interests.
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    I ask the Minister to bear in mind two matters. First, I hope that the new provision in schedule 6 will not be allowed to operate as some sort of pretext to exempt, for example, the Eurobond market from effective regulation.
    Secondly, will the Minister bear in mind that boundaries change between the professional investor and the smaller and less experienced investor, which require a great deal of flexibility in approach? Those boundaries must be watched carefully as the less experienced investor is tempted to move into new areas.
    Amendment agreed to.

    Schedule 7

      DESIGNATED AGENCIES: STATUS AND EXERCISE OF TRANSFERRED FL NCTIONS
      Amendments made: No. 175, in page 144, leave out lines 28 to 33.
      No. 182, in page 145, line 36, after 'evidence', insert
      'or, in Scotland, sufficient evidence'.
      No. 183, in page 146, line 18, leave out sub-paragraph (2) and insert—
      'Consultation
      12A. — (1) Before making any rules or regulations by virtue of functions transferred to is by a delegation order a designated agency shall, subject to sub-paragraphs (2) and (3) below, publish the proposed rules and regulations in such manner as appears to the agency to be best calculated to bring them to the attention of the public, together with a statement that representations in respect of the proposals can be made to the agency within a specified period; and before making the rules or regulations the agency snail have regard to any representations duly made in accordance with that statement.
      (2) Sub-paragraph (1) above does not apply in any case in which the agency considers that the delay involved in complying with that sub-paragraph would be prejudicial to the interests of investors.
      (3) Sub-paragraph (1) above does not apply to the making of any rule or regulation if it is in the same terms (or substantially the same terms) as a proposed rule or regulation which was furnished by the agency to the Secretary of State for the purposes of section 96(8) of this Act.'. —[Mr. Howard.]

    Clause 99

      REPORTS AND ACCOUNTS
      Mr. Ashdown: I beg to move amendment No. 184, in page 74, line 32, at end insert
      '; and every delegation order in respect of a designated agency shall cease to have effect at the end of the period of 28 days beginning with the day on which a report relating to the discharge of the functions trasferred to that designated agency is laid before Parliament under this section, unless before the end of that period that report is approved by a resolution of each House of Parliament.'.
      The purpose of the amendment can be stated quite briefly. It is to enshrine within the legislation the right of Parliament to debate a report — for which there is provision elsewhere in the legislation—that will be laid before the House on an annual basis. This is a matter of some importance, but it is one that can be dealth with briefly. I am seeking to probe and if the Minister will provide some useful words on the matter, I shall be satisfied.
      We are dealing with a framework which has been changed substantially. It has already been said that there are no fewer than 278 amendments, of which 249 are in in the name of the Government. We all know that there are more amendments to come in another place.

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      The real effectiveness of the general and overall structure which conducts the important function of regulating the financial services industry will not be known from the Bill and cannot be known from that source. That is because much of the framework needs to be filled in by the rules. Until the rules are drawn and properly enacted, we shall not be able to judge what the effect of the legislation will be.
      It is clear that we are moving into uncharted waters. As the hon. Member for Dagenham (Mr. Gould) said, nowhere else in the world have we set up a self-regulating body to regulate capital markets. I believe that it is the right solution in this instance, but I would rather see a stronger body than that which is proposed. It must he said that previous self-regulating bodies that have operated in the City, such as Lloyd's, have been manifestly unsucessful in regulating matters properly and effectively, and some would say that the same can be said of the stock exchange. Massive immunities are to be granted, and the stock exchange will now join the committee of Lloyd's, the Post Office, and the armed forces when fighting an enemy as the only bodies in Britain which have complete immunity from claims from ordinary members of the public for damages. That is an extremely significant immunity. My colleagues and I would say that it is too great an immunity, but that argument has been advanced already.
      We are entering uncharted waters in another sense, because we know that ahead of us is the big bang. Indeterminate factors will come into play and no one can predict exactly what will happen after the big bang takes place. It will be important to create a structure which is flexible and capable of being able to respond to and meet the needs that may be created. There are many who believe—I am one of them and I suspect that there are others on the Opposition Benches, and even some on the Government Benches — that the balance that the Minister has sought to draw is to fight the last war, not the next one, against City corruption.
      We must be flexible. The House has a right to comment yearly on what has taken place to ensure that the important institutions of our financial services industry, which have served Britain so magnificently in the past and are such an essential part of our economy, are regulated in a proper and appropriate fashion. I hope that the Minister recognises that we are moving into a difficult area and that it will be important to debate the issues that arise. He has gone a great deal towards allowing that to happen. In Committee, he said:
      "The agency is required to submit an annual report which must be laid before Parliament, and which Parliament will no doubt wish to debate." — [Official Report, Standing Committee E, 6 March 1986; c. 534.]
      I hope that the Minister will make a statement of equal clarity this evening. I hope also that he will say that he believes that it will be important, certainly in the early years, for Parliament to have the opportunity to debate the reports. If he says that it is important for the House to have that opportunity, I shall be satisfied. It is important that that should be so, especially in the early years of the development of such an important institution.
      Mr. Howard: Many bodies are required to produce annual reports which have to be laid before Parliament. It would be extraordinary for legislation to require that all such reports be debated and approved if dire consequences
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      were to be avoided. If we followed such an approach generally, there would be little time left for debates on other matters. It would be open to Parliament to debate a particular report of the agency if that were desired, and I am sure that it would often want to do so. It would not be sensible to provide that every report must be debated, regardless of whether such use of parliamentary time is justified. I invite the House to reject the amendment.
      Mr. Ashdown: I do not wish to prolong the debate, but the Minister has dismissed the amendment with rather less care and consideration than we expect of him. He was more forthcoming in Committee. I hope that he will recognise that it is important that the House should have an opportunity to debate the annual reports, especially in the early years. The financial services structure which he is putting into place will be extremely important. In the light of his comments in Committee, rather than those which he has just made, and in the interests of getting on to Third Reading as soon as possible, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 102

      MODIFICATION OF S. 101 WHERE RECOGNITION FUNCTION IS TRANSFERRED
      Amendment made: No. 185, in page 78, line 4, leave out from beginning to 'in' in line 3 and insert
      'subsection (3) of section 101 above he may, notwithstanding the delegation order, himself exercise the power conferred by paragraph (a) of that subsection or direct the designated agency to exercise the power conferred by paragraph (b) or (c) of that subsection'. —[Mr. Howard.]

    Clause 104

      REPORTS BY DIRECTOR GENERAL OF FAIR TRADING
      Amendments made: No. 186, in page 79, leave out lines 31 to 35 and insert
      'the matter specified in the notice of which a copy is sent to him under subsection (3) above'.
      No. 187, in page 79, line 38, leave out in' and insert 'before'.
      No. 188, in page 79, line 39, after 'above', insert
      'by reason of that matter'. —[Mr. Howard.]

    Clause 109

      SUPPLEMENTARY PROVISIONS
      Amendment made: No. 189, in page 83, line 21, after '109', insert—
      '(1A) Before the Secretary of State exercises a power under section 101(3)(b) or (c) above, his power to refuse leave under section 102(2) above or his power to give a direction under section 102(4) above in respect of a self-regulating organisation, investment exchange or clearing house, or his power under section 103(3)(b) above in respect of a designated agency, he shall —

      (a) give written notice of his intention do do so to the organisation, exchange, clearing house or agency and take such steps (whether by publication or otherwise) as he thinks appropriate for bringing the notice to the attention of any other person who in his opinion is likely to he affected by the exercise of the power; and

      (b) have regard to any representation made within such time as he considers reasonable by the organisation, exchange, clearing house or agency or by any such other person.

      615
      (1B) A notice under subsection (1A) above shall give particulars of the manner in which the Secretary of State proposes to exercise the power in question and state the reasons for which he proposes to act; and the statement of reasons may include matters contained in any report received by him under section 104 above.'. —[Mr. Howard.]

    Schedule 8

      REGULATED INSURANCE COMPANIES
      Amendment made: No. 190, in page 147, leave out lines 2 and 3 and insert—
      `2 —(1) An insurance company to which section 21 of this Act applies shall not he an authorised person except by virtue of that section.
      (1A) If an insurance company to which Part II of the Insurance Companies Act 1982 applies but to which section
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      21 of this Act does not apply becomes an authorised person by virtue of any other provision of this Act it shall be an authorised person only as respects the management of the investments of any pension fund which is established solely for the benefit of the officers or employees and their dependants of that company or of any other body corporate in the same group as that company.
      (1B) An insurance company to which section 30 of this Act applies shall not, so long as it is an authorised person by virtue of that section, be an authorised person by virtue of any other provision of this Act.'. —[Mr. Howard.]

    Financial Services Bill
      Schedule 9
        FRIENDLY SOCIETIES
        Amendments made: No. 194, in page 151, line 27, leave out from beginning to end of line 14 on page 152 and insert —
        PART I

          SELF-REGULATING ORGANISATIONS FOR FRIENDLY SOCIETIES
          Preliminary
          . In this Schedule—
          "a regulated friendly society" means a society which is an authorised person by virtue of section 22 of this Act as respects such investment business as is mentioned in that section;
          "regulated business", in relation to a regulated friendly society, means investment business as respects which the society is authorised by virtue of that section;
          "a self-regulating organisation for friendly societies" means a self-regulating organisation which is permitted under its rules to admit regulated friendly societies as members and to regulate the carrying on by such societies of regulated business;
          "a recognised self-regulating organisation for friendly societies" means a body declared by an order of the Registrar for the time being in force to he a recognised self-regulating organisation for friendly societies for the purposes of this Schedule;
          "a member society" means a regulated friendly society which is a member of an appropriate recognised self-regulating organisation for friendly societies and is subject to its rules in carrying on all its regulated business and, for the purposes of this definition, "an appropriate recognised self-regulating organisation for friendly societies" means —

          (a) in the case of any such society as is mentioned in section 22(1) of this Act, an organisation declared by an order of the Chief Registrar of friendly societies for the time being in force to be a recognised self-regulating organisation for friendly societies for the purposes of this Schedule; and

          (b) in the case of any such society as is mentioned in section 22(2) of this Act, an organisation declared by an order of the Registrar of Friendly Societies for Northern Ireland for the time being in force to be such an organisation;

          "the Registrar" means—

          (a) in relation to any such society as is mentioned in section 22(1) of this Act, or to any self-regulating organisation for friendly societies which has applied for or been granted a recognition order made by him, the Chief Registrar of friendly societies; and

          (b) in relation to any such society as is mentioned in section 22(2) of this Act, or to any self-regulating organisation for friendly societies which has applied for or been granted a recognition order made by him, the Registrar of Friendly Societies for Northern Ireland.

          Recognition
          2. — (1) A self-regulating organisation for friendly societies may apply to the Chief Registrar of Friendly Societies or the Registrar of Friendly Societies for Northern Ireland for an order declaring it to be a recognised self-regulating organisation for friendly societies for the purposes of this Schedule.
          (2) An application under sub-paragraph (1) above—

          (a) shall be made in such manner as the Registrar may direct; and

          (b) shall be accompanied by such information as the Registrar may reasonably require for the purpose of determining the application.

          (3) At any time after receiving an application and before determining it the Registrar may require the applicant to furnish additional information.
          618
          (4) The directions and requirements given or imposed under sub-paragraphs (2) and (3) above may differ as between different applications.
          (5) Any information to be furnished to the Registrar under this paragraph shall, if he so requires, be in such form or verified in such manner as he may specify.
          (6) Every application shall be accompanied by a copy of the applicant's rules and of any guidance issued by the applicant which is intended to have continuing effect and is issued in writing or other legible form.
          2A. —(1) If, on an application duly made in accordance with paragraph 2 above and after being furnished with all such information as he may require under that paragraph, it appears to the Registrar from that information and having regard to any other information in his possession that the requirements mentioned in paragraph 2B below are satisfied as respects that organisation. he may, with the consent of the Secretary of State and subject to sub-paragraph (2) below, make an order ("a recognition order") declaring the applicant to be a recognised self-regulating organisation for friendly societies.
          (2) Where the Registrar proposes to grant an application for a recognition order he shall send to the Secretary of State a copy of the application together with a copy of the rules and any guidance accompanying the application and the Secretary of State shall not consent to the making of the recognition order unless he is satisfied that the rules and guidance of which copies have been sent to him under this sub-paragraph do not have, and are not intended or likely to have, to any significant extent the effect of restricting, distorting or preventing competition or, if they have or are intended or likely to have that effect to any significant extent, that the effect is not greater than is necessary for the protection of investors.
          (3) Section 104 of this Act shall apply in relation to the decision whether to consent to the making of a recognition order under this paragraph as it applies to the decisions mentioned in subsection (1) of that section.
          (4) The Registrar may refuse to make a recognition order in respect of an organisation if he considers that its recognition is unnecessary having regard to the existence of one or more other organisations which are concerned with such investment business as is mentioned in section 22 of this Act and which have been or are likely to be recognised under this paragraph.
          (5) Where the Registrar refuses an application for a recognition order he shall give the applicant a written notice to that effect specifying a requirement which in the opinion of the Registrar is not satisfied, stating that the application is refused on the ground mentioned in sub-paragraph (4) above or stating that the Secretary of State has refused to consent to the making of the order.
          (6) A recognition order shall state the date on which it takes effect.
          2B.—(1) The requirements referred to in paragraph 2A above are that mentioned in sub-paragraph (2) below and those set out in paragraphs 2 to 7 of Schedule 2 to this Act as modified in sub-paragraphs (3) and (4) below.
          (2) The rules of the organisation must take proper account of the Friendly Societies Act 1974 or, as the case may be, the Friendly Societies Act (Northern Ireland) 1970.
          (3) In paragraph 3 of Schedule 2—

          (a) in sub-paragraph (1) for the reference to Chapter V of Part I of this Act there shall be substituted a reference to paragraphs 4 to 11 below; and

          (b) in sub-paragraph (2) for the reference to Chapter VI of that Part there shall be substituted a reference to the powers exercisable by the Registrar by virtue of paragraph 12 below.

          (4) In paragraph 4—

          (a) for the references to Chapter V of Part I of this Act there shall be substituted references to paragraphs 4 to 11 below; and

          (b) in sub-paragraph (1A) for the reference to members of a recognised self-regulating organisation or recognised professional body there shall be substituted a reference to members of a self-regulating organisation for friendly societies.

          Revocation of recognition
          2C. — (1) A recognition order may be revoked by a further order made by the Registrar if at any time it appears to him —

          (a) that any requirement mentioned in paragraph 2B(1) above is not satisfied in the case of the organisation to which the recognition order relates ("the recognised organisation");

          (b) that the recognised organisation has failed to comply with any obligation to which it is subject by virtue of this Act; or

          (c) that the continued recognition of the organisation is undesirable having regard to the existence of one or more other organisations which have been or are to be recognised under paragraph 2A above.

          (2) Subsections (2) to (9) of section 11 of this Act shall have effect in relation to the revocation of a recognition order under subsection (1) of that section but with the substitution for references to the Secretary of State for references to the Registrar.
          Compliance orders
          2D —(1) If at any time it appears to the Registrar—

          (a) that any requirement mentioned in paragraph 2B above is not satisfied in the case of a recognised organisation; or

          (b) that a recognised organisation has failed to comply with any obligation to which it is subject by virtue of this Act,

          he may, instead of revoking the recognition order under paragraph 2C above, make an application to the court under this paragraph.
          (2) If on any such application the court decides that the requirement in question is not satisfied or, as the case may be, that the organisation has failed to comply with the obligation in question it may order the organisation concerned to take such steps as the court directs for securing that that requirement is satisfied or that that obligation is complied with.
          (3) The jurisdiction conferred by this section shall be exercisable by the High Court and the Court of Session.
          2E. —(1) If at any time it appears to the Registrar that the rules of a recognised organisation do not satisfy the requirements of paragraph 3(1) of Schedule 2 to this Act as modified by paragraph 2B(3) above he may, instead of revoking the recognition order or making an application under paragraph 2D above, direct the organisation to alter, or himself alter, its rules in such manner as he considers necessary for securing that the rules satisfy those requirements.
          (2) Before giving a direction or making any alteration under this paragraph the Registrar shall consult the organisation concerned.
          (3) Any direction given under sub-paragraph (I) above shall, on the application of the Registrar, be enforceable by mandamus or, in Scotland, by an order for specific performance under section 91 of the Court of Session Act 1868.
          (4) A recognised organisation whose rules have been altered by or pursuant to a direction given by the Registrar under sub-paragraph (1) above may apply to the court and if the court is satisfied

          (a) that the rules without the alteration satisfied the requirements mentioned in that sub-paragraph; or

          (b) that other alterations proposed by the organisation would result in the rules satisfying those requirements,

          the court may set aside the alteration made by or pursuant to the direction given by the Registrar and, in a case within paragraph (b) above, order the organisation to make the alterations proposed by it; but the setting aside of an alteration under this sub-paragraph shall not affect its previous operation.
          (5) The jurisdiction conferred by sub-paragraph (4) above shall be exerciseable by the High Court and the Court of Session.
          (6) The fact that the rules of a recognised organisation have been altered by or pursuant to a direction given by the Registrar, or pursuant to an order made by the court, under this paragraph shall not preclude their subsequent alteration or revocation by that organisation.
          620
          2F. —(1) The Registrar or the Secretary of State may make regulations requiring a recognised organisation to give the Registrar or, as the case may be, the Secretary of Stale forthwith notice of the occurrence of such events relating to the organisation or its members as are specified in the regulations and such information in respect of those events as is so specified.
          (2) The Registrar or the Secretary of State may make regulations requiring a recognised organisation to furnish the Registrar or, as the case may be, the Secretary of State at such times or in respect of such periods as are specified in the regulations with such information relating to the organisation or its members as is so specified.
          (3) The notices and information required to be given or furnished under the foregoing provisions of this paragraph shall be such as the Registrar or, as the case may be, the Secretary of State may reasonably require for the exercise of his functions under this Act.
          (4) Regulations under the foregoing provisions of this paragraph may require information to be given in a specified form and to be verified in a specified manner.
          (5) A notice or information required to be given or furnished under the foregoing provisions of this paragraph shall be given in writing or in such other manner as the Registrar or, as the case may be, the Secretary of State may approve.
          (6) Where a recognised organisation amends, revokes or adds to its rules or guidance it shall within seven days give the Registrar written notice of the amendment, revocation or addition; but notice need not be given of the revocation of guidance other than such as is mentioned in paragraph 2(6) above or of any amendment of or addition to guidance which does not result in or consist of such guidance as is there mentioned.
          (7) The Registrar shall send the Secretary of State a copy of any notice given to him under sub-paragraph (6) above.
          (8) Contravention of this paragraph shall not be an offence.
          2G. — (1) A recognised self-regulating organisation for friendly societies shall not exercise any powers for purposes corresponding to those of the powers exercisable by the Registrar by virtue of paragraph 12 below in relation to a regulated friendly society unless it has given reasonable notice of its intention to do so to the Registrar and informed him—

          (a) of the manner in which and the date on or after which it intends to exercise the power; and

          (b) in the case of a proposal to impose a prohibition or requirement, of the reason why it proposes to act and its reasons for considering that that reason exists and that it is necessary to impose the prohibition or requirement.

          (2) A recognised self-regulating organisation for friendly societies shall not exercise any power to which sub-paragraph (1)(a) above applies if before the date given in the notice in pursuance of that sub-paragraph the Registrar has served on it a notice in writing directing it not to do so; and the Registrar may serve such a notice if he considers it is desirable for protecting members or potential members of the society against the risk that it may be unable to meet its liabilities or to fulfil the reasonable expectations of its members or potential members.
          Prevention of restrictive practices
          2H. — (1) The powers conferred by sub-paragraph (2) below shall be exercisable by the Secretary of State if at any time it appears to him that

          (a) any rules made or guidance issued by a recognised self-regulating organisation for friendly societies;

          (b) any practices of any such organisation; or

          (c) any practices of persons who are members of, or otherwise subject to the rules made by, any such organisation.

          have, or are intended or likely to have, to a significant extent the effect of restricting, distorting or preventing competition and that that effect is greater than is necessary for the protection of investors.
          (2) The powers exercisable under this sub-paragraph are to direct the Registrar—

          (a) to revoke the recognition order of the organisation;

          621

          (b) to direct the organisation to take specified steps for the purpose of securing that the rules, guidance or practices in question do not have the effect mentioned in sub-paragraph (1) above;

          (c) to make alterations in the rules for that purpose;

          and subsections (2) to (5), (7) and (9) of section 11 of this Act, as applied by sub-paragraph (2) of paragraph 2C above, shall have effect in relation to the revocation of a recognition order by virtue of a direction under this sub-paragraph as they have effect in relation to the revocation of such an order under subparagraph (1) of that paragraph.
          (3) The practices referred to in paragraph (b) of subparagraph (1) above arc practices of the organisation in its capacity as such; and the practices referred to in paragraph (c) of that sub-paragraph are practices in relation to business in respect of which the persons in question are subject to the rules of the organisation and which are required or contemplated by its rules or guidance or otherwise attributable to its conduct in its capacity as such.
          (4) The fact that any rules made by a recognised self-regulating organisation for friendly societies have been altered pursuant to a direction given by the Secretary of State under this paragraph shall not preclude their subsequent alteration or revocation by that organisation.
          (5) Subsections (3) to (6) of section 104 of this Act shall apply for the purposes of this paragraph as if—

          (a) the reference to a notice in subsection (3) included a notice received under paragraph 2F(7) above or 22A(4) below;

          (b) the reference to the Secretary of State's powers in subsection (4) included his powers under paragraph 2H(2) above; and

          (c) the reference to practices in subsection (5) included such practices as are mentioned in paragraph 2H(1) above.

          Fees
          21. — (1) An applicant for a recognition order under paragraph 2A above shall pay such fees in respect of his application as may he required by a scheme made and published by the Registrar; and no application for such an order shall be regarded as duly made unless this subparagraph is complied with.
          (2) Subsections (2) to (4) of section 94 of this Act apply to a scheme under subparagraph (1) above as they apply to a scheme under subsection (1) of that section.
          (3) Every recognised self-regulating organisation for friendly societies shall pay such periodical fees to the Registrar as he may by regulations prescribe.
          Application of provisions of this Act
          2J. —(1) Subject to sub-paragraph (2) below, sections 89(1)(c), 106, 107, 108, 109(4), 149(1)(l). [Exemption. from liability for damages] 152 and 156(4) of this Act and paragraph 3(3) of Schedule 5 to this Act shall apply in relation to recognised self-regulating organisations for friendly societies as they apply in relation to recognised self-regulating organisations.
          (2) In its application by virtue of sub-paragraph (1) above section 108(1) of this Act shall have effect as if the reference to section 101(2) were a reference to paragraph 2H(1) above.
          (3) In its application by virtue of sub-paragraph (1) above subsection (2) of section [Exemption from liability for damages]of this Act shall have effect as if—

          (a) the reference in paragraph (a) to paragraphs 1 to 6 of Schedule 2 were to paragraphs 2 to 6 of that Schedule; and

          (b) paragraph (d) referred to the powers of the organisation under paragraph 12(4) below.

          (4) A direction under subsection (1) of section 152 of this Act as it applies by virtue of sub-paragraph (1) above shall direct the Registrar to direct the organisation not to take or, as the case may be, to take the action in question; and where the function of making or revoking a recognition order in respect of a self-regulating organisation for friendly societies is exercisable by a transferee body any direction under that subsection as it applies as aforesaid shall be a direction requiring the Registrar to direct the transferee body to give the organisation such a direction as it specified in the direction given by the Secretary of State.
          622
          (5) Subsection (4) of that section shall not apply to a direction given to the Registrar by virtue of this paragraph.

        PART II

          REGISTRAR'S POWERS IN RELATION TO REGULATED FRIENDLY SOCIETIES'.
          No. 195, in page 152, line 17, after second 'in', insert 'this Part of.
          No. 196, in page 152, line 26, after 'society', insert 'other than a member society'.
          No. 197, in page 153, line 18, at end insert 'other than member societies'.
          No. 198, in page 153, line 26, after 'society', insert 'other than a member society'.
          No. 199, in page 153, line 34, after 'society', insert 'other than a member society'.
          No. 200, in page 153, line 45, leave out from 'anything' to end of line 49 and insert
          'done by such a society in the course of or in consequence of an unsolicited call which, as respects the society, constitutes the carrying on of regulated business, if it is permitted to be done by the society in those circumstances—

          (a) in the case of a member society, by the rules of the recognised self-regulating organisation for friendly societies of which it is a member; and

          (b) in any other case, by regulations made by the Registrar with the consent of the Secretary of State.'.

          No. 201, in page 154, line 2, after 'society', insert 'other than a member society'.
          No. 202, in page 154, leave out lines 20 and 21. No. 203, in page 154, line 21, at end insert—
          '(v) the rules of a recognised self-regulating organisation for friendly societies in relation to which it is a member society.'.
          No. 204, in page 154, line 37, after 'paragraph', insert '(a)'.
          No. 205, in page 154. line 39, after 'or'. insert `(b) a contravention of.
          No. 206, in page 154, line 39, at end insert
          'or

          (c) a contravention by a member society of any rules of the recognised self-regulating organisation for friendly societies of which it is a member relating to a matter in respect of which rules or regulations have been or could he made under this Schedule or any such requirement could be imposed,'.

          No. 207, in page 155, line 21, at end insert—
          '(4) The powers conferred by this paragraph shall not be exercisable in relation to a member society, except that the powers conferred by virtue of section 62( I )(b) of this Act may on any of the grounds mentioned in sub-paragraph (2) above be exercised in relation to a member society at the request of the organisation in relation to which it is a member society.'.
          No. 208, in page 155, line 23, after 'society', insert
          '(other than a member society) or any self-regulating organisation for friendly societies'.
          No. 209, in page 156, line 1, leave out paragraph 15.
          No. 210, in page 156, line 11, leave out from first 'of' to end of line 13 and insert—

          (i) this Act or any rules or regulations made under it;

          (ii) any requirement imposed under paragraph 13 above;

          (iii) the rules of a recognised self-regulating organisation for friendly societies in relation to which it is a member society; or'.

          No. 211, in page 156, line 37, leave out from first 'or to end of line 39 and insert—

          (i) this Act or any rules or regulations made under it;

          (ii) any requirement imposed under paragraph 13 above;

          (iii) the rules of a recognised self-regulating organisation for friendly societies in relation to which it is a member society; or'.

          No. 212, in page 157, line 11, at end insert—

        'PART III

          TRANSFER OF REGISTRAR'S FUNCTIONS'.
          No. 213, in page 157, line 23, at end insert—
          '(1A) The body to which functions are transferred by the first order made under sub-paragraph (1) above shall be the body known as the Securities and Investments Board Limited if the Secretary of State consents to the making of the order and it appears to the Registrar that that body is able and willing to discharge those functions, that the requirements mentioned in paragraph (b) of that sub-paragraph arc satisfied in the case of that body and that he is not precluded from making the order by the following provisions of this paragraph or paragraph 19 or 20 below.'.
          No. 214, in page 157, line 35, leave out 'sub-paragraph (5)' and insert 'sub-paragraphs (5) and (6A)'.
          No. 215, in page 157, line 37, leave out '4' and insert `2'
          No. 216, in page 158, line 4, at end insert—
          '(6A) A transfer order—

          (a) may reserve to the Registrar the function of revoking a recognition order in respect of a self-regulating organisation for friendly societies on the ground that the requirement mentioned in paragraph 2B(2) above is not satisfied; and

          (b) shall not transfer to a transferee body the function of revoking any such recognition order on the ground that the organisation has contravened the provisions of paragraph 2G above.

          No. 217, in page 159, line 1, leave out from 'the' to 'paragraph' in line 3 and insert
          `reference to section 96(8)(6) of this Act there shall be substituted a reference to'.
          No. 218, in page 159, line 6, leave out 'paragraphs 1(2) and (3) and 4(2)' and insert 'paragraph 1(2) and (3)'.
          No. 219, in page 159, line 11, at end insert—
          '(d) paragraph 12A(3) shall have effect as if the reference to section 96(8) were a reference to paragraph 19(1) above.'.
          No. 220, in page 159, line 18, at end insert—
          '22A.—(1) This paragraph applies where the function of making or revoking a recognition order in respect of a self-regulating organisation for friendly societies is exercisable by a transferee body.
          (2) Paragraph 2A(2) above shall have effect as if the first reference to the Secretary of State included a reference to the Registrar.
          (3) The transferee body shall not regard the requirement mentioned in paragraph 2B(2) as satisfied unless the Registrar has certified that he also regards it as satisfied.
          (4) A transferee body shall send the Registrar and the Secretary of State a copy of any notice received by it under paragraph 2F(6) above.
          (5) Where the Secretary of State exercises any of the powers conferred by paragraph 2H(2) above in relation to an organisation the Registrar shall direct the transferee body to take the appropriate action in relation to that organisation.'
          No. 221, in page 160, line 7, leave out '106, 108 and'.
          No. 222, in page 160, line 27, leave out 'Section 109(1)'and insert
          'For the powers referred to in subsection (IA) of section 109 there shall be substituted references to the powers under paragraphs 21–42)(b) or (c) or 2A(2) above or the power mentioned in paragraph 25(3)(b) above and subsection (1) of that section.'.
          No. 223, in page 161, leave out line 3 and insert—

        `PART IV

          MISCELLANEOUS AND SUPPLEMENTAL
          26A. In the case of an application for authorisation under section 25 of this Act made by a society which is registered under the Friendly Societies Act 1974 within the meaning of that Act or is registered or deemed to be registered under the Friendly Societies Act (Northern Ireland) 1970 ("a registered society"), section 26(3)(b) of this Act shall have effect as if it referred only to any person who is a trustee, manager or member of the committee of the society.
          26B. Where the other person mentioned in paragraph (c) of the definition of "connected person" in section 92(9) of this Act is a registered society that paragraph shall have effect with the substitution for the words from "member" onwards of the words "trustee, manager (A member of the committee of the society".
          26C. In relation to any such document as is mentioned in subsection (1) of section 161 of this Act which is required or authorised to be given to or served on a registered society —

          (a) subsection (3)(c) of that section shall have effect with the substitution for the words from "member" onwards of the words "`trustee, manager or member of the committee of the society"; and

          (b) subsection (4)(c) of that section shall have effect as if for the words from -member" onwards there were substituted the words "trustee, manager or member of the committee of the society, the office which is its registered office in accordance with its rules".'.

          No. 224, in page 161, line 8, after '28', insert
          `The proviso to section 32(1) cf the Industrial Assurance Act 1923,'.
          No. 225, in page 161, line 8, leave out 'and'.
          No. 226, in page 161, line 10, after '1970', insert
          'and Article 36(2) of the Industrial Assurance (Northern Ireland) Order 1979'.
          No. 227, in page 161, line 10, leave out from 'dispute' to end of line 13 and insert
          `to which there apply any rules such as are mentioned in section 45(2)(j) of this Act which have been made by the Registrar under paragraph 4 above or any corresponding rules made by a self-regulating company for friendly societies; but where those rules relate only to part of the matters in dispute—

          (a) this paragraph shall not preclude the reference to the Registrar of the matters to which the rules do not relate; and

          (b) the Registrar may, if he thinks fit, delegate his functions under section 77 of the said Act of 1974 or, as the case may be, section 65 of the said Act of 1970 in respect of those other matters so as to enable all the matters in dispute to be determined in accordance with the rules.'.

          No. 228, in page 161, line 25, after 'and', insert
          `the Statutory Instruments Act 1946 shall apply to any such power as if the Chief Registrar of friendly societies were a Minister of the Crown.
          (2)'. —[Mr. Howard.]

    Clause 118

      APPLICATIONS FOR LISTING
      Amendments made: No. 229, in page 90, line 35, after 'societies', insert
      ',industrial and provident societies or credit unions'.
      No. 230, in page 91 line 37, leave out subsection (9) —[Mr. Howard.]

    Clause 129

      LISTING RULES: GENERAL PROVISIONS
      Amendment made: No. 231, page 199, line 7, after `evidence' insert:
      `or, in Scotland, sufficient evidence'. —[Mr. Howard.]

    Clause 130
      QUESTIONS AS TO PREVIOUS CONVICTIONS
      Amendment made: No. 232, in page 99, line 15, leave out clause 130. —[Mr. Howard.]
    Schedule 10
      TAKEOVER OFFERS:

        PROVISIONS SUBSTITUTED FOR SECTIONS 428, 429 AND 43o OF COMPANIES ACT I985
        Amendments made: No. 233, in page 162, line 34, leave out 'the announcement of.
        No. 234, in page 163, line 35, leave out subsection (8) and insert—
        '(8) Where during the period within which a takeover offer can be accepted the offeror acquires or contracts to acquire any of the shares to which the offer relates but otherwise than by virtue of acceptances of the offer, then, if—

        (a) the value of the consideration for which they are acquired or contracted to be acquired ("the acquisition consideration") does not at that time exceed the value of the consideration specified in the terms of the offer; or

        (b) those terms are subsequently revised so that when the revision is announced the value of the acquisition consideration, at the time mentioned in paragraph (a)above, no longer exceeds the value of the consideration specified in those terms,

        the offeror shall be treated for the purposes of this section as having acquired or contracted to acquire those shares by virtue of acceptances of the offer; but in any other case those shares shall be treated as excluded from those to which the offer relates.'
        No. 235, in page 164, line 48, leave out from '(5)' to 'and' in line 49.
        No. 236, in page 165, line 3, leave out subsection (10) and insert—
        '(10) Any sum received by a company under paragraph (b) of subsection (5), and any dividend or other sum accruing from any other consideration received by a company under that paragraph, shall be paid into a separate bank account, being an account the balance on which bears interest at an appropriate rate and can be withdrawn by such notice (if any) as is appropriate.
        No. 237, in page 165, line 9, after 'enquiry', insert—
        'made at such intervals as are reasonable'.
        No. 238, in page 165, line 12, leave out from 'received' to end of line 13 and insert—
        'or the company is wound up the consideration (together with any interest, dividend or other benefit that has accrued from it) shall be paid into court.
        (12) In relation to a company registered in Scotland, subsections (13) and (14) shall apply in place of subsection (11).
        (13) Where after reasonable enquiry made at such intervals as are reasonable the person entitled to any consideration held on trust by virtue of subsection (9) cannot be found and twelve years have elapsed since the consideration was received or the company is wound up—

        (a) the trust shall terminate;

        (b) the company or, as the case may be, the liquidator shall sell any consideration other than cash and any benefit other than cash that has accrued from the consideration; and

        (c) a sum representing—

        (i) the consideration so far as it is cash;

        (ii) the proceeds of any sale under paragraph (b) above; and

        (iii) any interest, dividend or other benefit that has accrued from the consideration,

        626
        shall be deposited in the name of the Accountant of Court in a bank account such as is referred to in subsection (10) and the receipt for the deposit shall he transmitted to the Accountant of Court.
        (14) Section 58 of the Bankruptcy (Scotland) Act 1985 (so far as consistent with this Act) shall apply with any necessary modifications to sums deposited under subsection (13) as that section applies to sums deposited under section 57(1)(a) of that Act.
        (15) The expenses of any such enquiry as is mentioned in subsection (11) or (13) may be defrayed out of the money or other property held on trust for the person or persons to whom the enquiry relates.'.
        No. 239, in page 166, line 21, leave out from first 'the' to end of line 27 and insert
        'holder of the shares may indicate his choice when requiring the offer to acquire them and the notice given to the holder under section 430A(3)—

        (a) shall give particulars of the choice and of the rights conferred by this subsection; and

        (b) may state which consideration specified in the offer is to be taken as applying in default of his indicating a choice;'.

        No. 240, in page 167, line 9, after 'costs', insert 'or expenses'.
        No. 241, in page 167, line 33, leave out 'known shareholders' and insert
        'shareholders who have been traced but'.
        No 242, in page 167, line 36, leave out from 'jointly' to end of line 42 and insert
        'and in that event this Part of this Act has effect with the following modifications.
        (2) The conditions for the exercise of the rights conferred by sections 429 and 430A shall be satisfied by the joint offerors acquiring or contracting to acquire the necessary shares jointly (as respects acquisitions by virtue of acceptances of the offer) and either jointly or separately (in other cases); and, subject to the following provisions, the rights and obligations of the offeror under those sections and sections 430 and 430B shall he respectively joint rights and joint and several obligations of the joint offerors.
        (3) It shall be a sufficient compliance with any provision of those sections requiring or authorising a notice or other document to be given or sent by or to the joint offerors that it is given or sent by or to any of them; but the statutory declaration required by section 429(4) shall be made by all of them and, in the case of a joint offeror being a company, signed by a director of that company.
        (4) In sections 428, 430(8) and 430E references to the offeror shall he construed as references to the joint offerors or any of them.
        (5) In section 430(6) and (7) references to the offeror shall be construed as references to the joint offerors or such of them as they may determine.
        (6) In sections 430(4)(a) and 430B(4)(a) references to the offeror being no longer able to provide the relevant consideration shall he construed as references to none of the joint offerors being able to do so.
        (7) In section 430C references to the offeror shall be construed as references to the join offerors except that any application under subsection (3) or (5) may be made by any of them and the reference in subsection (5)(a) to the offeror having been unable to trace one or more of the persons holding shares shall be construed as a reference to none of the offerors having been able to do so.'.
        No. 243, in page 167, line 47, leave out from 'but' to end of line 2 on page 168 and insert
        `, subject to subsection (1A), shares which any such associate holds or has contracted to acquire, whether at the time when the offer is made or subsequently, shall be disregarded for the purposes of any reference in this Part of this Act to the shares to which a takeover offer relates.
        (1A) Where during the period within which a takeover offer can be accepted any associate of the offeror acquires or contracts to acquire any of the shares to which the offer relates, then, if the condition specified in subsection (8)(a) or

        627
        (b) of section 429 is satisfied as respects those shares they shall be treated for the purposes of that section as shares to which the offer relates.'. —[Mr. Howard.]

    Clause 147

      INVESTIGATIONS INTO INSIDER DEALING
      Amendments made: No. 244, in page 109, line 28, leave out 'books or'. —
      No. 245, in page 109, line 40, leave out subsection (5). —[Mr. Howard.]

    Clause 149

      EXEMPTIONS FROM RESTRICTIONS ON CLOSURE
      Amendments made: No. 246, in page 112, line 16, leave out 'under' and
      `arising under or by virtue of.
      No. 247, in page 113, line 8, at end insert—
      '(jj) for the purpose of enabling or assisting an official receiver to discharge his functions under the enactment relating to insolvency or for the purpose of enabling or assisting a body which is for the time being a recognised professional body for the purposes of section: 3 of the Insolvency Act 1985 to discharge its functions as such;'.
      No. 248, in page 113, line 15, at end insert—
      '(ll) with a view to the institution of, or otherwise for the purposes of, any disciplinary proceedings relating to the exercise by a solicitor, auditor, accountant, valuer or actuary of his professional duties;'.
      No. 249, in page 114, line 22, at end insert—
      '(6A) Section 148 above shall not preclude the disclosure of information by the Dierector General of Fair Trading or any officer or servant of his or any person obtaining the information directly or indirectly from the Director or any such officer or servant if the information was obtained by the director or any such officer or servant for the purposes of or in the discharge of his functions under this Act (whether or not he was the primary recipient of the information within the meaning of section 148 above) and the dislosure is made—

      (a) for the purpose of enabling or assisting the Director, the Secretary of State or any other Minister, the Monopolies and Mergers Commission or any Northern Ireland department to discharge any function conferred on him or them by the Fair Trading Act 1973 (other than Part II or III of that Act), the Restrictive Trade Practices Act 1976 or the Competition Act 1980; or

      (b) for the purposes of any civl proceedings under any of those provisions;

      and information shall not be treated as restricted information for the purposes of section 148 above if it has been made available to the public by virtue of this subsection.
      (6B) The Secretary of State may by order modify the application of any provision of this section so as—

      (a) to prevent the dislosure by virtue of that provision; or

      (b) to restrict the extent to which disclosure is permitted by virtue of that provision,

      of information received by a person specified in the order pursuant to a Community obligation from a person exercising functions in relation to collective investment schemes who is also so specified.'.
      No. 250, in page 114, line 23, after '(3)', insert 'or (6B)'. —[Mr. Howard.]

    Clause 151
      RECIPROCITY
      Amendment made: No. 251, in page 114, line 37, leave out Clause 151. —[Mr. Howard.]
    Clause 155

      DISCLOSURE OF INTERESTS IN SHARES: INTEREST HELD BY MARKET MAKER
      Amendment made: No. 252, in page 120, line 27, at end insert
      '; and an interest of such a person in shares is an exempt interest if he carries on business as a market maker in the United Kingdom, is subject to such rules in the carrying on of that business and holds the interest for the purposes of that business.'.—[Mr. Howard.]

    Clause 157
      INVESTIGATION OF UNAUTHORISED PERSONS
      Amendment made: No. 253, in page 122, line 1, leave out Clause 157.1. —[Mr. Howard]
    Clause 158

      PROSECUTIONS
      Amendments made: No. 254, in page 122, line 5. after '114', insert 'or (Banking business)'.
      No. 255, in page 122, line 6, leave out from 'by' to second 'or' in line 7 and insert:
      'or with the consent of the Secretary of State'.
      No. 256, in page 122, line 9, after 'by', insert:
      'or with the consent or.
      No. 257, in page 122, line 20. at end insert—
      '(2A) Proceedings in respect of an offence under section (Banking business) above shall not be instituted—

      (a) in England and Wales, except by or with the consent of the Treasury or the Director of Public Prosecutions; or

      (b) in Northern Ireland, except by or with the consent of the Treasury or the Director of Public Prosecutions for Northern Ireland.'.

      No. 258, in page 122, line 20, at end insert—
      '(3) The functions to which section 96 above applies shall include the function of the Secretary of State under subsection (1) above to institute proceedings but any transfer of that function shall be subject to a reservation that it is to be exercisable by him concurrently with the designated agency and so as to be exercisable by the agency subject to such conditions or restrictions as the Secretary of State may from time to time impose:. —[Mr. Howard.]

    Clause 163

      INTERPRETATION
      Amendments made: No. 259, in page 125, line 12, at end insert—
      '"appointed representative" has the meaning given in section 41 above;'.
      No. 260, in page 125, leave out lines 36 and 37.
      No. 261, in page 125, line 43, at end insert—
      '"guidance", in relation to a self-regulating organisation, professional body, investment exchange, clearing house or designated agency, has the meaning given in section 8(4), 16(4), 35(3), 37(3) or 96(11) above;'.
      No. 262, in page 126, line 32 leave out 'exempt' and insert 'appointed'.
      No. 263, in page 127, line 10, at end insert—

      629
      '"recognised self-regulating organisation for friendly societies" has the meaning given in paragraph I of Schedule 9 to this Act.'.
      No. 264, in page 127, line 12, after 'organisation', insert
      'self-regulating organisation for friendly societies'.
      No. 265, in page 127, line 13, at end insert—
      '"registered friendly society" means—

      (a) a society which is a friendly society within the meaning of section 7(1)(a) of the Friendly Societies Act 1974 and is registered within the meaning of that Act; or

      (b) a society which is a friendly society within the meaning of section 1(1)(a) of the Friendly Societies Act (Northern Ireland) 1970 and is registered or deemed to be registered under that Act;'.

      No. 266, in page 127, line 13, at end insert—
      '"rules", in relation to a self-regulating organsation, professional body, investment exchange or clearing house, has the meaning given in section 8(3), 16(3), 35(2) or 37(2) above;'.
      No. 267, in page 127, line 16, at end insert' —
      '"trustee", in relation to a collective investment scheme, has the meaning giving in section 67(7) above;'.
      No. 268, in page 128, line 6, at end insert—
      '(4) In this Act, except in relation to a unit trust scheme or a registered friendly society, "manager" means an employee who—

      (a) under the immediate authority of his employer is responsible, either alone or jointly with one or more other persons, for the conduct of his employer's business; or

      (b) under the immediate authority of his employer or of a person who is a manager by virtue of paragraph (a) above exercises managerial functions or is responsible for maintaining accounts or other records of his employer;

      and, where the employer is not an individual, references in this subsection to the authority of the employer are references to the authority, in the case of a body corporate, of the directors, in the case of a partnership, of the partners and, in the case of an unincorporated association, of its officers or the members of its governing body.'. —[Mr. Howard.]

    Clause 165

      NORTHERN IRELAND
      Amendment made: No. 269, in page 128, line 39, leave out from 'and' to end of line 40 and insert
      'any fees received under this Act by the Registrar of Friendly Societies for Northern Ireland shall be paid into the Consolidated Fund of Northern Ireland.'. —[Mr. Howard.]

    Clause 166

      COMMENCEMENT AND TRANSITIONAL PROVISIONS
      Amendment made: No. 270, in page 129, line 3, at end insert
      `(2) Subsection (1) above does not apply to section (Offers of short-dated debentures) which shall come into force when this Act is passed.'.

    Schedule 11

      TRANSITIONAL PROVISIONS
      Amendment made: No. 271, in page 172, line 11, at end insert —
      'Recognised collective investment schemes
      6A. —(1) If at any time before the coming into force of section 78 of this Act it appears to the Secretary of State that the law of a member State other than the United Kingdom confers rights on the managers and trustees of authorised unit trust schemes entitling them to carry on in that State on termse
      630
      quivalent to those of that section —

      (a) investment business which consists in operating or acting as trustee in relation to such schemes; and

      (b) any investment business which is carried on by them in connection with or for the purposes of such schemes,

      he may by order direct that schemes constituted in that State which satisfy such requirements as are specified in the order shall be recognised schemes for the purposes of this Act.
      (2) Subsections (2) to (9) of section 78 of this Act shall have effect in relation to any scheme recognised by virtue of this paragraph; and the references in sections 23 and 163(1) of this Act to a scheme recognised under section 78, and in section 68(1) of this Act to a scheme recognised under Chapter VII of Part I of this Act, shall include references to any scheme recognised by virtue of this paragraph.
      (3) In section 78(3)(a) as applied by sub-paragraph (2) above the reference to the rights conferred by any relevant Community instrument shall be construed as a reference to the rights conferred by virtue of an order made under this pa ra graph'. —[Mr. Howard.]

    Schedule 12
      CONSEQUENTIAL AMENDMENTS
      Amendment made: No. 272, in page 173, line 3, leave out 'E' and insert 'F'. —[Mr. Howard.]
    New Schedule
      RESTRICTION OF REHABILITATION OF OFFENDERS ACT I974
        PART I

          EXEMPTED PROCEEDINGS
          1. Any proceedings with respect to a decision or proposed decision of the Secretary of State or a designated agency—

          (a) refusing, withdrawing or suspending an authorisation;

          (b) refusing an application under section 27(4) of this Act;

          (c) giving a direction under section 54 of this Act or refusing an application for consent or for the variation of a consent under that section;

          (d) exercising a power under Chapter VI of Part I of this Act or refusing an application for the rescission or variation of a prohibition or requirement imposed under that Chapter;

          (e) refusing to make or revoking an order declaring a collective investment scheme to be an authorised unit trust scheme or a recognised scheme.

          2. Any procedings with respect to a decision or proposed decision of a recognised self-regulating organisation or recognised professional body—

          (a) refusing or suspending a person's membership of the organisation or body;

          (b) expelling a member of the organisation or body;

          (c) exercising a power of the organisation for purposes corresponding to those of Chapter VI of Part I of this Act.

          3. Any proceedings with respect to a decision or proposed decision of the competent authority under Part IV of this Act refusing an application for listing or to discontinue or suspend the listing of any securities.
          4. Any proceedings with respect to a decision or a proposed decision of the Chief Registrar of friendly societies, the Registrar of Friendly Societies for Northern Ireland or a transferee body, exercising a power exercisable by virtue of paragraph 12 of Schedule 9 to this Act or refusing an application for the rescission or variation of a prohibition or requirement imposed in the exercise of such a power.
          5. Any proceedings with respect to a decision or a proposed decision of a recognised self-regulating organisation for friendly societies—

          (a) refusing or suspending a society's membership of the organisation;

          631

          (b) expelling a member of the organisation;

          (c) exercising a power of the organisation for the purposes corresponding to those for which powers arc exercisable by the Registrar by virtue of paragraph 12 of Schedule 9 to this Act.

        PART II

          EXEMPTED QUESTIONS
          Person pulling question

          Individual to whom question relates

          1. The Secretary of State or a designated agency.

          (a) An authorised person.

          (b) An applicant for authorisation under section 25 of this Act.

          (c) A person whose authorisation is suspended.

          (d) The operator or trustee of a recognised scheme or a collective investment scheme in respect of which a notice has been given by the operator under section 79(3) or an application made under section 80 of this Act.

          (e) An individual who is an associate of a person (whether or not an individual) described in paragraph (a), (b), (c) or (d) above.

          2. A recognised self-regulating organisation or recognised professional body.

          (a) A member of the organisation or body.

          (b) An applicant for membership of the organisation or body.

          (c) A person whose membership of the organisation or body is suspended.

          (d) An individual who is an associate of a person (whether or not an individual) described in paragraph (a), (b) or (c) above.

          3. A person (whether or not an individual) described in paragraph 1(a), (b), (c) or (d) or paragraph 2(b) or (c) above.

          An individual who is or is seeking to become an associate of the person in column 1.

          4. The competent authority or any other person.

          An individual from or in respect of whom information is sought in connection with an application for listing under Part IV of this Act.

          5. The competent authority.

          An individual who is or is seeking to become an associate of the issuer of securities listed under Part IV of this Act and from or in respect of whom information is sought which the issuer of the securities is required to furnish under listing rules.

          6. The Chief Registrar of friendly societies, the Registrar of Friendly Societies for Northern Ireland or a transferee body.

          An individual who is an associate of a society which is authorised under section 22 of this Act.

          7. A recognised self-regulating organisation for friendly societies.

          An individual who is an associate of a member or an applicant for membership of the organisation or of a society whose membership of the organisation is suspended.

        PART III

          EXEMPTED ACTIONS
          Person taking action

          Exempted action

          1. The Secretary of State, a designated agency, a recognised self-regulating organisation, a recognised professional body or the competent authority.

          Any such decision or proposed decision as is mentioned in Part 1 of this Schedule.

          2. A person (whether or not an individual) described in paragraph 1(a), (b), (c) or (d) or paragraph 2(b) or (c) of Part II of this Schedule.

          Dismissing or excluding an individual from being or becoming an associate of the person in column 1.

          3. The issuer of securities listed or subject to an application for listing under Part IV of this Act.

          Dismissing or excluding an individual from being or becoming an associate of the issuer.

          4. The Chief Registrar of friendly societies, the Registrar of Friendly Societies for Northern Ireland, a transferee body or a recognised self-regulating organisation for friendly societies.

          Any such decision or proposed decision as is mentioned in Part I of this Schedule.

        PART IV

          SUPPLEMENTAL
          1. In Part I of this Schedule proceedings- includes any proceedings within the meaning of section 4 of the Rehabilitation of Offenders Act 1974.
          2. In Parts II and III of this Schedule —

          (a) references to an applicant for authorisation or membership are references to an applicant who has not yet been informed of the decision on his application;

          (b) references to an application for listing under Part IV of this Act are references to an application the decision on which has n 3t yet been communicated to the applicant and which is not taken by virtue of section 120(6) of this Act to have been refused.

          3. Paragraph 1(d) of Part II of this Schedule and so much of paragraph 1(e) as relates to it —

          (a) apply only if the question is put to elicit information for the purpose of determining whether the operator or trustee is a fit and proper person to act as operator or trustee of the scheme in question;

          (b) apply in the case of a scheme in respect of which a notice has been given under subsection (3) of section 79 only until the end of the period within which the operator may receive a notification from the Secretary of State under that subsection or, if earlier, the receipt by him of such a notification;

          (c) apply in the case of a scheme in respect of which an application has been made under section 81) only until the applicant has been informed of the decision of the application.'.;[Mr. Channon.]

          Brought up, read the First and Second time, and added to the Bill.

    New Schedule

      'DISCLOSURE OF INFORMATION
      1. In section 133(2)(a) of the Pair Trading Act 1973 after the words "the Telecommunications Act 1984" there shall be inserted the words "or Chapter XII of Part I of the Financial Services Act 1986".
      2. In section 41(1)(a) of the Restrictive Trade Practices Act 1976 after the words "the Telecommunications Act 1984" there shall be inserted the worth "or Chapter XII of the Financial Services Act 1986".
      3. At the end of section 19(3) of the Competition Act 1980 there shall he inserted—
      "(h) Chapter XII of Part I of the Financial Services Act 1986".
      4. For subsections (1) and (2) of section 47A of the Insurance Companies Act 1982 there shall be substituted—
      "(1) Subject to the following provisions of this section, no information relating to the business or other affairs of any person which has been obtained under section 44(2) to (4) above shall be disclosed without the consent of the person from whom the information was obtained and, if different, the person to whom it relates.
      (2) Subsection (1) above shall not preclude the disclosure of information to any person who is a competent authority for the purposes of section 449 of the Companies Act 1985.
      (2A) Subsection (I) above shall not preclude the disclosure of information as mentioned in any of the paragraphs except (k) of subsection (1) of section 149 of the Financial Services Act 1986 or in subsection (3) or (4) of that section or as mentioned in section 449(1) of the Companies Act 1985.
      (2B) Subsection (1) above shall not preclude the disclosure of any such information as is mentioned in section 149(5) of the Financial Services Act 1986 by any person who by virtue of that section is not precluded by section 148 of that Act from disclosing it."
      5. After subsection (1) of section 437 of the Companies Act 1985 there shall be inserted—
      "(1A) Any persons who have been appointed under section 431 or 432 may at any time and, if the Secretary of State directs them to do so, shall inform him of any matters coming to their knowledge of their investigations:"
      and subsection (2) of section 433 of that Act shall he omitted.
      6. In section 446 of that Act—

      (a) in subsection (3) for the word "436" there shall be substituted the word "437"; and

      (b) subsection 5 shall be omitted.

      7.—(1) In subsection ( 1) of section 449 of that Act—

      (a) for paragraphs (a) and (b) there shall be substituted—

      "(a) with a view to the institution of or otherwise for the purposes of criminal proceedings;".

      (b) for paragraph (d) there shall be substituted—

      "(d) for the purpose of enabling or assisting the Secretary of State to exercise any of his functions under this Act, the Insider Dealing Act, the Prevention of Fraud (Investments) Act 1958, the Insurance Companies Act 1982, the Insolvency Act 1985 or the Financial Services Act 1986,

      (dd) for the purposes of enabling or assisting the Department of Economic Development for Northern Ireland to exercise any powers conferred on it by the enactments relating to companies or insolvency or for the purpose of enabling or assisting any inspector appointed by it under the enactments relating to companies to discharge his functions".

      (c) after paragraph (e) there shall be inserted—

      "(f) for the purpose of enabling or assisting the Bank of England to discharge its functions under the Banking Act 1979 or any other functions,

      (g) for the purpose of enabling or assisting the Deposit Protection Board to discharge its functions under that Act,

      (h) for any purpose mentioned in section 149(1) (b), (e) (h) (l) or (m) of the Financial Services Act 1986,

      (i) for the purpose of enabling or assisting the Industrial Assurance Commissioner or the Industrial Assurance Commissioner for Northern Ireland to discharge his functions under the enactments relating to industrial assurance,

      (j) for the purpose of enabling or assisting the Insurance Brokers Registration Council to discharge its functions under the Insurance Brokers (Registration) Act 1977,

      634

      (k) for the purpose of enabling or assisting. an official receiver to discharge his functions under the enactments relating to insolvency or for the purpose of enabling or assisting a body which is for the time being a recognised professional body for the purposes of section 3 of the Insolvency Act 1985 to discharge its functions as such.

      (l) with a view to the institution of, or otherwise for the purposes of, any disciplinary proceedings relating to the exercise by a solicitor, auditor, accountant, valuer or actuary of his professional duties,

      (m) for the purpose of enabling or assisting an authority in a country or territory outside the United Kingdom to exercise corresponding supervisory functions.".

      2 After subsection (1) of that section there shall be inserted—
      "(1A) In subsection (1) above 'corresponding supervisory functions' means functions corresponding to those of the Secretary of State or the competent authority under the Financial Services Act 1986 or to those of the Secretary of State under the Insurance Companies Act 1982 or to those of the Bank of England under the Banking Act 1979 or any other functions in connection with the rules of law corresponding to the provisions of the Insider Dealing Act or Part VII of the Financial Services Act 1986.
      (1B) Subject to subsection (1C), subsection (1) shall not preclude publication or disclosure for the purpose of enabling or assisting any public or other authority for the time being designated for the purposes of this section by the Secretary of State by an order in a statutory instrument to discharge any functions which are specified in the order.
      (1C) An order under subsection (1B) designating an authority for the purpose of that subsection may—

      (a) impose conditions subject to which the publication or disclosure of any information or document is permitted by the subsection; and

      (b) otherwise restrict the circumstances in which that subsection permits publication or disclosure.

      (1D) Subsection (1) shall not preclude the publication or disclosure of any such information as is mentioned in section 149(5) of the Financial Services Act 1986 by any person who by virtue of that section is not precluded by section 148 of that Act from disclosing it."
      (3) For subsection (3) of that section (competent authorities) there shall he substituted—
      "(3) For the purposes of this section each of the following is a competent authority—

      (a) the Secretary of State,

      (b) the Department of Economic Development for Northern Ireland and any officer of that Department,

      (c) an inspector appointed under this Part by the Secretary of State,

      (d) the Treasury and any officer of the Treasury,

      (e) the bank of England and any officer or servant of the Bank,

      (f) the Lord Advocate,

      (g) the director of Public Prosecutions, and the Director of Public Prosecutions for Northern Ireland,

      (h) any designated agency or transferee body within the meaning of the Financial Services Act 1986 and any officer or servant of such an agency or body,

      (i) any person appointed or authorised to exercise any powers under section 81, 93 or 147 of the Financial Services Act 1986 and any officer or servant of such a person,

      (j) the Chief Registrar of Friendly Societies and the Registrar of Friendly Societies for Northern Ireland and any officer or servant of either of them,

      635

      (k) the Industrial Assurance Commissioner and the Industrial Assurance Commissioner for Northern Ireland and any officer of either of them,

      (l) any constable,

      (m) any procurator fiscal.

      (4) A statutory instrument containing an order under subsection (1B) is subject to annulment in pursuance of a resolution of either House of Parliament.".
      8. After section 451 of that Act there shall be inserted—
      "Disclosure of information by Secretary of State.
      451A. The Secretary of State may, if he thinks fit, disclose any information obtained under this Part of this Act—

      (a) to any person who is a competent authority for the purposes of section 449, or

      (b) in any circumstances in which or for any purpose for which that section does not preclude the disclosure of the information to which it applies.".'.—[ Mr. Channon.]

      Brought up, read the First and Second time, and added to the Bill.

    Schedule 13

      REPEALS AND REVOCATIONS
      Amendments made:: No. 275, in page 175, line 30, at end insert—

      'Section 433(2)

      Section 446(5).'.

      No. 276, in page 175, line 41, column 3, at beginning insert—

      'Section 7.'.

      No. 277, in page 175, line 46, at end insert—

      1986 c.

      The Financial Services Act 1986

      Section (Offers of short-dated debentures). [Mr. Howard.]

    Title
    Amendment made: No. 278, in page 1, line 6, after 'dealing', insert
    'to make provision as to the disclosure of information obtained under enactments relating to fair trading, companies and insurance'.—[Mr. Howard.]
    10.11 pm,
    Mr. Howard: I beg to move, That the Bill be now read the Third time.
    The House will understand why I am moving the Third Reading and not the Secretary of State for Trade and Industry as planned. I know that my right hon. Friend and his family have the deepest sympathy of the House in their tragic loss.
    The Bill is a most important measure. The foundations of the Bill were laid in the White Paper on Financial Services in the United Kingdom published in January 1985. I should like to pay the warmest tributes to my right hon. Friend the Chancellor of the Duchy of Lancaster and my hon. Friend the Member for Edinburgh, Central (Mr. Fletcher) for their work on the White Paper, which was the precursor of the Bill. I also thank my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) for his work.
    The importance of the Bill reflects the importance to the British economy of the financial services sector. In many of the financial services the City of London is the international market leader — for example, in international banking where London handles a quarter of the world total of bank lending, in the Eurobond market, and in insurance.
    636
    The maintenance of a strong British invisibles sector is an objective of considerable importance to the British Government. But more than in almost any other industry the maintenance of London's position rests upon its reputation for integrity and fait dealing. That is why the Government attach the highest priority to the rooting out of financial malpractice. By establishing a new practitioner-based regulatory system within a statutory framework, the Bill will play a major part in stamping out unfair and dishonest practice.
    We have been concerned to create a tough and effective regime which will provide investors with a high level of protection, whilst at the same time avoiding a right bureaucratic structure incapable of adapting with the market. Our system of regulation has to be both effective and flexible. The balance is a fine one. We are convinced that in this Bill we have got it right.
    Throughout we have always made it clear that our own views were not rigid and immovable. We have invited and welcomed comments and suggestions. I am most grateful to all those outside and inside the House—especially members of the Standing Committee—for the time and effort they have devoted to helping us get the legislation right. In Committee, we had many long debates. There were moments of humour and drama, and there was the odd defeat here and there. Undoubtedly, the Bill is better for the Committee's consideration.
    We have accepted the proposal to give a special recognition in the Bill to the Securities and Investments Board, which hopes to become the designated agency. We have agreed to strengthen the powers of the designated agency over the recognised self-regulating organisations and to transfer more of the Secretary of State's powers to the designated agency. We have deliberately not created a statutory commission but have preserved the vital flexibility of the system. We have strengthened the effective enforcement of the provisions of the Bill by granting immunity to recognised self-regulating organisations. On other points, we are still consulting.
    We are now ready to send to the other place a Bill setting out clearly the basic intitutional shape and the powers of our proposed new regulatory structure, with the weight of this House behind it. I commend the Bill to the House.
    10.14 pm
    Mr. Ashdown: The Government foresaw, as early as 1981, the need for comprehensive legislation to protect the investors when it asked Professor Gower to report. It is not surprising that with all that planning, in June 1986, the Government still propose major amendments to the Bill. making it extremely difficult to farm a balanced judgment as to whether or not the Bill is adequate. Doubtless, we shall be told that it is all part of flexibility and open-mindedness. Frankly, it looks to me much more like muddleheadedness, confusion and retreat in the face of the vested interested groups which must not be offended prior to passing the plate round to replenish the Conservative coffers.
    On Second Reading, I welcomed the fact that the Government had brought forward a Bill to reform the City of London but said that it was not possible to welcome the Bill, as it was then constituted, as an istrument of that intention. Since then, we have fought for a balance, which must be struck, between the need to protect investors and the avoidance of regulations that are too onerous and

    637
    would only force users of the City of London to go elsewhere, thus causing loss of a great source of wealth for this country.
    The Standing Committee, of which I was privileged to be a member, worked constructively. I pay tribute to the way in which the Minister and his staff took care to inform us all with the various briefing notes, which were invaluable.
    I do not complain about the basic structure which has been proposed. There is flexibility in the arrangement. Had we legislated for similar flexibility when the Lloyd's Bill was before us, much trouble could have been prevented. There is nothing wrong with the SROs and professional bodies supervising the day-to-day activities of authorised or other persons overseen by the Securities and Investments Board. I am not happy, however, with the fact that the SIB will account for its stewardship in an annual report which, as things stand, we shall have no right to debate, certainly in the early years.
    My doubts and worries really start when we look at the flesh that covers this structure. Regulation will be by rules laid down by the SIB. The Bill contains certain guidelines for these rules, but such guidelines can mean all things to all men. When we tried in Committee to obtain commitments on specific matters, we were told that that was not for primary legislation but was for the rules. Therefore, we shall have no say on the content of the rules, that being solely a matter for the Secretary of State or the SIB.
    At this stage it is difficult to discover what the rules will be, for those that are available appear to be at best in draft, at second best in a consultative stage, and at worst not yet thought of. What I have seen in respect of competence tests, disclosure by insurance companies of commissions and surrender values, and cold calling fills me with a degree of apprehension, because they seem to lean over backwards time and again in favour of the practitioner. That is not good enough as far as I am concerned; nor will it be good enough, for instance, for the hon. Member for Chichester (Mr. Nelson), who delivered a clear exposition on this matter on Second Reading. He stated:
    "The principle function of both the designated agency and the SROs should not be to provide an easy working machine which is not subjected to criticism. Their principle objective is to protect investors.—[Official Report, 14 January 1986; Vol. 89, c. 991.]
    I could not agree more. But what guarantee is there that the Secretary of State will take that attitude when he examines the rules? Even if he did, what enforcement powers are there? It is one thing to have rules; it is another to apply them; and it is yet another to ensure their proper application and enforcement. Although I am happy that the SIB now has the power to insist on rules for the SROs, I very much regret that the Secretary of State has not seen fit to give it direct powers of enforcement. Apparently, he is happy for the SIB to rely on an application to the courts —probably a slow and ponderous procedure at best—or to invoke the nuclear deterrent of a revocation of recognition.
    It is with equal regret that I note, despite a useful debate on clause 20 in Committee, that the Secretary of State has now decided not to give the SIB "intermediate powers" over recognised professional bodies. The quality of the work that the SIB will do, even inside what I regard to be
    638
    its too limited powers, will in large part depend on the quality and type of persons appointed to it and the quality of the information available to them.
    I make two complaints on that score. First, I am extremely unhappy that the Governor of the Bank of England has a veto. It is unnecessary, and it turns out to be present for political purposes.
    Mr. Nelson indicated assent.
    Mr. Ashdown: I am glad to have the hon. Gentleman's agreement. He made an effective contribution in Standing Committee on that point.
    My second complaint concerns user and independent representations on the SIB. In debating schedule 5 we managed — in a process that must be something like drawing a tooth from an elephant—to get the Minister to say that he expected a "significant proportion" of the board members to be independent people. "Significant" and "independent" are words capable of wide interpretation. I shall not be satisfied that my view is the same as the Government's until I have seen what is meant, and I probably shall not do that until after the Bill is enacted. I will not regard two or three names plucked from the list of the retired or the great and the good as meeting that requirement. Much the same comments could be made about the user content of the SROs.
    Even if I am dissatisfied with the way in which members are appointed to the SIB and with the information available to them, I appreciate that the board's activities have to be paid for. I can see the force in the argument that if the board might be paid from state funds, it does have, in one sense, greater independence from those it is regulating. I am even more persuaded by the argument that if it is paid for by the City it avoids the clammy hand, or perhaps under this Government I should say dry hand, of the Treasury from falling on its activities. However, there must be a safeguard, and that safeguard should ensure that the city cannot limit funds to reduce the regulator's effectiveness. It was for that reason that I wanted the Secretary of State to have the reserve power to prescribe fees if he thought that insufficient resources had been made available for regulation. That power was denied.
    I shall touch briefly on three other points of concern. I shall deal with them briefly not because they lack importance, far from it, but because time is limited and the measure we are considering is very substantial. I cannot be entirely happy with the scope of the immunity granted to SROs, in particular immunity from damage claimed by investors themselves. That seems to significantly diminish the safeguards to investors. I believe that going further than the clear consensus of the Committee, which crossed all parties, in favour of immunity for the regulators but not going so far as immunity for investors, will be a decision which will return to haunt the Minister in years to come when there will be some problems. This Government will be blamed, rightly or wrongly, for taking a decision which went against the consensus, spanning all parties, which they could have enjoyed in response to pressure from the larger vested interest groups. Whether that is correct or not is irrelevant. That will be the charge levelled.
    I think that there are serious omissions from the Bill in respect of activities covered. I would have liked to have seen real property—by that I mean office blocks, shops,

    639
    factories and agricultural land—covered in schedule 1, because such assets are held extensively by pension funds and, therefore, appear indirectly in the savings of millions.
    In its present form the Bill will not cope with the growing complexities of the financial services industry, or expecially with the big bang, which is round the corner. I shall make a prediction to the Minister. The Bill will have to be changed in order to strengthen it and that will cause a period of instability in the City precisely when the Government wish to cause a period of stability. That will happen in due course. Whether that will happen sooner or later I do not know, but happen it will. If change is to be left in the hands of some, it may well end, as the hon. Member for Dagenham (Mr. Gould) has predicted, as a state organisation. It may be that if we get into that position it will be so difficult to unravel and resolve that that might be the only way left open to us.
    In that sense, I believe that the Bill, as it is currently presented, represents a missed opportunity. The crux of the Bill has always been, and has been properly identified by all as being the balance to be struck between maintaining the efficiency and flexibility necessary for the practitioners and the safeguards necessary for investors to ensure probity. The Bill, in its final form, comes down, as I suppose we might always have suspected with a Conservative Government, far too much on the side of the City and far too little on the side of the small investor.
    10.24 pm
    Mr. Gould: We welcomed the introduction of this Bill, we recognised the need for it and we agreed with the principle and broad structure of it. In particular, we thought that it was right to strike a balance between statutory regulations and a statutory framework and a substantial element of self-regulation. That was our starting point. I think that it is fair to say that, as we proceeded with the Bill, especially in Committee, we made substantial improvements to it.
    The Minister was generous in his recognition of the work of the Committee, sometimes against opposition from Conservative Members or, at least, his civil servants. The Committee managed to make major improvements to the working of the Bill. It is fair to pay tribute to Conservative Members, as well as to my hon. Friends and the hon. Member for Yeovil (Mr. Ashdown) for managing to construct the sort of all-party consensus which was our objective from the outset and which produced an unusually constructive approach to the matter.
    It is a matter for regret that, having agreed in principle with the Bill at the outset and having played our part in making the Bill a better measure, we continue to regard the Bill as a missed opportunity. It is defective, not only in the myriad small ways which the hon. Member for Yeovil enumerated, but in major matters. It does not cover the ground that it should cover. The exclusion of Lloyd's is a blot on the Bill and the Government. The failure to put in place a proper independent statutory commission will be regretted by the Government and is already being regretted by the City. Because we believe that those failings are important, we shall return to them when we return to Government and we shall vote against Third Reading tonight.
    Question put, That the Bill be now read the Third time:—
    The House divided: Ayes 142, Noes 24.

    Division No. 223]

    [10.28 pm

    AYES

    Amess, David

    Hogg, Hon Douglas (Gr'th'm)

    Ancram, Michael

    Holt, Richard

    Ashby, David

    Howard, Michael

    Atkinson, David (B'm'th E)

    Hunt, David (Wirral W)

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

    Jenkin, Rt Hon Patrick

    Baker, Nicholas (Dorset N)

    Jessel, Toby

    Baldry, Tony

    Jones, Robert (Herts W)

    Bellingham, Henry

    Key, Robert

    Benyon, William

    Knight, Greg (Derby N)

    Bevan, David Gilroy

    Knowles, Michael

    Biggs-Davison, Sir John

    Lang, Ian

    Blackburn, John

    Lawler, Geoffrey

    Blaker, Rt Hon Sir Peter

    Lennox-Boyd, Hon Mark

    Boscawen, Hon Robert

    Lester, Jim

    Bottomley, Peter

    Lightbown, David

    Bottomley, Mrs Virginia

    Lilley, Peter

    Bowden, Gerald (Dulwich)

    Lloyd, Peter (Fareham)

    Braine, Rt Hon Sir Bernard

    McCrindle, Robert

    Bright, Graham

    MacKay, John (Argyll & Bute)

    Brinton, Tim

    Maclean, David John

    Brooke, Hon Peter

    McNair-Wilson, M. (N'bury)

    Browne, John

    Malone, Gerald

    Bruinvels, Peter

    Mather, Carol

    Buck, Sir Antony

    Maxwell-Hyslop, Robin

    Burt, Alistair

    Meyer, Sir Anthony

    Butcher, John

    Miller, Hal (B'grove)

    Butler, Rt Hon Sir Adam

    Mitchell, David (Hants NW)

    Butterfill, John

    Nelson, Anthony

    Carlisle, John (Luton N)

    Newton, Tony

    Carttiss, Michael

    Ottaway, Richard

    Cash, William

    Page, Sir John (Harrow W)

    Chapman, Sydney

    Parkinson, Rt Hon Cecil

    Chope, Christopher

    Percival, Rt Hon Sir Ian

    Churchill, W. S.

    Powell, William (Corby)

    Clark, Dr Michael (Rochford)

    Proctor, K. Harvey

    Conway, Derek

    Rhodes James, Robert

    Coombs, Simon

    Roe, Mrs Marion

    Cope, John

    Rowe, Andrew

    Corrie, John

    Sainsbury, Hon Timothy

    Couchman, James

    Sayeed, Jonathan

    Crouch, David

    Shelton, William (Streatham)

    Currie, Mrs Edwina

    Shepherd, Colin (Hereford)

    Dicks, Terry

    Sims, Roger

    Douglas-Hamilton, Lord J.

    Smith, Tim (Beaconsfield)

    Dover, Den

    Spencer, Derek

    Dunn, Robert

    Stern, Michael

    Durant, Tony

    Stevens, Lewis (Nuneaton)

    Evennett, David

    Stewart, Allan (Eastwood)

    Fallon, Michael

    Stewart, Andrew (Sherwood)

    Fletcher, Alexander

    Taylor, Teddy (S'end E)

    Forman, Nigel

    Tebbit, Rt Hon Norman

    Forsyth, Michael (Stirling)

    Temple-Morris, Peter

    Forth, Eric

    Thomas, Rt Hon Peter

    Fox, Marcus

    Thompson, Donald (Calder V)

    Fraser, Peter (Angus East)

    Thompson, Patrick (N'ich N)

    Freeman, Roger

    Thorne, Neil (Ilford S)

    Galley, Roy

    Thurnham, Peter

    Garel-Jones, Tristan

    Twinn, Dr Ian

    Glyn, Dr Alan

    van Straubenzee, Sir W.

    Goodhart, Sir Philip

    Viggers, Peter

    Gorst, John

    Waidle, C. (Bexhill)

    Greenway, Harry

    Watts, John

    Griffiths, Sir Eldon

    Wells, Bowen (Hertford)

    Griffiths, Peter (Portsm'th N)

    Wiggin, Jerry

    Gummer, Rt Hon John S

    Wilkinson, John

    Hargreaves, Kenneth

    Winterton, Mrs Ann

    Harris, David

    Wolfson, Mark

    Harvey, Robert

    Wood, Timothy

    Hawkins, Sir Paul (N'folk SW)

    Yeo, Tim

    Hayward, Robert

    Hickmet, Richard

    Tellers for the Ayes:

    Hind, Kenneth

    Mr. Archie Hamilton and

    Hirst, Michael

    Mr. Francis Maude.

    NOES

    Ashdown, Paddy

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

    Banks, Tony (Newham NW)

    Campbell-Savours, Dale

    641

    Cocks, Rt Hon M. (Bristol S)

    Nellist, David

    Cook, Robin F. (Livingston)

    Orme, Rt Hon Stanley

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

    Pike, Peter

    Dewar, Donald

    Raynsford, Nick

    Field, Frank (Birkenhead)

    Sheerman, Barry

    Gould, Bryan

    Shields, Mrs Elizabeth

    Hogg, N. (C'nauld & Kilsyth)

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

    Hoyle, Douglas

    Wallace, James

    Hughes, Simon (Southwark)

    McDonald, Dr Oonagh

    Tellers for the Noes:

    McWilliam, John

    Mr. Frank Haynes and

    Millan, Rt Hon Bruce

    Mr. Allen McKay.

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

    Patronage (Benefices)
    Queen's Consent, on behalf of the Crown, having been signified.
    10.36 pm
    Sir William van Straubenzee: I beg to move,
    That the Patronage (Benefices) Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament
    I must first declare a personal interest, in that I am the patron of a living. The House well knows that such matters can no longer be passed for any financial consideration—quite rightly—and have not been for many years, so I have no financial interest to declare. Nevertheless, I wish the House to be aware of my personal interest.
    At this hour, I think that the House would like me to explain the Measure, but not at inordinate length. The Measure is very different from that which originally saw the light of day some years ago and which, as some of us here recall, excited considerable opposition and anxiety. It sought, in whole or in part, to abolish patronage.
    I think that it was wise for there to be a period of consultation and reconsideration. What is now before us is a very different Measure. It retains the right of patronage, although it makes what I believe are several improvements in the law which I shall describe briefly.
    The House has the advantage in these matters of the report of the Ecclesiastical Committee, the legislative Committee of the General Synod and, in recent years, the verbatim report of the proceedings before the Ecclesiastical Committee which, painstakingly, as with other measures, studied this measure and decided to report to both Houses that it was expedient.
    The measure has four purposes, the first of which is to establish certainty. I hope that this purpose was secured by expert approval. Part I, schedule I, to the measure provides for a register and lays down careful regulations about how that register should he established. The provisions concerning the register deal with the right to appeal and other measures which, I am sure, the House would not wish me to spell out in detail.
    At present there is no central register. I hope that all hon. Members would agree that it is beneficial to those in parishes, to the diocesan bishops and to patrons that there should be a conclusive register.
    The second purpose of the Measure is to confirm and put in legislative form the collegiality and partnership which is now the accepted pratice, in most cases, when appointments are being considered. Over the years I have been responsible for one parish, then for a parish with another joined to it and lastly responsible for a parish with colleagues in a joint patronage. We would never have considered it possible to proceed without careful consultations with the laity of the parishes concerned. We carried out such consultation at all stages. Hon. Members will be aware of certain rights which are given to parochial church councils.
    Part II of the measure provides, in legislative form, for the provision of collegiality, consultation and partnership when dealing with the appointment of the new incumbent. If some hon. Members are rather concerned at the unnecessary elaboration of those arrangements, may I say that it is possible, if there is consent on all sides, to dispose of those arrangements. It is necessary to have such

    643
    provisions in the cases—I hope they are few—when a person is disposed not to operate the provisions. It is right for the House to make sure that those rights are enshrined in law. I attach considerable importance to the third purpose of the Bill. I find it offensive that, in the 1980s, there should be only two classes of persons, Roman Catholics and Jews, who are specifically identified as persons who may not exercise right of presentation. We all understand the historical reasons for this, but I do not think it accords with the attitudes of the 20th century. I shall be happy to see that go. In precisely the same way as I as an Anglican would not expect to play an effective and active role in the appointment to some position of importance in another church, it is not unreasonable that the person concerned, who will exercise his right of patronage, shall be able to say that he is a communicant member, as defined, of the Church of England.
    I make it clear that the person concerned does not lose the right of patronage. It is the question of the presentation at the time in question, so if it were, for example, in a family—this is real to me in my family—it would at a later stage, or as the case might be. I hope that the House will feel that it accords far more with the general approach and attitudes of the present day that this narrow discrimination should be eliminated. Nevertheless, there should be a requirement for the person exercising the right of presentation to be a communicant member of the church to which he or she is appointing somebody of great importance to the active congregation concerned.
    Sir John Page: Having served with my hon. Friend on the Ecclesiastical Committee, I should know what he means by the term "presentation". But will he explain it?
    Sir William van Straubenzee: I was seeking to distinguish, but doubtless very inadequately, between the fact that a patron remains a patron, whether or not there is a vacancy, and that a person who is not a communicant member of the Church of England remains a patron regardless of that fact. If there comes a vacancy and either he or she has to exercise that right, that is the moment at which they have to say that they are a communicant member of the Church. Do I properly explain that?
    Mr. Peter Bruinvels: In those circumstances, does the bishop have more power or less in the right to a presentation where the patron is not a communicant member of the Church of England, so that the bishop would be the one to nominate the incumbant?
    Sir William van Straubenzee: No, Sir, I think not. The position of the bishop is the same in both circumstances, so he has neither more nor less power. A right is invested in the patron who is not a communicant member to nominate one who is. That nomination is a matter for the patron concerned, and has nothing to do with the bishop. I hope that my hon. Friend feels that that is a satisfactory answer. I am glad to see that my hon. Friend is nodding his assent.
    It is inevitable that when we start on an operation such as this there will be considerable number of anomalies in the law that need bringing up to date. I can illustrate this. It is because it is correctly no longer possible, nor has it been by a decision of Parliament made many years ago, for an advowson to be bought or sold, so equally it is no longer appropriate for certain rights to be associated with
    644
    property that can be bought and sold, and to which is attached an advowson, because the advowson no longer has any financial importance, nor would the House feel that it should. Such matters are dealt with in the fourth purpose of the measure.
    I feel sure that the House appreciates that the Ecclesiastical Committee, to my certain knowledge because I am a member of it, looked at this matter most exhaustively and carefully and decided to report to Parliament that the Measure is expedient. I have the figures but I will not bore the House by reciting them. It was overwhelmingly approved. I see that the voting figures record only four House of Clergy against, and no voting against in the House of Bishops or the House of Laity by the General Synod.
    I hope that the House will feel that I have trodden a middle course between treating the House merely as a rubber stamp — which I would never do, because it certainly is not a rubber stamp far Church legislation and I hope never will be—and taking too long. I commend the Measure to the House.
    10.51 pm
    Mr. J. Enoch Powell: Firstly, may I dispose of a procedural point which is also in a sense a constitutional point, that was first established some two years ago, I think, in connection with the Appointment of Bishops Measure. It is that we were privileged to have with us for a short time at the commencement of the debate the chairman of the Conservative party. He was in dinner dress in order to signify the Queen's consent to our entering upon these proceedings. It is, of course, upon the advice of the Government that the Queen's consent is given and that was intimated by the distinguished source from which the message was conveyed to us this evening.
    I place on record again as was done emphatically two years ago, the fact that no Government approval of the Measure, no espousal of the Measure by the Government, is implied in their providing the assistance to the House of the Queen's consent to our entering upon the matter. It is merely the means by which the Government facilitate the consideration by the House of Measures that come to it from the General Synod. There is no party issue or Government interest, and I assume that the Government would certainly not intend in any way to use their influence for or against such a Measure. In this context, the Government, as the Government, are very properly neutral.
    One major matter arises from this measure and it was dealt with faithfully by the hon. Member for Wokingham (Sir W. van Straubenzee). It is the change in the religious qualifications for the excercise of the function of patronage. Hitherto, that exercise has been forbidden exclusively to Roman Catholics and to Jews. I see no reason why either a Roman Catholic or a Jew could not exercise the lay functions of a lay patron in the filling of a living with as much consideration and as much wisdom and propriety as anyone else. I agree entirely with the hon. Member for Wokingham that this was an invidious limitation and it was high time that it was removed. The Synod has not proceeded by way of removing that limitation. It has not proceeded to enfranchise in the matter Jews and Roman Catholics. On the contrary, it has disfranchised everbody except Anglicans who have taken communion according to the rites of the Church of England or the rites of a church in communion with the

    645
    Church of England within the preceding 12 months. A religious test of that nature has been imposed upon the exercise of a function of patronage.
    The Ecclestiastical Committee was clearly horrified by the possibility that an indulgence which everybody would wish to be extended to a lay patron who was a Roman Catholic or a Jew should be exercised, heaven forfend, by a Methodist or a Baptist. I stop there for a moment to invite the House to contemplate the horrific consequences of a lay patron who happened to be a Baptist actually proceeding to exercise the functions of patronage. But that was not all, because further horrors were envisaged by the Ecclesiastical Committee to the effect that it might be a Mohammedan, a Hindu or a athiest who, but for the provisions in the Measure, could exercise the functions of a patron.
    There is an important issue at stake here. We are dealing with the functions of lay patrons, who may be, by the process of acquisition of the advowsons, of any religion or of none, and the Synod of the Church of England has told the House that it is its wish that that function should be limited to those who are confessionally members of the Church of England. That was candidly brought out by the hon. Member for Wokingham, who said that in exactly the same way—I noted his words, because I do not agree that the way is exactly the same — he as an Anglican would not expect to exercise a function in making appointments in any other church. Indeed not, but we are dealing with the Church of England, which is the established church of this land—the church which is the possession of all who inhabit England. Therefore, the considerations that should apply to the exclusion of persons who are not Anglicans from the exercise of the rights of patronage are different from those which would apply in the private and interior arrangements of any other church or sect.
    Indeed, the Bill—admittedly on a small scale—is an example of the tendency, which I fear is implicit in many of the procedures of the General Synod, to approximate the Church of England to a sect and, to that extent, to deprive it of the character of universality in the realm of England, which is one of its characteristic and beneficent marks.
    It is not right to impose a confessional test upon the exercise of the right of ownership of this hereditament of the patronage or advowson. If we do that, we raise several questions. This is not the only or the most important context in which advice may be given, or steps may be taken, in relation to appointments in the Church of England by persons who are not necessarily members of the church. Will we be told that it is the view of the General Synod that all those who are responsible for acting to make appointments in the Church of England should be communicant members of the Church of England? That would be a decisive declaration that the Church of England had become a sect, and had ceased to be the national church under the headship of the Crown in Parliament.
    There are wide and far-reaching implications in this apparently minor adjustment in the qualifications for the exercise of the right of patronage. That departure and its implications should be signalised on the occasion of this measure, so that we shall not be told in future—I am afraid that it is becoming a characteristic of the
    646
    proceedings of the General Synod in regard to Parliament that a small encroachment is made and is then claimed as a precedent — that we have created a precedent for saying that, in other respects, appointments and steps leading to them in the Church of England may be made only by persons, and advice may be offered only by persons who are communicant members of the Church of England.
    Mr. Simon Hughes: I have listened carefully to the right hon. Gentleman's remarks. Does not his arguement imply that there is a defect in the current practice of the Church of England, which when someone seeks membership requires that person to renounce membership of other Christian churches by formal statement before being admitted into the Church of England? That is inconsistent with the principle of universality or national church that he was expounding.
    Mr. Powell: The hon. Gentleman has told me something of which I was unaware. I was unaware that any such act of renunciation was required of parents who bring a child for baptism, or even of those who present themselves for the first time to receive holy communion in the Anglican church. It may or may not be that the hon. Member is well informed. I am not aware that there is such exclusivity in the nature of membership of the Church of England in such a deed of renunciation that has to be made before a person resident in England can exercise his legal right to the ministrations of the Church of England.
    Mr. Frank Field: Adults seeking membership to the church who belong to other parts of the church are asked to accept the 39 articles. Given what some of those articles say, it may well cover the point made by the hon. Member for Southwark and Bermondsey (Mr. Hughes).
    Mr. J. Enoch Powell: I am much obliged.
    11 pm
    Mr. William Powell: I wish to associate myself with the central theme of the remarks made by the right hon. Member for South Down (Mr. Powell). There is not the slightest doubt in my mind that we have on all occasions to assert in the House that the Church of England is a national, not a sectional, church. We must on all occasions that we can articulate the primacy of the Crown in Parliament in the regulation of the affairs of the Church of England. The Church of England is not a sectional church. It can never be so. If it ever wishes to become so, it will simply fall apart into its own individual elements, and it will count for nothing in the country.
    For myself, I find it impossible to oppose the measure. However, in saying that, I must tell my hon. Friend the Member for Wokingham (Sir W. van Straubenzee) that in my opinion it is a quite unnecessary measure. As we have been told, it has had a long period of gestation. On several occasions in its gestation. its final form has been very uncertain. It has veered one way and then another way. Fortunately, as has been pointed out, what we now have is a sensible measure. In its gestation, I think it had every prospect of being a very foolish measure but sense has prevailed.
    Nevertheless, over this long period of gestation, a considerable amount of time has been taken up first in Convocation—that shows how old it is—then in Synod

    647
    and in various committees, trying to work out what would be the best method of securing a general patronage law for the Church of England. I am not aware of any evidence at present which shows that such a measure is necessary. I am not aware of any substantial abuse of existing procedures which compels changes to be made. It would have been a very good thing if Convocation and then Synod had decided to leave well alone, but they chose not to.
    I assert further that in all these synodical discussions and committees involving people travelling up to London no doubt from all over the country, considerable sums of money have been spent over the years. That money would have been much better spent within the Church of England in securing a wider number of clergy and deploying that clergy in parishes throughout the country.
    The fundamental of the Church of England is that it is a parochial church. All its strength lies within its parishes, and not within a synod, a committee or even within a diocese as a diocese. The particular character of the Church of England lies within the parochial ministry.
    I for one—and I know that I am not alone—would wish that all the resources of the Church be devoted to parochial church life and to the preparation and training of the clergy to ensure that the clergy is available, and not to the running of the General Synod, the staffing of the General Synod, the running of its committees and so on.
    Mr. Simon Hughes: We understand the issue about the cost of administering any body as large as the Church of England. However, I trust that the hon. Gentleman will accept that there is great merit in national debate, both temporal and spiritual, and for the Church to be seen to come together to pronounce on matters of importance to the nation. Since the synods back to Whitby and even further, there has been great merit in the Church coming together to seek a common mind. When it does so, as it did recently on the matter of the Sunday trading with almost total unaminity, it has a substantial effect on the affairs of this place and of the nation. Surely we should not renounce that.
    Mr. Powell: I am grateful to the hon. Gentleman for that intervention. I am aware that in the Church of England there are different traditions and groups of people who attach different degrees of importance to various elements within it. I speak as the son of a clergyman. It is 50 years since he was ordained and he has spent 44 years in the same parish. He finds the idea of the national Synod simply preposterous. Not everyone takes that view, but some do — and they should not be ignored. It is not just one obscure country clergyman who takes that view, but vey many.
    One danger within the Church of England is that those in the synod had come to believe that the synod is the only thing that matters. One of the very great dangers is for example, that episcopal promotion is now almost entirely granted to those who take part in the affairs of the synod——
    Mr. David Crouch: It always was.
    Mr. Powell: I see that my hon. Friend the Member for Canterbury (Mr. Crouch) is here, and it is appropriate that he should seek to intervene, albeit from a sedentary position. However, he is not correct—it has not always
    648
    been the case. Many of the greatest pastors of the Church of England have played no part in the convocational synodical discussions.
    The greatest danger that threatens parochial life in the Church of England is the way in which episcopal patronage is being exercised. In the days when there were far many more lay patrons, there was an opportunity for independence—for the parson's freehold to grant the independence — which meant that everything was not dependent on the one fountain, which was the bishop of the diocese, and increasingly area bishops within diocese; yet they have no authority in law to exercise the functions that they are increasingly delegated.
    Some 40 per cent. of patrons are bishops, but in rural England where parishes are increasingly doubled, trebled and quadrupled—even five, six and seven parishes are put together, as has happened in east Anglia and many other parts of the country — invariably there are different patrons, and then the patronage actually conies to be exercised by the bishop of the diocese. Therefore, although in 40 per cent. the patron is actually the bishop, he is really exercising the patronage in a great many more cases.
    It goes one step further. One of the major changes in the Church of Englnd in the past generation has been that the clergy no longer stay in their parishes for a measurable length of time. In any parish church in the country one can see the long incumbancies through the 18th, 19th and early 20th century— but for the post-war era, they are for only three, four or five years. There are parishes close to the parish that my father has he d for nearly five decades where there have been 11 changes of incumbant during that time. Bishops are the very people who are sending a man to one parish and then moving him on, and then on again. It means that it is impossible to establish the stability in the parish that holds together the community of the Church of England, which is the very strengh of the church in the parish.
    Bishops are not exercising their patronage in a way which is necessarily in the best interests of the parishes, and that concerns me more than anything else. They are entitled to make a judgment, of course, and their resources may not be as adequate as they would wish. One of the depressing features in the Church of England in the past generation has been that the quality of the men who come forward for ordination has not always been as high as in earlier times. I revert again to the case of my father, about which I have personal knowledge. He held a parish in Oxfordshire just before the second world war and he was the only clergyman in the rural deanery who was not a doctor. It is inconceivable now that there could be a rural deanery in which a dozen or more clergymen were all doctors of divinity, music or whatever. The decline in the clergy is there for all to see, and the Church of England has declined with it.
    Beyond that, the feature of the measure which worries me are the circumstances in which the bishop of the diocese comes into conflict — perhaps an unspoken conflict, but a real one—with the wishes of the parish when it comes to the appointment of a new incumbent. The old battles between the lay patron and the incumbent that were taken up in Victorian novels in the time of Lady Catherine de Bourg have passed, and we find now that patronage is increasingly exercised by the bishops.
    In the parish in which I live new incumbents have been twice appointed in the past decade by the bishop of the

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    diocese, and on each occasion contrary to the wishes of the parochial church council. I have not the slightest doubt that on each occasion the bishop of the diocese had good reason for wanting to make the appointment, but on each occasion his wishes clashed with those of the parochial church council.
    What are we left with when that happens in rural England? The parish is told, "If you do not have this man, it is likely that your parish will be joined with another and the prospective clergyman will live in a vicarage or rectory some three, four or five miles away and not in the vicarage or rectory of the community." When that happens, the people feel that they are under an obligation to take what is on offer.
    Mr. Harry Greenway: I have some sympathy with what my hon. Friend is saying, but is it not fair to say that under the measure the lay representatives of the parochial church council will be involved in the selection of the new incumbent and will have a veto over the appointment? Does the measure not say that? It does not set out how the representatives will be chosen, whether they will be mandated and how they will operate, and I think it should, but I think it says that the representations of the parochial church council will have an involvement.
    Mr. Powell: My hon. Friend is right, but beyond that there is something more subtle. Let us suppose that they exercise their veto and the bishop of the diocese says, "There is nobody else who I can offer you"? There may then be another prolonged vacancy. If there is a prolonged vacancy, especially in a small parish, it is likely that the congregation will begin to fall apart. Members of the congregation will drift off to other churches. Long vacancies are bad, especially in small parishes, and they must be avoided. If the issue is pushed to the point of veto, there is a danger that the parish will end up with nothing. That is what worries many parishes as they face ever changing circumstances with new clergymen being appointed to them.
    I was brought up to believe in the principle that if it is not necessary to change, there should be no change. I must tell my hon. Friend the Member for Wokingham that in this instance I cannot find the evidence upon which we should make changes. Accordingly, I think that it would be better to leave things as they are. Having said that, I think that with the important constitutional provisos which the right hon. Member for South Down has articulated and which I fully support, it would not be right to oppose the measure.
    11.15 pm
    Mr. Frank Field: Many hon. Members will be in considerable sympathy with the views expressed by the hon. Member for Corby (Mr. William Powell). However, I had difficulty trying to relate what he said to the measure before us. He made some good points, but others were really a cry to understand how the Church of England has declined in they way it has. I fear that it will take more than an hour and a half of parliamentary time to reverse that decline.
    Before the debate bagan, I would have put all the money I have on it being an uncontroversial debate. That
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    may be a sign of my frail judgment, or it may be a sign of how interesting this place is—that debates can take off and get a momentum of their own.
    I have put aside what I wanted to say. Instead, I shall address myself to the main point made by the right hon. Member for South Down (Mr. Powell). He knows—other hon. Members may not — that on the issue of whether the Church of England should remain a national church, he and I stand shoulder to shoulder. I am destressed at the tendency of the Church to move itself to a sect and to have that cosiness that comes with it.
    There is a point of difference between the right hon. Gentleman and I this evening, because I support the Measure. I maintain, as the right hon. Gentleman does, that the Church is a national church and has a mission to the whole nation. Regarding the internal runnings of the Church, we must take on board the difference between the present position and that which existed 100 or 200 years ago. At that time, it was acceptable for a national church to allow other people, apart from the two categories outlined by the Second Church Estates Commissioner, to appoint clergy to livings in the Church of England, when few people in other parts of the Church held that privilege.
    Today, it is possible to argue that we should have the exclusive right to appoint people to livings in the Church of England— in other words, practising communicants of that part of the Church — and at the same time maintain that we have a mission to the nation and oppose the Synod when it, as it often does, goes down the path of trying to move the Church to the status of a sect.
    The hon. Member for Corby believes that the Synod is a waste of time and resources. When the next elections for the Synod are held, it may be possible for people who hold that view to try to get elected. Then they could try to lessen the number of Synod meetings. If one looks at other parts of the Anglican communion, one sees that Synods do not have to meet three times a year. I sympathise with those who want to see, in certain circumstances stronger leadership from the bishops. I sympathise when they say that they are often bogged down in activities and with committees of the General Synod.
    I accept the inconsistencies. I do not put that stronger in the line I take.
    Conservative Members expressed their agreement, facially, when the point was made that we are against bishops possessing more power of appointment. As a libertarian, part of me supports that line. As a church which believes in the apostolic succession and obviously gives a certain command to the bishops in the governing of the Church, I feel that to some extent it is overshadowed by the Synod.
    I put aside the points I wanted to make to argue with the main point put by the right hon. Member for South Down. As so often happens in these debates, the answers that one gives are not always as neat as one would wish. I recall a statement made by Aneurin Bevan in the Chamber after listening to the then Prime Minister, Neville Chamberlain. He said, that it was like a trip around Woolworth — everything was in place and nothing was priced over sixpence. In this life, it is difficult to get everything in place and have nothing priced over sixpence.
    Given the circumstances in which the Church finds itself and given that the Church would be better to spend less of its time reforming its internal arrangements, I do not think that on this issue it has done a bad job. I said that I thought that this would be an uncontroversial

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    measure. I notice that, with some sense of timing, the Vote Office today published the women deacons Measure. I thought that I would he able to say that this Measure would be passed peacefully. I do not think that that will happen with the second Measure. Indeed, I am not sure even about this one now
    11.20 pm
    Mr. Peter Bruinvels: I must declare an interest as a current member of the General Synod. I greatly enjoy serving on it, and it is not surprising that I do not find it a waste of time. It might be an expensive body to run, but so far I do not think that I have charged my local diocesan synod too much, if anything. I must declare also that I have voted on this measure in the past, both on the Guildford diocesan synod and in my local Dorking deanery synod. I am also a member of the board of patrons in the diocese. That does not mean that I agree with everything in the Measure. We are talking about the established Church of England, which is the property of its people and of the Crown. It is only right that such a Measure should come before the House, because there are 11,500 benefices, 28 per cent. of which are in the hands of individual patrons.
    I am concerned that the bishops seem to have more and more power. But I make no critcism of the bishops. There is much to be commended in the historical role of a patron. The village life, with the patron in his personal pew and certain responsibilities, is to be admired. Patrons have a historical right to appoint those people whom they believe to be best suited to their benefice.
    Under clause 8 a registered patron must be a communicant of the Church of England. I believe that, as long as a person is not an atheist, he should have the right to act as a registered patron. I regret that a representative has to be found to stand in for him if he is not a communicant of the Church.
    The restrictions imposed in the Measure are understandable, but an existing patron—I hope that my hon. Friend the Second Church Estates Commissioner will explain this to me—experiences no such restriction. It is true that many patrons have held their positions for years, but I believe that they should be allowed to continue as patrons. Many churches in Leicester villages are still in tha hands of patrons. One patron has five churches under his command.
    As for the registration of patrons, any diocesan handbook lists them and their names are found also in Crockfords. The facts are there already. I cannot unerstand why it is necessary to register patrons when they are already registered. Under the Measure, a patron who cannot make the necessary declaration will not be able to exercise that important right to present. With the united benefices that now exist, his role becomes even more important.
    I am especially concerned about the patron's representative. He may be a church warden, who cannot serve as one of the two lay representatives. I am afraid that the patron's representative may on many occasions, be a bishop. That seems to be taking power away from the communicants and giving more power to the bishops. We admire bishops for what they have to do but I do not want to see a magic circle, with the bishop's favoured people coming forward. Indeed, I believe that, to a large extent, the patron understands the communicants and the
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    residents of the parish far more than the bishop. The bishop is far more concerned with issues other than local parochial matters.
    The votes in the synod, before I became a member, made it clear that all members or the laity voted in favour of the Measure. The vote was 121 to nil. Only four of the 138 clergy voted against it. I would say, "They would, wouldn't they". It is interesting, having been a member of the synod for eight months, to see how certain members of the clergy perform in front o their bishops, obviously in the hope of preferment in the long run. Some are commendably independent. However, it is almost a closed shop and it seems that the people being promoted and getting new benefices tend to be those who are most supportive of the bishop. I welcome independence in the Church of England, but I am a little worried about that.
    There are not enough people coming forward to the Ministry and it is important to get the right kind of people. It is a calling and in controversial questions recently it was clear that, unfortunately, some parents of prospective clergy are deterring their sons from coming forward. It is a calling but there is, of course, a financial increment involved. It is a sad fact but it is necessary because clergy must be able to survive.
    The patronage Measures are getting more complex and confusing. I rather like the Trollope way of church life. There was a bit of mystery. Certain favoured people came forward, but I want to ensure that the traditionalists are brought forward for presentation. I know that this measure retains the right of patronage and I know that consultation of the laity will still exist. However, I want the laity to be independent of bishops. I want them to work with the bishops but it is the church wardens who know what is best for their parish. The church wardens, in conjunction with the patron, can decide the future of that church.
    Members on both sides of the House agree that a long interregnum is a serious matter. It can damage the future of the Church and these matters have to be speedily resolved. The Average wait for a new incumbent seems to be about eight months, sometimes longer. That is too long. Therefore, we must speed up the way in which incumbants are selected.
    The historical relationship is important. The role of the bishop would be purely in a consultative capacity. Sometimes the bishops do not get on with the patrons. The bishop may be new to the diocese and the patron and his family may have been their for centuries. The bishop must pay far more attention to the views of the patron.
    The rights to presentation must be carefully monitored, as they must be when the church warden is given the role of presentation. The universities, the Lord Chancellor and representatives of the Crown have a number of rights as patrons. It seems that anyone cm be a patron. There is nothing wrong with that; but who is really representative of the Church? Most of the patrons I know have a total interest in the church of England. However, some patrons are the exception and do not wish to get involved in the running of the Church and that is why the Measure has been brought forward. It is right that we should have the Measure for them but not as a general rule. The patron must be a believer, but he must get on well with the church wardens. He will appoint them as the parish representatives, but both of them must listen to what the paraochial church council would like.

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    Clause 14 gives the power to the bishops to appoint a priest to the benefice. I would much prefer to see more emphasis put on clause 15, with the patron appointing his personal choice. However, clause 15 provides for the approval of the bishop. We should consider that because we must maintain the independence of mind which some patrons have had and which has preserved the Church of England from the modern laissez-faire approach, which is more Socialist than Christian.
    We must also consider the role of the archbishop. Sometimes difficulties arise, and the archbishop must review the position. I hope that the need to introduce an archbishop to resolve a disagreement never arises. Existing patrons must be allowed to continue their good work.
    The measure is complex, and having heard some of my colleagues speak I am tempted to wonder why it is necessary. Indeed, has not the Church of England been getting along nicely? We should encourage more people into the ministry so that we have a wider selection of candidates. The number of people applying for the Advisory Council for the Church's Ministry has so deteriorated that the Church should develop its skills in promoting itself in the market and encouraging more believers to come forward.
    Clause 8, on the exercise and rights of presentation, should be noted with interest. The appointment of today's clergy is important to preserve the impartiality of the Church of England and the Christian faith which needs guidance, our help and prayers. We must ensure that the right type of people properly represent the Church. If the wrong people are appointed now, they could be bishops in 20 years' time, and where would the Church of England be then?
    11.31 pm
    Mr. Simon Hughes: All those interested in this matter, and certainly all those who are members of the Church of England by admission, baptism or confirmation, will agree with the last point made by the hon. Member for Leicester. East (Mr. Bruinvels). He may not always get such cross-party support.
    The substantive issue is how one manages — I am fully aware that it is not only within the lot of men and women to manage—the advancement of the ministry within the Church, and how one seeks by every measure possible to increase the number of people able to give full-time ministry to the Christian gospel in this land. We are doing pretty badly regarding the number of those who are full-time ministers and the number who believe in the Christian faith.
    Two colleagues from the House—who in this context and I hope on other occasions the Official Report will permit me to call my hon. Friends, although they are not party colleagues— the hon. Members for Burnley (Mr. Pike) and for Bury, North (Mr. Bury), and I were in the Anglican church in the Alexandra township outside Johannesburg in South Africa a week and a half ago. We were reminded of the enthusiasm and commitment to the Church and gospel there, despite the most horrendous adversity. Between apparently 75 and 80 per cent. of the 27 million population of South Africa still proclaim their belief and adherence to Christianity—as a result in large parts of the missionary work of the past few centuries.
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    When one compares that with the level of Christian adherence here—there is another debate about the link between the Christian belief and the political system——
    Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I am anxious to be tolerant, but the hon. Gentleman must relate his remarks to the measure before the House.
    Mr. Hughes: My point is that we have a challenge to meet because our ability to bring ministers into the Church is certainly more limited and increasingly insufficient to meet the needs of Britain.
    The hon. Member for Wokingham (Sir W. van Straubenzee) introduced the debate with his customary efficiency and expertise, for which the House will be grateful. I shall deal in turn with each of the four matters to which he alluded.
    The first purpose was to establish certainty. It was the simple administrative matter of providing that a record be kept of patrons thoughout the Church. Everyone would welcome that.
    The report that was supplied to the House by the Ecclesiastical Committee noted that the matter before the House is
    "the only major area of the law of the Church of England in which, since 1945 there has not been a Measure designed to modernise and update the law."
    Clearly, the measure is also a technical matter. We are told that part of the fourth purpose of the measures is to amend and repeal 35 statutes which go back to the 16th century. It would consolidate the law. I hope that everyone will benefit from a measure that makes the law in this area much clearer. It would be specifically more useful where people were looking for the names and the lists of patrons.
    The second and third expressed purposes are the most crucial. The hon. Member for Birkenhead (Mr. Field) has said that the debate has centred upon certain important issues, despite the breadth of the measure. The second purpose was described in the opening speech as having the intention of affirming collegiality and partnership. Without going into the history of the matter in detail, the report from the Ecclesiastical Committee confirms that the debate on this subject has had a long history in the Church, dating back for decades.
    For many years. the Church went in a different direction.
    In the mid-1970s the Synod voted on the system of patronage that it had inherited. It came close to carrying an amendment calling for the abolition of patronage. The amendment was carried in the houses of clergy and laity and was lost only in the House of Bishops, because of a tied vote.
    I started to consider the matter from the premise that patronage and, thereby the ability of lay people to appoint clergy irrespective of the lay person's position of seniority in the Church, was something that we should do away with. However, I realised that when the Church was divided on the issue it was more important for the Church to achieve unity. The Church has done that. According to the figures available to us only a total of four votes were cast against the Measure in the three Houses as a whole.
    I take the view—I respect those of others, as I know do all Members of the House—that when the Church of England takes a clear view, then the House should seek to interfere with that with the greatest reluctance. But the more controversial a matter might be in the Synod and in its result, the more right it is that we should examine it in

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    the House. I say that without betraying my views on the much more controversial subject of the principle of the relationship between the House and the Church of England. That discussion is not for now.
    I believe that, given that the Church has found great unity in seeking the right direction and change, we must support the principle of a partnership between the patron, the bishop and the local people. That must be the right way to reconcile the conflicting interests that the hon. Member for Corby (Mr. Powell) and others have regarded as often important and useful. Clearly, it is important not to have regular occurrences of a situation in which a bishop proposes for a living someone who the local people find unacceptable. That situation does not make for a good community or relationship between pastoral leadership and congregation.
    Occasionally, it is right for a bishop to press the congregation further than they would wish to go. I was somewhat perturbed by one argument put forward by the hon. Member for Corby, which seemed to suggest his lack of conviction in the competence and wisdom of bishops in their appointments. I do not wish to engage now in that debate, other than to refer to it. However, if that is his concern and the bishops are thought not to be sensitive, that should teach us something about the advice given and the methods by which the bishops should properly have a clear view and understanding of the pastoral needs of his diocese. He should be well equipped to make appointments according to its needs and the changing situations. I hope that there is no suggestion within the Church that people are losing confidence in the ability of the episcopate to make those crucial decisions.
    The solution proposed combines the wisdom and authority of the bishops with the ability of the people to participate. Being a Liberal, I mischievously thought that it would be wrong — having decided originally as my premise that the patronage system should disappear, but believing in community politics— not to allow the local community to have as much say as possible. I feel that I have now found my rightful position in party political terms—inasmuch as they can ever apply to matters of this sort—by believing that it is right to maintain this partnership.
    Another matter that has clearly troubled the House is that of the third purpose—credibility. How appropriate is it for appointments to be made by patrons who are not either Christians or members of the Church of England? I am unhappy that a patron who is neither a Christian nor a communicant member of the Church of England, nor of a church in relationship in communion terms with the Church of England, should have the right to pass that over to somebody of the same designation.
    Somebody of a totally different faith, with no particular interest in this inherited right as a patron, might not show any care in the nomination of the member of clergy in question. Such a person might nominate the first candidate who happened, by that definition, to be qualified. In such cases, I should prefer the patronage entitlement to revert to the bishop, rather than have it rest with the nominee of the patron, the patron being a person who might not be a Christian, but alone a member of the Church of England.
    A linked question is whether it is right for a patron who is not a member of the Church of England to have the right of patronage. That issue was explored by the right hon.
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    Member for South Down (Mr. Powell) when he spoke of the relationship between the universality or nationality of the Church and the denominations of the other churches.
    The Gospel makes it clear that there is one Church, one faith and one Lord. I am not a denominationalist, although I accept that people have chosen to group themselves into denominations mainly because of the feelings and practices with which they feel comfortable. Having agreed, for the unity of the Church, to maintain the role of patrons, we should not seek to disqualify patrons from exercising that patronage if they assert and affirm the one true Christian faith.
    I hope, in those circumstances, that they will show equal concern, as Christians, for spiritual leadership in the Church. They have a responsibility, though it may not be to the Church of their denomination, to exercise their activities with great care.
    I support this instrument because it has been required by the Church for a long time. It will allow progress to be made along the lines suggested by the hon. Member for Wokingham. I hope, above all that in considering the views of this House, the Church will be encouraged to strive even harder to meet the desperate need that still exists in Britain for more people to be called into the ministry of the Church. I hope, too, that the ministry will be ever more empowered to do le work that, more now than ever, we need the Church to perform.
    11.44 pm
    Dr. John G. Blackburn: This is my first opportunity to pay a warm and generous tribute to my hon. Friend the Member for Wokingham (Sir W. van Straubenzee) on the manner in which he presented the Measure and for the opportunity, which I count as a great privilege, to serve with him on the Ecclesiastical Committee for seven years.
    I should like to relate my speech to the 191st report of the Ecclesiastical Committee, which concerns the matter under debate. I do not accept that the Measure has been a waste of time and energy. It is an important and reforming Measure, and the last in a long line to appear before the Ecclesiastical Committee. It has a major role to play in the future life and work of the Church, especially pastoral care.
    I expressed my support for the Measure when the Committee studied it diligently. It embodies some 35 measures that go back four centuries. Clause 1 establishes a register. That is important for credibility. It will be open for the public to examine it. The Measure comes at a historic time for the Church of England. It is established and wide, but I am glad that it still encompasses the evangelical traditions that I hold so dear. The Church's credibility has been tarnished. but the Measure corrects that.
    The General Synod considered the Measure and voted as follows: the House of Bishops, 15 Ayes and no Noes, the House of Clergy, 134 Ayes and four Noes and the House of Laity 121 Ayes and no Noes.
    The measure has received considerable debate within the Synod in an attempt to produce that which is good and that which will stand the test of time. When the measure came before the Ecclesiastical Committee I and other members of the Committee—they have spoken with so much knowledge tonight—considered it in great detail. II am delighted to say that the measure in not just the best we could do but I unashamedly hold the view that it is a

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    good and reforming measure. The measure will bring with it credibility and in that spirit I wholeheartedly support the measure.
    In ecclesiastical terms I must get used to describing the measure as expedient. That was the view of the Synod. In simple terms I wish the measure God's speed. I am quitely confident that it will prove to be a considerable blessing to the Church and the work it undertakes. Some of the criticisms which have been made about patronage do not appear to have anything to do with the measure which is before us.
    My simple and perhaps puritanical view is that there is no greater calling on any man than to be called of God. That being so, I am sure that such men will be called and that they will restore this nation to the Christian faith which it sadly appears to have left. This is one of the most important measures dealt with in the Ecclesiastic Committee. I commend it to the House and pray for its assent.
    11.51 pm
    Mr. Harry Greenway: I apoligise for leaving the House for a short time. I find it fascinating that, under this Measure, a patron may be simple-minded but still a communicant member of the Church of England. People are excommunicated automatically only if they are definitely insane. Those who are simple-minded are acceptable communicants of the Church and are able to present someone to a living, but those who are in total possession of their faculties but who practise a different faith are not able to do so. I point out the fascination of that situation to the House. I agree with the right hon. Member for South Down (Mr. Powell). my hon. Friend the Member for Corby (Mr. Powell) and the hon. Member for Birkenhead (Mr. Field) on this matter.
    The measure is unclear about the role of the laity. It does say that parochial church councils should be represented when considering an appointment and that its representatives should have a veto over an appointment. It does not say how those representatives will be appointed, whether they are to be mandated or whether they report back to the Church council. Effectively the veto lies with the church council and I agree with that. Such lay involvement should relate to the whole of the parochial church councils.
    When the laity have not been involved, or to a small degree only, with appointments, some such appointments are disasterous because the laity of the Church have not accepted the individual because he is incompatible with them. I hope that, one day, the Synod will consider the role of archbishops and bishops when instituting people to livings.
    There was a remarkable story of Canon Newell Long, who was appointed by a patron to the living of St. Aidan's, Birmingham, but the then Bishop of Birmingham, Ernest Barnes, refused to institute on the grounds of his Tractarian views, and there was an enormous battle between the Church and the Bishop of Birmingham. Eventually, the Archbishop of the day instituted the priest in Lambeth chapel, but still the bishop refused to recognise or accept the priest. It was a painful and sad situation, to. which the Synod never faced up.
    Under this measure, the Synod could have picked up such matters, because there are still occasions when
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    bishops say that if a certain person is appointed, they are not sure that they could institute them. These matters do not come out in the open very much, but they exist, and it is tiresome, wrong and dangerous that they do, and something should be done about it. I hope that the Synod will one day face up to this question, which is even more important than the one with which we have dealt this evening.
    11.57 pm
    Sir William van Straubenzee: With the leave of the House, I shall reply to what has been a most helpful debate. The House will acquit me if I do so briefly because it will realise that if the House is to come to a decision tonight, which I sense is the general wish, I have to do so within a general constraint of time, according to our Standing Orders.
    I am obliged to hon. Members on both sides of the House who have been good enough to take part in the debate. If my hon. Friend the Member for Ealing, North (Mr. Greenway) will look closely at clause 11, he will see how the lay representatives operate, and he will see that they are representatives and not delegates. That is a difference of which we in this House are rather specially conscious because we pride ourselves on being not delegates but representatives. I hope that when he studies clause 11 my hon. Friend will feel that there is a good deal in it for the lay representation.
    Rightly, the House has concerned itself with the point initially raised by the right hon. Member for South Down (Mr. Powell), which concerns the exercise of the right of patronage by a patron who is not a communicant member of the Church of England. I make clear the difference between the ownership of the patronage, on the one hand, and the exercise of the right in any particular vacancy, on the other. I hope and believe that this is not a narrow point.
    The right hon. Member used the word "ownership" —I made a careful note of this—and said that it would lapse if the patron was not a communicant member of the Church of England. That is an uncharacteristic slip on his part. for we know him to be an exact person in the use of his words. The ownership continues, if necessary, from generation to generation. This is part of the historical nature of the Church of England as it is constituted, and as I approve of it, although not all would do so. I accept that there comes a point when such a person has to exercise in the vacancy concerned his or her right of presentation, and this is what is set out in the Measure. I realise that there have been some doubts about this.
    I agree with the hon. Member for Southwark and Bermondsey (Mr. Hughes) that these are matters of judgment, but I should be relucant, in such an eventuality, to see such a right revert to the bishop. However, I recognise that these are matters of judgment. I much prefer the right of the patron concerned to appoint a representative who is a communicant member of the Church.
    I warmly agree with my hon. Friend the Member for Corby (Mr. Powell) and other hon. Members that the role of the lay patron in the Church of England is immensely important. I agree with that wholeheartedly. Once again I have to record my personal interest, but my hon. Friend the Member for Corby knows about that. The role of a lay

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    patron can be important and often is important, and for that reason I want to strengthen the role. I want to ensure that it can be ascertained without peradventure.
    My hon. Friend the Member for Leicester, East (Mr. Bruinvels) made a most helpful speech, but I do not think that the register in Crockfords is by any means complete. It is interesting to note that the register will eventually be completed and this in itself will strengthen the role of the lay patron. The other provisions of the Measure also help.
    The lay patron is often a person with local knowledge, and is sometimes a bastion against a diocesan bishop who may want to move a man who, as the phrase goes, "has problems." The diocesan bishop may want to move such a person to a parish for reasons which may be quite right from his point of view but which are not helpful from the point of view of parochial life in the parish concerned. My hon. Friend the Member for Corby and I are united in anything that will strengthen, as this Measure does, the position of the private patron.
    We all listened with great interest and respect to my hon. Friend the Member for Corby, who told us about the long years of devoted service given to one parish by his father. It brought back to mind, although not from personal recollection, my grandfather's grandfather in my village who was the rector of his parish for 51 years. It was his proud boast that he could drink any gentleman in his county under the table. That is a measure of hospitality that I try hard to maintain. Long service has much to commend it, but equally I see the great benefit nowadays of a proper period of service and then an equal period of splendid service in another parish.
    I hope that I have answered the main points raised. The fact that I have not answered at greater length will be understood by the House. Hon. Members will appreciate my problem and will acquit me of discourtesy. I warmly commend the Measure to the House.
    Question put and agreed to.
    Resolved,
    That the Patronage (Benefices) Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.

    Filey Coastguard
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Archie Hamilton.]
    12.4 am
    Mrs. Elizabeth Shields: The subject of the retention of the coastguard at Filey has been causing widespread concern to many people, both locally and elsewhere. More than a century ago — in 1862 to be precise — a coastguard station was first established to keep guard over the bay at Filey. The geographical features of Filey comprise seven miles of sandy beaches which end in three miles of cliff about 300 ft high at the north end, which is towards Scarborough. The bay is attractive to yachtsmen, canoeists, fishermen, swimmers and divers, but it contains some treacherous undercurrents with which only skilled people can successfully contend.
    The necessity of keeping a coastguard at Filey must not be underestimated. The population of Filey and its environs is vastly increased each year during the summer months when as many as 100,000 or 150,000 visitors make their way to this popular seaside resort.
    The bay is watched over by a full-time coastguard from a specially constructed lookout window built in the coastguard station. The visual importance of that lookout cannot be overemphasised. Scarborough borough council, Filey town council, and the Filey district home and water safety committee, as well as the Filey auxiliary coastguards, have expressed anxiety about the proposals, which are regarded as just another part of the general erosion of visual watchkeeping to which opposition has already been expressed. Several hundred residents and tourists who visit Filey regularly each year have also written to me on the matter.
    The number of reportable incidents—those requiring external assistance, such as the lifeboat, helicopter, police or ambulance — illustrates the extent to which the coastguard helps the public. During the past four years, there has been an average of 33 incidents each summer, and this year to date there have been 10 incidents. The number of incidents that are avoided because of the physical presence of the coastguard is considerably more. Part of the his job is the prevention of accidents —warning people not to surf or swim or advising against putting a boat out to sea. It is impossible to quantify the incidents prevented that might otherwise have ended in tragedy.
    Not only visitors use the sea at Filey bay. There is a fishing fleet of 16 cobbles, which put out to sea regularly throughout the year, and in the appropriate season there are an additional 13 salmon boats. During the summer months, six fishing boats take parties of anglers out to enjoy their pastime, and dozens of small boats sail in the bay, most of them without radios. All are kept under surveillance by the unremitting efforts of the full-time coastguard.
    Another worrying factor is that the proposed reorganisation will lay the major responsibility for replacement cover on the Filey auxiliary coastguards. That is not a practical idea, since most of the auxiliaries are in full-time employment and would be unable to provide the overall weekly cover required in the summer.
    The personnel at Filey have already been reduced drastically. In 1982, there were three coastguards. Two have subsequently retired and not been replaced. A year

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    ago, there were as many as 25 auxiliaries. Today, there are only 11, and I understand that there is little possibility of enlisting more members to the auxiliary. Yet the responsibility for that bay is no less.
    It is absurd to say that by merging the sectors of Scarborough and Filey and depriving the latter of its full-time vigilante, the residents of the town, the tourists and fishermen will,
    "detect an improvement in the standards of coverage."
    This is a prime example of remote bureacrats playing with maps and budgets, without taking into consideration the real local case. I wonder whether the Minister has visited Filey and is conversant with the geography, tides and dangers of the area. I should be delighted to show him round Filey, if necessary.
    No money will be saved by transferring the service to Scarborough, although money will have to be spent on converting the toll house at Scarborough when there is already a purpose-built station at Filey. Scarborough also has a harbour master and lifeguards. Neither of those facilities is available at Filey.
    One of the most important factors is the excellent Royal National Lifeboat Institution, whose members were not informed of the decision to remove the coastguard, with whom they work in close conjunction. During operations, the RNLI relies heavily on the expertise of the coastguard, who acts as a co-ordinator and monitor for its boats when they are out in the bay.
    In his letter, the deputy chief coastguard assured me:
    "When it is necessary to provide watch locally at Filey, it will be set, whether on the advice of the auxiliary-in-charge, the Sector Officer or the watch at Bridlington."
    Without the visual aid, immediate knowledge of incidents in the bay will be delayed. The Filey auxiliary-in-charge lives in Scarborough. The sector officer, who will spend only two days a week at Filey, will also be based at Scarborough, and the watch at Bridlington is equally remote. Perhaps the Scarborough coastguard will be omniscient as well as omnipresent.
    The most important issue in all this is safety — the safety of human life, be it that of a child or an adult. I beg the hon. Gentleman to make this his main priority.
    12.9 am
    The Minister of State, Department of Transport (Mr. David Mitchell): I congratulate the hon. Member for Ryedale (Mrs. Shields) on her good fortune in securing this Adjournment debate.
    I welcome the opportunity to explain to the House the circumstances surrounding the change in one coastguard officer's duties at Filey and to demonstrate that, in consequence, there will be no reduction in coastguard coverage on the coastline in the hon. Lady's constituency.
    However, I am somewhat perplexed about why the hon. Lady has sought this opportunity to raise the matter on the Floor of the House since Adjournment debates normally follow correspondence in which Ministers have failed to satisfy the Member of Parliament concerned. In this case the hon. Lady wrote to the chief coastguard on 23 April, the letter was received on 28 April, and it was replied to on 2 May. Nothing more was heard until there was a telephone call on or about 3 June to say that the hon. Lady or her office had mislaid the reply to the letter and asking for a copy, which was sent to the House of
    662
    Commons on 3 June. I make no criticism of the hon. Lady for having apparently lost the letter—it can happen to any of us.
    I wonder whether the hon. Lady sought this Adjournment debate in the time when the letter had been mislaid. I say that because, when my hon. Friends the Members for Scarborough (Sir M. Shaw), and for Bridlington (Mr. Townend) and the hon. Member for Kingston upon Hull, East (Mr. Prescott) and the right hon. Member for Barnsley, Central (Mr. Mason) all raised this matter with Ministers, they received a full response which, I think, clarified the matter.
    In her letter on Monday this week to the Secretary of State, the hon. Lady, as in her speech tonight, expressed concern about what she calls the Government's plan to close the vital coastguard service station. The Government have no such plan, they never had and there is no intention to close it, as I would gladly have told the hon. Lady, and will confirm in reply to her letter of Monday this week.
    It may help the House if I explain the coastguard organisation. The United Kingdom coastline is divided into coastguard districts, each under the control of a coastguard rescue centre manned 24 hours a day with constant monitoring of radio distress channels and a 999 telephone system. I was concerned—as, no doubt, the hon. Lady is — that the hon. Lady had to refer, no doubt quite rightly, to the fact that boats go out to sea without VHF radio. It is a relatively inexpensive piece of equipment, and I hope that she will join me in urging all who take boats to sea to carry VHF radio because it is their lifeline to the coastguard and to the rescue service that comes with the coastguard.
    The hon. Lady will well know that, slightly further north of the lookout point to which she referred at Filey, there is a ridge of cliff beyond which the coastguard cannot see. No matter whether he stands over the telescope or elsewhere, he cannot see it. That illustrates the value and importance of boats having VHF radio. I hope that all Members will seek opportunities to remind those who take out boats that they should ensure that they have VHF radio. It is a small cost for making life more secure.
    I can assure the hon. Lady that any part of the coast can be placed under visual surveillance if required, and visual watch is ordered whenever required. That applies especially during bank holidays, when there are many more amateur sailors about—in which number I include myself — which obviously requires more visual watch because of the higher risk involved.
    Each of the districts to which I referred — the coastguard districts under the control of a coastguard rescue centre manned 24 hours a day—is divided into sectors with a regular coastguard as sector officer, responsible for recruitment, training, overseeing and administration of the auxiliary coastguards who form the local coastguard company for the unit. The sector officer is not intended to man a watch. He recruits, he trains, and he organises.
    The system can well be illustrated by a recent incident off Filey on Saturday 10 May, with which the hon. Lady is familiar. A sailing dinghy capsised, throwing four people into the water. I know the coast a little further north than Filey quite well; the water is very cold and it is necessary to get people out of it very quickly. They did not have lifebelts or any suiting to protect them against the cold. The incident was reported by a 999 call to the coastguard rescue centre at 14.23 hours. It immediately alerted the

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    Filey auxiliary coastguard manning the Filey marine rescue unit. The unit, led by Mr. Parrish, arrived on the scene in five minutes, and having assessed the position arranged the launch of the Filey inshore lifeboat. It was launched at 14.32 hours and, seven minutes later, had effected rescue, no doubt to the relief of the local windsurfer and his friend who had assisted, and, needless to say, to the immense gratitude of those who were in dire trouble in the water. I think that we would all wish to thank Mr. Parrish and his team for what they did and also the RNLI for its sterling and, as always, reliable work.
    As I said, the sector officer's job is not to man the watch. He was on that day, having a day off. The first that he knew of the incident was when the RNLI fired its maroons for the inshore lifeboat. The crew already in the boathouse had been alerted by the coastguard through radio pagers; thus the rescue was fully under way without the participation of the sector coastguard. That is no criticism of him, for that is the way that the system is designed to work. In fact, Mr. Cother, the sector officer, although off duty, came as soon as the maroon launching the lifeboat was heard. I would like to thank him for that, and I am sure that the hon. Lady would also wish to do so.
    I turn now from the way that the system was supposed to work and did work to the small staffing change that is to take place at Filey. In future, the sector covered by the sector coastguard officer will have 40 auxiliaries in three companies, one of which will be at Filey, and will consist of 14 auxiliares—exactly the same number as now. The lookout is not being closed; it will be used as required. The marine rescue unit remains. The only difference will be that the regular sector officer responsible, not for watchkeeping but for recruitment. training and arranging duties, will he stationed in Scarborough. No one can realistically claim that it should take one man to recruit, train and organise 14 auxiliaries— it does not anywhere else.
    It has been claimed that the purpose of this reallocation of duties is to save money. The hon. Lady did not say that,
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    but it has been claimed in her local papers. I wish to make it clear that this rationalization is to enable increased manning to be provided on the Humber estuary. There is a great deal more activity there. There are various forms of danger and there is mixed shipping. I can assure the House that the sector officer, Mr. Cother, to whom I have already referred, will not lose his employment. He will be offered an alternative post in the coastguard service where he will be more fully employed.
    Swimmers do not come within coastguard duties and many local authorities recoglise this by providing lifeguards, who mark safe batting beaches, and watch over them. If the local coastguard unit is aware of a problem, however, it will always Leek to help. At Filey, the 14-strong company remains. It is there for any duties which it may be called upon to perform. I cannot too strongly emphasise that there will be no reduction in coast guard services to those in trouble on the sea in the Filey area.
    The hon. Lady referred to the proposed changes in her letter — she made a somewhat similar reference in her speech—having
    "an incalculable effect on the fishing and tourist industries."
    If I may say so, that is going over the top a bit. Will there be an incalculable effect in putting the Filey auxiliaries under a different coastguard officer for the purpose of training and rostering? It would stem that the position has been misunderstood and that the hon. Lady's assertion cannot be taken seriously.
    As the Minister who at one time had direct responsibility for HM Coastguard, I pay tribute to it for its constant watchfulness round the clock. Regular and auxiliary coastguards alike do a wonderful job right round our coast, including Filey, and will continue to do so. The House and those who go down to the sea in ships, boats, dinghies, and in these days surfboards as well, have every reason to say thank you to them. I believe that that is the right note on which to end this short debate.
    Question put and agreed to.
    Adjourned accordingly at twenty-two minutes past Twelve o'clock.

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Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Rochester.): The LORD CHANCELLOR on the Woolsack.
The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, before the commencement of business, I take the opportunity to inform the House that, with the approval of Her Majesty the Queen, I have accepted an invitation to attend the centenary celebrations of the British School at Athens on 20th June. Accordingly, I trust that the House will agree to grant me leave of absence for Thursday 19th and Friday 20th June this year.

BBC and ITV: Anti-Competitive Practices
Baroness Burton of Coventry: 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, further to their Written Answer on 10th February (H.L. Debates cols. 89–91) concerning BBC and ITV: Anti-Competitive Practices, and the five suggestions put forward by the Monopolies and Mergers Commission on the arrangements for providing information about forthcoming programmes on BBC and IBA services, they will write again to the BBC and IBA to ascertain what progress has been made concerning the suggestion that both organisations should give further consideration to the advantages and possibility of introducing a system under which publishers would be licensed to publish (on payment of a reasonable fee) programme details for a week ahead in substantially the same form in which the details are supplied.
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, the Monopolies and Mergers Commission concluded that the practices of the BBC and Independent Publications Limited did not operate against the public interest. In the absence of an adverse finding the Government have no further formal powers which they can use in this matter. We have, however, been in touch with the BBC and ITP in the past week to establish their present position. Both organisations have informed us that they continue to keep their practices under review, but that neither sees a requirement for change at the present time.
Baroness Burton of Coventry: My Lords, as I imagine that the Minister's reply is as disappointing to him as it is to me, may I ask him whether what he is really saying is that the Government do not feel that there is anything further they can do on this particular matter?
Lord Glenarthur: My Lords, there is nothing further the Government can do. Parliament has laid down what steps the Government may take through the Monopolies and Mergers Commission to investigate trading practices. In the event of the Monopolies and Mergers Commission reaching an adverse finding, the Government have further powers which they can take to remedy the mischief. In the absence of an adverse finding, as in the present case, Parliament has given us no powers and I think it would be oppressive and improper if the Government were to attempt to put pressure on an independent organisation in these circumstances.
Baroness Burton of Coventry: My Lords, while I believe the Minister would wish to help, may I ask him whether he is aware that the House never thinks a great deal of the phrase "matters are being kept under review", because that never leads to any action? As it is not advisable to accept defeat when wishing to make progress, does he feel that the occasional Question to him on this matter in future might induce some action on the part of the authorities concerned?
Lord Glenarthur: My Lords, I shall certainly do my best to answer any Questions which the noble Baroness asks. I am sure that the broadcasters are aware of public feeling on this issue and I am quite certain that they will take note, as they always do, of what the noble Baroness says.
Lord Lloyd of Kilgerran: My Lords, will the noble Lord the Minister say, either now or later, whether this matter has been considered in the context of the EC and in particular of Articles 85 and 86 of the Treaty of Rome?
Lord Glenarthur: My Lords, I cannot give the noble Lord that information. I shall find out and let him know.
Lord Lloyd of Kilgerran: My Lords, I am very much obliged.
Lord Ferrier: My Lords, is my noble friend aware that large numbers of listeners feel that something should be done about the noble Baroness's suggestion as soon as possible?
Lord Glenarthur: My Lords, as I indicated to the noble Baroness, I think both organisations are aware of the concern that has been expressed. It is a matter for them and there is nothing that the Government can do. Nevertheless, I am sure that they will note my noble friend's views as well.
Lord Taylor of Gryfe: My Lords, is it not somewhat naïve to consult the IBA and the BBC in this matter when they are enjoying all the advantages of the monopoly? Is not an element of public interest involved?
Lord Glenarthur: My Lords, of course there is a question of public interest. It goes quite widely, as I think the noble Baroness has indicated. Nevertheless, it was right that we should ask them how they were getting on. That is what we have done.

Heathrow-Gatwick Helicopter Link
3.4 p.m.
Lord Boyd-Carpenter: 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 is their estimate of the annual loss of revenue to British civil aviation arising directly and indirectly from the decision of the Secretary of State for Transport to revoke the licence granted by the Civil Aviation Authority for the operation of a helicopter service between Heathrow and Gatwick Airports.
The Parliamentary Under-Secretary of State, Department of Transport (The Earl of Caithness): My Lords, the Civil Aviation Authority estimated that the annual loss to British Caledonian would be about £2 million to £3 million and to British civil aviation as a whole about £8 million. Actual losses depend upon the extent to which interlining passengers avoid London. The alternatives to the helicopter should prove acceptable to most people.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that very interesting reply. Is he aware that the former Secretary of State justified his decision to overrule the Civil Aviation Authority on the grounds that, with the opening of the M.25, there would now be a speedy means of communication between the two airports? Is my noble friend aware, as I sure the Secretary of State for Transport is aware, that that has not turned out to be the case and the M.25 is crowded, congested and full of traffic? In the light of that and of the very large figure of loss which this decision involves to an industry of great importance to this country, will not my noble friend and the new Secretary of State reconsider this matter?
The Earl of Caithness: My Lords, I am aware of the traffic on the M.25. Traffic forecasts are being undertaken and a survey is being done which my right honourable friend will consider as soon as it is published.
Baroness Burton of Coventry: My Lords, is the Minister aware that I have been given a figure of 80,000 passengers per annum using the helicopter link? Does he not agree that those 80,000 passengers will now be disgorged onto the already crowded motorway leading to the airport? Can he say why at the very least the Government did not allow the helicopter link to continue until the necessary road widening and the road motorway link were completed?
The Earl of Caithness: My Lords, the link was terminated under the terms set by my right honourable friend the Secretary of State, which were considered right at the time. When the vital section of the M.25 opened four months later it was part of the condition of the licence that the link would be terminated; and so it was.
Lord Orr- Ewing: My Lords, is my noble friend not aware that if this useful service is not re-examined and
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re-established there will be increasing pressure for more and more operators to operate in and out of Heathrow instead of sharing the bases between Gatwick, Heathrow and a future third airport? Communication between London's airports is of paramount importance if the airlines are to be spread equally among the three.
The Earl of Caithness: My Lords, I am very concerned that the links between Gatwick and Heathrow remain open. There is a very good bus service and alternative means of getting from one to the other. I hope that my noble friend will not forget the fact that a great many cancellations of the helicopter service were due to adverse weather conditions. That meant that people had to go by road in any case, and for part of the day, both from Gatwick to Heathrow and vice versa, some 100 commercial flights were arriving when no helicopter service was being provided.
Lord Underhill: My Lords, does the noble Earl appreciate that, in view what I have been saying on the Airports Bill, I am the last person to dispose easily of environmental considerations? Nevertheless, I appreciate the value of a speedy link between Gatwick and Heathrow. Was it not the case that new routes and higher altitudes were proposed which would have reduced the environmental impact? In addition, did not the Secretary of State say when he made the decision that it might not be possible to maintain a surface route and that he would reconsider the matter if the need arose? How then will be the matter be carefully monitored so that the link could be re-established if necessary?
The Earl of Caithness: My Lords, the noble Lord, Lord Underhill, is absolutely right, in that new alternative routes were proposed. It was a very finely balanced judgment. There are very good arguments on both sides, but at the end of the day, as the noble Lord will know from our discussions on the Airports Bill, we take environmental factors very seriously. It was that aspect that tipped the scales in favour of the decision that was taken.
Lord Campbell of Croy: My Lords, will my noble friend confirm that withdrawal of the licence does not entail closure of the helicopter lane that is being used? It only involves reducing the amount of traffic by about one-fifth. That cannot make much difference to the amount of noise disturbance, which I understand was the main reason for the decision.
The Earl of Caithness: My Lords, there were reasons other than the noise mentioned by my noble friend that had to be taken into account. The scheduled service has terminated. If the M.25 road link does not prove satisfactory in the future—and we will watch the situation—my right honourable friend the Secretary of State has said that he will examine the matter again.
Lord Mellish: My Lords, would it not be possible for the Government to make a very refreshing change by admitting that they were wrong and reversing their decision? Everybody would be so excited.
The Earl of Caithness: My Lords, as I said before, there were very good arguments on both sides. Having examined the matter very carefully, and having considered all the representations, my right honourable friend came down in favour of the M.25 road link being the one that should be used for the time being.
Lord Aldington: My Lords, perhaps I may ask a question of my noble friend after declaring an interest as a former helicopter manufacturer and as holding an honorary position in that now well-known company. I support the points that have been made about noise, but is it not a fact that if air traffic control allowed the helicopters to fly higher, the noise problem would not exist? Secondly, I draw my noble friend's attention to this point. Is it not rather curious that a government who invest many millions of pounds in developing two helicopters of suitable commuter size should make it impossible for helicopters to provide commuter services in this country?
The Earl of Caithness: My Lords, this Government do not stop helicopters from being used for commuter services, because each application for a commuter service is considered on its merits. I believe that my noble friend is right when he says that there would be less noise if the helicopters were permitted to fly higher, but that would have to take into account the other air traffic movements in the vicinity. As I have said before, there is more than noise to this question.
The Earl of Onslow: My Lords, when answering an earlier question my noble friend said that there would be a further review of the forecast of traffic flow on the M.25. In view of the total inaccuracy of forecasts of traffic flow on the M.25, where will that get us? Furthermore, I assume that my noble friend is saying that it is possible that traffic volume on the M.25 will decrease and that therefore there will be no need for a helicopter service. Is my noble friend aware that I live halfway between Gatwick and Heathrow, three miles south of the M.25, and that at certain times it is actually impossible to get onto the M.25? It is intolerable, and therefore we should seriously think again about a helicopter route.
The Earl of Caithness: My Lords, I believe that my noble friend misconstrued some of my words. My right honourable friend the Secretary of State announced last month that he was commissioning a study to determine whether the problems could best be tackled by improving traffic management arrangements at junctions, remodelling junctions, widening parts of the motorway, or a combination of those options. We expect to receive the consultants' report later this month, and it will be considered urgently.
Lord Cledwyn of Penrhos: My Lords, in view of the complete unanimity of opinion from knowledgeable quarters throughout the House, among noble Lords of all parties, does the noble Earl not consider it essential that he should discuss this matter in detail with his right honourable friend and seek to explain to him the strength of feeling that exists in this House, and then return here with a statement affirming that the facility in question will be preserved?
The Earl of Caithness: My Lords, I have discussed this matter at length with my right honourable friend, particularly in view of Questions that have been asked before, and I know full well the feelings that exist. I can only say that I will again talk to my right honourable friend. The decision was taken on finely balanced arguments both ways. The department received about 16,000 representations. They have all been looked into, and there were more representations opposed to the air link than there were for the air link. My right honourable friend the present Secretary of State is fully aware, as was his predecessor, of the views of this House on the matter.
Lord Boyd-Carpenter: My Lords, is it not the case that although the decision was taken on the basis of finely balance arguments, it now appears that one of the arguments against continuing the licence—that the M.25 would have an easy traffic flow—has turned out to be unsound? Is not that ground alone, apart from the general opinion of this House, sufficient cause for reconsidering the matter further?
The Earl of Caithness: My Lords, I can assure my noble friend that the present situation concerning traffic on the M.25 was fully taken into account when the matter was examined by my right honourable friend.
Lady Saltoun of Abernethy: My Lords, will the noble Earl say a little more about the other reasons that led to the decision that has been taken?
The Earl of Caithness: My Lords, one of the other reasons was the visual intrusion of the helicopter. It was rather a large helicopter holding some 25 people, which is rather bigger than the normal helicopter one sees flying around.
Lord Maude of Stratford-upon-Avon: My Lords, is it not time that the Department of Transport woke up to the fact that every new motorway creates new traffic and that the forecasts are always wrong?
The Earl of Caithness: My Lords, we realise that new motorways cause traffic. However, the planning system in this country leads one to the conclusion that it takes so long from the time that it is decided to construct a motorway or by-pass until it is completed—it takes well over 13 years—that there might be more in the argument my noble friend has produced than just the extra traffic generated by the motorway.
Lord Tordoff: My Lords, is it not a fact, as we have said many times from these Benches, that in the long term the problems will be solved only by the introduction of proper rail links between central London and Heathrow and between Heathrow and Gatwick? The roads solution has been shown to have failed, and the helicopter solution can be only a partial and temporary one. A proper rail link is absolutely essential to the major international airports in question.
The Earl of Caithness: My Lords, if British Rail bring forward a proposition for a rail link between the

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two airports that can be justified on the normal basis, we will consider it with very great care.

Inflation: International Trends
3.18 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 what has been the movements in the last year in consumer prices in West Germany, Japan, the United States of America, France and the United Kingdom, and what is their response to these movements.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, in the year to April 1986 the rate of inflation was minus 0·2 per cent. in West Germany, 0·9 per cent. in Japan, 1·6 per cent. in the United States of America, 2·7 per cent. in France, and 3 per cent. in the United Kingdom. The Government are gratified by the fall in inflation in the United Kingdom and are also pleased that inflation has fallen in other countries.
Lord Hatch of Lusby: My Lords, why is it that, taking those major industrial countries, inflation in this country is higher than that of any of the other industrial countries mentioned, while at the same time the rate of unemployment is also higher?
Lord Young of Graffham: My Lords, it is for a whole variety of reasons—though I often suspect that the noble Lord thinks that he knows the answer even before he asks his question on these particular occasions. We are now looking at a number of very complex matters, and relating unemployment directly to the current rate of inflation is something that I have been doing month after month after month, in drawing everyone's attention to the importance of moderating wage claims.
Lord Renton: My Lords, is it not a fact that in this country, in the past year or so, wage increases have considerably exceeded the rate of inflation? Do not the trade unions have a constructive part to play in helping to restrain wage increases and therefore limit our costs of production?
Lord Young of Graffham: My Lords, it is true that if we look at the tax and price index it would be necessary to receive a wage increase of 1·2 per cent. to maintain one's standard of living. Nevertheless, within manufacturing industry the increase was 7½ per cent. and that is probably the largest real increase for decades. That is not good news for employment in the future.
Baroness Seear: My Lords, does not the Secretary of State agree that probably one of the most hopeful ways of dealing with the problem is a full development of the Chancellor's ideas—which were of course other people's ideas, too—on increasing the profit-sharing element in the return to labour?
Lord Young of Graffham: My Lords, may I say to the noble Baroness that I completely agree with her. I hope very much that the whole idea of profit sharing will commend itself to both sides of industry so that we can see a more fruitful way forward to bringing back manufacturing profits to this country.
Lord Alport: My Lords, may I ask my noble friend, in relation to the reduction in inflation in the manufacturing countries mentioned in the Question, how far that is due to the fall in oil prices and raw materials?
Lord Young of Graffham: My Lords, it is an interesting position. In 1984, unit labour costs in manufacturing were running at 2½ per cent. increase. Material and fuels purchased by manufacturing industry were running at 8½ per cent. increase and output prices went up by 5½ per cent. This year, materials and fuels purchased by manufacturing industry are running at minus 11 per cent. However, unit labour costs are increasing by 4½ per cent. Putting the two together, output prices are going up by 4 per cent. If unit labour costs could have been contained we might have seen output prices showing little or no growth and be in a similar position to that of our competitors.
Lord Williams of Elvel: My Lords, does not the noble Lord agree with the comments of Mr. Lamfalussy, the chairman of the Bank for International Settlements, that the generalised fall in the inflation rate of the major industrial countries has been largely due to the very sharp fall in commodity prices, including oil? Does he further agree that this fall has had a severe impact on the national income of commodity exporting countries? Does not the noble Lord recognise that Australia falls into the latter catogory and that it is a tax on the Australian Labour Government, who have been a consistent friend of this country over the years? To say otherwise does neither the Secretary of State nor his Government any credit.
Lord Young of Graffham: My Lords, I think I accept the tenor of the noble Lord's remarks. Of course, in my comments on the Australian Labour Government I did no more than repeat the words of the Finance Minister of that Government.
Lord Hatch of Lusby: My Lords, the noble Lord is constantly telling us about the success of the British Government's economic policies, but why is it that compared to all our major industrial and manufacturing competitors inflation has risen faster here and is at a higher rate than that of any of our competitors while—and I have asked him this before—the unemployment rate is also higher than that of any of our competitors? How do the Government's economic policies deal with this issue of competition from our major competitor nations?
Lord Young of Graffham: My Lords, the noble Lord has brought into one supplementary question inflation, unemployment and competition. Perhaps I may at least answer part of that question by saying that, compared with OECD countries as a whole, today we have a narrow gap of 0.4 per cent. which is

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narrower than it has been for many years, and particularly during the period 1974–79 when the gap was 6·1 percentage points.
So far as unemployment is concerned, on occasion I point out in your Lordships' House that Germany has seen unemployment rise by over 80 per cent. in the past three years; France and the United Kingdom have seen it rise by 35 per cent. and 37 per cent., and other European countries are midway between the two.
Baroness Seear: My Lords, does not the Secretary of State agree that, since he has now admitted that the problems in Australia are in no small part due to the fall in commodity prices, it is not accurate to say, as he has done on a number of occasions, that those problems arose from the fact that Australia was investing in the infrastructure?
Lord Young of Graffham: My Lords, I did no more than repeat the words of the Finance Minister, who said that the current economic policy has to stop if Australia is not to turn itself into a banana republic. I do not know how much more I have to say about that except that Australia went in for infrastructure spending and today it has rising unemployment, balance of payments problems, soaring inflation, and a Finance Minister who at least is dissatisfied with the present state of Australia's economy. That is the lesson I wanted to draw from infrastructure investment.

Gruinard Island: Cost of Decontamination
3.25 p.m.
Lord Campbell of Croy: 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 is the estimated cost of decontaminating the island of Gruinard from the residues of anthrax used in experiments during World War II.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, the cost of decontaminating Gruinard Island is estimated at up to £500,000.
Lord Campbell of Croy: My Lords, I thank my noble friend for his reply. If the island is to become available soon, after more than 40 years, and its future use is to be considered could it not provide the answer to a pressing current problem? Would it not be a perfect permanent site for the hippies who are now having great difficulty in finding one? There are no farmers or neighbours to be upset. Pop concerts could be continuous and the hippies are less likely than other people to be bothered by any remaining germs.
Lord Trefgarne: My Lords, it is our intention, once the island is safe, to offer the island back to the original owner from whom it was purchased in 1947. What he would say about the prospect of continuous pop concerts, I am not sure.
Baroness Faithfull: My Lords, if the owner agrees, how would they get there—by helicopter?
Lord Trefgarne: My Lords, either that or swim.

Business
3.26 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Lyell will, with the leave of the House, repeat a Statement that is to be made in another place on the Northern Ireland Assembly.
It may be for the convenience of the House if I announce that the Committee stage of the Agriculture Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Third Reading of the Drug Trafficking Offences Bill and the Education Support Grants (Amendment) Regulations 1986 will be taken.

Blyth Harbour Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

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

Agriculture Bill
3.29 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): 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 Belstead.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Provision of services and goods connected with agriculture and countryside]:
Lord John-Mackie Lord John-Mackie moved Amendment No. 1:
Page 1, line 6, leave out ("may") and insert ("shall").
The noble Lord said: This amendment was moved in another place and it took two-and-a-half hours to discuss it and reach a decision. I propose to speak for only a few minutes and to hear what the Minister has to say. We want to see whether we can extract from the

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Government their actual plans. On Second Reading the noble Lord, Lord Belstead, made great play of new technologies, new pressures of overproduction, reduced margins, unprecedented change, new demands and changing needs. He then asked a lot of questions, and I admit that there were no instant answers.
Is the Minister going to tell us today that these matters are so difficult that the Government have no plans for dealing with them immediately? Clause 1 states that the Minister "may make provision for" the various proposals. Is there anything that the Government are doubtful about? Surely there are parts of Clause 1 which the Government are ready to put into operation immediately; or are they too busy making arrangements to carry out what is proposed in the last phrase of subsection (3), of which more in due course? I look forward to hearing that the Minister will accept the amendment and will let us have a little less of the enabling legislation that we have had so much of in the past. I beg to move.
Lord Stanley of Alderley: I wonder whether it would be for the convenience of the Committee if I speak to my Amendments Nos. 2 and 7 with the amendment of the noble Lord, Lord John-Mackie. They are more or less the same. My amendment, as has been partly stated by the noble Lord, is to ensure a long-term future for ADAS. There is nothing worse or more liable to cause low morale than uncertainty. At the moment, in part due to this Bill being an enabling Bill, there is great uncertainty felt about the future of ADAS by both farmers and ministry staff. Indeed, rumours abound that in future there may be no service at all. My amendment—our amendment, rather—would remove that uncertainty by giving a firm undertaking that some service would be provided.
Amendment No. 7 takes into account that in future it may be necessary to change the role of ADAS. For instance, it is already being given duties regarding advice on conservation, and so as not to limit or restrict in any way the free movement of advice, my amendment allows the Minister to accept this. It also allows the Minister the right to refuse to accept duties involving advice that are plainly unnecessary. This was a point that was made forcefully by my noble friend Lord Belstead at Second Reading and I fully accept it.
Lord Walston: I should like to support the general principle of these amendments. I think that the noble Lord, Lord Stanley of Alderley, was absolutely right in what he said about the importance of maintaining morale in ADAS, or rather re-establishing it, as one unfortunately has to say, and about ensuring that there is a long-term future for that invaluable organisation. There can be no question but that the people who are at present engaged in giving this service, not only to farmers but to agriculture and the rural community as a whole, are suffering very much from a feeling of uncertainty as to their future. I accept entirely that the present Government intend to maintain ADAS. I hope that we can have an assurance that they will maintain ADAS at least in its present form, which has been considerably attenuated over the past years.
Both amendments will go quite a long way toward removing the uncertainty which now exists over the
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future of ADAS. In no way do they run counter to the intentions of this Bill; in fact they do no more than put into statutory form what I believe is the intention of Her Majesty's Government. I hope therefore that the Minister will be able to accept both amendments.
The Earl of Radnor: I, too, support the amendments. I think that it is very important at this stage to inject some certainty into the future of ADAS for the reasons that have already been given. This is needed not only to help morale, which I think everyone now knows is very low, but also, and perhaps even more importantly, because in fact ADAS has a very real future. I myself am quite sure of that, and perhaps it will be brought out later in the proceedings when we are discussing other parts of this Bill. Notwithstanding private consultancy firms and other advisory bodies of that nature, I think that at this stage we ought to put certainty into the future of ADAS, and I very much hope that my noble friend will see the importance of this.
The Earl of Onslow: I can feel rather sorry for my noble friend because on the Marshalled List he can see all the old hounds which harass him on agricultural matters when Bills of this sort come before Parliament. Their names always keep appearing—the Onslows, the Melchetts, the Buxtons. We could go on for ever really; and even the noble Baroness, Lady Nicol, need not look quite so smug sitting on the Opposition Benches.
I should like to support this amendment for the following reasons. First, ADAS now appears to have become more important than it was before simply because, unless we can persuade them otherwise, the Government intend to introduce charges. That is the first reason. The second reason, which it seems to me is very important—and we must congratulate the Government very sincerely on this—is the introduction of Clause 12 which makes the Ministry of Agriculture seriously responsible for running the countryside as a whole rather than just as a food producing machine. Under those circumstances it seems to me that ADAS becomes even more important than it was. If that is allied to the fact that the Government will try—against certain of our better judgments; and we shall come to this matter later—to introduce charges, we shall then push the advice factor back on to the chemical firms, etc. It seems to me that this is why it is very important that the word "shall" should be inserted in place of the word "may".
Baroness White: I hesitate to intervene because by now the Minister must realise the feelings of the Committee from all quarters. I entirely follow the argument of the noble Earl, Lord Onslow. How do the Government think that they will carry out the obligations which they are accepting under Clause 12 without the help of a really efficient, well trained, alert, highly motivated and enthusiastic advisory service?
I usually listen to the radio in the mornings and I try to listen to the farming programme. I did so only the other day and I am sorry to say that it seems to me that Mr. Jopling has got stuck in a groove of a long playing record. All he can say is that a further 334 staff of ADAS are under notice or will shortly be under notice

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of dismissal. Yet it was made perfectly clear on Second Reading that agricultural advice is more than ever necessary when agriculture is not on the up-and-up, as it has been for a number of years, but is in a state of considerable anxiety, apprehension and confusion. The NFU, the CLA and all the other organisations, have made it absolutely plain that they believe that even on the agricultural side ADAS is very necessary and desirable. It seems to most of us who have any concern about this matter that with these additional obligations under Clause 12, ADAS is essential.
There are other matters concerned with the difficulties over charges which we discussed at Second Reading and no doubt the Minister will enlighten us further as to how the Government propose to deal with that situation. But a positive affirmation now at the beginning of the Bill seems to me to be unavoidable.
Baroness Elliot of Harwood: I should like to support my noble friend Lord Stanley. This is money well spent. A lot of money gets spent through Acts of Parliament, by ourselves and in other ways and very often we do not get as good a return as we ought. But if ever money is well spent it is spent on preventing disease and illness and improving the conditions under which our cattle, our sheep, and so on, are looked after. It would pay hand over fist to keep this service going. It will not keep going unless the people who work for it are certain that it is to continue and they and the next generation are trained for it. The Government would be most unwise if they did not agree to the amendment which is simply making clear what is a great success and continuing the success under the Bill.
Lord Melchett: The noble Earl, Lord Onslow, said that the Minister was under attack from all the people who usually attacked him on agricultural measures. But when we come to discuss the future of ADAS there is a significant difference. Concern about its future unites all who are interested in the British countryside. It unites farmers and landowners with environmentalists and conservationists and with many other interests. For instance, the water authorities (which I want to raise specifically on a later amendment) are extremely concerned about the dangers of the present state of ADAS and the contemplated cuts.
I wish to make two points. First, whatever the Government say today, whatever they have said in another place and whatever these Ministers say over the next few months, the Bill gives absolutely no commitment to ADAS continuing in any shape or form. Once the Bill is passed, ADAS could be brought to an end by any future Minister of Agriculture and any future Government. We all admire the commitment of the noble Lord, Lord Belstead, to many of these issues, but nothing that he can say today can change that one jot. That is the legal effect of the changes that the Bill introduces. It inevitably presages sooner or later the end of a state advisory service for agriculture. That is why I believe the Government are making the change that the Bill introduces. It is hard to see any other reason.
There have been massive cuts in ADAS over recent years. Four hundred clerical posts are to be lost by
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April 1987 and I think 334 scientific and specialist jobs are to go by April 1987. Over 1,000 scientific and research jobs will be lost as a result of cuts in agricultural research. They are to go by April 1987.
This is my second point. There is no doubt that that has already had an absolutely catastrophic effect on the people who work for ADAS. It is a service that depends on the quality of its staff. Any advisory service is bound to depend on the quality of its staff, and the scientific back-up that it has, for example, by research funded by the AFRC. Both have been decimated. The Institute of Professional Civil Servants, which represents the staff of ADAS, makes no bones about that. It says that the morale of those working in ADAS is such that many now wish to leave as quickly as possible. On a purely anecdotal basis, having met a number of young, well-qualified and enthusiastic people over the past 12 months who work for ADAS, I find that the universal story they tell me is that they are getting out. They are either getting out next month to go into private consultancy or in the next few months. They believe that there is no future for them in ADAS. That is the effect that the Bill has already had.
The idea that ADAS will be in a position to take on new responsibilities, functions and wider remits to do with conservation is nonsense. It is disappearing down a tube of spiralling low morale, with cuts in services. The introduction of charges will simply hasten that spiralling decline. Nobody who works in ADAS—and I suspect that this applies even to Professor Bell, who is allegedly in charge, although the Treasury clearly is actually in charge—believes anything different. The service is going down the tube rapidly. Unless we have an amendment to the Bill such as that proposed by my noble friend, I see no future for ADAS at all.
3.45 p.m.
Lord Belstead: Having heard from all round the Committee expressions of view on the importance of ADAS, I wonder whether I may now intervene. From the Benches opposite we heard criticisms from the noble Lord, Lord Melchett, and the noble Baroness, Lady White, of how it is developing at the present time. The noble Lord says that the service is not developing; but I disagree, and I hope to explain why.
First of all, let me come to the amendment of the noble Lord, Lord John-Mackie. It would impose a duty on ADAS to provide advice and indeed goods and services to any person who asked for it on every subject falling within the broad range covered by the clause. Clause 1 represents a much wider range of activities than the existing area in which ADAS is presently required to provide advice. The basis of the law as it exists is that in the Agriculture (Miscellaneous Provisions) Act 1944 there is a duty only to give technical advice and instruction on agricultural matters.
It is clear from the speeches that noble Lords have looked closely at the Bill, but if Members of the Committee care to glance once again at it you will find in Clause 1(1) something very different from just a duty to give technical advice and instruction. There is,

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first, a commitment to provide goods and services (which of course includes advice) on:
"the production and marketing of agricultural produce and other food".
I am sure that my noble friend Lady Elliot will be pleased to see the word "marketing".
Secondly, there is a commitment for ADAS to be involved in:
"the conservation and enhancement of the natural beauty and amenity of the countryside".
That is an echo of the enormously important amendment that my noble friend Lord Sandford persuaded the Ministry of Agriculture to accept, and it did it with a light heart eventually. He was instrumental in getting that provision into the Wildlife and Countryside Act 1981. There were consultations between the Department of the Environment and the Ministry of Agriculture during the passage of the Bill.
Thirdly, paragraph (c) is a complete catchall:
"any other agricultural activity or other enterprise of benefit to the rural economy".
The difficulty that I have in replying to what has been said is that if we are to keep Clause 1(1)(c) in the Bill—and I hope that we shall—it is asking a lot of the Minister of Agriculture for his advisory service to have a duty to provide goods and services for:
"any other agricultural activity or other enterprise of benefit to the rural economy",
all at the same time.
Let us suppose, if that were to be a duty, that in a soft-fruit growing area the growers and their wives came to the Ministry in London and said: "We have looked at Clause 1(1)(c) and there is a duty on you to provide ADAS services for any other agricultural activity or other enterprise of benefit to the rural economy. We explained to your divisional office that we were starting a jam-making enterprise in the village, but we were told that they were sorry but there were no jam-making advisers in ADAS".
Let me give another example. This is something that I saw only a little while ago. Suppose that on a group of farms the farmers agreed to get together and funnel at least some of their vegetable production in a big vegetable growing area into a freezer plant to make use of the unused buildings on a particular farm. If they go to the divisional office of the Ministry of Agriculture, Fisheries and Food and say "We want some advice on this"—in fact we could give advice—and at that moment the Ministry said. "We are sorry, but we cannot give you advice; we do not have a specialist at the moment", that would be a statutory breach by my right honourable friend because of Clause 1(1)(c). If we are to have Clause 1(1)(c) in the Bill, which goes infinitely wider than the law has ever gone before, I beg the Committee to think carefully before it lays that as a duty in the Bill on the Minister of Agriculture, Fisheries and Food.
Lord Walston; I thank the noble Lord for giving way. I go along with all that the noble Lord has said; but in the earlier part of his speech he said that Clause 1(1) lays a firm commitment on the Minister. I find it hard to reconcile a firm commitment with the words as printed, "The Minister may make" that does not seem to me to be a firm commitment. It seems that he
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may if he so wishes, without any firm commitment. I fully accept that the present Minister and the noble Lord are firmly committed, but can he assure us that it will be a firm commitment on successive Ministers?
Lord Belstead: That is a fair point that the noble Lord, Lord Walston has made. It is the point around which the debate is turning. Although I realise that there is a difference between a duty and a power, we are I hope showing our, bona fides by not just putting down in Clause 1(1) what has been in the law until now. We are making it a power because we are trying to spread the remit of ADAS much wider than the law has spread it so far.
My right honourable friend the Minister of State said in Committee in another place that the clause was not an opting-out clause but an opting-in one. I thought that that was a happy phrase because by putting paragraphs (a) and (b) on to page 1 of the Bill and adding paragraph (c) we are showing that we mean ADAS to have a wider remit in the future than It has had before.
The noble Lord, Lord Melchett, sdot;said that he believes that people will not want a career in ADAS in the future. Last week, we had a week which the Ministry of Agriculture, Fisheries and Food called the Farming and Countryside Week of Events. It was highly publicised. It included a television programme at lunchtime on the previous Sunday in which the noble Lord, Lord Melchett, took part, and which was a trailer for the coming week. Some 33 farms throughout the length and breadth of England, with a hill farming event in Wales, were devoted to open days to show that agricultural production and conservation can, truly go hand in hand.
If any Members of the Committee had the opportunity to visit any of those open events they would have found some members of the advisory service from the land and water service, the science service, the agriculture service and the veterinary service, although they are enormously busy in other ways. They were manning those events, ready to show people around and clearly proud of what they are doing.
I have tried to set out the difficulty as I see it with the amendment that the noble Lord, Lord John-Mackie, has put down. However, we have Amendment No. 2 tabled by my noble friend Lord Stanley of Alderley, and with it goes Amendment No. 7. The effect of the amendments is to ensure that Ministers and their officials will be in regular contact with the farming industry if there were to be a change made or proposed—I am looking at Amendment No. 7—in the provision of goods or services to be supplied under Clause 1.
My noble friend was restrained when he moved his amendment. I am sure that he will not mind if I say that I think what lies behind the amendment is a feeling, which I have heard in the speeches already, that there may be changes made to ADAS. I have tried to dispel that feeling in what I have already said. The effect of the amendment would be that if there were to be changes, there should be consultations. I believe that is my noble friend's thinking.

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I could not help but reflect, as I listened to my noble friend's brief introduction of the amendment, on the enormous amount of consultation we undertake whenever we take an initiative of any kind. I am talking for the Ministry of Agriculture, Fisheries and Food but that applies to all the other territorial departments responsible for agriculture throughout the United Kingdom. The list is sometimes as long as one's arm.
The difficulty I see with the amendment is that Clause 1(1) is drawn so enormously wide. It includes not just producers but, as my noble friend recognised in his amendment, other people—those involved in the environment, especially from the point of view of access and conservation, people who might be in the consultancy profession in agriculture, or even people who are in the food industry. It would mean that the consultation which we should have to make, if we were to do what my noble friend Lord Stanley wants in Amendments Nos. 2 and 7, would be enormous.
Having listened to the debate and the expressions of view which have been made in the past half an hour, I must of course take these amendments seriously and I must try and make some response to my noble friend Lord Stanley. I could not possibly do it now. I am afraid that the Government amendments did not go down in very good time, but I am sure that my noble friend will forgive me if I say that I have not had a great deal of time to look at Amendments Nos. 2 and 7. It is only 48 hours since they appeared, and we had one or two other things on yesterday. It would help me a great deal if it were possible to look with care at what my noble friend is trying to do to see—I cannot give a commitment—whether I can make some move on the face of the Bill in the direction that my noble friend Lord Stanley is taking.
May I return to my original point on Amendment No. 1? There is a genuine difficulty about laying a duty in Clause 1 if the Committee wishes to retain clause 1(1)(c).
The noble Baroness, Lady White, said that she assumed that the Committee would be hearing more about the Government's concept of charging for the services of ADAS. Not much has so far been said in detail on that in another place. I want to say something to the Committee about the detail of the Government's proposals for ADAS charging. It could wait for an amendment or two, but if the Committee would prefer to hear it on this amendment, I could intervene again.
The Earl of Onslow: I have an amendment with the noble Lord, Lord Buxton, concerning charges. Would it be convenient to the Committee if we left the matter until then rather than to do it now?
Lord John-Mackie: We must thank the Minister for his reply and for the fact that he has been very much seized of the Committee's feelings on the subject. My amendment was perhaps a little abrupt. The noble Lord, Lord Stanley, made his proposal rather better by attaching Amendment No. 7 to it. On Clause 1(1)(c) I had a note, "consultation point" because I realised that we were asking for a wide commitment from the Government. Unfortunately, I could not read my
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writing when I was speaking and I had to miss out the point.
I beg leave to withdraw the amendment after hearing the Minister's speech, which we all welcome, and the fact that he will look at what has been said in Committee.
Amendment, by leave, withdrawn.
4 p.m.
Lord Stanley of Alderley Lord Stanley of Alderley had given notice of his intention to move Amendment No. 2:
Page 1, line 6, leave out ("may") and insert ("shall, subject to subsection (2A),").
The noble Lord said: I have already spoken to this amendment. I do not intend to move it.
[Amendment No. 2 not moved.]
Lord Melchett Lord Melchett moved Amendment No. 3:
Page 1, line 10, leave out paragraph (b).
The noble Lord said: This amendment also deals with the part of the Bill that we have been discussing. But rather than looking at paragraphs (a) and (c), upon which the previous debate concentrated, my amendment takes up the area covered by paragraph (b); namely, advice on conservation, amenity, access and so on. I should perhaps remind the Committee that ADAS was first placed under a statutory duty to provide, free of charge, advice on these issues as a result of an amendment carried in your Lordships' House (not entirely, I believe, with Government support at the time, although subsequently it had strong Government support in another place) to the Wildlife and Countryside Act 1981. Section 41 of that Act amended the 1944 Agriculture (Miscellaneous Provisions) Act to make it a requirement that ADAS should give free advice on these issues—namely, conservation, enhancement of the natural beauty and amenity of the countryside and diversification into other enterprises that benefit the rural economy—and advice to government departments and other bodies exercising statutory functions on the promotion and furtherance of such diversification.
This was done as a result of an amendment moved by the noble Lord, Lord Sandford, in your Lordships' House. It is fair to say that the amendment was very widely supported in your Lordships' House because of a strong feeling on two issues: first, that it was important that there should be an independent source of advice for people managing land, farmers and landowners about conservation issues and about diversification; and, secondly that ADAS was the right organisation to provide such advice. The objective that all of us had in mind in supporting the noble Lord, Lord Sandford, when he moved the amendment in 1981 was that this was a major way in which differences between, for example, conservation and agriculture could be reconciled effectively and successfully. The idea has a long and honourable pedigree. It was first recommended in the Strutt report many years ago.
Much to my surprise and, I hope, to the surprise of all your Lordships, the Agriculture Bill actually repeals this section of the Wildlife and Countryside Act. It does so not entirely overtly, which is why, along with this amendment, I wish to speak to Amendment No.

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80. Amendment No. 80 is an amendment to the third schedule. Your Lordships will find in Schedule 3, on page 28 of the Bill, a repeal listed to Section 41(1) of the Wildlife and Countryside Act, which provision appeared in that Act as a result of the decision taken by your Lordships on the amendment moved by the noble Lord, Lord Sandford.
I must say, in passing, that I rather share the worries of the noble Lord, Lord Belstead, about the amendment in the name of the noble Lord, Lord Stanley. I am not sure that the best way forward, in looking at this part of the Bill, is to try to insist that the Government consult a very wide range of interests before making changes. It seems to me much more desirable that we divide out those bits of Clause 1 where we believe that ADAS should continue to provide a service and make those a duty on the Minister, and those areas where we think that there should be a discretion on Ministers as to whether advice and other services are provided in future. I am with the noble Lord, Lord Belstead, in saying that paragraph (c) is one where there should be discretion about whether or not advice is offered in the future. I do not believe that such arguments apply to paragraph (a) or (b). In particular, in the context of my amendment, it definitely should not apply to paragraph (b).
Parliament decided in 1981 that there should be a duty on Ministers to provide the sort of advice through ADAS and on diversification that paragraph (b) and, to some extent, paragraph (c) would cover. I believe that Parliament was right in 1981. Everything that has happened since 1981 should have made us more convinced that the decision was right. It can hardly be said five years later that there is less of a need for advice on diversification in agriculture now than in 1981. The need is incomparably greater. It can hardly be said five years later that the need for advice to farmers on conservation and amenity is less than it was in 1981. With new measures coming from the European Commission and the possibility of environmentally sensitive areas, with which we shall be dealing later in the Bill, becoming a European-wide Community-funded programme, the idea that there is less need for advice in this area now than there was in 1981 is nonsensical. There is a much greater need and much greater importance attached to the matters covered in Section 41 of the Wildlife and Countryside Act now than there was in 1981. And, goodness knows, the need was pressing enough then!
I am suggesting in these narrow areas that we leave the law as it was when your Lordships approved it in 1981 and that we leave Section 41 of the 1981 Act unamended and unrepealed. This means that the Ministry of Agriculture would be under a duty to provide, free of charge, advice of the sort listed in the Wildlife and Countryside Act, very broadly on conservation and diversification. If it was right in 1981, it is doubly right today that we should do this. I hope that the amendment will have the support of noble Lords on all sides of the Committee and that it will not be open to the objection that the noble Lord has raised in respect of my noble friend's amendment, Amendment No. 1. I beg to move.
Lord Belstead: I have listened carefully to the speech of the noble Lord, Lord Melchett. The Government yield to no one in their view, which coincides with the noble Lord's, about the importance of giving first-class environmental advice—something, incidentally, I accept, that the advisory services benefit from as well as the recipients. I know perfectly well, having worked in the Ministry now for three years, how much one learns from going to see people and hearing what they have to say as well as how much clients, in the case of the advisory services, are learning from ADAS. It is fair to say that an enormous amount has gone on in recent years in relation to training in ADAS. There have been regional conferences at which speakers from many conservation and environmental agencies have been welcomed to address officers in the advisory services. I assert that the expertise of ADAS today, not only on agricultural production but also on environmental advice, is on the up and up.
However, the noble Lord presents a difficulty with this amendment for two reasons. I hope that the noble Lord will not mind my saying that it is, first, technically defective. This does not of course mean that the thrust of his argument cannot be fully debated. Obviously, if the amendment is technically defective the noble Lord will be able to put down a replacement. However, for the record, my advice in respect of Amendments Nos. 3 and 80 is that because Section 41(1) of theWildlife and Countryside Act 1981 relies on powers in Section 1(1) of the Agriculture (Miscellaneous Provisions) Act 1944, and as the latter will be repealed by this Bill, the effect of the amendment would be to remove Ministers' powers to provide advice on conservation altogether. That is, I know, something that the noble Lord does not intend in the amendment. With respect, therefore, the amendment is not technically quite correct.
I resist the amendment, too, on the basis that there are genuine reasons as to why we are bringing in charges for the advisory service. We believe that this will give to us in the Ministry of Agriculture and in ADAS proper signals as to what the farming community and, indeed all others who are in touch with ADAS really want from the advisory services. Without going over the ground in the previous amendment again at any length may I simply say in one sentence that it also gives us the chance to spread the net of ADAS wider in Clause 1(1)—far wider than it has ever been spread before.
I realise that the noble Lord, Lord Melchett, does not agree—because that is not the effect of his amendment—with what I have just said. But I think that it might be for the convenience of the Committee if I seized this opportunity to explain how we intend, if Parliament agrees, to make good the undertaking which was given by my right honourable friend the Minister that the Government do not have any plans to introduce charges for the kind of advice now provided to farmers free of charge on conservation, animal welfare and rural diversification.
My right honourable friend said this quite openly on 7th November last year. He said this because the Government's purpose is to help protect the countryside by encouraging farmers and landowners to seek advice on conservation matters. That is why this part of the work of ADAS, together with advice on

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farm diversification, and animal welfare, will remain, as we intend, free of charge. Noble Lords, will say, "All right, how will you do it?" Because almost all ADAS advice these days is bound to have an environmental element it would not, I think, be practical to give a list in a statute of those types of advice which can be said to be environmental and those which can be said to be not environmental. Only the circumstances of each case can determine whether, say, advice on a pesticide application programme by a farmer is being sought primarily in order to protect his crop at a lower cost, or whether what he wants to do is to have a talk with the adviser to find out how he can better reduce the risk to birds and insects.
Therefore, whether the adviser should offer free or chargeable advice in an individual case should depend, we believe, upon the adviser's answer to the question: for what purpose is the advice primarily being sought? If the adviser judges that the client's primary objective is to improve the running of his business, we are proposing that the advice would be chargeable. On the other hand, if the adviser judges that the primary purpose would be environmental, the advice should be free. "Environment" here would mean anything primarily designed to conserve or enhance the natural beauty of an area or its flora or fauna, or geological and physiological features or to prevent environmental pollution.
The duty of the ADAS adviser to decide whether advice is being sought primarily for economic or for environmental reasons places an important responsibility upon him or her. The Government believe that ADAS advisers are well qualified to bear this responsibility by their ability, knowledge and experience of the farming conditions and of the farmers themselves among whom they work. But cases may arise where there would be disagreement or genuine doubt about the primary purpose for which advice is being sought. In all cases the adviser must leave no doubt whether he or she considers the work to be chargeable or not.
The adviser must not commit the client to fees without making that clear in advance, and if there is any disagreement the adviser must postpone giving the advice until it is resolved. It is our intention, if there is disagreement which cannot be settled in a discussion between the farmer and the advisory service, that the farmer may appeal to the local regional panel whose members are independent and whose recommendation the Minister would normally accept.
I emphasise that the Government realise that cases will arise from time to time where a farmer and his adviser may have agreed to discuss a technical or economic farming problem and that a fee would be charged. But then the farmer takes advantage of the visit to raise a quite separate environmental issue. Of course, the conversation might go the other way—starting with an environmental matter and moving on to something about husbandry. ADAS advisers would have discretion in such cases to use their honest judgment in deciding how much of their time had been devoted to advice primarily with an economic purpose, and how much on environmental matters. But once again the adviser would be required to let his client know, when the discussion switched
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from the free to the chargeable, that a charge ought to be made.
I am sorry that I have been rather long-winded. This is the first time that the Government have tried to set out honestly and clearly what it is that we intend, if Parliament agrees, to achieve the undertaking given by by right honourable friend on 7th November last year—that there will not be charges in future for conservation, animal welfare and rural diversification. In doing this we are therefore trying to provide three things: first, clear guidelines for the ADAS officers to judge in the circumstances of each case whether the advice is environmental; secondly, flexibility to exercise judgment within those guidelines in discussion with the farmer; and, thirdly, a right of appeal where the farmer cannot accept the adviser's judgment. We believe that this will secure the objective of encouraging farmers to seek advice that will protect and enhance the countryside. But I assure noble Lords that the Government will watch closely to see how matters develop and will revise the instructions to ADAS if experience shows this to be necessary.
I have used the amendment of the noble Lord as the vehicle to make this statement. The noble Lord will forgive me if I return to my original point. I must resist this amendment for the reasons that I gave at the beginning and because , with respect, the amendment is not technically correct.
4.15 p.m.
Lord Sandford: I wonder whether I may make one or two comments on the response of my noble friend to this amendment. On the technical difficulty that he raised, it was not I, when I moved the original amendment, who introduced the tortuous form of wording that Members find in Section 41, which makes it difficult to amend the repeal in the way that the noble Lord, Lord Melchett, indicated in his amendment. I think that is a relatively trivial point. It is quite clear that the noble Lord, Lord Melchett, is seeking to avoid a watering down of the objective of the original Clause 41 of the Wildlife and Countryside Act.
My noble friend on the Front Bench has not answered the main point which the noble Lord, Lord Melchett, made; namely, what has happened in recent years to reduce the need for the Minister of Agriculture to have a duty laid upon him to provide advice on conservation free of charge to farmers? That is the point to which we need to address our minds and to which I want to return at the Report stage.
What has happened is that the Ministry of Agriculture, which did not like this amendment in the first place and resisted it to the extent that it could (but was defeated), watered it down to the extent that it could in the Commons and has sat pretty lightly on it ever since. It is now using the opportunity of this Agriculture Bill to water it down even more on the pretext—and I think it is a rather flimsy one—that with the introduction of charges for advice on mainline agriculture it is necessary to divest itself of a duty to give advice on conservation and to limit it to discretionary power only. I do not think that is good enough.
Lord Melchett: May I take up that point? The noble Lord has made some interesting and I think thoroughly confusing points about how charges will or will not be implemented. However, I agree with the noble Earl, Lord Onslow, that we may return to that on a later amendment.
I have a number of questions that I should like to ask the noble Lord on that. How he will make charging, or not charging, work is not the question in my mind at the moment, as the noble Lord suggested would be the case. The noble Lord says that all the services which the Government are under a duty to provide free of charge under Section 41 of the Wildlife and Countryside Act will continue to be provided free of charge by ADAS. The question in my mind is this. Why repeal Section 41 in those circumstances? That question has not been answered.
Lord Belstead: Perhaps I may once again briefly intervene. I think that both my noble friend Lord Sandford and the noble Lord, Lord Melchett, are upbraiding me from each side of the Committee for not addressing myself to what they regard as the fundamental question. Just for once perhaps I may throw the ball back, because they have left me in some perplexity. If, for reasons which I deployed when I dealt with Amendment No. 1, the Ministry of Agriculture intends to introduce charges for the advisory services—and I realise that there is a difference of view on this—somehow or other there must be a way of drawing a dividing line between where you charge and where you do not charge.
There is no difference between my noble friend Lord Sandford, the noble Lord, Lord Melchett, and the Government on the desirability of not charging for conservation. Indeed, on 7th November last year my right honourable friend gave an undertaking that the kind of advice now provided to farmers free of charge on conservation, animal welfare and rural diversification would remain free.
The whole point of the quite long statement which I was prepared to make and which I was waiting to read out for the first time (because we have been unable to get down to the detail of what is a difficult problem until the Bill arrived in your Lordships' House) is simply to try to show how we believe we can fulfil the assurance given by my right honourable friend and, in doing that, ensure that we are genuinely not charging for conservation advice, although it is our intention to charge for general agricultural advice.
If my noble friend, or the noble Lord opposite, can show that in my statement I have not drawn the line in the right way, I would be very ready to listen. That is what a Committee stage is all about. However, I have tried to show what I believe would be a workable approach. I beg the Members of the Committee not to sweep what I have said out of the way.
Lord Sandford: My noble friend is putting up an even thicker smokescreen about charges. The criticism which is being levelled by the noble Lord, Lord Melchett, and which I share, is that my noble friend and his department have used this opportunity to divest themselves of a statutory duty and have put in its place a discretionary power, and my noble friend has not justified that move.
Baroness Nicol: I find this quite confusing, because it seems to me that the noble Lord, Lord Sandford, and my noble friend Lord Melchett specifically asked about keeping a duty. Then we heard a long and very interesting speech about charges, which presumably we shall have to hear again when we come to Amendment No. 11. We still have not received an answer to the point about duty. Can the noble Lord, Lord Belstead, give us that answer, and then perhaps later we can deal with the charges point, on which we are all hoping to comment?
Lord Belstead: With respect, I think that I answered the point raised by the noble Baroness, Lady Nicol, when I spoke on Amendment No. 1. I made it clear in answer to the noble Lord, Lord John-Mackie, in relation to Amendment No. 1 that, because we are drawing the remit of ADAS in Clause 1(1) of this Bill infinitely wider than it has ever been drawn before, we want to make it a power. I gave two examples of ways in which, if we made Clause 1(1) into a duty, people could come to the Ministry of Agriculture and cause great difficulties for the ministry, because the remit had become wider and wider. It would mean that the duty to provide advice and advisory services had become yet wider and wider. I did not think that that was reasonable. I particularly hung it on the peg of the fact that Clause 1(1)(c) is such a wide catch-all that it would make it impossible to hang that onto a duty.
As part of that we are debating Clause 1(1)(b), and so far as conservation, rural diversification and animal welfare are concerned, my right honourable friend gave an undertaking on 7th November last year. It was given in the clearest possible terms and it was that we did not intend to make charges. That therefore leaves us with one final responsibility to discharge, and that is to decide how we draw the dividing line between what is charged for and what is not.
I have devoted a lot of time to saying how I believe that dividing line should be drawn and, with respect, not one Member of the Committee has come back to me and said that the dividing line is drawn in the wrong way.
Baroness White: We are being led from confusion into confusion in this matter. Apart from the noble Lord the Minister it appears to all of us who have spoken so far that a more determined effort to redraft Clause 1 would bring us to a much more satisfactory situation than that in which we now find ourselves. After all, what is to prevent the Government from putting paragraph (c)—which one must recognise is extremely wide—as a permissive power but leaving the other two, (a) and (b), as statutory duties? I am no draftsman, but I am quite certain that, given the will, it is by no means impossible to retain the duty which is included in the Wildlife and Countryside Act, to which my two noble friends (and for the moment, the noble Lord, Lord Sandford, is my noble friend) have drawn attention.
I have great sympathy with the Minister. He has been extremely assiduous in his duties in this Chamber. Had he not had to spend his time on the subject of gas, for example, we might have had more sense in this particular Bill. I suggest that this problem is not insuperable. The trouble is that we have these

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three paragraphs which, with the abandonment of the first amendment for the time being, have been left as permissive when virtually all of us present wish to make two of them at any rate absolute duties. I cannot believe that there is no way in which this can be redrafted.
Lord Melchett: May I—
Lord Belstead: Perhaps I may speak at this stage because I want to pose two questions. The key element of Section 41 is that advice must be provided free, but that is to farmers, and Clause 1 of this Bill is not just wide in substance; it also has no restriction as regards farmers. First, does that not create some problem in knowing where to draw the line? Secondly, if the noble Baroness is saying—and I quite understand what she is saying—that there is no problem here, that we simply keep a duty, as it was in Section 41, but we leave paragraphs (a) and (b) of Clause 1(1) of the Bill as they are, we still have to decide how to distinguish between the free conservation advice and advice which is not free but which is concerned with husbandry. In practice we must actually draw a dividing line when an adviser visits a farm. I ask the noble Baroness, Lady White, how she would do that if it was not done in the way I have suggested.
The Earl of Onslow: I suspect that in rising I shall perhaps add more confusion to the debate rather than anything else. Throughout the whole Bill—and I go back to the core of the Bill—it seems that the ministry has had a major strategic change of policy, which is to look at the countryside as a whole rather than just as a food-producing unit. I welcome that totally, completely, utterly and wholeheartedly because I believe that it is a great and gallant step forward.
However, we are then slightly crabbing on ADAS and we are clamping the performance of ADAS. ADAS is the machine that we have. It is full of very good people. At the moment it suffers from a slight morale problem, which I hope we can overcome, because ADAS will be there to give us the advice.
It seems that the feeling of the Committee is that Clause 1(1)(a) and (b) should be compulsory, that paragraph (b) should go back to Section 41 of the Wildlife and Countryside Act, and that paragraph (c) should be allowable rather than compulsory. Having taken a major step forward in its thinking on the countryside, can the ministry not take the last little bit in its stride?
Lord Walston: The Minister has asked a specific question. He has told us how he proposes to draw the dividing line between the sort of advice which is paid for and the sort of advice which is not. The noble Lord has asked those of us who disagree with him if we will give him some answer as to a different form of dividing line. My answer would be, as I said on Second Reading, as the noble Lord may remember, that in principle I am entirely in favour of the farmers paying for advice which will increase their profit but not paying for advice which improves the environment. After considering this, and listening to the noble Lord very carefully, my opinion is that it is impossible to
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draw a satisfactory dividing line between those two functions carried out by the same individual on the same farm at the same time. While it would be worth doing if the savings were really going to be very substantial to the national Exchequer, as I understand it the amount expected to be received in governmental terms, is pretty minimal.
I would say it would be far better not to attempt a dividing line, not to attempt to have this allocation by the official of the amount of time he spends on one and on the other, and an appeal procedure, and all the rest of it, that the noble Lord has explained to us, but rather to say that the job of the official of ADAS is these two completely inseparable jobs. When he goes on to a farm, whatever it may be for, whether to give technical advice on crop production or whether to give environmental advice, as a friend of the farmer, as an expert with a pretty wide remit, with wide knowledge and experience, he should be able to combine all these operations. He comes to give advice on sprays, and at the same time he gives advice on small things which can be done for the environment, and vice versa.
Therefore, it is something wherein without an enormous paraphernalia of bureaucratic timewasting, it is impossible to achieve any satisfactory dividing line between the two. That is why I would hope that the noble Lord the Minister will come to the conclusion eventually—sooner rather than later—that the game is not worth the candle, the amount of money to be saved is not worth this paraphernalia, and certainly not worth the potential loss to the environmental protection which is an increasing obligation and responsibility of ADAS.
Lord Melchett: If I may say so, the noble Earl, Lord Onslow, and the noble Lord, Lord Walston, have successfully widened the debate on a narrow and simple amendment, no doubt as a result of the enthusiastic encouragment they received to do this from the noble Lord, Lord Belstead.
This is a simple, narrow amendment which looks solely at the repeal of Section 41 of the Wildlife and Countryside Act. There is no difference between the Government and myself about the fact that the advice given under Section 41 of the Wildlife and Countryside Act will continue to be given free. That is agreed. We do not need to argue about that.
Perhaps I may put to the noble Lord, Lord Belstead, the same question as he has already been asked by myself and by the noble Lord, Lord Sandford. May I ask him to accept a couple of things in order to try and avoid the Committee going off at a tangent again? Can the noble Lord accept for a moment that I agree with him that there should be a charge for advice given under Clause 1(1)(a) and Clause 1(1)(c) for the sake of this amendment. I am moving an amendment which only affects Clause 1(1)(b), and for the sake of this amendment I accept charging for Clauses 1(1)(a) and (c). Perhaps I may also ask the noble Lord to accept for a moment that I think he has got his dividing line in exactly the right place—there is no argument about that whatsoever—for the purposes of this amendment.
But there is still a question that the noble Lord has not answered. If he is going to continue to give this advice free, and if he has the line in the right place and he is charging for the other things, why does he need to

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repeal Section 41 of the Wildlife and Countryside Act? Why does he need to remove the duty on him to continue to give that specific advice free? That is the question.
Lord Belstead: I am glad the noble Lord, Lord Melchett, has asked that question, because it is a perfectly fair one. The answer to it is, if I may be absolutely honest, that in drawing a line which I have made a statement about we would be having to use the words I have already used, "an honest judgment". It would be possible if the farmer believed, or indeed not only the farmer under Clause 1(1) but someone involved in the food industry or in rural diversification—maybe a whole variety of people—but if the recipient believed the line was being drawn in the wrong place, I have said in the statement I made there would be a right of appeal to the regional panel of the Ministry whose advice the Minister almost always accepts. So we believe this would be the right way of going about it.
But it would be very much more serious to say that there had been a statutory breach when you are having to draw a line using your honest judgment. It cannot be an exact science. That is an honest answer.
Lord Melchett: If I may say so, at last we have got to the nub of the question which this amendment was designed to address. We have spent a long time—the clock has not been restarted, but I think it is about 66 minutes—getting to what I had hoped the noble Lord would have said after I moiled the amendment, and then we could have embarked on the debate which I hope we can now embark on, which is what this amendment was designed to address our minds to.
As I understand it, what the noble Lord is saying is that if you introduce charging for any part of the ADAS advisory service, it is impossible to have a statutory duty on ADAS to provide any advice, however narrowly drawn that advice might be because in practice there will always be a boundary, and you will always come up against a statutory obligation to give advice.
What I do not follow from what the noble Lord said is what the implications of that would be. If the noble Lord the Minister has said that it was his policy to give free advice on conservation and diversification, and that is what ADAS are under instruction to do, and the farmer then appeals, surely he would have a right to go to court to enforce the Minister's policy against ADAS, just as the farmer would have the right to go to court if the Minister is under a statutory duty to do the same thing. Or is that in effect what this is taking away—the right of farmers to go to an independent tribunal to get the Minister to carry out the Minister's policy? Are we talking about the difference between an advisory panel making a decision, or a farmer having the right to take the Minister to court? Can the noble Lord tell me that?
Lord Belstead: The noble Lord, Lord Melchett, has put his finger again on a point. We are talking about the difference between an appeal to an advisory panel, which is well understood, certainly by farmers in all localities. There are a large number of appeals going on about the extension of less favoured areas, for
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instance. The farming community know very well about this. We would not be talking about an appeal to a court.
Lord Melchett: It seems to me that that raises serious issues. So far as I know, the Government have not admitted that this is the case up to now, that what they are doing by making all this advice simply a discretionary power rather than a duty is preventing anybody insisting that they carry out their policy and give advice on these matters. Frankly, I find that unacceptable, and I hope the Committee will find it unacceptable. Certainly I shall want to come back on Report stage with an amendment which does not have the technical defects which the noble Lord kindly pointed out to the Government's version of the amendment of the noble Lord, Lord Sandford, and insist that the the Minister should have a statutory duty to give advice on matters which the Minister is saying he will do anyhow. If that means that the Ministry ends up in court for not carrying out their duty, I do not see that that is a great advantage to anyone, except possibly the Minister. It will be a great advantage to the farmers and the countryside as a whole. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Swinton: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Northern Ireland Assembly
4.40 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell): My Lords, with the leave of the House, I now repeat the Statement being made in another place by my right honourable friend the Secretary of State for Northern Ireland. The Statement is as follows;
"Under the Northern Ireland Act 1982 the present Assembly has two functions: first, to consider and report on how a devolved Northern Ireland administration should be formed. Secondly, the Act requires the Assembly to monitor and report on the policies and activities of the Northern Ireland departments.
"The task of making proposals on devolution was undoubtedly made much more difficult by the regrettable decision of the SDLP not to take their seats. The Assembly has not been able to come forward with agreed proposals and there is no present prospect of that occurring. As for the monitoring of the Northern Ireland departments, the Assembly suspended this work on 5th December. In spite of clear warnings about the threat that this action would pose to the continuation of the Assembly, the Unionist parties have not been prepared to resume this function. As a result, the Alliance Party withdrew from the Assembly since they believed there was no longer any useful role to be played.

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"On 13th March the Assembly formally resolved not to carry out its monitoring functions, to wind up the Devolution Report Committee and merely to meet one afternoon a week for a debate on aspects of the Anglo-Irish agreement.
"The position therefore is that the present Assembly charged under the Northern Ireland Act 1982 with two important functions is now discharging neither. As long ago as last December in this House, I warned that if the Assembly continued the suspension of its scrutiny role for long, questions about its future would inevitably arise; and on 1st May and 19th May I repeated this warning. On 27th May I invited the leaders of the main parties in the Assembly to discuss with me the position of the present Assembly. The leaders of the two main Unionist parties refused even to talk about it. I regret that I have therefore had to reach my decision without hearing their views.
"The decision I have now taken is to lay an order today for the Assembly's dissolution under the powers in Section 5(1) of the Northern Ireland Act 1982. This order will come before the House for debate under the affirmative procedure. In taking this step I would make the following points. The present Assembly would in any case reach the end of its normal life on 20th October. There would then automatically within six weeks be fresh elections for a new Assembly. The effect of this order is not to abolish the legal basis for an Assembly but simply to dissolve the present Assembly and to leave open the date for a new election for a fresh Assembly.
"I wish to emphasise to the House that dissolution of the present Assembly in no way conflicts with our desire for devolved government nor our commitment to the Anglo-Irish agreement. Devolution remains the Government's preferred option and I hope that we may see a future Assembly playing a responsible and valuable role in the Province. The sooner that happens, the better.
"Meanwhile, the Government remain ready to discuss with all the constitutional parties in Northern Ireland the best way forward. In particular I would urge the Unionist parties to return to this House to argue their case and to take up the offer of my right honourable friend the Prime Minister to discuss with her the four matters proposed: namely, devolution and the possibility of a round table conference; the future of the Assembly; arrangements for handling Northern Ireland business at Westminster; and new means of consultation between the Government and Unionist leaders.
"Only if we are prepared to talk together and discuss these matters can we hope fully to play our separate but complementary roles in building a better future for the people of Northern Ireland".
My Lords, that concludes the Statement.
4.45 p.m.
Lord Prys-Davies: My Lords, we thank the noble Lord, Lord Lyell, for repeating the Statement made by the Secretary of State in the other place. Many of us who believe that devolution can help to satisfy the aspirations in Northern Ireland will have received the
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Statement with a great deal of sadness. But we are gratified that the door opened by the 1982 Act still remains open.
We agree that the present evidence indicates that a newly-elected Assembly would not, at this stage, produce the will among the constitutional parties to work together. This is not the time to apportion blame for this state of affairs. But to elect an Assembly which would not work together in support of the prescribed functions of the Assembly would appear to be a pretty pointless exercise.
The Government propose to dissolve the Assembly by an Order in Council and not to abolish its legal basis. We regard this as encouraging, because this means that an Assembly could be revived by an Order in Council if the Government were satisfied that the constitutional parties in Northern Ireland were committed to making it work. This is important because we believe that the 1982 Act still provides probably the best platform upon which Northern Ireland can build for itself a better future.
Nevertheless, it should not be overlooked that the Assembly played a valuable role for three years in the scrutiny of Northern Ireland measures, and it compensated for some of the deficiencies of legislating for Northern Ireland largely by means of Orders in Council. Those of us who speak regularly on Northern Ireland measures benefited greatly from the knowledge and experience of the Assembly Members. We trust that when the House debates the order dissolving the Assembly the Government will have something to say about how Parliament, in the absence of an Assembly for any length of time, can improve its scrutiny of the contents of direct rule measures. We consider this also to be important.
Finally, we endorse the Government's invitation to the constitutional parties to return to discussions and to a possible round table conference. We hope that that invitation will be accepted, and that before too long we shall have the pleasure of debating an order authorising fresh elections to an Assembly.
Lord Donaldson of Kingsbridge: My Lords, I should like to associate our Benches with what my noble friend has just said. We may feel sad, as he does, but we can hardly be surprised that the Government find it necessary to take some action. The Assembly was formed, as the Statement tells us, originally as an all-party group to examine how to set up a devolved Northern Ireland administration, and to monitor and report on the Northern Ireland departments. It now consists of one party only, the SDLP having led to its downfall by refusing to co-operate. It is therefore unable to consider how to make an advance towards an all-party Assembly, and recently it has refused to continue with its duties of monitoring. It had only two functions, and it is not performing either of them now, though up to date it has been fairly decently paid for its attendance.
We cannot hesitate for one moment in approving the Government's action. We are also grateful that it is not final, and that it leaves the machinery behind the Assembly available so that at some later stage something new and more constructive may be done. I end by saying that as we on these Benches are convinced—and I think that a lot of other noble Lords

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share this view—that there can be no move forward in Northern Ireland without some shape or form of shared government, we must hope that the Members of the Assembly, who have a bit more time to do other things than go to the Assembly, will spend at least some of it in trying to help the Government to persuade all parties to get together again so that a new Assembly may be formed which will be properly functional as soon as possible.
Lord Lyell: My Lords, may I briefly reply to the noble Lord, Lord Prys-Davies, and the noble Lord, Lord Donaldson, and thank both noble Lords, and especially the noble Lord, Lord Prys-Davies, for his welcome of the Statement that I read out. We believe that the Statement that I have read out today, and what has happened, need not be the end of the road. We hope that it is not, for an elected Assembly acting constructively, as many of us believe they did until fairly recently, is a valuable institution. We want to have a new election when attitudes change, and that is particularly important.
The noble Lord, Lord Prys-Davies, stressed the aspect of devolution. I am sure he will agree and all students of Northern Ireland matters and those of your Lordships who speak on them will agree that integration would not solve Northern Ireland's problems, because of its divided community, its politics, and, above all, its different attitudes on many issues. All of these warrant special treatment. The Government's objective remains the establishment of a new devolved government because it could give—I stress the words "could give"—politicians from all parts of the community in Northern Ireland a real say in developing and protecting the interests of their constituents.
We have no illusions that any progress will be easy. We shall do our utmost to promote it. Your Lordships will agree that any new arrangements must be acceptable throughout the community if they are, first, to survive and, secondly, to work effectively.
We thank the noble Lord, Lord Donaldson of Kingsbridge, for his welcome and his wise words today. He is sad, as indeed all of us are. We agree on that. We agree that the two functions of the Assembly have not been carried out—and certainly not constructively. All the politicians who have hitherto taken part in the Assembly should pay attention to the wise words of the noble Lord, Lord Donaldson, because he has considerable experience of working both here and in Northern Ireland. We believe that the politicians would benefit from paying heed to his words.
Lord Houghton of Sowerby: My Lords, is this not another confession of failure regarding the problems of Northern Ireland? I am merely a distressed observer of the condition of Northern Ireland; I have been that for the last 50 years. This latest move almost confirms the belief that we have an insoluble problem on our hands. Your Lordships should be a little sensitive to suggestions that parts of the institution of parliamentary democracy should be abolished when it is believed that they have ceased to be useful. We are ourselves very sensitive to the word "abolition". We ought to be on guard against believing that institutions have failed when miraculously they have shown a new
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lease of life and have come to be regarded with great respect and as being useful, sober and worthwhile. Your Lordships' House has emerged from this kind of condition of uselessness in its time.
We should be a little careful about meting on any other assembly within the body politic the sort of fate that some people would have visited upon us. It is a great pity if one abolishes anything that has been set up to achieve a particular purpose unless there is something else to put in its place. I do not believe it helps to say that the Government's aim remains as something which at the present time is not within sight. It strikes me that people are looking upon the Northern Ireland situation as Britain's permanent confession of failure to solve the problem of unity within the United Kingdom; but we go round the world telling everybody else how to get rid of their internal difficulties. I think our reputation for hypocrisy and incompetence must surely shine throughout the world.
Lord Lyell: My Lords, I immediately refute the two words to which the noble Lord referred—hypocrisy and incompetence. I do not think any fair and unbiased observer would label the efforts of this Government and, indeed, successive governments in the past with those two words: The noble Lord mentioned at least three times the word "abolition". May I stress to him especially, and to your Lordships, that we are not abolishing the Assembly; we are dissolving it. There is a major difference.
As I pointed out in the opening Statement, we are dissolving the Assembly under the powers we have in Section 5 of the 1982 Act. We are dissolving it for all the reasons I explained both in the answers I gave to the noble Lords, Lord Prys-Davies and Lord Donaldson, and in the opening Statement. The Statement of my right honourable friend spelt out the reasons for taking this action. We regret it, we are sad; but I refute the two labels of hypocrisy and incompetence which the noble Lord seeks to place on our efforts. The Government will spare no effort to try to resolve the appallingly difficult problems of Northern Ireland which have been spelled out in your Lordships' House. I give that undertaking. We are not pleased that we have to take this action, but we believe that it is about the only option open to us.
Lord Monson: My Lords, will the noble Lord the Minister assure the House on behalf of Her Majesty's Government that in future the people of Northern Ireland will be accorded the same democratic rights as are enjoyed by the people of the rest of the United Kingdom? In particular, will he assure the House that future legislation affecting the Province will be subject to full parliamentary deliberation and scrutiny, including the power to amend such legislation as and when Parliament considers it right to do so?
Lord Lyell: My Lords, the opening service (if I may put it that way) of the noble Lord, Lord Monson, was getting quite away from today's Statement. However, he referred to scrutiny in dealing with Northern Ireland parliamentary and political arrangements. The opening Statement stressed that my right honourable friend the Prime Minister would be very willing to

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discuss with the leaders of the Unionist Party four matters, one of which was the arrangements for handling Northern Ireland business at Westminster. I hope that that places squarely on the record what my right honourable friend would wish to discuss with the leaders of the Unionist Party. We hope that they will take up this invitation.
Lord Fitt: My Lords, is it not a sad commentary that 14 years after the abolition of Stormont in 1972 by order of the House of Commons we now have the seventh Secretary of State—five of them have been Conservative and two Labour—coming to the House this afternoon to admit that yet another initiative has failed? Will the noble Lord the Minister accept from me as one who has lived through those years in Northern Ireland that the failure lay not with any single one of those Secretaries of State to try to find a solution to the problem? The failure lay with the problem of the Northern Ireland people. The nearest that we ever came to success was the initiative of 1973 known as Sunningdale, which was the most hopeful political development that we had had throughout the years, but unfortunately it was brought crashing to the ground.
Will the noble Lord accept that the failure of the Assembly is to be laid at the feet not of any one of the political parties, but of a combination of every single one of them, perhaps excluding the Alliance? Will he also accept that the Unionist Members at Westminster in 1982, when the legislation was going through the House, expressed their opposition to the Assembly, but attempted subsequently to make it work, whereas the SDLP and Sinn Fein representatives totally boycotted it and made its failure certain?
Will the noble Lord accept that sentiments now being expressed by the leaders of the various political parties in Northern Ireland that they want to talk without preconditions are just so much hot air because they all have their own conditions? Does he accept the fact that the Anglo-Irish Intergovernmental Council has made it more difficult for talks on devolution to take place? There are many members of the Unionist majority who regard the existence of the Anglo-Irish intergovernmental conference as being a precondition in itself. Will the noble Lord agree that following the failure of this latest initiative the only hope of any help towards solving the ongoing problem in Northern Ireland is to be found within the confines of Northern Ireland and the island of Ireland and that no solution can emanate from this House?
5 p.m.
Lord Lyell: My Lords, perhaps I may first deal with the noble Lord's last point. He is getting a little wide of the somewhat narrow track that I beat this afternoon in regard to the Statement. Perhaps the noble Lord will go over this again when we debate the order, which we shall be doing at a future date. Perhaps I may then be able to approach the noble Lord's question and do a little more justice to it. I think that your Lordships would not wish me to go too far down that path this afternoon.
The noble Lord referred to the regrettable fact that the SDLP refused to attend this Assembly, and I
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pointed that out in my opening comments in relation to my right honourable friend's Statement earlier this afternoon. I believe that the House would wish the Government to take a constructive line, and that we should not rake over the reasons for failure. We can learn lessons, and I hope that we shall, but I hope that the tenor of everything I have said this afternoon, both in the Statement and in reply to your Lordships, has been one of seeking for a constructive solution. I think that that, too, was the tenor of the questions asked by the noble Lord, Lord Fitt, today. I would thank him for his kind comments about successive Secretaries of State for Northern Ireland, and I am sure that his good wishes cover all of your Lordships and everybody who has tried to serve in Northern Ireland. I stress that we adopt a constructive outlook, and I hope that we might be able to have more to say on that on a future occasion.
Lord Moran: My Lords, as today's announcement seems to mark the failure of this particular experiment in devolution, might it not be sensible, despite the special problems of Northern Ireland to which the noble Lord referred, to consider in future treating Northern Ireland more like other parts of the United Kingdom?
Lord Lyell: My Lords, that is a very interesting thought and we are very grateful to the noble Lord for raising it. May I ask him whether we might cover that a little more fully when we debate the whole of this order, which we shall be doing, I hope, in the near future? It is one part of the political argument that is under way at the moment in Northern Ireland. As I suggested to your Lordships, we believe that devolution is the best avenue; but perhaps we may leave discussion of that particular aspect to a later date.
Lord Blease: My Lords, I should like to join in thanking the noble Lord the Minister for repeating the Statement. I cannot say that I welcome it, but I certainly understand and accept the inevitability of the situation that has brought about the reasons for the Statement. I note that we are to be presented with an Order in Council next week, when we shall have an opportunity to debate the position and the Government's policy. Today, I should like, with others, to express the regret that elected members of the Assembly failed to fulfil the democratic functions of the Northern Ireland Assembly and its devolved powers, although important powers, in promoting a basis for justice, peace and prosperity in the Province.
I think that this would be an opportune time for me to pay tribute and commend highly the thoughtful efforts and work of the Speaker, Mr. Jim Kilfedder; the Clerk, Mr. Kennedy; and the officers and staff of the Assembly, all of whom worked under extreme difficulties earnestly and genuinely to uphold the principles and practices of parliamentary democracy. I should like to conclude my brief remarks on this Statement at this stage by quoting two sentences from a statement made by the Prime Minister in the House of Commons on 26th November last. The Prime Minister said:
"We, the United Kingdom Government, accountable to Parliament, remain responsible for the government of Northern

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Ireland … we will make determined efforts to resolve differences." [Official Report, Commons, 26/11/85; col. 752]
Matters have been raised here today about the rights and about the dissolution, and, in my view, the dissolution leaves a vacuum. I consider that rights in Northern Ireland are on a parity with those of the rest of the United Kingdom. What is required, as others have stated here, is that those rights be exercised. I think that a dangerous void exists in the vital democratic processes in Northern Ireland. It cannot be filled by ministerial statements, nor by the verbiage of politicians; nor, indeed, by the media announcements of clergy and others. I believe that it requires concerted action on agreed principles. Therefore, I hope that the Minister, when he comes to us—if it is to be next week—to debate the order will assure us of the determined measures by which the Government now propose to bring about the brighter picture of the future, to which the Minister referred, to bring peace and prosperity with justice in Northern Ireland.
Lord Lyell: My Lords, I hope that I have guarded my words suitably about the time at which we shall come to debate this order; but it will be in the near future. That is all I will indicate to the noble Lord. We are very grateful for his forthright support for the efforts that are made by everybody, particularly by the Government and all of those who seek to assist in the political life of Northern Ireland. But the noble Lord rightly stresses that all of us are seeking after peace and prosperity in Northern Ireland.
Quite rightly the noble Lord also stresses that dissolution leaves a vacuum. I hope that in my replies this afternoon and in the Statement we have gone some way to try to set out our ideas on the decision that we have taken, why we have taken it, and, I hope, some avenues for hope in the future. I note the noble Lord's comments and indeed his tributes to the Speaker of the Assembly and to others who have served so well, so long and so loyally to try to make it work. I think that tributes are due from all of us. We share the noble Lord's sadness that the Members of the Assembly felt unable to carry out their main task of scrutinising the work of the Northern Ireland departments.

Agriculture Bill
5.8 p.m.
House again in Committee, on Clause 1.
Lord Melchett Lord Melchett moved Amendment No. 4:
Page 1, line 11, after ("countryside;") insert—
("( ) the promotion of public enjoyment of the countryside;")
The noble Lord said: I beg to move Amendment No. 4. I think it would be convenient to take with this amendment, Amendment No. 77, which has the same effect as regards Scotland as would Amendment No. 4 for England and Wales. I hope that we can take this and the next two lots of amendments in my name rather more speedily than was the case with Amendment No. 3. As noble Lords will know, Clause 12 gives the Minister of Agriculture a new and, I must say for my part, very welcome duty to have regard to the promotion of the enjoyment of the countryside by
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the public and to endeavour to achieve a reasonable balance between that and a number of other considerations—the promotion of a healthy agricultural industry, conservation and so on.
As I say, that is very welcome and I have no complaints about the range of new duties which Clause 12 will introduce. But I am concerned that the same recognition of the importance of promoting public enjoyment of the countryside has not been carried into Clause 1 of the Bill. It seems to me that, however we draw the line and whether there is a duty or a power, and so on, the Ministry's advisory service will be one of the principal means through which it implements the new duties that are placed on the Minister by Clause 12. It therefore seems to me important that in Clause 1, when we look at the remit of the advisory service, it should be at least as wide as the new duties placed on the Minister by Clause 12. That is what this amendment and Amendment No. 77 would do. They would include in Clause 1 (though it is not included at the moment) the promotion of the public enjoyment of the countryside. It seems to me that unless I have misunderstood Clause 1, at the moment the way it is drafted would mean that, for example, if ADAS was visiting a farm to advise on conservation and the amenity of the farm, it would be outside its statutory remit to provide some literature about increasing access on that farm and providing facilities for people wishing to enjoy the countryside, such as picnic sites and so on.
I am sure that is not the intention and that ADAS will want to be involved in that field as it is becoming involved in the giving of conservation advice. This amendment would ensure that that was a possibility. Whether it actually did it of course would be up to the Minister, because it would be a discretionary power. I beg to move.
Lord Houghton of Sowerby: I wish to support this amendment. I believe that the enjoyment of the countryside will become of greater importance as the years go by. I think this whole question of land use and the rights of the public to have access to the countryside will become a major social and political issue. Surely before very long the present madness of growing to excess cereal crops that apparently are going to benefit nobody but the Russians will have to come to an end. The question of land use will arise when cereal growing has ceased to be the prevailing economic lunacy. Then the time will come when either we have alternative crops or we find alternative uses for our land.
When you come to think of it, it is rather disgraceful, however angry we may feel about the hippy convoy, that we have to push people from place to place because there is no land upon which they can go temporarily, even to follow the mode of life they feel they want to follow. We are horrible to the gypsies; we are beastly to the hippy convoy. We think that everyone should live in houses, but we do not make it our business to see that they are there to live in. We are really a quite ridiculous people when it comes to matters of this kind.
So far as the use of land is concerned there ought to be a wider recreational use of the land by people. Every beauty spot is overcrowded; motorcars go into open

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gates; litter is left all over the countryside. There is nowhere to go. Notices say that trespassers will be prosecuted and you must not go on to the land. Footpaths are obscured and wheat crops are grown so that you do not know where the paths are. Urban dwellers have a respect for the land and they do not like wandering through growing crops even to reestablish their right to a footpath.
We must now recognise that the enjoyment of the countryside by the people—a growing population—including those who want more recreational opportunities and more relaxation from the pressures of life is going to be of much greater value than large parts of the National Health Service, which is not a health service but a sickness service. I believe the health of the country is going to lie in wider, fresh opportunities to regard the land as our own, and if it is not used for vital food production, it should be turned over to those of us who can enjoy it much better than we now have the opportunity to do.
Lord Craigton: I rise to support this amendment because I think that without expert advice the enjoyment of the countryside can do more harm than good. The farmer has to have some expert advice on how people should enjoy it and where they should go. Left to himself, he might do more damage conservationwise than with the advice of ADAS. For that reason I support the amendment.
The Earl of Onslow: I should like to support the amendment for two reasons. First, Clause 12 refers to the promotion of the enjoyment of the countryside by the public, and surely ADAS should be used to support that. Secondly, it is infinitely better that people should have access, and it is, after all, everybody's countryside. Even though I own some land, I am quite happy for people to enjoy my little bit. But I should like other people who live in the crowded south-east of England where I live to enjoy it responsibly and to keep to public footpaths. I want to get advice because there is room for all people to enjoy the land. As amended—I am sure the noble Lord, Lord Houghton, will appreciate this—I think the provision means that as fox hunting folk we can ask for advice on covers and how to make hunt ditches. I am sure beyond peradventure that the noble Lord, Lord Houghton, would love that.
Lord Walston: All I wish to do from these Benches is to give our support and my personal support to this amendment. The principle, as the noble Earl, Lord Onslow, has pointed out, is established in Clause 12(1)(d), and when we come to that it will be worthy of complete support. This amendment does no more than make it easier for farmers to fulfil one of the objectives of the occupation or ownershiup of agricultural land.
5.15 p.m.
Lord John-Mackie: We certainly support my noble friend's amendment, but I hope he does not wish ADAS to be chivvying people into the countryside and forcing them to enjoy it. It rather gives me that impression; nevertheless we support it.
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When I first came to this Chamber I was not very sure of the procedure and I followed the noble Lord, Lord Houghton, on something. I criticised what he had said and that brought him to his feet again and he spoke for another 10 to 15 minutes when we were rather wanting to get away home. So I got up and was going to apologise for doing that, but I was shouted down because I was not supposed to speak a second time. I am rather tempted to say something about what the noble Lord said in regard to wheat growers when he turned to the economic side of farming. However, I think I had better refrain at the moment. There will be an opportunity at a later stage of the Bill.
Lord Belstead: This is an interesting amendment, and once again it has received much support. It is unusual in such circumstances for a Minister to turn down an invitation to extend the Government's powers, but I am going to make a case for doing so. I would remind your Lordships that Clause 1 of the Bill already provides powers for advice to be given to any person on a very wide range of issues, including those relating to the natural beauty and amenity of the countryside and any other agricultural activity or enterprise of benefit to the rural economy. As the noble Lord, Lord Walston, quite rightly said, the requirements of Clause 12 to have regard to and endeavour to balance all the considerations set out in that clause, including the promotion of the enjoyment of the countryside by the public, apply as much to ADAS as they do to other statutory activities and, I contend, would adequately meet the concerns which have been expressed.
I am saying this because I think a difficulty would arise if this amendment were to be accepted, to the extent that the powers it would give would impinge on the responsibilities of existing statutory and other bodies with interests in this area. I am glad to say that ADAS enjoys good working relations with such bodies as the Countryside Commission, the Development Commission and so on. And of course there are voluntary bodies doing an excellent job. I am simply saying that I do not think it would be a good idea if it were to appear that the statutory remit of ADAS was being constantly and specifically extended when other agencies already have a statutory responsibility.
The Committee may ask: what am I getting at? I am getting at the fact that the Countryside Commission is after all under a statutory remit under the Countryside Act 1968 to encourage the provision and improvement, for persons resorting to the countryside, of facilities for the enjoyment of the countryside and of open air recreation in the countryside. Excellent though working relations are with the Countryside Commission and ADAS, I am not entirely sure that the commission would welcome with open arms the news that quite suddenly an exactly parallel statutory responsibility had been laid on the Ministry of Agriculture. The Countryside Commission could quite reasonably pick up the telephone and say to my right honourable friend, "It is all very well. We thought we worked well with you. Are you now trying to take a statutory responsibility from us?"
Not very long ago—about six months or more ago—the Countryside Commission produced an absolutely excellent pamphlet on access to the

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countryside. It was launched by the chairman, Sir Derek Barber, at the Royal Institution of Chartered Surveyors' headquarters. On that occasion I was privileged to be there representing the Ministry of Agriculture and my right honourable friend Mr. Waldegrave was there representing the Department of the Environment.
I thought when I attended that launch that this surely was exactly the way that we ought to go about things in this country, with that now highly respected statutory agency—the Countryside Commission—taking the lead in this particular matter (access to the countryside) and the two government departments there and represented in order to show that we were all working together. I seriously say that if the amendment were to be put into statute the Countryside Commission would ask some direct questions as to what it was the Ministry of Agriculture wanted to do in statute. In practice, we are determined to work as closely as we possibly can with the Countryside Commission and with the Nature Conservancy Council, but we are not trying to take over their statutory functions.
Baroness White: For once I want to help the Minister. One could perhaps add the national park authorities because they have certain duties in this direction. I know that they work with ADAS at present, but whether ADAS should be given a specific remit is at least open to discussion.
Earl Peel: I should like to support what was said by my noble friend on the Front Bench. The position at the moment is such that the Countryside Commission has this responsibility, and to try to bring it on to the Ministry of Agriculture at this stage would be misleading.
I should like to pick up something said by the noble Lord, Lord Houghton. He described as ridiculous—and think I am quoting correctly—people who are nasty to hippies. I can only assume therefore that if this amendment were to be accepted by the Committee he would expect the Ministry of Agriculture to take the side of the hippies against the farmer in incidents such as the unfortunate one that took place the other day.
Lord Melchett: So that we do not repeat earlier experiences, it may be helpful if we stick to the amendment. That is what I should like to do. I am delighted, incidentally, that the noble Lord, Lord Belstead, enjoyed so much as he did the Countryside Commission's launch of its access charter with Mr. Waldegrave and Sir Derek Barber. I am not sure whether he was aware that the access charter was produced by the Countryside Commission as a result of an amendment made to the National Parks and Access to the Countryside Act through the Wildlife and Countryside Act in your Lordships' Chamber, an amendment which I moved against the Government's wishes and had placed in the Bill. I am delighted that the outcome has been to give the noble Lord, Lord Belstead, a good party at the Countryside Commission's expense.
Unless I misunderstood it, I am not at all happy with what the noble Lord said in reply to the amendment.
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First, he said that if the amendment went into the Bill ADAS would have powers which overlap with those of the Countryside Commission. Clause 1 already gives it powers which mean that the remit of ADAS overlaps with those of a number of other statutory bodies. It overlaps with the Development Commission and CoSIRA under subsection (1)(c); it overlaps with the Nature Conservancy Council, another statutory body, under subsection (1)(b), because ADAS has a remit for conservation. It overlaps with the Countryside Commission already in subsection 1(b) because one of its primary statutory functions is to safeguard the natural beauty and amenity of the countryside. If I may say so to the noble Lord, that is no answer at all.
Clause 1 already has ADAS overlapping with all sorts of other statutory bodies. Indeed, as I understand it, that is what all of us want to see. We want to see ADAS being able to give advice to farmers about a wide range of matters simply because the number of times a member of staff from the Countryside Commission, of whom there are very few indeed, turns up at a farm and starts talking to a farmer and where in the course of conversation some issue comes up and advice can be given is perhaps once in a thousand years on the average farm and may be less frequently than that, whereas ADAS is there more regularly.
That is why ADAS—as we have all been arguing (and the Government now accept it)—should have a remit for giving advice on conservation, on natural beauty and on amenity. If it is right for ADAS to have a remit to give advice on all those matters because its people are in regular contact with farmers, why is it suddenly wrong for ADAS to have a remit to give advice on access? With respect to the noble Lord, it cannot be on the grounds that he mainly advanced, that this would mean an overlap with the Countryside Commission.
This amendment has been on a little longer than some, but the noble Lord may not have had a chance to consult the Countryside Commission formally. My understanding was that the commission would not have any serious reservations about the amendment. The noble Lord has much faster and more efficient communication with the commission than I have. I wonder whether he has managed to ask the commission its view, and if he has not whether he will consider, if I withdraw the amendment, doing so between now and Report stage.
Secondly, the noble Lord said that the new duty on the Ministry of Agriculture in Clause 12, which includes the words in my amendment, would be sufficient statutory cover to allow ADAS to do what my amendment says it should do. I am not sure whether or not that is right. But if I have understood the noble Lord correctly, what he nearly said (and what I frankly expected him to say) is that my amendment is unncecessary. Clause 12 will give the statutory power for ADAS to give advice along the lines I am suggesting in my amendment. I want to ask the noble Lord whether I have understood that correctly.
For example, if a farmer has an area of high wildlife interest—a farmer, let us say, farming in an ESA and receiving money from the Government to maintain the environment, the wildlife interest, of his land—and

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he wants to talk to ADAS about allowing more visitors on to that land—about whether it would be sensible; about how he would do it; about what times of year to encourage visitors and what times of year to discourage them because of the wild flowers on the site—would ADAS be able to give advice on those issues under the Bill as it stands? That is the kind of question in my mind.
Lord Belstead: The noble Lord asked me whether I have consulted with the Countryside Commission. No, I have not—though I should be very pleased to do so. It is true that there is overlap between Ministry functions in Clause 1(1) and other statutory functions, but this would be an absolutely direct duplication of another statutory function. It would be very questionable whether that would be desirable—whether it is desirable from a statutory point of view and whether it is desirable as a matter of practice in our public life to lay duplicating duties on two bodies or more than two bodies.
The noble Lord asked me a final question about Clause 12. We must wait until we get to Clause 12, a clause which has been widely welcomed. Indeed, the noble Lord himself has welcomed it on other occasions. I simply said in my original remarks that the requirements of Clause 12 to have regard to an endeavour to balance all the considerations set out in that clause including,
"the promotion of the enjoyment of the countryside by the public"
apply as much to the advisory service as they do to other Ministry activities.
As we have tried to make clear, we have been putting into statutory form in Clause 12 what we believe the Ministry has been trying to do now for quite a few years. I do not think that at this stage, before we get to Clause 12, I would want to go further than that. I certainly do not want to get into the particular example that the noble Lord put to me.
The Earl of Onslow: I am sorry. When my noble friend first spoke I was totally satisfied with his answer. But now he says that ADAS should not have a statutory duty because it overlaps with the Countryside Commission and that would be a bad idea. He then says, "But actually it does have one anyway in Clause 12 but I do not want to discuss it yet". I am sorry. I am in a terrible muddle as to what he actually means.
5.30 p.m.
Lord Melchett: I was going to make precisely the same point. The Government themselves have laid this power on the Minister. They have taken to the Minister of Agriculture the Countryside Commission's remit. To say that it is all right to take it to the Minister of Agriculture, who has to balance these matters, but that it is not all right to take it to ADAS—and one should remember that it is a powers and not a duty on ADAS, that can be exercised if they want to exercise it—is something that I find impossible to follow. It is made even more difficult by the point that the noble Earl, Lord Onslow, has raised, when he said that one cannot do that for ADAS because that will overlap with the Countryside Commission, but one should not
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worry because Clause 12 does it anyway. Those two statements are not logically consistent.
I appreciate the noble Lord's anxiety to move on to Clause 12, but we are dealing in Clause 1 with the remit of ADAS. When we are dealing with the remit of ADAS, the Minister should either answer now, or say that he will let me know, whether its remit includes giving advice in the kind of circumstances I have mentioned and in the circumstances spelt out by the noble Lord, Lord Craigton, when he spoke in support of the amendment.
If a matter concerning public access arises and an ADAS adviser is giving advice on conservation or diversification, for example, then will ADAS be statutorily empowered to do that because of Clause 12, or will it need of more specific remit in Clause 1? That is the question.
Lord Belstead: Clause 12, as its sidenote says, deals with a duty to balance interests in the exercise of the Ministry's agricultural functions. I believe that the four ways in which that ought to be done, which include the promotion and enjoyment of the countryside by the public, are right. However, Clause 1, as the noble Lord, Lord Melchett, says is different. It concerns a direct power inviting the Ministry to give advice which, in this particular amendment, would relate to the promotion of public enjoyment of the countryside. That would mean such things as drafting and giving out pamphlets and literature on public access. I am clear in my own mind that if we do that, then it would be a direct duplication of the duty that is laid on the Countryside Commission by the Countryside Act 1968. I do not believe that would be right.
I believe that it is right that the Ministry of Agriculture should at all times work in very close collaboration with the statutory agencies—that is to say, the Countryside Commission and the Nature Conservancy Council—which are charged by statute to give particular advice to the Government, and also with the voluntary agencies. I do not believe, however, that the proposed amendment would be right, for the reasons that I have tried to deploy.
Lord Mackie of Benshie: Perhaps I may ask the noble Lord, Lord Melchett, exactly what he means. I am all for promoting enjoyment of the countryside, but I would have thought that the advice I would get would be where to site car parks when people come to look at the daffodils that I have planted by the roadside through my farm. But they would not, I imagine, give me advice as to how I should advertise that the daffodils were there. That would be someody else's duty. The advice that ADAS would give would be how to site the car parks or how to point visitors to the high chairs to see the deer that we have about us.
Lord Melchett: I agree with the noble Lord; that is the kind of advice I should like to see ADAS being able to give. The Government's point of view, as I understand it, is that ADAS should not do so because it might upset the Countryside Commission. My information is that the Countryside Commission would welcome the amendment I have tabled, which is in sharp contrast to what has been said by the

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Minister. I do not have the Commission's view in writing—it is simply an informal view. So that we do not prolong the debate, I suggest that the noble Lord should agree to consult the Countryside Commission between now and the next stage of the Bill, and have a discussion about it. Naturally, I shall try to get something definite from the commission itself. If it would welcome such a power, and if the Minister and myself could both obtain its view, then we could return at Report stage with more informed advice from the statutory body whose remit, as the Minister has said, this is. If the noble Lord is prepared to agree to doing that. I shall be happy to withdraw the amendment.
Lord Belstead: I do not want to appear unhelpful or taciturn, but I am not going to have other people making statue law for the Government. I do not believe that the amendment is right, and I have given my reasons. I am delighted to talk to anybody but I do not think that further discussion would make the Government change their mind on this point.
Lord Melchett: In that case, it would have short-circuited matters a little if the Minister had said so in the first place, rather than base his whole argument on what he suggested would be the view of the Countryside Commission, which is what he spent several minutes telling the Committee. Nevertheless, even if the Minister will not speak to the commission between now and Report stage, I shall do so. That will at least remove what the Minister said was his main argument against the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Melchett Lord Melchett moved Amendment No. 5:
Page 2, line 4, at end insert—
("( ) the giving of information or advice, or the performance of any service required to prevent the pollution of any body of fresh water or ground water.").
The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 15. The amendment would ensure that in giving information or advice to farmers on the steps that they should take to avoid polluting fresh water or ground water, ADAS will give advice free of charge. This is simply a probing amendment and I hope that on this occasion the noble Lord will at least be able to reassure me that it is not needed.
I put down this amendment because the Water Authorities Association suggested that water authorities are particularly concerned about the changes that are being made in the remit of ADAS, and are worried, in their position as the statutory bodies responsible for pollution control, that any advice ADAS may give about measures to avoid pollution of water should remain outside the charging scheme and should be given free of charge. I beg to move.
Lord Belstead: The giving of information and advice is already covered by paragraph (a), and it is clear from subsection (1) that such advice may cover any matters relating to conservation. With respect to the noble Lord, I do not see therefore that the proposed new paragraph would add anything
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significant, and I do not believe that it would be helpful or necessary to single out one particular aspect of conservation in that way. It might create the impression that water pollution ought to receive some special degree of priority over all other environmental matters.
I recognise that water pollution is enormously important, and we have put a lot of effort into trying to prevent pollution, so far as the Ministry of Agriculture is concerned—and the noble Lord is good enough to be nodding his head. An advisory leaflet was issued last year which I believe has been very widely read. However, other environmental issues also are important. The list of matters in subsection (2) is only intended to illustrate the kind of broad areas in which ADAS is likely to be operating. We could create all kinds of distinctions and impressions if we started adding in detailed subjects and leaving others out.
The amendment seeks to establish whether pollution advice is covered by general undertakings that the Government have given on charges for conservation advice. Although the noble Lord did not get into that area, maybe it is part and parcel of the amendment. I hope that the general guidelines that I tried to explain when speaking to the very first amendment that the noble Lord moved about conservation show that the Government's intentions to keep environmental advice free of charge would apply to pollution advice, including advice concerning water pollution. Although it is a subject on which the noble Lord and I are not in agreement at the present time, I hope that shows that the Government, for their part, intend that my right honourable friend's undertaking of 7th November last about free advice for conservation matters will extend to pollution advice.
Lord Melchett: I am grateful to the noble Lord. I am sure the Water Authorities Association, which apparently has not previously received such a clear assurance on the matter, will be encouraged. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Melchett Lord Melchett moved Amendment No. 6:
Page 2, line 4, at end insert—
("( ) the undertaking of research and development of organic agriculture;
( ) the supply to any person of any services or goods relating to the production and marketing of organic agricultural produce and other organic food.").
The noble Lord said: This amendment is also a probing amendment which I do not intend to press. It is tabled merely to give me an opportunity to ask the noble Lord what are the Government's intentions in giving advice and undertaking research on organic agriculture.
My reason for singling out this aspect of farming in particular and asking the noble Lord whether the Government are going to take the subject seriously, do some research and give advice, is because I think it is fair to say that there is widespread concern at the moment that organic agriculture has been given the cold shoulder by the noble Lord's department. For example, in an editorial in March this year the Farmers Weekly noted that farmers were being

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encouraged by everyone, including the noble Lord and his ministerial colleagues, to diversify and take notice of the market place. However, the editorial noted that the Ministry apparently did not apply this creed to their own research and advisory services and that the Ministry had suppressed a report on organic agriculture.
In fact, my understanding is that two senior members of staff in the Ministry of Agriculture went to West Germany and Holland and in a report made a number of recommendations on organic farming to the Ministry. According to the Farmers Weekly that report has been ignored—indeed, suppressed. The report apparently states that in both Holland and West Germany investment in organic research was seen by the governments concerned as money well spent. Organic methods in both countries were attracting an increasing number of farmers and growers. Indeed, I understand that there are about 3,000 farms in West Germany which are fully organic compared with probably a thousand or so organic farmers and growers, many on a small scale, in the United Kingdom. The ADAS report, which I understand the Ministry has not published or responded to publicly, states that crops grown organically can command a high premium.
I mentioned on Second Reading that, as a farmer, I find it very disturbing that other countries in Europe within the CAP are taking organic agriculture very seriously. For example, in West Germany three state farms have already been converted to organic agriculture. The West Germans employ specialist advisers who are experts on organic agriculture. Universities and research stations are spending considerable sums of money on it. Even with 3,000 farms producing organic output in West Germany the supply is far exceeded by demand.
In those circumstances, it seem to me particularly unfortunate that the Ministry has none of the experimental husbandry farms doing any work on organic agriculture. I believe that the Government have claimed to be involved in one farm where research on organic farming is carried out but I understand they intend to pull out of that project within the next six months so so. It is disappointing that where there is one sector of demand for agricultural produce which is expanding rapidly, where at least one supermarket chain is buying organic output and another is seriously investigating it, and where at some times of the year up to 90 per cent. of the demand for organically-grown vegetables has to be met by imports from the rest of Europe, the Ministry is not taking this matter more seriously and diverting resources into research, thus allowing its advisers to gain some scientific background and expertise so that they can give advice on the subject.
I hope that the noble Lord will be able to assure me and the many others concerned that the Ministry is taking this issue more seriously than appears from what has been said in many quarters. I beg to move.
5.45 p.m.
Baroness White: I support my noble friend. There is considerable interest in parts of Wales in the
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development of what is commonly called organic agriculture; that is to say, relatively low input and relatively low output. After all, the problems in agriculture today are costly input and over-large output. I am not sure whether it was to our particular pioneer that my noble friend Lord Melchett was referring when he spoke of marketing the products. It so happens that there is an extremely entrepreneurial and imaginative marketing scheme for these products with some of the large supermarkets. It is therefore no longer to be regarded as a rather cranky form of food production. It is undoubtedly of some importance for the future and I hope very much that we can have some reassurance on the Ministry's attitude towards this matter.
The Earl of Radnor: I think that this amendment should be resisted, though I am not in any way against organic farming or the pursuit of research into that subject. I believe that it should not be put into statute in the same way that water should not be in statute. It is possible for advice to be given within the Bill as it stands. It would be a pity to include research specifically because I do not believe, as perhaps do some noble Lords opposite, that organic farming is a subject on its own.
The definition causes some of us a great deal of trouble. All farming is a little blurred at the edges and it would be a pity to put organic farming on to one side. I know that organic farmers must have their land free of chemical fertilisers for two years, and so on, but there are degrees of organic farming. It can be combined with other forms of farming—I will not say traditional farming because organic farming is probably more traditional than what we do now—and for those reasons I believe that the amendment should not be taken on board.
Lord Melchett: I entirely agree with everything that the noble Earl said, and I said so in introducing the amendment. It is possible in Committee to introduce probing amendments so that subjects can be raised for debate. I explicitly said that that was my intention. I agree that it would be wrong to put this amendment in the Bill, but I hope the noble Lord the Minister will be able to give us some information on what the Government are doing in this respect.
The Earl of Onslow: I could not tell an organically-grown swede from a non-organically grown swede if they were dished up on my plate, but that is another matter. Some people, however, like the idea of an organically-grown swede, or whatever. Organic farming is, as my noble friend Lord Radnor said, extremely difficult to define, and there is a problem. If ADAS gives advice on organic farming, is that conservation farming or is it increased-profit farming? It produces yet another muddle as regards the ADAS charge.
If it is said to be conservation farming, and if this lovely organically grown swede is then flogged by a supermarket at double the price of the swede which is fattened on nitrogen which comes from an oil company as opposed to a pile of horse manure, there would seem to be something odd in the idea of charging at all; but we may get to that later.
Lord John-Mackie: My noble friend has raised an interesting point. As he said, he raised it for discussion and he does not feel that the amendment should be put into the Bill.
Along with one of my sons, I investigated organic farming. There is a private organisation that advises on it. We found the conditions so severe that in considering the situation we felt that if it was carried out on any great scale the noble Lord, Lord Houghton, would not have to complain about surpluses in any shape or form—that is for certain.
I want to make the point that the Association of Agriculture also carries out research into organic farming. Does the Minister know whether that association receives any assistance? I have a feeling that it does, and, if so, that may satisfy my noble friend; so the Minister may not be quite so bad as my noble friend suggests.
Lord Mackie of Benshie: I try to practise a mixture of farming. Certainly I would not burn the straw and regard people who do as evil, and I also keep fattened cattle and that sort of thing. I think there is rightly a tremendous interest in organic food. A lot of the food that we eat is rather dull and certain ways of producing it make it taste better. However, because there is a big demand for it, I should have thought that it would be right and proper for the Government to do some research, if only to expose what is phoney and to praise what is genuine. There is a big demand and people do think in this way. The more accidents that occur and the more people become frightened of nuclear power, the more they want to go back to nature. I think that the Government ought to undertake at least to see that the claims can be backed up and are correct in this case.
Lord Belstead: Perhaps I may first of all say that ADAS is taking an increasing interest in organic methods of farming. We already provide advice and we have plans to designate a number of advisers with specialised interests in organic issues to help us respond to the industry on this matter. I am not sure that we have said this publicly before, but I am saying it now. This is one reason for having a probing amendment.
In that context I think we should like to think about what the noble Lord, Lord Mackie of Benshie, has said. If I may say so on behalf of the Government, I think that it is very important that the best practices of organic growing and the best prospects for marketing should be pursued and indeed supported so far as possible, because obviously at its best, for those who want organic produce, organic growing is a very interesting sector of the agricultural industry.
I should like to go on from there and say that we are funding research into organic farming. We are monitoring a farm in Wiltshire, which I have had the pleasure of visiting, and we have awarded a research contract to the University of Wales to undertake a three-year study of the nitrogen balance and nitrogen cycle in organic farming systems. I am not quite sure when that research contract comes to an end but it is a three-year study and, so I am advised, not a study which will suddenly end.
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ADAS is always prepared to consider undertaking research projects that are commissioned and paid for by the industry or by particular sections of the industry, and I can confirm that the service is willing to assist organic farmers and those wishing to convert to this system in the same way as it assists farmers with other systems of farming. Organic farm businesses come within the scope of the agricultural improvements scheme which, as the Committee will know, is the new form of capital grant which came into effect at the end of last year. Grants are available to organic farmers on a wide range of investments, including organic irrigation and the storage of farm waste.
I shall just add that Food from Britain is conscious of the development of markets for organically grown food. Food from Britain has recently received a report that it had commissioned on the future of organically grown produce. I realise that it will need to study the report before deciding what action to take but that locus is there for our main marketing arm in this country.
Having said that, I share the concern of my noble friend Lord Radnor about this particular amendment. What worries my noble friend—and it worries me too—is the implication that research into organic farming methods in some way is different and special. Though I think it is an extremely interesting area, I do not think it is different. Indeed, many organic farmers would say that they are doing in the most natural way what they believe farmers have been doing over the centuries.
If we were to accept the amendment, I think that we would create the impression that this is an entirely specific sector with specific methods and we should then end up with a very much larger clause or we should find that we have picked out just one or two items from the whole of the agricultural industry for no really very logical reason. So I hope that the noble Lord will feel that, even though I am resisting the amendment for reasons which are shared by my noble friend Lord Radnor, what I have been able to say in reply to this brief exchange has made the tabling of this amendment worth while.
Lord Melchett: I was very interested in what the noble Lord had to say. I think that organic farming is different and special in two respects. First, it represents one of the only areas in UK agriculture where there is a rapidly growing market and where there is no sign of that market being met from domestic production even though it could be met from domestic production. That makes it rather different and rather special; but I do not think that it makes it sufficiently different or special to warrant a particular mention in the Bill.
The other respect in which it has been different and special, up to now at least, is because the Ministry has shown very little enthusiasm for giving advice or doing research on the subject, and in that sense it has been different and special compared with other forms of agriculture. The statement of the noble Lord that some ADAS officers were being designated to develop particular expertise is very welcome indeed. I am sure that all those involved in the organic farming movement will welcome it, as will many farmers who

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are thinking of converting some or all of their enterprise to organic farming.
I wonder whether I may just ask the noble Lord one further question. He mentioned a farm in Wiltshire. That was the farm where I understood that the Ministry intended to pull out of the research project in a few months' time—indeed, my understanding was that it would be in about three months from now. I do not know whether or not that is correct but I think that while it is very useful to have some advisers with expertise, it would also be useful either for some work to be done on an experimental husbandry farm (of which there are many very good ones around the country) or for the Ministry to continue to monitor organic farming on an existing organic farm such as the one in Wiltshire. Can the noble Lord give me some information on how long that project will continue?
Lord Belstead: I should like to give a straight answer to the first question. I think that it was two years ago that I had the opportunity to pay a visit to that particular farm in Wiltshire. There were two members of the agricultural science service who were monitoring the pests and diseases in the organically grown crops on that particular farm. Incidentally, as a matter of interest, my visit took place about three weeks before harvest started in July, and it really was something I shall never forget. On that particular farm the crops were entirely clean. They were wholly free from disease of any kind. It is certainly an abiding memory for me. I am sure that the farmer concerned would have been the first to have pointed out that whereas the corn crops in the first year after the land had been laid down to grass—it was being done on that cycle—were producing really quite heavy crops, when one reached the second year of corn, of course the crops were less thick, and no doubt this has some bearing on their freedom from disease. Nonetheless, there were some very good crops of winter and spring wheat the first year after being laid down to grass and all the fields—the whole lot—were absolutely clean. I think that is something on which our minds need to dwell.
The Ministry's mind has dwelt on it—the noble Lord is right—for a period of three years. Indeed, after I had had the pleasure of visiting the farm, we brought in a research student from the University of Bristol to do a project there, and so we increased the Ministry's input into the farm. I am now speaking off the cuff but I think that if the noble Lord is right and that project is due to be coming to an end because we have finished a three year study, we really ought to be thinking at least of moving our focus of attention. As I tried to show, it is a farm which is enormously interesting, but I am sure that the farmer himself would probably say that it is right that in the cause of research and development one should also look elsewhere.
I seize this opportunity just to say that perhaps we have somewhat hidden our light under a bushel, in the sense that the three-year project of the University of Wales at Aberystwyth that I mentioned is having its work planned and monitored with the assistance of a steering group which includes senior representatives of the organic farming sector. I like to feel therefore that the Ministry and the organic farmers have been in fruitful co-operation.
6 p.m.
Lord Moran: May I ask the Minister whether it is intended to publish this study by the University of Wales, when it is completed?
Lord Belstead: I must write to the noble Lord on that matter. I am sure the answer will be yes; but as I am not briefed on this question I shall write to him.
Lord Mackie of Benshie: If the noble Lord cares to look at the records for the North of Scotland College he will find that Aberdeenshire was farmed in precisely that way for 100 years before the war.
Lord Melchett: I think that the noble Lord is wrong. It is a common misapprehension that modern organic farming simply involves turning the clock back 100 years. Perhaps he should take the opportunity to see some of the detailed research work that is being done in West Germany, for example, on flame weeding, using quite sophisticated, modern equipment. I doubt whether that was available even in Aberdeenshire 100 years ago. This is one of the areas—modern equipment for modern organic farming—where I am afraid that our rivals in the rest of Europe (although we are all in the EC) will be stealing a march. British agricultural machinery manufacturers will be suffering from even more imports as organic farming grows throughout Europe, as it will. The EC is considering setting a European-wide standard for organic farming produce.
That is another reason why it is important that we should take it seriously, as the noble Lord, Lord Belstead, obviously is. I am encouraged by what he said. I agree that it would be wise to look at another area and another farming system after the research in Wiltshire. If the ministry is to do that, that would be widely welcomed.
I do not think that the noble Earl, Lord Onslow, was that concerned whether his swedes were organically grown, but a lot of people are. It seems to me to be a source of considerable shame to British agriculture that even in the swedes market most are being imported by the entrepreneurs in Wales that my noble friend Lady White mentioned. We cannot even produce enough organic swedes in this country to satisfy our market. There is a lot of work still to be done. The noble Lord, Lord Belstead, has been extremely encouraging. I am grateful to him for what he said, and I beg leave to withdraw the amendment.
Lord Boothby: Does the noble Lord realise that, whatever he may say, farming in Aberdeenshire remains the best in Europe?
Amendment, by leave, withdrawn.
Lord Stanley of Alderley Lord Stanley of Alderley had given notice of his intention to move Amendment No. 7:
Page 2, line 4, at end insert—
("(2A) the Minister shall from time to time consult with such persons appearing to him to represent the interests of producers in the agricultural industry and to represent other interests concerned as he considers appropriate, regarding the provision of any goods or services which are supplied to any person, or for which provision is contemplated, by virtue of this section.").
The noble Lord said: I explained this amendment when I spoke to Amendments Nos. 1 and 2. My noble

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friend made sympathetic noises. I take his point that the amendment might suggest that the Minister must consult all and sundry and that might cause inefficiency. Like him, I hope that it may be possible before Report to ensure that the Minister has a less onerous and difficult job. I hoped that my amendment said that he should consult only those whom he wished to consult. I thank my noble friend for his offer of help, and I hope that he will be in contact with me before the Report stage.
Lord Belstead: I give my noble friend an undertaking on those last words of his. I shall be in contact with him on the amendment before the next stage of the Bill.
Lord Stanley of Alderley: I therefore shall not move the amendment.
[Amendment No. 7 not moved.]
Lord John-Mackie Lord John-Mackie moved Amendment No. 8:
Page 2, line 5, leave out ("or goods").
The noble Lord said: First, I want to apologise for the stupid way that I put down the amendment. Instead of asking for the subsection to be withdrawn and rewriting it, I tried to amend it by Amendments Nos. 8, 9, 10 and 11. They are really only one amendment. The provision would read:
"Any services provided by this section will be provided free of charge and all"—
and I think that the "all" should have been "any", but let us leave it there for now—
"goods provided by virtue of these services will be charged for at a reasonable cost".
I put in the last part of the provision because I would be prepared to say that farmers should pay for goods, although I am not quite sure, and I should like the Minister's enlightenment when he replies as to what goods he was considering other than veterinary medicines and so on. I can think of no goods that ADAS provides other than those.
As usual, I must declare an interest. I am a farmer and use ADAS liberally. I first used the advisory service in Scotland 56 years ago. I remember the occasion well. I had heard from somebody that sulphuric acid could be used on cereal crops to kill weeds. (Do I hear a murmur against spraying already?) I asked the college adviser whether he could find out about that. He discovered that it had been used in France quite a lot, and he went to no amount of trouble to get me the advice. I used sulphuric acid and it had to be carefully done. It was valuable information. That has been my experience in Scotland and in England ever since, and I have farmed in both countries.
I should like to emphasise that the advice has always been unbiased, free and in 99 cases out of 100 (or on ever larger odds) correct. That free and unbiased advice has been a major factor in the unprecedented increase in the efficiency and productivity of British farms and has resulted in an increased supply of food to the British people, which not only feeds them better but effects enormous savings on imports. Because of that I do not believe that the British taxpayer would
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grudge that free service to his farmers. I believe that the saving target is about £6 million, or 10p per person, but I may not be correct here.
As I said earlier, in his Second Reading speech the Minister catalogued all the changes and difficulties, including reduced incomes, but he ends up by implying that the best way to help farmers is to charge them for advice which they have had free for so long. Not only that, but the number of advisers has been cut. Although the extent of the cuts has been reduced recently, there will still have been a reduction of about 750 posts in the service in the past five years. That is equivalent to about 20 per cent. With all the difficulties and changes in our industry this is surely the time for more free advice and not less and more expensive advice.
I return to the Minister's words on Second Reading (at col. 621 of Hansard):
"This will enable farmers to have the clearest possible say in the kinds of services they receive. That is crucial, at a time when the agricultural industry is facing a period of unprecedented change. There is no point in providing services that farmers do not value or which are no longer relevant to their needs".
I should like the Committee to look at that carefully. Quite frankly, when I consider what the Minister said it seems to me to be a strong slur on ADAS to suggest that because the advice was free over past years ADAS did not keep up to date and provided services which farmers did not value and which were no longer relevant to their needs. I beg to differ strongly. I think that on reflection he may wish to drop that argument.
What will the reaction of farmers be? Times are hard and they look like getting harder still. My bet is that the small farmer especially will not pay ADAS for advice. The likelihood is that commercial advisers will go to them. However unbiased a commercial adviser tries to be, his advice is tied up with selling something. I have a lot of friends in the commercial advisory service and get on well with them, but I have had various experiences.
I had a young farm manager who had many attributes, but dealing with salesmen was not one of them. He was persuaded to spray quite a large field of wheat to kill black grass. I looked at the field and could find no black grass. I had a big row with the company about that. That is the sort of thing that happens.
My son had another experience. I wish to illustrate the difference in the experience of using ADAS. As we know, we are now looking for ways to reduce expenditure. He was being advised about a fertiliser that he should put on his wheat for next year, looking well forward. He took the advice that he had received from a commercial company to ADAS. ADAS pointed out to him that if he had his soil analysed and he found that his phosphate and his potash were above a certain figure, he need not use any fertiliser. I looked through all the commercial literature to see whether I could find that advice, but it was not there. That is the type of thing that one must remember when considering charging farmers for advice.
The great advantage at the moment is that one can go to ADAS and obtain advice and have matters that I have described confirmed. That will no longer be the case if the Government have their way. ADAS does a great deal more than just go to farms and give advice on the spot. It provides demonstrations, meetings and

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pamphlets. I have an excellent pamphlet which arrived just the other day. It gives clear advice about what to do when diseases hit crops. I wonder whether we shall have to pay for all that advice which is so helpful when we do our jobs.
The noble Lord told us that there is to be no charge for advice on conservation. The argument on that point that we had earlier, on my noble friend's amendment, has almost taken the wind out of my sails. Apparently advice on conservation, rural diversification and animal welfare is to be free. We received an explanation of that from the noble Lord the Minister earlier, but I do not think that it satisfied the Committee. Why make such advice free and confuse farmers and advisers? That point was brought out in our earlier discussion. What does "animal welfare" cover? It is a wide subject. If a sick cow requires welfare, will that be free? What does "rural diversification" mean? Farmers are not fools. If they realise that environmental advice is free they will make the case that everything that they are doing is environmental. There could be diversification through new crops. Will that be free?
I make those points to show that there will probably be a muddle if ADAS is put on a semi-commercial basis. I cannot emphasise too much the muddle that there will be. That point was also brought out in our earlier discussion.
The staff at ADAS do not like the proposal. I have discussed it often. The noble Lord said he was at a demonstration and that some ADAS staff were there. They feel that the good relationship with farmers that they have built up over the years will be put under a considerable strain. That will be to the great detriment of both. I appeal to the noble Lord the Minister and the Government to accept the amendment.
There is another similar amendment, and I shall be interested to know what the noble Lord will say about it. The industry is worried about the Government's treatment of ADAS. There is a great deal of stick going about just now, and I do not want to see headlines such as, "ADAS bleeds to death" in the agricultural press again. That is the sort of headline that the Government are creating. I hold no brief for the press, but that headline is in a widely-read agricultural paper. I plead with the noble Lord to ensure that such a thing does not happen again. I beg to move.
6.15 p.m.
Lord Buxton of Alsa: I had intended to move Amendment No. 13, which relates to charges by ADAS, but if I speak now I shall not have to introduce that amendment. I had intended to say a great deal about ADAS and the subject of charges, but almost all of it has been said. I should like to underline the fact that I feel deeply and am as worried as anybody about the prospects for ADAS and the dangers, implications and consequences that may arise from the proposed charges for advice.
I am puzzled because I have not heard in this Chamber, in the other place or even in a public statement any reason given for making charges. Will my noble friend the Minister make it clear why these charges are suddenly thought to be necessary and to be
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a good idea? They seem to be completely illogical. If it is argued that there is an economic or financial basis for them, before the Bill's next stage I urge him to tell us the figures, what the Ministry's revenue estimates are and how it thinks the charges will help.
I feel that the proposal is an ill-thought-out and unfortunate insertion into the Bill which cannot be justified on any basis. I believe that the exemption for conservation advice is an afterthought. Although my noble friend has eloquently described how that provision will work, it will never be like that in practice. I can only describe the whole idea as a nonsense.
I hate to criticise my noble friend the Minister because of the marvellous part he has played over the past year or two in agriculture and conservation, and I pay tribute to him. Nevertheless, the brilliant and eloquent way in which my noble friend described how things would work between an ADAS adviser and a farmer sounded like a first-class lecture to a new squad of students at ADAS. After half a century as a landowner, farmer and conservationist, I know that that does not happen. It is manifestly impossible to stand with a man in the middle of a farm and decide whether one is talking about agriculture or conservation because the two matters are one and are indivisible.
The whole basis of the Government's policy, which we all applaud and welcome, is to proclaim that agriculture and conservation are one and are indivisible. That is the direction in which we are supposed to be moving. I cannot therefore understand how at this stage one can take one pace forward and three paces backwards and start dividing the two again. The ways around the provision are absolutely legion. There will be abuse, certainly by me. Every time I receive advice about agriculture I shall draw the adviser's attention to a blue tit sitting on a hedge. We shall discuss that for a few minutes and then continue with the agricultural discussion. I shall then say, "Why do you not stay on and catch a trout?" It is impossible to deal with matters in that way. It will lead to a great deal of unnecessary bureaucracy, form filling, arguments, correspondence and complaints from farmers saying that that was not what they agreed.
My amendment seeks to have no charges, not to argue about what should be charged and what should not. Anything else would lead to serious consequences for ADAS. I can see that after two or three years the Treasury will say, "How much revenue did we get last year from ADAS? How much did it charge?" Of course there will not be much, and the Treasury will probably then say, "ADAS is not earning enough. It is not earning its keep. It is about time we started to wind it up". The consequences of the proposal are serious and the idea of charging should be dropped and forgotten.
I implore my noble friend to realise that the charging proposal is completely inconsistent with the splendid way that he has carried forward the whole idea of integrating agriculture, conservation and the countryside. To go into reverse and to start trying to separate them will lead to nothing but chaos and trouble.
Baroness Nicol: If it was possible to separate the functions in the way that the noble Lord describes, there would be an even greater danger that ADAS would not be on the farm in the first place. If the farmer has to decide about advice and is offered free advice by commercial companies wanting to sell their products, the ADAS man will not be there. Much of the conservation advice given in the past has been incidental advice to the more technical advice that ADAS was called in to give.
It might be useful to give the Committee my list of a number of associations that have expressed anxiety over the question of ADAS charges. There is the World Wildlife fund, and then the RSPB, which has said:
"The RSPB believes that opportunities to influence farmers and encourage conservation will be reduced because farmers will increasingly reject the ministry's services in favour of free advice offered by manufacturers of pesticides, chemicals and farm machinery".
I believe that that is so. It is a point raised by a number of other organisations. The Water Authorities Association, to which my noble friend Lord Melchett has already referred, thinks that the same will happen in regard to pollution of water supplies. It points out that ADAS already gives advice on pollution of water supplies. This has proved very useful. The association fears, too, that farmers will be disinclined to seek help from ADAS if there will be a cost to them in the long run.
The noble Lord. Lord Buxton, asked how much the ministry hopes to raise from these charges. I should like to ask the Minister whether a cost benefit analysis was done at the beginning of the exercise, or whether it amounts really to the pursuit of a dogmatic approach in respect of charging. It is awfully difficult to see how any true profit can be made at the end of the exercise. The noble Lord, Lord Stodart of Leaston, pointed out at Second Reading that when charges for soil analysis were introduced in Scotland some time ago there was a substantial reduction in the number of soil analyses requested. There is a great danger that this may happen in the case of all services offered by ADAS. I hope that the Minister will think again on the question of charges and that he will decide that the game is not worth the candle.
The Earl of Onslow: I must support my noble friend Lord Buxton and the noble Lord, Lord John-Mackie, to the greatest of my power. I cannot conceive of an exercise that is going to cause more muddle than trying to separate conservation charges, animal welfare charges and profit charges. I asked my noble friend on an earlier amendment whether organic farming was conservation or profit making, and answer came there none. If an ADAS officer was to advise that the use of spray X meant that while one's yield of weeds might be slightly higher, there would be more partridges and there would still more or less be the same yield of wheat, is that conservation or agricultural advice? It is impossible to separate.
If the ministry was to say that it would form a Royal agricultural advisory service to be made into a company that would function as a paying concern, there might be some logic in the proposal. I suspect, however, that the six million quid—the figure that one
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has heard mentioned—that will be raised will simply disappear into the great bowels of the Treasury without touching the sides on its way down. No one will hear of it at all. It will have no effect whatever on the public sector borrowing requirement. It will simply vanish, and we shall have done a terrible damage to the agricultural industry and to an excellent service that is under pressure and where morale is low. That would be a very retrograde step, especially when the Government, as my noble friend Lord Buxton said, are now coming round to the right and sensible policy for the countryside which pleases those who care passionately about it.
The Government's thoughts are as plain as a pikestaff. Their reasoning is that farmers are a bit unpopular, that "green" people are nice, and that they will therefore charge farmers who are in any case producing too much food. However, they have not actually thought the whole operation through. They have come up with an illogical proposal for trying to raise six million quid extra in tax. In the same process they will wreck the ADAS service. That is not a good step for them to take.
Lord Mackie of Benshie: I should like to add my tuppenceworth. I have nothing new to say. My noble kinsman, for once, was talking complete common sense. The noble Lord, Lord Buxton, was eloquent and exposed how ludicrous is the double charge or no-charge charge and the glorious opportunity that this will afford hirers of bluetits for the afternoon. The whole idea is quite ludicrous. It would be funny if it were not so serious. The fact is that the colleges in Scotland are suffering a severe drain of very good people. Some are going out of farming altogether and others are going to commercial firms. The commercial firms will be employed by those who do not need them, the good farmers on the good farms. Those who really need them but who cannot afford to pay will not have an advisory service.
The noble Lord the Minister has been offered a way out. The money could be raised with great ease through levies on various bodies. There could then be a free service. This would be logical and would permit advice to be given on both conservation and farming. After all, farming is still very important. The noble Lord, Lord Houghton, talked about these ridiculous people who cover the countryside with unwanted cereals. We also feed the people of this country to the extent of almost 100 per cent of their needs in terms of temperate products and save an enormous amount of money. It is still quite important that these people are kept going. I admit that is is important to get rid of the surpluses, but it is also important to consider the other side. The Minister has been offered a logical way out from all sides of the Committee. I see no disagreement around. Maybe some loyal chap will get up and defend the Minister; I hope not.
Lord Stodart of Leaston: I am going to defend my noble friend, who seems to be under great stress. It is most complimentary that the noble Baroness, Lady Nicol, should remember what I said on Second Reading. It is perfectly true that I started by saying—I say it again—that I believe that advice for which you are asked to pay is probably treated as more valuable

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than that which you get for nothing; I firmly believe that. The crux of the matter is what the charge will be. This is, I am bound to say, an unfortunate time to introduce a charge. The farming industry is under considerable stress. Yet, throughout what one might call the good years, during which I watched carefully, as did nearly every farmer north of the Border, what the Mackies were doing on their respective farms, we discovered that provided we followed what they were doing, we made a little money as well. I suggest that they could have afforded, out of the fairly substantial profits that I believe they made, to pay for the advice that they received.
Most of the farm buildings that one sees, put up to the great benefit of the industry and provided under the farm capital grant scheme, were designed by architects of the advisory services totally free of charge. I have often wondered why an industry that claimed to be the greatest in the country should expect to get totally free services of that kind.
I come back to what the charges will be. I think that it is an immensely difficult question. I know that my noble friend was sitting on the Front Bench last night when the noble Lord had a certain success with an amendment of his. One of the most learned of the Law Lords made the observation that it was most unwise to introduce into any statute the word "reasonable" because it was almost hopeless for anyone to interpret what the word "reasonable" means.
I hope that my noble friend will tell us what some of these charges will be. I shall also ask him whether he will let me into a secret. Are the words in his brief those that were in my brief when the word "reasonable" came up in a Ministry of Agriculture matter 12 years ago? The brief said, "If asked what 'reasonable' means, to be reasonable is to take an action that a reasonable Minister would find it reasonable to take."
Lord John-Mackie: I hope that the noble Lord is not suggesting that the farm building service provides an architectural service as well as a design service. It can give only a design service, not an architectural service.
Lord Stodart of Leaston: I fully accept that.
6.30 p.m.
Lord Melchett: I was waiting for the noble Lord to do what he said he was going to do—spring to the defence of the noble Lord, Lord Belstead. I was waiting with interest to hear him defend the indefensible. However, he never got round to it.
The objection to charging which has mainly been raised in this debate is the impossibility of drawing distinctions between those matters which the Government will charge for and those that they will not. A number of people have illustrated how one aspect might be seen as conservation or diversification or might be seen as normal agricultural advice. It seem to me that there is another twist to this. The same project can quite happily jump from one category to the other depending on how the conversation goes. For example, if I were to ask ADAS to give me advice on providing a farm pond for the benefit of wildlife—as many farmers are now doing—it would come along and give me free conservation advice. But at some
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point in the discussion, as always happens in these instances, the ADAS officer would be duty bound to remind me that if I called this farm pond a reservoir it would be eligible for grant-aid from the Ministry.
At the point that the ADAS officer says that, our discussion becomes one about agricultural development and not conservation, because otherwise I am not eligible for the grant. I suppose that we would slip in and out of this—sometimes with free advice, sometimes not—depending on whether we were talking about the species of trees we were going to plant around the pond or the quantity of water that it was going to hold for emergency fire-fighting purposes, which would make it eligible for grant-aid.
Perhaps we may take another less common example, but one certainly on my mind as I watched my sugarbeet crop blow out of the ground in northwest Norfolk at least three times this spring. If I were to ask ADAS to come along and give me advice on erosion and on reducing the damage caused to sugar beet by strong spring winds and dry weather, I suppose that would be agricultural and I would expect to pay a charge. We would look at the soil structure and matters of that kind. Those would all be matters of agricultural advice. That is money ticking away. However, the ADAS officer might then reasonably come up with a solution that a shelter belt or a hedge might be desirable to reduce this problem. We then go straight into conservation advice. That would be free advice. Would all the previous work that he had done on looking at the soil profile become free of charge as a result or would it not?
I think that that is the nub of the problem. It is a totally illogical and impossible split. As the noble Lord, Lord Buxton, said, it moves directly against what for the past seven years the Government in every department have been urging all of us—conservationists, environmentalists and farmers—to do: namely, to draw these interests together, integrate them and reconcile them in the countryside. This is a deliberate attempt to stop that process and reverse it. It will have damaging effects on conservation. As the noble Lord, Lord Mackie of Benshie, said, it will make sure that those who most need advice, and therefore can least afford it, do not get advice. But those (and I would include myself) farming larger farms who do not need the advice so badly can afford to pay for it and get it mostly, I have no doubt, from private consultants.
It would be a total disaster. To my mind, the end result would quite clearly be that ADAS will cease altogether to give advice on conservation. While farmers will want to get advice on conservation and will dress matters up to pretend that they are conservation so that the advice is free, the relentless pressure on ADAS is to raise the money. That pressure is against the background of an industry facing rising costs and falling prices year by year. There is pressure to raise the money, against stiff competition from private consultants, against a background where they are losing staff, expertise and, sadly, competence because the best people are going. They face a quite impossible job. They will be forced to try to do everything on a commercial basis to meet their target. They will fail. The Treasury will impose further cuts. This is undoubtedly, to my mind, the beginning of the end of ADAS.
Lord Forbes: I simply do not believe that this will save, or bring in, £6 million if ADAS make any charge. It might bring in a thousand or two at best. What will happen is that the ADAS man—who obviously wants to keep his job—will come to one's farm and investigate, say, a piggery. The first thing he will say is, "Let us look at what effect this alteration will have on duck flighting onto a nearby pond because if I do that then I do not have to charge for it". That is what will happen. The ADAS man will bend over backwards so that there is no charge. By doing that he will have a job. In the end it will be complete nonsense. It is simply not worth making any charge at all because one will get nothing out of it if one does make a charge.
Earl Peel: In speaking to this amendment I must say that I feel rather a turncoat because—I make no bones about it—I had every intention of speaking along the lines of my noble friends Lord Onslow and Lord Buxton. However, I have to say, having listened to the arguments on both sides, that I am not convinced by theirs.
Everybody has explained that the complications of trying to define what is conservation and what is not will be extremely difficult to solve. That is no doubt right. I would say to my noble friend Lord Onslow that if he wants advice on partridges he should go to the game conservancy and not to ADAS. He will be charged but he will get first-class advice.
I am extremely concerned that conservation matters and matters relating to the diversification of farm industries should be free. In this respect I am concerned in particular for those farmers in the less favoured areas. However, my noble friend has given us his assurance that these services will be free. I am certainly not against the basic principles of charging for certain advice and services. Indeed, I very much welcome the widening that the clause gives to ADAS. I believe that it would be far too complicated to try to incorporate in a Bill of this nature what should be charged for and what should not. Either one scraps ADAS charges altogether—as has been recommended by most people in this Chamber—or one has an order which dictates quite clearly what should be charged for and what should not.
However, I believe that in view of the widening of the ADAS remit and its further responsibilities on giving advice (some of which, as I have already said, should be charged for), on balance I come down in favour of the arguments that my noble friend on the Front Bench has given. I would go further in saying that by not charging for certain ADAS services it is possible that we may be eliminating the advance of ADAS.
It is absolutely imperative that the Ministry remains highly flexible in these matters in view of the uncertainty of farming in the future. That is a point that has been made by many noble Lords. I believe that it could be very restraining on the Ministry if it was tied by specifics in the Bill. Certain noble Lords have mentioned the free advice that would be given by chemical companies. They include the noble Baroness, Lady Nicol. Surely farmers realise that the advice they will receive from chemical companies will be one-sided, and that the advice which they will
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receive from ADAS will be impartial advice. Of course they will have the sense to differentiate between the two.
This is a very thorny subject, and I quite freely admit that I have changed my view about it. That perhaps is due to the advantage of being able to come here and listen to the debate. However, after considerable thought I have changed my mind and I support my noble friend.
Lord Belstead: This has been an interesting debate and I have also listened carefully to it and learned something from it. The first reason I say that it is interesting is that the effect of the amendment of the noble Lord, Lord John-Mackie, would be that advisory services were provided entirely free. However, interestingly enough, the noble Lord is more draconian than the Government in that the amendment says that there should be a charge of a reasonable amount for any goods provided as part of an advisory service. There, of course, the Government want to keep more flexibility. For instance, we think that advisory publications or emergency vaccines, which the noble Lord mentioned, could in some cases be free as well as being charged for. So there are quite interesting cross-currents in relation to this amendment.
Nonetheless, the main thrust of this debate has been that Members of the Committee think that the advisory services should continue to be entirely free of charge. My noble friend Lord Buxton asked me why the Government think that they should start charging for the advisory services. My noble friend was indeed generous in the remarks that he made but, uncharacteristically, perhaps not quite fair when he said that he felt that it was a sudden, last-minute decision.
The reasons were clearly set out in Professor Bell's report, which was published in November 1984, and, as I made clear earlier this afternoon, in November last year my right honourable friend the Minister of Agriculture gave his assurance about intending to see that advice on diversification, animal welfare and conservation should be free. Therefore, I think it is fair for me to claim that for some time we have been thinking about these matters and gradually trying to develop our thoughts.
Nonetheless, my noble friend asked why we wanted to charge. It was my noble friend Lord Stodart who really gave the answer. We genuinely believe that, at a time when we are looking very carefully at every penny in the agricultural budget, it really will give the opportunity for both the agricultural industry and the Ministry to decide between themselves what is of most value in the services which ADAS provides and how, over the years, these services can best be developed for the future.
However, we also believe—and I shall not disguise this from Members of the Committee—that it is not unreasonable to say that, where an industry benefits from a public service, it ought to contribute to the cost. Do not let us forget that on the present proposals the Government will still be paying over 80 per cent. of the cost of ADAS, which is in the region of £100 million.
I was interested that my noble friend Lord Peel, who yields to no one in wanting to ensure that the right

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advice gets through not only in husbandry matters but also in conservation matters, came out straight and said that, although he was absolutely determined that environmental advice should be free, he believed that the Government were on the right track in introducing charges. I was interested in that remark of my noble friend and, indeed, in my noble friend Lord Stodart taking a friendly attitude on the general thrust of the Government's policy, because if we look at Europe we will see that we do not stand alone.
We find that the agricultural industry contributes about 40 per cent. of the cost of advice in Germany. Indeed, two years ago I had the opportunity to visit Schleswig-Holstein and I was told that there it was being carried out on a Läander basis; that farmers were contributing 50 per cent. and the state the other 50 per cent. Farmers in France are contributing not far short of half of the cost of the advisory services; and I am told that nearly 80 per cent. is contributed by farmers in Denmark to their advisory services. I understand that an average charge per farmer off £1,000 is made in Denmark where the average sized farm, at about 30 hectares, is less than half the United Kingdom average. In the Netherlands discussions are continuing in the expectation of a greater contribution from the farmer, but there is a move to 50/50 funding for research and for some animal health functions, including tuberculosis and brucellosis work. Therefore, with respect we do not stand alone in Europe. Indeed, other countries have moved ahead of us in this particular matter.
Lord Mackie of Benshie: Can the noble Lord tell us how the services are paid for in Denmark and Holland? Is it by contribution or by individual charges for advice?
6.45 p.m.
Lord Belstead: I am very sorry, but I do not have that information. I shall have to come back on that to the noble Lord. When I visited Germany my understanding was that it was on a subscription basis at the beginning of the year, but I shall come back to the noble Lord on that. However, the noble Lord's question leads me to try to answer a question which was put to me by my noble friend Lord Stodart, who said that, while we are on this subject, we ought now to know exactly what it is that the Government are putting before the Committee as regards charging.
If the Members of the Committee will bear with me for a moment—again, this is a prepared statement and, again, we have not said this elsewhere—I think that in this Committee stage in your Lordships' House I ought to say this. We currently envisage, if Parliament agrees to charging coming into effect for ADAS, providing four broad categories of service. Firstly, we would envisage that there would be two annual subscription schemes under which farmers would receive free advisory literature and regular information about ADAS services and, for the higher priced scheme, some advisory visits.
We are still working out the precise details of these two annual subscription schemes, but the aim would be to provide a straightforward service at a reasonable charge aimed at those farmers who have relatively
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modest information demands but who nevertheless value the contact with ADAS, and those who may take up more complex specialist advice but who wish to establish a longer-term contact with ADAS than that provided by purchasing advice only when it is needed. Detailed costings, cannot yet be made, but we would envisage two standard charges for two different levels of service: something in the region of £50 a year for the simpler service and about £150 for a service offering advisory visits. These prices, which exclude VAT, are still very provisional, but they give an indication of the levels that we would be considering.
Secondly, we intend to offer advice on a time-related basis at a standard charge per hour. This is likely to be of the order of £25 or £30, excluding VAT, for the majority of ADAS advisers. We are also considering whether a higher charge would be appropriate for national or other specialists. Thirdly, we would intend offering a number of special advisory packages, ranging from a financial review of the farm business to compehensive recording and advisory schemes to help farmers manage specialist enterprises.
I shall not weary the Committee by trying to describe those in detail, but we shall be publishing a series of leaflets describing these packages in outline within the next few weeks, and I shall arrange for copies to be placed in the Library of your Lordships' House in due course. It would also be possible for farmers to purchase individually tailored packages.
Finally, we would intend to offer special contracts for farmers or groups of farmers whose needs are not covered by the schemes in the other groups that I have described. These contracts would provide whatever advisory services are needed, including research and development, which ADAS can provide at a price which will have to be negotiated for each contract. In parenthesis, perhaps I may say that that does not of course mean that ADAS R and D will not be made publicly available. I am simply saying that there may be occasions when these may be particular contract R and D work which certain farmers or groups of farmers would want to commission with ADAS.
May I just end by making a general point or two. We envisage these categories of services as being independent. For example, a farmer would not have to join a subscription scheme before being able to buy advice by the hour. Farmers certainly would not have to pay to find out what ADAS can offer by way of changeable services and should not be afraid to discuss matters with their ADAS advisers. Farmers will always be told beforehand whether they are incurring charges. I should not like it to be thought that these proposals are in any way our last thoughts and I should not like it to be thought that this Committee would allow them to be.
If it becomes clear following introduction that a demand for particular services is lower than anticipated—and I listened very carefully to what my noble friend Lord Forbes has just said—we will examine critically whether the services are too elaborate and expensive, and will try to make necessary changes. Opportunities will also be taken to introduce further services.
The prices for ADAS' services will have a major influence on demand; of course we realise that. The

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prices of ADAS' services will be set at levels which cover the direct cost of the service and make an appropriate contribution to the overhead costs properly attributable to the service, having regard to what the market will bear. We will continue to keep under review the scope for improving efficiency within ADAS and hence reduce the cost of ADAS services, and will give careful consideration to the overhead costs appropriate to the chargeable services that ADAS is providing. It is important that I say that because we are talking about the interests of others who are in the market as well.
Perhaps I may add a final word. I am not worried about how ADAS will be competing in the market. Working in the Ministry of Agriculture I can say that I believe ADAS will succeed well in the market place because it has a lot of expertise, a lot of skills to offer and great integrity. That is known and accepted. I should like to pay tribute to the professionalism and dedication of the officers of the service.
I hope noble Lords will forgive me for having been rather long-winded, but I felt that it was important that this statement about ADAS charging should be laid before the Committee at this stage.
Earl Peel: May I ask the noble Lord the Minister whether, in view of the particular hardships that occur in the less favoured areas, he would consider a reduced charge for farmers in those places?
Lord Belstead: I should like to look at that and perhaps have a word with my noble friend between now and the next stage of the Bill. There are problems as to where one would draw the dividing lines in this particular matter. It was because I was bearing in mind the sort of point my noble friend has just put to me that I started my statement by pointing out that we will have two levels of subscriptions, and the first will be at a very reasonable level indeed.
Lord Melchett: Before the noble Lord sits down may I ask him whether he will say anything more about the other important problem raised by noble Lords on all sides in this debate about distinguishing between conservation and other free advice and advice which will be charged for? Can he say something more about what happens if a project turns from one thing into another in the course of discussion? The noble Lord the Minister told us how he saw the dividing line working on an earlier amendment, but it clearly did not satisfy noble Lords on either side. Is the noble Lord able to respond to any of those criticisms which have arisen despite the long statement he has made on another matter just now?
The Earl of Onslow: I especially underline that point because the noble Lord the Minister has just said to my noble friend Lord Peel that dividing lines are difficult to arrive at.
Lord Belstead: With great respect to the noble Lord, Lord Melchett, we had a long debate on his Amendment No. 3, and this was exactly what we discussed and I had hoped that we had moved on from that. May be we differ on this, but we can agree to differ. I do not see that there is much point in going over all the ground again, if I may say so.
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However, I would say just one thing to my noble friend Lord Onslow. My noble friend said that he had not had a reply about whether organic farming would fall within the definition of conservation. When making the statement about not charging for conservation I endeavoured to say that we would feel that environmental matters would mean anything primarily designed to conserve or enhance the natural beauty of an area or its flora or fauna, or its biological, geological or geographical features, or to prevent environmental pollution. If I may say so, I do not think that organic farming would fall within that category. My noble friend Lord Radnor said he did not feel, and I said I did not feel, either, that organic farming should be treated as something separate and apart. It is admirable when done well, but something which is not separate and apart. Therefore, I do not think there will be a case for saying that organic farming will be a sort of conservation.
Lord John-Mackie: I do not want to delay the Committee, but nothing that the noble Lord the Minister has said has changed my mind in any shape or form. May I point out that the mix-up between conservation and commercial advice is not one of my main points, although it is an important one.
My main point is that farmers, in particular the farmers the noble Earl, Lord Peel, has mentioned, in the less favoured areas, will not go to ADAS if the charges are what the noble Lord says. I think the figure is £25 to £35 per hour and more, and if it is a specialist it will be £150. I am not quite sure what that covered, but I think it covered obtaining literature, etc. I feel that will bear very hardly on small farmers. The average small farm is only about 160 acres; I am sorry, but I cannot convert that into hectares. Bearing in mind the debate and the fact that the noble Lord, Lord Stodart of Leaston, did not have a lot of support (at least, it was limited support as was that for the noble Earl, Lord Peel) I think we should test the feeling of the Committee.
6.56 p.m.
On Question, Whether the said amendment (No. 8) shall be agreed to?
Their Lordships divided: Contents, 53; Not-Contents, 81.

DIVISION NO. 1

CONTENTS

Airedale, L.

Grey, E.

Attlee, E.

Hanworth, V.

Banks, L.

Harris of Greenwich, L.

Birk, B.

Hatch of Lusby, L.

Boston of Faversham, L.

Heycock, L.

Briginshaw, L.

Houghton of Sowerby, L.

Broadbridge, L.

Jacques, L.

Buxton of Alsa, L.

Jeger, B.

Craigavon, V.

John-Mackie, L.

David, B.

Kilmarnock, L.

Elwyn-Jones, L.

Kirkhill, L.

Falkender, B.

McIntosh of Haringey, L.

Falkland, V.

Mackie of Benshie, L.

Fisher of Rednal, B.

McNair, L.

Foot, L.

Melchett, L.

Forbes, L.

Molloy, L.

Gallacher, L.

Mountevans, L.

Graham of Edmonton, L. [Teller.]

Murray of Epping Forest, L.

Nicol, B. [Teller.]

447

Onslow, E.

Taylor of Mansfield, L.

Oram, L.

Underhill, L.

Pitt of Hampstead, L.

White, B.

Ponsonby of Shulbrede, L.

Wigoder, L.

Ritchie of Dundee, L.

Willis, L.

Seear, B.

Winchilsea and Nottingham, E.

Stoddart of Swindon, L.

Strabolgi, L.

Wise, L.

Taylor of Blackburn, L.

NOT- CONTENTS

Amptill, L.

Marshall of Leeds, L.

Ashbourne, L.

Masham of Ilton, B.

Auckland, L.

Maude of Stratford-upon- Avon, L.

Bauer, L.

Beaverbrook, L.

Merrivale, L.

Belhaven and Stenton, L.

Mersey, V.

Belstead, L.

Middleton, L.

Bessborough, E.

Morris, L.

Boyd-Carpenter, L.

Mottistone, L.

Brabazon of Tara, L.

Murton of Lindisfarne, L.

Brougham and Vaux, L.

Napier and Ettrick, L.

Butterworth, L.

Northbourne, L.

Caithness, E.

Peel, E.

Cameron of Lochbroom, L.

Penrhyn, L.

Carnegy of Lour, B.

Radnor, E.

Carnock, L.

Rankeillour, L.

Clinton, L.

Reay, L.

Coleraine, L.

Reigate, L.

Craigmyle, L.

St. Aldwyn, E.

Davidson, V.

Salisbury, M.

Denham, L. [Teller.]

Savile, L.

Denning, L.

Skelmersdale, L.

Drumalbyn, L.

Stodart of Leaston, L.

Elliot of Harwood, B.

Strathcona and Mount Royal, L.

Elliott of Morpeth, L.

Elton, L.

Swansea, L.

Fraser of Kilmorack, L.

Swinfen, L.

Glanusk, L.

Swinton, E. [Teller.]

Glenarthur, L.

Teviot, L.

Gray of Contin, L.

Tranmire, L.

Greenway, L.

Trefgarne, L.

Hardinge of Penshurst, L.

Trumpington, B.

Harmar-Nicholls, L.

Ullswater, V.

Hives, L.

Vaux of Harrowden, L.

Hooper, B.

Vickers, B.

Inglewood, L.

Vivian, L.

Kitchener, E.

Ward of Witley, V.

Lane-Fox, B.

Whitelaw, V.

Layton, L.

Wynford, L.

Lindsey and Abingdon, E.

Ypres, E.

Long, V.

Zouche of Haryngworth, L.

Lucas of Chilworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
The Earl of Swinton: This might be a convenient time to postpone the Committee stage of this Bill. In doing so, may I suggest that we do not return to the Committee stage on the Agriculture Bill before five minutes past eight. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Drug Trafficking Offences Bill
7.4 p.m.
Read a third time.
Clause 5 [Definition of principal terms used]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 1:
Page 6, line 23, after ("time") insert ("referred to in subsection (6) below as").
The noble Lord said: My Lords, this amendment is purely drafting. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 2:
Page 7, leave out lines 7 to 26 and insert—
("(b) pay any sum which would be included among the preferential debts (within the meaning given by section 386 of the Insolvency Act 1986) in the defendant's bankruptcy commencing on the date of the confiscation order or winding up under an order of the court made on that date.
(8) In the case of a confiscation order made before the coming into force of the Insolvency Act 1986, subsection (7) above shall have effect as if for paragraph (b) there were substituted—
"(b) pay any sum which, if the defendant had been adjudged bankrupt or was being wound up, would be among the preferential debts.";
and in that paragraph "the preferential debts"—

(a) in relation to bankruptcy, means the debts to be paid in priority under section 33 of the Bankruptcy Act 1914 (assuming the date of the confiscation order to be the date of the receiving order) and

(b) in relation to winding-up, means the preferential debts listed in Schedule 19 to the Companies Act 1985 assuming the date of the confiscation order to be the relevant date for the purposes of that Schedule.")

The noble Lord said: My Lords, I beg to move Amendment No. 2. May I at the same time speak to Amendments Nos. 6, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18 and 35. This lengthy list of amendments is required to take account of the Bill consolidating the law on insolvency which was yesterday considered by the Joint Committee. I beg to move.
On Question, amendment agreed to.
Clause 7 [Cases in which restraint orders and charging orders may be made]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 3:
Page 10, line 16, leave out ("court") and insert ("High Court").
The noble Lord said: My Lords, the purpose of this small amendment is to clarify that where action requires to be taken under this Bill before criminal proceedings have been commenced, it will be for the High Court to determine who is to be regarded as the prosecutor. Under the Bill as at present drafted the Scottish Court of Session might have to take a separate decision in this matter in cross-Border cases, and this would add an unnecessary complication. I beg to move.
On Question, amendment agreed to.
Clause 14 [Variation of confiscation orders]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 4:
Page 16, line 10, after ("above") insert ("(a)").
The noble Lord said: My Lords, I beg to move Amendment No. 4, and, if I may, speak to Amendments Nos. 5, 13, 20 and the new clause intended to follow Clause 16. I have a lengthy note, but perhaps it may suffice if I say that your Lordships will recall that during the Report stage of the Bill we agreed amendments to deal with the situation which might arise if assets belonging to a trafficker were tied up in bankruptcy proceedings at the time when a restraint or confiscation order was made. I indicated then that the Government might bring forward similar amendments on Third Reading relating to the

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liquidation of companies. These are those amendments. If the noble Lord, Lord Mishcon, would like me to go further I can do so; but if he is happy, I beg to move.
Lord Mishcon: My Lords, I postpone my happiness with the amendment for only a moment. I have no comment on it.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 5:
Page 16, line 14, at end insert ("and
(b) the court may disregard any inadequacy in the realisable property which appears to the court to be attributable wholly or partly to anything done by the defendant for the purpose of preserving any property held by a person to whom the defendant had directly or indirectly made a gift caught by this Act from any risk of realisation under this Act.").
On Question, amendment agreed to.
Clause 15 [Bankruptcy of defendant etc.]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 6:
Page 16, line 38, leave out ("Part III of the Insolvency Act 1985") and insert ("Part IX of the Insolvency Act 1986").
The noble Lord said The noble Lord said: My Lords, this amendment was spoken to with Amendment No. 2. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 7:
Page 17, line 2, after ("21") insert ("of this Act").
The noble Lord said: My Lords, this is a drafting amendment. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 8:
Page 17, line 7, leave out ("154 or 155") and insert ("307 or 308").
The noble Lord said: My Lords, I beg to move Amendments Nos. 8, 9, 10, 11 and 12 en bloc. I spoke to them with Amendment No. 2.
The Deputy Speaker (Lord Airedale): My Lords, I must take Amendment No. 8 separately.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 9 to 12:
Page 17, line 12, leave out ("127(2)(c)") and insert ("280(2)(c)").
Page 17, line 22, leave out ("133") and insert ("286").
Page 17, line 27, leave out ("134(6)") and insert ("287(4)").
Page 17, line 28, leave out ("133(3)") and insert ("286(3)").
On Question, amendments agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 13:
Page 17, line 33, after ("shall") insert (", subject to a lien for any expenses (including his remuneration) properly incurred in respect of the property,").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 4. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 14:
Page 17, line 38, leave out ("174 or 212") and insert ("339 or 423").
The noble Lord said: My Lords, I beg to move Amendments Nos. 14, 15, 16, 17 and 18 en bloc. I spoke to these amendments with Amendment No. 2.
On Question, Amendment No. 14 agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 15 to 18:
Page 18, line 7, leave out ("Part III of that Act") and insert ("the Insolvency Act 1986").
Page 18, line 10, leave out ("III of the Insolvency Act 1985") and insert ("IX of that Act").
Page 18, line 13, leave out ("127(2)(c), 133, 174 and 212") and insert ("280(2)(c), 286, 339 and 423").
Page 18, line 13, leave out ("1985") and insert ("1986").
The Deputy Speaker: My Lords, with the leave of the House I shall put a single Question as to Amendments Nos. 15, 16, 17 and 18.
On Question, amendments agreed to.
Clause 16 [Sequestration in Scotland of defendant etc.]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 19:
Page 18, line 36, after ("21") insert ("of this Act").
The noble Lord said: My Lords, this is a drafting amendment. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 20:
Page 19, line 26, after ("shall") insert (", subject to a lien for any expenses (including his remuneration) properly incurred in respect of the property.").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 4. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 21:
Page 19, line 41, at end insert—
("(7) In any case in which, notwithstanding the coming into force of the Bankruptcy (Scotland) Act 1985, the Bankruptcy (Scotland) Act 1913 applies to a sequestration, subsection (2) above shall have effect as if for paragraphs (a) and (b) thereof there were substituted the following paragraphs—

"(a) property comprised in the whole property of the debtor which vests in the trustee under section 97 of the Bankruptcy (Scotland) Act 1913,

(b) any income of the bankrupt which has been ordered, under subsection (2) of section 98 of that Act, to be paid to the trustee or any estate which, under subsection (1) of that section, vests in the trustee";

and subsection (3) above shall have effect as if for the reference there into the Act of 1985 there were substituted a reference to the Act of 1913.").
The noble Lord said: My Lords, the purpose of Clause 16 is to regulate the relationship between the provisions of this Bill and sequestration under Scots law. This amendment makes transitional provision in the case where the sequestration was awarded before 1st April 1985 (the commencement date for the Bankruptcy (Scotland) Act 1985) and thus is governed by the Bankruptcy (Scotland) Act 1913. The amendment therefore substitutes in Clause 16 (2) and (3), in their application to such cases, suitable references to the 1913 Act in place of references to the 1985 Act. I beg to move.
Lord Mishcon: My Lords, may I congratulate the noble Lord the Minister on his expertise in Scots law, which appears to equal his expertise in his own native law of England?
Lord Glenarthur: My Lords, I merely correct the noble Lord about the words my "native law", because he will find that my native law is Scots also.
Lord Mishcon: My Lords, I must correct myself and apologise and ask the noble Lord whether he will not mislead the House and will really obtain a Scots accent when he addresses us.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 22:
After Clause 16 insert the following new clause:
"Winding up of company holding realisable property.
.—(1) Where realisable property is held by a company and an order for the winding up of the company has been made or a resolution has been passed by the company for voluntary winding up, the functions of the liquidator (or any provisional liquidator) shall not be exercisable in relation to—

(a) property for the time being subject to a restraint order made before the relevant time, and

(b) any proceeds of property realised by virtue of section 8(6) or 11(5) or (6) of this Act for the time being in the hands of a receiver appointed under section 8 or 11 of this Act;

but there shall be payable out of such property any expenses (including the remuneration of the liquidator or provisional liquidator) properly incurred in the winding up in respect of the property.
(2) Where, in the case of a company, such an order has been made or such a resolution has been passed, the powers conferred on the High Court by sections 8 to 12 of this Act or on a receiver so appointed or on the Court of Sessions by sections 19 to 21 of this Act shall not be exercised in relation to any realisable property held by the company in relation to which the functions of the liquidator are exercisable—

(a) so as to inhibit him from exercising those functions for the purpose of distributing any property held by the company to the company's creditors, or

(b) so as to prevent the payment out of any property of expenses (including the remuneration of the liquidator or any provisional liquidator) property incurred in the winding up in respect of the property.

(3) Nothing in the Insolvency Act 1986 shall be taken as restricting, or enabling the restriction of, the exercise of those powers.
(4) Subsection (2) above does not affect the enforcement of a charging order made before the relevant time or on property which was subject to a restraint order at the relevant time.
(5) In this section—
"Company" means any company which may be wound up under the Insolvency Act 1986; and
"the relevant time" means—

(a) where no order for the winding up of the company has been made, the time of the passing of the resolution for voluntary winding up,

(b) where such an order has been made and, before the presentation of the petition for the winding up of the company by the court, such a resolution had been passed by the company, the time of the passing of the resolution, and

(c) in any other case where such an order has been made, the time of the making of the order.

(6) In any case in which a winding up of a company has commenced, or is treated as having commenced, before the date on which the Insolvency Act 1986 comes into force, this section has effect with the substitution for references to that Act of references of the Companies Act 1985.").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 4. I beg to move.
On Question, amendment agreed to.
Clause 25 [Enforcement of other external orders]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 23:
Page 27, line 14, leave out ("14") and insert ("17").
The noble Lord said: My Lords, this amendment is consequential. I beg to move.
On Question, amendment agreed to.
Clause 28 [Sections 26 and 27: supplementary provisions]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 24:
Page 31, line 24, leave out ("professional").
The noble Lord said: My Lords, this again is a drafting amendment. I beg to move.
On Question, amendment agreed to.
Clause 29 [Disclosure of information held by government departments]:
7.15 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 25:
Page 32, line 20, leave out ("property available in respect of the defendant") and insert ("realisable property").
The noble Lord said: My Lords, your Lordships will recall that on Report stage we deleted a large number of references to "property available in respect of the defendant" and replaced them with references to the new concept of "realisable property". I am afraid that one escaped us, and this amendment is intended to bring the terminology of Clause 29 into line with the rest of the Bill as revised. I beg to move.
On Question, amendment agreed to.
Clause 30 [Offence of prejudicing investigation]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 26:
Page 34, line 5, leave out ("or having reasonable grounds to suspect").
The noble Lord said: My Lords, this amendment was suggested by the Criminal Bar Association, as I think the noble Lord, Lord Mishcon, will remember. It will alter the required mental element in the offence of prejudicing a drug trafficking investigation by removing the objective test of having reasonable grounds to suspect that an investigation was taking place. If the amendment is adopted the prosecution would have to show that the accused knew or suspected that such an investigation was under way at the time he disclosed information prejudicial to it, not simply that there were grounds for him to suspect it.
Your Lordships will recall that at Report stage we adopted a similar amendment to the mental element in the new laundering offence when I explained that the Government had concluded that it would be right to avoid any risk of punishing mere inadvertence. I believe that the same considerations apply here and I am grateful to the Criminal Bar Association for its suggestion. I beg to move.
Lord Denning: My Lords, I should like to say a word about this. I do not agree with the Criminal Bar Association. I think we shall have a great problem, if this amendment is accepted, both in regard to this and

453
to the laundering. Let me explain a little. We are dealing here with a new offence; namely, warning, say by a friend of the drug trafficker, that proceedings are being taken. We are dealing with two methods of investigating drug trafficking offences. One concerns seizing the material that has been involved in drug trafficking. That is one section. The other section is getting a search warrant or the equivalent of a search warrant for premises where you may find material engaged in drug trafficking. Those can be obtained on application to the court.
What this clause is intended to do is to catch the man who gives the tip-off—a friend of the drug trafficker—who may say to him, "They are going to the court to get an order. You be quick. Get rid of those proceeds at once before they get the court order". It is that person whom this clause is intended to hit. It is intended to make him guilty of a criminal offence if he warns someone. He may be a clerk in a solicitor's office or anyone else who can say, "Look here, they are going to the court to get an order. You get rid of those proceeds at once". It is that person who is held by this clause to be committing a criminal offence.
Let us see what the Criminal Bar Association says about it. It suggests the words "knows or suspects". It says that the prosecution has to prove his state of mind, that he knew or suspected. As Clause 30(1) stands, it states that a person who knows or suspects or has reasonable cause to suspect that an investigation has taken place is guilty—in other words, if he turns a blind eye to it.
Then come the words:
"In proceedings against a person for an offence under this section, it is a defence to prove that he did not know or suspect that the disclosure was likely to prejudice an investigation".
If this amendment goes through, there would be a complete inconsistency in the clause. You would have the first clause which says that he is guilty if he knows or suspects, and then you have the next clause saying that it is a defence for him to prove that he did not know or suspect. In other words, you have two inconsistent clauses; one saying that it is for the prosecution to prove that he knew or suspected; and the other clause saying it is a defence for him to prove he did not know or suspect. That is my criticism of this clause as it stands.
I am sorry that I could not be here at the Report stage; but I am very glad indeed to see laundering made a complete offence. When anyone in a bank, institution or building society, knows or suspects, or has reasonable ground to suspect, that it is drug-trafficking money, then it is his duty to disclose it. Otherwise, if he lets the arrangement go forward, if he helps in the laundering, then he himself is guilty of an offence. The clause makes it perfectly clear that the man in the bank or building society or whatever it may be, ought to tell the constable or Customs and Excise or whoever: "I think that it is probably drug-trafficking money". He ought to tell that to the police and then go by what the police tell him to do.
The same question arises here concerning laundering. I am afraid that words were taken out in Committee. As originally drafted, I think Clause 23 was quite good. It was not only that the man knew or suspected, but also had reasonable grounds to suspect.
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Those words were taken out. So you have the same inconsistency. You have on the one side the prosecution having to prove that he knew or suspected; and then, in that case, you have the same thing in Clause 23(4) that it is a defence to prove that he did not know or suspect. There you have again the prosecution having to prove that he knew or suspected but you have a clause in the statute which says that it is a defence for him to prove that he did not know or suspect. Those are the two inconsistencies. I do not know how the courts will go about it. I certainly would not want any time to be taken up or delay caused by any amendments here. This Bill ought to he got through as quickly as may be.
I am not sure that the best policy is not to let the amendment go through as it is and leave the courts to solve the problem when it comes before them. I do not know whether or not that is right. I have an idea that they will say, "If it is a defence for him to prove that he did not know or suspect, the inference from that is that it is presumed against him that he did know or suspect unless he makes good his defence". Whether the courts will do that or not, I do not know. They do not read Hansard—they are not allowed to read Hansard—to see what any of us say about it. The courts will have to go through it and decide it without the help of anything that is said in here in this House at all.
I would point out that this amendment to Clause 30 and the present state of Clause 23 leaves the courts with an almost insoluble problem: the prosecution having to prove that he knew or suspected—and that is what the Criminal Bar Association says—but the statute saying that it is a defence for him to prove that he did not know or suspect. There it is. It has to be solved somehow. I should like to know what anyone else has to say about it.
Lord Mishcon: My Lords, one always listens with the greatest possible respect—and this is a phrase always used when one follows the noble and learned Lord, Lord Denning; and I use it once more—to anything that the noble and learned Lord says to the House. If I really believed that there was a grave inconsistency here and that the courts would have a terribly difficult task to perform—which is what the noble and learned Lord thought—I should certainly want to consider negating this amendment. I did not quite follow the noble and learned Lord when he said that possibly the best course, in spite of the inconsistency that he saw and the impossible task laid before the courts, was to leave it to the courts to sort it out.
If he will forgive me for saying so, to me that was a graver inconsistency than the one that he pointed out; since if they have an impossible task it is not for Parliament to put them in such a position that they have such an impossible task. I view this amendment in the following way, and I say this most respectfully. We are dealing with a criminal charge where, in a Bill, we have imported very unusual sanctions and very unusual provisions in our criminal law. But here we are not dealing with the people directly involved when we are dealing with laundering. Nor are we dealing in this section with those who are directly involved. We are dealing with those who disclose that an investigation is pending; and there may be more than one reason for such a disclosure.

455
There, we have to be extremely careful that we do not allow the rigours of our criminal law to fall upon the heads of people without giving them adequate room for adequate defences. Where I do not see the inconsistency is in this. The prosecution, as I see it, will have to make a prima facie case out before the court that this prisoner knew or suspected. Having made out that prima facie case, the defendant is then put in the position either of seeing that the evidence is so weighty that he cannot possibly rebut it—in which case presumably the court finds him guilty—or the defendant says, "Yes, all that circumstantial and suspicious evidence which has been put forward by the prosecution is all very well. They have indeed to the satisfaction of the court made out a prima facie case. Now the onus is upon me to show that I did not know and that I did not suspect". If that onus of proof is satisfied by his evidence, or the evidence that he calls, then he is entitled to an acquittal.
However, if you import into the Bill another way of allowing the prosecution to make out a prima facie case and you say, "I can't prove that he knew and I certainly can't prove that he suspected. But I put evidence before the court that he ought to have suspected even if he didn't know". He had "reasonable grounds"—those are the words, if I may respectfully say so to the noble and learned Lord, and not "reasonable cause". There may be a slight difference in the two words. The words in the Bill originally were, "reasonable grounds".
If you import that and you say that if the court is satisfied about that and then you put upon the defendant the onus of proving to the court that he had no reasonable grounds for suspecting at all, that really is an objective test which I would have thought our criminal law would want to retreat from because it is a negation, I would have said, of proper justice in this context where somebody is not directly connected with the offence.
So I say that it is right; and I say to the Criminal Law Association that their submission to the Minister was a useful one and I congratulate the Minister, if I may say so, for having listened to such a worthy association. I am sure that, equally, he has listened with great deference to the noble and learned Lord; but I hope that he finds that what I have said—and, indeed, I hope that the noble and learned Lord finds that what I have said—is not without sense.
7.30 p.m.
Lord Wigoder: My Lords, speaking as one who I believe is still a vice-president of the Criminal Bar Association, may I very strongly support this amendment and hope that the Government will persist in it? I give my support on three grounds. First, the offence in Clause 30 will then be the offence of knowing or suspecting certain matters. That is a formula which is accepted and recognised in the criminal law of this country.
Secondly, it is clearly desirable that there should be consistency throughout this Bill, and the fact that those are the words used in Clause 23 and that no attempt has been made today to amend them makes it necessary that we should now amend Clause 30 to bring it into line. Thirdly, on general principles, I
456
would think it wrong for us to attempt to import into Clause 30 the objective element about which the noble Lord, Lord Mishcon, has spoken, which is included in the words,
"having reasonable grounds to suspect".
I go along with the noble and learned Lord, Lord Denning, when he says that this offence may not always be an easy one to prove. In our submission, that is no justification for tinkering with established legal principles in order to make it easier to obtain convictions. I hope the Government will persist with this amendment.
Lord Glenarthur: My Lords, I am grateful to the noble Lord, Lord Mishcon, and indeed to the noble and learned Lord, Lord Denning, for their comments. So far as consistency is concerned—a point which the noble Lord, Lord Wigoder, raised—of course it is consistent with Clause 23. I will study what the noble and learned Lord has said, but I believe the point about our amendment was really best summarised perhaps by what the noble Lord, Lord Mishcon, said. If the person making the disclosure knew or suspected that the investigation was taking place—and that is a matter for the jury on the basis of the evidence put forward—he would be found guilty. What we want to avoid is putting at risk, for example, a bank clerk who might not realise the investigation was taking place and who might disclose something prejudicial to it. We do not want to punish mere oversight, and although the prosecution must prove that the person actually knew or suspected, the defendant can be asked questions (if he gives evidence) about the reasonableness of his conduct to establish that beyond all reasonable doubt he knew that he was tipping off the defendant.
The noble Lord, Lord Wigoder, referred to the defence in Clause 32. It is indeed a defence if he did not know or suspect that the disclosure would prejudice the investigation. But in Clause 31 a person will commit an offence if he knows or suspects that the investigation is taking place and makes a disclosure. I believe we have it right. Of course I note the wisdom of the noble and learned Lord, but I hope he will allow this amendment to go forward.
Lord Denning: My Lords, certainly I will. I should like to say only this. I preferred the original draft of the Government's advisers, both in regard to Clause 23 and in regard to this one. But, on the other hand, I quite agree that there ought to be consistency. Clauses 23 and 30 ought to be on the same lines; otherwise, we shall have the courts arguing about that. On the whole, I think that in the circumstances it is much better to let the amendment go forward, and if there are troubles —I think there might be, but I hope there will not be—I am sure the courts will be able to decide them satisfactorily. If I may say so, they all lean in favour of the defence a great deal, perhaps, but, on the other hand, in those cases I hope they will realise that we want to stop this drug trafficking and all those who assist in it just as much as we can.
On Question, amendment agreed to.
Clause 33 [Power to inspect Land Register etc.]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 27:
Transpose clause 33 to after clause 31.
The noble Lord said: My Lords, this is a rearrangement of two clauses, and I beg to move.
On Question, amendment agreed to.
Clause 37 [General interpretation]:
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 28 to 34:
Page 40, line 17, leave out ("where") and insert ("when").
Page 40, line 17, after ("summons") insert ("or warrant").
Page 40, line 18, leave out from ("1980") to end of line 22 and insert ("in respect of the offence").
Page 40, line 23, leave out ("where") and insert ("when").
Page 40, line 24, leave out from ("warrant") to end of line 25.
Page 40, line 26, leave out ("where") and insert ("when").
Page 40, line 29, leave out from ("section") to end of line 30.
The noble Lord said: My Lords, I beg to move Amendments Nos. 28 to 34 en bloc. They are all drafting amendments.
On Question, amendments agreed to.
Clause 38 [Minor amendments]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 35:
Page 41, line 31, leave out ("128(4) of the Insolvency Act 1985") and insert ("281(4) of the Insolvency Act 1986").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 2. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 36:
Page 41, line 35, leave out "(1)") and insert ("(2)").
The noble Lord said: My Lords, this is a drafting amendment, and I beg to move.
On Question, amendment agreed to.
Clause 39 [Short title, commencement and extent]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 37:
Page 42, line 4, leave out ("subsection (4)") and insert ("subsections (4) and (5)").
The noble Lord said: My Lords, this, again, is a drafting amendment. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 38:
Page 42, line 7, after ("sections") insert ("7(4),").
The noble Lord said: My Lords, with the leave of the House I should like to move Amendment No. 38 and to speak also to Amendments Nos. 39, 40 and 41. These amendments to this extant clause of the Bill provide for four further provisions of the Bill to apply to Scotland. The first three amendments are of a drafting and consequential nature. The amendment concerning Clause 23 is more substantial.
The House may recall that my noble and learned friend the Lord Advocate announced at Report stage his intention to introduce this amendment to extend to Scotland the statutory protection from actions for breach of confidence afforded by the Bill to any person who discloses information about funds or investments which they suspect may be derived from drug trafficking. This amendment to this extant clause achieves that purpose, and I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 39 to 41:
Page 42, line 10, at end insert ("section 7(3)").
Page 42, line 13, leave out ("and 16") and insert (", 16 and [Winding up of company holding realisable property]").
Page 42, line 14, at end insert—
("section 23(3)(a)").
The noble Lord said: My Lords, I have already spoken to these amendments. I beg to move them en bloc.
On Question, amendments agreed to.
Lord Glenarthur: My Lords, I beg to move that this Bill do now pass. Tonight we have completed our consideration of a measure which, although entirely straightforward in intention, has proved perhaps unusually complex. I believe there has been no doubt anywhere in your Lordships' House about the importance of depriving those who traffick in drugs of the proceeds they have made. All your Lordships who have spoken during the consideration of this Bill, and indeed on other occasions, have expressed abhorrence of those who engage in this dreadful trade, and have also expressed their deep concern for those—very often young people—whose lives are effectively destroyed as a result. Your Lordships have rightly stressed the need for wide-ranging action against drug misuse, both to bring about a reduction in demand and also to take effective action to counter the illegal supply of controlled drugs.
In the context of our attack on illegal supply, this Bill has a dual purpose. On the one hand, it will send a clear signal to the trafficker that if he is convicted he will not be able to retain any of the wealth he has made as a result of his evil activities. If he is found guilty of just one trafficking offence, he stands to lose everything he has gained. That will surely give cause for thought to those who are currently prepared to take the risk of receiving a long prison sentence provided they can look forward to a life of ease and plenty on their release.
Secondly, the legislation will allow the proceeds to be taken out of the drugs trade altogether so that they cannot be used to finance further drugs deals. Large-scale trafficking not only generates big money but also depends and even thrives on it. The more money we can get away from the drugs area by means of confiscation, the greater will be our impact on the trade, and the Bill provides for the police and Customs to investigate a drug trafficker's financial dealings. The greater the trafficker's likelihood of being caught in the first place, the greater deterrent will be the prospect of confiscation.
The deep concern we all share about the misuse of drugs has been demonstrated in the spirit of constructive

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co-operation which has marked the approach to this Bill at all its stages in your Lordships' House and in another place. I should like to express my deep gratitude for the suggestions which have come forward and for the assistance which the Bill has received. I should particularly like to express my thanks for the patience and good humour with which your Lordships have considered an unusually large number of Government amendments during the later stages of the Bill's passage. I know that this has put something of a burden on all those who have participated in the proceedings and has caused not a little alarm on the part of my noble friend the Chief Whip. But the confiscation scheme established by the Bill is a novel one and its details are very complex. We thought it right to take our opportunities to refine the Bill's provisions as it went through your Lordships' House.
The Bill before us must of course be considered on its own merits. As I have explained, I am certain it will play a significant role in the overall battle against the traffickers and i repeat the Government's gratitude for the patient and constructive way in which it has been considered by your Lordships. I beg to move.
Moved, That the Bill do now pass.—[Lord Glenarthur.]
Lord Mishcon: My Lords, the noble Lord the Minister was right to stress at the end of the passage of this Bill through your Lordships' House what was said in the introductory speeches on the Bill; namely, that the House was dealing with one of the greatest evils with which our society has to deal. Possibly there has been an example of that only over the past 24 hours or so; whether or not that be so, I know that all your Lordships would wish to extend your sympathy to a bereaved family which is of significant value in public duty and in public work for this country.
It was because of this situation that the Government achieved co-operation from all sections in your Lordships' House as they did in another place. I hope on behalf of my noble friends that I have shown our deep concern at this dreadful traffic and our desire to do anything we possibly can by legislation to bring the drug trafficking business to an end, and where it still exists, to see that appropriate punishments of a very high order are administered and that profits do not accrue if we can stop that. That is the reason for the confiscation provisions and other unusual provisions in the Bill.
I make no apology to your Lordships for repeating something I have said so often in the course of our discussions. It is that this should be realised as being a unique case where we have introduced unique provisions and unique penalties. The noble Lord, Lord Wigoder, is much more entitled to speak on behalf of the Criminal Law Association than ever I would be as he is a distinguished officer of the association, as indeed he was a distinguished member before his retirement of the criminal Bar. The association emphasised the uniqueness of the situation in a letter which it sent to Mr. Mellor who dealt with this matter in the Commons on behalf of the Government. I have seen a copy of Mr. Mellor's reply. I hope it is made perfectly clear that the Government realise the unique
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measures that have been introduced, and that if there is any question of ever introducing them into any other criminal legislation, such provisions will have to be taken on their merit by Parliament, and that this is not deemed to be a precedent in any way.
My last words are of congratulation to the noble Lord the Minister on the way in which he has steered this measure through the House with his usual courtesy and clarity of thought.
7.45 p.m.
Lord Denning: My Lords, I should like to join in congratulating the noble Lord, Lord Glenarthur, on introducing the Bill in the House and carrying it through. It is perhaps revolutionary in our law, but it deals with a most intransigent subject. The new provisions are as follows. There is confiscation. After the man is convicted there will be confiscation of the proceeds of drug trafficking. We have not had it before. There is the restraint order. Before the man is convicted, or long before that—almost as soon as he is charged—you can go to the High Court and get an order preventing any of the people who hold or may hold the proceeds of the trafficking of drugs dealing with them or getting them away.
Perhaps I may mention the laundering provisions suggested at first by the Select Committee of the House of Commons and then taken up by your Lordships. How important they are, because the first thing a drug trafficker does is to try to get the moneys away—out to a numbered bank account in Switzerland, out to buy a house in the name of his wife, or put in the name of a nominee. There are all kinds of ways in which a trafficker launders the dirty money and tries to make it appear clean so that when it comes back to this country it cannot be traced.
With regard to the laundering provisions, how important it is that the banks have all agreed to deal with it. The banks will notify the constable or the Customs when any laundering arrangement comes to their notice. When any money comes into their hands which they suspect is drug trafficking money they will notify the constable or the authorities as it may be. That will help a great deal. If they do not notify when they ought, they will be guilty of an offence. There it is; for their own protection they will readily co-operate.
I shall say only one word of controversy. The noble Lord, Lord Mishcon, raised it. He said that this provision must be applied only to drug trafficking money; it must not apply to the money which robbers steal from banks and then put in another bank. He said that we must have nothing to do with that. My Lords, hesitate a little. When a bank cashier receives£100,000 in bank notes he may suspect that it is drug trafficking money; he may suspect that it is from a burglary or some other crime. He cannot tell which, but he very much suspects that it is ill-gotten money. What is he to do? If he wants to be safe, he should tell the authorities.
I should like to repeat what the noble Lord, Lord Glenarthur, said at Report stage:
"There will be cases in which a bank suspects that money is the proceeds of crime but cannot say whether it is the proceeds of drug trafficking. In order to avoid the possibility of the laundering offence

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being committed the bank would be wise to proceed on the basis that it is drugs money, and the new protection would extend to it if it did".—[Official Report, 13/5/86; col. 1117.]
It seems to me that that is very good advice to the banks or anyone handling money which they suspect may be from drugs or from something else. At all events they should report it. Let the police and all those concerned get on with it, and try to get hold of the drug traffickers, bring them to justice and confiscate their money. This will be by far the most important provision on the statute book with regard to trying to get the drug traffickers. I thank the Government for bringing it forward and for doing it so quickly and so well.
Lord Wigoder: My Lords, I do not want at this late stage of the Bill to intervene in the controversial matter that has arisen as a result of what has been said by the noble Lord, Lord Mishcon, and the noble and learned Lord, Lord Denning. Nor indeed do I want to make any comments at this stage on the contents of the Bill, because most of what one wanted to say has been said on several occasions during the course of the Bill's passage.
All I want to do, particularly on behalf of my noble friend Lord Harris of Greenwich, who is not able to be here at this moment, is to say how much we have appreciated the assistance that we have always received from the Minister throughout the passage of the Bill, and the sympathetic and careful way in which he has considered such suggestions as have been made.
That has been exemplified by the submission of the Criminal Bar Association, which was a lengthy submission and a complicated one. Unfortunately, it arrived too late to be of any real assistance so far as the noble Lord, Lord Mishcon, or I could be of assistance in tabling amendments. One was forced to ensure that the noble Lord, Lord Glenarthur, had received that submission and to invite him to consider it with care, to see whether there was anything in it that he thought was worth while. The fact that the Government have today brought forward at least one amendment based on that submission is a clear indication of the Government's determination to get the Bill right. We are all very grateful to the noble Lord.
Lord Glenarthur: My Lords, I thank all noble Lords for their kind comments. Having listened to the introduction of a slightly contentious point between the noble Lord, Lord Mishcon, and the noble and learned Lord, Lord Denning, I will merely say that the extent to which the provisions in the Bill should apply to other kinds of profitable offences has been raised before, as the noble and learned Lord said. I have noted the views of all those who have taken an interest in this matter—the noble Lords, Lord Mishcon and Lord Harris, and the noble and learned Lord, Lord Wilson, and others. The Government will of course examine those matters very fully before developing their wider proposals.
Reconciling some of the views that are held will be far from easy. I am thinking particularly of the dilemma of resolving the opposing views expressed earlier by the noble Lord, Lord Mishcon, and the noble Lord, Lord Harris, on the subject of bank disclosure, but I can promise that the implications of
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both points of view will be studied with the utmost care. This particular measure is a proper and significant addition to the statute book; we are all agreed on that. I beg to move.
On Question, Bill passed, and returned to the Commons with amendments.

Education Support Grants (Amendment) Regulations 1986
7.52 p.m.
Baroness Hooper Baroness Hooper rose to move That the draft regulations laid before the House on 12th May be approved. [24th Report from the Joint Committee.]
The noble Baroness said: My Lords, 1987–88 will be the third year in which education support grants are available. These draft regulations, which further amend the Education Support Grant Regulations 1984, extend the purposes in support of which the Secretaries of State for Education and Science and for Wales will pay grant in that year.
In 1986–87, the number and volume of bids from local education authorities considerably exceeded the total of expenditure that could be supported, as it did in 1985–86. Of a total of £40 million of expenditure planned for in 1986–87, expenditure of £39 million has already been approved for grant; we remain ready to support expenditure of up to £1 million on teacher management. All 96 local education authorities in England are receiving grant support in this financial year.
My right honourable friend the then Secretary of State for Education and Science had full consultations with the appropriate local authority associations about the programme for 1987–88 and on 12th May announced in another place the Government's intention to support expenditure amounting to some £53 million cash in that year. Of that total, he indicated that £32 million would be devoted to the continuing expenditure arising from projects first approved in earlier years and roughly £21 million would be available to support expenditure on new activities and the extension of existing ones. Grant will be paid on this expenditure at a rate of 70 per cent. Thus, the Government plan to pay some £37 million of education support grant in the 1987–88 financial year in England in respect of expenditure by local authorities of £53 million.
The Government also specified the new purposes for which we propose to pay education support grants in 1987–88, a provisional assessment of the amount of expenditure to be supported for each purpose, a provisional assessment of the number of local education authorities to be supported, and the likely length of support. A circular describing in greater detail the activities to be supported will be sent to LEAs if Parliament approves these regulations.
I should now like to comment on the amendment regulations themselves and in particular to say a few words about each of the new activities that they add to the schedule of purposes on which it is proposed grant should be paid. Your Lordships will be aware of the Government's commitment to the successful launch of the GCSE. We have held discussions with the local

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authority associations and teachers' associations, and we accept that there is considerable concern about the resourcing of the GCSE. We are, of course, aware that the GCSE will, over time, require additional textbooks and equipment; in particular, it will require additional scientific and technical equipment. The Government's rate support grant settlement for 1986–87 allows local authorities to make appropriate provision in those respects for the beginning of the new GCSE courses this September.
Moreover, your Lordships may know that on Tuesday my right honourable friend the Secretary of State for Education and Science announced during the Second Reading debate on the Education Bill in another place that he had decided to make £20 million available for books and equipment on the GCSE in the current year. Of this, £15 million would be through education support grants, in addition to our intention to support £10 million on this activity in each of the financial years 1987–88 and 1988–89. Those amounts are direct resources to encourage local education authorities to supplement their capitation allowances by an average of more than £9,000 per secondary school over the first three years of GCSE.
The project relating to the development of the spoken word is intended to promote a new emphasis in language work on the skills of speaking and listening alongside the traditional concerns with reading and writing. Accordingly, that proposal is for a small-scale experiment in a few authorities; its findings would of course be disseminated to all authorities.
The third proposal for a new activity is the pilot projects to promote social responsibility. We are keen to use the education support grant programme to help local education authorities to improve standards of conduct among young people. The activity that we included in the 1986–87 programme aimed at countering drug abuse has been well taken up by authorities. We should like to encourage them to initiate projects using a variety of means to promote law-abiding behaviour. We have in mind that the projects would cover a wide range of imaginative experimentation, which might include more and better extra curricular activities, schemes aimed at reducing vandalism in schools, links with parents, and liaison with the police and other services. We do not intend to use rigid criteria, but we propose to give some preference to bids that relate to the 13 to 16 year-old age range, bearing in mind that the peak ages for offending are 14 for girls and 15 for boys, and to areas of high juvenile delinquency.
In addition to supporting those three new activities in 1987–88, the Secretaries of State for Education and Science and for Wales have also decided that a further tranche of new expenditure should be supported in respect of seven of the activities in the 1986–87 programme that were oversubscribed, or where considerable scope for further development exists.
My right honourable friend the Secretary of State for Wales is responsible for the operation of education support grants in Wales. On 12th May he announced his intention to pay some £2.3 million of grant in
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support of expenditure of some £3.3 million in 1987–88. Next year's programme of activities in Wales will be similar to that in England, but there are some differences reflecting my right honourable friend's judgment of the particular circumstances in Wales. Of the existing activities, management and appraisal of schoolteachers and provision for children under five years of age with special educational needs were not included in this year's Welsh programme and will not be included in next year's programme. Of the proposed new activities, my right honourable friend has decided against including development of the use of the spoken word, bearing in mind the small scale of the proposed experiment in England and the intention that the findings there would be available for dissemination to authorities in Wales as well as in England.
We believe that, taken as a whole, this is a constructive and well-balanced programme, carefully prepared and reflecting our consultations with the local authority associations. It will facilitate further modest redeployment of expenditure into areas acknowledged as of particular importance and assist LEAs to reflect on, and to make, improvements to provision which changing circumstances demand. The education support grant programme enables the education partners to collaborate on a programme of experiment and innovation whose fruits will ultimately be shared with and benefit the education service as a whole. I commend these amendment regulations and the list of purposes to be supported in 1987–88 to the House.
Moved, That the draft regulations laid before the House on 12th May be approved. [24th Report from the Joint Committee.]—(Baroness Hooper.)
8 p.m.
Lord McIntosh of Haringey: My Lords, the House will be grateful to the noble Baroness for introducing these regulations and for the explanations she has given. The larger issues concerned with the use of education support grants and specific support for education by central government in addition to the block grant were, of course, considered by your Lordships at some length during the passage of the Education Bill. The point of view was put by a number of noble Lords, including the noble Lord, Lord Beloff, and my noble friends Lord Houghton of Sowerby and Lord Stewart, that perhaps it would be as well to recognise the reality and have a great deal more control by central government of the curriculum and of expenditure.
However, that has not been the way in this country. We have taken the view that the decisions about the use of educational finance shall be taken by local authorities rather than by central government. I am the first to say that the regulations now proposed do not depart significantly from that principle. They do not extend that proportion of education expenditure which is in the direct control of the Secretary of State. Therefore, it is not necessary to raise the more fundamental issues in considering these regulations.
However, in looking at the regulations themselves it is plain that the use of this marginal power of the

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Secretary of State becomes simply an opportunity for the Secretary of State, and perhaps for the department, to air their own prejudices and their own ephemeral interests. I have no enormous objection to the individual items, although I am bound to say that the phrase "social responsibility in children" reminds me of the unfortunate amendment that was approved—I am sorry to say it was an amendment put by the noble Baroness—which provided that sex education should have regard to moral considerations and the value of family life.
I learnt a lesson on that amendment. I learnt that it is not safe to employ irony in this House. In commenting on the amendment I said that there was one thing I should like to achieve and if that could be secured by statute we should be achieving something. What I meant to say was that there was no possibility of achieving these high-minded and pious aspirations by statute and that statute ought not to be involved in phrases of this kind. I am sorry to see that this kind of pious nonsense is creeping into the education support grant regulations as well as on to the statute book in the Education Bill. It is simply an opportunity for the Secretary of State to air his prejudices and to pay lip service to something which may well be admirable—indeed, is admirable in itself—but which is not a suitable subject for statute.
On a more serious issue, the noble Baroness explained the financial aspects of the provision for additional expenditure on books and equipment for use on courses leading to an examination for the General Certificate of Secondary Education. I am not confident that I followed her argument fully, and I should like her to clarify it. I apologise for what might be simply a confusion in my mind.
The noble Baroness said that a figure of £20 million was mentioned by the Secretary of State in his speech on Tuesday in another place as additional expenditure on books and equipment for the GCSE. Of that, £15 million is to be in education support grant. Does that mean that the impression given by the Secretary of State that there is to be an additional £20 million for the GCSE is not, in fact, the case? Does it mean that £15 million of that is constrained by the limitations on the education support grants and that only £5 million is genuinely new money? If that is the case, I think that those in another place who welcomed the additional expenditure may not be so enthusiastic as they were originally.
The noble Baroness also mentioned that it was in addition to the £10 million already provided, and that is common ground between us. However, it would be deeply disappointing to discover that only £5 million of the £20 million offered by the Secretary of State is genuinely new money. I shall be grateful for any clarification which the noble Baroness is able to give us.
In pursuance of convention, we shall not oppose these regulations but we look forward to hearing any further explanations that the noble Baroness is able to give.
Lord Ritchie of Dundee: My Lords, I, too, thank the noble Baroness for her clear exposition of the new
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regulations for 1986. This is not the moment to carp at the whole working of the scheme of education support grants. It seems to me a little like father saying to his child, "Here is £1 but in fact you can only have 75p of it. I am keeping back 25p which you can have only if you agree to spend it on a new exercise book for school or a new ruler. However, they cost 35p, so you will have to find 10p from somewhere else, probably your mother". The child is left somewhat aggrieved because he is not getting his £1. For "father" one might read "Secretary of State"; for "child" read "the local education authority"; and for "mother" read "the ratepayers". There is, therefore, a tendency to feel a little aggrieved.
Be that as it may, I feel that there is a case for rejoicing in accordance with the Secretary of State's announcement in another place that the provision of books and equipment for the GCSE is to be funded with what I understand is to be £20 million of new money. No doubt the Minister will explain this more clearly. The question is whether that is going to be enough. According to the Statement in another place on Tuesday, if that is added to the amounts already dedicated to the new exam by the local education authorities it should amount to £60 million or £70 million. One hopes that is enough, except that word has been current that the minimum required is £100 million. However, one must hope, as this is not the time or place to query it.
I express hearty approval of the first two pilot projects named for this new year. I could deliver a lecture on the subject, but I assure your Lordships that I will spare the House at this time of hunger and thirst. I should like to say just two things about the teaching of the spoken word. I am certain that this has nothing whatever to do with the activities of Professor Higgins and Eliza Doolittle. We should not, in schools, be trying to turn flower girls into duchesses. The object is to achieve clear, articulate and confident speech in whatever variation of standard English comes naturally to the child. Long may dialects survive, as long as they are intelligible.
The second point I should like to make about speech is that the way a child speaks is the tip of a psychological iceberg. By that I mean that a confident child will always speak clearly and articulately. When a child begins to lose confidence its speech begins to deteriorate, and we often see this phenomenon in adolescence. What interests me about this is that if you attend to a child's speech and give it help with its speech, it is amazing how the child's confidence begins to return. It may be done in the context of drama, for example. I have seen a child's whole personality transformed because someone has begun to help him achieve clear speech.
Speech is a skill which is as worthy of cultivation as physical fitness. Clear speech is terribly important, and a very worthy objective. The noble Baroness told us that in Wales they did not intend to pursue this matter. I take it that the reason for this is partly because the Welsh already speak so well that they do not need to pursue it. It is a noticeable fact.
The promotion of social responsibility in children is a big subject. I would have said that there is certainly

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room for it. I cannot entirely agree with the noble Lord, Lord McIntosh, about it, Plato said that a man's education should make him passionately desire to be a perfect citizen. This rings very strangely in our modern ears, but perhaps if we thought a little more about it, we might attach more importance to it than it seems we do. It is possible that this measure is the beginning of a move in that direction.,
To sum up, on these Benches we regret that the funding of such worthy objects as these two pilot projects cannot come as new money, but we applaud the objects themselves. We welcome the additional funding for the other object, and while we hope that it will be enough, we ask leave to reserve judgment.
Baroness Hooper: My Lords, we have had a useful debate, in spite of the hour. I am most grateful to the noble Lords, Lord McIntosh of Haringey and Lord Ritchie of Dundee, for the general if perhaps somewhat reserved welcome that they have given to these new regulations. Perhaps I may first refer to the objective of education support grants which is to facilitate the redeployment of a modest amount of expenditure into areas which by common consent are of national importance. I think perhaps that this takes in the comments of the noble Lord, Lord McIntosh.
The amount of expenditure that can be supported by grant is limited by statute to 1 per cent. of local authority expenditure on education. A more pertinent question is whether this investment is being made in the right areas. On that I detect far greater unanimity both in the Government's recent consultations with the local authority associations and here today to some extent. There is a general consensus that the activities to be covered by the education support grant programme in 1987–88 merit being accorded priority. Education support grants provide a mechanism whereby the Government and their partners in the education service can jointly explore, in an experimental way, how progress can be made more generally in meeting the needs which underlie each activity, and furthermore, as I said, can disseminate the findings to the benefit of other authorities. I think and hope that we are doing rather more than voicing the pious hopes to which the noble Lord, Lord McIntosh, referred.
Specifically in answer to the point raised by both noble Lords about the question of new money in relation to the GCSE expenditure, I can assure them that this is new money for the education service over and above the present plans. The £15 million will be in addition to relevant expenditure for local authorities in England and Wales and will be supported by education support grants at the rate of 70 per cent. Grant related expenditure will be raised to take account of the 30 per cent. contribution made by local education authorities. However, my noble friend the Secretary of State for Employment is supplying the missing £5 million which will become available through the Manpower Services Commission for the provision of scientific and technological equipment. I hope that that clarifies the position. The noble Lord,
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Lord Ritchie, asked whether this was enough. Perhaps if he will refer to my opening remarks and explanations, he will see that we believe it to be adequate at this stage.
I am grateful to the noble Lord, Lord Ritchie, for his welcome and his enthusiasm for developing the use of the spoken word. Work on the development and assessment of children's oral skills is indeed still at an early stage and in our view the best use of the education support grant moneys in this area is in support of pilot projects in a small number of authorities, the results of which can be drawn upon by authorities generally. I think I can confirm the Government's agreement with the remarks the noble Lord made in relation to the needs of Wales in this respect.
In conclusion, I should like to reiterate the Government's conviction that the education support grant programme for 1987–88 embraces activities whose importance is widely recognised, and I am confident that local education authorities will respond constructively. I commend these amendment regulations to the House.
On Question, Motion agreed to.

Agriculture Bill
8.15 p.m.
House again in Committee on Clause 1.
[Amendments Nos. 9 and 10 not moved.]
The Deputy Chairman of Committees (Lord Strabolgi): I have to inform the Committee that Amendment No. 13 has been marshalled in the wrong order and I am therefore bound to call it now after Amendment No. 10.
Lord Buxton of Alsa Lord Buxton of Alsa had given notice of his intention to move Amendment No. 13.
Page 2, line 6, leave out ("or for such reasonable charge as the Ministers may determine").
The noble Lord said: I do not intend to move this amendment. In view of the response of my noble friend the Minister, who I am sure will give careful thought to everything that has been said in the previous exchanges, I have decided not to move the amendment.
[Amendment No. 13 not moved.]
[Amendment No. 11 not moved.]
Lord John-Mackie Lord John-Mackie moved Amendment No. 12:
Page 2, line 6, leave out from first ("charge") to end of line 7 and insert ("and a proportion of the cost may be recouped by a levy determined by the Minister and applied by the Milk Marketing Board, the Home-Grown Cereals Organisation, the Meat and Livestock Commission, the Potato Marketing Board and any other authority that may have the right to levy marketed agricultural produce.").
The noble Lord said: If the Minister is determined to raise money from farmers for advice, I suggest that this

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should be done collectively. This amendment will have two effects. It will rid ADAS of all the work entailed in a commercial enterprise and leave the advisers free to advise. I think that is a very important point. We had a long discussion on this topic during one of the earlier amendments and many Members of the Committee were aware of the mix up and the hassle that could result in separating the advice that is free and the advice that has to be paid for. It is very important that it will also leave farmers free to ask advice on anything and at any time without worrying about payment.
I know that the NFU does not like the idea of these levies, which they suggest means one farmer is paying for the cost of another's advice. I have argued with the NFU that this is a rather narrow view to take. After all, we all pay the same motor tax, whether we travel 2,000 miles or 20,000 miles a year. That is just one instance of a collective payment.
Let us suppose that the figure that the Minister wants to raise to pay for the advice of ADAS is £6 million. I gather that it is around that figure, or at least the Minister has not denied it and the figure has been bandied about quite a lot tonight. Let us spread that figure over the gross income from the main products—cereals, all meats and milk. I worked this sum out myself; I do not think that it is necessarily very accurate, and perhaps it is on the low side. The amount is between £8,500 million and £9,000 million, and the £6 million is 0.063 per cent. Surely no farmer would begrudge that.
Collection would be simple. The means are there through the various bodies mentioned in the amendment. It is a better method and simpler, but I know that officials in ministries do not like simplicity for some reason or other. They do not think that they are doing a good job of work unless they produce large and complicated provisions such as the two amendments that we have on the Marshalled List today, one of 10 pages and another of seven. If only they could think of simplification. This levy of only 0.063 per cent. is simple and no farmer would begrudge it. That would save the hassle of setting up a charging system within ADAS. I did not manage to take them all down, but I think that the charges suggested by the Minister earlier this evening will just exacerbate the situation. I beg to move.
The Deputy Chairman of Committees: I have to inform the Committee that if this amendment is agreed to, I cannot call Amendment No. 14.
Lord Belstead: I am interested that the noble Lord, who has been consistent in advising that he does not like the idea of charging for ADAS, is nonetheless saying that if there are to be charges, they could be collected comparatively painlessly and reasonably by way of levies. I should be foolish if I disregarded the advice that he gives. There are advantages in doing it that way.
The difficulty is that there are major practical problems. The levy power of the various bodies to
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which the amendment refers are diverse and complex. In most cases I do not think that it would be possible for the Government simply to say "Your producers must pay this or that towards the cost of advice" to a levy-raising body. There would have to be amendments to the existing levy arrangements, certainly in some cases, and there would be a need for further legislation.
It is one thing for such bodies to decide on their own initiative that they want to raise money voluntarily (for example, to commission research) and quite another to introduce what would be a compulsory levy for advisory services. There would have to be some form of penalty for producers who refused to pay and provision for the necessary enforcement. There would be difficulty in establishing an equitable levy for each sector. Arrangements would have to be made to cover sectors without marketing bodies; and all that would be enormously expensive and complex to administer.
It gives me no joy at all to be picking holes in the suggestion. As I say, I realise that there are good reasons why the noble Lord puts the amendment forward. He may ask whether I am nit-picking. But there are one or two more general reasons why what he suggests is difficult, and they may appeal to him.
If we went down the road of levies it would mean that, although the industry was still paying for ADAS or at least for a part of its cost, farmers would not have the direct influence over services that they will get through direct payment for advice. Nor is there any guarantee that smaller or less well-off farmers would benefit. Some do not use ADAS now and may not want to in the future, yet they would still be faced with paying the levy if that was what we instituted. If we have a charging system, it is possible for the farmer to ask himself whether he wants the service and whether he is prepared to pay; he can then reach a decision.
We looked at the question of raising money for the services of ADAS in the ministry, and the noble Lord worked in the ministry for many years. He is distinguished in agricultural service and knows the ministry well, and so it will not surprise him that we looked at the suggestion very carefully indeed. But those are the reasons that we sheered away from it and felt that it was not the road that we wanted to go down.
Lord Mackie of Benshie: I thought that we had discussed this part of the amendment before; but there are reasons why the Minister might look at it again. At the present moment the cereal growers are being polled, and they cannot quite understand why they should pay for a Food from Britain campaign which does not directly affect them. Nevertheless, I think that the majority of those polled will accede to the request. They realise that the value of marketing food applies to everyone. The cereals that they grow will ultimately be eaten, whether they have gone through a pig or some other animal, and the campaign will ultimately benefit them.
The Minister might look at the amendment again. The suggestion need not be spread over everyone. The Government could simply use the people that they have, and it could be spread further at a later date.

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The argument that if people pay that will make the service better is not a good one. Farmers will use ADAS for only certain services, and instead of the service being universal it will become a service for big cereal growers and the specialists in the other fields will be lost. The great value of ADAS and the colleges is that they have a wide range of knowledge which is enormously useful to farmers. If ADAS goes the way that the Government are pointing it, it will need to do the things necessary to bring in the money. The only service that I can see that it will get money for is a specialised cereal service, and that will narrow the field enormously. We shall lose a lot of people, turn it into another commercial service and destroy the basis that has given the service in the colleges and in ADAS the reputation that it has.
Lord Gallacher: The Minister's answer has been discouraging, although he said that the concept advanced by my noble friend had been examined in the ministry and rejected. We feel that it may be worthy of further examination. Of the alternatives so far canvassed, this seems to us to be the most practicable, as my noble friend pointed out, and in the long term the best way to deal with the matter.
It is not a novel concept by any manner of means. The co-operative movement, with which I used to have a connection, has practised the principle of mutual aid at the national level for years. The idea simply is that one pays according to one's size and thereafter claims benefit on the basis of need. In the main, that tends to help the small society, and I think that such a scheme would in the main tend to help the small farmer.
The Minister mentioned the fact that the levy powers which will be required to give effect to the scheme are diverse and might require additional legislation. I direct his attention to the fact that in Clause 7 we are about to do just that so far as meat is concerned, for a different purpose admittedly, but the opportunity is with us in this Bill if the ministry is minded to take it. If there should be amendments of that kind tabled at Report stage, he will get the maximum encouragement from this side of the Chamber.
The noble Lord mentioned the question of penalties for non-payment. We envisage the levy being raised on the basis of the invoice, or else a deduction from the milk cheque, or any of the other devices which are already much in use by these boards at the present time for various purposes, some of them in my view not as worthy as funding ADAS in that way. I shall not particularise by mentioning which ones.
The question of non-payment is not a major obstacle because of the way in which, as I say, the levy can be deducted from payments due or added to invoices. In that fashion not merely does one raise the money but one does so cheaply and economically, without the problem of bad debts, and without the arguments which undoubtedly my noble friend is right in saying are likely to arise from a part-funded scheme such as the Minister is advancing, leaving out the
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question already decided of what is environmental and therefore free and what is non-environmental and therefore subject to charge.
In reply to an earlier amendment, the Minister mentioned that the Dutch and the Danes were funding their advice to the tune of 50 per cent., but when asked to say how the 50 per cent. was raised from small farmers in Holland and Denmark he had no information. I do not claim to have any great knowledge of the agricultural mechanisms in either country but I should be surprised if a scheme such as this is not the basis of doing it, because I am aware that in many ways the co-operative movement in Denmark undertakes fund raising in a number of ways.
One of the great advantages of the scheme which my noble friend Lord John-Mackie is asking the Committee to consider is that it would give a much more solid basis to the part funding of ADAS than the scheme outlined by the noble Lord the Minister whereby one subscribes for pamphlets, either fully or partly. There is also the proposal that its services should cost £25 an hour or rather more if a national specialist has to be brought in.
Those are alternatives which have an element of uncertainty about them. They are unlikely to appeal to the farmer because he has to bring in the man to decide how much the job is likely to cost. When told how much it is he then has to make a decision as to whether it is worth it to him in the circumstances in which he finds himself. There is no guarantee and indeed no one can even know, if £6 million is the sum to be raised, whether at the level at which the charges will be pitched sufficient use will be made of the service to raise the money that the noble Lord has in mind. If there is a shortfall in demand the Ministry is in the unfortunate position of not raising its £6 million because farmers are unwilling to find the money and, on the basis of the estimate that they have been given, decide to do without the service.
Another point in favour of our scheme in preference to the Ministry's is that, by reason of its nature and character, it will give great assurance to the staff of ADAS that their future is certain, because the basis of funding, although now to be borne by farmers, is much more definite and assured and not subject to the vagaries to which inevitably the Ministry's scheme will give rise.
On the whole, we have offered the noble Lord a good scheme. I hope that, despite his refusal of it tonight, as he is taking back other proposals to think over this one may enter his thinking as well. We have no desire to press this matter this evening, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Radnor The Earl of Radnor moved Amendment No. 14:
Page 2, line 6, after ("or") insert ("at a charge which takes into account the full economic cost of providing the service or").
The noble Earl said: At least twice this evening I thought that there was a possibility that I might not be able to put forward the amendment. It is a probing

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amendment which is capable of alteration. I think that it brings up an important point that has not so far come forward in the debates today. As the Bill stands at the moment, some matters to do with the environment and so on will not be paid for but there will be matters more directly to do with farming which are to be paid for. There has been a long discussion of the difficulties that may or may not arise in sorting out those two matters. My noble friend Lord Buxton explained how he would go about it.
Nobody except my noble friend Lord Belstead has talked much about how the charges will be charged out. There will be confusion. A new situation has suddenly arisen. ADAS will make charges directly to farmers. The noble Baroness, Lady Nicol, pointed out that there were other people involved in consultancy, but she only mentioned the firms which perhaps plug their own lines. There are other people who give good advice and who have so far worked extremely well with ADAS. It has been said (and I think it is a fair description) that there has been a degree of symbiosis. ADAS has dealt with the broader issues and has often used private consultants who charge to deal with those matters which are particular to the farmer.
There is a strong feeling that through being asked to enter the market, ADAS will go into the consultancy firms' sphere of influence competitively. My noble friend said that he had no fears for ADAS in the market. Indeed, it will be in the market place. I more than agree with him, because I think that the people who have fears belong to those private consultancy firms which tend to be small and give a particular service. They often have to pay for their back-up. It is fair that they should have a degree of suspicion that a government agency such as ADAS will have an advantage over them. That is why I included the words "full economic" in the amendment. I prefaced them by "takes into account". If the clause is read carefully, it will be seen that it deals with advice that is half free and half charged for. I wanted,
"takes into account the full economic cost"
included as a protection for those who are already gaining their livelihoods by giving advice.
If that provision is not included in some form or other and made clear, the clause would set a precedent. I am not clear about the rules and regulations that govern various government agencies, but I know that they exist. I know, for instance, that the Forestry Commission has a careful set of rules regarding the sale of little trees from its nurseries and the sale of timber. I believe that the same applies to water authorities. They cannot enter unfairly into the market of selling fish against impoverished farmers. For that reason alone, it would be interesting to hear on what basis the charges will be made, because there is a problem.
I made a slight mistake; however, it does not alter the amendment. I should have liked to end at "service". I think that that is adequate. It would have got rid of the word "reasonable" which I, like my noble friend Lord Stodart, would like to see out of all statutes. Perhaps my noble friend will tell us something about how ADAS will enter the
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commercial world without trading unfairly against those who are already in it.
Lord Stanley of Alderley: I support my noble friend. I have little to add to his remarks except to reinforce the point that there is need for thought as to what job ADAS will do successfully in the future. It will be necessary for ADAS to become more specialised. It must not shrink from providing specialised services, not just to the farmer but to the farmers' specialised private advisers.
ADAS is in an advantageous position with regard to back-up services in the form of veterinary investigation, which I mentioned on Second Reading, plant disease and diagnosis and overall management. It has access to costings and experimental advice. This is certainly how I, who use the services of a private agronomist, use ADAS. I believe, as I think ADAS believes, that it has a great future in this area. Both I, as a farmer, and private consultants, would be happy to pay for this ADAS advice. I believe therefore that it would be to the detriment of all parties, as my noble friend Lord Radnor has said, and particularly to ADAS, if ADAS used its subsidised position (if I may use the word) to undercut the private sector. There is certainly enough work and demand for both.
I feel somewhat embarrassed. I have listened with great interest to the discussion on charging and the difficulty of deciding where and when and on what to charge. I am supporting this amendment therefore in order to try to find out how it is going to work.
I can see that it is easy enough to charge for specialised advice and services such as I have mentioned. Indeed, my noble friend Lord Belstead mentioned this in an earlier speech. My question relates to more general advice. I should like to see whether it is possible, before discussion on this Bill is completed, to have a more detailed list of individual charges by ADAS—for what and for how much—in the whole advisory field.
Lord Mackie of Benshie: There is one curious aspect to this amendment. At present the private consultants are competing against a completely free service and doing it apparently very well. It appears to be unnecessary to take care of them in the charges if they can compete against the free service.
The Earl of Radnor: I tried to cover that question, but obviously did so very badly. There is a feeling that when ADAS charges it will be moving into a different sphere of advice. It is also, I believe, thinking of a specific target to be earned in 1987. Whereas previously it would be happy to pass on a client at a certain stage to a private consultant for detailed work, ADAS now feels that it will be doing the detailed work as well.
Lord John-Mackie: I have already talked about the simplicity that would be required in making the charges. This amendment would complicate the

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matter more. I can imagine a week where an ADAS adviser does only conservation work and is paid nothing, while in another week his work will be half and half. The accountant in the office will have a devil of a job working out the economic cost of paid visits. If the noble Lord was successful in getting this amendment through, it would add to the complications that all agree are there now.
Lord Melchett: I rather agree with that. It seems that both noble Lords opposite have pointed to a real difficulty and indeed a real evil so far as ADAS and other people operating in this field are concerned. I do not believe that the amendment does much to help matters. If anything, like my noble friend on the Front Bench, I feel that it will probably make matters worse. Like other noble Lords, I, as a farmer, make use of the services of private consultants. At the moment, because ADAS advice and particularly research advice from things like experimental husbandry farms is made available generally to the industry, including private consultants, it is then very effectively disseminated to many farmers through the services of those private consultants. It is interpreted at an individual farm level and converted into pounds and pence by private consultants for a particular farm business in a way that an experimental husbandry farm or ADAS itself would not be able to do. All that is going to stop. Nothing that the two noble Lords opposite can do in this amendment or any other that we are likely to debate will help matters. Experimental husbandry farms have already stopped sending reports free of charge. The flow of information from the advisory services and their research facilities has dried up. The only people who will get it in future are those prepared to pay.
This seems to me to be one of the real disadvantages of what the Government are doing. They are turning off a flow of information that will become very selective and that will go to a few people who can afford to pay and who have access to those who are getting information from ADAS or who happen to see ADAS at the right time in the right place about the right subject when it is not called conservation and they are allowed to be told what an experimental husbandry farm has found out about something. This will put British agriculture, whatever direction we take in future, at a great disadvantage by comparision with the past.
8.45 p.m.
Lord Belstead: My noble friend Lord Radnor has made clear, in moving the amendment, that he is anxious to see that where ADAS charges are made they should reflect the full economic cost of providing the service. I quite understand why my noble friend moves the amendment, although, as the noble Lord, Lord Mackie of Benshie, observed, the private sector has competed very successfully with free ADAS services in the past. And, really, there should not be any reason to suppose that the introduction of charges will change that. None the less, there is a very
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understandable point behind the amendment that my noble friend moves. The noble Lord, Lord John-Mackie, put his finger on an important matter when he said that ADAS would be in some difficulty in the sense that during the week a particular adviser would be giving non-chargeable advice and then chargeable advice. If we had literally to conform to the small print of the amendment, ADAS would find itself in considerable difficulty in assessing that part of its costs attributable to chargeable activities and that part attributable to the wide range of non-chargeable activities and functions that ADAS performs.
These problems will ease as experience is gained with charging. I should like to give an assurance to the Committee that our intention is that charges should reflect the appropriate resource costs and market conditions that the private sector takes into account in setting its own prices. I said very much that before the dinner break towards the end of the statement on how we would envisage charges for ADAS being arranged. I would add that a statutory requirement to charge full economic costs would be difficult to observe without constant adjustment of prices and could, I believe, prevent ADAS providing the same degree of price flexibility enjoyed by the commercial sector. We do not believe that this would be in the interests of the farmer or the taxpayer.
I am confident that the current proposals, with the safeguard provided by the market, will result in fair prices. I repeat, however, that we shall be doing our very best to see that prices for ADAS services will be set at levels that cover the direct costs of the service and make an appropriate contribution to the overhead costs. In other words, we shall do our very best to see that there is fair competition.
In this context it was I think my noble friend Lord Radnor who said that he would be interested to know what the rules and regulations were so far as this was concerned, if there were any. This amendment really suggests that a reasonable charge must always be something different from full economic cost. Indeed, my noble friend said that he regretted having the word "reasonable" in and that what he wanted was this amendment. With respect, I do not think that this is the case. Prices will be set according to the usual Treasury guidelines. This means that prices must be realistic but not excessive. It follows that we realise that if prices are too high, the industry will not pay them and if they are too low, ADAS will not earn the revenue that it needs which, for advisory services, is £5 million. That is what we have budgeted for. Like any commercial company, ADAS must aim to provide attractive services at sensible prices.
I should like finally to deal with research and development. My noble friend Lord Stanley emphasised the hope that specialised services to farmers and to other interests would continue. This is exactly what Clause 1 of the Bill provides for. Clause 1(1) allows goods and services to be provided to any person. Apart from farmers, other potential clients might include agro-businesses, professional consultancies, academic institutions, local authorities, members of the public and overseas governments and organisations. The effective limitation would be only

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that the goods or services must be connected with agriculture or the other related subjects listed in the subsection. If I remember rightly, my noble friend went on to say that he very much hoped that the results of publicly funded R&D would be channeled through to a wide range of clients.
I was sorry in this context to hear the noble Lord, Lord Melchett, saying that he felt that R&D from ADAS was starting to dry up. I must say, with great respect, that is not my impression. I am not aware that any of the 19 experimental husbandry farms or experimental horticultural stations have been closed. That is where so much of the developmental work of the advisory services is done. We are of course going to pour into the running of ADAS a very large sum of money as I quoted before we broke for dinner.
Lord Melchett: May I—
Lord Belstead: Perhaps I may simply say this. There will continue to be written up in the scientific press in the normal way the results of publicly funded R&D. As such this will be freely available to interested parties such as outside consultants for them to draw their own conclusions and to formulate their advice accordingly. Discussions are in hand between ADAS and representatives of the private advisory sector concerning future possibilities for collaboration including arrangements for access by outside consultants to other data and services that ADAS can provide.
Lord Melchett: I am very grateful to the noble Lord for giving way. I did not suggest that any of the experimental husbandry farms had been closed. Perhaps I should add the words "closed yet". I suggested that the information which used to be freely available from them—for example, in the shape of annual reports—has dried up. It may be that my annual report from Gleadthorpe has not come through in the post, but I understood that all the experimental husbandry farms have been told that they should not issue information like that generally and freely to farmers as they have in the past.
Lord Belstead: On annual reports, we are not sure that they have been putting before the general public information which is of interest. It has always been nice to see an annual report. It has been extremely interesting and encouraging to see the reflection in the annual report of the activity going on in the experimental husbandry farms. However, if one wants to get the results of the work done in experimental husbandry farms we believe that there are other ways of doing so. The noble Lord has put his finger on an important point. I can assure him that there will continue to be written up in the scientific press in the ordinary way the results of work at the experimental husbandry farms and horticultural stations—not to mention the fact that there will continue to be the open days which are always such an enormous success in these establishments.
Lord Melchett: That seems to miss the audience at which an experimental husbandry farm should be aiming. I was not aware that the annual reports were aimed at the general public. My understanding was that they were aimed at farmers farming on soil similar to the experimental husbandry farm with systems similar to it. The scientific press is very useful for scientists, but not many farmers—I would certainly include myself in this—have the opportunity to read the scientific press. Open days are very useful for having a look at what is happening but they do not give one the facts and figures which annual reports do. Annual reports from experimental husbandry farms, as the noble Lord knows, contain the results of work done on the farm in that year. It is not just a glossy report; it provides one with facts and figures which are often very valuable indeed.
My understanding was that it was exactly that kind of information which farmers in the past would have been able to get for free which in future we shall have to pay for.
Lord Belstead: I do not think that there is anything unreasonable in the last few words which the noble Lord has spoken. To pay for literature is not unreasonable. There will be subscription schemes in order to do that.
I repeat that whereas experimental husbandry farms' annual reports have been encouraging and interesting to read, I think that there are other ways—individual pamphlets or booklets rather than in the annual report—of disseminating the information from work which has been done at the experimental husbandry farms. There will be no secrecy—nothing kept away from people. It is simply that we believe that instead of putting them in annual reports they can be put in individual publications.
Lord Melchett: Can I pursue one further point with the noble Lord? He knows that this is a matter which is giving rise to a great deal of concern not only among farmers but private consultants, at which the amendment was particularly directed. As I understand it, what will happen—the noble Lord has now confirmed it—is that farmers will have to pay for this information from experimental husbandry farms by buying publications. Am I right in assuming that that will also be the position of private consultants? They will have to buy the information by buying the publications? But ADAS will presumably have free access to the information from experimental husbandry farms. Is not one of the matters about which the private consultants are worried that ADAS will have this huge publicly funded research programme through such things as experimental husbandry farms available to them for nothing while all the rest of us will have to pay for it twice through our taxes?
Lord Belstead: I thought that I gave a rather valuable assurance to my noble friend Lord Radnor about the dissemination of publicly funded R & D particularly with regard to consultants. I think that what I said will be welcomed by consultants in that respect.
Lord Mackie of Benshie: Will the noble Lord confirm that it is not that they will have to pay for information but for the literature? I think that is what the noble Lord said. In other words, they will pay the cost of the printing?
Lord Belstead: That is indeed the case.
Lord Burton: The various amendments put forward this afternoon have thrown up some very interesting points which I think will put difficulty in the way of the Government's proposals.
On this amendment I am rather worried that the expense will be so high that a number of the smaller farmers—although a number of my noble friends may be prepared to pay for it—will not go for consultation until such time as they have an epidemic on their hands which will probably be affecting their neighbours.
Charging for some services and not for others will cause trouble. The amendment put forward suggesting a levy seems to be on the right lines, I should have thought. If my noble friend could look at this again before the next stage it seems sensible that some form of levy would be very much preferable to the provision in the Bill at the present time.
The Earl of Radnor: I am most grateful to my noble friend for giving the various assurances that he has given, and indeed the last one to which my noble friend Lord Melchett referred.
I am a little disappointed—and I shall certainly read with great interest what my noble friend has said—that something cannot be put in the statute which will make this situation a little happier for the private consultants, and make me a little happier about the principle of the whole matter. I know that my noble friend mentioned the direct costs and how they would be dealt with. He then referred to a fair proportion of the overheads. This is the most important matter which is causing most worry. What happens to the overheads, and how are they to be allocated in a fair manner?
I shall not carry the matter any further. I shall read the remarks of my noble friend very carefully indeed. I beg to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 15 not moved.]
Lord Stanley of Alderley Lord Stanley of Alderley moved Amendment No. 16:
Page 2, line 7, at end insert ("provided that no charge shall be made for the enforcement of Milk and Dairies Regulations made under the Food Act 1984 or for swill feed licensing under the Animal Health Act 1981").
The noble Lord said: The Government have already said that statutory duties for tests for tuberculosis and brucellosis should not be charged for. This amendment would also include the Milk and Dairy Regulations and swill feed licensing in that same exemption.
I need hardly remind the Committee of the present concern over a recent outbreak of swine fever, or the concern throughout the Western world over milk safety after Chernobyl, to emphasise the vital necessity for care with these foodstuffs, particularly milk, not only for the farmer but, of far more importance, for the consumer. I cannot see any reason why the farming industry should pay by levy or specific charges for services which I hope Members of the Committee would agree are essential for the public benefit. I believe that it would be similar to charging every individual driver who is checked for an MoT and found to be innocent, or charging every individual for every visit by the local police constable or every time he or she asks the friendly bobby for help or advice. I beg to move.
9 p.m.
Lord Melchett: Perhaps I may ask a very brief question simply for information. Has the Ministry taken any decision as to who should pay for badger control operations in the South-West of England, where badgers are being killed by the noble Lord's department in efforts to eradicate bovine tuberculosis in cattle? Is there any intention of charging the farmers concerned for that operation? I ask this question with no particular desire to hear one answer or the other. On balance, I would probably prefer to hear that farmers would be charged for the service and then the killing of badgers would come to an end. Perhaps the noble Lord can tell me what view has been reached on that.
Lord Belstead: This is an amendment of my noble friend Lord Stanley about milk and dairies regulations and also licences for swill feeding. In deciding to introduce charges for inspections under the milk and dairies regulations we were conscious of the fact that producers derive benefit from this work. The high quality and reputation of our domestic milk production helps to maintain liquid consumption, and this in turn benefits producers returns, which would certainly suffer if consumers had less confidence in the product. It is for that reason that we felt that there was a strong case here for charges to be made.
We are discussing practical arrangements with the industry and have already agreed that charges should be directly linked to actual visits rather than applied on a per litre basis, because we understand that this is what the National Farmers' Union and the Milk Marketing Board prefer. We are also ready to discuss the actual method of collection but I must make clear that we regard collection via the milk cheque as by far the simplest and cheapest option, which is a statement that will not entirely surprise noble Lords opposite.
So far as the licensing of swill feeders is concerned, similar considerations apply. Licensees are being permitted, subject to safeguards, to undertake a business which would otherwise have to be prohibited because of the risk of spreading disease through swill feeding of pigs. The arrangements are designed to ensure that such swill is heat-treated to kill harmful

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viruses, such as swine vesicular disease and swine fever. Consultations have been taking place with the National Farmers' Union and others representing swill feeding interests on the Government's proposals to introduce charges for this licensing work. We would envisage that the charges would be on an annual basis but collected quarterly in advance.
Perhaps I may make one comment about both these charges. These have been picked out by my noble friend Lord Stanley for reasons which my noble friend explained in moving the amendment, but they form part of a list of other charges which my right honourable friend has said he intends to make as statutory charges which, in addition to the saving of £5 million for advice, would constitute a saving of about £6 million for these charges for statutory regulations. We are really talking about quite considerable sums of money which otherwise will have to be footed by the taxpayer.
Although I yield to no one in this Committee in wanting to see that the farmers of our country have a fair deal, it really needs quite a quantum leap as regards logic to be able to claim that all these things should be absolutely free, paid for by the taxpayer. I say that bearing in mind that, even when the savings on expenditure on ADAS have been achieved, the Government will still have to contribute 80 per cent. of the total expenditure of ADAS, which, as I said earlier this afternoon, is about £100 million.
The noble Lord, Lord Melchett, asked me a question about badger control charging. The answer to the noble Lord's question is, No.
Lord Mackie of Benshie: It is a little illogical to say that these charges are to be made because they benefit the farmer. Surely all the public health regulations are made for the public and not for the farmer at all. They are for the protection of the public and therefore it appears more logical that the public should pay.
Lord Belstead: If it was not possible to have checks for health in dairies I think we should very soon find that liquid milk consumption would be harmed, and if we were unable to have the assurance of licences for swill feeding I think swill feeders would simply go out of business.
Lord Burton: Surely we are being put at an increasing disadvantage compared to our European competitors. We are suggesting that British farmers should be saddled with an extra £6 million expenditure for public health, which seems to be unreasonable.
Lord Belstead: Perhaps my noble friend was not in the Committee earlier this afternoon when I gave figures for other European countries, which show that charges for their advisory services started earlier and are higher than ours.
Lord Stanley of Alderley: I really cannot accept the argument of my noble friend Lord Belstead. If the Government have agreed to pay the charges for tuberculosis and brucellosis, why cannot they pay the charges for the inspection of milk? Other diseases carried by milk are probably worse than those two diseases. I just cannot see how they separate the two. As the noble Lord, Lord Mackie of Benshie, said, this is a public health worry and should therefore be carried by the public, as I said when I proposed the amendment.
My noble friend says that it is to my benefit as a milk producer that I am selling more milk because it is cleaner. I suggest that it is a very marginal amount. I doubt whether the housewife is really conscious of the fact that the milk has been inspected and kept clean. She expects it to be, and I cannot see that this is anything else other than a public expense.
As far as swill feeding is concerned, perhaps I will leave it with the remark—and my noble friend will no doubt think about it—that I think his department is slightly out of touch with reality. I will leave this amendment now, but I really feel I may have to come back to it again because I do not think my noble friend was very convincing. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Gallacher Lord Gallacher moved Amendment No. 17:
Page 2, line 7, at end insert—
("( ) No charge will be made for advisory services provided by Ministers where the request for such services arises because of, and directly from, socio-structural measures agreed by Member States of the European Community.").
The noble Lord said: This amendment is designed to give some assistance to farmers who may decide to take advantage of proposals which are presently before the Council of Ministers in the European Community affecting socio-structural measures in the Community. It is true that the proposals themselves are optional —that is to say, if finally approved by the Council of Ministers farmers will not be obliged to take advantage of them. The proposals are in the form of a draft regulation and to that extent I think will become of significance as far as Community members are concerned.
I will not weary the Committee with an attempt to describe all that is contained in the socio-structural proposals because for one thing I cannot recollect in detail all that is in them. Suffice it to say that it is envisaged that farmers will have the option of either retiring at the age of 55 with a pension which will be part-funded by the Community, and handing over to someone else upon condition that the someone else farms less intensively and changes the whole nature of the farm itself; or, if he stays on the farm he can attract certain benefits under the scheme if he, the original farmer, changes the nature of the farming policy and farms less intensively. Indeed, there are payments to be made for allowing fields to lie fallow, and other measures of that kind. In addition, he is expected not merely to farm less intensively but also to farm products which are not in surplus in the Community and which may not be as remunerative for him as the farming products he hitherto has been producing on that farm.
This is an ambitious scheme, and represents an attempt by the Commission to do something about surpluses and ultimately to reduce the cost of the common agricultural policy. From the point of view of the farmer who may be involved, he is going to need advice because although there are certain financial payments to be made to him from the Community funds, undoubtedly those payments are not going to be sufficient in themselves to enable him either to maintain his previous living or even to earn an acceptable living.
Although there is provision in the scheme for member states to assist, particularly in the matter of topping-up pensions where pensions are taken, undoubtedly this new scheme, if taken up to any marked degree by farmers in the Community, may give rise to the necessity for specialist advice as to how best to farm within the meaning of the scheme and, as I say, at the same time to maintain a reasonable standard of living, and, no less important because it is in the scheme, to have regard to the environment as part of the changeover which he is making as to his farming style.
Therefore, it seems to us that this justifies treatment of the kind suggested in the amendment so that (and this is on the assumption that the scheme is ratified by the Council of Ministers) where a farmer under the scheme asks for advice from ADAS it should be given to him free of charge, bearing in mind the fact that he is probably accepting a lower standard of living and that in point of fact unless he has that specialist advice the environment may suffer as a result of extensive rather than intensive farming. Even some of the other measures in the scheme could result in the deterioration of the countryside, which I am sure all of us would wish to see avoided.
It is for these reasons that I think there is a case here for a special category qualifying for free advice. There should be no difficulties in deciding whether or not they are within the scheme because the scheme, being a Brussels scheme, will be well regulated. I think the noble Lord the Minister might care to say that this is something which, even if he cannot agree to it tonight, will be looked at by the Government, particularly as the scheme itself, if it sees the light of day, is likely to see the light of day during the British presidency of the council. I beg to move.
Lord Belstead: Like the noble Lord, Lord Gallacher, who I think has a very great deal of knowledge of this subject as it falls within the scope of the committee of your Lordships' House of which he is chairman, I shall not try to embark upon the details of the socio-economic proposals of the Community because they have only just been published and are not all that easy to follow.
What is certain is that this is an amendment which, although I understand it, could nonetheless lead to some rather strange anomalies. For instance, those
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who wanted to leave farming, or to start farming, might find themselves qualifying for free advice because there are the arrangements for special help under the socio-economic measures proposed from Brussels for those who want to leave the farming industry at the age of 55 and those who are coming in. Those who wanted to leave, or start, might suddenly find themselves getting free advice, whereas those who are perhaps doing their best to make a successful business of their existing enterprise in mid-career would find that they were not being offered free advice.
We have given a firm commitment about advice on diversification as well as, of course, conservation and animal welfare, and where additional special help is needed we ought to give it directly and be clear that that is what we are doing. I have often heard people say that one of the difficulties with the common agricultural policy is that so much of it is really a social policy. With respect, this amendment comes close to that particular danger. That is the difficulty I see with it, and it is on those grounds that I would say to the noble Lord that I cannot accept the amendment.
9.15 p.m.
Lord Gallacher: That is a somewhat disappointing reply from the Minister. I agreed with him when he said that we are dealing not so much with a farming policy as with a social policy. If there were any way of taking this problem out of the realm of the CAP and into the realm of some other aspect of Community financing, I think everyone would be happy. But in point of fact the Commission seem determined to keep these schemes within the ambit of the common agricultural policy, and therefore we must deal with them as we find them rather than as we should like them to be.
I still believe that the Minister is wrong to assume that this in some way is an attractive scheme. In many ways it is a sad scheme, and unless properly handled could result in some fairly severe difficulties in the countryside, though not so much for farmers because participation is voluntary. But if there is participation, there could be an environmental spin-off which might undo some of the good work which, by common consent, has been achieved in more successful days so far as agricultural production is concerned.
However, in the light of the Minister's view I think I have no alternative but to withdraw the amendment. In case by the time Report stage comes round the proposals themselves are clearer and there is a better understanding of them, and more particularly if it becomes apparent that other member states are likely to give the kind of assistance which the Minister this evening is declining to give, I reserve the right then to re-table an amendment of this kind. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Buxton of Alsa Lord Buxton of Alsa moved Amendment No. 18:
Page 2, line 7, at end insert
("(3A) The Ministers shall—

(a) prepare a code containing such recommendations, advice and information, relating to achieving a reasonable balance between the conservation and enhancement of natural beauty and conservation of flora, fauna and of ecological or physiological features of special interest and the production of food and other agricultural produce, as they consider proper for the guidance of any person supplying services or goods referred to in subsections (1) and (2) whether or not such persons are exercising functions under this section; and

(b) revise any such code by revoking, varying, amending or adding to the provisions of the code in such a manner as the Ministers think fit.

(3B) A code prepared in pursuance of subsection (3A) and any alterations proposed to be made on a revision of such a code shall be laid before both Houses of Parliament forthwith after being prepared; and the code or revised code, as the case may be, shall not he issued until the code or the proposed alterations have been approved by both Houses.
(3C) Subject to subsection (3B), the Ministers shall cause every code prepared or revised in pursuance of subsection (3A) to be printed, and may cause copies of it to be put on sale to the public at such prices as the Ministers may determine.")
The noble Lord said: This is a simple subject and I can explain it simply. The amendment is rather long by my standards, but it is simply a new subsection to follow subsection (3) as (3A). It seeks to rectify or fill a vacuum in the system that we have been discussing almost all day. There have been many references to independent consultants and to representatives of manufacturers, all of whom are doing a perfectly proper and legitimate job around the countryside. But unlike most other authorities, bodies, and even individuals they have no proper criteria, guidance, or code of practice relating to the general agriculture-conservation subject with which we are so concerned today.
There is no pressure, no guidance, nor obligation placed upon them to conform with government policy and with public interest in this area, and at the same time marketing consultants and their activities are rapidly expanding. If the great ADAS charges saga develops and goes through, they will undoubtedly multiply yet again. A company—whether they are manufacturers of pesticides, chemicals, or farm machinery—have a perfectly proper right to pursue their own commercial ends, and I feel that it is up to the Government to give them guidance. I have no doubt whatever that it would be welcomed. There is no mechanism at present by which conservation criteria should apply to all that growing new activity.
This amendment in my view is totally noncontroversial. It places no imposition on the Government, the Ministry of Agriculture, the agricultural industry or anybody else. Once the code of practice has been worked out and published, that is the end of the matter unless from time to time it needs updating. I cannot believe or conceive that anybody would feel that this is a bad idea, or that it would not be welcomed by all the parties.
The only parties affected would be private consultants, the industry and so forth—the representatives to which I have already referred. It is my belief that they would find it an enormously valuable and helpful weapon in their hands and would continue to
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conform to public and Government attitudes on these matters. They would find it useful and would do a favourable job throughout the country. It must be remembered that industry and most other sectors in the country are bound and if not restricted—though certainly industry is restricted—are encouraged to conform to codes of practice affecting conservation, planning permissions, pollution, including water pollution, emissions into the atmosphere and so forth. There is therefore no conceivable reason why these people, simply because they are connected with agriculture, should live in a sort of gilded cage not subject to any codes of practice, guidance or advice. I hope I have made the point. I do not need to labour it. I beg to move.
Lord Melchett: May I briefly support this amendment tabled by noble Lords opposite. We spent some time until a few minutes ago discussing the terms of competition between ADAS and private consultants. The noble Lord, Lord Belstead, said in an earlier debate this afternoon that the new duties laid on the Minister of Agriculture in Clause 12 will apply to ADAS and other functions carried out on the Minister's behalf. So ADAS will continue, quite rightly—and I think it is supported by everyone—to need to have regard to balancing the various interests in the countryside, giving advice on conservation (free of charge, of course) and other matters.
But those constraints do not apply to private consultants. They are playing an increasing role in giving advice to farmers, particularly those farming larger areas and so on. I hope that this amendment will be welcomed by all those involved. It would enhance the reputation of the private consultants and ensure that they were operating on a fair basis vis-à-vis ADAS. It would go some way at least to reassuring those of us concerned about the future of advice, conservation and related matters that private consultants would take this into account as well. I hope the amendment will be acceptable to the noble Lord.
The Earl of Onslow: I put my name to this amendment, and it seems to me that what we are asking the Minister to do, not by statute but by a code or guideline, is to put some flesh onto the bones of Clause 12. Clause 12, as I said before, is very much to be welcomed. I shall not repeat my earlier criticisms of the charges for ADAS, but those views do not in any way detract from my generally keen suport for much in the Bill. This amendment would be a help to everybody—private people and also possibly ADAS—who is involved in the care of the countryside. I hope that my noble friend will agree to this amendment or something very similar which would produce the same effect.
Baroness White: I am sure that many of us in the voluntary organisations are much concerned about the proposal here being an essential ingredient if the Government are serious about carrying out the obligations under Clause 12. After all, although the obligation lies on the Minister, the way in which it is implemented depends entirely on farmers or

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landowners. If they are seeking professional advice from private consultants, which is a perfectly proper thing to do, and the balance is to be maintained—because this is a change of policy on the part of the Government—they will surely have to ask how is the balance to be incorporated in such advice as is proffered by the private organisations.
ADAS, because it is a public service, will be under the obligation accepted by the Minister to whom it is answerable; but the commercial consultants of course have no such obligation. It is difficult to see how they can have a statutory obligation, but on the other hand the least that one ought to be able to do is to indicate that the Minister regards this as a serious ingredient in the advice that they should be proffering.
I am advised that the British Institute of Agricultural Consultants (which as I understand it is one of the principal professional organisations for these activities) has a code of practice. But I am told that this contains no guidance at all as to how consultants should seek to integrate conservation priorities into the commercial advice that they give. They may quite reasonably say, "It is really no business of ours". But if one is trying to attain the objectives of Clause 12, then it becomes incumbent on the Government to do anything that is within their power at any rate to assist in bringing these considerations into the minds of those who are offering technical, scientific or commercial advice to their clients.
Therefore this initiative (as it was described by the noble Lord, Lord Buxton) is, I think, an important one. It may not be statutorily enforceable but at least it will give, or should give, a very strong lead from government indicating that these considerations are regarded as of considerable importance even if the advice is coming from the private sector. I hope very much that we shall have a sympathetic response from the Minister.
Lord John-Mackie: I do not envy the Minister's job in making up this code. It is going to be one that has got to satisfy the noble Lord, Lord Houghton, and me —and that is going to be very difficult. He made it perfectly plain earlier in the debate that he did not think that wheat was very important at all. In fact, he wanted to condemn all wheat to perdition and, so far as I could see, cover the countryside with hedges.
I have said in earlier debates on this subject that agriculture, the countryside, is the producer of food for this nation. It must take first place. But that does not mean to say that environmental affairs must be cut out or will not fit in, just to try to get a code that will satisfy the environmentalists. In saying that, I think that it is a very good idea and I am in favour of the idea. But I hope that whoever makes out the code appreciates the difficulty they will have in doing so. I emphasise that the environment has got to fit into the agricultural scene and not the other way round.
Lord Melchett: May I just point out to my noble friend that those who moved this amendment are not
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suggesting that private consultants should be treated any differently from ADAS, the public service which is giving advice to farmers and landowners? As a result of this Bill, it is now under a statutory duty to balance various interests in the countryside. The suggestion of this amendment is that private consultants should be given guidance so that they are able to do the same thing. I hope that my noble friend does not want to see the public service, ADAS, operating at a major disadvantage by comparison with private consultants just because he and my noble friend Lord Houghton find it difficult to agree on some subjects.
9.30 p.m.
Lord Houghton of Sowerby: I shall not keep the Committee for more than a moment. I must say that I feel that there is everything wrong with this amendment except the good intention behind it. This really is setting government an impossible task. Surely it is about time that we got rid of these weasel words, "striking the balance between". It is the most difficult thing in the world to strike balances between good and evil and good and less good or good and not so good. It seems to me that to set a Minister this task, he probably being neither a good writer of English nor a poet, raises the question of how he can produce the kind of guidelines and codes that are being sought in this amendment.
I thought that there was an abundance of erudite, understanding and thoughtful essays on what it is we want to achieve. We all want to get to the kingdom of heaven—that is what we want—and these codes of conduct and guidelines will not always get us there. Fancy the Minister being asked to produce something he considers proper in the field of advice and guidance of this kind. That is setting him a very difficult task indeed. The area to be covered by this survey is so wide and so full of philosophical, altruistic, artistic and moral issues that it is the work of a great philosopher with some understanding of the relations between man and nature.
In some ways, I think the term "the balance between conservation and agricultural production" is a sort of screen behind which bad decisions are taken. Sometimes there is no balance to be struck. Something is dreadful and should not be done, and there cannot be agricultural interests which should take precedence over what is proposed. One is irrevocable—the destruction of something—and the other is remedial; that is, the lack of agricultural production. Surely we all have to work towards these aims as best we can in our different capacities and by the administration of the statute law.
I am afraid that we sometimes set ourselves and Ministers an impossible task. With great respect to the noble Lord who moved the amendment, to the noble Lord who supported it and to the noble Earl, Lord Onslow, who also supported it, the noble Earl has many times scornfully referred to "the gibberish of Whitehall English". I am sure that he will get quite a big dose of it in these codes of conduct and what not. He, of all people, should steer clear of ministerial and bureaucratic essays of the kind suggested in the amendment.
Lord Melchett: May I ask my noble friend why he has changed his view about this so sharply since we were discussing the Animals (Scientific Procedures) Bill, when on numerous occasions he staunchly defended the Home Office's decision to include in guidance notes a whole range of matters which posed much more difficult philosophical questions, if I may say so, than matters of balancing conservation and agricultural production? That, if I may also remind him, is not something that was invented by the amendment but by the Government, in the text of the Bill in Clause 12. Nevertheless, in the Animals (Scientific Procedures) Bill my noble friend, against some opposition from other parties, insisted that it was sensible to put something of a sort which involved guidance to the experimenters in exactly the sort of code of practice that this amendment is proposing.
Lord Belstead: This amendment has brought about a somewhat improbable alliance on agricultural matters between the noble Lord, Lord John-Mackie, and the noble Lord, Lord Houghton of Sowerby. I must say it is an alliance which I join, but not because this amendment does not seem like a good idea: indeed, it does seem like a good idea and it was run in another place. We have thought very seriously, as I do not mind revealing, about whether it is possible to bring together the available advice. Perhaps I might just say in passing that some of the discussion we have had seemed to indicate to some extent that there was not very much advice going out to all the various people who ought to have it. I must say that there really is a library every year of published material which goes out from the four different services which make up ADAS. If anybody is interested they have only to put the publications together, or even to keep one or two of them, to be able to be on the right lines in a whole variety of ways.
Nonetheless, this amendment says, "Bring it together and put it into a code." The difficulty has been revealed, from their rather different standpoints, by the two noble Lords opposite, in that it would be advice which would have to be given not only by ADAS, by the private agricultural consultants, land agents, veterinarians and the like, but also by a wide range of statutory and voluntary bodies.
The noble Lord, Lord John-Mackie, doubted whether this could be done and, as I said, I agree with him and with the noble Lord, Lord Houghton of Sowerby, that it would really be very difficult, because it would cover also all types of goods relating to agriculture, food production, conservation and the rural economy. Just consider the range of activities which would be involved in this code. Anyone who supplied any goods to farmers would need to have regard to the code—not only the farm machinery, agro-chemical and fuel suppliers but local retailers, builders' merchants, co-operatives, and so on. All of these would be expected to know of the code and the code would have to be drafted in such a way that it was useful to them.
Finally, the real difficulty, the one which worries me, is that I think it would be impossible to cope in detail with all these recipients and with all the different types of goods and services which were being supplied
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without producing something of almost encyclopaedic proportions. I fear that we would find ourselves confining the code to something so general that noble Lords who are moving the amendment would not approve of it.
I repeat two things. First, let us not run away with the idea that there is not published material. There is literally piles of it which comes out every year from ADAS and indeed from the experimental husbandry farms and horticultural stations, not to mention the Agricultural Food Research Council and all the other agencies connected with the agricultural, food and fishing industries.
May I assure the Committee that I not only say that I take this seriously but that this is something of which we have thought very seriously indeed. We wondered whether we could have some sort of code with pull-out pieces, something of that kind, but all the time one comes back to the inevitable conclusion that the publication would be so vast or else so general that we feel it would be better to rely on what is published at the present time and as the years go by.
Lord Buxton of Alsa: I have listened with great interest. I regard the attitude of several noble Lords as being negative and lacking in enterprise. I hope my noble friend the Minister will forgive me once again for not being my usual very amiable, friendly self.
First and foremost, I believe that something of a very general nature is what is required. Secondly, I totally reject what the noble Lord, Lord Houghton, said about it being quite impossible. If you look at a thing like that in a totally negative way it is very easy for any of us to pull it to pieces and say it is a load of rubbish. But if you look at it in a constructive way it is asking only for the most general guidance to the marketing consultants and these people who are subject to absolutely no obligations or guidance whatever.
I leave the Committee and my noble friend the Minister with this thought. If this is rejected there will be thousands—and later on thousands more—of individuals—consultants and advisers—going out to people all over the British Isles giving either totally different advice on the subjects we have been discussing today—perhaps 10,000 different ideas—or no advice at all. Is that the best we can do? Could it not be rectified by a general guidance or code as I have suggested? But in view—
Lord Melchett: Before the noble Lord moves to withdraw the amendment, which I sense he may, perhaps I can intervene to ask the noble Lord, Lord Belstead, one question. He said that with his colleagues he had considered this proposal very carefully. I wondered whether in the course of that he had an opportunity to talk to the two professional associations which represent the overwhelming majority of private consultants in agriculture, and whether there was any possibility of them accepting voluntarily the need for themselves to prepare a code of practice.
After all, we are talking not about detailed instructions about what advice to give but about a code of practice, which I thought on occasions in this debate some noble Lords seemed to be assuming,

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which would encourage consultants working in the private sector to take into account conservation and other interests in the countryside when they give advice to farmers. I wondered whether the professional associations representing consultants had been approached about this and indeed whether they had expressed any views. I imagine that they might well have suggested if they had that they would consider doing something voluntarily. I wonder whether that is a way of possibly moving forward.
Lord Belstead: I do not want to appear unfriendly but the noble Lord, Lord Melchett, has put his finger on the one section of the rural community who really are well informed. If one is a consultant, the one thing that one makes sure of is that one has the available literature. Indeed, one of the reasons why my noble friend Lord Radnor moved Amendment No. 14 earlier this evening was that he was anxious that consultants should know exactly where they would stand with ADAS in the future. Probably in my noble friend's mind, although he did not dwell on it, was the wish to know that there would be a continuing flow of information from ADAS. I like to think that I gave some reassurance on that particular point.
Consultants have naturally looked at their national ministry in whichever territorial parts of the United Kingdom that they happen to be, to make sure that they have the necessary flow of information. With great respect, consultants represent the one sector that is well "genned up" concerning advice.
Where I think that this is a very serious amendment is this. I understand that my noble friend Lord Buxton is saying that there are a lot of other people who also need to be well informed, because they might cause damage and danger to the rural environment just as much as those who normally work in the rural environment. My answer to that point is that we would be moving with the very greatest of reluctance into a document that would either be so general or would be of such encyclopaedic proportions that it would be difficult to go down that particular road.
I give an undertaking to my noble friends Lord Buxton and Lord Onslow that I shall look at that matter again before the next stage of the Bill, but I hope that they will not remind me, having just repeated my two major objections.
The Earl of Onslow: Before my noble friend finally withdraws the amendment, perhaps I may offer what I hope is a constructive idea—that the model should be a kind of advisory circular issued by the Department of Education, or by the Department of the Environment on planning matters. What we should like the Ministry to do is to produce an advisory circular, which does not need to be extremely detailed, which beefs up Clause 12 a little bit. If that were done, then all the advisers, or whoever it may be, will know in what intellectual and physical climate they are being asked to work. That is really what we want. Whether or not the wording is correct, I am certainly not qualified to judge, but that is the kind of circular that my noble friend and I should like to see.
Lord Melchett: I am not sure whether I am on exactly the same point as the noble Earl and the noble
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Lord opposite, but I think I am. It seems to me that so far as concerns the noble Lord, Lord Belstead, and myself, we are talking at cross-purposes. Certainly private consultants are in business, if they are successful, because they are well informed about agricultural policy, agricultural economics, and so on. However, they would not on the whole claim to be necessarily well informed about, for example, wildlife conservation.
The noble Lord himself spoke earlier about the training courses that have been organised by bodies such as the Nature Conservancy Council and the Countryside Commission that advisers have attended. At least, those bodies have been involved in such training programmes. I am not aware that any training of that kind has been provided for private consultants. They may know plenty about agricultural policy, but given that the Ministry and its advisers will have to balance that with wildlife, amenities, and so on, private consultants should be encouraged to do the same. That will mean them approaching new sources of information. It may be that one of the things that is required is to inform them where they can obtain such information and what priorities they need to consider.
Lord Buxton of Alsa: One last word. I agree with my noble friend the Minister that consultants probably are fairly well informed; but I have in mind also the increasing number of representatives, especially manufacturers' sales representatives, and so on. I am extremely grateful to my noble friend for his offer to think about the amendment. In view of that generous response, which was certainly well worth waiting the entire day for, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clauses 2 and 3 agreed to.
Clause 4 [Constitution and functions of Home-Grown Cereals Authority]:
9.45 p.m.
Lord Melchett Lord Melchett moved Amendment No. 19:
Page 3, line 13, at end insert—
("( ) After subection (1) of that section there shall be inserted the following subsection—
"(1A) It shall be the duty of the Authority, in carrying out its function to promote the production of cereals, to inform growers of home-grown cereals of the need to keep public rights of way free from obstruction by such crops".").
The noble Lord said: In this amendment I suggest that one of the duties of the Home-Grown Cereals Authority should be, as well as its agricultural functions—the promotion and the production of cereals, and so on—the need to take some account of access to the countryside and, in particular, keeping rights of way free from obstruction.
I have said previously at the beginning of my introduction to an amendment (and I hope I may say again, without having to repeat it later) that I do not intend to press the amendment. It is not an amendment that should be included in the Bill. I move it simply as a probing amendment in order to seek a clearer picture in my mind, and in the minds of those outside the Committee who are interested, about the

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way the Government see the new duties that are placed on the Ministry of Agriculture in Clause 12 operating in practice.
I have taken as a specific example the problem of access to the countryside. It is a problem which is increasing rapidly year by year. I have taken a Ministry of Agriculture appointed authority to see whether the new duty is going to help in this specific instance. The problem is that rights of way in the countryside increasingly cross arable fields. This is for two reasons. It is partly because of the removal of field boundaries so that public rights of way that once followed a field boundary now cross the middle of a larger field, and partly because increasingly permanent pasture is being ploughed up and converted to arable cropping so that paths that used to cross permanent pasture or go round the edge of it now go across or through arable fields.
Most of those arable fields are producing cereals or oil-seed rape which, as I understand the Bill, is now included in the definition of cereals. Oil-seed rape is also one of those crops which causes severe obstructions on footpaths. Indeed, it is so severe that the Ramblers' Association has successfully prosecuted at least one farmer in recent months because of the obstruction caused to footpaths by that crop. When that crop falls across a footpath or is planted along the line of a footpath it is more or less impenetrable when it has grown.
I hope that the new duties placed on the Minister by Clause 12 will mean that the Ministry will be looking at all aspects—for example, at the appointments it makes to bodies; and I have an amendment about that later on the Marshalled List—and at the way it expects bodies concerned with agricultural policy and agricultural functions to operate. In all those cases those bodies must bear in mind the new duties which are placed on the Minister and help to implement them in their particular sphere of influence. I beg to move.
Lord Belstead: The Home-Grown Cereals Authority's functions are concerned with improving the production and marketing of home-grown cereals and not promoting the production of cereals. I do not think that it should be part of the authority's role to remind cereal growers of their on-farm responsibilities. For that reason, I resist the amendment.
However, I am sympathetic to the concept behind the amendment and I should like to say in response that the Ministry and the Countryside Commission are preparing a guidance booklet and code for farmers on ploughing and rights of way. I understand that this material has been seen in draft by a wide range of relevant interested parties, including the Ramblers' Association, the National Farmers' Union and the Country Landowners' Association, and that it will be available shortly. I hope that demonstrates to the noble Lord, Lord Melchett, that I have taken his amendment seriously and that we do indeed work closely with the Countryside Commission.
Lord Melchett: On some matters, at least. I am grateful to the noble Lord for responding so positively to the amendment. We shall come later to the issue of the ploughing of footpaths and the problems associated with that. I acknowledge that the noble
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Lord's Ministry is working with other interests in order to try to reduce these problems.
I hope, nevertheless, that in accepting the new duties under Clause 12, when it becomes law, the Ministry will not simply see it (as the noble Lord has sometimes suggested in his speeches and indeed in other debates in this Chamber in recent weeks, as have Ministers in another place in the same way) as a matter of acknowledging publicly what is going on in the Ministry anyway. I really think that the public outside Parliament and outside the agricultural industry will have rather higher expectations of the noble Lord and his department than that, and will expect to see the new duties of this sort carried through into a whole range of areas in which the Ministry operates, simply so that the reconcilement of different interests can be seen to be taking place, not just in the Minister's person but in all those bodies and organisations which are available to implement the Minister's wishes or to give him advice. I hope that that message will gradually start to permeate the noble Lord's department and the many other organisations with which he has some contact and for which he has some responsibility. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Belstead Lord Belstead moved Amendment No. 20:
Page 3, line 20, leave out ("one") and insert ("two").
The noble Lord said: This amendment provides for at least two independent members of the Home-Grown Cereals Authority who would fill the offices of chairman and deputy chairman. I beg to move.
On Question, amendment agreed to.
Lord Belstead Lord Belstead moved Amendment No. 21:
Page 4, line 17, leave out ("of that subsection").
The noble Lord said: This is a drafting amendment. I beg to move.
On Question, amendment agreed to.
Clause 4, as amended, agreed to.
Clauses 5 and 6 agreed to.
Clause 7 [Constitution and levy schemes of Meat and Livestock Commission]:
Lord John-Mackie Lord John-Mackie moved Amendment No. 21A:
Page 7, line 23, leave out (" "fifteen" ") and insert (" "eleven" ").
The noble Lord said: I tabled this amendment because I have had some discussion with the Meat and Livestock Commission on the subject of increasing the size of its membership. This clause introduces a 50 per cent. increase. Quite frankly, the Minister, and in fact all of us, have been talking a lot about saving money and costs, and putting five extra members on the Meat and Livestock Commission is bound to increase the cost of running it.
I understand that some of the bodies, particularly in the meat trade, do not think that they are well enough represented on it. Frankly, though all members on boards and commissions of this kind are supposed to be independent, they may come from various interests in the trade, and it seems to me that to put the number

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up by 50 per cent. is overdoing it. It is almost like Parkinson's law: if these five people go on the commission then at some future date there is likely to be some other excuse brought forward, such as that another body of some description is not represented, yet another two or three people will be added, and before you know where you are you will have an unwieldy committee or commission.
I had an old friend—and many Members here will have known him also: the late Wilfrid Cave—who said that the ideal size of a committee was one, provided you could sack him. I think that is right. I feel that to bump up this committee by 50 per cent. is a mistake. The original request was for 11, and that is the figure that I have put in. I should like to hear the Minister's views. I feel that there must have been pressure from various interests on officials to increase the number. I think that it is a mistake. I beg to move.
Lord Belstead: I welcome the opportunity to explain the reasons for seeking to increase the maximum membership of the MLC to 15. As the noble Lord knows, membership is limited to a maximum of 10 at the moment. Of these, Ministers appoint three as independents and seven on the basis of industry nominations. Broadly speaking, three commissioners represent the livestock production sector; two the slaughtering, wholesaling and manufacturing sector; and two the retail sector. Last year, a group of key industry organisations from all three sectors proposed that membership should be increased to 11 so that the direct levy payers—producers and slaughterers—could each be represented by three commissioners. Clause 7 was drafted accordingly.
At the same time, discussions were taking place on a proposal whereby organisations would be grouped into three sectoral panels to submit joint lists of nominations for appointment to the commission and to provide a forum for communication between commissioners and the industry. In the course of these discussions, it was suggested that the task of appointing a balanced membership would be facilitated if the MLC were enlarged further.
The NFU and the key meat trade organisations, together representing the direct levy payers, agreed that producers and slaughterers/wholesalers should each be represented by four commissioners. If the number of retail and independent members remained unchanged, this would imply a total membership of 13. However, this formula would not provide flexibility to appoint additional members in the light of nominations actually received or of future changes in the MLC's role and funding. We therefore consulted organisations on the possibility of increasing maximum membership to 15, on the understanding that within this number the agreed balance between producers and slaughterers/wholesalers would be preserved.
Consultations revealed no major objection to the proposed increase to 15 and the necessary amendment was accordingly made in the other place. That is the story about how it happened. The additional two places, which brings the number to 15, will, I hope, mean that we shall have no further pressure for an increase in size. As I understand it, 15 is acceptable to the interests concerned.
Lord John-Mackie: The Minister confirms what I said. No sooner does one give way to one then one has to give way to two more and then yet another two to make the number 15. The Minister sees no reason why the figure should be further increased. I have my doubts. However, he has given an explanation, and although I am not satisfied, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 [Constitution and levy schemes of Meat and Livestock Commission]:
10 p.m.
Lord Belstead Lord Belstead moved Amendment No. 22:
Page 7, line 36, leave out ("and").
The noble Lord said: I beg to move Amendment No. 22, and with the Committee's agreement I shall speak also to Amendment No. 23. Under existing legislation, the MLC fixes the actual rate of levy payable in respect of each species of livestock, up to maximum rates laid down in a levy scheme. Levy schemes are subject to affirmative resolutions of both Houses. The levy is then paid on a broadly 50/50 basis by livestock producers and slaughterers.
Clause 7 gives the MLC scope to specify different elements within the levy for different purposes. This is required because producers have expressed a wish to increase funding for theme and species meat promotion, while slaughterers do not wish to make the parallel contributions which present arrangements would require. Clause 7 goes on to provide scope for a levy scheme to require different sectors to pay different proportions of the combined levy and the different elements within it. Thus it is likely that producers will, at least initially, pay 100 per cent. of the new funds for theme and species meat promotion, while continuing to pay 50 per cent. of the bulk of the levy. There may in due course be separate arrangements for other items of funding, such as research and development.
Decisions on all this will be taken by the MLC after full consultation with the industry. The arrangements will then be kept under the review, and it is quite possible that the MLC will in due course wish to vary the proportions of particular elements of the levy payable by different sectors. For example, slaughterers may offer to contribute some part of the funds for theme and species promotion. As things stand, that would require a new or amending levy scheme involving a round of statutory consultations by the MLC, detailed consideration by Ministers and affirmative resolutions of both Houses.
Just as the MLC has discretion to fix actual levy rates within maxima laid down in a levy scheme, it seems to us that it should have some freedom to change the proportions payable by different sectors within limits set out in the levy scheme, and that is what the amendment is designed to achieve.
I stress that the amendment is worded to ensure that maximum and minimum proportions which the MLC can specify are set out explicitly in the levy scheme. In that way they will be subjected to the closest scrutiny by the industry, Ministers and Parliament before being given effect to. That is important as a safeguard for the MLC's levy payments. I beg to move.
Lord Gallacher: We do not oppose the proposal, but the noble Lord the Minister will recall that earlier this evening I said that levies would be one way of financing the supplementary cash requirement which the Government now need for ADAS. I am glad that safeguards are being built in. I hope that the scheme will work as smoothly as it sounded when the noble Lord outlined it.
I hope also that those who seek not to contribute much by way of levies will not be rewarded for their exemption by being given a place on the commission, because that would seem odd. I hope that with a commission of 15 and a modified -system of levy arrangements the peace will be maintained at the MLC, because from my limited knowledge of the industry I should say it is not the easiest industry in which to maintain peace. On that basis, we shall not oppose the proposition.
On Question, amendment agreed to.
Lord Belstead Lord Belstead moved Amendment No. 23:
Page 7, line 44, at end insert—
("(d) in subsection (6) (provision in levy schemes for persons on whom levy imposed to recover all or a specified part of sums paid by them from others) the words "all or a specified part of" shall be omitted; and
(e) after that subsection there shall be inserted—
"(6A) Where a levy scheme makes such provision as is mentioned in subsection (6) above it shall—

(a) authorise the Commission from time to time to determine the proportion of the sums paid under the levy scheme which shall be recoverable;

(b) specify whether the Commission may determine that the whole of those sums shall be recoverable and, if not, the maximum proportion of them which they may determine shall be recoverable; and

(c) specify whether the Commission may determine that none of those sums shall be recoverable and, if not, the minimum proportion of them which they may determine shall be recoverable.".").

On Question, amendment agreed to.
Clause 7, as amended, agreed to.
Clauses 8 to 10 agreed to.
Lord Airedale Lord Airedale moved Amendment No. 24:
After Clause 10, insert the following new clause:
("Consolidation of agricultural marketing schemes. 1958 c. 47.
. After paragraph 5 of Schedule I to the Agricultural Marketing Act 1958 (amendment and revocation of agricultural marketing schemes) there shall be inserted—
"5A.—(1) Where the Minister considers it appropriate to do so he may—

(a) prepare a consolidation of any scheme as it has effect with amendments ("the amended scheme"); and

(b) by order revoke the amended scheme and approve the consolidated scheme.

(2) An order made by virtue of this paragraph—

(a) shall state that it is made only for the purposes of consolidation; and

(b) may contain such transitional and consequential provision as the Minister considers necessary or expedient.".").

The noble Lord said: Perhaps I may mention also Amendment No. 76, which is consequential upon this amendment. The Joint Committee on Statutory Instruments, on which I have the honour to serve, ever mindful that every person is presumed to know the
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law, does its best to ensure that the law is presented in such a way that it is accessible and intelligible to the reader. That gives the committee great concern over the milk marketing scheme of 1933, which after half a century is still in force having been amended goodness knows how many times. It has been amended out of all recognition. The paragraphs have been renumbered and the cross-references are extremely difficult to follow. Consolidation is urgently required.
I believe that the ministry entirely agrees with all that, but it points out that a marketing scheme is not like an order or a regulation which is entirely under the Minister's control and includes power to consolidate; a marketing scheme emanates from the board which administers it and the producers, and it is laid before the Minister for his approval.
I believe that the ministry is hesitant about proceeding to consolidate a marketing scheme in the absence of a specific clause in legislation enabling it to undertake the work. The proposed new clause gives that enabling power which I believe the ministry seeks. I hope that it commends itself to the Committee and to the noble Lord the Minister and that it will be accepted. That will enable the ministry to proceed with consolidation of marketing schemes wherever that is desirable. I beg to move.
Lord Belstead: On behalf of the Government, I most certainly support the noble Lord's amendment. The noble Lord acquainted me with it on Peterborough Station last week. It sounds even better in your Lordships' Committee than it sounded then. I have great pleasure in supporting it.
On Question, amendment agreed to.
Lord Sandford Lord Sandford moved Amendment No. 25:
After Clause 10, insert the following new clause:
("Entry to food premises of trainees.
. In subsection (3) of section 87 of the Food Act 1984 (which permits an authorised officer of a council entering premises to take with him other persons) after the words "such other persons as may be necessary" there shall be inserted the words:—
"or a person who is receiving instruction in the performance of any of the functions of the Council under this Act".").
The noble Lord said: The problem that this amendment is designed to give us an opportunity to discuss concerns the inspection of poultry food, before and after birds are slaughtered. My noble friend on the Front Bench is, I believe, aware of the problem. If the Committee wishes to be made fully aware of the problem, I have about three pages of foolscap here on which I could dilate. I judge that the Committee prefers me to address my remarks chiefly to my noble friend and not to enter into all the details of the background.
Briefly, the situation is that an EC directive of some years ago requires poultry food, before it is exported to other member countries of the Community, to be thoroughly inspected. That, in turn, requires more poultry meat inspectors. The district councils, whose president I am, have the job of conducting those inspections. In order to increase the number of inspectors to the figure required to do a conscientious and thorough job, more have to be trained. They can only complete their training if they are able to enter places where poultry is being processed, slaughtered

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and prepared for the market. This cannot be done without the support and co-operation of the poultry processors, who are members of the British Poultry Federation. Those members do not like the directive. They do not like the scale of inspection. Most of all, they do not like being charged with the cost of it all. At the moment, co-operation is not forthcoming.
There are two solutions, neither of them very good. One is a statutory provision of the kind incorporated in my amendment. The Minister will say that the matter is not appropriate to this legislation, or he will say that it must await revision of the Food Act. But long before revision of the Food Act is forthcoming we shall reach a situation where there are not enough inspectors to do the job. The producers who wish to export poultry will find themselves being deprived of the health mark that is necessary because inspections are not being carried out adequately or thoroughly enough. Neither of those is a satisfactory solution. It would be useful to hear from my noble friend what better solution he has to the impasse that exists. I beg to move.
Lord Belstead: I agree with my noble friend that there is something of an impasse. My understanding is that poultry slaughterhouses are able to refuse access to plants to trainee poultry meat inspectors for practical instruction which Community legislation requires before qualification. This has led to a very unsatisfactory state of affairs.
For our part we would wish to continue discussions with local authority associations and the industry in order to seek appropriate solutions. It is in this context that the Government have considered the amendment of my noble friend and in our view what are needed are discussions between representatives of local authorities, the industry, and Government with the aim of achieving a speedy consensus of those issues of concern. For their part the Government are eager to make progress. We very much hope that local authorities in the industry will share our readiness.
I have replied in this way because I would be concerned—and I am sure that my noble friend would be concerned—about putting through an amendment dealing with powers of entry about which there are always implications and on which it is always normal to consult the interests affected.
In addition to that, it is possible, as my noble friend suggested, that the Food Act, which is being reviewed at the present time, could provide a way of proceeding. Nonetheless, that is not the offer that I have given to my noble friend. My suggestion is that we should get down to discussions. I hope that my noble friend will agree.
Lord Sandford: Yes, I certainly would. I should like to suggest that it would be appropriate for the Committee at this stage to agree to that. However, I think that Parliament ought not to let the Report stage go by without having rather more assurances than my noble friend has given so far that these discussions will be fruitful. I should have thought that it is certainly not in the interests of the British Poultry Federation to withhold its co-operation for this training to the point where its members begin to lose the health mark,
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because that is what will happen if nothing is done. Having received an undertaking on this point at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Swinton: I think that your Lordships have had a number of late nights this week. We have made some very good progress on this Bill. Perhaps I may move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at thirteen minutes past ten o'clock.

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