Sitting of 17 March 1986

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

    London Docklands Light Railway
    Mr. Spearingasked the Secretary of State for Transport if he will make a statement concerning the current state of discussions on applications concerning the London docklands light railway and its proposed extension.
    The Secretary of State for Transport (Mr. Nicholas Ridley): I have nothing further to add to what my hon. Friend the Minister of State told the House during the debate on the Second Reading of the London Docklands Railway (City Extension) Bill on 6 March, at columns 532–35.
    Mr. Spearing: Does the Secretary of State recall that his hon. Friend told the House that public money would support the City extension of the docklands light railway, and that instead of requiring it to be privately run it would, if constructed, be run by London Regional Transport? Has the sum that will go towards this extension been agreed, and, whatever the amount, will it not mean a subsidy to the developers of Canary wharf?
    Mr. Ridley: The negotiations are not yet complete and, therefore, I cannot tell the hon. Gentleman the outcome. However, there are two elements to the cost of the
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    westward extension to the Bank—the capital cost and the profit or loss of operating the railway in the public sector. I confirm that it will be operated in the public sector.
    Mr. Mikardo: Is the Docklands Light Railway Company taking any steps to ascertain views on its proposals from the people in the area in which the railway will operate? If not, will he suggest that it would be in the company's best interests to seek to meet representatives of the organisations that represent those people?
    Mr. Ridley: I do not know what the body is to which the hon. Gentleman refers. The procurer of the initial railway is the London Docklands Development Corporation. The transport users' consultative committee arrangements will also apply when the railway comes into operation.

    Transport Act 1985
    Mr. James Hamiltonasked the Secretary of State for Transport how he intends to monitor the effect on public transport services of full operation of the Transport Act 1985.
    Mr. Ridley: My Department's Transport and Road Research Laboratory has established a programme for monitoring the effects of the Act with the help of various consultants. The results will be made public from time to time.
    Mr. Hamilton: Is the right hon. Gentleman aware that many people, particularly the elderly, are concerned that when deregulation takes place there will be no late-night or weekend buses? Has he discovered whether, when he has monitored the situation, that is so?
    Mr. Ridley: The hon. Gentleman will be extremely pleased to know that, according to my information, on the day when registrations closed about 15,000 bus services were registered. If they do not include late-night or weekend services, the county council in the area affected has the right and the duty to go out to tender to obtain extra services on contract. That is what the public assistance to county council expenditure is for. I am sure that the hon.

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    Gentleman will join me in welcoming the fact that 15,000 services have been registered at no cost whatever to the ratepayer or taxpayer.
    Mr. Adley: Has my right hon. Friend noticed that since the liberalisation of coach services his Department has been forced to put governors on coaches because of excessive speeds on motorways? Is he further aware that the Metropolitan police are extremely worried and aggravagated about the result that my right hon. Friend's coach policy has had on the routes that coaches use in London, and also on parking? In particular, will he review the impact of his policy on the behaviour of coach operators?
    Mr. Ridley: I cannot accept any connection between the deregulation of long-distance coach services and the behaviour of individual drivers on the road. In some cases it is deplorable, but in many cases coach drivers are extremely good. If the coaching industry is prospering and expanding and needs more access to the capital, my hon. Friend will join me in welcoming that, because it produces extra, cheap and efficient services for customers, which is what transport is all about.
    Mr. James Lamond: Is the Minister aware that some of the predictions in Committee on the Transport Bill, as it was, are already coming to fruition? Is he aware that there are thousands of redundancies among transport workers, that many small villages are to be left without bus services, that fares are already forecast to increase and, all in all, that this is the biggest fiasco over which even he has presided?
    Mr. Ridley: I agree with the hon. Gentleman that many of the forecasts made are coming to fruition. The first is the 15,000 registered services without subsidy. The second is the extraordinarily successful effect of minibus introduction, which has been a direct consequence of the Bill, and which in Exeter now has three times the patronage that it had before the Bill, is providing hundreds of extra jobs for drivers, and is running at a profit instead of a loss. I do not know what the hon. Gentleman is complaining about.
    Mr. Brandon-Bravo: Is the Minister aware that some councils and councillors have a vested interest in ensuring that deregulation does not work, irrespective of the damage that they may do to their undertakings or to the people whom they are supposed to serve? Will the monitoring process recognise that grave danger?
    Mr. Ridley: Yes. I take my hon. Friend's point, which is perfectly correct. The monitoring process will not only have a computerised data base of all bus service registrations, but will include detailed studies of selected areas and case studies of particular developments. We shall watch it carefully.
    Mr. Robert Hughes: Is there not already evidence to show that the number of services registered is far below even the most pessimistic forecasts, and are in some cases as low as 20 per cent.? Does the Minister recall his statement to the Bus and Coach Council that operators are now free to operate without the constraints of a social conscience? Does that not mean that the policy will reduce vast swathes of the country to nothing more than open prisons?
    Mr. Ridley: No, Sir. Whereas the National Bus Company expected about 70 per cent. of existing routes
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    to be registered, the figure is more likely to be 80 per cent. I am sure that the hon. Gentleman will cheer at another piece of good news. It is a major benefit that the responsibility for providing socially necessary and desirable routes on social and political grounds is now firmly and properly where it should be— with local authorities, not the NBC.

    Transport Act 1985
    Mr. Bob Edwardsasked the Secretary of State for Transport what discussions he has had with passenger transport executive staff concerning transitional arrangements following from abolition of the metropolitan counties and implementation of the Transport Act 1985.
    Mr. Easthamasked the Secretary of State for Transport if he is satisfied with transitional arrangements for public transport in the metropolitan counties.
    The Minister of State, Department of Transport (Mr. David Mitchell): I have on a number of occasions during the past few months met representatives of the new PTAs and their PTEs to discuss various aspects of public transport in the metropolitan counties, including the transitional arrangements consequent upon the Local Government Act 1985 and the Transport Act 1985. These arrangements seem to be reasonable.
    Mr. Edwards: Is the Minister aware that the trade unions concerned do not think that the arrangements are reasonable? They are afraid that national agreements are being srcapped which will lead to absolute starvation competition among the workers in the transport industry.
    Mr. Mitchell: I can tell the hon. Gentleman that £3 million has been allocated for the west midlands for this purpose. We shall consider applications for borrowing consent, should that prove to be insufficient.
    Mr. Eastham: Is it not a fact that none of the local transport authorities believe that the Government are improving the services, and that every authority is predicting chaos on public transport? Are not local authorities saying constantly that they are now underfunded and, consequently, are introducing massive fare increases and massive redundancies?
    Mr. Mitchell: For the Greater Manchester area, about £83 million is available. That should enable the purchase of a substantial number of additional services over and above those registered. The hon. Gentleman and other Labour Members representing metropolitan county areas have known since last summer that if they persuaded the PTAs to start gradually increasing fares, more bus workers jobs would be saved. They have failed to do that, and they have failed the busmen.
    Sir Peter Emery: Will my hon. Friend look carefully at the strange arrangements that have been made by the GLC, particularly the institution of a large number of bus lanes and large islands in the centre of the road, which seem intended to do only one thing—bring traffic to a standstill?
    Mr. Mitchell: I note what my hon. Friend has said, but his point is somewhat outside the question.
    Mr. Parris: In the past, have metropolitan authorities been getting more, or less, than their fair share of the total amount of subsidy?
    Mr. Mitchell: My hon. Friend has put his finger on a good way of measuring the appropriate support. Expenditure per person of the county population on bus subsidy is £2 in Oxfordshire, £3 in Warwickshire, £23 in West Yorkshire, £30 in Greater Manchester, £53 in Merseyside and £60 in South Yorkshire.
    Mr. Snape: They keep voting for it.
    Mr. Mitchell: In other words, the expenditure in the metropolitan counties has been grossly extravagant compared with expenditure in the rest of the country.
    Mr. Snape: They vote for it.
    Mr. Mitchell: The hon. Member for West Bromwich, East (Mr. Snape), who keeps interrupting from a sedentary position, should know that, unfortunately, there is no direct co-relationship between the ratepayers and the voters.
    Mr. Madden: Will the Minister of State accept that when he comes to Bradford on Wednesday he will find a large number of people who want to maintain a good bus service in West Yorkshire, who are disgusted at the proportion of services that will be cut, and are dismayed that up to 800 bus staff will be made redundant? Will he put his arguments to the ratepayers and electors of Bradford, who want to keep the best possible transport services and do not want to see the Government kill them all?
    Mr. Mitchell: Perhaps the hon. Member also wishes me to tell the people of Bradford that the high level of rates is part of the reason for the high level of unemployment. The people of Bradford are as anxious as those in other parts of the country to serve in the increasing job opportunities being created by this Government.
    Mr. Stott: The Secretary of State, as well as the Minister of State, have made much of the figure of 15,000 services being registered. Would the Minister not have done a greater service to the House of Commons had he been more honest and expressed that figure as a percentage? Is he aware that I am advised that in Greater Manchester, only 40 per cent. of the services have been registered as profitable, leaving 60 per cent. of the routes currently being run as unprofitable? Will not those groups have to be subsidised by the ratepayers or the taxpayers? Do the Secretary of State and the Minister of State not know full well that the money allocated to the metropolitan authorities falls far below the level required to maintain those services? If the Minister is not aware of that, he should have been with me in Saddleworth last Thursday night, when I spoke in the constituency of the hon. Member for Littleborough and Saddleworth (Mr. Dickens), where not one route has been registered as profitable? If he cannot tell me, will he tell his hon. Friend whether those buses will still be running after October?
    Mr. Mitchell: I can give the hon. Gentleman the information for which he asks, and I hope that he will be pleased when he hears it. Between two thirds and three quarters of the routes being run now have been registered. In addition, I can tell him that although in Greater Manchester a smaller proportion of routes are registered, a much larger allocation of finance is available—about £83 million. One could buy many bus routes with £83 million.
    Mr. Dickens: As my constituency has been mentioned, is my hon. Friend surprised to learn that the people of Littleborough and Saddleworth have been grumbling for many years about their deplorable bus services? We hope that the plans laid before Parliament will give those people the excellent service for which they have hoped for many years.
    Mr. Mitchell: In recent years there has been a chronic decline in bus services throughout the country. We have every reason to believe that the changes that we have introduced will stem that decline and, in many places, lead to additional services.

    British Rail
    Mr. Maclennanasked the Secretary of State for Transport when he last met the chairman of British Rail, and what subjects were discussed.
    Mr. Ridley: I last met the chairman on 17 February and discussed a wide range of matters of current interest.
    Mr. Maclennan: What resources may be made available from the Department of Transport to the chairman and the board to carry out their policy of improving the track between Wick, Thurso and Inverness by bridging the Dornoch firth and laying a new railway line?
    Mr. Ridley: Investment in track, bridges, or any other material is entirely a matter for the board to consider. It puts forward plans, and we always approve them if they are viable. We have received no investment application in relation to the Dornoch firth bridge.
    Mr. Fry: When my right hon. Friend sees Sir Robert Reid, will he tell him that the recent statement by the management at Leicester that British Rail does not want so many commuters from Wellingborough and Kettering and that they will price them away is hardly a marketing policy to be commended, nor should it be expected of British Rail?
    Mr. Ridley: My hon. Friend will agree that that is a matter for the management of British Rail, which must be responsible for what its managers say. I am sure that he will take the matter up with the chairman.
    Mr. Anderson: When the Minister meets the chairman, will he make clear his views about the swathe of redundancies on the freight side in south Wales, from the constituency of my hon. Friend the Member for Newport, East (Mr. Hughes) and the Severn tunnel junction in the east through to Llanelli in the west, both of which will be closed, which will have a considerable effect on job losses in the Principality, and on the environment, because of the increased lorry movements? Does he recognise that this is due principally to the Government's policy of destroying the manufacturing base of south Wales and imposing an impossible freight target on British Rail?
    Mr. Ridley: The hon. Gentleman knows that that is a matter for the management of British Rail. It has agreed the present PSO target and the target for freight, and it must decide how to implement that policy. The hon. Gentleman should take the matter up with British Rail.
    Mr. Robert Atkins: When he next meets the chairman of British Rail, will my right hon. Friend tell him that my

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    constituents and I are fed up with the west coast intercity line being the Cinderella of British Rail, in that it has no 125s or advanced passenger trains, punctuality is no more than a joke, and the information given to passengers before and during travelling on the line is inadequate? Will he tell him that there must be some changes, because I am fed up with receiving letters from my constituents, who express rightful concern about the quality of the service?
    Mr. Ridley: I am sure that the chairman will read Hansard and see the comments of my hon. Friend and other hon. Members. However, I must repeat that these are matters for British Rail. The House would not expect me to be permanently employed conveying messages from hon. Members to the chairman of British Rail.
    Mr. Snape: When the Secretary of State next meets the chairman of British Rail, will he discuss punctuality with him? Does he agree with the secretary of the Central Transport Consultative Committee that many routes are causing serious concern and that the CTCC is strongly urging British Rail to improve standards? Does it give him any cause for comfort to know that 48 per cent. of eastern region trains and 34 per cent. of trains on southern region ran late last year? Does he think that Sir Robert Reid is making a pretty rotten job of running British Rail, and if the Secretary of State considers that he could do better, has he thought of applying for the job himself?
    Mr. Ridley: I must repudiate the hon. Gentleman's last suggestion. I believe that Sir Robert Reid is extremely good at running British Rail. I do not think that I would be at all good at it. Equally, Sir Robert Reid would not be quite so good at running my Department. As for the first part of the hon. Gentleman's question, the level of standards expected of British Rail, including punctuality, is laid down in the objectives which I gave to the chairman two and a half years ago. It is up to the management of British Rail to achieve those standards.

    London (Lorry Ban)
    Mr. Chapmanasked the Secretary of State for Transport if he will make a statement on his assessment of the effect of the Greater London council lorry ban which came into operation on 31 January.
    The Parliamentary Under-Secretary of State for Transport (Mr. Peter Bottomley): I am not aware of any beneficial effects so far for Londoners in return for the considerable sums the exercise has cost.
    Mr. Chapman: Will my hon. Friend tell the House how much this pointless exercise has cost London ratepayers? Does he agree that the best possible way to keep unnecessary lorry loads off the streets of London has been the construction and will be the completion of the M25 orbital motorway?
    Mr. Bottomley: Yes, Sir. The M25 has reduced lorry mileage in London by over 20 per cent. and it has reduced the number of lorries on some major roads by 40 per cent. The lorry ban exercise has included 2,000 signs, 20,000 permits and 200,000 pages of application forms. It will probably cost £250,000 a year to run and the probable capital cost will be £2 million. It seems to me that that is not very good value for money.
    Mr. Tony Banks: Is the Under-Secretary of State aware that large numbers of London residents support the
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    lorry ban and want it to be enforced, and that the reason why it is not working as effectively as it should is that the Metropolitan police refuse to enforce it? Will he have a word with his right hon. Friend the Secretary of State for the Home Department and get the law enforced, or is the Under-Secretary of State prepared to enforce only the pieces of law with which he agrees, not those with which he disagrees?
    Mr. Bottomley: May I say to the honourable chairman of the Greater London council that if a little boy saw the honourable chairman in his clothes and pointed out that he was wearing none, the hon. Gentleman might be covered with embarrassment, despite his finery. I am unaware of any of the applications for exemption being turned down, so it is very difficult to see that the lorry ban is having any effect.
    Mr. Stanbrook: Do the Government have any reason to believe that there is a demand for lorries to enter London unnecessarily?
    Mr. Bottomley: My hon. Friend is absolutely right. Neither lorry users nor local residents want lorries to be where they are not needed. The plain truth is that lorries do not go through London when it is unnecessary. That is where the M25 has helped. It is also worth noting that 250 width and weight restrictions are in force in London and that they are not so controversial as this apparent lorry ban.
    Mr. Greenway: Is my hon. Friend the Minister aware that the Greater London council is said to have appointed 50,000 snoops to watch the police to see that they are doing their job? Would it not be better if the GLC were looking after residents whose homes are damaged by vibration and noise from heavy lorries than interfering with the course of law?
    Mr. Bottomley: It would be sensible for people to spend a little more time looking at what the Government are trying to do to develop quieter lorries, to support sensible local lorry bans and to try to ensure that effort is put into worthwhile projects rather than into things which apparently have no beneficial effect.

    London Assessment Studies
    Mr. Cartwrightasked the Secretary of State for Transport when he expects to publish the consultants' reports on the four London assessment studies.
    Mr. Peter Bottomley: Later this year.
    Mr. Cartwright: Is the Minister satisfied with the fact that it has already taken more than 18 months to produce an initial report merely identifying problems in four of London's main traffic corridors? In view of the doubt and uncertainty that those studies inevitably create in the areas concerned, how much longer will we have to wait before we see, not the problems, but the solutions to those problems being put forward?
    Mr. Bottomley: The hon. Gentleman will accept that one of the reasons for the extended period for the first stage is public consultation. People want to be involved and to give their views. The second problem is that the GLC was not co-operative in sharing opportunities for gaining information.
    Mr. Dubs: Is not the truth that the proposed trunk roads and other schemes in London are enormously unpopular

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    and that the Minister is worried lest news gets out before the local elections, because that will have a cataclysmic effect on the prospects of Tories standing on 8 May?
    Mr. Bottomley: That sort of scaremongering comes ill from the hon. Gentleman, although we might have expected it from some of his hon. Friends. The plain truth is that anyone who lives in or represents south London is aware of the massive traffic problems and how residents are having to cope with through traffic. We are not proposing new trunk roads in those areas, but we are trying to look at the problems and come forward with solutions. I suggest that the hon. Gentleman has a word with me and the hon. Member for Woolwich (Mr. Cartwright) afterwards.

    British Airways
    Mr. McCrindleasked the Secretary of State for Transport if he will make a statement on progress towards the privatisation of British Airways.
    Mr. Ridley: I refer my hon. Friend to the answer I gave to my hon. Friend the Member for the hon. Member for Keighley (Mr. Waller) on 12 March.
    Mr. McCrindle: Now that privatisation has been postponed, and without prejudice to the current talk of a management buy-out, will my right hon. Friend be able to reassure me that the other principal plank of the Government's aviation policy— the cultivation and encouragement of competition among British airlines on the appropriate routes— is not equally likely to be postponed? Has he any new initiatives to announce in that respect this afternoon?
    Mr. Ridley: My hon. Friend knows that the policy on competition was settled in the White Paper "Airline Competition Policy", Cmnd. 9366, in October 1984, which was endorsed by the House. I assure him that we will continually watch opportunities for increasing competition in the airline industry, but I have no plans for reopening the whole matter again.
    Mr. Carter-Jones: Will the Secretary of State give a firm assurance to British Airways, whether publicly or privately owned, that neither he nor any member of his Government will prevent British Airways from ordering and purchasing from now until 1995 the appropriate aircraft to keep it in the lead?
    Mr. Ridley: Yes, Sir.
    Mr. Dicks: When will my right hon. Friend look to the wellbeing of British Airways, as he always does for the British Airports Authority? Will he consider positively the proposed management-staff buy-out by British Airways?
    Mr. Ridley: I am grateful to my hon. Friend. The mystery about the alleged management buy-out proposal is that nobody seems to know who suggested the idea. The chairman of British Airways has written to my right hon. Friend the Prime Minister and in that letter, which is now in the public domain, to coin a phrase, one paragraph says:
    "We would prefer this"—
    the privatisation—
    "to be accomplished by means of a public flotation and will pursue such intention with much vigour while continuing to work closely with Nicholas Ridley and his Department. Furthermore, we support HMG' s efforts to achieve a successful outcome in the current negotiations with the United States Government over the capacity annex to the Bermuda II agreement."
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    I am not quite clear what all the row was about.
    Mr. Foulkes: Is the Secretary of State aware that we are grateful to the hon. Member for Harlow (Mr. Hayes) for revealing that Lord King of Wartnaby invited 140 Tory Members of Parliament to a gargantuan beanfeast in the Savoy? Does the right hon. Gentleman think that that is a good way of spending public money? Will he find out what that was all about, and will he do something about it?
    Mr. Ridley: I am sure that the time will come when the board of British Airways will wish to entertain Labour Members. Now that we have reached a position where all the pressure in the House and in the media is to criticise the Government for not proceeding more speedily with the privatisation of British Airways, the hon. Gentleman might find a way of getting himself a hot, free lunch.
    Mr. Gerald Howarth: Does my right hon. Friend agree that it is not the purpose of privatisation to give the investor a risk-free investment? Does he not further agree that privatised concerns such as British Aerospace, BP—not to mention the British Airports Authority— are, indeed, subject to the whim of the Government? Moreover, many of us regard it as unacceptable that the flotation of British Airways should be delayed because of an inability to write a prospectus.
    Mr. Ridley: I am sure that my hon. Friend knows enough about the subject to recognise that the writing of a prospectus places a heavy and important legal responsibility on the vendor and the board to ensure that it contains entirely accurate information about the future, upon which investment decisions can be based. That applies to any company. I regret to say that at present the difficulties involved in doing that are too great. However, I hope that the time will very soon come when we are able to do it.
    Mr. Robert Hughes: Although we understand the Secretary of State's embarrassment in not coming to the House last week to tell us that, yet again, he had had to postpone BA's flotation, can he be a bit more forthcoming now? Will he tell us plainly that BA's privatisation will be abandoned and that he will have urgent discussions— I gather there will be an opportunity later this afternoon— with Lord King about the development programme and the replacement of BA's fleet? In particular, will the right hon. Gentleman make it clear to Lord King that the privatisation of the helicopter division of British Airways should cease forthwith?
    Mr. Ridley: I must correct the hon. Gentleman. I have not postponed BA's privatisation. The position before last week was that we hoped that it would be possible to privatise it during the coming financial year. That is still the position. The Government never mentioned a summer date. I have already given the assurance that equipment that is needed by BA, and which passes the viability test, will be sanctioned by the Government. Moreover, I have no intention of interfering with commercial decisions that BA may or may not take on disposing of its helicopter subsidiary.
    Mr. Higgins: Does my right hon. Friend agree that the success of BA's privatisation is likely to be much greater if outstanding problems are resolved before the publication of the prospectus, rather than afterwards?
    Mr. Ridley: That is true. As we hope to involve the managers and staff of BA, together with many small investors, it is most important that the prospectus is straightforward and does not mislead them.

    Tavistock
    Sir Peter Millsasked the Secretary of State for Transport what consideration his Department is giving to traffic levels in Tavistock; and what plans he has for a bypass of the town.
    Mr. Peter Bottomley: Traffic arrangements in Tavistock are for the Devon county council. If the county council put forward proposals for a bypass, consideration would be given to their eligibility for transport supplementary grant.
    Sir Peter Mills: Will my hon. Friend bear in mind that there are growing problems on the route between Plymouth, Tavistock, Hatherleigh and the north? Given the increase in the number of heavy lorries and the container port at Plymouth, Tavistock and Hatherleigh will need proper bypasses. Will my hon. Friend accept that I do not want to have to wait 15 years, as I had to in the case of the Okehampton bypass, for those two bypasses?
    Mr. Bottomley: I appreciate my hon. Friend's point, but he will understand that we are largely in the hands of Devon county council.

    Transport Act 1985
    Mr. Campbell-Savoursasked the Secretary of State for Transport when he last met representatives of shire and metropolitan counties to discuss the impact of the Transport Act 1985.
    Mr. David Mitchell: My right hon. Friend the Secretary of State met representatives of the Association of Metropolitan Authorities on 16 January. I have met various representatives of both shire and metropolitan counties at a series of seminars organised by the Bus and Coach Council earlier this year.
    Mr. Campbell-Savours: Is it not true that deregulation, cuts in transport supplementary grant and cuts in bus grant have reduced the national demand for buses from 5,800 in 1980 to 2,400 in 1985? Is that not the real reason for the question mark over the bus plants at Lowestoft, Preston and Workington?
    Mr. Mitchell: No, Sir. The hon. Gentleman deplores the phasing out of bus grant, but it was announced by the Labour Government in 1977, and it fell to this Government to carry out that intention. Thus, the hon. Gentleman can hardly blame this Government for carrying out a decision that was announced by their Labour predecessors. The hon. Gentleman mentioned the demand for buses, but there is very substantial demand for many smaller buses. Indeed, I hope that British industry will gear itself up to manufacturing what the market requires.
    Mr. Haywood: Is the Minister aware that minibuses have started operating in Avon? Is he further aware that in my constituency the 16 and 15-seaters are immensely popular and are serving parts of my constituency which have never before had a bus service? Is that not a reflection of the competition provided by the Devon General Bus Company?
    Mr. Mitchell: I am grateful to my hon. Friend for that illustration, to which I could add many others. The Exeter experiment is well known. Not only has it increased the availability of bus services; it has increased the number of jobs for bus drivers. The scheme is so successful that the Devon General Bus Company is extending it to Torquay, where it is warmly welcomed.
    Mr. Stephen Ross: Is the Minister aware that the 15,000 registrations relate mainly to the urban routes and that in the rural areas the outlook is grim? When he discusses these matters with the shire counties, will he remember that finances are inadequate to subsidise the rural routes when the time comes in the autumn? What does he intend to do about that?
    Mr. Mitchell: In some rural areas, such as Devon, a high proportion of the routes have already been registered, so that it does not necessarily follow that there will be less registration in the rural areas. Substantial funds are available for contract services to be provided in the rural areas. One would expect the counties to use that substantial sum— nearly £100 million for the shire counties—to secure services in such areas. The people there can have the security and certainty of a contract service, and therefore feel safe.

  ATTORNEY-GENERAL

    European Community Budget
    Mr. Teddy Taylorasked the Attorney-General if he is satisfied with the preparations which have been made for the hearing of the interim application by the United Kingdom to the European Court of Justice on the expenditure by the Commission of the sums raised in the budget as passed by the European Assembly; and if he will make a statement.
    The Attorney-General (Sir Michael Havers): Yes, we expect judgment shortly.
    Mr. Taylor: Will the necessary steps be taken to prevent the Commission from spending this money in an illegal budget before the judgment is made? Will the Attorney-General consider recommending to his Government colleagues that an amendment be made to the Single European Act to prevent the European Assembly from making illegal budgets in the future?
    The Attorney-General: It was expected that the judgment in the main action would not be delivered until the early part of next year. We now hope that it will be in high summer, and therefore part of the worry expressed by my hon. Friend will be removed. I shall draw the rest of his remarks to the attention of my colleagues.
    Mr. Deakins: If we are successful in our application to the court, will we be able to reclaim, and is it our intention to reclaim, the moneys paid over which are outwith the Consolidated Fund?
    The Attorney-General: If the moneys have not been spent, we shall, of course, seek to reclaim them.
    Mr. John Morris: Is not at least £70 million at stake? Why did Britain wait from December to March before it tried to seek an interim injunction? The Government parade their belief in the rule of law, so why the delay?
    The Attorney-General: The sum is £70 million up to the end of March—the end of the financial year. We

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    have moved as fast as possible, but we have had to consider and consult our colleagues in the Community. They are all on our side in relation to the illegality of the European budget, but only we are prepared— I think properly—to take the initiative of going for an interim judgment.

    Peter Cameron Webb Syndicate
    Mr. Stephen Rossasked the Attorney-General when he anticipates charges may be laid with regard to the allegations of fraud in the management of the Peter Cameron Webb Syndicate at Lloyd's.
    The Attorney-General: The investigation coordinated by the fraud investigation group set up by the Director of Public Prosecutions for that purpose continues to be vigorously pursued. Substantial progress has been made in recent months, but it would not be right for me to discuss the present state of the evidence. Nor do I propose to speculate as to when a decision will be taken about the preferring of charges.
    Mr. Stephen Ross: Has the Attorney-General seen the Daily Mail of 10 March, which identifies Mr. Peter Dixon of the syndicate, who went off with only a cool £7 million—not £40 million that the other gentleman went off with— and who is now living in Virginia? Are we applying for an extradition order so that he can be brought back to face trial in this country?
    The Attorney-General: I hope that we shall be in a position to apply for an extradition order. I must remind the House that the United States is slow in dealing with extradition. First, we must have a case that will satisfy the judges in the United States.
    Sir Peter Emery: Will my right hon. and learned Friend bear in mind that many Conservative Members are concerned to ensure that where fraud occurs, especially against small investors, the courts should be able to act as soon as possible to bring the perpetrators to justice? Is he aware that there is great public concern about fraud?
    The Attorney-General: I share my hon. Friend's concern. There has been a marked improvement in reducing delays lately. In 1983, 25 serious frauds were committed for trial. In 1984 there were 45 committals, and there were 93 in 1985. There were 150 prosecutions started in 1985 and 55 trials were completed, 42 resulting in conviction, which my hon. Friend will know is well above the average conviction rate. A great many compliments are due to the fraud investigation group for what it is doing.
    Mr. Skinner: Does the Attorney-General recall saying to one of his hon. Friends that he found the level of City fraud unacceptable? Is he aware that Peter Dixon was issued with a writ in America a short time ago in respect of a civil action? If it is possible for the civil authorities to serve a writ on that man, who with his partner got away with £39 million according to the investigations which were carried out by Lloyd's, why is it that the Government, the fraud squad and those who act on behalf of the DPP find themselves unable to track down Peter Dixon and carry out what most people regard as British justice? If old-age pensioners can be done for taking a tin of salmon— some of them are locked up for such offences—I am sure that the British people will regard it as less than even-handed treatment when crooks in the City can get away with blue murder.
    The Attorney-General: The degree of proof and the testing of it in civil proceedings is different from that in criminal matters. I shall tell the House what is happening. The Deputy Director of Public Prosecutions is heading a squad comprising the assistant director, a professional officer, two detective superintendents and five counsel, two of them being Queen's counsel. All of them have been trained in the process of reinsurance. The difficulty is the tracing of the funds to ultimate beneficiaries. The funds have gone through several countries. Some of the witnesses have been unhelpful, and I am probably using a phrase of understatement in saying that. It is extremely difficult for us to deal with laws abroad on disclosures of confidential information. We have been having difficulties with Switzerland, which in this instance is the most important country, and where the Banque du Rhone is situated. We are doing everything possible to bring to justice those who committed these offences.
    Mr. McCrindle: Will my right hon. and learned Friend confirm that whoever or whatever is holding up the pursuit of these prosecutions, Lloyd's is not, contrary to what has often been suggested, one of the responsible parties? On the contrary, Lloyd's is prepared to continue to give every possible assistance in bringing the perpetrators of the frauds to justice.
    The Attorney-General: I can confirm that. Lloyd's is giving to the Director all the documents that are relevant, and I am extremely grateful to it. However, the difficulty in obtaining evidence from abroad and the rules of confidentiality make it very difficult to get on as fast as we would like.

    Nationalised Industries (Legal Advice)
    Mr. Eadieasked the Attorney-General if he will outline his duties in relation to the giving of legal advice to the boards of nationalised industries; and if he will make a statement.
    The Attorney-General: Nationalised industries are not part of the Crown and my duties do not include giving them legal advice. Each of them can obtain legal advice, whenever necessary, from their own legal advisers, who are independent of the Law Officers and of the Government.
    Mr. Eadie: Does the Attorney-General agree that his answer appears to be in conflict with what has been reported in the press? For example, it is well known that the National Coal Board consulted the Attorney-General's Department on whether it was in breach of the law in paying pension credits to mineworkers. We know that it was told that it was in breach of the law not to do so. Why is there secrecy? The Attorney-General's Department seems to be trying to cover up the NCB's deplorable industrial relations department. Will he do something about that? Will he stop his Department being used by the NCB in such a despicable way to deprive miners of their legitimate rights to pension credits?
    The Attorney-General: I wish that I could give the hon. Gentleman the advice that I gave, as he would no doubt be delighted. The National Coal Board received two conflicting opinions, so it asked the advice of my right hon. Friend the Secretary of State for Energy. As a result

    15
    of that, I advised my right hon. Friend the Secretary of State and, with my permission, the NCB was shown my view.
    Mr. Nicholas Brown: Is the right hon. and learned Gentleman aware that the issue goes much wider than that? Is he not dismayed that the NCB has ignored decisions of the industrial tribunal process if it does not like them, and also ignores decisions of the colliery review procedure if it does not like them? As a matter of policy, will the right hon. and learned Gentleman confirm that that is an unacceptable way for a publicly owned nationalised industry to treat the law?
    The Attorney-General: That must surely be a question for my right hon. Friend the Secretary of State and not for me.

  OVERSEAS DEVELOPMENT

    Africa (Aid)
    Mr. Beithasked the Secretary of State for Foreign and Commonwealth Affairs what response he has made to the United Nations emergency agency for Africa appeal for £460 million, in aid in the current year.
    The Minister for Overseas Development (Mr. Timothy Raison): During 1986 we shall deliver at least 68,000 tonnes of wheat or wheat equivalent to Ethiopia, Sudan and Mozambique at an approximate cost of £10·7 million, and some £12 million in other aid for relief and rehabilitation. In addition, we shall be meeting our share of the cost of European Community actions, including its substantial food aid provision.
    Mr. Beith: In view of the enhanced press interest in overseas development questions, will the Minister tell us the Government's response to the appeal from Mr. Bradford Morse, head of the United Nations development programme, for £460 million additional emergency aid this year in view of the threat to the lives of 11·5 million people in Ethiopia, Angola, Mozambique and Sudan? Has there been any special British Government response to that appeal?
    Mr. Raison: In fact, there has not been an appeal from Mr. Bradford Morse. He has published estimates of the scale of need. I think that those estimates probably include some development work as well as relief work. I assure the hon. Gentleman and the House, however, that we shall continue as we have done in the past two years to play a very full part in helping to deal with the emergency.
    Sir John Biggs-Davison: Has not Ethiopia, a major recipient of the aid, been moving population on a scale and with a savagery far exceeding anything known in South Africa? Do the Government intend to raise that matter at the United Nations?
    Mr. Raison: We have made our concern about the resettlement policy absolutely clear and we have not supported any programmes involving resettlement.
    Mr. Stuart Holland: How can the Minister be sure that money given to the Ethiopian Government or to voluntary agencies working in Ethiopia is not spent on resettlement schemes? Does he share the widespread concern of the House that the schemes are not concerned with moving
    16
    people for their own welfare and development, but are political manoeuvres to depopulate areas which are contested in law?
    Mr. Raison: We always take very great care over the destiny of the resources that we provide. I have had no reports that money provided by us has been used to further resettlement.
    Mr. Simon Hughesasked the Secretary of State for Foreign and Commonwealth Affairs whether he plans to respond further to the all-party parliamentary group report on United Kingdom aid to African agriculture.
    Mr. Raison: I answered oral questions on the report on 11 November 1985, and my noble Friend Lord Trefgarne responded fully to a debate on it in another place on 18 December. I am, of course, willing to continue to respond to letters or questions from hon. Members on the report.
    Mr. Hughes: Does the Minister accept that the lessening of development aid is one of the reasons why there is such a need for relief aid at times of famine in Africa, and that the advantage of increasing the development aid budget is that there can be the sort of sustained support for African agriculture which gives self-sufficiency through methods such as irrigation schemes, which might reflect much better on the need for voluntary contributions towards relief that we have seen over the past year? The Government were substantially criticised in the report. Will the Minister tell the House that he will do something this year to make British aid to African agriculture much less miserly?
    Mr. Raison: We all accept the importance of long-term development as a way of forestalling famine of the kind that we have seen. In fact, the proportion of our bilateral programme that has gone to aid to agriculture has increased and I have recently shown my concern for aid to agriculture by announcing one or two very important additional projects in this area.
    Mr. Moynihan: In view of the comments made in the report regarding the Equatoria region agricultural project, will my hon. Friend make a statement to the House regarding the security of the ODA project and the personnel, in view of the civil war in northern Uganda, 18 miles away, the civil war in the southern Sudan and the current isolation of the project from diesel and food supplies?
    Mr. Raison: I visited the ERAP project in January of this year. I believe that it is an extremely good project. My hon. Friend is right to say that there is a considerable problem posed to it more immediately by the difficulty of getting fuel which comes out through north Uganda. I hope that the project will continue in being, because it is one which I value, but we shall have to watch what happens carefully.
    Mr. Tom Clarke: As the main thrust of the report was to express concern about the percentage that is being spent on agriculture, and even that is not always right, does the Minister agree that the emphasis might be changed in the interests of the peasant food-producing sector?
    Mr. Raison: I largely agree with what the hon. Gentleman has said. As I said earlier, I have recently announced one or two further agricultural projects which are designed very much to help the peasant farmer.

    United Nations High Commissioner for Refugees
    Mr. Tom Coxasked the Secretary of State for Foreign and Commonwealth affairs when he last met the United Nations High Commissioner for Refugees; and what matters were discussed.
    Mr. Raison: I have not yet met the new High Commissioner, Mr. Hocké, since he took up his post. In June 1985 I met the High Commission's Director of External Affairs, Mr. Volfing. We had a wide-ranging discussion of UNHCR's activities, including its financial position. In that regard I am pleased to announce that I have just approved a further £1·05 million for UNHCR's african refugee programmes.
    Mr. Cox: I welcome that reply. However, is the Minister aware that the High Commissioner last month sent out urgent appeals for some 1 million people in Africa who are suffering from hunger and lack of proper shelter? May we have an assurance in the House that the Government and our EEC partners will give all the help they can so that we do not see the tragic problems this year that we saw so often last year in the Sudan, Somalia and Ethiopia?
    Mr. Raison: I accept the importance of what the hon. Gentleman has said. I believe that our record vis á vis UNHCR has been very good. In the current financial year we shall have spent £33 million on refugees, of which £17 million will go through UNHCR.
    Mr. Teddy Taylor: Does my right hon. Friend agree that some of the most effective work being done on a substantial scale for refugees is being done by the Government of Pakistan to assist the 3 million refugees from Afghanistan? Will the Government give every possible help to the magnificent effort of the Pakistan Government?
    Mr. Raison: I agree. I think that the Government of Pakistan have behaved with a great sense of hospitality to the refugees from Afghanistan. We have responded to the appeals for Afghan refugees with considerable generosity and continue to do so.
    Mr. Pavitt: In view of the continuing tragedy of Lebanon and the middle east, and the excellent work being done for refugees there, did the Minister, in his discussions, make any extra allocation for that part of the world, where there is constant flux and where, as a result, the administrative problem becomes even more expensive?
    Mr. Raison: The form of support for refugees in the middle east is the United Nations Relief and Works Agency, which is not covered by the United Nations High Commissioner for Refugees.

    India (Aid)
    Mr. Jannerasked the Secretary of State for Commonwealth and Foreign Affairs what plans he has for
    18
    the provision of aid to India during the years 1986, 1987 and 1988, respectively; and whether he will make a statement.
    Mr. Raison: British aid is planned on a financial year basis. In 1986–87 we plan to spend about £108 million on bilateral aid to India, and at least £11 million more from the aid and trade provision. Figures are not available for subsequent years.
    Mr. Janner: Is the Minister aware that some of us feel that that sum is totally inadequate to meet the vastness of the need and suffering in India? Now that, happily, the Indian aspect of Westland's affairs has been settled, what plans are there for discussions with the Indian Government in the immediate future regarding further needs and projects?
    Mr. Raison: I share the view of the hon. and learned Gentleman that the signature of the Westland agreement is very much to be welcomed, from the Indian point of view, and of course from the point of view of the employees of Westland in this country. However, the hon. and learned Gentleman is wrong to suggest that our aid programme to India is inadequate. It is a very large aid programme. In my view it is extremely well constructed, and I believe that the Indians much appreciate it. We discuss regularly the composition of that programme.
    Mr. Jessel: As so much of our EEC aid goes to Africa, is it not right that it should be balanced by our bilateral aid being concentrated largely on India?
    Mr. Raison: Our bilateral aid goes to Africa in large quantities as well, but, as I have just said, we have a large bilateral programme to India. I am sure that it is absolutely right that we should.

    Aid (Conservation Strategy)
    Mr. Meadowcroftasked the Secretary of State for Foreign and Commonwealth Affairs what steps he has taken to ensure that the overseas development programme is guided by the principles of the world conservation strategy.
    Mr. Raison: We have adopted principles that are in harmony with those of the world conservation strategy. They are contained in guidance notes and checklists that are issued to Overseas Development Administration staff.
    Mr. Meadowcroft: Surely the Minister accepts that soil erosion and deforestation are crucial issues, particularly in Africa. If that is so, why have the Land Resources Development Centre and the Tropical Development Research Institute been starved of resources, and why have they less manpower than before?
    Mr. Raison: Those issues are very important, but the fact is that the TDRI and the LRDC are very well equipped to carry on the outstanding work that they have been doing for several years.

Tercentenary of Bill of Rights
3.31 pm
Mr. Speaker: In 1988 we will be celebrating the tercentenary of the "Glorious— or bloodless— revolution", and the Bill of Rights. Those were the foundations from which evolved, peacefully, the system of parliamentary democracy under a constitutional monarch which we enjoy today, and which has inspired the constitutions of many other countries of the world.
Parliament itself will wish to take a lead with an appropriate celebration to mark that anniversary. The Lord Chancellor and I are therefore appointing today a small Committee of Members of both Houses to advise us on the form of those celebrations, and to oversee the arrangements to be made.
I am also happy to say that the Prime Minister, the Leader of the Opposition, and the Leaders of other parties in this House have indicated their full support for these proposals and have agreed to become patrons of the project.
The following Members have kindly agreed to serve on the advisory committee:
The right hon. Member for Cambridgeshire, South-East (Mr. Pym), as chairman, the right hon. Member for Blaenau Gwent (Mr. Foot), the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), the hon. Member for Woking (Mr. Onslow), the hon. Member for Monmouth (Sir J. Stradling Thomas), the hon. Member for Newham, South (Mr. Spearing) and the hon. Member for Staffordshire, South (Mr. Cormack).
I have asked Mr. Michael Ryle, Clerk of the Journals, to serve as the Commons secretary of the Committee.
Mr. John Stokes: On a point of order, Mr. Speaker. As a lover of our monarchy, our Parliament and our institutions, I was most interested to hear about the proposal for 1688 to be remembered and for the setting up of the Committee. Will you please make sure, when the Committee deliberates, that the Whig dogs do not get the best of it?
Mr. Speaker: I do not think that that will be a matter for me. It will be a matter for the Committee.
Mr. Eric Deakins: Further to that point of order, Mr. Speaker. May I draw your attention and that of the House to the fact that the next Parliament to be elected, which will be no later than the same year, 1988, will be the 50th Parliament of the United Kingdom and might also merit an appropriate commemoration?
Mr. Speaker: It will depend on when those celebrations will take place. Perhaps we will be able to commemorate both events.
3.33 pm
Mr. Edward Leigh: On a point of order, Mr. Speaker.
Mr. Speaker: Order. Does it arise from questions?
Mr. Leigh: I have given you notice of my point of order, Mr. Speaker. Is this an appropriate time to ask for your ruling?
Mr. Speaker: I shall take points of order after hearing applications under Standing Order No. 10.

British Airways (Privatisation)
3.34 pm
Mr. Peter Snape: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the privatisation of British Airways."
The matter is specific because, despite last week's written reply, it is understood that the chairman of British Airways is today seeing the Prime Minister to urge a management buy-out in apparent defiance of the decision of the Secretary of State for Transport.
The matter is important because these decisions should be taken by the House, not over expensive lunches at the Savoy hotel by most of the members of the 1922 Committee. It is urgent because the future of the world's largest airline is being seriously affected by the uncertainties surrounding its prospects and the open and public disagreement between its chairman and his sponsoring Minister, the Secretary of State for Transport.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration namely,
"the privatisation of British Airways."
I listened carefully to the hon. Member, but I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10 and I cannot, therefore, submit his application to the House.

Newspaper Dispute (Scotland)
3.36 pm
Mr. Gordon Wilson: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter requiring urgent examination, namely,
"the dispute affecting the Daily Record and the Sunday Mail."
The dispute affects Scotland's highest selling daily newspaper and the production of its sister newspaper, the Sunday Mail. The two newspapers are not affected by the general Fleet street crisis. The papers are printed in an up-to-date plant using modern technology. In 1986 their profits will approach £7 million. Their circulations are large and growing, with the Daily Record selling more than 750,000 copies daily.
Because of the disruptive management by Mr. Robert Maxwell, who seeks to destroy the Scottish identity of the Daily Record and the Sunday Mail, the future of those newspapers is in dispute. The Scottish community is up in arms about the matter. As there is no tradition of militancy involved in the production of these newspapers, as the dispute is continuing and as there are no signs that the parties will come together, I ask you, Mr. Speaker, to consider my application seriously.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the dispute affecting the Daily Record and the Sunday Mail.
I am afraid that I must give the hon. Member the same answer as I gave to the hon. Member for West Bromwich, East (Mr. Snape). I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10 and I cannot, therefore, submit his application to the House.

Huddersfield Polytechnic School of Architecture
3.38 pm
Mr. Barry Sheerman: I beg 10 ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent attention, namely,
"the proposed closure of the Huddersfield polytechnic school of architecture."
My request is specific, because it relates to an announcement of closure that was made public only last Saturday. It is important, because closure will dramatically affect the ability of the Yorkshire and Humberside region to supply skilled architectural staff to rebuild and reconstruct the ravaged infrastructure of our region. The matter is urgent because the late date at which the Secretary of State for Education and Science has made the announcement will seriously impair the recruitment drive for this September's courses. It will dramatically affect the school of architecture, which places 100 per cent. of its students in employment. The school is renowned for the quality of its department and the modern methods that it has pioneered.
Above all, I hope that my application will be successful because it will allow me and my Yorkshire colleagues to express at greater length our horror and the frustration and anger in the region at the proposed closure. A debate would give us an opportunity to consider this incomprehensible decision and the grounds on which it has been made.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the proposed closure of the Huddersfield polytechnic school of architecture."
As the hon. Member knows, my sole duty in considering an application under Standing Order No. 10 is to decide whether it should be given priority over the business already set down for consideration this evening or tomorrow. I regret that I do not consider that the matters that he has raised meet all the criteria laid down in the Standing Order and, therefore, I am not able to submit his application to the House.

Privilege
3.40 pm
Dr. Michael Clark: On a point of order, Mr. Speaker. My point of order, of which I have given prior notice, relates to the use and possible abuse of parliamentary privilege. I seek advice and a ruling on a particular instance.
It is with considerable hesitation and regret that I raise this matter, because it refers to a Conservative Member—the hon. Member for Littleborough and Saddleworth (Mr. Dickens)—who on Thursday 13 March tabled a question to the Attorney-General asking him whether he would now prosecute a doctor in my constituency in respect of a rape offence. The man was named.
At the outset, I must stress that it is not for me to comment on the man's guilt or innocence. I am content to let the law take its course. However, I feel that at best it is a breach of parliamentary convention—and possibly an abuse of parliamentary privilege— to name an individual in this way. This is a double abuse, as it is not permissible to name an accused before he is charged, and in rape cases the accused cannot be named unless found guilty.
Like other hon. Members, I wish to see all criminals, particularly rapists, and especially child abusers, brought to justice. If any hon. Member feels that the police are not being diligent or that individuals are being protected, it is right and proper that questions should be put to the Attorney-General so that he may investigate further. The hon. Member for Littleborough and Saddleworth would have been doing a public service had he put his question and omitted the name, but by putting the name into the question he is now denying justice.
The full details of this case are more complex than those that have come out in the newspapers, as my right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) may well know. The man cannot defend himself without giving more details, which would almost certainly identify the rape victim. In the absence of his defence, he is being found guilty by parliamentary privilege and newspaper headlines, and he now struggles to try to prove his innocence. This is quite contrary to English law, and led to some of the outrageous comments that we had from hon. Members last Friday.
If the police have sufficient evidence against this man, he should be brought to trial. But can he now have a fair trial? I wish to make it clear again that I am not attempting to defend this man. It is not for me to judge his guilt or innocence, nor is it the duty of this Parliament, nor any Member of this Parliament, to do just that. However, I ask whether justice is being done at the present time. Can it be obtained in the future if a trial should take place? Is parliamentary privilege being abused, and if so, how can it be stopped? I seek your ruling, Mr. Speaker.
Several Hon. Members rose—
Mr. Speaker: Order. If the right hon. Member for Chelmsford (Mr. St. John-Stevas) wishes to raise a point of order on the same matter, I shall call him first.
Mr. Norman St. John-Stevas: I am grateful to you, Mr. Speaker. Further to the point of order so lucidly put by my hon. Friend the Member for Rochford (Dr. Clark), may I point out that this tragic case of the rape
24
of a child took place in my constituency and that the child is the daughter of one of my constituents—[Hon. Members: "Alleged rape."] The alleged rape. In fact, the police have indicated that in their opinion a rape has taken place, but there is doubt as to who was responsible for it.
Is it not one of the strongest conventions of this House that constituency cases are taken up by the Member of Parliament concerned? Yet there was no consultation or information given and nothing was said to me by my hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens) before he tabled his question. Should there not be some protection for hon. Members in these cases?
I had taken up the case with the local police and the Director of Public Prosecutions, and their legal, impartial opinion was that the prosecution could not succeed and so should not take place. May we have some protection and guidance on that crucial point? Do you agree that the higher the privilege, the greater the sense of responsibility with which it should be used?
Mr. Kevin McNamara: Further to that point of order, Mr. Speaker. You will be aware that the hon. Member for Littleborough and Saddleworth (Mr. Dickens) has also made allegations about a constituent of mine in north Humberside. He did so without consulting me, without reference to me, and without any discussion with me. If a matter concerning a constituent is to be raised, it is a matter of courtesy to refer it to the hon. Member in whose constituency that person resides. If that hon. Member then takes no action, another hon. Member may feel free to act in the interests of justice.
Both the alleged perpetrator of the crime and the victim happen to live in my constituency, yet at no time did the hon. Gentleman refer the matter to me. As a result of the statement being made, the press have camped out at a church in my constituency. Everybody knows who is involved in the case. The result is that a person is being tried by the media and would have been subject to a form of parliamentary lynch-law by the hon. Gentleman had he been able to speak during questions earlier. I am grateful to my hon. Friend the Member for Midlothian (Mr. Eadie) for the succinct way in which he asked his supplementary question.
Apart from the courtesies of the House, the matter should be referred to the Committee of Privileges because it involves the freedom, honesty and dignity of individual constituents who, no matter what they are accused of, are entitled to a free, fair and unbiased trial, which at present they are not getting.
Mr. Edward Leigh: Further to that point of order, Mr. Speaker. Paragraph 3, entitled "Personal reflections" on page 338 of "Erskine May" states:
"It is not in order in a question to reflect on the character or conduct of those persons whose conduct may only be challenged on a substantive motion… nor is it permissible to reflect on the conduct of other persons otherwise than in their official or public capacity. Moreover, a question introducing names (whether of persons or of bodies) invidiously or for advertisement or in any way not strictly necessary to render the question intelligible is not in order."
You may rule, Mr. Speaker, that the paragraph does not cover the conduct of my hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens). However, it is in your power to set a precedent, by which if, in a similar case, an hon. Member wishes to name a person who is accused but not yet charged, he should do so on the

25
Floor of the House by reference to a letter that he has sent to the Attorney-General, in which he can mention the name of the accused. Surely it is a principle of our country that a person is innocent until proven guilty, and it is a principle of the House—this is in our sub judice rules—that we should not supplant the role of the courts of the realm as my hon. Friend has done.
Several hon. Members rose—
Mr. Speaker: Order. I shall take one more point of order, then I shall allow the hon. Member for Littleborough and Saddleworth (Mr. Dickens) to have a word.
Mr. John Ryman: I wish, Mr. Speaker, to submit one further point in support of the submissions that have been made. Any hon. Member who is genuinely interested in bringing someone to justice has a perfectly easy remedy, which is to seek a private meeting with a Law Officer. Law Officers are always prepared to see hon. Members at short notice to discuss a matter and then, through the Director of Public Prosecutions, to ask the police to make the necessary inquiries. If there is insufficient legally admissible evidence in the opinion of counsel advising the Director of Public Prosecutions, the Attorney-General and the Solicitor-General will tell the hon. Member. Many years ago I sought the advice of the Law Officers when a local chief constable refused to prosecute. As a result of a meeting with officials in the Law Officer's Department, the local chief constable prosecuted the case, the defendant was tried, pleaded guilty and was sentenced to a long term of imprisonment.
There is a disrceet and realistic way of dealing with such matters, and I support the applications that are being made to consider this a breach of privilege.
Mr. Geoffrey Dickens: It is five years since I named someone in the House of Commons, and it was a distasteful thing to have to do. I wish to be helpful. You will appreciate Mr. Speaker, that during the past five years letters have flowed to me containing allegations and details of cases that I should look into and demanding that I name various people, some very important. I always sent the files to the Home Office, which investigated the cases for me, and in many cases to the chief constables concerned. Therefore, I was jealously guarding, not misusing, parliamentary privilege.
When I was elected to the House, I thought that I could come here and speak without fear or favour on my constituency's problems and on matters of national importance, as child abuse and child protection are. My difficulty is that people offend against children in privacy, by and large, without an audience. We are in some difficulty when the victims are little children and where the courts cannot prosecute unless there is corroboration.
May I conclude, because I see that hon. Members are getting restless, by saying that children are being abused, but that such cases do not come to court because the Director of Public Prosecutions decided otherwise. I unreservedly apologise to the hon. Members who have criticised me, but I say to each of them that I have been fighting a national crusade to protect little children. I do not intend to slip in any names now, but I advise the hon. Member for Kingston upon Hull, North (Mr. McNamara) that a man in his constituency is abusing children. I have named him in a question—
Mr. Speaker: Order. Let me deal with this matter. I am grateful to hon. Members for giving me notice that they intended to raise the matter on points of order. The hon. Member for Gainsborough and Horncastle (Mr. Leigh) is correct. "Erskine May" makes it clear on page 338 that the invidious use of a person's name in a question should be resorted to only if to do so is strictly necessary to render the question intelligible. I commend to hon. Members the device in appropriate cases of supplying the relevant Minister privately with the name of an individual who is the subject of a question, and I hope that wherever possible hon. Members will use that method of avoiding unnecessarily damaging references to individuals. I thank the hon. Member for Blyth Valley (Mr. Ryman) for raising that point.
Freedom of speech is essential to the work of Parliament. It is the responsibility of every individual Member to ensure that he uses his freedom in a way that does not needlessly damage those who do not enjoy that privilege and in a way that does not damage the good name of the House.
Several Hon. Members rose—
Mr. Speaker: Order. I have made a statement and a ruling. I do not think anything else can arise.
Mr. McNamara: Further to that point of order, Mr. Speaker. This arises from what the hon. Member for Littleborough and Saddleworth said. I am grateful for your ruling, which the House heard with respect, and which I appreciate greatly. The hon. Gentleman said that he would not slip in any names, but he has already named my constituent in a question. May I take it that if a written question has been tabled today, the Clerks will ensure that it is altered to make sure that that man's name is not shown?
Mr. Speaker: I have no knowledge of any question, but the House may be certain that I shall look carefully at any such question if one is tabled.
Mr. Robin Maxwell-Hyslop: On one point, Mr. Speaker, I raise a point of order. So that no one should be misled, would it not be as well to add that following the Strauss case any such communication between a Member and a Law Officer is not subject to privilege?
Mr. Speaker: That is correct.
Mr. George Foulkes rose—
Mr. Speaker: Is the hon. Gentleman's question directly involved with this matter?
Mr. Foulkes: It follows from your ruling, Mr. Speaker. The hon. Member for Littleborough and Saddleworth (Mr. Dickens) said that he had tabled a question. Can you confirm that if he does not withdraw it he will be in contempt of the ruling that you have just given?
Mr. Speaker: I understand that the hon. Member for Littleborough and Saddleworth has submitted a question, but it has not yet been accepted. I shall look carefully at it.

Ordered,
That the Outer Space Bill [Lords] be referred to a Second Reading Committee.—[Mr. Archie Hamilton].

STATUTORY INSTRUMENTS, &C.
Mr. Speaker: With the leave of the House I shall put together the two Questions on Statutory Instruments.
Ordered,
That the draft Professions Supplementary to Medicine (Winding up of Remedial Gymnasts) Board Order of Council 1986 be referred to a Standing Committee on Statutory Instruments, &c.
That the Local Authority Grants (Termination) (Scotland) Order 1986 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Archie Hamilton.]

Gas Bill (Allocation of Time)
Ordered,
That the Report [12th March] from the Business Committee be now considered,—[Mr. Biffen]
Report considered accordingly.
Question, That this House doth agree with the Committee in its Resolution, put forthwith, pursuant to Standing Order No. 45 (Business Committee) and agreed to.
Following is the report of the Business Committee:
That the allotted days which under the Order [17th February] are to be given to the proceedings on Consideration and Third Reading shall be allotted in the manner shown in the Table set out below and, subject to the provisions of that Order, each part of those proceedings shall be brought to a conclusion at the time specified in the third column of that Table.

TABLE

Allotted days

Proceedings

Time for Conclusion of Proceedings

First day

New Clauses

8.30 pm

Remaining proceedings on Consideration

Midnight

Second day

Third Reading

7 pm

Orders of the Day
  Gas Bill
  As amended (in the Standing Committee), considered.
New clause 8

  POWER OF COUNCIL TO INVESTIGATE OTHER MATTERS
  '(1) The Council shall have power to investigate any matter (not being a matter which it is its duty to investigate under section 32 above) which—

  (a) appears to it to be a matter to which subsection (2) below applies and not to be an enforcement matter within the meaning of that section; and

  (b) is the subject of a representation (other than one appearing to the Council to be frivolous) made to the Council by or on behalf of a person appearing to the Council to have an interest in that matter.

  (2) This subsection applies to—

  (a) any matter relating to the design, manufacture, importation or supply (whether by sale, hire or loan or otherwise) of gas fittings used or intended to be used by persons supplied with gas by public gas suppliers;

  (b) any matter relating to the installation, maintenance or inspection of gas fittings used or intended to be used by such persons; and

  (c) any other matter relating to, or to anything connected with, the use by such persons of gas supplied by such a supplier or the use of such fittings.

  (3) Where the Council has investigated any matter under this section, it may prepare a report on that matter and (subject to section 41 below) shall send a copy of any such report to such (if any) for the following persons as it thinks appropriate, that is to say—

  (a) any person to whom the report refers or who (whether or not he has made a representation to the Council) appears to the Council to have an interest in the matter to which the report relates;

  (b) the Director General of Fair Trading or any person whose functions under any enactment appear to the Council to be exercisable in relation to that matter;

  (c) any person who appears to the Council to be a person who ought to take account of the report in determining how to act in relation to that matter;

  but nothing in this subsection shall require the Council to send any such copy to the Director.'.—[Mr. Buchanan-Smith.]
  Brought up, and read the First time.
  3.57 pm
  The Minister of State, Department of Energy (Mr. Alick Buchanan-Smith): I beg to move, That the clause be read a Second time.
  Mr. Speaker: With this it will be convenient to take the following:

New Clause 6

  GAS CONSUMERS COUNCIL (LOCAL REPRESENTATION)
  (1) It shall be the duty of the Gas Consumer's Council to appoint in accordance with a scheme under this section individuals to be local representatives of the Council.
  (2) It shall be the duty of such individuals representing the Council in any locality:

  (a) to be available for receiving on behalf of the Council representations from consumers or prospective consumers of gas in the locality;

  (b) to consider and investigate any matter which appears to affect the interests of gas consumers or prospective gas consumers;

  (c) where action appears to be requisite as to any matter referred to in paragraph (b) above to make representations to the Council; and

  30

  (d) where action appears to the Council to be requisite as to any functions assigned to it by this part to assist the Council in making representations to achieve that action in any way in which the Council deems appropriate.

  (3) The scheme shall be prepared by the Gas Consumers' Council within a period of twelve months beginning with the appointed day.
  (4) The scheme shall have regard to the individual requirements and circumstances of the different regions and areas of Great Britain with, in the first instance, specific arrangements appropriate to each of the marketing regions of the "successor company" (interpretation as in section 64 of the Bill). Insofar as it fixes the number of local representatives to be appointed the scheme:

  (a) shall come into force on being approved by the Secretary of State

  (b) may be varied from time to time and if the variation affects the number of local representatives, such variation shall require the approval of the Secretary of State.'.

  Government amendments Nos. 16 to 18.
  Amendment No. 20, in clause 33, page 37, line 8, at end insert
  'and any matter relating to the manufacture importation, supply, installation and maintenance of gas fittings'.
  Government amendments Nos. 22 to 25, 39 and 40.
  Mr. Buchanan-Smith: As hon. Members who participated in the debates on the Bill either on Second Reading or in Committee realise, a major priority of the legislation must be to ensure that the interests of all gas consumers are fully protected. When I say all gas consumers, I mean of course not only domestic gas consumers, but industrial and commercial consumers. These categories were covered in the original Bill, but because of the system of regulation that was being set up, with the power to appoint a Director General of Gas Supply, the powers of the new Gas Consumers Council were directly related to tariff consumers and also to the relationship that they have with the Director General of Gas Supply.
  This would not, as my right hon. Friend the Secretary of State explained on Second Reading, inhibit the council, once it had been set up, from acting on behalf of all consumers, not just tariff consumers. None the less, having listened to the lengthy debates in Committee on the important issue of the interests of gas consumers, my right hon. Friend and I are concerned by the views that have been expressed in the House both on Second Reading and in Standing Committee.
  The powers relating to the role of the Gas Consumers Council are specifically set out in the Bill. This means that there should be no doubt about the responsibilities of the council. I have had full consultations with Miss Sheila Black, the chairman-designate of the new Gas Consumers Council, who made it plain to me that she and her colleagues on the old council would like these powers to be fully and clearly set out in the legislation.
  That is the background to new clause 8. The Bill already lays a duty on the council to investigate complaints concerning the supply of gas. However, the new clause puts the new council's remit into statutory form. It provides the new council with power to investigate any complaints from gas consumers about all relevant matters concerning the sale, installation, use and maintenance of gas appliances and fittings, whether they are in use in people's homes, or whether they are for sale in shops and intended for use. The council will also have the power to investigate any other matters associated with the use of gas

  31
  or gas fittings. In particular, it will have the power to investigate safety matters. All those who participated in the debates on the Bill believe, as do the Government, that this is of paramount importance. The new clause seeks to set out precisely what the Gas Consumers Council can do to enforce safety.
  These powers are not in themselves adequate unless the council is able to follow up its investigations in whatever way it feels is appropriate, given its wide remit. It is important that the council should have the power to take follow-up action when it has investigated a complaint. Therefore, the new clause provides the council with the power to pass on any of the findings of British Gas or of any other supplier to the Director General of Fair Trading, the Health and Safety Executive, the complainant, or any other person or organisation that has an interest in the matter.
  I hope that the new clause meets the wishes of the House and fulfils in statutory form the Government's intentions relating to the powers of the Gas Consumers Council and the points that have been made in our debates. The new clause has been warmly welcomed by Miss Sheila Black, the chairman-designate of the Gas Consumers Council. She wanted these powers to be fully spelt out. I hope that the House will accept that the new clause fulfils those objectives.
  Amendments Nos. 16, 17 and 18 are required to achieve consistency in the extent to which the new Gas Consumers Council receives copies of documents. The Government have accepted an important amendment in Committee. It provides that the council is to receive copies of the annual report of the Director General of Fair Trading. Having accepted the amendment, the Government looked carefully into the matter to see whether the amendment needed to be extended to include other documents. I hope that the House agrees that it is right and proper that the council should be made fully aware of any proposals relating to a modification of the authorisation.
  Amendments Nos. 22, 23 and 25 are consequential upon the new clause, if introduced. They extend the statutory remit of the new Gas Consumers Council to cover all complaints from gas consumers. The amendment will allow the council to pass on, without the normal confidentiality restrictions that are povided for in clause 41, relevant information that is gained in the course of its investigation of complaints. It will be able to give full information to the Health and Safety Executive and to Ministers and trading standards officers for the purposes of the consumer protection and consumer safety Acts. This will ensure that matters relating to the safety and standards of gas appliances can be drawn to the attention of the proper authorities.
  Amendments Nos. 39 and 40 enable the Secretary of State for Energy—in practice, the Secretary of State for Trade and Industry—to be involved in setting the terms and conditions of employment of staff of the Gas Consumers Council. As drafted, paragraph 3 of schedule 2 requires these terms and conditions to be approved only by the Treasury. The amendments retain this requirement, but add to it the need for the approval of the Secretary of State. This is a sensible extension of the requirement,
  32
  because the Secretary of State for Trade and Industry should be involved in this matter. He can bring to bear his experience of other consumer bodies.
  As new clause 8 and its associated amendments are of interest to the House, they will probably form a substantial part of our Report stage debate. We have put into statutory form a substantial number of the matters that were discussed in Committee. However, I emphasise again that, as originally drafted, the Bill would not have inhibited the Gas Consumers Council from doing any of the things that we are now seeking to set out in statutory form.
  As I said earlier, I hope that the new clause and its associated amendments meet the wishes of the House. The Gas Consumers Council will be able to act with complete confidence, knowing that its powers are provided for in the Bill, and investigate all complaints—not just those of tariff consumers—and deal with all matters relating to appliances, fittings and installations. I commend new clause 8 and its associated amendments to the House.
  Mr. Stanley Orme: I wish to deal first with new clause 6, but before I do so, I should like to comment on what the Minister of State has just said about new clause 8. I agree that it takes into account some of the points that were raised in Committee, but may I direct his attention to paragraphs (b) and (c) of subsection (3). The last two lines of new clause 8 say:
  "but nothing in this subsection shall require the Council to send any such copy to the Director."
  That is unsatisfactory. The Director General of Fair Trading will not have the power to make references. Furthermore, he will not receive copies of complaints. We are dealing not just with competition but, as the Minister of State said, with wider aspects relating to the powers of the Gas Consumers Council.
  The Opposition's new clause 6 deals with representations to local representatives of the Gas Consumers Council. This matter was debated in detail in Committee, but the Government have not seen fit to take into account the representations that were made then. Therefore, the Opposition have decided to put them before the House at Report stage.
  The Minister referred to the chairman-designate of the Gas Consumers Council, Miss Sheila Black, but we are indebted to the South-Western Gas Consumers Council, which has submitted a great deal of evidence to the Committee and to hon. Members on both sides of the House. Clause 2 refers in only the vaguest terms to the Secretary of State when it says that he
  "shall have regard to the desirability of having members who are familiar with the special requirements and circumstances of different regions and areas in Great Britain"
  when appointing members to the new Gas Consumers Council.
  In Committee, the Under-Secretary told us that it was intended that the new Gas Consumers Council would have the powers to set up an advice structure on the various industrial and consumer interests in any area or to ensure that widely scattered consumers are adequately represented. However, that seems entirely to depend on the disrcetion of the future chairmen of the new Gas Consumers Council. The view of the recently appointed chairman of the new Gas Consumers Council, as expressed in her evidence to the Select Committee, is that local representation, certainly in its present form and extent, does not carry out a vital function. We contest that because our information is that over the years regional bodies of

  33
  the Gas Consumers Council, perhaps not with great publicity—we have learnt more about this since the Bill—have carried out a great deal of important investigative work and have played a major part in monitoring a major publicly owned industry. I do not need to remind the House that this will be a major privately owned monopoly. The circumstances do not change.
  Local representation is vital and a duty needs to be placed on the GCC rather than just on the chairman to draw up and maintain a scheme of local representation. When, as I have pointed out, the industry is transferred from public ownership into a private monopoly, the same consumer interests will remain. Therefore, they need adequate representation.
  Among the main functions of local representatives is, first, troubleshooting. Customers who have complained against British Gas ask local members to take up individual problems which they have not been able to sort out themselves in, for instance, the south-western region. The same applies to Wales, Scotland, the north-west and every other region in the United Kingdom. They represent them in finding a way through the bureaucracy of the monopoly. They deal with straightforward problems by personal contact or telephone, thus preventing long written reports, and pass on to the Gas Consumers Council those cases which need a more detailed analysis or assessment. Those are important areas in which the Gas Consumers Councils act and they will be denied such opportunities when that regional representation is taken away from them. That is the vital factor.
  Therefore, new clause 6 takes into account the need expressed by the Under-Secretary in Committee to maintain flexibility in the new arrangements. The proposed new clause does not take away flexibility. It makes the use of that flexibility subject to a broader base of disrcetion than the whim of an unknown future chairman of the Gas Consumers Council. In effect, it transfers from the regional gas consumers councils, based on the Gas Act 1972, section 11, to the new Gas Consumers Council the duty to draw up and maintain a scheme for local representation. However, in the requirement to have the Secretary of State's approval to the numbers in the scheme, the residual right of appeal by any regional interest group is left, should it be felt that any future proposal to dismantle, reduce, or alter the scheme set up by the new Gas Consumers Council is not justified. It widens the base of the responsibility for exercising the disrcetion to the Gas Consumers Council and the Secretary of State rather than leaving it to the apparent disrcetion of one particular person, however good that person might be, to which I have already referred. The provision relating to numbers also exists in the Gas Act 1972. Nevertheless, the new clause allows flexibility to change those arrangements without altering the prime legislation as appropriate.
  4.15 pm
  That is the basis of new clause 6 and I have made the case for its adoption. In effect, we are trying to put back what the Government are taking out of current legislation. I have also pointed out the weaknesses of new clause 8 and perhaps, when he replies, the Minister will deal with my points on subsection (3)(b) and (c) because we are extremely concerned about the fact that any reference to the director is removed from the new clause.
  34
  I understand that it is not possible at this stage to move new clause 6 but that will be our intention at the appropriate time.
  Mr. Peter Rost: I congratulate my right hon. Friend the Minister of State on introducing this important new clause, into which he and his Department have put a great deal of effort. It allows one or two of his hon. Friends to start the proceedings on Report in a rather more harmonious way than might be the case later when some of the amendments put down by the members of the Select Committee come up for debate. Nevertheless, it is gratifying to see that the Government have responded in full measure to the large numbers of representations that some of us have had from the consumer organisations. Indeed, I understand that they are pleased with the new clause.
  It is also pleasing to see that the Government have responded so adequately to the amendment put down by my hon. Friend the Member for Enfield, Southgate (Mr. Portillo) in Committee. Unfortunately, he has to be absent for the moment this afternoon, but I know that he initiated the prodding of the Government in order to ensure that the legislation provided a little more adequate protection for the consumer by putting a few more teeth behind the consumer organisations. That my right hon. Friend has done and in doing so he has also responded magnanimously to the Select Committee's recommendations. We also received a great deal of evidence from consumer organisations suggesting that the procedures to protect consumers in the legislation needed stiffening up a bit, and that my right hon. Friend has done.
  We are pleased to say that he has also made reference to the funding of the consumer organisation. The Select Committee was concerned as to whether resources would be adequate to do the job properly. However, my right hon. Friend has given the Select Committee the assurance that whatever resources are needed to do the job properly will be provided. Thus, from all points of view the new clause is most satisfactory, and I am happy to wish it well.
  Mr. Michael Cocks: I am pleased to speak to this group of new clauses and amendments because, since the termination of the Committee stage, I have received a letter from the Under-Secretary of State covering two safety points that I raised. I thank him for his helpful letter.
  My first point concerns gas cookers. The situation will probably improve substantially, but it still needs to be watched carefully.
  More consideration should be given to open flue heaters. I may be raising detailed points, but they will be important when the Government's massive legislation is implemented. Open flue heaters have received some publicity already. In his letter the Under-Secretary of State wrote:
  "the heater in question is now obsolete and it is likely that only a few old properties remain."
  I have made some inquiries, and I believe that until recently there were about 10,000 such heaters in the southwest region alone. The number has now been reduced to about 8,000. About half of them are in the Bristol area, as they tend to be concentrated in inner city multi-occupation accommodation. Yet the south-west is only one area, and the problem is probably still larger than the Under-Secretary of State would have us believe Thus, the situation needs to be monitored carefully.

  35
  The Under-Secretary of State also said in his letter that anybody who had this sort of heater should have it checked by a competent gas installer, which brings me to my next point, because it is expected that as a result of privatisation there will be some touting for business. Two of my constituents recently drew my attention to a reply-paid card advertising something called "South West Services". One of my constituents works for the South-West gas board and says that, to the casual observer, the logo is not dissimilar from that used by the board. Moreover, there is a freepost address in Keynsham, Bristol. Keynsham is the headquarters of the South-West gas board, and my constituent feels that the material is so similar to that sent out by the board that someone might well think that it comes from that official source. Moreover, the service is based in Stokes Croft, and there is no indication whether the people concerned are properly registered suppliers. Perhaps the Under-Secretary of State will look into that. I should be happy to give him the details if they would be of any help.
  We welcome the Government's move towards the point that we made in Committee, but there is still much to done to locate defective appliances. Even at this late stage I ask the Under-Secretary of State to consider asking the successor authorities to institute some sort of census of appliances that may be defective, even if it means putting a question on the part of the gas account that is returned with the bill.
  Mrs. Ann Clwyd: We must welcome the fact that the Government have apparently, at this late stage, seen the light and the necessity to strengthen consumers' rights. Throughout the Committee stage we argued that consumers' rights were not properly enshrined in the Bill. We believe that their position is being severely weakened through the watering-down of the regional consumer councils. Access to advice and information is vital, especially for those with fuel debt problems, and we believe that that access will be reduced. The abolition of the metropolitan counties and the GLC will also put at risk citizens advice bureaux, which deal with thousands of fuel problem cases. As drafted, the Bill yet again weakens the consumers' position.
  Given the huge, powerful and wealthy monopoly that will lie in private hands, it is important that the rights of consumers should be strengthened. It is vital that they should have strong statutory protection. Thus, I welcome the Government's new clause. Throughout the Committee stage we expressed our concern and said that there should be regional offices which were adequately staffed with efficient and experienced personnel in each British Gas region. Given the tight budget, it seems unlikely that such offices will be adequately staffed. I hope that the Minister can give us an assurance on that point.
  There is obviously a need for complaints to be handled at regional level. It is essential that there should be regional complaints offices, with adequate staffing, which come under the overall management of the national body. It worries us that the scale of the proposed budget will not allow for some essential consumer services.
  In Committee the Minister told us that the funding of the Gas Consumers Council was to be demand-led. He said:
  "There is no intention to introduce a cost-cutting exercise because the function of the Gas Consumers Council must be
  36
  demand led and not financially constructive to enable it to carry out its reasonable functions in the most effective way."—[Official Report, Standing Committee F; 21 January 1986, c. 166.]
  How is that demand to be decided? Apparently the Department of Trade and Industry is assessing future workloads for the new council and its regional offices in order to discover the demand for staff and to work out the new structure. How much confidence can gas consumers have in the new council if they are told that it cannot deal with their complaints effectively because British Gas will not co-operate or because the council does not have the resources available?
  As the Government have tabled this new clause early in the debate, I hope it means that they will support our new clause, which furthers the needs of the consumer, because these needs are clearly not adequately covered by the Bill as drafted.
  Mr. Geoffrey Lofthouse: I shall be brief. I welcome the Government's move and the fact that we have the support of the hon. Member for Erewash (Mr. Rost) on behalf of the Select Committee. In Committee there was little support from members of the Select Committee, apart from myself.
  Can the Minister say whether the consumer has any protection against the right of entry? I have put that question to him before, but I have never had an answer. I believe that a private sector monopoly will be able to decide to enter a person's private home without a magistrate's order. If I am wrong, the Minister will no doubt put me right, but there should be a provision in the Bill to protect the consumer from the threat of the private sector. A subcontractor, or perhaps a cowboy, employed by a gas supplier could take the decision to enter a person's home. The foreman on the site might decide to do that.
  I hope the Minister can assure us that under new clause 8 consumers will be protected from a decision to enter their home or private property. Civil liberties are involved, and the people should be protected.
  4.30 pm
  Mr. Allan Rogers: The amendments and new clauses are important. I am pleased that the Government have accepted our arguments in Committee and that the surveillance area of the Gas Consumers Council is to be extended under new clause 8. However, those of us who come from the provinces, regions and nations that make up Great Britain regret that the new Gas Consumers Council is to have a centralised complaints role.
  The regional gas consumer councils were set up by the 1972 Act and broadly continued the existence of the consultative councils set up in the Gas Act 1948. Herbert Morrison was one of the chief architects of nationalisation. He believed that when the large monopolies were created in the public sector it was important that the industries served the people and that people should have a say in the running of those industries. We argued in Committee that that ethos is even more important in relation to a large private monopoly.
  The Government's attitude is typical of the Conservative party. They believe that market forces will decide all things, that British Gas plc's functions will be maintained and general standards levelled as people buy their goods or purchase energy from it. Under the new monopoly people will not have real choices and the normal

  37
  market forces will not operate. That is why we want the right representation structure to be established for consumers. Consumers of gas will number almost 20 million by the end of the century and they will have to buy their energy from British Gas plc.
  The Government will say that everything is working well now and that after vesting day they will still work well, but it will be a different kettle of fish with the large private monopoly. Clause 2 refers only in the vaguest terms to the Secretary of State having
  "regard to the desirability of having members who are familiar with the special requirements and circumstances of different regions and areas in Great Britain"
  when appointing members of the new Gas Consumers Council. That is not good enough. We should go much further. During the Standing Committee's sixth sitting the Under-Secretary of State said:
  "the new Gas Consumers Council will have the powers to set up an advice structure on the various industrial and consumer interests in any area or to ensure that widely scattered consumers are adequately represented."
  I do not know whether the people of Wales or of the north-east and north-west of England regard themselves as "widely scattered consumers". I am sure that they would prefer more formal representation to ensure that by statute they have a right to be involved in the consumer protection aspect of gas.
  That representation under the Bill depends on the disrcetion of the future chairman or chief officer of the new Gas Consumers Council. Miss Sheila Black, the current chairman, expressed her view recently to the Select Committee. She said:
  "Local representation in its present form and extent does not carry out a vital function."
  We are unsure whether appointments to and developments of the new structure will be left to her disrcetion.
  The Under-Secretary said in Committee that the Government's desire was to maintain flexibility. He said:
  "Every word added would be a restriction, and inflexibility would rule."—[Official Report, Standing Committee F, 21 January 1986; c. 168.]
  That is an example of the woolly thinking and limbo state in which we shall be left as a result of the Bill. The Government just seem to be hoping that things will happen. Because everything has gone marvellously for British Gas in the last 10 years, the Government hope that things will carry on like that. I have less faith in their friends in the City and in private management than they have. The general record in the private sector shows that our views are justified.
  The arguments have been well rehearsed in Committee. The Opposition believe that there should be a more structured relationship between the consumer and British Gas plc. We believe that that structure should be enshrined in the Bill.
  Mr. Peter Pike: I speak briefly in support of new clause 6. We believe that new clause 8 is an improvement to the Bill. It is certainly an improvement on the consumer protection proposals that we debated in Committee. Ministers have said repeatedly that the Bill offers the best deal for consumers and for their protection. We dispute that, but it is futile to pursue that line in the time available.
  New clause 6 follows the line that we have pursued in trying to improve the Bill. If the Government are correct
  38
  in saying that the Bill gives consumers the best deal, that is no reason why we should accept that the Bill is perfect and incapable of further improvement.
  New clause 6 deals in particular with the regional aspect. It tries to ensure that regional and district consumer councils are strengthened and preserved. Throughout many hours of debate we have expressed our concern that many people who have given valuable time and experience over many years, representing consumer interests at district and regional level, will be swept away and their expertise will no longer be available. The Bill provides for some regional representation, but it will not be as strong or as efficient as it is at present. We want to improve on the present position.
  As I have said on many occasions, there is considerable regional variation. Most consumers will find it easier to contact officials locally and any move towards a system of centralism and the relegation of the regions' importance will be a detrimental step. The proposals that are set out in new clause 6 go some way to redressing the deterioration that would ensue if the Bill were enacted unamended.
  Mr. Peter Hardy: The Minister appeared to be resting a large part of his case on the somewhat smug response of the Government after consultation with Miss Black, the chairman of the National Gas Consumers Council. Unfortunately, the response that the Minister has offered the House does not seem to offer any reassurance. New clause 8 does not respond to the needs that were clearly emphasised in our long consideration of these matters in Committee, and we remain entirely dissatisfied and deeply concerned.
  I emphasise the argument that has been advanced by my hon. Friend the Member for Burnley (Mr. Pike). We cannot object to the modest progress and the slight change that is being made, but it will still leave a state of affairs that could become entirely and disgracefully unsatisfactory.
  The hon. Member for Erewash (Mr. Rost), who contributed to the debate, is a distinguished member of the Select Committee on Energy. He may distance himself slightly from the Government at a later stage, but he seems to be accepting new clause 8 with equanimity. Paragraph 93 of the report of the Select Committee on Energy states:
  "The proposed Gas Users' Council must have powers and duties to srcutinise the actions of British Gas in all areas of its operations."
  However, the hon. Gentleman represents a Derbyshire constituency which comes within the area of East Midlands gas, which serves my constituency as well., and when the Bill is enacted and implemented there will be only one person to represent the large area of the east midlands. That one person may reside a long way from the hon. Gentleman's constituency, or from mine. Twelve individuals all represent large areas within which there will be, perhaps, millions of consumers. That shows how disgracefully the Government have responded to the Select Committee's recommendations.
  Mr. Rost: The hon. Gentleman referred to one paragraph of the Select Committee's report. That paragraph goes on to state that the Gas Consumers Council should have adequate resources to perform its task, which is something that has been conceded by the Government.

  39
  I do not accept that the srcutiny point has not been conceded. A little more centralisation might provide a more effective consumers' organisation.
  Mr. Hardy: I hope that the hon. Gentleman will not have cause to regret that comment in due course. If he believes that one individual representing millions of consumers, or potential consumers, in the east midlands will be satisfactory, he has a great deal more faith in centralisation than I have.
  The hon. Gentleman must consider the argument of my right hon. Friend the Member for Bristol, South (Mr. Cocks). We are not talking about slight and unimportant matters. We must bear in mind, as we stressed on many occasions in Committee, that gas is a volatile substance and that there are circumstances in which there could be peril and risk for the consumer. On the grounds of safety and security, it is grossly unsatisfactory to have only one person representing millions of consumers.
  4.45 pm
  My hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) shed light on another aspect of this issue when he said that we are giving a great deal of power to a private monopoly. Its representatives will be able to enter private property. It is a serious and strange departure for the Conservative party to confer such powers when it has always stood for the principle of an Englishman's home being his castle. If the Government are giving powers to a private monopoly to operate in such a way, there is even more of a case for the consumer councils to have a proper regional character. Even though the Government have moved slightly in acting on the advice of Miss Black, they have not satisfied those who are concerned that regional cover should be adequate. The Minister may have paid attention to Miss Black and to the Gas Consumers Council, which she represents, but the evidence of the South-Western gas consumers council, which was referred to by my right hon. Friend the Member for Bristol, South, was probably much more wise and valuable than that from other sources.
  Apart from anything else, the new arrangements for local structures could be wiped out at the whim of an individual. There is nothing in the Bill that removes our anxiety about that. We do not believe that the appointment of one person to represent the interests of gas consumers in each of the 12 gas regions will be adequate. A comprehensive network of officers is necessary and they must have adequate resources. It is astonishing that the Government did not adopt that approach when the Bill was introduced. The fact that their conversion has been entirely half-hearted causes us still to be anxious. The fact that they are still reluctant to provide an adequate assurance that the interests of regional consumers will be protected leads us to the view that the Government are far more concerned to please the future shareholders of British Gas than to ensure that consumers' needs are met.
  Mr. Buchanan-Smith: With the exception of the speech of the hon. Member for Wentworth (Mr. Hardy), I began to feel that the Government's new clause was welcomed generally. The hon. Gentleman, in language to which we became accustomed in Committee— for example, he said that he was "entirely dissatisfied"—went a little over the top. In contrast, the right hon.
  40
  Member for Salford, East (Mr. Orme) said that there were certain directions in which he would like to see the Government go further. When the hon. Member for Wentworth reflects on these matters, I think he will appreciate that we have gone a long way towards spelling out in considerable detail the statutory responsibilities of the council. I am delighted that hon. Members on both sides of the House have taken that view, especially my hon. Friend the Member for Erewash (Mr. Rost), who is an experienced member of the Select Committee on Energy. The Government respected the views of the Select Committee, and I am glad that my hon. Friend feels that its views on these matters have been covered by the new clause.
  When we were dealing with new clause 8, I was asked specifically why there was not an obligation to submit a report to the Director General of Gas Supply.
  Mr. Ted Rowlands: Surely the director should receive reports.
  Mr. Buchanan-Smith: The hon. Gentleman makes a good suggestion and one that might be acted upon. I should explain to the right hon. Member for Salford, East that the reference to the director has been added for the sake of clarity. There is already fierce competition in the gas appliances and servicing market, and the competitors are not gas suppliers. It is an area in which competition law already applies. The new clause requires the council to refer reports as appropriate to the Director General of Fair Trading, who will be concerned with any anti-competitive practices or monopoly abuse in supply and servicing. That is why we put it in that way, as in tariff matters the National Gas Consumers Council already has a direct role in relation to customers, reporting to the Director General of Gas Supply if it so wishes.
  In relation to the other statutory extensions of powers in paragraphs (a), (b) and (c), it is made absolutely clear that these are not covered by the director general and that the reports are made to those responsible for those matters. To save the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) intervening at this point, I should make it clear that if the council feels that in any matters covered by those provisions it might be appropriate to inform the director general or if it feels that he should act on an investigation which may have begun in one area and extended into another, nothing in the new clause will prevent the council from informing the director general and the director general from acting on the matter.
  The new clause seeks to clarify the functions of the Gas Consumers Council. It is therefore important to make it clear to whom the council is responsible when it has investigated a complaint and wishes to make a report. In the interests of clarity, therefore, the right hon. Member for Salford, East may conclude on reflection that we have got it right.
  Mr. Orme: The Minister talks of clarity, but the last two lines of new clause 8 confuse the situation. I cannot see why they are included. What is wrong with the director general being informed even if there are no immediate implications for him or for action by him? He is an important part of the new set-up, together with the Gas Consumers Council and British Gas plc, and each should know what is happening. The new clause concludes:
  "but nothing in this subsection shall require the Council to send any such copy to the Director."

  41
  We believe that that provision is wrong and should be deleted.
  Mr. Buchanan-Smith: This brings us back to a fundamental difference between the two sides, which arose many times in Committee. In the area of regulation, in which the director general has strong powers of control, we have sought to make the limits of his responsibility absolutely clear. Spelling this out in relation to the Gas Consumers Council also makes it clear to whom the council is obliged to report. The council is not required to report to the director general, but it is perfectly free to do so if it wishes.
  The new clause makes it clear to whom the council should report—for instance, the Director General of Fair Trading—in relation to various matters. We believe that that clarity of responsibility is necessary. The Opposition would like the director general to have a wider role. That is the fundamental difference between us.
  Mr. Rowlands: Perhaps I may suggest a more modest reason why the wording is not appropriate. Clause 33(1) refers to the director general's powers to review activities connected with the supply of gas through pipes, including appliances and installation. That being so, under the general review procedures he should at least receive reports from the Gas Consumers Council in relation to complaints.
  Mr. Buchanan-Smith: The director general does not have a role in this area. Clause 33 simply allows him to inform himself about the general activities. Including a direct requirement for the council to report to him under the new clause could lead to confusion as to the person to whom the council is required to report. We have made it absolutely clear who is responsible for following up references by the Gas Consumers Council.
  New clause 6, as the right hon. Member for Salford, East made clear, turns on local representation and the local role of the Gas Consumers Council. The hon. Member for Cynon Valley (Mrs. Clwyd) also referred to this. The hon. Member for Rhondda (Mr. Rogers) fears over-centralisation in Gas Consumers Council activities, and the hon. Member for Wentworth made a similar point.
  While we were preparing the Bill, the existing National Gas Consumers Council, without any prompting from the Government or the Department, carried out a review of its own activities and the effectiveness with which they could be carried out. As the evidence to the Select Committee by Miss Sheila Black shows, the existing council—not the new body, of which only the chairman-designate has been appointed—felt from its experience of dealing with complaints that the existing statutory system of regional councils was over-rigid and over-structured and did not necessarily achieve the most effective representation of consumers or the most effective protection of their interests.
  It was very much in the light of that evidence that, after consultation with colleagues at the Department of Trade and Industry, who are ultimately responsible for consumer matters, we decided that representation and protection of consumer interests would be more effective under the structure that we have proposed, and which I freely admit is more centralised in one sense, although members of the council will be drawn from and represent every region of
  42
  British Gas. Staff will be appointed in each area and there is power for the council to set up whatever consultation or advisory procedures it thinks appropriate.
  It is perhaps an exaggeration to say that no two regions are alike, but there is wide variation from the Scottish region, catering for a wide geographical area with many scattered communities, to North Thames region at the other extreme. What is appropriate for one region may well be inappropriate for another, in view of the entirely different circumstances. The Bill in no way restricts the ability of the new Gas Consumers Council to set up the structure that it believes appropriate in the various regions to satisfy the responsibilities laid upon it by the Bill.
  Mr. Gordon Wilson: Having referred to the great variations between, say, Scotland and North Thames, the Minister said that under the Bill it would be for the new Gas Consumers Council to decide what structure was suitable for Scotland and for North Thames. At what stage will the people of Scotland be consulted as to what structure is best for them?
  Mr. Buchanan Smith: If the hon. Gentleman had been patient for a moment longer I would have desrcibed the consultation procedures which are being undertaken before any final views are taken as to precisely what structure should be set up. There is no question of the Government imposing a structure from the centre, although I emphasise that it is not the responsibility of my right hon. Friend or myself but the responsibility of my right hon. Friend the Secretary of State for Trade and Industry, given his statuory responsibilities for consumer protection. However, I can give the hon. Member for Dundee, East (Mr. Wilson) the assurance that what is eventually decided will be decided only after full consultation with the existing regional council offices.
  5 pm.
  I have heard no criticism throughout the passage of the Bill of the conduct of the regional councils and of how assiduous they have been in their work of investigating complaints and representing the intersts of consumers in their different areas. It is the existing regional councils and those employed by them whom we are currently consulting. We are also consulting with them in relation to the work that is now being done to set up an organising committee to deal with the new structure. I emphasise to the House, and particularly to the hon. Member for Dundee, East, that a number of existing regional consumers council chairmen are represented on the organising committee. For example, the present chairman of the consumers council in Scotland is a member of that committee. I think that there are concerns in Scotland. I say to the hon. Member for Dundee, East that I have met representatives of the local committee in the Grampian region in the north-east of Scotland in my constituency and I understand their views. I know that they have made their views clear to us. We have urged anybody who has approached us to direct their views to the organising committee through their own regional chairman. Therefore, I believe that there is a scope for local views to be taken into account in setting up what I admit may be a less structured, less rigid, and more flexible arrangement than that which currently exists. We are doing that in response to what the existing National Gas Consumers Council feels is in the best interests of consumers.
  One of the questions which I know the council is examining in detail is the precise structure and

  43
  organisation of the local representatives that would be appropriate. At this stage, I do not want to pre-empt its deliberations but, as we have repeatedly made clear, there will be staff who will work with the council of representatives appointed from each region to take up complaints at local level and keep in close touch with the views and needs of local consumers. On that point, I am at one with the right hon. Member for Salford, East. I think that it is important that there are grass roots links with consumers. Certainly, our objective is to provide a body that can give speedy and effective help. As I have said, we have been persuaded that the present system has been too rigid and it is for that reason that we are trying to provide a more flexible approach.
  I would like to express my thanks to those who have served on the regional gas consumers councils because they have done an extremely good job. They have given much time and effort to dealing with the problems of gas consumers and I am sure that both sides of the House will join in paying tribute to those who, over the years, have served on the councils at local level.
  One or two other points were raised during the debate. The right hon. Member for Bristol, South (Mr. Cocks) raised the question of safety, which we rightly debated at considerable length in Committee, and in my opening remarks today I expressed the importance that we attach to that. As the right hon. Gentleman knows, the installation and maintenance of gas fittings is already covered by the Gas Safety (Installation and Use) Regulations 1984 which are administered by the Health and Safety Executive. In addition, the Department of Trade and Industry has considerable powers under the Consumer Safety Act 1978 in respect of the sale or supply of unsafe goods. Trading standards officers can take action to prevent the sale of any appliance considered unsafe. Those powers are to be reinforced.
  I am grateful to the right hon. Member for Bristol, South for raising that matter because it gives me the opportunity to repeat on the Floor of the House what my hon. Friend the Parliamentary Under-Secretary and I said in Committee. The Department of Trade and Industry is hoping to introduce regulations later this year in respect of the sale of gas cookers. I repeat that because I do not want there to be any confusion about the fact that there is already an effective legislative structure to deal with safety in a number of areas.
  The right hon. Member for Bristol, South raised the substantial question of appliances which might be dangerous and which were already installed. He said that he would send more details to my hon. Friend the Parliamentary Under-Secretary of State and myself. I would be grateful if he would do that and I or my hon. Friend would be happy to respond to him on that point. I think that we are all united on the need to ensure that safety is as effective as we can make it.
  The hon. Member for Pontefract and Castleford (Mr. Lofthouse) and the hon. Member for Wentworth raised the question of rights of entry. The point made by the hon. Member for Pontefract and Castleford is that British Gas will be a private company and not a nationalised industry in the future. I accept that, but British Gas could exercise compulsory rights of entry only in limited circumstances. I refer the hon. Gentleman to clause 18, and in particular paragraphs 14 to 17 of schedule 5. That clause and the
  44
  paragraphs of schedule 5 control rights of entry. I do not think that there is any disagreement or concern over the need for rights of entry in an emergency. But, outside emergencies, rights of entry can only be exercised with a magistrate's warrant under the procedure set down in the Rights of Entry (Gas and Electricity Boards) Act 1954.
  That is particularly relevant to the new clause and the debate on the consumer councils, because if there were any question of abuse of those powers, it is certainly an area where the council could receive a complaint, investigate it and act upon it in order to assist a consumer, if the consumer felt that any of the powers in the Bill were being abused in any way.
  Mr. Lofthouse: I should like to clarify a point. On page 77, in schedule 5, paragraph 17, the Bill spells out the provisions as to powers of entry:
  "Where in pursuance of any powers of entry conferred by this Part of this Schedule, entry is made on any premises by an officer authorised by a public gas supplier".
  Before the officer can have that authority, must he have a justice's warrant?
  Mr. Buchanan-Smith: I should like to look into that point and I shall reply to the hon. Gentleman.
  The important point in this debate on consumer councils is that we must ensure that the consumers council has the power to investigate any complaint from a gas user.
  We have had a useful debate on what is an important matter. I make no complaint about the amount of time spent on Second Reading, in Committee or during Report this afternoon in debating the interests of consumers, and the best way to protect them and deal with them. By spelling it out in the new clause, we have made it clear what the powers of the new Gas Consumers Council are, and to whom it can refer any complaints that it feels are justified. I am grateful for the welcome that has been given to it.
  I am sorry that I cannot accept the new clause of the right hon. Member for Salford, East or the amendments associated with it, for the reasons that I have explained, but I believe that what is now in our new clause, if the House approves it, will give the new Gas Consumers Council a much clearer background against which to operate. I am sure that that is to the benefit of consumers.
  Mr. Orme: We shall not oppose the Government's new clause, although we feel that it does not go far enough. It is only the guillotine that prevents us from voting for our new clause.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.

New Clause 9

  STATEMENTS IN CONNECTION WITH FLOTATION
  '(1) This section shall apply where—

  (a) an offer for sale to the public of any securities of the successor company is made by or on behalf of the Crown;

  (b) any invitation or advertisement is issued (whether or not in documentary form) by or on behalf of the Crown in connection with the offer; and

  (c) that invitation or advertisement does not contain all the listing particulars.

  (2) None of the persons mentioned in subsection (3) below shall incur any civil liability by reason of the invitation or advertisement, or any omission from it, if—

  (a) the contents of the invitation or advertisement were submitted to the Council of The Stock Exchange;

  45

  (b) that Council did not object to the contents of the invitation or advertisement; and

  (c) the invitation or advertisement and the listing particulars, taken together, would not be likely to mislead persons of the kind likely to consider the offer.

  (3) The persons referred to in subsection (2) above are—

  (a) the Crown;

  (b) any person acting on behalf of the Crown in connection with the offer;

  (c) the maker of any statement contained in the invitation or advertisement;

  (d) any person responsible for the preparation of, or of any part of, the listing particulars.

  (4) The reference in subsection (2) above to a person mentioned in subsection (3) above incurring civil liability shall include a reference to any other person being entitled as against the person so mentioned to be granted any civil remedy or to rescind or repudiate any agreement.
  (5) In this section "the listing particulars", in relation to the offer, means such particulars as, by virtue of any provision of any enactment other than this section or of any subordinate legislation, have been approved by the Council of The Stock Exchange for the purposes of the admission of the securities to which the offer relates to the Official List of The Stock Exchange.'.—[Mr. David Hunt.]
  Brought up, and read the First time.
  The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt): I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker (Sir Paul Dean): With this it will be convenient to take the following:—
  New clause 7—

  STATEMENTS IN CONNECTION WITH FLOTATION

    DRAFT PROSPECTUS
    'The Secretary of State shall present to Parliament a draft prospectus for the successor company which shall include independent valuations of the company.'.
    Government amendment No. 38.
    Mr. Hunt: The House will be aware that the mini-prospectus is becoming a popular art form in the flotation of companies, particularly those moving from the public to the private sector. It is a particularly valuable means of publicising an issue the size of British Gas, in attracting the necessary funds and a wider spread of share ownership. Nevertheless, mini-prospectuses are a relatively recent innovation and were first given general application under the Stock Exchange (Listing) Regulations 1984, which implemented three European Community directives. Like many such useful tools, they carry one possible disadvantage: it could be argued that the process of abridgement or extraction of selected information from the full listing particulars that the preparation of a mini-prospectus involves could give rise to liability for misrepresenation or the omission of material facts, although they have been amply disclosed in the full prospectus.
    A provision is included in clause 126 (5) of the Financial Services Bill to give protection against any liability thus arising where the material has been approved by the stock exchange under the 1984 regulations. However, we are dealing with the present situation. I am sure that hon. Members on both sides of the House, whatever their views on the principle of the proposed flotation of British Gas, will agree that we should make full use of the marketing tools available. The new clause provides the necessary protection against liability that might arise simply by virtue of the abridgement that I have desrcibed, despite the fact that full disclosure would already have been made elsewhere. It is a protection that
    46
    the Government are proposing to extend to all issues under the Financial Services Bill. I therefore urge hon. Members to support the new clause.
    5.15 pm
    Mr. Orme: We find the Government's approach to flotation unacceptable. I specifically draw attention to new clause 7, which states:
    "The Secretary of State shall present to Parliament a draft prospectus for the successor company which shall include independent valuations of the company."
    We say that because of what has happened in previous flotations, not least British Telecom. Because of the strength of our feeling and because our new clause is not likely to be reached in the voting pattern, I shall ask my right hon. and hon. Friends to vote against the Government's new clause 9. We shall do so because of the importance that we attach to the flotation of shares.
    The terms of the sale of British Gas are a cause for concern, particularly in view of the report of the Public Accounts Committee on the sale of British Telecom. Unfortunately, the PAC's reports are always after the event, for obvious reasons, and therefore too late to influence it. However, it is not too late to influence the sale of British Gas. That is why we raise the matter on the Floor of the House now.
    The Government have said, and Ministers said in Committee, that the PAC's conclusions would be taken fully into account when the new clauses were considered. Looking at the Amendment Paper, we find that that is not so. Our new clause gives us the opportunity to discuss and put forward our views on that important matter.
    The reports of the PAC are an indictment of the handling of the sale of BT. We use the argument about BT, as we did in Committee, because it is the only parallel that we can use for the size of the sale, in that it is a transfer of a public monopoly into a private monopoly. We are dealing with a large amount of expenditure. The British taxpayer has a right to be informed about the proposed sale.
    The City continues to be the main beneficiary of privatisation. For example, in fees, commission and so on, in the small sale of Associated British Ports, the City made £2·6 million. It made £12·5 million on Britoil, and a massive £190 million on British Telecom. In its 17th report on 16 May 1984, the PAC criticised the failure to use the usual Government method of floating new Government stocks and the Government's heavy reliance on the advice of merchant bankers who also had a stake in the sale as underwriters. That shows clearly that there have been conflicts of interest in the conduct of previous flotations. Who can have confidence in the City at present? What is happening in some areas of the City of London is a disgrace. In effect, about £200 million is being handed over in the sale of a public company, to which a large part of the electorate is opposed. Therefore, we must endeavour to protect their interests and at least bring forward the issues.
    Many of the PAC's criticisms are a direct result of the undervaluing of shares. For instance, a gain of 18 per cent. was made on the sale of Cable and Wireless, with a loss of £40 million to the taxpayer. For Associated British Ports, the gain was 23 per cent., the equivalent of £10·58 million. Amersham International showed a gain costing

    47
    the taxpayer £22 million. However, the most astonishing example has been the sale of British Telecom. In December 1984, the Financial Times commented:
    "the Government have sold BT for some £1·3 billion less than its initial stock value".
    According to the share index in The London Standard today, British Telecom shares are selling at 218p a share yet, at the time of BT's sale, they were sold at 130p a share. There has already been a massive gain in the pricing of British Telecom shares. The taxpayer is paying for it, but what benefit has he had from the sale? Recently, BT prices, not least standing charges, have increased, and this is affecting pensioners and many other sections of the community.
    No doubt the Under-Secretary of State saw the recent "World in Action" programme which looked closely at the sale of BT. Independent financial experts said that by the summer it was increasingly clear that the sale would be a success. The sale was first thought to be a massive risk, but that was no longer the case. The programme told us that one firm of City stockbrokers upset its competitors by saying that and was accused of "talking up" the selling price. The success of the sale was desrcibed as inevitable—similar to giving £10 notes for £5 notes.
    British Telecom was a British-owned company, one of the 10 most successful companies in the United Kingdom, and was sold off for one reason— to enable the Government to use the proceeds for tax relief at what they thought was the appropriate time. British taxpayers are still paying for that massive undervaluation. The "World in Action" programme pointed out that if the proceeds had been used differently 30 hospitals could have been built. Instead, the money was used to line the pockets of people in the City.
    The third report of the Committee of Public Accounts, which was printed on 11 November 1985, continued the srcutiny of the sale of British Telecom. In the coming months and years, will we see the PAC dealing with the sale of British Gas in the same way? Will people wring their hands and say, "Why did we allow that to happen?" I wish to put it on the record, as, no doubt, do other hon. Members, that we warn the British public before the event of the consequences of the sale. The PAC concluded that the Department of Trade and Industry got the flotation hopelessly wrong. The Committee understood why the Department and the Treasury took that underwriting course but was
    "not convinced that the extent of risk justified the rates agreed for placing commission."
    The Committee noted the Department's explanation of the reasons for the high premium in the aftermarket but was "surprised that the Department had not foreseen the possibility of this situation arising. Inevitably this also raised the question whether … the Government objective of maximising net sale proceeds has been met. Moreover, we note the Department's view that if the special selling measures led to their receiving an extra 4p a share that was equivalent to £120 million. By the same token it can be argued … that the price was over cautious and that a modest further increase … would have brought in a higher return without risk".
    That would have meant a higher return to the taxpayer. Whatever one's view on privatisation, this can be seen only as a powerful indictment of the way in which the matter was handled.
    There has not been a Government response to the PAC report. The Secretary of State for Energy today gave a
    48
    response to the report of the Select Committee on Energy. On Sunday, the right hon. Gentleman rubbished the report of the Select Committee on the Environment. The right hon. Gentleman has been quick to reply to the reports of the Energy and Environment Select Committees, which are not strictly within his remit, but he has not replied to the PAC's report, with its implications for British Gas.
    The PAC report commented also on the sale of shares overseas. Within the first week, every British Telecom share put into the New York market was sold back into Britain, giving New York investors a killing of £108 million. The PAC recommends that
    "a thorough review of the method, desirability and value of overseas sales should be carried out by the Department and the Treasury."
    What do the Government have to say about the sale overseas of British Gas shares? They have appointed a Japanese merchant bank, Goldman Sachs of the United States and the Swiss Bank Corporation to promote the sale of shares overseas. This morning, the Financial Times was catching up with events—it was a little behind the times—in referring to the 15 per cent. limit on the sale of shares overseas. We should like the Government to spell out how that sale will operate in terms of the information they put before the Standing Committee. We should like also information which the Standing Committee was not given on the operation of the golden share. We are dealing with a crucial industry and we are, therefore, entitled to ask for more information.
    The purpose of the new clause is to allow Parliament to assess the method of the sale, to ensure that valuations are independent and to srcutinise the desirability of promoting sales overseas. If the Government are selling off our national assets—it does not matter whether it is Westland, British Leyland or British Gas—they should at least ensure that the sale does not result in tremendous losses for the taxpayer.
    The new clause offers the Government an opportunity to show that their hands are clean and that they are not just providing another killing for the City. Their actions with public assets must come under public srcutiny, preferably before mistakes are made. There must be srcutiny by the House. That is why the new clause is important. We are entitled to a Government reply. If that reply is not satisfactory, we shall divide the House.
    5.30 pm
    Mr. Allan Rogers: The Minister made some interesting slips when introducing the new clause, and I was particularly interested in his reference to the prospectus as an art form. This Government would turn me off anything, and the desrciption of the prospectus as a particularly interesting art form would not encourage me to buy shares in British Gas. Although I shall not buy them, many other people will. As my right hon. Friend the Member for Salford, East (Mr. Orme) said, it will almost be like giving people £10 notes for £5 notes.
    It should be remembered that this flotation is not part of the Government's policy of extending share-owning democracy. Given the immense volume of the flotation, it is clear that the number of British Gas employees who will take up shares will be relatively small. It is more than likely that the billions of pounds of shares that will be floated will be bought by the institutions in the City and on the exchanges of New York and Japan. Therefore, it is a smokesrceen for the Government to suggest that they

    49
    are returning a national industry into the hands of the British people through the purchase of shares. That is absolute nonsense. One could even say that such a suggestion is a lie. To a large extent, as with British Telecom, the ownership of these shares will fall into the hands of the large institutions which will be at least one or two, if not more, steps divorced from the British public. As a result, British Gas will be even further removed from the British people than it is at present.
    That is why the Opposition have tabled new clause 7. We want to ensure that the value of the gift that is to be handed over is known to the public at large. As was said in Committee, many parts of British Gas were taken into public ownership without compensation. It is a bit much that assets which were formerly owned by municipalities and local government should now be sold without such bodies receiving any compensation. That is especially so, given that compensation was paid by the Labour Government to the private corporations that ran sectors of the gas industry prior to public ownership. That is why we have argued that there should be a proper evaluation of the assets, so that a comparison can be made with the assets at the time that the industry was taken into public ownership, and so that proper compensation can be paid.
    My right hon. Friend the Member for Salford, East referred to the huge sums of money that would be paid to the stockbrokers in the City of London. It will run into millions of pounds for a job that a donkey could do. This national asset will be worth around £17 billion, and up to £1 billion may be paid to City stockbrokers for handling this flotation. In Committee we considered the mechanics of the flotation at some length. Some figures were given about the volume of the flotation and the fact that the amount involved might be two to three times the total sum handled by the City of London on new issues in any one year. In other words, this flotation could take up all the investment capital available for a considerable time.
    Last week the Secretary of State for Transport said that there would be a delay in the privatisation of British Airways, and the Minister of State said that this was due to all sorts of reasons that were outside the Government's control. I giggled at that, because the truth is that the market could not stand these two flotations this year. The Government have decided to go ahead with the sale of British Gas and to hold back the sale of British Airways, simply because not enough money is available as investment capital to allow the two flotations to proceed at the same time. That is another Government hypocrisy that has been exposed as we have considered the Bill.
    I accept that the Government have a sufficient majority to ensure that this exercise goes ahead. We are anxious that they produce information on which the people can judge what it is all about. We had some successes in Committee and received some publicity, but we shall continue to expose the Government for the charlatan way in which they are promoting this Bill.
    Mr. Rost: I welcome the Government's new clause, which will allow a mini-prospectus to be issued. It would be nonsense if that were not allowed. A full prospectus would have to be published in large quantities, and would probably take up to eight or 10 pages in one of the heavy newspapers. Apart from the enormous cost involved, the average investor does not read the small print anyway. He wants to know who is backing the issue, who the brokers
    50
    are, who the advisers and merchant bankers are, and who the sponsors are. In this case, the Government have some good names sponsoring the flotation.
    Even the experienced professional investor will take much of the small print as read, provided that the backers are reputable and that their reputations are at stake. If we are to encourage the new smaller investor and British Gas employees to become involved in this issue—that is the main motivation of the Government's privatisation policy; it is the spreading of capitalism—it is essential that we do not confuse such investors with an enormously bulky prospectus published in the newspapers or elsewhere that will simply put them off. On the other hand, a simplified prospectus might encourage the small investor to go for it.
    Although I have sympathy with some of the arguments put by the right hon. Member for Salford, East (Mr. Orme), I feel that he over-stated his case. He referred to PAC criticism of previous flotations. I sympathise with him, and have supported him publicly on previous occasions, but if the right hon. Gentleman is basing his argument on the subsequent rise in the price of British Telecom shares, he should reflect on whether he has overstated his case. In fact, since British Telecom was floated about 15 months ago the share price has risen substantially, but the right hon. Gentleman did not point out that the BT share price has risen by far less than most other leading shares during that period. If investors had bought other shares, such as in Imperial Chemical Industries, they would have more than doubled their money. Indeed, a portfolio of leading shares would have done much better for investors than have British Telecom shares.
    The right hon. Gentleman should also have pointed out that the market as a whole has risen substantially during the past 15 months—by more than 40 per cent. I do not have the figures before me, but within that market many leading companies' shares have more than doubled in price. This is a reflection of confidence in the Government's economic policy. The encouragement of new investors and the new mood of optimism is reflected in investor confidence, at home and abroad, in the Government and in the future of our economy. For the right hon. Gentleman to criticise the flotation of British Telecom as having been under-priced because the whole market sector has improved substantially is to be unfair to himself, because he usually presents a fairer argument.
    I sympathise slightly with the gist of the right hon. Gentleman's overall criticism of the basis of flotation of the Government's privatisation programme. There is a better way of establishing a fairer price than we have so far achieved. I cannot understand why it is essential that 100 per cent. of the shares that the Government intend to sell must be sold on one day. That is unnecessary. The Government do not sell their gilts in that way, and companies do not sell their shares in that way. They sell sufficient shares to establish a market, and then gradually peddle them once the market level has been established. There seems to be no reason why the Government, who are acting on behalf of the nation as the trustee for British Gas shares, should not establish a market by selling 10 per cent. and withholding 90 per cent. of the shares, and then sell the 90 per cent. gradually during the following months, probably fairly rapidly, at a market level which will have established itself according to the market

    51
    assessment of the value of British Gas. If the flotation were handled in that way, it would overcome the necessity for the right hon. Gentleman's new clause.
    While I understand the gist of the right hon. Gentleman's argument, the proposal that a fair independent valuation should be prepared for British Gas and presented to Parliament is nonsense. The only independent fair valuation is the market valuation. Many investments and companies are valued on a fraction of their asset values. I can name any number of oil companies which are valued at well below their asset values, and I can think of many investments and companies which are valued at many times their asset values because of the premium that is paid for management, prospects or goodwill.
    I do not understand what the right hon. Gentleman means by an independent valuation. The only independent valuation that is meaningful is the market valuation—the balance between supply and demand, and buyers and sellers. That is why I suggest that if British Gas and other privatisation issues are to be floated by the Government, only a small proportion of shares should be issued initially to establish an independent share valuation through a balance between buyers and sellers in the market. That way we would not have the problem which has been highlighted and criticised by the Public Accounts Committee, and shareholders—the nation—would be guaranteed a fair price. It is inevitably almost impossible to value in advance a company of this nature.
    That is important if we are to encourage wider share ownership and the new small saver to buy shares in British Gas. A genuine investor will not be put off by the proposal for a fair valuation, because he will not go for a quick short-term profit, but will be more interested in long-term investment. Certainly British Gas employees, whom we hope will participate, will consider the long-term interest, because their future and livelihood are involved. Therefore, they will not take a short-term view or be tempted by a quick short-term profit.
    The right hon. Gentleman's new clause is impractical and unnecessary if we think carefully about the way in which the flotation of British Gas should be handled to achieve a fair balance between the desire to encourage new small investors and employees, and to seek a fair price for the nation and shareholders.
    5.45 pm
    Mr. Malcolm Bruce: I wish to deal with the new clauses tabled by the Government and the Labour party. It is conceivable that when the Secretary of State announced the privatisation of British Gas many people outside the House who do not hold the strong ideological views that are represented across the divide may have thought that it seemed not a bad idea. During the past few months the House has witnessed a dynamic change which requires this massive flotation to be considered carefully.
    It has been said, and, indeed, it should be true, that this is the biggest single company flotation that we have ever seen. When the Secretary of State announced the flotation, the price of oil was nearly $30, which consequently increased the valuation of British Gas above what it is now, when the price of oil has fallen to $15. If Sheikh
    52
    Yamani is to be believed— he has not been wrong during the past few months—the price of oil is heading towards $8.
    If those circumstances prevail, it is reasonable to assume that one would not expect to offer a major energy company on the market in the autumn. We have legitimate reasons for ensuring that the prospectus and details of the flotation are brought back to the House because the needs of the Conservative party may conflict substantially with the national interest. The House and even the Government's supporters are entitled to ensure that we are not forced to make a flotation at the bottom of the market and in circumstances where the valuation of British Gas, which should be about £8 billion, could be depressed by up to £3 billion simply because of the oil and gas markets.
    I have considerable sympathy with the sentiments behind new clause 7 and the provision that the prospectus should be brought back to the House. I have heard the Minister's objections to that, but he should recognise that we are considering a major issue, not something that can be brushed aside by saying, "Trust us. We are the Government. We shall do it in the best way." There is a clear conflict of interests between the Conservative party's political objectives and the national interest.
    It is important that this peculiar sort of flotation is spelt out in significant detail. It is wrong to privatise a major utility, as we are doing, especially in a way which neither introduces an element of major competition nor produces proper accountability and regulation. If it is appropriate to bring private money into a major utility, such as British Gas, the right approach would be to look for some sort of franchise operation. It is a privilege to operate a utility, and, to paraphrase what has already been said, it should not be a licence to print money. The right hon. Member for Salford, East (Mr. Orme) said that the British Telecom flotation had been desrcibed as buying £10 notes for £5 notes. Our worry is that the Government, in their desperation, might offer £10 notes for £2 or even £1, because they are anxious to get their hands on the money in the short term and will float the company even when the market is out of tune with the flotation. It is important that those who are invited to subsrcibe to the British Gas Flotation are aware of the circumstances.
    Another factor that must be taken into account is that there is likely to be a general election within a year of the flotation. The prospectus must spell out the political objectives of a different Government. I shall not speculate on the nature of that different Government, but let us assume that they are not a Conservative Government. If they are not, there will be moves towards greater regulation of British Gas and greater accountability, which will affect the value of the shares. If the Government floated British Gas at the bottom of the market, some people might make a substantial killing. However, if they held off a little longer or the price recovered, some people might be surprised later to discover that the British Gas operation was not as cheerful as they had thought and was not a licence to print money. In those circumstances, they would have had every right to know in advance the risks that they were taking.
    On balance, the greater risk is that the Government will sell us short rather than the other way round. In those circumstances, the Minister should accept that a substantial body of opinion outside the House is not satisfied with the way in which the Committee stage of the Bill was conducted and the fact that no significant changes

    53
    were made. The Government seem intent on pressing ahead with the flotation, ignoring the completely changed market circumstances since the idea of privatising British Gas was mooted. Therefore, the Government should bring the details of the prospectus back to the House and should require that a full explanation of what is involved is laid before the prospective shareholders. They must not simply say, "Leave it to us." I am afraid that we do not trust them.
    Mrs. Clwyd: Conservative Members have tried to convince us that wider share ownership is good for everyone, but research has shown that the number of individual shareholdings in privatised companies drops dramatically soon after privatisation and that strategic control of the stock remains in relatively few hands. In Cable and Wireless, for example, the initial 150,000 shareholders slumped to 26,000 within a year, and 467 large shareholders owned three quarters of the 346 million shares in private hands. There are plenty of similar examples, and it is a fraud to suggest that wider share ownership will be achieved by privatisation.
    As my right hon. Friend the Member for Salford, East (Mr. Orme) said forcefully, public assets have been substantially undervalued. If the Government have nothing to hide—if they are not simply trying to line the pockets of their friends—there is no reason why they should not support our new clause. Of course, they might be doing what we all suspect they are doing. As my right hon. Friend said, the terms of sale of British Gas are a cause for great concern. Our new clause tries to do something about them.
    My right hon. Friend gave detailed examples of sale receipts, percentage speculative gains and the immediate loss to the taxpayer in previous privatisations. Indeed, the Government have a poor record on such sales. Their practice is to sell assets cheaply so that flotations cannot fail. The Government's problem now is the falling price of oil, which is increasing the public's anxiety about the sale of British Gas. My right hon. Friend talked about the Public Accounts Committee, which expressed its worries about stock going to an immediate substantial premium and creating windfall gains for the investor at public expense. He challenged the Minister to answer the points made by the PAC, and perhaps we shall hear some answers from him today.
    The Public Accounts Committee made an important point about the handling of share sales. It mentioned the advice of merchant bankers, on which the Government rely heavily, who also have a stake in the sale as underwriters. The PAC said that the merchant bank advisers who were also underwriting the issue would have an incentive to ensure that the issue was fully taken up.
    An interesting side effect of the privatisation programme that we discussed in Committee is that the public spotlight is beginning to focus on the fat fees for the City. I am not surprised that Conservative Members have so vigorously defended privatisation. My right hon. Friend gave examples of the millions of pounds lost to taxpayers by the previous 10 sales of nationalised companies. The report on British Telecom showed that the Government and their advisers undervalued the offer by a factor of five, while the City was rewarded with sale fees of at least £128 million.
    The new clause is designed to ensure that that does not happen again. Judged by any standards—even by the standards of Conservative Members—those fees are
    54
    excessive and appear to bear no relation to whether a sale has failed. We want basic information on why large fees are charged and paid to enable us to determine how the costs are arrived at. The Public Accounts Committee and Parliament should investigate the fees and other expenses paid for privatisation sales, not with a view to establishing what is normal in the City, but with a view to discovering how the costs are arrived at and distributed and whether the taxpayer is getting value for money. Why have the Government ignored the advice of the PAC that the Bank of England be used more often as an adviser during sell-offs?
    Unless the Government support our new clause, the Bill will simply line the pockets of their friends. The salaries of the chairmen and top directors of 10 privatised companies increased by an average of 85 per cent. within two years of privatisation. The profits that once belonged to the public are being plundered to pay excessive salary increases to top executives.
    If the Government do not support our new clause, they will show what we suspect: that the privatisation programme has more to do with private greed than with public need.
    Mr. David Hunt: The right hon. Member for Salford, East (Mr. Orme) and his hon. Friends have extended the debate to cover some general points on the flotation. My hon. Friend the Member for Erewash (Mr. Rost) was right to say that this is a marvellous opportunity for wider share ownership. The Government have made it clear that they intend to ensure that the ownership of British Gas is widely spread throughout the British public, and specific proposals will be made to ensure that those who manage the industry and are employed in it can have a direct stake in the industry for which they work.— [Interruption.] Now that I have woken up the Opposition Front Bench, may I make some more important points?
    The Government are determined that the privatisation of British Gas will be good for the consumer, the employee and the nation. Anybody who now objectively studies the legislation, improved further here today, will see that that is the clear objective. No longer will British Gas suffer from unwarranted restrictions on its freedom to act as an efficient, successful and commercial business.
    6 pm
    The right hon. Member for Salford, East quoted from the Public Accounts Committee report, and the Government treat its comments seriously and will carefully consider the points that it makes. The formal response will, however, be a matter for my right hon. Friend the Secretary of State for Trade and Industry. The right hon. Gentleman said that he and his hon. Friends wanted to involve Parliament in the details of the proposed sale of shares in British Gas. I fully understand their interest in the contents of the prospectus, which will naturally and rightly be the subject of the widest possible interest.
    Part II will enable the assets of BGC to vest in a Companes Act company wholly owned by the Crown, with the securities issued to the Secretary of State. Clause 50 specifically contemplates the disposal by the Secretary of State of such securities. Parliamentary approval to the Secretary of State's exercise of his powers of disposal will therefore have been given when the Bill reaches the statute book. Therefore, it is not necessary to involve Parliament in the details of the execution of those powers, and it

    55
    would not be appropriate to require in the statute the presentation to Parliament of the prospectus in relation to one particular private sector company over another.
    Nevertheless—I pay particular regard to what my hon. Friend the Member for Erewash said—my right hon. Friends and I shall pay particular regard to making the prospectus available to Parliament. We shall arrange for copies to be placed in the Libraries of both Houses at an appropriate time. I share my hon. Friend's view that we must see the widest possible extension of share ownership through this privatisation issue.
    Hon. Members seek independent valuations of the company in the prospectus, but it is nonsense to value companies on the basis, for example, of the current cost of replacing all its assets. The company's value should be seen as the value of the business to investors, and depends on a number of factors at the time of sale, including the profitability of the company, and of other companies in the same market sector, and the overall state of the market. The new clause proposed by the Opposition is both unnecessary and inappropriate, and I shall urge my hon. Friends to vote against it. We want as wide a spread of ownership as possible, in particular to the employees of British Gas. My right hon. Friends and I are determined to see that the flotation provides an opportunity for all those employed in this great industry to have participation in its future success. Managers and employees will have a unique opportunity, for the first time, of a direct benefit resulting from their future success.
    Mr. Bruce: If the Government thought that the market was adverse, are there any circumstances under which they would postpone or abandon the sale for commercial reasons?
    Mr. Hunt: That question and the hon. Gentleman's contribution to the debate have demonstrated once again that the Liberal party is all over the place. It does not know whether to support or oppose the issue. I have noticed that there has been a singular absence of any member of the SDP here. Perhaps that is a good thing, because we do not know where the Liberal party or the SDP stand on this point.
    Mr. Bruce: Answer the question.
    Mr. Hunt: The answer to the question is that it is now evident for all to see that neither the Liberal party nor the SDP wants this issue to be a success. I have news for them—it will be a success. I have no doubt that the future commercial success of Britain will greatly benefit from the ownership of this company being spread among the employees, the managers, the pension funds and individual investors. These proposals will enhance the commercial success of our nation and bring benefit to industry, consumers and the employees.
    Mr. Orme: With the leave of the House, Mr. Speaker. The Minister's reply proves that we were right to table our new clause. The House is right to srcutinise the sale of a major national asset. On almost every occasion that the Government have privatised, they have got it wrong over the sale of shares. This is the biggest sale of shares ever. As for wider share ownership, we have seen what has happened with the shares that have been resold and gone into larger units and companies. For example, the total
    56
    share ownership of British Telecom among employees is less than 2 per cent. Therefore, I ask my right hon. and hon. Friends to vote against the Government's new clause, on the basis that our new clause on public srcutiny by the House of Commons is the correct one.
    Question put, That the clause be read a Second time:—
    The House divided: Ayes 228, Noes 185.

    Division No. 102]

    [6.10 pm

    AYES

    Adley, Robert

    Fry, Peter

    Alison, Rt Hon Michael

    Galley, Roy

    Amess, David

    Gardiner, George (Reigate)

    Ancram, Michael

    Garel-Jones, Tristan

    Aspinwall, Jack

    Gilmour, Rt Hon Sir Ian

    Atkins, Rt Hon Sir H.

    Glyn, Dr Alan

    Atkins, Robert (South Ribble)

    Gorst, John

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

    Gower, Sir Raymond

    Baldry, Tony

    Grant, Sir Anthony

    Beaumont-Dark, Anthony

    Greenway, Harry

    Bellingham, Henry

    Gregory, Conal

    Benyon, William

    Griffiths, Sir Eldon

    Best, Keith

    Grist, Ian

    Biffen, Rt Hon John

    Ground, Patrick

    Biggs-Davison, Sir John

    Grylls, Michael

    Blaker, Rt Hon Sir Peter

    Gummer, Rt Hon John S

    Body, Sir Richard

    Hamilton, Hon A. (Epsom)

    Boscawen, Hon Robert

    Hamilton, Neil (Tatton)

    Bottomley, Peter

    Hannam, John

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

    Harris, David

    Bowden, Gerald (Dulwich)

    Hayes, J.

    Boyson, Dr Rhodes

    Hayhoe, Rt Hon Barney

    Braine, Rt Hon Sir Bernard

    Heddle, John

    Brandon-Bravo, Martin

    Henderson, Barry

    Bright, Graham

    Higgins, Rt Hon Terence L.

    Brittan, Rt Hon Leon

    Hind, Kenneth

    Brown, M. (Brigg & Cl'thpes)

    Hirst, Michael

    Browne, John

    Holland, Sir Philip (Gedling)

    Bruinvels, Peter

    Holt, Richard

    Bryan, Sir Paul

    Howarth, Gerald (Cannock)

    Buchanan-Smith, Rt Hon A.

    Howell, Rt Hon D. (G'ldford)

    Buck, Sir Antony

    Howell, Ralph (Norfolk, N)

    Butler, Rt Hon Sir Adam

    Hunt, David (Wirral W)

    Butterfill, John

    Irving, Charles

    Carlisle, John (Luton N)

    Johnson Smith, Sir Geoffrey

    Carlisle, Kenneth (Lincoln)

    Kershaw, Sir Anthony

    Cash, William

    Key, Robert

    Chapman, Sydney

    Knox, David

    Chope, Christopher

    Latham, Michael

    Clark, Dr Michael (Rochford)

    Lawler, Geoffrey

    Clark, Sir W. (Croydon S)

    Lawrence, Ivan

    Clarke, Rt Hon K. (Rushcliffe)

    Leigh, Edward (Gainsbor'gh)

    Cockeram, Eric

    Lester, Jim

    Colvin, Michael

    Lewis, Sir Kenneth (Stamf'd)

    Conway, Derek

    Lightbown, David

    Coombs, Simon

    Lilley, Peter

    Cope, John

    Lloyd, Ian (Havant)

    Cormack, Patrick

    Lord, Michael

    Corrie, John

    Luce, Rt Hon Richard

    Cranborne, Viscount

    Lyell, Nicholas

    Critchley, Julian

    McCurley, Mrs Anna

    Currie, Mrs Edwina

    Macfarlane, Neil

    Dickens, Geoffrey

    MacGregor, Rt Hon John

    Dicks, Terry

    MacKay, Andrew (Berkshire)

    Dorrell, Stephen

    Maclean, David John

    Douglas-Hamilton, Lord J.

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

    Dover, Den

    Madel, David

    du Cann, Rt Hon Sir Edward

    Malone, Gerald

    Durant, Tony

    Maples, John

    Eggar, Tim

    Marshall, Michael (Arundel)

    Evennett, David

    Mates, Michael

    Eyre, Sir Reginald

    Mather, Carol

    Finsberg, Sir Geoffrey

    Maude, Hon Francis

    Fletcher, Alexander

    Merchant, Piers

    Fookes, Miss Janet

    Meyer, Sir Anthony

    Forman, Nigel

    Miller, Hal (B'grove)

    Forth, Eric

    Mills, Iain (Meriden)

    Fowler, Rt Hon Norman

    Mills, Sir Peter (West Devon)

    57

    Miscampbell, Norman

    Speller, Tony

    Mitchell, David (Hants NW)

    Spencer, Derek

    Monro, Sir Hector

    Spicer, Jim (Dorset W)

    Moore, Rt Hon John

    Spicer, Michael (S Worcs)

    Morrison, Hon C. (Devizes)

    Stanbrook, Ivor

    Moynihan, Hon C.

    Stanley, Rt Hon John

    Needham, Richard

    Stern, Michael

    Nelson, Anthony

    Stevens, Lewis (Nuneaton)

    Neubert, Michael

    Stewart, Allan (Eastwood)

    Nicholls, Patrick

    Stewart, Andrew (Sherwood)

    Norris, Steven

    Stewart, Ian (Hertf'dshire N)

    Onslow, Cranley

    Stokes, John

    Ottaway, Richard

    Stradling Thomas, Sir John

    Page, Sir John (Harrow W)

    Sumberg, David

    Page, Richard (Herts SW)

    Taylor, John (Solihull)

    Parris, Matthew

    Taylor, Teddy (S'end E)

    Patten, J. (Oxf W & Abgdn)

    Temple-Morris, Peter

    Pattie, Geoffrey

    Thomas, Rt Hon Peter

    Pawsey, James

    Thompson, Donald (Calder V)

    Peacock, Mrs Elizabeth

    Thorne, Neil (Ilford S)

    Percival, Rt Hon Sir Ian

    Thornton, Malcolm

    Porter, Barry

    Townend, John (Bridlington)

    Powell, William (Corby)

    Tracey, Richard

    Prentice, Rt Hon Reg

    Twinn, Dr Ian

    Price, Sir David

    van Straubenzee, Sir W.

    Pym, Rt Hon Francis

    Vaughan, Sir Gerard

    Raffan, Keith

    Viggers, Peter

    Raison, Rt Hon Timothy

    Waddington, David

    Rathbone, Tim

    Wakeham, Rt Hon John

    Rhodes James, Robert

    Waldegrave, Hon William

    Ridley, Rt Hon Nicholas

    Walker, Bill (T'side N)

    Ridsdale, Sir Julian

    Walker, Rt Hon P. (W'cester)

    Robinson, Mark (N'port W)

    Waller, Gary

    Roe, Mrs Marion

    Ward, John

    Rossi, Sir Hugh

    Wardle, C. (Bexhill)

    Rost, Peter

    Warren, Kenneth

    Rumbold, Mrs Angela

    Watson, John

    Ryder, Richard

    Watts, John

    Sackville, Hon Thomas

    Wheeler, John

    Sainsbury, Hon Timothy

    Whitney, Raymond

    Sayeed, Jonathan

    Wolfson, Mark

    Shaw, Sir Michael (Scarb')

    Wood, Timothy

    Shepherd, Colin (Hereford)

    Woodcock, Michael

    Shepherd, Richard (Aldridge)

    Young, Sir George (Acton)

    Silvester, Fred

    Skeet, Sir Trevor

    Tellers for the Ayes:

    Smith, Sir Dudley (Warwick)

    Mr. Peter Lloyd and

    Smith, Tim (Beaconsfield)

    Mr. Mark Lennox Boyd.

    NOES

    Adams, Allen (Paisley N)

    Clarke, Thomas

    Anderson, Donald

    Clay, Robert

    Archer, Rt Hon Peter

    Clelland, David Gordon

    Atkinson, N. (Tottenham)

    Clwyd, Mrs Ann

    Bagier, Gordon A. T.

    Cocks, Rt Hon M. (Bristol S)

    Barnett, Guy

    Cohen, Harry

    Barron, Kevin

    Conlan, Bernard

    Beckett, Mrs Margaret

    Corbett, Robin

    Beith, A. J.

    Corbyn, Jeremy

    Bell, Stuart

    Cox, Thomas (Tooting)

    Benn, Rt Hon Tony

    Craigen, J. M.

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

    Crowther, Stan

    Bermingham, Gerald

    Cunningham, Dr John

    Bidwell, Sydney

    Davies, Ronald (Caerphilly)

    Blair, Anthony

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

    Bray, Dr Jeremy

    Deakins, Eric

    Brown, Gordon (D'f'mline E)

    Dixon, Donald

    Brown, Hugh D. (Provan)

    Dormand, Jack

    Brown, N. (N'c'tle-u-Tyne E)

    Douglas, Dick

    Brown, R. (N'c'tle-u-Tyne N)

    Dubs, Alfred

    Bruce, Malcolm

    Dunwoody, Hon Mrs G.

    Buchan, Norman

    Eadie, Alex

    Callaghan, Jim (Heyw'd & M)

    Eastham, Ken

    Campbell, Ian

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

    Campbell-Savours, Dale

    Evans, John (St. Helens N)

    Canavan, Dennis

    Ewing, Harry

    Carlile, Alexander (Montg'y)

    Fatchett, Derek

    Carter-Jones, Lewis

    Fields, T. (L'pool Broad Gn)

    Cartwright, John

    Fisher, Mark

    Clark, Dr David (S Shields)

    Flannery, Martin

    58

    Foot, Rt Hon Michael

    Mitchell, Austin (G't Grimsby)

    Forrester, John

    Morris, Rt Hon A. (W'shawe)

    Foster, Derek

    Morris, Rt Hon J. (Aberavon)

    Foulkes, George

    Nellist, David

    Fraser, J. (Norwood)

    Oakes, Rt Hon Gordon

    Freeson, Rt Hon Reginald

    O'Brien, William

    Freud, Clement

    O'Neill, Martin

    Garrett, W. E.

    Orme, Rt Hon Stanley

    George, Bruce

    Park, George

    Gilbert, Rt Hon Dr John

    Parry, Robert

    Godman, Dr Norman

    Patchett, Terry

    Golding, John

    Pendry, Tom

    Gould, Bryan

    Pike, Peter

    Gourlay, Harry

    Powell, Raymond (Ogmore)

    Hamilton, James (M'well N)

    Prescott, John

    Hamilton, W. W. (Fife Central)

    Radice, Giles

    Hancock, Michael

    Redmond, Martin

    Hardy, Peter

    Richardson, Ms Jo

    Harman, Ms Harriet

    Roberts, Allan (Bootle)

    Harrison, Rt Hon Walter

    Robinson, G. (Coventry NW)

    Hart, Rt Hon Dame Judith

    Rogers, Allan

    Hattersley, Rt Hon Roy

    Rooker, J. W.

    Haynes, Frank

    Ross, Ernest (Dundee W)

    Heffer, Eric S.

    Ross, Stephen (Isle of Wight)

    Hogg, N. (C'nauld & Kilsyth)

    Rowlands, Ted

    Holland, Stuart (Vauxhall)

    Sedgemore, Brian

    Howells, Geraint

    Sheerman, Barry

    Hoyle, Douglas

    Sheldon, Rt Hon R.

    Hughes, Dr Mark (Durham)

    Shore, Rt Hon Peter

    Hughes, Robert (Aberdeen N)

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

    Hughes, Roy (Newport East)

    Silkin, Rt Hon J.

    Hughes, Sean (Knowsley S)

    Skinner, Dennis

    Janner, Hon Greville

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

    Jones, Barry (Alyn & Deeside)

    Snape, Peter

    Kaufman, Rt Hon Gerald

    Soley, Clive

    Kilroy-Silk, Robert

    Spearing, Nigel

    Kinnock, Rt Hon Neil

    Steel, Rt Hon David

    Kirkwood, Archy

    Stewart, Rt Hon D. (W Isles)

    Lambie, David

    Stott, Roger

    Lamond, James

    Strang, Gavin

    Leighton, Ronald

    Straw, Jack

    Lewis, Terence (Worsley)

    Thomas, Dafydd (Merioneth)

    Litherland, Robert

    Thomas, Dr R. (Carmarthen)

    Lloyd, Tony (Stretford)

    Thompson, J. (Wansbeck)

    Lofthouse, Geoffrey

    Thorne, Stan (Preston)

    Loyden, Edward

    Tinn, James

    McCartney, Hugh

    Torney, Tom

    McDonald, Dr Oonagh

    Wainwright, R.

    McKelvey, William

    Wallace, James

    MacKenzie, Rt Hon Gregor

    Wardell, Gareth (Gower)

    Maclennan, Robert

    Wareing, Robert

    McNamara, Kevin

    Weetch, Ken

    McTaggart, Robert

    Welsh, Michael

    McWilliam, John

    White, James

    Madden, Max

    Williams, Rt Hon A.

    Marek, Dr John

    Wilson, Gordon

    Marshall, David (Shettleston)

    Winnick, David

    Martin, Michael

    Woodall, Alec

    Mason, Rt Hon Roy

    Wrigglesworth, Ian

    Maynard, Miss Joan

    Young, David (Bolton SE)

    Meadowcroft, Michael

    Michie, William

    Tellers for the Noes:

    Mikardo, Ian

    Mr. Allen McKay and

    Millan, Rt Hon Bruce

    Mr. Lawrence Cunliffe.

    Miller, Dr M. S. (E Kilbride)

    Question accordingly agreed to.
    Clause read a Second time, and added to the Bill.

New Clause 1

  REGIONAL COMPANIES
  'The Secretary of State shall as soon as possible after the transfer to the successor Company of the property, rights and liabilities of the Corporation form and register under the Companies Act 1985 a Company for each region of the Corporation and transfer from the successor Company to each such regional Company the property, rights and liabilities

  59
  formerly pertaining to the Corporation in each relevant region together with a share of the property, rights and liabilities of the successor Company which the Secretary of State shall deem equitable.".—[Mr. Wilson.]
  Brought up, and read the First time.
  Mr. Wilson: I beg to move, That the clause be read a Second time.
  The new clause is probably one of most radical that has been tabled. Although many hon. Members are completely and utterly against the privatisation of British Gas, it is recognised that the Government have a substantial majority and on Second Reading the vote was given for privatisation. My new clause is no approval of privatisation— I am against it. The structure that has been adopted by the Government for British Gas is highly dangerous.
  My new clause seeks to establish not the one successor company that the Government have outlined as appropriate to take over the work, enterprise, rights, assets and obligations of the BGC, but to use the mechanism that exists in the Bill for the successor company so as to provide for each of the regional boards or areas of British Gas to be divided up into companies and for those to be floated on the stock market.
  It is important to address ourselves to a point that did not emerge in Committee but which was acceded to in Committee—that British Gas in its present form is a public utility which is highly centralised but which has some regional operations which, prior to the 1972 Act, were autonomous boards in the gas industry. Since nationalisation, bit by bit we have seen those powers disappear.
  I am suggesting that we retain the central successor company. The Bill provides for transfer of the assets on a vesting day to that company. It would perhaps have been easier to eliminate that company altogether but I would be forestalled in that by the Bill's long title. In any event, it is a useful mechanism because, although I would prefer, for instance, to see Scottish Gas become a completely autonomous company with access to its own sources of gas, I recognise that that might not be appropriate to other parts of the United Kingdom. A substantial pool of gas is available to Scottish Gas because twice our market consumption share comes from indigenous resources in the North sea. I exclude the supplies of gas which come from the Norwegian sector. A successor company could be a holder of the pool of gas which exists and could make it available to the regional companies which will be set up to market it, to provide for the distribution services, the sales of appliances in the showrooms, and so forth.
  There are some parallels to that. In England there is the Central Electricity Generating Board and there are marketing companies, but those are, of course, in the public sector. The independent television industry provides another example. The Independent Broadcasting Authority sponsors Independent Television News, which supplies news or central facilities to individual companies down the line. Those companies supply the programmes to the consumers and they have to pay their share of the costs of ITN.
  Mr. Jim Craigen: Following those analogies, will there be some franchising arrangement with the regional companies and do I take it
  60
  from what the hon. Gentleman says that he has in mind marketing companies?
  Mr. Wilson: No, I shall correct the hon. Gentleman's impression. I want gas companies in each region where British Gas currently operates. I would not necessarily take the franchising further than the analogy I gave in relation to ITN. It would not be appropriate in the circumstances that I have outlined. Nevertheless, it is quite a good analogy to show that there can be a central holding of the raw material of gas and yet independent companies would be able to market their own.
  Alternatively, there is the other situation that I have desrcibed of an independent company in each area, but then the current pool of gas would have to be divided in some way so that a continuity of supply was provided for.
  Mr. Dick Douglas: Would the regional companies that the hon. Gentleman proposes be independent or wholly owned subsidiaries of the central company? A strict reading of the new clause shows that they would be wholly owned subsidiaries of the central company.
  Mr. Wilson: The hon. Gentleman was fortunate enough not to serve on the Standing Committee that considered the Bill which, to put it mildly, took a rather long time. If the hon. Gentleman consulted the Bill he would find that it is necessary to go through the procedure that I have outlined. The long title, in particular, would prevent the setting up of individual companies as successor companies through transfer by the Crown direct from British Gas. As I said at the outset, independent companies would be floated off separately and they would be centres of authority.
  Let me deal with the structure which exists in the Bill. Whether or not we embark on the principle of privatisation, what the Government have sought to do is not acceptable to many people. In other words, they are turning a public monopoly into a private monopoly with no real opportunity for competition, with weak regulatory powers, and, as is hinted at in the abolition of the regional gas consumers councils now served by British Gas which was discussed earlier, we are seeing incipient centralisation by British Gas. That background is ominous. Few countries will allow the creation of such a huge monopoly on that basis. Indeed, in the United States, the home of the free market, legislation seeks to bust trusts when they come to that stage. The Americans found it necessary to break up "Ma Bell", whereas here we have an example of the Government going ahead with the creation of Mr. Gas. It is dangerous in terms of the accumulation of authority within the overall economy of the United Kingdom and it is also dangerous for the various areas of the United Kingdom because they will see what responsibility and authority is left to British Gas operating in their areas slide to the centre.
  In Committee we discussed the fact that already British Gas is altering the name of Scottish Gas to British Gas Scotland and Wales Gas to British Gas Wales, and so on. A new uniform structure is being imposed from the centre.
  The only reason why the Government have gone ahead with the privatisation of British Gas in this form is that they wish to sell in a hurry. Their time is running out and this is one example where the Government have not even tried to project the benefits of privatisation. Instead, they

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  seem more honest in their aims when they recognise that, given the reduction in oil revenues, it is a great advantage to them to have massive resources coming in, albeit of capital arising through the sale of shares in British Gas, in order to finance tax cuts for the next election. But that is a short-term advantage that would have disastrous consequences. In the interests of widening the share distribution and strengthening the economy, it would be far healthier for the Government to consider the flotation of separate companies, each having a distinctive basis. Thus, I have in mind the setting up of 12 companies.
  In Committee I drew the following analogy. One of the difficulties facing Merseyside is the absence of indigenous companies. When Liverpool was flourishing, insurance and shipping companies acted autonomously, creating wealth and providing jobs in the area. Now there is a wasteland. Many of us in Scotland are worried that if too many of our companies are taken over, any opportunities to change our economy will go, along with the units on which we had previously relied. Thus, I fear the Bill's consequences for regional development.
  In Committee, I drew attention to an interesting article by Mr. Dennis Wilson, a former director of British Gas, which appeared in the magazine Gas World. He lamented the abandonment of autonomous systems of staff and line management, and desrcibed the flight of authority from the regional boards under the 1972 Act, saying that they had been emasculated. He also complained that British Gas, at the centre, was spawning a central hyperstructure of mammoth proportions, situated in expensive London locations and of no benefit to local consumers. He clinched that argument with the remarkable information that, at March 1985, there were 6,768 employees at the headquarters of British Gas. As a former director, he made it clear that he thought that the headquarters exercised an over-close srcutiny of the activities going on in the various regions or areas of the corporation. He said that, although demanning and efficiency had been called for from British Gas as a whole, there had been 4·4 per cent. demanning in the regions with only 1·1 per cent. demanning at headquarters. That rings true.
  Perhaps the headquarters staff are doing work that is duplicated elsewhere. But even if they are doing valuable work, it could be done at area headquarters. That would create employment as well as opportunities for promotion and advancement and would give a commercial boost to the many areas that suffer from high unemployment. Thus, good quality jobs are being lost. When so many employees are employed at head office a sort of arteriosclerosis of the corporation develops. However, as I am not medically qualified, I would not want to elaborate on that save to say that it does not bode well for the corporation's commercial health.
  I believe that we should float off companies in each of the areas. They would carry out the main functions with the exception, perhaps, of buying gas, although they could perhaps undertake that function in competition with each other 'at a later stage. They could oversee supply within their respective areas, management techniques and the taking of decisions with regard to gas showrooms. Regional companies might well have the advantage of being able to favour local suppliers, which would be good for the health of the economy.
  Moreover, the flotation of such companies would strengthen the economy, particularly in Scotland. Some of those companies would be substantial. The number of staff
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  at regional level ranges from 5,000 to 11,000. Scottish Gas serves more than 1 million customers, has 74,000 appliance sales per year and carried out 1·25 million service jobs in the last year of operation. All those functions would be better controlled at an area level. Scottish Gas also has sales of £403 million and investment worth about £20 million per year. Its wages amount to £57 million and a recent magazine article estimated its pre-tax profits to be about £35 million. However, that as an estimate, as British Gas does not attempt to split up its overall profits between the area organisations.
  I commend the new clause to the House. The Government should have undertaken something like it from the beginning, instead of creating a colossus which might have adverse effects on the economy. If a Scottish Gas plc was established it might make up, in some small way, for the recent loss of Andersson Strathclyde, Bells, House of Fraser, perhaps the Trustee Savings Bank if the appellate committee of the other place does not change the judgment, Coats Patons and possibly Distillers. It would greatly help the Scottish economy to have a new, thriving company on the market that was controlled from within Scotland. It might also be an answer to some of the economic problems affecting different parts of the United Kingdom, and I commend it to hon. Members.
  Mr. Alex Fletcher: I shall be brief, as I was not a member of the Committee and so have not followed the arguments as closely as have the hon. Member for Dundee, East (Mr. Wilson) and my right hon. Friend the Minister of State. I apologise to my right hon. Friend in advance in case I make some points which have already been considered in Committee, or which to his mind are too obvious even to be discussed. However, I am sure that my right hon. Friend will have patience with me.
  I was attracted by the new clause because it gives the House a chance to consider the structure of the new, privatised corporation. My interest is based, not only on any regional or Scottish consideration, but on the question of how the corporation will develop over the years. We naturally think of British Gas as a national and local gas supplier and distributor, but we shall be introducing a company which has the capacity to stand alongside BP as a large high-tech energy business which is capable of supplying the domestic market as its primary consideration as well as of moving internationally and taking its place in the exploration, distribution and development of energy resources in other parts of the world. I have the same view of British Telecom, although it is the local and national telephone company. I hope that it will use its domestic base to exercise influence, economic power, and profitability in other parts of the world.
  I return to the local, regional and Scottish scene. It is important for regional policy that the management and administration of separate regional companies—I see them as subsidiaries of the main privatised corporation—have local accountability. Their ability to contribute to high calibre management jobs would satisfy the regions and Scotland.
  The proposed system will give us a local chairman who is little more than a PR man. He will have a grand title—I make no criticism of people holding such jobs—but he will be a PR officer for customer service. With separate fully accountable subsidiary companies, with all the local and regional assets in the balance sheet, we could have proper local management and boards of directors and some

  63
  competition between regions in terms of service, quality of service and efficiency of administration. It would be possible to compare the efficiency of the different subsidiaries and to discover what benefits might accrue from the lessons learnt.
  That is done in the electricity industry in Scotland. The two companies submit two balance sheets and accounts which include all the assets. A different system is operated south of the border by the Central Electricity Generating Board and the distribution boards, but the Scottish model is at least worthy of consideration and debate. The consumer should be able to judge, on a full and proper company law basis, the performance of one regional gas operating company compared with another, without taking anything away from the efficiency or efficacy of British Gas plc. With those thoughts in mind, I support the new clause.
  Mr. Bruce: I support the new clause tabled by the hon. Member for Dundee, East (Mr. Wilson), to which I have appended my name. The issue was raised in Committee and I regret that the Government are not prepared to face up to it. A number of matters have emerged. It is not just a question of before and after. The clause proposes to go further than what occurs at present. The Bill will create a more centralised gas industry. Even if the Government cannot accept the full thrust of the clause, they should have the grace to acknowledge that they are not simply transferring the status quo but are engaged in greater centralisation. Many of us feel that that is a retrograde step.
  6.45 pm
  The new clause suggests that we go further and create autonomous companies in Scotland and Wales and in the English regions. I accept that the competition would be limited, since the core business would have a substantial monopolistic element, but the scope for more competition would be greater. The transparency factor would be greater, but one would be able to examine the performance of different regional and national companies and draw lessons from them, whereas at present we are at the mercy of a centralised wisdom heavily concentrated at the corporate headquarters in London.
  I suggest that the regional companies should be able to buy their gas—in most cases from British Gas through the transmission system—with the option of buying gas from other sources, whether that is from other than natural sources as technology changes, or from local natural sources onshore or offshore.
  The hon. Member for Dundee, East mentioned the concern about the size of the British Gas Corporation headquarters in London. I fear that after privatisation the headquarters will be even bigger and that the management jobs available outside London will be fewer. Management decisions are being made at a central corporate headquarters and decision-making is not being devolved, so the freedom to pursue action needed in a particular area or region is not taken on board.
  The decisions by North Thames gas on a particular course of action are fundamentally different from those that might be taken in Scotland. If they are that different, separate and autonomous companies should make the
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  decisions. Each area should have the freedom to pursue policies in the light of local circumstances and different market circumstances.
  Consumer councils have also been discussed in terms of regionalisation. I am slightly puzzled that some members of the Committee seemed enthusiastic about regional consumer councils, but were unwilling to accept that that need for local control and autonomy should reach the management and organisation of the gas industry. It seems strange to be in favour of regional consumer councils, but in favour of a unified, centralist, London-based corporation, without the opportunity to develop separate identities in the region.
  The Government have rejected our proposals and have been inclined to rubbish them, but they have not come up with arguments as to why our proposals cannot be put into effect. The Minister will recognise that many people outside the House are puzzled about why that option has not been seriously considered. If it had been fully considered and the Government had said that they had examined it in depth but had good, coherent reasons why it would not be in the best interests of the consumer, the shareholders or the taxpayers, we should be more satisfied. The Government have said that they do not see any advantage in our proposals, but they have failed to say why.
  In Scotland there is considerable interest in the idea of Scottish gas being handled by a separate company operating as an independent entity. It would have its headquarters in Scotland and the people of Scotland would have a direct stake in it. We see no reason why other regions, such as Wales, should not be given a similar opportunity. The proposal does not mean that there would be no centralised gas industry. Of course the transmission system must be centralised, and many of the corporate offices will continue to function to provide a service, but we need a counterbalance.
  A monolithic structure will pursue its own policies and there will be no opportunities for the Scottish, Welsh and the English regions to say that they do not believe that the corporate central decisions are in the best interests of their consumers. They will be outvoted. All that we shall have is a National Consumer Council with possibly one regional representative. That is a weak and inadequate alternative to what is proposed.
  The Government should have explored the sentiment behind the new clause more thoroughly. I urge them to take on board our serious proposal, even if the clause is not structured perfectly. If the Government go ahead with their centralist philosophy they will alienate many people outside London who are fed up with decision-making being taken away from their locality and made in London. The decision-making process will be removed from their localities and there will be an inability to get at the person making the decisions. The local representative may continue to be near to someone's doorstep, but very often it will be necessary to go to London to get satisfaction or to change policy.
  Mr. Douglas: I shall try to be brief, but we are dealing with an important issue which must be treated seriously. We have heard three speeches on the new clause and there have been three different interpretations of it, and I shall not necessarily present my interpretation of the clause. I am in favour of a decentralised operation. The hon. Member for Dundee, East (Mr. Wilson) made clear the

  65
  thrust of his argument in his closing remarks. He puts forward the clause as a piece of decentralisation, and in so doing claims that Scottish Gas plc will become the cure-all for the ills of the Scottish economy.
  Mr. Wilson: I did not say that.
  Mr. Douglas: I am not saying that the hon. Gentleman used those exact words, but he suggested that Scottish Gas plc would become a cure-all. Is he saying that the Strathclyde problem would be resolved and that Scottish Gas would lead to an expansion of employment? Under the existing structure we have had reasonable decentralisation. I do not say that everything has been perfect because public utilities, which tend to be monolithic, cannot be perfect. However, when a public utility has some form of accountability through a Minister to Parliament, pressures can be exerted in reflecting regional concerns.
  The real thrust against the Government's proposals is that once the corporation becomes a company the chances of controlling it and achieving a regional dimension, whether the region is Scotland as a nation or another area, will diminish and evaporate almost completely. I found the remarks of the hon. Member for Edinburgh, Central (Mr. Fletcher) humorous when he said that he wanted the new company to be a real challenger to BP. The Government introduced the Oil and Gas (Enterprise) Act 1982 and in so doing they stripped British Gas of any opportunities it had of engaging in exploration and production. However, every sinner who repenteth is worth while.
  I think that I speak for all Scottish Labour Members when I say that we want to see decentralisation. However, we recognise that the chances of us exerting pressures within a regional dimension will diminish and evaporate once the Bill is enacted. That is why we are so opposed to it. I do not think that it is valuable to give the impression to the Scottish people, the Welsh people, or the people of any region of the United Kingdom that if we set up mini companies that are independent, or wholly-owned subsidiaries of the major company, they will cure the major difficulties within the Scottish economy and that Scotland will get a great prize.
  Mr. Orme: The hon. Members for Dundee, East (Mr. Wilson) and for Gordon (Mr. Bruce) asked me on Second Reading whether the Opposition were in favour of the sort of proposal that is before us in new clause 1. I said then that we were not. Notwithstanding all the faults or weaknesses that may exist in British Gas, I think that Scotland, along with other areas, has had good service from it. The policy that has been advanced by the hon. Member for Dundee, East could lead to different charges in different areas. If independent companies were set up, their charges could be different. I come from the northwest and I do not want differential charging to be a feature of life in areas that are far from the centre. That would pose a danger for Scotland, Wales and other areas.
  How far should we go with any independence that is created? I think that we should—
  Mr. Wilson: It does not necessarily follow that charges in the more remote areas would be higher. In Scotland we have two electricity generating boards, and the price of electricity is cheaper to the customer in Scotland than in England and Wales. If a pool of gas is owned by the successor company and there is level pricing, any
  66
  reductions in the price of gas that are enjoyed by the customer will be the result of the efficient management of the local companies.
  Mr. Orme: I do not think that the parallel with electricity is valid. The hon. Gentleman is playing into the hands of Conservatives who talk about competition and want to see British Gas broken up. British Gas is highly efficient and the charges for gas are too high only because of things like the gas levy. The Government are draining away that which is created by the efficiency of British Gas. There could be cheaper prices in Scotland, Wales and England. The structure that is proposed by the hon. Gentleman would not work, and it would not be in the interests of Scotland or any other region within the United Kingdom.
  Mr. Fletcher: The right hon. Gentleman said a few moments ago that there could be differential pricing in the regions. He argued that the further away from the centre an area was the more that that could he. Surely he is not suggesting that the centre of the gas industry is the west end of London. Everything depends on where the centre is.
  Mr. Orme: It is not a geographical issue in that sense. When the Telecommunications Bill, as it then was, passed through the House, I was involved because of my responsibilities as an Opposition spokesman. There were major arguments on behalf of those living in rural areas and much time was spent discussing what would happen to them if the Bill were enacted. We spoke of the dangers of differential pricing.
  The Opposition feel that the new clause is unnecessary. If the hon. Member for Dundee, East and those who support him force a Division on this issue, I shall ask my right hon. and hon. Friends not to support the clause.
  Mr. Buchanan-Smith: I agree with the comments of the right hon. Member for Salford, East (Mr. Orme) about the woolliness of the way in which the new clause was introduced by the hon. Member for Dundee, East (Mr. Wilson). The hon. Gentleman talked about cheaper electricity being available in Scotland, but he did not acknowledge that the lower prices are related directly to the extent to which we depend upon nuclear power in Scotland. I hope that the hon. Gentleman consulted the hon. Member for Gordon (Mr. Bruce), and I hope that he in turn consulted his hon. Friends in the Social Democratic party.
  With respect to my hon. Friend the Member for Edinburgh, Central (Mr. Fletcher), the alliance that we see on the new clause does not take into account the fact that the people of Scotland would not know where they were when it came to their energy policy. Each party would be advocating a different policy. On that basis, if on no other, anyone who believes that a clause of this nature would be for the benefit of Scotland would be wise to srcutinise closely precisely what it is that those who support it are trying to achieve.
  I think that the hon. Member for Dundee, East was less than fair when he said that a new structure was being imposed on Scotland by British Gas. That is not true. British Gas is maintaining the structure and organisation that currently applies. There has been a change of name and Scottish Gas has become British Gas Scotland. I should have thought that the hon. Gentleman would prefer

  67
  "Scotland" to the adjective "Scottish". It is important that that is on the record, because the hon. Gentleman returns constantly to this issue and misleads people in desrcibing what is taking place. As I said in Committee, there will be no change in the structure and organisation of British Gas Scotland.
  I think that my hon. Friend the Member for Edinburgh, Central was less than fair to the chairman of what will be British Gas Scotland in desrcibing him as no more than a public relations officer. My hon. Friend has a different kind of constituency, and I do not know whether he has had any dealings with the chairman, but I have had many dealings with the chairman in relation to service, transmission lines, and so on—I do not mean small individual consumer questions, but larger matters of supply to whole communities, renewal or reinforcement of transmission lines, and so on—and have never failed to obtain complete satisfaction. I felt, therefore, that my hon. Friend's comments belittled the chairman's role.
  The hon. Member for Gordon asked why the proposal in the new clause could not be carried out, but nobody has said that. I am surprised that the hon. Gentleman did not listen more carefuly to what was said in Committee. The question, as the right hon. Member for Salford, East has said, is whether it is worth doing and whether it is in the interests of consumers in Scotland.
  Those who support the new clause must realise that we start from a successful, integrated industry. That is partly due to the development of North sea gas and the almost total reliance, apart from some liquid natural gas, on an integrated distribution system throughout the United Kingdom. Had we begun from the situation at the time of nationalisation, with individual gas works producing gas from coal in a large number of different places, different considerations might apply, but as we now have an integrated industry relying on a single source of supply it makes no sense to break it down.
  Mr. Craigen: The Minister has spent so much time telling us what an excellent gas industry we have that I am surprised there is any need for privatisation. How can he guarantee that the industry will behave as he suggests in relation to structure once it is privatised?
  Mr. Buchanan-Smith: That is exactly the question that I wanted. I was getting worried that it would not be asked. I believe that the tests in the private sector—competition with other fuels in the industrial market, and so on—will provide far greater incentives to efficiency and higher standards of service to the consumer. It has been amply demonstrated that the private sector provides better standards of service and efficiency in the interests of the consumer.
  The hon. Member for Dunfermline, West (Mr. Douglas) referred to the problem of a private company serving the interests of the region. For industrial consumers, as has been shown in this period of falling oil prices, competition from other fuels ensures that consumers obtain proper services. On the question of tariffs, the hon. Gentleman failed to recognise that the Director General of Gas Supply is charged under the Bill to observe the need to avoid preferences and to ensure fairness between different areas. I stress that point also to my hon. Friend the Member for Edinburgh, Central.
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  There might have been more of an argument if hon. Members could have said, as I thought my hon. Friend the Member for Edinburgh, Central was about to say, that the new clause would lead to more competition. In fact, because there would still be a monopoly supplier in each region there would be no more competition than there would be among the various regions of British Gas. I believe—here I am absolutely at one with the right hon. Member for Salford, East—that the result would be differential pricing. I have dealt with the false analogy with electricity suggested by the hon. Member for Dundee, East. The fact that Scotland has far more scattered communities probably than any other region means that British Gas must provide special supplies of liquid natural gas, and so on. I accept that Scotland has problems, but without an integrated British Gas those problems could lead to much higher costs.
  I believe that the new clause would do nothing to serve the interests of Scottish consumers. Having listened to those who spoke in favour of the new clause, I am left wondering what they really want. My hon. Friend the Member for Edinburgh, Central wants a strong British Gas to go out into the world market, but British Gas is already in the world market. Representatives of British Gas have accompanied me on trade missions and British Gas provides consultancies, advice and services overseas. Breaking down that integrated industry within the United Kingdom would not serve the best interests of British Gas or its consumers in this country.
  The hon. Member for Glasgow, Maryhill (Mr. Craigen) asked the hon. Member for Dundee, East whether the proposed system would apply just to marketing or whether it would apply to franchising. The reply was, in effect, that the pool of gas would simply be divided up somehow. When the hon. Member for Dunfermline, West asked whether the companies would be subsidiaries of British Gas or whether they would be independent companies, the hon. Member for Dundee, East said that there would be centres of authority in the regions. That is woolliness of the first order. To accept the new clause would be to buy a pig in a poke. It would not be in the interests of consumers in Scotland and it would certainly not be in the interests of Scotland.
  Mr. Wilson: I cannot allow the debate to end on the farcical note struck by the Minister, who suggested that I did not know what I was after. He clearly does not appreciate the idea of breaking up the centralised system that he has in force, and I am surprised at the way in which the Labour and Conservative parties seem at one in trying to maintain the Goliath of British Gas.
  I am even more surprised to hear the right hon. Member for Salford, East (Mr. Orme), for whom I have great respect, talking about the benefits of British Gas—from which I do not dissent—but failing to realise that British Gas plc will be completely unlike the previous organism and therefore that he cannot make judgments about how this creature will react on the basis of what has gone before.
  Then there is the strange situation of the hon. Member for Dunfermline, East (Mr. Brown). Apparently Scottish Labour Members are all in favour of decentralisation but are not prepared to vote for it. Sooner or later they will have to make up their minds. It is a Labour party tradition

  69
  that everything should be organised from the centre, but I thought that they had been breaking away from that. I am very disillusioned by the attitude that they have adopted.
  I am rather more cynical, of course, about the Government's stance on these matters. The Minister raises the question of differential pricing, but fails to acknowledge what was well known in Committee—that remote communities which are not connected to the main gas grid are charged a premium price for the liquefied gas provided. Is the Minister about to give an assurance that those communities will be provided with gas at the standard rate? If not, there is a huge hole in his argument about benefits.
  As for the parallel with the network or grid, we already have that in the electricity supply industry. The North of Scotland Hydro-Electric Board and the South of Scotland Electricity Board work together harmoniously on joint projects but still maintain their independence. They export power to each other and to the Central Electricity Generating Board, which in turn is linking up with Electricité de France, so it is possible for independent, autonomous companies to work in an international framework. If that is correct for the electricity supply industry, it seems self-evident that we could do so in relation to gas. The fact is that the Government want to keep a centralised gas corporation and the Labour party, which its leader has just desrcibed as a party of devolution, still wants to keep the power at the centre by having a huge organisation with 7,000 employees at its headquarters with all the tentacles coining out of London.
  I hope that those hon. Members who believe in decentralisation, competition and a good service being offered within the gas industry will vote with me because I intend to press this matter to a Division.
  Question put, That the clause be read a Second time:—
  The House divided: Ayes 22, Noes 228.

  Division No. 103]

  [7.15 pm

  AYES

  Beith, A. J.

  Parry, Robert

  Bruce, Malcolm

  Ross, Stephen (Isle of Wight)

  Canavan, Dennis

  Skinner, Dennis

  Cartwright, John

  Steel, Rt Hon David

  Craigen, J. M.

  Stewart, Rt Hon D. (W Isles)

  Freud, Clement

  Thomas, Dafydd (Merioneth)

  Hancock, Michael

  Wainwright, R.

  Howells, Geraint

  Wallace, James

  Hughes, Simon (Southwark)

  Wrigglesworth, Ian

  Maclennan, Robert

  Marshall, David (Shettleston)

  Tellers for the Ayes:

  Meadowcroft, Michael

  Mr. Gordon Wilson and

  Owen, Rt Hon Dr David

  Mr. Archy Kirkwood.

  NOES

  Aitken, Jonathan

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

  Amess, David

  Bowden, Gerald (Dulwich)

  Ancram, Michael

  Boyson, Dr Rhodes

  Atkins, Rt Hon Sir H.

  Brandon-Bravo, Martin

  Atkins, Robert (South Ribble)

  Bright, Graham

  Baker, Nicholas (Dorset N)

  Brittan, Rt Hon Leon

  Baldry, Tony

  Brown, M. (Brigg & Cl'thpes)

  Banks, Robert (Harrogate)

  Browne, John

  Batiste, Spencer

  Bruinvels, Peter

  Beaumont-Dark, Anthony

  Bryan, Sir Paul

  Bellingham, Henry

  Buchanan-Smith, Rt Hon A.

  Benyon, William

  Buck, Sir Antony

  Best, Keith

  Butler, Rt Hon Sir Adam

  Biffen, Rt Hon John

  Butterfill, John

  Biggs-Davison, Sir John

  Carlisle, John (Luton N)

  Blaker, Rt Hon Sir Peter

  Carlisle, Kenneth (Lincoln)

  Body, Sir Richard

  Cash, William

  Boscawen, Hon Robert

  Chapman, Sydney

  70

  Chope, Christopher

  MacGregor, Rt Hon John

  Churchill, W. S.

  MacKay, Andrew (Berkshire)

  Clark, Dr Michael (Rochford)

  Maclean, David John

  Clark, Sir W. (Croydon S)

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

  Clarke, Rt Hon K. (Rushcliffe)

  Madel, David

  Cockeram, Eric

  Maples, John

  Colvin, Michael

  Marshall, Michael (Arundel)

  Conway, Derek

  Mates, Michael

  Coombs, Simon

  Mather, Carol

  Cope, John

  Maude, Hon Francis

  Cormack, Patrick

  Merchant, Piers

  Corrie, John

  Meyer, Sir Anthony

  Critchley, Julian

  Miller, Hal (B'grove)

  Currie, Mrs Edwina

  Mills, Iain (Meriden)

  Dicks, Terry

  Miscampbell, Norman

  Dorrell, Stephen

  Moate, Roger

  Douglas-Hamilton, Lord J.

  Monro, Sir Hector

  Dover, Den

  Morrison, Hon C. (Devizes)

  du Cann, Rt Hon Sir Edward

  Moynihan, Hon C.

  Durant, Tony

  Needham, Richard

  Eggar, Tim

  Nelson, Anthony

  Emery, Sir Peter

  Neubert, Michael

  Evennett, David

  Nicholls, Patrick

  Eyre, Sir Reginald

  Normanton, Tom

  Fookes, Miss Janet

  Norris, Steven

  Forman, Nigel

  Onslow, Cranley

  Forth, Eric

  Ottaway, Richard

  Fowler, Rt Hon Norman

  Page, Sir John (Harrow W)

  Fry, Peter

  Page, Richard (Herts SW)

  Galley, Roy

  Parris, Matthew

  Gardiner, George (Reigate)

  Patten, J. (Oxf W & Abgdn)

  Garel-Jones, Tristan

  Pattie, Geoffrey

  Glyn, Dr Alan

  Pawsey, James

  Goodhart, Sir Philip

  Peacock, Mrs Elizabeth

  Gorst, John

  Percival, Rt Hon Sir Ian

  Gow, Ian

  Porter, Barry

  Gower, Sir Raymond

  Powell, William (Corby)

  Greenway, Harry

  Powley, John

  Gregory, Conal

  Prentice, Rt Hon Reg

  Griffiths, Sir Eldon

  Price, Sir David

  Grist, Ian

  Pym, Rt Hon Francis

  Grylls, Michael

  Raffan, Keith

  Gummer, Rt Hon John S

  Raison, Rt Hon Timothy

  Hamilton, Hon A. (Epsom)

  Rathbone, Tim

  Hamilton, Neil (Tatton)

  Rhodes James, Robert

  Hampson, Dr Keith

  Rhys Williams, Sir Brandon

  Hannam, John

  Ridley, Rt Hon Nicholas

  Harris, David

  Ridsdale, Sir Julian

  Hayhoe, Rt Hon Barney

  Roberts, Wyn (Conwy)

  Heddle, John

  Robinson, Mark (N'port W)

  Henderson, Barry

  Roe, Mrs Marion

  Heseltine, Rt Hon Michael

  Rossi, Sir Hugh

  Higgins, Rt Hon Terence L.

  Rost, Peter

  Hind, Kenneth

  Rumbold, Mrs Angela

  Hirst, Michael

  Ryder, Richard

  Holland, Sir Philip (Gedling)

  Sackville, Hon Thomas

  Holt, Richard

  Sainsbury, Hon Timothy

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

  Sayeed, Jonathan

  Howarth, Gerald (Cannock)

  Shaw, Sir Michael (Scarb')

  Howell, Rt Hon D. (G'Idford)

  Shepherd, Colin (Hereford)

  Howell, Ralph (Norfolk, N)

  Shepherd, Richard (Aldridge)

  Hunt, David (Wirral W)

  Silvester, Fred

  Irving, Charles

  Sims, Roger

  Johnson Smith, Sir Geoffrey

  Skeet, Sir Trevor

  Key, Robert

  Smith, Sir Dudley (Warwick)

  Latham, Michael

  Smith, Tim (Beaconsfield)

  Lawler, Geoffrey

  Speller, Tony

  Lawrence, Ivan

  Spencer, Derek

  Leigh, Edward (Gainsbor'gh)

  Spicer, Jim (Dorset W)

  Lennox-Boyd, Hon Mark

  Spicer, Michael (S Worcs)

  Lester, Jim

  Stanbrook, Ivor

  Lewis, Sir Kenneth (Stamf'd)

  Stanley, Rt Hon John

  Lightbown, David

  Steen, Anthony

  Lilley, Peter

  Stern, Michael

  Lloyd, Ian (Havant)

  Stevens, Lewis (Nuneaton)

  Lord, Michael

  Stewart, Andrew (Sherwood)

  Luce, Rt Hon Richard

  Stewart, Ian (Hertf'dshire N)

  McCrindle, Robert

  Stokes, John

  McCurley, Mrs Anna

  Stradling Thomas, Sir John

  Macfarlane, Neil

  Sumberg, David

  71

  Taylor, John (Solihull)

  Waller, Gary

  Taylor, Teddy (S'end E)

  Ward, John

  Temple-Morris, Peter

  Wardle, C. (Bexhill)

  Thomas, Rt Hon Peter

  Warren, Kenneth

  Thompson, Donald (Calder V)

  Watson, John

  Thompson, Patrick (N'ich N)

  Watts, John

  Thorne, Neil (Ilford S)

  Wheeler, John

  Thornton, Malcolm

  Whitney, Raymond

  Townend, John (Bridlington)

  Winterton, Mrs Ann

  Twinn, Dr Ian

  Winterton, Nicholas

  van Straubenzee, Sir W.

  Wolfson, Mark

  Vaughan, Sir Gerard

  Wood, Timothy

  Viggers, Peter

  Woodcock, Michael

  Waddington, David

  Young, Sir George (Acton)

  Waldegrave, Hon William

  Walden, George

  Tellers for the Noes:

  Walker, Bill (T'side N)

  Mr. Peter Lloyd and

  Walker, Rt Hon P. (W'cester)

  Mr. Gerald Malone.

  Question accordingly negatived.

New Clause 3

  RECOGNITION OF TRADE UNIONS BY THE PUBLIC GAS SUPPLIER
  (1) A public gas supplier shall extend recognition to Trade Unions supported by the staff.
  (2) It shall also be the responsibility of a public gas supplier by agreement with such recognised trade unions to establish joint negotiating machinery for the purposes of regulating industrial relations, education and training, and health and safety in the company; and such machinery shall reflect both the regional and national structure of the public gas supplier.".—[Mr. Orme.]
  Brought up, and read the First time.
  Mr. Orme: I beg to move, That the clause be read a Second time.
  The new clause deals with recognition of trade unions by the public gas supplier when the British Gas Corporation becomes a public limited company.
  The British Gas Corporation currently employs over 93,000 people in a vital industry. It is clearly essential that industrial relations in the industry continue to run smoothly and that the recognition and framework that currently apply should continue after privatisation. BGC management has been promising that everything will stay the same. The new clause gives substance to that promise, and puts it into legislation.
  The new clause seeks to ensure that a public gas supplier does two things that will help industrial relations. First, it requires the supplier to recognise appropriate trade unions. That is the first step as it encourages staff to believe that they are properly represented. It ensures that management has a suitable channel for consultation and negotiation.
  The second part of the new clause seeks to ensure that proper negotiating machinery is established by the supplier. That is nothing new. Under the Gas Act 1972 the BGC is required to establish machinery for the negotiation of terms of employment and the promotion of the health, safety and welfare of gas employees. That machinery already exists within British Gas. It is essential that it continues with legislative backing. If the Government are not prepared to accept the new clause, we want to know what changes will take place and what machinery there will be under British Gas plc.
  The current machinery has developed over the years. It is centralised and efficient. Negotiations over salaries and major conditions of service in the gas industry take place primarily at national level. There is virtually no
  72
  negotiation at local level, but at regional or district level there are various forms of consultative and negotiating machinery for dealing with such items as car allowance schemes and so on. The machinery for joint negotiation is based mainly on Whitley principles and consists of a trade union side and an employers' side. Therefore, one side of a council cannot outvote the other.
  There are three national joint councils—the national joint council for gas staffs and senior officers, the national joint council for higher management, and the national joint industrial council covering manual workers. Those councils deal not only with grades and salaries but with the promotion of training, safety, health and welfare, and improved efficiency and methods.
  For each of the 12 regions and for the headquarters of the BGC there are three joint committees or councils that cover consultative and negotiable matters. The composition of regional councils varies from region to region, but their joint membership ranges from 12 to 26 people. The regional councils are both consultative and negotiating bodies. Local service conditions agreements are made for such matters as deputising allowances, car allowances and so on.
  There is no local negotiating machinery in the gas industry, but there is machinery for consultation. Local joint consultative committees have been established in many areas in accordance with the provisions of the Gas Act 1972, and they represent all grades of staff. Those committees deal with matters such as hygiene, health and welfare, and do not consider or discuss terms and conditions of employment.
  It will be appreciated that the machinery currently in operation in the gas industry is elaborate and well balanced. I am informed that it works well, mainly because the employees feel that they are given a fair hearing. On that basis, they are prepared to accept decisions that they may not like. It would be a tragedy if an industrial relations procedure based on recognition of appropriate trade unions and the establishment of workable machinery were to be thrown away. Employees of the British Gas Corporation who have worked hard to create a successful industry deserve to have their future assured, at least in this important area. They already have such protection under the current Act. They should have it also under the new legislation.
  I am disturbed by the deterioration of industrial relations in British Telecom since privatisation. Representations have been made to me on several occasions about the changes in work practices and in the form of consultation.
  The consultative machinery in the BGC has been built up over many years. It has worked well and is accepted by management and trade unions. That machinery may appear perfect on paper, but when real problems arise between the workers, particularly when one is representing 93,000 of them, and management, those consultations are not love-ins, but serious negotiations in which major issues are decided, ranging from wages and conditions to safety and health. It would be wrong to form a public limited company without first creating consultative machinery.
  I understand that British Gas has consulted its employees. It has issued bulletins decribing what will happen under privatisation and giving information about pensions and other matters, but those bulletins have not said that the machinery that now exists will continue. That

  73
  is why I have moved the new clause. We should like the Under-Secretary of State to give a full reply on these developments. The Government accepted the machinery provided under the 1972 Act, so what is wrong with accepting that machinery in an efficient privatised gas industry?
  7.30 pm
  Mr. Robert C. Brown: I should like to support the motion. Trade unionism in the gas industry is by no stretch of the imagination an innovation. In three years, my union— the General, Municipal, Boilermakers and Allied Trades Union—will celebrate its centenary. That union began 97 years ago as the National Union of Gasworkers, and it has grown from strength to strength.
  It is against that background that we make a perfectly reasonable request— that the rights of trade unions should be recognised and written into statute. There should be no question of the public limited company having the right to determine whether there shall be a trade union organisation. As long ago as 1945, the Heyworh committee commented on the industry in the following terms:
  "we have satisfied ourselves that the necessary machinery for negotiations between the two sides exists and has a satisfactory record of achievement."
  I should like to underline the words, "satisfactory record of achievement."
  I am proud to be the founder member of the first staff branch of my union in the gas industry. I am proud that we have never had any industrial troubles. There were tough talks but we always resolved the issues by talking and did not need to take the ultimate step of strike action. In the 30 years in which I worked in the industry we never knew what it was to strike. It was only the nonsense floated by the Government about selling off the showrooms that led to the first ever national stoppage in the industry. It is to the Government's shame that extremely responsible people—the workers in the gas industry—were pushed into taking strike action.
  The concerns to which I have referred are as valid today as they were in the past. One need only look at fortress Wapping where many first-class journalists have walked out because trade unions are being trampled on. Unless the new clause is accepted, the same could apply in the gas industry. Skilled workers by the score might walk out because they are not prepared to work in an industry that does not recognise trade unions.
  Clearly, we want to continue the good industrial relations record because that would be to the consumers' benefit. It is not sufficient for the Government to say that the privatised company may make its own arrangements and be confident about that. The Government may be confident that British Gas plc will establish the same kind of negotiating machinery that the publicly owned gas industry has enjoyed, but I am not.
  We are talking about a monopoly energy supplier. Disruptions to that industry would be catastrophic. The one-day strike against the selling off of gas showrooms was simply a shot across the bows. A national stoppage is almost unthinkable.
  Mr. David Winnick: Does my hon. Friend agree that one reason why we should be extremely worried is the Government's known hostility to trade unionism? Does my hon. Friend agree that that is all the
  74
  more reason why, when the stupidity of privatisation takes place, we must be extremely careful to retain the trade union strength and organisation that has been built up in the gas industry?
  Mr. Brown: My hon. Friend has underlined my points. There must be some control by statute over monopoly. One can choose not to read The Sun or The Times but one cannot choose to live without gas.
  Mr. Rost: Although I have been carefully following the Opposition's arguments, I find it difficult to understand why the new clause is necessary. I should have thought that all the evidence of previous privatisations during the past few years has shown that industrial relations improve once an industry has been privatised. There has been no question of workers in the industries not having proper representation. Industrial relations have improved in those industries mainly because large numbers of employees have become shareholders. The best way employees can have representations and communication with management is by their becoming shareholders, because shareholders can hold the management responsible for their actions by exercising their rights at annual meetings and even by dismissing the management if they wish. That pattern has been followed to tremendous effect in all the privatised industries.
  I was a little surprised that the right hon. Member for Salford, East (Mr. Orme) and the hon. Member for Newcastle upon Tyne, North (Mr. Brown) did not say one word advocating that employees of British Gas plc should be encouraged to become shareholders. I should be more sympathetic to the new clause if union leaders were to give positive rather than the negative advice given in other privatised industries to the effect that union members should not subsrcibe for shares. Union leaders have given unfortunate advice to employees in companies such as the National Freight Consortium, British Aerospace and British Telecom not to subsrcibe for shares. Those who took that advice have suffered financially.
  I would have hoped that the right hon. Member for Salford, East would, as part of his case for proper industrial relations and representation, have incorporated a plea that the union leaders in British Gas should be advising their members to become shareholders, thereby influencing the management and improve industrial relations by becoming owners of the business.
  Mr. Pike: I support the new clause. We have already heard that only 2 per cent. of the shares in British Telecom are now held by BT employees. If the Government were really sincere, they would permit a workers' representative on the board of directors. However, they have failed to do so in respect of any of the industries that they have so far privatised, yet they talk about giving employees greater participation. Given the small percentage of British Gas shares that will be held by employees, it is unrealistic to expect that they will be able to elect a director who will specifically represent them.
  Conservative Members frequently knock the role of trade unions, but they fail to recognise the important part the trade unions play in the running of industry. The trade unions and management have one mutual interest—to see industry succeed. They do not want to see the production line grind to a halt. That is bad for management, because profits go down, and it is equally bad for the workers, because they lose wages. It is obvious

  75
  that in conjunction with management the trade unions and the gas industry have had a tremendous record of achievement, and it is equally obvious that the procedures have worked well.
  In Committee, the Minister said that an undertaking has already been given that the current procedures will be carried forward once privatisation take place. If that is so, there is no reason at all why the Government should not be prepared to accept this moderate and reasonable new clause. It will ensure that suitable procedures are carried forward, not only for the benefit of the workers but for the benefit of the industry and the nation as a whole. This is a sensible and modest new clause, and I hope that it will be supported.
  Mr. David Hunt: This has been an interesting debate. I hope that Opposition Members will recognise that in drawing up the legislation the Government have made every effort to ensure that employees enjoy the same rights after privatisation as they do now. British Gas has made it clear in its privatisation reports for employees that the existing negotiating machinery, which is the substance of the proposed new clause, will be carried forward. That will apply at both national and regional levels.
  Industrial relations is a matter to which the corporation rightly affords a high priority, and the record of the industry is a testament to the success of its attitude to staff. All sides of the House greatly welcomed the fact that the hon. Member for Newcastle upon Tyne, North (Mr. Brown) participated in the debate. In paying him that tribute, I hope he recognises that I do not accept what he said. However, the hon. Gentleman has a tremendous knowledge of this industry. I understand that he was apprenticed as a plumber to the Newcastle gas industry in 1937. He knows the importance of industrial relations to the present management of British Gas, and its record is a testament to the success of its attitude to the staff.
  The new clause would require a public gas supplier to recognise the industry's trade unions and to establish joint negotiating machinery. There can be no doubt that British Gas has given full recognition to representative trade unions and that it will continue to do so.
  The second limb of the new clause again seeks to reestablish section 35 of the 1972 Act, which placed a duty on the corporation to seek consultation with organisations on machinery for settling terms and conditions of employment and for the promotion and encouragement of safety, health, welfare, training and education. Again, the record of British Gas in these areas is second to none, and it is simple commercial prudence to ensure that it develops the skills of its staff in the interests of efficiency and customer service in general.
  7.45 pm
  British Gas has already assured those involved in the operation of the present negotiating machinery that it does not intend to make any changes in its approach as a consequence of privatisation, and the same assurance has been given to employees generally. If the existing arrangements prove inadequate in some way over the passage of time, any changes will be the subject of joint consideration between management and unions.
  The right hon. Member for Salford, East (Mr. Dunn) said that he had seen nothing in the privatisation reports to show that British Gas would continue the present
  76
  arrangements. He said that it was for that reason that the Opposition proposed the new clause. I am happy to give him the opportunity now to withdraw the motion because privatisation report No. 6, under the heading of industrial relations, states:
  "British Gas has stated that it sees the existing negotiation and consultation arrangements which have served industry well in the past carrying us into the future. Over time we may need to alter our arrangements according to any new circumstances which may arise—but that would be a matter for joint consideration between management and Trade Unions."
  Mr. Orme: My point was that that is not controlled by legislation. We are arguing that the management of British Gas could change and there could be an entirely different management. We therefore see nothing wrong in incorporating the provisions of the 1972 Act into this Bill.
  Mr. Hunt: I apologise to the right hon. Gentleman. I thought he said that he could find nowhere in the privatisation reports an assurance that British Gas would continue the present arrangements. I thought I understood him to say that it was for that reason that the Opposition proposed the new clause.
  We have already had a substantial debate in Committee on these questions, and in direct response to the right hon. Gentleman I made it clear that in the Government's view it would be wrong to write into this statute obligations that were not written into statute for other private sector companies. I then gave the Committee the assurances that I give now—that British Gas does not envisage any change in the existing negotiating machinery, and that it will continue its fundamental commitments to consultation and discussion on matters affecting employees.
  Mr. Robert C. Brown: The Minister must surely appreciate the fears of the present employees of British Gas. If this provision is not written into statute, as it was in the 1972 Act, there is nothing at all to prevent the newly privatised management from suddenly becoming bloody-minded—as we have seen in the newspaper this week— and taking action that would be anathema to the entire British trade union movement. That could have dreadful repercussions for the nation.
  Mr. Hunt: I understand the fears that the hon. Gentleman has expressed, but I believe that they are groundless. I hope that employees will recognise, in view of the assurances that they have received from the existing management, that there is no need to be concerned about the future of industrial relations, given the great tradition of this important industry in the past.
  I very much welcome the contribution of my hon. Friend the Member for Erewash (Mr. Rost). He has considerable knowledge of privatisation and profit-sharing. He rightly pointed out that there was Opposition silence on the question of buying shares, and that in the past there has been no encouragement from trade union leaders.
  The hon. Member for Burnley (Mr. Pike) misunderstood the importance of employee participation through share ownership. The hon. Member for Walsall, North (Mr. Winnick) also made a speech. The hon. Gentlemen are not correct. Nationalisation has not meant ownership by people or by employees. In reality, it has meant ownership by politicians and the Government. There is no need for the new clause to entrench in any way

  77
  arrangements which have existed until now. The legislation affords for the first time true public ownership of the gas industry.
  Question put, That the clause be read a Second time:—
  The House divided: Ayes 179, Noes 225.

  Division No. 104]

  [7.50 pm

  AYES

  Abse, Leo

  Godman, Dr Norman

  Adams, Allen (Paisley N)

  Golding, John

  Anderson, Donald

  Gould, Bryan

  Archer, Rt Hon Peter

  Gourlay, Harry

  Ashley, Rt Hon Jack

  Hamilton, James (M'well N)

  Ashton, Joe

  Hamilton, W. W. (Fife Central)

  Atkinson, N. (Tottenham)

  Hancock, Michael

  Bagier, Gordon A. T.

  Hardy, Peter

  Barnett, Guy

  Harrison, Rt Hon Walter

  Barron, Kevin

  Hart, Rt Hon Dame Judith

  Beckett, Mrs Margaret

  Hattersley, Rt Hon Roy

  Beith, A. J.

  Haynes, Frank

  Bell, Stuart

  Healey, Rt Hon Denis

  Benn, Rt Hon Tony

  Heffer, Eric S.

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

  Hogg, N. (C'nauld & Kilsyth)

  Bermingham, Gerald

  Holland, Stuart (Vauxhall)

  Bidwell, Sydney

  Howells, Geraint

  Blair, Anthony

  Hoyle, Douglas

  Bray, Dr Jeremy

  Hughes, Robert (Aberdeen N)

  Brown, Gordon (D'f'mline E)

  Hughes, Roy (Newport East)

  Brown, Hugh D. (Provan)

  Hughes, Sean (Knowsley S)

  Brown, N. (N'c'tle-u-Tyne E)

  Hughes, Simon (Southwark)

  Brown, R. (N'c'tle-u-Tyne N)

  Janner, Hon Greville

  Bruce, Malcolm

  Jones, Barry (Alyn & Deeside)

  Callaghan, Jim (Heyw'd & M)

  Kaufman, Rt Hon Gerald

  Campbell, Ian

  Kilroy-Silk, Robert

  Campbell-Savours, Dale

  Kirkwood, Archy

  Canavan, Dennis

  Lambie, David

  Carter-Jones, Lewis

  Lamond, James

  Cartwright, John

  Leadbitter, Ted

  Clark, Dr David (S Shields)

  Leighton, Ronald

  Clarke, Thomas

  Lewis, Terence (Worsley)

  Clay, Robert

  Litherland, Robert

  Clelland, David Gordon

  Lloyd, Tony (Stretford)

  Clwyd, Mrs Ann

  Lofthouse, Geoffrey

  Cocks, Rt Hon M. (Bristol S)

  Loyden, Edward

  Cohen, Harry

  McCartney, Hugh

  Conlan, Bernard

  McDonald, Dr Oonagh

  Corbett, Robin

  McKelvey, William

  Cox, Thomas (Tooting)

  MacKenzie, Rt Hon Gregor

  Craigen, J. M.

  McNamara, Kevin

  Crowther, Stan

  McWilliam, John

  Cunliffe, Lawrence

  Madden, Max

  Cunningham, Dr John

  Marek, Dr John

  Davies, Ronald (Caerphilly)

  Marshall, David (Shettleston)

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

  Martin, Michael

  Deakins, Eric

  Mason, Rt Hon Roy

  Dixon, Donald

  Maxton, John

  Dormand, Jack

  Maynard, Miss Joan

  Douglas, Dick

  Meadowcroft, Michael

  Dubs, Alfred

  Michie, William

  Duffy, A. E. P.

  Mikardo, Ian

  Dunwoody, Hon Mrs G.

  Millan, Rt Hon Bruce

  Eadie, Alex

  Miller, Dr M. S. (E Kilbride)

  Eastham, Ken

  Mitchell, Austin (G't Grimsby)

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

  Morris, Rt Hon A. (W'shawe)

  Evans, John (St. Helens N)

  Morris, Rt Hon J. (Aberavon)

  Ewing, Harry

  Nellist, David

  Fatchett, Derek

  Oakes, Rt Hon Gordon

  Field, Frank (Birkenhead)

  O'Brien, William

  Fields, T. (L'pool Broad Gn)

  O'Neill, Martin

  Fisher, Mark

  Orme, Rt Hon Stanley

  Flannery, Martin

  Owen, Rt Hon Dr David

  Foot, Rt Hon Michael

  Park, George

  Forrester, John

  Parry, Robert

  Foster, Derek

  Patchett, Terry

  Foulkes, George

  Pavitt, Laurie

  Freeson, Rt Hon Reginald

  Pendry, Tom

  Freud, Clement

  Pike, Peter

  George, Bruce

  Prescott, John

  Gilbert, Rt Hon Dr John

  Radice, Giles

  78

  Redmond, Martin

  Thomas, Dafydd (Merioneth)

  Richardson, Ms Jo

  Thomas, Dr R. (Carmarthen)

  Roberts, Allan (Bootle)

  Thompson, J. (Wansbeck)

  Robinson, G. (Coventry NW)

  Thorne, Stan (Preston)

  Rogers, Allan

  Tinn, James

  Rooker, J. W.

  Torney, Tom

  Ross, Ernest (Dundee W)

  Wainwright, R.

  Rowlands, Ted

  Wardell, Gareth (Gower)

  Sedgemore, Brian

  Wareing, Robert

  Sheldon, Rt Hon R.

  Weetch, Ken

  Shore, Rt Hon Peter

  Welsh, Michael

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

  White, James

  Skinner, Dennis

  Williams, Rt Hon A.

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

  Winnick, David

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

  Wrigglesworth, Ian

  Snape, Peter

  Young, David (Bolton SE)

  Soley, Clive

  Spearing, Nigel

  Tellers for the Ayes:

  Stott, Roger

  Mr. Allen McKay and

  Strang, Gavin

  Mr. Ray Powell.

  Straw, Jack

  NOES

  Aitken, Jonathan

  Durant, Tony

  Alison, Rt Hon Michael

  Eggar, Tim

  Amess, David

  Emery, Sir Peter

  Ancram, Michael

  Evennett, David

  Aspinwall, Jack

  Eyre, Sir Reginald

  Atkins, Rt Hon Sir H.

  Fletcher, Alexander

  Atkins, Robert (South Ribble)

  Fookes, Miss Janet

  Baker, Nicholas (Dorset N)

  Forman, Nigel

  Baldry, Tony

  Forth, Eric

  Batiste, Spencer

  Fry, Peter

  Beaumont-Dark, Anthony

  Garel-Jones, Tristan

  Bellingham, Henry

  Glyn, Dr Alan

  Benyon, William

  Goodhart, Sir Philip

  Best, Keith

  Gorst, John

  Bevan, David Gilroy

  Gower, Sir Raymond

  Biffen, Rt Hon John

  Greenway, Harry

  Biggs-Davison, Sir John

  Gregory, Conal

  Blaker, Rt Hon Sir Peter

  Griffiths, Sir Eldon

  Body, Sir Richard

  Grist, Ian

  Boscawen, Hon Robert

  Grylls, Michael

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

  Gummer, Rt Hon John S

  Bowden, Gerald (Dulwich)

  Hamilton, Neil (Tatton)

  Boyson, Dr Rhodes

  Hampson, Dr Keith

  Brandon-Bravo, Martin

  Harris, David

  Bright, Graham

  Heddle, John

  Brittan, Rt Hon Leon

  Henderson, Barry

  Brown, M. (Brigg & Cl'thpes)

  Heseltine, Rt Hon Michael

  Browne, John

  Higgins, Rt Hon Terence L.

  Bruinvels, Peter

  Hirst, Michael

  Bryan, Sir Paul

  Holland, Sir Philip (Gedling)

  Buchanan-Smith, Rt Hon A.

  Howarth, Gerald (Cannock)

  Butler, Rt Hon Sir Adam

  Howell, Rt Hon D. (G'Idford)

  Butterfill, John

  Howell, Ralph (Norfolk, N)

  Carlisle, Kenneth (Lincoln)

  Hunt, David (Wirral W)

  Cash, William

  Hunter, Andrew

  Chapman, Sydney

  Irving, Charles

  Chope, Christopher

  Key, Robert

  Churchill, W. S.

  Lang, Ian

  Clark, Dr Michael (Rochford)

  Latham, Michael

  Clark, Sir W. (Croydon S)

  Lee, John (Pendle)

  Clarke, Rt Hon K. (Rushcliffe)

  Leigh, Edward (Gainsbor'gh)

  Cockeram, Eric

  Lennox-Boyd, Hon Mark

  Colvin, Michael

  Lester, Jim

  Conway, Derek

  Lewis, Sir Kenneth (Stamf'd)

  Coombs, Simon

  Lightbown, David

  Cope, John

  Lilley, Peter

  Cormack, Patrick

  Lloyd, Ian (Havant)

  Corrie, John

  Lloyd, Peter (Fareham)

  Cranborne, Viscount

  Lord, Michael

  Critchley, Julian

  Luce, Rt Hon Richard

  Currie, Mrs Edwina

  Lyell, Nicholas

  Dickens, Geoffrey

  McCrindle, Robert

  Dicks, Terry

  McCurley, Mrs Anna

  Dorrell, Stephen

  Macfarlane, Neil

  Douglas-Hamilton, Lord J.

  MacGregor, Rt Hon John

  Dover, Den

  MacKay, Andrew (Berkshire)

  du Cann, Rt Hon Sir Edward

  Maclean, David John

  79

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

  Shepherd, Richard (Aldridge)

  Madel, David

  Silvester, Fred

  Malone, Gerald

  Sims, Roger

  Maples, John

  Skeet, Sir Trevor

  Marshall, Michael (Arundel)

  Smith, Sir Dudley (Warwick)

  Mates, Michael

  Smith, Tim (Beaconsfield)

  Mather, Carol

  Speller, Tony

  Mayhew, Sir Patrick

  Spencer, Derek

  Merchant, Piers

  Spicer, Jim (Dorset W)

  Meyer, Sir Anthony

  Spicer, Michael (S Worcs)

  Miller, Hal (B'grove)

  Stanbrook, Ivor

  Mills, Iain (Meriden)

  Stanley, Rt Hon John

  Miscampbell, Norman

  Steen, Anthony

  Moate, Roger

  Stern, Michael

  Monro, Sir Hector

  Stevens, Lewis (Nuneaton)

  Morrison, Hon C. (Devizes)

  Stewart, Andrew (Sherwood)

  Moynihan, Hon C.

  Stewart, Ian (Hertf'dshire N)

  Needham, Richard

  Stokes, John

  Nelson, Anthony

  Stradling Thomas, Sir John

  Neubert, Michael

  Sumberg, David

  Nicholls, Patrick

  Taylor, John (Solihull)

  Normanton, Tom

  Taylor, Teddy (S'end E)

  Norris, Steven

  Temple-Morris, Peter

  Ottaway, Richard

  Thomas, Rt Hon Peter

  Page, Sir John (Harrow W)

  Thompson, Donald (Calder V)

  Page, Richard (Herts SW)

  Thompson, Patrick (N'ich N)

  Parris, Matthew

  Thorne, Neil (llford S)

  Patten, J. (Oxf W & Abgdn)

  Thornton, Malcolm

  Pattie, Geoffrey

  Townend, John (Bridlington)

  Pawsey, James

  Tracey, Richard

  Peacock, Mrs Elizabeth

  Trippier, David

  Percival, Rt Hon Sir Ian

  Twinn, Dr Ian

  Pollock, Alexander

  van Straubenzee, Sir W.

  Porter, Barry

  Vaughan, Sir Gerard

  Powell, William (Corby)

  Viggers, Peter

  Powley, John

  Waddington, David

  Prentice, Rt Hon Reg

  Waldegrave, Hon William

  Price, Sir David

  Walden, George

  Pym, Rt Hon Francis

  Walker, Bill (T'side N)

  Raffan, Keith

  Walker, Rt Hon P. (W'cester)

  Raison, Rt Hon Timothy

  Waller, Gary

  Rathbone, Tim

  Ward, John

  Rhodes James, Robert

  Wardle, C. (Bexhill)

  Rhys Williams, Sir Brandon

  Watson, John

  Ridley, Rt Hon Nicholas

  Watts, John

  Ridsdale, Sir Julian

  Whitney, Raymond

  Roberts, Wyn (Conwy)

  Wiggin, Jerry

  Robinson, Mark (N'port W)

  Winterton, Mrs Ann

  Roe, Mrs Marion

  Winterton, Nicholas

  Rossi, Sir Hugh

  Wolfson, Mark

  Rost, Peter

  Wood, Timothy

  Rumbold, Mrs Angela

  Woodcock, Michael

  Ryder, Richard

  Young, Sir George (Acton)

  Sackville, Hon Thomas

  Sainsbury, Hon Timothy

  Tellers for the Noes

  Sayeed, Jonathan

  Mr. Archie Hamilton and

  Shaw, Sir Michael (Scarb')

  Mr. Francis Maude

  Shepherd, Colin (Hereford)

  Question accordingly negatived.

New Clause 4

  FIXING OF THE STANDING CHARGE BY A PUBLIC GAS SUPPLIER
  `(1) A standing charge fixed by a public gas supplier shall in any one year rise no higher than the retail price index.
  (2) Before a standing charge is fixed by a public gas supplier he shall notify the Director who shall investigate the components and levels of such a charge.
  (3) Where in the light of such investigations the Director is satisfied.

  (a) the services provided and paid for by the standing charge have been reduced; or

  (b) the public gas supplier has achieved significant cost reductions in the components making up such a charge then the Director may give direction to the public gas
  80
  supplier to reduce standing charges or to increase them by amounts in any one year less than the increase in the retail price index.'.—[Mr. Rowlands.]

  Brought up, and read the First time.
  Mr. Rowlands: I beg to move, That the clause be read a Second time.
  Few hon. Members will have failed to notice the growing anger, frustration and bitterness among an increasing number of consumers of gas and electricity about standing charges. During the past four years, while I have been an Opposition spokesman on energy, I have received many complaints and heard many arguments about standing charges. Indeed, enough pressure built up inside and outside the House to compel the Government to cajole the gas and electricity industries to introduce new codes on standing charges. The feelings of frustration, anger and bitterness come especially from the elderly. Sometimes, the cost of the gas that they consume is less than the cost of their standing charges.
  As a result of the pressures, the gas and electricity councils introduced codes to govern standing charges and ensured initially that the charge would be no greater than the cost of gas consumed in any quarter. However, as hon. Members on both sides of the House will recognise, the gas and electricity industries were not enthusiastic supporters of the initial proposition and have tried to nibble away at the voluntary arrangements. That was the background to our debates in Committee on the Government's proposals for standing charges.
  The new clause endeavours to ensure that standing charges will not increase by more than the rate of inflation. In some circumstances, and after the director general has investigated, the increases should be less than the rate of inflation. Indeed, in some cases there should be decreases in standing charges.
  We tried to entice the Government into supporting a similar provision in Committee, but we failed. Unless we get satisfaction tonight, we shall press the new clause to a Division because of the weasel words that are used in a condition to the 25-year monopoly licence that will be given to British Gas. The condition attached to the proposed draft licence states that the supplier—British Gas— shall use its best endeavours to ensure that standing charges do not increase above the retail prices index. It does not say that the supplier will be unable to increase charges above the retail prices index; simply that he should use his best endeavours. The Opposition distrust those words. They are weasel words that could be used as a let-out, so that the supplier could wriggle out of the commitment which the Government believe they have established.
  We distrust the condition, not only because of the words, but because of the information that we have received on the background to the condition. We understand that when the Bill was published last November, internal management documents from the BGC expected that the formula for standing charges in the draft licence would be RPI plus Z. The BGC expected, not unreasonably, that such a formula would be included in a draft licence. We were extremely suspicious when that was brought to our attention and we believe that, late in the day, the Government realised how much outrage would be caused by such a formula. As a result of the pressure that built up, the Government managed to obtain a compromise arrangement. The words "best endeavours"

  81
  are no more than a compromise between the condition wanted by the BGC—RPI plus Z—and the present formula for the condition attached to the licence.
  We passionately believe that there is a case for ensuring statutorily that the upper increase limit on standing charges should be no higher than the increase in the retail prices index. However, we also believe—this relates to the other half of the new clause—that the director general should have the power to investigate the components of a standing charge. If he discovers that the supplier has made savings in services which are supposedly covered by the standing charge, he should recommend an increase less than the RPI, or a decrease.
  Let me illustrate the point that I am trying to make. It is possible, and even probable, that British Gas plc will try to make savings on meter reading. Instead of reading meters quarterly, there will be longer periods between readings, estimates of bills will be sent to customers and the company will wait for customers to inform it of the correct amount. The result could be considerable savings. Meter staff and reading are two components of the standing charge, so if the director general discovered such savings, he could attribute them directly to the standing charge and suggest either a lower increase or a reduction in charges. There have also been many changes in meter technology and in the way in which supplies into our homes can be metered.
  The Government might say that such savings are indirectly reflected on other aspects of the price formula, but where the savings can be related specifically to the components of a standing charge, they should reflect directly on increases or decreases in the charge. Therefore, the director general has a useful and important role to play in monitoring and investigating standing charges. If the public gas supplier can achieve significant cost reductions in the components of a standing charge, the director general may direct the supplier to reduce standing charges or at least to increase them by less than the increase in the retail prices index.
  We are introducing some flexibility, not in the increase of standing charges above the RPI, but, where savings might be made, in the increase below the rate of inflation. We submit the new clause in a spirit of moderation and to respond to the growing feeling of frustration and anger felt by a large number of elderly consumers about the level of standing charges.
  Miss Black has not been a notable critic of the Government; she has not been up front on many of these major issues. I hope that she and the Gas Consumers Council will support the arrangements that we propose, because we believe that we are justifiably responding to the feelings, demands, anger and bitterness about standing charges that have been made clear to the House in the past four years.
  Mr. Rost: I am sorry to have to tell my right hon. and hon. Friends on the Front Bench that I am slightly tempted to support the Opposition's new clause, unless my hon. Friend the Under-Secretary can, somehow or other, dissuade me from doing so. I was one of those—there were a number on the Conservative Benches—who, on Second Reading, raised the question of standing charges. We were rather disturbed to see the wording in the draft authorisation as simply imposing on British Gas a requirement that it would use its "best endeavours" to keep increases below the rate of inflation. Some of us felt that
  82
  that needed re-wording to make it a little more precise and forceful. I did not serve on the Committee, and I am surprised to find on Report that we have made no progress.
  The Select Committee made recommendations on standing charges which the Government do not appear to have taken on board, and I find myself in something of a dilemma in supporting the Government. We know that there is a great deal of irritation about standing charges, particularly among low-income consumers, and I should have thought that it would be reasonable to provide, before fixing the standing charge, not only that the director general should be notified, but that he should be obliged to investigate whether the increase is justified.
  Standing charges can be a skilful way of concealing rises in tariffs. If there are to be rises in tariffs through standing charges, there must be a way in which they can be prevented if British Gas says that it has acted in its "best endeavours" but requires more income and intends to get some through increased standing charges rather than through increased tariffs. That could have an undesirable impact on certain consumers.
  Therefore, I hope that my hon. Friend, before the new clause is pressed to a Division, will make some much more reassuring noises than my right hon. Friend the Secretary of State was able to do on Second Reading.
  Mrs. Clwyd: My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) has made the case for our new clause forcefully. I draw the attention of the House, as I am sure it will be drawn later tonight, to the latest report of the Select Committee on Energy which talks about the unacceptable and shameful
  "lack of heat in poor homes this winter … a winter which should have concentrated the Government's mind both on the hardship and danger to life caused by unacceptable and shameful levels of fuel poverty."
  In Committee, we made clear our concern about standing charges and their importance in fuel poverty. The Parliamentary Under-Secretary of State for Health and Social Security during a debate last year said:
  "energy prices … are for my right hon. Friend the Secretary of State for Energy."
  He spoke about:
  "the extent to which the cost of fuel is relevant to those on low incomes … Fuel is clearly a basic necessity, especially for the elderly and the sick. I recognise the concern that is felt by many on low incomes when it comes to paying for fuel."—[Official Report, 16 December 1985; Vol. 89, c. 134.]
  8.15 pm
  However, we know from the Social Security Bill that the Under-Secretary's understanding has lost the day, because the Bill proposes to abolish heating additions and single payments to help with fuel bills. We are concerned that the Gas Bill does not oblige British Gas to keep any increase in standing charges within the rate of inflation. We do not understand the phrase "best endeavours", despite the Minister's attempts to explain it in legal terminology in Committee. I am sure that no other Opposition Member understands that phrase and nor do members of the public.
  Do the majority of Conservative Members have any understanding of what fuel poverty means to so many people? Evidence has been given time after time to the Select Committee on Energy from Age Concern and the National Right to Fuel Campaign about fuel poverty. How can the Government still shelter behind the phrase "best endeavours"? The National Right to Fuel Campaign gave detailed evidence about domestic gas disconnections,

  83
  which it admitted were fewer than for electricity. However, there is worrying evidence, about which we should all be concerned, and the number of disconnections is still too high. They continue to occur in households for which alternative measures and aid would reduce hardship. Age Concern and the Child Poverty Action Group have shown that the present level of social security benefit given to low income households is inadequate to help those who experience difficulty in paying their fuel bills. We gave many such examples in Committee.
  For example, at the beginning of last year an article in The Guardian talked about
  "A 13-year-old boy whose mother and sister were found dead in the council flat where the heaters were cold, died in St. Thomas's Hospital, London, yesterday. He was found with his mother, aged 31."
  Intense cold and the problems of paying for fuel bills are not associated only with the elderly. The family were living in a flat in central London. The article said that gas central heating in the flat was working two days before Mrs. Smith and Natasha were found dead, but a preliminary investigation after the family was found showed that the main jets would not ignite. Mrs Smith, a student, could have decided to do without heat
  "because she had been worried about the prospect of mounting fuel bills."
  As a result of that tragic case, various voluntary organisations pressed for more Government action to prevent hypothermia and other cold-induced illnesses. This country has a greater number of deaths from hypothermia than north America and north Europe. We should be thoroughly ashamed of that in this day and age.
  Many of my constituents turn off the heat because they are afraid of the size of their fuel bills. I am referring not only to poor pensioners, those on supplementary benefit or the unemployed, but to relatively well-off pensioners, who are scared stiff about the size of their fuel bills. For all households who rely upon low incomes, the expenses incurred in paying their fuel bills are already high. Since the energy crisis in the late 1960s there have been escalating increases in electricity prices and Government-induced increases in gas prices.
  Fuel poverty since 1979 has become even more prevalent. Both the Social Security Bill and the Gas Bill completely ignore the fact by refusing to recognise that fuel costs are incurred disproportionately and that low income households spend a greater percentage of their income on fuel than do higher income households. That is part of the reason for fuel poverty becoming so prevalent. The real needs of low income households in relation to fuel expenditure have not been recognised. If implemented in its present form without the Opposition amendment, the Bill will only compound this very serious problem.
  Mr. Peter Hardy: I am left with only one or two minutes to speak because the Minister has to reply to this debate. It is disgraceful that a subject that is as important and serious as this for many thousands of our fellow citizens cannot be properly considered because of the operation of the guillotine.
  I trust that the Government recognise that the proposal of my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) is sensible. It is free of the gobbledegook which disfigured the Government's earlier
  84
  approach. There are standing charges not only for gas but for water, electricity, telephones, and so on. All of them present very serious problems. We are concerned that that problem should not be intensified.
  Mr. David Hunt: The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) began by reminding the House that there were extensive discussions in Committee about standing charges. However, he referred again to the anger that is felt about standing charges. I have no alternative but to remind him that a wide ranging interdepartmental committee was set up by his right hon. Friend the Member for Chesterfield (Mr. Benn). In February 1976, under the signature of the right hon Gentleman, who was then Secretary of State for Energy, it said:
  "The Government asked an interdepartmental group of officials to review the scope for helping poor consumers by adjusting the structure of energy tariffs or by other means".
  After considering the group's report the Government concluded that none of these possibilities offered a satisfactory way of helping poor consumers with their fuel bills. In paragraph 8, on the specific point raised by the hon. Member for Merthyr Tydfil and Rhymney, the interdepartmental committee concluded:
  "We are satisfied that there is a sound case in economic principle for a tariff structure under which standing charges are maintained separate from the unit consumption charge."
  The hon. Gentleman referred to the anger that is felt about standing charges. He should not try to rewrite the history books. If he is to be fair to the House of Commons tonight, he should remind hon. Members that it was a Labour Government who reached that conclusion.
  The hon. Gentleman is right to remind the House that the clause deals mainly with limiting the increase, which is what this debate has been partly about, subject to other points that have been raised. But standing charges are only part of the price that is paid by the customer. The price formula that is set out in condition 3 of the draft authorisation covers both the standing charge and the rate per therm. Under that price formula, British Gas will have a clear incentive to achieve a real reduction in all the costs under its control, whether they be the costs recovered through the standing charge or through the rate per therm. Efficiency factor "X" in the formula ensures that customers will benefit from increased efficiency.
  There is an important question as to the appropriate distribution of the total between the standing charge and the rate per therm. The Government believe that the fair approach is to prevent standing charges from rising faster than the rate of inflation. I note that the new clause adopts the same approach. However, to put that requirement into the legislation would limit the flexibility of the director general to propose adjustments to the regulatory controls in the light of changing circumstances. That is the reason for setting out appropriate regulatory requirements in the authorisation and providing in the Bill a mechanism for making amendments to the authorisation. The new clause would introduce unnecessary and undesirable inflexibility into the controls over standing charges. It is much better to leave the controls in the authorisation.
  Mr. Lofthouse: Does the Under-Secretary of State recall that in his evidence to the Select Committee the Secretary of State was as much confused as everybody else about the words "best endeavours"? In reply to a question from me he said:

  85
  "In the Committee stage I shall be perfectly willing to examine this. That is my objective, although to you as a layman and to me as a layman this phrase sounds like 'If you can't make the effort, bad luck."'
  Mr. Hunt: I have not reached that point yet. I hope that the hon. Member for Pontefract and Castleford (Mr. Lofthouse) recognises that I have gone through the argument about why it is in the authorisation rather than in the Bill. That answers the points put to me by his hon. Friends. I have still to deal with the exact words.
  The new clause also provides that the director general shall investigate the components and levels of such a charge. That, too, is unnecessary. The director general will have full powers to investigate the make up of the standing charge and he may call for any informaion that he believes is necessary. That is provided for in condition 7 of the draft authorisation. If he took the view that the controls on standing charges in the authorisation were producing results that were contrary to the interests of consumers, he would be able to take steps to rectify the situation by initiating a modification.
  The final part of the new clause provides that if there have been significant cost reductions in the components making up such a charge, the director general may intervene. Under clause 14 of the Bill, in fixing tariffs British Gas must not show undue preference or disrcimination. This means that standing charges must be fairly related to fixed costs, otherwise small consumers would either be subsidising or being subsidised by larger consumers. The allocation of cost is not an exact science. That is why, for the additional protection of customers, explicit control over standing charges is set out in condition 4.
  I seek to convince my hon. Friend the Member for Erewash (Mr. Rost), as I was able to convince other Conservative Members, that the phrase "best endeavours" has a great deal of legal force. In Committee I quoted the case of IBM (UK) Ltd. against Rockware Glass Ltd. In that case the extent of the plaintiff's obligations to use best endeavours was desrcibed by Lord Justice Buckley as
  "obliging the plaintiffs to be bound to take all those steps in their power which are capable of producing the desired results."
  In Committee I quoted other cases. In all of those cases it is accepted that to use best endeavours imposes a clear obligation to comply with that requirement.
  Condition 4 states clearly that the supplier shall use its best endeavours. That important provision is a satisfactory way of dealing with the matter. If, however, there were a significant reduction in fixed costs and this was not reflected in the balance between standing charges and the rate per therm, the director general could intervene to enforce the non-disrcimination provision if he took the view that it was being infringed.
  I realise that the hon. Member for Merthyr Tydfil and Rhymney cannot agree with me. Indeed, it would be asking too much of him suddenly to agree with me. However, if he reflects upon it for a moment, I think he will see that I have endeavoured to set out these arguments step by step, that his proposal is unnecessary and that it would remove much of the director general's ability to ensure that those who are paying standing charges are properly protected.
  Mr. Bruce: Is the Under-Secretary of State able to assure the House that if the general price per therm was not being increased, or was not being increased in line with
  86
  inflation, standing charges would be, at worst, increased at the same rate as the increase in unit cost, or preferably at less than that rate?
  Mr. Hunt: I am not sure whether the hon. Gentleman understands what I have been saying. I have given a clear assurance. In the authorisation there is the provision, which my right hon. Friend repeated earlier, that standing charges will not be increased higher than the rate of inflation. That is clearly set out. The supplier shall use its "best endeavours" to ensure that. I have further assured him that—this is an important provision—the director general has an opportunity, if he feels that the balance is beginning to infringe the duty—
  And it being half past Eight o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to the Order [17th February] and the Resolution this day, to put forthwith the Question already proposed from the Chair.
  Question put, That the clause be read a Second time:—
  The House divided: Ayes 188, Noes 230.

  Division No. 105]

  [8.30 pm

  AYES

  Abse, Leo

  Duffy, A. E. P.

  Adams, Allen (Paisley N)

  Dunwoody, Hon Mrs G.

  Anderson, Donald

  Eadie, Alex

  Archer, Rt Hon Peter

  Eastham, Ken

  Ashley, Rt Hon Jack

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

  Ashton, Joe

  Evans, John (St. Helens N)

  Atkinson, N. (Tottenham)

  Ewing, Harry

  Bagier, Gordon A. T.

  Fatchett, Derek

  Banks, Tony (Newham NW)

  Field, Frank (Birkenhead)

  Barnett, Guy

  Fields, T. (L'pool Broad Gn)

  Barron, Kevin

  Fisher, Mark

  Beckett, Mrs Margaret

  Flannery, Martin

  Beith, A. J.

  Foot, Rt Hon Michael

  Bell, Stuart

  Forrester, John

  Benn, Rt Hon Tony

  Foster, Derek

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

  Foulkes, George

  Bermingham, Gerald

  Fraser, J. (Norwood)

  Bidwell, Sydney

  Freeson, Rt Hon Reginald

  Blair, Anthony

  Freud, Clement

  Bray, Dr Jeremy

  Garrett, W. E.

  Brown, Gordon (D'f'mline E)

  George, Bruce

  Brown, Hugh D. (Provan)

  Gilbert, Rt Hon Dr John

  Brown, N. (N'c'tle-u-Tyne E)

  Godman, Dr Norman

  Brown, R. (N'c'tle-u-Tyne N)

  Golding, John

  Bruce, Malcolm

  Gould, Bryan

  Callaghan, Rt Hon J.

  Gourlay, Harry

  Callaghan, Jim (Heyw'd & M)

  Hamilton, James (M'well N)

  Campbell, Ian

  Hamilton, W. W. (Fife Central)

  Campbell-Savours, Dale

  Hancock, Michael

  Canavan, Dennis

  Hardy, Peter

  Carter-Jones, Lewis

  Harman, Ms Harriet

  Cartwright, John

  Harrison, Rt Hon Walter

  Clark, Dr David (S Shields)

  Hart, Rt Hon Dame Judith

  Clarke, Thomas

  Hattersley, Rt Hon Roy

  Clay, Robert

  Haynes, Frank

  Clelland, David Gordon

  Healey, Rt Hon Denis

  Clwyd, Mrs Ann

  Heffer, Eric S.

  Cocks, Rt Hon M. (Bristol S)

  Hogg, N. (C'nauld & Kilsyth)

  Cohen, Harry

  Holland, Stuart (Vauxhall)

  Conlan, Bernard

  Howells, Geraint

  Corbett, Robin

  Hoyle, Douglas

  Cox, Thomas (Tooting)

  Hughes, Robert (Aberdeen N)

  Craigen, J. M.

  Hughes, Roy (Newport East)

  Crowther, Stan

  Hughes, Sean (Knowsley S)

  Cunliffe, Lawrence

  Hughes, Simon (Southwark)

  Cunningham, Dr John

  Janner, Hon Greville

  Davies, Ronald (Caerphilly)

  Jones, Barry (Alyn & Deeside)

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

  Kaufman, Rt Hon Gerald

  Deakins, Eric

  Kilroy-Silk, Robert

  Dixon, Donald

  Kirkwood, Archy

  Dormand, Jack

  Lambie, David

  Douglas, Dick

  Lamond, James

  Dubs, Alfred

  Leadbitter, Ted

  87

  Leighton, Ronald

  Roberts, Allan (Bootle)

  Lewis, Terence (Worsley)

  Robinson, G. (Coventry NW)

  Litherland, Robert

  Rogers, Allan

  Lloyd, Tony (Stretford)

  Rooker, J. W.

  Lofthouse, Geoffrey

  Ross, Ernest (Dundee W)

  Loyden, Edward

  Rowlands, Ted

  McCartney, Hugh

  Sedgemore, Brian

  McDonald, Dr Oonagh

  Sheerman, Barry

  McKelvey, William

  Sheldon, Rt Hon R.

  MacKenzie, Rt Hon Gregor

  Shore, Rt Hon Peter

  McNamara, Kevin

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

  McTaggart, Robert

  Silkin, Rt Hon J.

  McWilliam, John

  Skinner, Dennis

  Madden, Max

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

  Marek, Dr John

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

  Marshall, David (Shettleston)

  Snape, Peter

  Martin, Michael

  Soley, Clive

  Mason, Rt Hon Roy

  Spearing, Nigel

  Maxton, John

  Steel, Rt Hon David

  Maynard, Miss Joan

  Stewart, Rt Hon D. (W Isles)

  Meadowcroft, Michael

  Stott, Roger

  Michie, William

  Strang, Gavin

  Mikardo, Ian

  Thomas, Dafydd (Merioneth)

  Millan, Rt Hon Bruce

  Thomas, Dr R. (Carmarthen)

  Miller, Dr M. S. (E Kilbride)

  Thompson, J. (Wansbeck)

  Mitchell, Austin (G't Grimsby)

  Thorne, Stan (Preston)

  Morris, Rt Hon A. (W'shawe)

  Tinn, James

  Morris, Rt Hon J. (Aberavon)

  Torney, Tom

  Nellist, David

  Wainwright, R.

  Oakes, Rt Hon Gordon

  Wallace, James

  O'Brien, William

  Wardell, Gareth (Gower)

  O'Neill, Martin

  Wareing, Robert

  Orme, Rt Hon Stanley

  Weetch, Ken

  Park, George

  Welsh, Michael

  Parry, Robert

  White, James

  Patchett, Terry

  Williams, Rt Hon A.

  Pavitt, Laurie

  Wilson, Gordon

  Pendry, Tom

  Winnick, David

  Pike, Peter

  Young, David (Bolton SE)

  Prescott, John

  Radice, Giles

  Tellers for the Ayes:

  Redmond, Martin

  Mr. Ray Powell and

  Richardson, Ms Jo

  Mr. Allen McKay.

  NOES

  Adley, Robert

  Butler, Rt Hon Sir Adam

  Aitken, Jonathan

  Butterfill, John

  Alison, Rt Hon Michael

  Carlisle, Kenneth (Lincoln)

  Amess, David

  Cash, William

  Ancram, Michael

  Chapman, Sydney

  Aspinwall, Jack

  Chope, Christopher

  Atkins, Rt Hon Sir H.

  Churchill, W. S.

  Atkins, Robert (South Ribble)

  Clark, Dr Michael (Rochford)

  Baker, Nicholas (Dorset N)

  Clark, Sir W. (Croydon S)

  Baldry, Tony

  Clarke, Rt Hon K. (Rusqhcliffe)

  Banks, Robert (Harrogate)

  Cockeram, Eric

  Batiste, Spencer

  Colvin, Michael

  Beaumont-Dark, Anthony

  Conway, Derek

  Bellingham, Henry

  Coombs, Simon

  Benyon, William

  Cope, John

  Best, Keith

  Cormack, Patrick

  Bevan, David Gilroy

  Corrie, John

  Biffen, Rt Hon John

  Cranborne, Viscount

  Biggs-Davison, Sir John

  Critchley, Julian

  Blaker, Rt Hon Sir Peter

  Currie, Mrs Edwina

  Body, Sir Richard

  Dickens, Geoffrey

  Boscawen, Hon Robert

  Dicks, Terry

  Bottomley, Peter

  Dorrell, Stephen

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

  Douglas-Hamilton, Lord J.

  Bowden, Gerald (Dulwich)

  Dover, Den

  Boyson, Dr Rhodes

  du Cann, Rt Hon Sir Edward

  Brandon-Bravo, Martin

  Durant, Tony

  Bright, Graham

  Eggar, Tim

  Brittan, Rt Hon Leon

  Emery, Sir Peter

  Brooke, Hon Peter

  Evennett, David

  Brown, M. (Brigg & Cl'thpes)

  Eyre, Sir Reginald

  Browne, John

  Fletcher, Alexander

  Bruinvels, Peter

  Fookes, Miss Janet

  Bryan, Sir Paul

  Forman, Nigel

  Buchanan-Smith, Rt Hon A.

  Forth, Eric

  88

  Fry, Peter

  Percival, Rt Hon Sir Ian

  Garel-Jones, Tristan

  Pollock, Alexander

  Glyn, Dr Alan

  Porter, Barry

  Gorst, John

  Powell, William (Corby)

  Gower, Sir Raymond

  Powley, John

  Greenway, Harry

  Prentice, Rt Hon Reg

  Gregory, Conal

  Price, Sir David

  Griffiths, Sir Eldon

  Pym, Rt Hon Francis

  Grist, Ian

  Raffan, Keith

  Grylls, Michael

  Raison, Rt Hon Timothy

  Gummer, Rt Hon John S

  Rathbone, Tim

  Hamilton, Hon A. (Epsom)

  Rhodes James, Robert

  Hamilton, Neil (Tatton)

  Rhys Williams, Sir Brandon

  Hampson, Dr Keith

  Ridley, Rt Hon Nicholas

  Harris, David

  Ridsdale, Sir Julian

  Hawksley, Warren

  Rifkind, Rt Hon Malcolm

  Heddle, John

  Roberts, Wyn (Conwy)

  Henderson, Barry

  Robinson, Mark (N'port W)

  Heseltine, Rt Hon Michael

  Roe, Mrs Marion

  Higgins, Rt Hon Terence L.

  Rossi, Sir Hugh

  Hirst, Michael

  Rost, Peter

  Holland, Sir Philip (Gedling)

  Rumbold, Mrs Angela

  Howarth, Gerald (Cannock)

  Ryder, Richard

  Howell, Rt Hon D. (G'ldford)

  Sackville, Hon Thomas

  Howell, Ralph (Norfolk, N)

  St. John-Stevas, Rt Hon N.

  Hunt, David (Wirral W)

  Sayeed, Jonathan

  Irving, Charles

  Shaw, Sir Michael (Scarb')

  Key, Robert

  Shepherd, Colin (Hereford)

  Lang, Ian

  Shepherd, Richard (Aldridge)

  Latham, Michael

  Silvester, Fred

  Lee, John (Pendle)

  Sims, Roger

  Leigh, Edward (Gainsbor'gh)

  Skeet, Sir Trevor

  Lennox-Boyd, Hon Mark

  Smith, Sir Dudley (Warwick)

  Lester, Jim

  Smith, Tim (Beaconsfield)

  Lewis, Sir Kenneth (Stamf'd)

  Speller, Tony

  Lightbown, David

  Spencer, Derek

  Lilley, Peter

  Spicer, Jim (Dorset W)

  Lloyd, Ian (Havant)

  Spicer, Michael (S Worcs)

  Lord, Michael

  Stanbrook, Ivor

  Luce, Rt Hon Richard

  Stanley, Rt Hon John

  Lyell, Nicholas

  Steen, Anthony

  McCrindle, Robert

  Stern, Michael

  McCurley, Mrs Anna

  Stevens, Lewis (Nuneaton)

  Macfarlane, Neil

  Stewart, Allan (Eastwood)

  MacGregor, Rt Hon John

  Stewart, Andrew (Sherwood)

  MacKay, Andrew (Berkshire)

  Stewart, Ian (Hertf'dshire N)

  Maclean, David John

  Stokes, John

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

  Sumberg, David

  Madel, David

  Taylor, John (Solihull)

  Malone, Gerald

  Taylor, Teddy (S'end E)

  Maples, John

  Temple-Morris, Peter

  Marshall, Michael (Arundel)

  Thomas, Rt Hon Peter

  Mates, Michael

  Thompson, Donald (Calder V)

  Mather, Carol

  Thompson, Patrick (N'ich N)

  Maude, Hon Francis

  Thorne, Neil (Ilford S)

  Mayhew, Sir Patrick

  Thornton, Malcolm

  Merchant, Piers

  Townend, John (Bridlington)

  Meyer, Sir Anthony

  Tracey, Richard

  Miller, Hal (B'grove)

  Trippier, David

  Mills, Iain (Meriden)

  Twinn, Dr Ian

  Miscampbell, Norman

  van Straubenzee, Sir W.

  Moate, Roger

  Vaughan, Sir Gerard

  Monro, Sir Hector

  Viggers, Peter

  Morrison, Hon C. (Devizes)

  Waddington, David

  Moynihan, Hon C.

  Waldegrave, Hon William

  Needham, Richard

  Walden, George

  Nelson, Anthony

  Walker, Bill (T'side N)

  Neubert, Michael

  Waller, Gary

  Nicholls, Patrick

  Ward, John

  Normanton, Tom

  Wardle, C. (Bexhill)

  Norris, Steven

  Warren, Kenneth

  Ottaway, Richard

  Watson, John

  Page, Sir John (Harrow W)

  Watts, John

  Page, Richard (Herts SW)

  Whitney, Raymond

  Parris, Matthew

  Wiggin, Jerry

  Patten, J. (Oxf W & Abgdn)

  Winterton, Mrs Ann

  Pattie, Geoffrey

  Winterton, Nicholas

  Pawsey, James

  Wolfson, Mark

  Peacock, Mrs Elizabeth

  Wood, Timothy

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  Woodcock,Michael

  Tellers for the Noes:

  Young,Sir George(Acton)

  Mr.Tim Sainsbury and

  Mr. Peter Lloyd.

  Question accordingly negatived.

Clause 7

  AUTHORISATION OF PUBLIC GAS SUPPLIERS
  Mr. Rowlands: I beg to move amendment No. 1, in page 5, line 13 at end insert—
  '(4) Before granting an authorisation, the Secretary of State shall require any public gas supplier, following consultations with the Director and the Council, to prepare codes of practice specifying

  (a) the nature of service available to tariff customers in relation to gas supplied by the supplier;

  (b) the conditions attached to the payment of gas bills including guidance to domestic customers if they have difficulty in paying; and

  (c) the provision of special services for elderly and disabled persons and any public gas supplier shall arrange for the publication of such codes of practice, in such form and such manner as the Director may consider appropriate.

  (5) The Director and the Council shall collect information on, and keep under review, all matters relating to such codes of practice under sub-section (4) above with respect to which the functions of the Director or the Council are exercisable.'.
  Mr. Deputy Speaker (Sir Paul Dean): With this it will be convenient to discuss the following amendments:
  No. 5, in page 7, line 7 leave out subsection (13).
  No. 7, in clause 9, page 8, line 33 at end insert—
  '(2A) It shall also be the duty of a public gas supplier to employ a sufficient number of qualified staff trained to an appropriate standard to fulfill the obligations placed upon the supplier by Schedule 5 of this Act'.
  No. 14 in clause 23, page 26, line 16 leave out subsection (1) and insert—
  `The Director may modify, with the consent of the Secretary of State, conditions of a public gas supplier's authorisation in respect of conditions relating to prices and charges made by the supplier; and in respect of conditions relating to the level of service provided to customers.'.
  No. 15, in page 26, line 38 leave out `the consent of' and insert 'consulting'.
  No. 42. in schedule 5, page 73, leave out lines 20 to 23 and insert—

  '(a) seek an order from the court to cut off the supply to the premises by disconnecting the service pipe at the meter (whether the pipe belongs to the supplier or not) or by such other means as he thinks fit; and

  (b) if such an order is granted recover any expenses incurred in so doing from the customer.

  In deciding whether to make an order for the purpose of subparagraph 5(a) above the court shall have regard to provisions of the Code of Practice for payment of bills.'.
  No. 43, page 73, line 24, leave out subsection (6) and insert
  `(6) In this paragraph "the court" means the High Court or a county court and a county court shall have jurisdiction in the proceedings if the charges due do not exceed the county court limit.
  (7) Where a public gas supplies has cut off the supply of gas to any premises as a result of an order made in accordance with subsection (5), the supplier shall not be under any obligation to resume the supply of gas to the customer until he has made good the default and paid the reasonable expenses of re-connecting the supply.'.
  8.45 pm
  Mr. Rowlands: One of the most constant and widespread criticisms, not only of the Bill, but of the Government's whole approach to privatisation, which has
  90
  been reflected in our debates and in journals and newspapers, ranging from the Financial Times to the Morning Star, is that by privatising British Gas the Government will create a new monster private monopoly, while at the same time failing to provide any meaningful or effective regulation of it. That is the fundamental charge made against the Bill and the whole process of privatisation adopted by the Government.
  In their turn, the Government have claimed that this private monopoly monster will be controlled by a combination of competition and regulation. However, for the vast majority of gas consumers competition will be non-existent. In Committee we investigated the Bill in detail, together with the draft conditions attached to the 25-year monopoly licence to be granted to the new BG plc. We found that the system of regulation, and the functions and powers given to the director general, would not provide any meaningful regulation or protection for consumers in key areas of consumer interest.
  These amendments together with the next two sets of amendments, which I understand will be moved by the Chairman of the all-party Select Committee, go some way towards remedying the defects and towards giving some substance to the concept of regulation and the power of the director general.
  Amendment No.1 has been promoted by the Gas Consumers Council and is fully supported by it. It seeks to ensure that the gas supplier has to prepare a series of codes of practice specifying the nature of the service available to tariff customers and, in particular, the conditions attached to the payment of gas bills, including guidance to domestic customers if they have any difficulty in paying. The gas supplier is to provide a code that covers the provision of special services to the elderly and disabled. Such a code must be prepared following consultation with both the director general and the Gas Consumers Council. We believe that that is vital to the needs and interests of many consumers.
  We fear, not that British Gas will not initially maintain a variety of voluntary codes, but that a future British Gas may decide to cut corners, to reduce services or to cut the number of meter reading staff, while not passing on those reduced costs of the consumer. We wish to ensure that the Bill gives statutory support to the idea of codes relating to the payment of gas bills car to the disconnection of supply for failure to pay them.
  A voluntary code has been agreed. Some 35,000 gas consumers were disconnected in 1985 because of failure to pay their bills. Thus, we are not talking about something modest. It is necessary that codes of practice as outlined in the amendment should be in force and should be the subject of consultation. We strongly believe that the provisions laid down by the Government, in the conditions attached to the 25-year monopoly licence granted to British Gas, do not provide the full range of statutory support that is necessary for standards of customer service. Thus, we believe that the gas supplier should be compelled to prepare codes of practice specifying various things, and that they should be the subject of consultation with the director general and the council.
  We also believe that the director general and the council should have the power to collect the information and to keep under review all matters relating to such codes of practice as are suggested in the proposed subsection (4). We place great emphasis on the ability to obtain and collect information, because of the experience of

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  telephone user groups in relation to British Telecom. Before privatisation BT issued a lot of information about problems, breakdowns and failures. However, after privatisation it used the cloak of commercial secrecy as an excuse for not providing such information.
  We do not want those mistakes to be repeated. Consequently, it is vital that the director general and the council should have the power to collect information. British Gas should not feel, after privatisation, that it can wrap some of its information in a cloak of commercial secrecy, as BT has done. Therefore, there is a strong case for proposals such as those the Gas Consumers Council has suggested, which are incorporated in amendment No.1.
  In amendment No. 5 we go further in giving some power and meaning to the director general's role. We give the director general the power to modify, with the Secretary of State's consent, certain conditions that are attached to the licence in relation to prices, charges and the level of services. In Committee we debated some aspects of that. At present, the Bill allows the director general to do only two things: he can modify the licence if he obtains agreement from British Gas under clause 23, or, if he does not get agreement, he can modify it if he makes a recommendation to the Monopolies and Mergers Commission, which in turn takes the necessary decision.
  We believe that saying that modification should occur only by agreement or through the elaborate procedure of reference to the Monopolies and Mergers Commission makes the Director General of Gas Supply a pathetic creature, without any meaningful power in the key areas. Apart from enforcing the existing arrangements or authorisations, all that he can do is to recommend changes, which have then to be submitted to the Monopolies and Mergers Commission. The director general's power is reduced to that of postman. Any of his recommendations to British Gas to modify a 25-year-old licence will have to be passed to the Monopolies and Mergers Commission.
  Anyone who has followed the activities of that commission in the last few months will wonder whether such a cumbersome outfit, already overstretched and coping with the merger mania which has struck us, is an appropriate body to deal with the range of probably modest modifications which cannot be achieved by agreement with British Gas. Is that not an incredibly cumbersome process?
  We debated the matter in general in Committee, but we have returned with a modification of our own proposals. We suggest that the director general should have limited powers to modify a licence. We provide the safeguard that the director general must have the consent of the Secretary of State, but we believe that if Ofgas is to be set up, the only function of which is to consider complaints about gas supply, the director general should have the right to decide on modifications to a licence in relation to services, charges and prices— with the Secretary of State's consent. The director general should not be expected to pass his recommendations on to the Monopolies and Mergers Commission, which might know very little about the nature, background and reasons why such modifications of the licence are proposed.
  The Government's plan will insert another tier of obstruction into the flexible arrangements which the Government desrcibe as necessary. It will undermine the potential authority of a regulatory body. We plead with the
  92
  Minister to reconsider this "either or nothing" arrangement. The director general has either to get agreement or pass on his recommendation to the Monopolies and Mergers Commission. If we are to create the director general, we must give him a proper job to do. We should give him limited power to modify a licence and the conditions attached to it.
  In Committee I explained how nonsensical it would be if, when the director general wanted to recommend a modification to the conditional connection charges, or to the codes for payments of bills or services, he had to refer this to the Monopolies and Mergers Commission. That commission deals with other matters, such as competition. It does not normally consider the moderate and sensible modifications that might be proposed by the director general on charges, pricing and standards of service.
  I hope that the Government will respond to our plea to make the director general and the Department more meaningful, with a reasonable set of functions. I hope that our plea will not fall on deaf ears as it did in Committee. We have a strong case for giving the director general more powers than are offered in the Bill.
  Another amendment refers to safety, which we debated at length in Committee. We believed then, as we believe now, that the Government have made an exaggerated case, to the point of being bogus, in their claim to improve safety by reducing the statutory time given to British Gas to deal with gas escapes from 24 hours to 12 hours under schedule 5. The majority of regions respond within two hours to a gas escape report.
  As important as the speed with which a gas escape is dealt is who deals with it. Will the person be equipped, trained and qualified to deal with it? Our amendment suggests that a duty be placed on the public gas supplier to ensure that such people are qualified and trained to a certain standard. We debated those standards at length in Committee when we discussed the training of staff.
  Even before privatisation the problems and arguments are with us. The problems exist now, before the privatised company, which will be more interested in profit than service and might cut corners, is established.
  I shall quote an extract from a letter from employees in Plymouth. It says:
  "The Plymouth area of British Gas has not taken on an apprentice gas fitter for at least four years, and even if it were to do so it now would mean a gap of eight years before a qualified and certificated fitter became available. Within that eight-year period there has, and will be a reduction in the direct labour force due to retirement, ill health etc. Already contractors are being used to deal with peak work loads and if those employers are not inclined to set up their own apprenticeship schemes which should adhere to British Gas standards, where are the qualified persons to come from? We fear there is a great danger of cowboy operators, with limited knowledge, moving into the industry, perhaps producing sub-standard work which eventually could cause damage to life and limb, and of course property."
  The letter suggests that I bring these fears to the attention of the appropriate committee. I bring it to the attention of the House. The letter concludes:
  "a fully certified operator should be the only person allowed to fit and maintain any gas appliances. This should also apply to contractors engaged on mains and service work whose training programme leaves a lot to be desired."
  Mr. Robert C. Brown: It is appalling that some gas depots have not employed an apprentice for four years. Is my hon. Friend aware that this is typical of area boards

  93
  throughout the country, and that in many instances many more years than four have passed since an apprentice was employed?
  Mr. Rowlands: I am grateful to my hon. Friend for intervening. As we know, he has great knowledge of these matters.
  I hope the Minister will not contend that we are engaging in scaremongering. I did not prompt the letter from which I have quoted. I have not been to Plymouth to arrange for such a letter to be written, and I have not sought to arouse the feeling which is expressed within it. I assure the House that the letter was written spontaneously. I hope that the Minister will heed the authentic words and views that have been set out on behalf of those who work in the industry.
  Worries and concerns are being expressed before British Gas is privatised, and amendment No. 7 will impose a duty on public gas suppliers
  "to employ a sufficient number of qualified staff trained to an appropriate standard to fulfil the obligations placed upon the supplier by Schedule 5 of this Act."
  This is not a marginal issue, and it cannot be desrcibed as an academic consideration. We are discussing a factor which is central to safety issues.
  9 pm
  British Gas has tried to maintain high standards and it has a tremendous record of training apprentices. My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Brown) and many of his contemporaries are examples of the training that has been provided. We are worried about the deterioration in training standards. If the Government decide to embark upon a further privatisation measure and to create a new public company, we feel that the duty should be placed upon the company to ensure that training takes place and that a sufficient number of qualified and trained staff are available to meet the challenge of ensuring safety in future.
  We are worried about an increase in the number of cowboys in the industry. There is great concern about some of the gas applicances, including gas cookers, which are being supplied. There is increased competition in the selling of gas cookers and a significant percentage of the 110,000 cookers that have been imported from the continent and elsewhere are not reaching the safety standards that have been set by British Gas. We know that strong statements have been issued by Ministers in the Department of Trade and Industry to the effect that unsafe goods constitute unsafe competition. We have not yet seen the draft regulations on the safety of appliances that have been promised, although we have pressed harder and harder for them to be produced and introduced.
  There is a huge gulf between the Government's rhetoric, the words in the Bill, the conditions in the licence, the system of regulation and the powers that have been given to the Director General of Gas Supply. We do not believe that the draft licence that will be granted for 25 years will meet the needs as we see them. They will not meet the needs of the consumer. The Gas Consumers Council will be able only to advise on the presentation of some of the codes, as laid down in condition 14. That demonstrates how derisory and modest is the role of the council in preparing and drafting codes that will be of great concern to domestic gas consumers.
  We believe in strengthening the statutory backing of the codes, in strengthening the role of the Gas Consumers
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  Council and the director general in the preparation of the codes, and in giving the director general important and useful functions by being able to modify the licence without embarking on the enormously cumbersome procedure of making recommendations to yet another quango, the Monopolies and Mergers Commission. For all these reasons, I hope that the Minister, even at this late stage, will accept some of the arguments that we have been advancing.
  Mr. Bruce: I shall speak briefly on amendments Nos. 42 and 43, which I tabled and to which the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) has been addressing himself. Although this may not be apparent at first sight, the amendments are designed to provide protection for those who have difficulties in meeting the payment of their bills and are faced with disconnection. Even under the present system, consumers can be disconnected in circumstances which would be regarded as unjust and unfair and which aggravate the difficulties being experienced. We need a service that is designed to try to help consumers cope with their difficulties. In most instances there is not a refusal or a show of unwillingness to pay. Instead, there is more often than not genuine financial hardship that leads to difficulty or inability to pay.
  It is argued— in my view quite rightly— that consumers who are in difficulties should be faced with court action. I am not encouraging British Gas or any gas authority to take court action. Instead, I am trying to avoid the circumstances which arise now and which could become worse under a private company that will face, perhaps, more commercial pressures. I am trying to avoid arbitrary disconnections which do not relate to a code of practice. I do not want consumers who face difficulties enough being confronted with what would seem to them to be abrupt disconnection.
  The basis of the amendments is not abstract. They are based on considerable evidence and experience over the years, which I am sure is shared by many hon. Members, of people who have suffered considerably as a result of arbitrary disconnection in circumstances in which it should not have happened. As I do not wish to detain the House unduly, I will give just one example.
  Last year, a London consumer who had been away for six months received an estimated bill. He queried the estimate, but while he was awaiting a reply he received a second bill— not an unfamiliar experience— and the supply was then disconnected although there was a two-month old baby in the house and the consumer had offered to pay the £59 that he owed. He was then asked to pay not just the amount that he owed, but a reconnection fee, although I am sure that hon. Members would agree that the supply should never have been disconnected. Apart from anything else, it seems extremely dangerous to disconnect a house in which there is such a young baby, and I do not believe that that would have been done even by the electricity industry. The consumer had said that he had been away, he had queried the bill, and he had offered to pay the amount that he owed. To disconnect the supply in those circumstances seems arbitrary and heartless in the extreme.
  The amendments would require the gas board to take court action, so the circumstances that I have desrcibed could not have arisen. The time needed to take court action would have ensured that the circumstances were brought

  95
  to light and would have given the advice and aid agencies time to provide a legal defence if necessary or to ensure that the case did not proceed in view of the circumstances. In fact, the details of the case that I have desrcibed were provided by the National Association of Citizens Advice Bureaux. At present, because there is no legal requirement to the contrary, the supplier can disconnect the supply without recourse to law, resulting in the injustices and uncertainties to which I have referred. In the case that I have cited, the disconnection was unfair and unjust, but no harm was done. It is not difficult, however, to imagine circumstances in which disconnection could have serious consequences, for example, for an old person or a household with very young children and without any alternative form of heating in very cold weather.
  I believe that the requirement that disconnection should be undertaken only after court action would be welcomed by many people. It is quite wrong for people who have no direct dealings with cases of this kind to assume that people do not pay their bills because they are unwilling recidivists and wish to defraud the gas board. The evidence shows that in 99 per cent. of cases it is because people are experiencing genuine hardship and real financial difficulty. Those people need help. They certainly do not need an abrupt and arbitrary withdrawal of essential supplies.
  I can understand why some hon. Members would rather the courts were not involved, but the purpose of the amendments is to protect the individual by making it clear that the gas authority cannot disconnect any consumer, even if bills have not been paid, without taking the matter to court where all the facts and arguments can be considered and it can be clearly determined whether the person is simply refusing to pay or has genuine difficulties which can be much better resolved by the various aid and support agencies. I commend these as fair, balanced and reasonable amendments.
  Amendment 43 makes it quite clear that, where it is proved that the person has not paid the bill because of unwillingness or refusal to pay or where there are no circumstances which justify extra aid or help, the consumer will not get his supply reconnected until the bill has been settled. That seems to be reasonable because it puts an onus on both sides. In my view, the amendments would ensure that those facing real difficulites or hardship would be removed from the threat of arbitrary disconnection and would have the protection of the courts to ensure that they could not have their gas supply terminated unless it was conclusively proved that they were guilty of an offence. I think that that would very much improve the present position. I commend the amendments to the House.
  Mr. Simon Coombs: My justification for speaking briefly in this debate is my former membership of a consumer council, albeit, I admit, not in the gas industry but in the electricity industry. However, I think that there are some important similarities between the two and I hope that on that basis I shall be allowed to say a few words.
  The Opposition have tonight demonstrated more than anything else their fundamental disagreement with the principle of privatisation. That can be no surprise to any of us. They seek, therefore, to surround a Bill such as this
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  with the kind of controls which a new private company does not need in order to be successful. It is interesting that the Opposition spokesman, the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), sought information on faults and instanced the example of British Telecom. I am hopeful that there will be a general improvement in the performance of British Gas when it becomes a private company. I do not look for information on the bad things but an improvement which will be demonstrable to all consumers. I think that that says something about the attitude of the Opposition.
  It is unfortunate that the Opposition regard the British Gas of the future as a monster. I think that that was the word used by the hon. Member for Merthyr Tydfil and Rhymney. Why should it be a monster? Why is there this deep-rooted suspicion that the new private company will want to cut back on services? I should be interested to know why that should be. To take the example of the disconnection code of practice which the hon. Member for Gordon (Mr. Bruce) mentioned, it seems to me that it is in the interest of a private company to maintain the best possible relationship with its customers in order to maintain good public relations. In the long term, those customers will pay for the success and profitability of the company. It seems extremely unlikely that the company would want to cut people off until all other methods of achieving payment had been tried. Certainly, it may go to the courts but I would have thought that the last thing the company would want would be to disconnect a consumer, because the gas industry is not such a monopoly as some hon. Members have suggested. It always has the competition of the electricity industry. A person who cooks by gas can transfer to electricity if he does not like the service which is being provided by the gas industry.
  The fears which the attitude of the Opposition have raised deserve some form of answer from the Government. I take it as natural that in the future the industry will want to provide, for example, special services for the elderly and disabled. Services currently provided include free safety checks and special appliance adaptors. Research should continue into new facilities such as special meters for the blind. I hope that we are all of one mind in seeing that as the right way to go in the future. Is my right hon. Friend the Minister of State satisfied with the assurance that he has been given by the British Gas Corporation that it intends to continue along those lines in future?
  9.15 pm
  Despite my right hon. Friend's confidence about the industry's future behaviour, confidence that I share, what would happen if there were changes, and if the fears that have been expressed tonight turned out to be justified? Is my right hon. Friend satisfied that the protection for the elderly and disabled would be maintained? Who would the consumer go to first with his complaint? Does my right hon. Friend expect to see the same dedicated band of men and women who currently serve the consumer councils at local level continuing in the future through the flexible arrangements that are being introduced in the Bill? It would bring considerable comfort to many of those who have been frightened by the Opposition's campaign against the Bill to be given an assurance tonight. I invite my right hon. Friend to say how the Government would react if some of those fears turned out to be justified.
  Mr. Pike: I agreed with the hon. Member for Swindon (Mr. Coombs) when he said that the Opposition have made

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  it clear from the start that they are totally opposed to privatisation. That is exactly our position. I regret that I did not agree with most of the other conclusions that he reached.
  In spite of our total opposition to privatisation, throughout the debate, as an Opposition, we have tried to pursue three aims— to protect our national energy, to protect the consumer interest and to protect the industry's employees. This group of amendments is aimed at protecting the interests of consumers.
  The hon. Member for Swindon referred to the monopoly. British Gas will have a monopoly for the average gas consumer. Throughout the Committee, it was made clear that in most gas appliance sales, British Gas has a near monopoly at present and will continue to have one after privatisation. The hon. Member for Swindon said that a person with a gas cooker could easily go out and buy an electric cooker. He failed to recognise what sort of people we are trying to protect with the amendments that we are debating. Even those on a reasonably good wage cannot afford to suddenly go out and buy a new gas or electric cooker without difficulty—it is an expensive item. Therefore, it is unrealistic to say that there is competition.
  Mr. Robert C. Brown: What about central heating?
  Mr. Pike: I was going to mention that. Once someone has installed gas central heating, he is bound to that system for some time. Even if the boiler needs to be changed, the average person cannot suddenly say, "I have had enough of British Gas. I want to transfer to oil or coal." Therefore, in many respects, British Gas will continue to have a monopoly. It is right that we should put into the Bill and into primary legislation consumer protection.
  We have now reached a stage where we can predict Ministers' replies to our debates. They say that we do not need to put provisions into primary legislation because what Opposition Members are seeking would be in the interests of British Gas, and would be done anyway. We disagree with the Government. We believe that the Bill's provisions must be strengthened to give consumers the safeguards we seek.
  Amendment No. 7 states that a public gas supplier must
  "employ a sufficient number of qualified staff trained to an approporiate standard".
  There is no reason for the Government not to accept that, but the Minister is almost certain to state that the public gas suppliers will employ a sufficient number of such staff. If he believes that, he should accept the amendment because it will not change the position. However, we believe that this provision should be written into the Bill to ensure that a sufficient number of trained staff are employed. It is important in dealing with such a highly volatile material as gas to have properly trained staff to ensure that work is properly carried out and that consumers are fully safeguarded. I see no reason why the Government should refuse to accept amendment No. 7.
  Subsection (4)(b) in amendment No. 1 refers to
  "the payment of gas bills including guidance to domestic customers if they have difficulty in paying".
  That is an extremely important provision. No doubt the Minister will say that British Gas plc will continue to publicise details of the codes of practice. We believe that this provision will ensure that the public gas suppliers will do that properly.
  The Labour party has never pretended that, because British Gas is publicly owned, everything is perfect and
  98
  there is no need for improvements. We have tried on a number of times to make improvements. The hon. Member for Gordon (Mr. Bruce) pointed out that in 99 per cent. of cases it was a matter not of people deliberately refusing to pay their bills but of people not being able to afford to pay them and thereby having to make the difficult choice of whether to provide heating or food at the weekends. Often they are the people who are at least able to defend themselves and to understand what protection and facilities are available to assist them.
  As we know, many people do not understand how to claim payments under the exceptionally severe weather regulations. Many people operated their heating systems at low levels during the very cold weather in February but they suddenly found that assistance was available if their heating bills were higher than they were a year ago. In many cases heating bills will not be higher because people deliberately turned down or turned off the heating because they were afraid that they could not meet their bills Some people have paid the penalty and died from hypothermia. That is why protection must be clearly written into the Bill.
  Subsection (4)(c) refers to
  "the provision of special services for elderly and disabled persons".
  We should ensure that privatised British Gas assists the elderly and disabled people. There should be no doubt about their position. The Minister may say that British Gas plc will undertake all these measures anyway and that, therefore, these provisions are not necessary. That is not satisfactory. If the Minister believes that, he should accept some of the Labour party's amendments. I believe that these are sensible, moderate amendments which only strengthen the position and try to give the public the protection to which the Labour party believes they are entitled.
  Mr. Michael Cocks: The speech of the hon Member for Swindon (Mr Coombs) was a parliamentary gem. He said that we were raising a bogy man, and he huffed and puffed and blew the matter up so large that in the end he frightened himself to death. He ended by pleading with the Minister to give him some assurances that he could take back to his constituency to satisfy the disadvantaged and the disabled so that they would not be frightened.
  These amendments reveal the difference in philosophy between the two sides of the Chamber. My hon. Friend the Member for Burnley (Mr. Pike) said that we do not argue that the existing gas structure is beyond criticism. However, some flexibility exists. We know that if we get in touch with the gas authorities, we shall get some satisfaction in respect of the complaints that we raise.
  Only this morning, like my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), I received a letter from a lady who said that she was being asked to pay £11 to have her meter emptied. It has not been emptied for 15 weeks and contained between £150 and £200. She was afraid of a burglary, because she was going on holiday and had already been burgled once. She is a 66-year-old pensioner and fosters a child for Mencap. I am quite sure that when I telephone the office of the chairman of the south-west gas board tomorrow disrcetion will be used and that something will be done about this case. Can we really believe that the use of such disrcetion will be extrapolated into the new situation that the Government are creating?
  The Minister should think hard before rejecting these amendments, because they go to the heart of the matter.

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  It is not that the present gas structure is a large bureaucratic organisation, because it contains people who are not entirely wedded to the profit motive. We said in Committee that there was an inherent tension between the maximisation of profit and the rendering of a public service, and we are afraid that that will be eroded. I therefore hope that the Minister will give us some reassurance, and even set at rest the mind of the hon. Member for Swindon. This is an extremely important detailed human point.
  Mr. Hardy: My right hon. Friend the Member for Bristol, South (Mr. Cocks) has made an important point. We are seeking to maintain the civilised and caring approach that exists in the gas industry. We want to see it continue, even though the pressure to maintain or enhance profit may become very strong.
  My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) advanced a powerful case. He appeared in the most reasonable manner to be appealing to the Government just this once to drop their hitherto hard approach and to recognise that, although they are maintaining a pretence that they wish to stand aside from the economy, they are still sitting in the directors' box. Unfortunately, the referee, in the person of the director of Ofgas, has been given neither rules to follow nor an effective whistle to blow. We want his position to be important, if only to protect the people to whom my right hon. Friend the Member for Bristol, South referred.
  The last debate was sadly curtailed because of the guillotine. We did not even get a complete response from the Under-Secretary. I know that he would have replied very fully to that brief debate, but he was prevented by the guillotine— a form of political suicide that I find deplorable.
  That debate was relevant to this one, because it was an expression of our concern for the hundreds of thousands of people who are in need. They are the sort of people whom the hon. Member for Swindon (Mr. Coombs) may not have been thinking of when he said that they could easily switch from a gas cooker to an electric one. Such people cannot afford to buy another very expensive appliance simply because they are currently dissatisfied with one supplier. The hon. Gentleman may not think that it is particularly expansive, but thousands of the constituents of Opposition Members cannot afford to buy a different appliance. Thousands of people, indeed probably millions, are like that. They will not reap any benefit from privatisation. They cannot join the rush to make a great deal of money because they do not have money to accumulate or to buy shares, or capital to invest. They have problems of considerable intensity, which is why we have considerable sympathy with the arguments of the hon. Member for Gordon (Mr. Bruce).
  I accept that the hon. Gentleman is a trifle more mechanistic in his approach to the needy, in seeking to establish the structures by which disconnections can be achieved. Our concern is to ensure that a proper code of practice exists, and that a caring element is engendered in the gas industry to prevent disconnections as often as possible. We are grateful that the hon. Gentlemn has taken part in the debate, unlike the other half of the alliance. The debate has continued for nearly six hours, yet no SDP
  100
  Member has been present. This shows how greatly the SDP is concerned about the millions of people for whom we speak.
  My hon. Friend the Member for Burnley (Mr. Pike) expressed our concern for the needy. Their numbers are growing. The number of unemployed is substantial, and the figures that the Government produce are only a small part of the whole story. The number of elderly people is also substantial. The Government are well aware from our arguments in Committee during this particularly bitter winter how serious the problem is. Because the problem is serious and extensive, it is absolutely necessary to have a code of practice and for the director general to have a meaningful position. Unless the groundwork for rules and practices is laid down, the director general's position is nebulous.
  If the Government do not go some way along the road which my hon. Friend advocated, no responsible person will wish to accept that important job. However, it can be important only if it is meaningful, and in the present circumstances without the proper code of practice the job may have the characteristics of cotton wool. Society has serious needs and we should not restrict ourselves simply to making money. The maintenance of a proper service is also essential.
  Mr. Buchanan-Smith: We have had a useful debate on a wide range of topics, some of which we considered in Committee. The Opposition do not have a monopoly of compassion and caring. I wholly understand, as do all hon. Members, the problem that our constituents occasionally face in relation to some of the matters that we have discussed. Therefore, the motivation to ensure the provision of care for the less well-off and those who are less well able to defend themselves is an objective that is certainly shared on both sides of the House.
  We begin to part company on the best ways of achieving that. The amendment tabled by the hon. Member for Merthyr Tydfil and Rhynmey (Mr. Rowlands) adopts a more structured approach, as does the amendment tabled by the hon. Member for Gordon (Mr. Bruce), than exists at present. The hon. Member for Merthyr Tydfil and Rhymney asked about the codes of practice. It is important to be clear precisely what they are, how they can be applied and how changes can take place. Indeed, my hon. Friend the Member for Swindon (Mr. Coombs) raised that point.
  Clause 7 enables the Secretary of State to include conditions in the authorisation granted to a public gas supplier covering a wide range of matters. Condition 12 of the draft authorisation requires British Gas to publish codes of practice on the nature of the gas supply service available to tariff customers and on the matter which dominated the debate—the payment of bills. I accept that the codes of practice do not come into effect immediately on the authorisation, and that there is a gap after the passage of the Bill, but there will be plenty of time for them to be in place before British Gas plc comes into operation.
  Condition 12 requires British Gas to consult the director general and the council in the event of a substantive revision to the codes of practice. I emphasise that it is a draft authorisation, and we have debated fully some of its provisions. We shall reflect on some of the points that have been raised about the final draft authorisation.
  Mr. Rowlands: The Minister says that he will reflect upon the matter. We have raised this issue almost from Second Reading. Our fundamental complaint about condition 12 is that paragraph 2 confines the process of consultation to the presentation of each code. Will the Minister give a firm commitment that that will be revised to include a provision about the substance of each code, not just its presentation? That has caused great offence.
  Mr. Buchanan-Smith: The hon. Gentleman forgets that British Gas has made it clear that it will continue its present codes of practice. Those codes are clear, and I have heard no criticism in the House of how they operate. I have not been satisfied of the Opposition's case by the debate, but I shall continue to reflect on the authorisation. If the existing codes are continued, there may be a question of how the codes should operate. If there is a change in their operation, we must know what procedures will be used to deal with that.
  Mr. Robert C. Brown: Throughout the debate, Ministers have quoted assurances given by British Gas. British Gas will have no more power than Her Majesty's Government to dictate to British Gas plc after privatisation unless the power is written into the statute.
  Mr. Buchanan-Smith: I was about to respond to the points made by my hon. Friend the Member for Swindon. The director general and the consumers council will play a role in the operation of the codes. The Opposition have overlooked that point. The council will wish to investigate any representations about standards of service, and if it seems to the director general that British Gas is falling short, he can modify the authorisation. I assure my hon. Friend that, in the event that the codes are not operated properly, the director general has the power to modify the authorisation. The new Gas Consumers Council will monitor the operation of the code of practice on the payment of bills, just as the existing council does.
  That shows the fundamental difference between the two sides of the House. As my hon. Friend the Member for Swindon said, the Labour party wishes to overstructure the position and make the codes of practice over-rigid. It cannot be in the interests of British Gas, if it is to be successful, not to fulfil the undertakings that it has given.
  We are concerned about the special needs of the elderly and disabled, as we said in Committee, and the BGC has said that it will continue free safety checks for the elderly. On the needs of the disabled, it is our intention that at least one member of the Gas Consumers Council should have experience of this sector. The code on this has worked successfully, although we can all give examples of where individual cases may have gone awry, and I have not heard any criticism from either side of the House that the code of practice has not worked satisfactorily.
  We have an undertaking from the BGC that it will continue the codes, and there is an assurance that if it does not continue to operate those codes satisfactorily, the matter can be taken up by the Gas Consumers Council and by the director general, and modification of the code can be required. It is better to achieve proper standards in this way than by the overstructuring suggested by the amendments.
  Mr. Rogers: Does not the Minister understand that in Committee we were attempting to tell him that what exists now is not necessarily what will exist after vesting day?
  102
  He is still telling us that he has had assurances today from British Gas, but that is British Gas as a public company, responsible, through the Secretary of State, to Parliament. It is not British Gas plc, which will be a private company and responsible only to its shareholders— that is the critical difference. By introducing the amendments, we are not attempting to overstructure. We are anxious only to ensure that there will be a statutory basis for the protection of consumers after vesting day. The Minister must accept that any assurances given now are not binding on British Gas plc.
  Mr. Buchanan-Smith: The hon. Gentleman cannot have been listening to what I was saying. We are privatising British Gas, but with the same management. The hon. Gentleman is saying that that management's assurances are worthless.
  Mr. Rogers: Absolutely.
  Mr. Buchanan-Smith: I happen to disagree. It is a responsible management, and I believe that it will honour the undertakings that it has given. However, I have made it clear that if it fails to do so, and it falls short on other practices, it is open to the Gas Consumers Council to take up the matter in the event of complaints from consumers, and to report to the director general, who can initiate the modification procedure.
  Amendments Nos. 14 and 15 are about procedure for modification. Again, we come to a fairly fundamental difference between the two sides of the House. Clause 23 deals with modification in circumstances where the public gas supplier consents to modifications being made. There have been criticisms of our procedures of reference, when there is not consent, to the Monopolies and Mergers Commission, saying that it is too cumbersome and top-heavy. I do not think it is because it is the protector in cases of monopoly abuse. If modifications need to be made, this body, much more than the director general, can review the position not only of British Gas, but of monopoly measures more generally. The MMC has much more experience than the director general. This is, therefore, a reasonable way to approach the matter. First, there should be consultation. In the case of supplies to tariff customers the Monopolies and Mergers Commission route should be used, where agreement is not possible, or if the director general decides that an investigation is desirable. The director general may feel that it is best to use that body because it has the qualifications and the experience to investigate the matter. I accept that our approach is fundamentally different from that of the right hon. Member for Salford, East (Mr. Orme), but I hope that my hon. Friends will not support this amendment.
  The hon. Member for Merthyr Tydfil and Rhymney also referred to safety and asked two questions specifically in the context of training. The first was whether the number of staff available will be adequate to deal with the responsibilities of British Gas in connection with emergencies, repairs and other safety matters. His second question related to staff qualifications. British Gas has always said that its level of recruitment will vary from year to year, according to the demands that are placed upon it. It cannot guarantee necessarily to employ the same number of staff each year to deal with the specific questions that were referred to by the hon. Gentleman. However, any changes that are made are introduced after consultation

  103
  with the employees and their trade unions. I referred in Committee to the fact that in its privatisation report No. 6 British Gas made it clear that consultation will continue.
  Failure by a public gas supplier to comply with the obligations placed upon it by paragraphs 1 to 4 of schedule 5 are enforceable by the director general under the clause 28 powers. Failure to prevent escapes of gas within 12 hours is a criminal offence under paragraph 13 of schedule 5. It will be necessary, therefore, for British Gas to maintain its level of recruitment and training in order to fulfil its obligations. An explicit duty of the kind proposed in the amendment is unnecessary.
  The hon. Member for Merthyr Tydfil and Rhymney may believe that it will be worth while for him to pursue with the chairman of British Gas the particular instance that he quoted this evening, but I think that British Gas has a good training record. It has an annual recruitment policy and it provides formal training and practical experience for all of its recruits. This ensures that tasks that must be performed under schedule 5 to ensure safety are always performed by competent and experienced staff. British Gas has developed its training programmes on an entirely voluntary basis. There is no reason to suppose that after privatisation there will be any diminution in the British Gas Corporation's commitment to recrutiment and to training adequate members of staff to fulfil its obligations.
  The hon. Member for Gordon dealt with disconnections in amendments Nos. 42 and 43. Disconnections are serious. I am grateful to the hon. Gentleman for giving the House another opportunity to discuss the problem. He knows that public gas suppliers, like the British Gas Corporation, will be under a statutory obligation to supply the vast majority of their domestic consumers. Customers already have 35 days in which to pay their bills before action to disconnect the supply is taken. It would be unfair, and could be economically damaging to the industry, to remove the ultimate sanction— I know that the hon. Gentleman is not going that far, but this is worth saying—of disconnection where statutory supply obligations arise. It is against that background that we must view disconnections.
  The involvement of the courts could have two consequences. First, the customer's debt could be increasing during the time that the court action would take because obviously there will be an interval between the time of the reference to the courts and the time when the court examines and decides the case. Secondly, one could run the risk of a significant new burden being placed on the courts. Courts are already involved in a number of disconnection cases where entry for that purpose is refused. In those circumstances, a magistrate's warrant has to be obtained and before granting such a warrant he has to be satisfied that a right exists and that the requirements of the relevant enactment have been complied with. Therefore, that provides consumers with a valuable protection against wrongful disconnection. That element of protection does not go as far as the hon. Gentleman would seek, but he is going further than is necessary.
  In condition 12 of the code of practice to which I have already referred British Gas is under an obligation to publish a code of practice on the payment of bills, including guidance to domestic consumers if they have difficulty in paying. We envisage that the new Gas Consumers Council will monitor the operation of that code
  104
  in the same way that the National Gas Consumers Council does now. In the disconnection cases that I have had to handle in my constituency the role of the National Gas Consumers Council, which will continue, is a useful and helpful one. British Gas has publicly stated its commitment to the continuation of the code and it will follow its provisions and draw it to the attention of customers in difficulty before taking any decision to disconnect.
  Therefore, the framework that we have provided in schedule 5 for the recovery of gas charges is reasonable and I hope that the hon. Gentleman will think about it in the light of what I have said and perhaps withdraw the amendment.
  The House will realise that I share the views of my hon. Friend the Member for Swindon. I have sympathy with the motivation behind almost all the amendments in making sure that the less well-off consumer and the consumer less well able to stand up for his own interests is properly protected. In the light of the commitments from British Gas that there will be codes of practice and that any abuse of them can be monitored and investigated by the new Gas Consumers Council, and ultimately that the director can introduce a modification if the codes of practice are not seen to work, our approach is the better one and does not need to be structured in the way that the amendments have suggested.
  Question put, That the amendment be made:—
  The House divided: Ayes 187, Noes 224.

  Division No. 106]

  [9.55 pm

  AYES

  Abse, Leo

  Cook, Robin F. (Livingston)

  Adams, Allen (Paisley N)

  Corbett, Robin

  Anderson, Donald

  Corbyn, Jeremy

  Archer, Rt Hon Peter

  Cox, Thomas (Tooting)

  Ashdown, Paddy

  Craigen, J. M.

  Ashley, Rt Hon Jack

  Crowther, Stan

  Ashton, Joe

  Cunliffe, Lawrence

  Atkinson, N. (Tottenham)

  Cunningham, Dr John

  Bagier, Gordon A. T.

  Davies, Ronald (Caerphilly)

  Banks, Tony (Newham NW)

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

  Barnett, Guy

  Deakins, Eric

  Barron, Kevin

  Dormand, Jack

  Beckett, Mrs Margaret

  Douglas, Dick

  Beith, A. J.

  Dubs, Alfred

  Benn, Rt Hon Tony

  Duffy, A. E. P.

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

  Dunwoody, Hon Mrs G.

  Bermingham, Gerald

  Eadie, Alex

  Bidwell, Sydney

  Eastham, Ken

  Blair, Anthony

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

  Bray, Dr Jeremy

  Evans, John (St. Helens N)

  Brown, Gordon (D'f'mline E)

  Ewing, Harry

  Brown, Hugh D. (Provan)

  Fatchett, Derek

  Brown, N. (N'c'tle-u-Tyne E)

  Field, Frank (Birkenhead)

  Brown, R. (N'c'tle-u-Tyne N)

  Fields, T. (L'pool Broad Gn)

  Bruce, Malcolm

  Fisher, Mark

  Buchan, Norman

  Flannery, Martin

  Callaghan, Rt Hon J.

  Foot, Rt Hon Michael

  Callaghan, Jim (Heyw'd & M)

  Forrester, John

  Campbell, Ian

  Foster, Derek

  Campbell-Savours, Dale

  Foulkes, George

  Canavan, Dennis

  Freeson, Rt Hon Reginald

  Carter-Jones, Lewis

  Freud, Clement

  Cartwright, John

  Garrett, W. E.

  Clark, Dr David (S Shields)

  George, Bruce

  Clarke, Thomas

  Gilbert, Rt Hon Dr John

  Clay, Robert

  Godman, Dr Norman

  Clelland, David Gordon

  Golding, John

  Clwyd, Mrs Ann

  Gould, Bryan

  Cocks, Rt Hon M. (Bristol S)

  Gourlay, Harry

  Cohen, Harry

  Hamilton, James (M'well N)

  Conlan, Bernard

  Hamilton, W. W. (Fife Central)

  105

  Hancock, Michael

  Park, George

  Hardy, Peter

  Parry, Robert

  Harman, Ms Harriet

  Patchett, Terry

  Harrison, Rt Hon Walter

  Pavitt, Laurie

  Hart, Rt Hon Dame Judith

  Pendry, Tom

  Heffer, Eric S.

  Pike, Peter

  Hogg, N. (C'nauld & Kilsyth)

  Powell, Raymond (Ogmore)

  Holland, Stuart (Vauxhall)

  Prescott, John

  Howells, Geraint

  Redmond, Martin

  Hoyle, Douglas

  Richardson, Ms Jo

  Hughes, Robert (Aberdeen N)

  Roberts, Allan (Bootle)

  Hughes, Roy (Newport East)

  Robinson, G. (Coventry NW)

  Hughes, Sean (Knowsley S)

  Rogers, Allan

  Janner, Hon Greville

  Rooker, J. W.

  Jones, Barry (Alyn & Deeside)

  Ross, Ernest (Dundee W)

  Kaufman, Rt Hon Gerald

  Rowlands, Ted

  Kilroy-Silk, Robert

  Sedgemore, Brian

  Kirkwood, Archy

  Sheerman, Barry

  Lambie, David

  Sheldon, Rt Hon R.

  Lamond, James

  Shore, Rt Hon Peter

  Leadbitter, Ted

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

  Leighton, Ronald

  Silkin, Rt Hon J.

  Lewis, Terence (Worsley)

  Skinner, Dennis

  Litherland, Robert

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

  Livsey, Richard

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

  Lloyd, Tony (Stretford)

  Snape, Peter

  Lofthouse, Geoffrey

  Soley, Clive

  Loyden, Edward

  Spearing, Nigel

  McCartney, Hugh

  Steel, Rt Hon David

  McDonald, Dr Oonagh

  Stott, Roger

  McKay, Allen (Penistone)

  Strang, Gavin

  McKelvey, William

  Straw, Jack

  MacKenzie, Rt Hon Gregor

  Thomas, Dafydd (Merioneth)

  McNamara, Kevin

  Thomas, Dr R. (Carmarthen)

  McTaggart, Robert

  Thompson, J. (Wansbeck)

  McWilliam, John

  Thorne, Stan (Preston)

  Madden, Max

  Tinn, James

  Marek, Dr John

  Torney, Tom

  Marshall, David (Shettleston)

  Wallace, James

  Martin, Michael

  Wardell, Gareth (Gower)

  Mason, Rt Hon Roy

  Wareing, Robert

  Maxton, John

  Weetch, Ken

  Maynard, Miss Joan

  Welsh, Michael

  Meadowcroft, Michael

  White, James

  Michie, William

  Wigley, Dafydd

  Mikardo, Ian

  Williams, Rt Hon A.

  Millan, Rt Hon Bruce

  Wilson, Gordon

  Miller, Dr M. S. (E Kilbride)

  Winnick, David

  Mitchell, Austin (G't Grimsby)

  Wrigglesworth, Ian

  Morris, Rt Hon A. (W'shawe)

  Young, David (Bolton SE)

  Morris, Rt Hon J. (Aberavon)

  Nellist, David

  Tellers for the Ayes:

  Oakes, Rt Hon Gordon

  Mr. Frank Haynes and

  O'Brien, William

  Mr. Don Dixon.

  O'Neill, Martin

  NOES

  Adley, Robert

  Bowden, Gerald (Dulwich)

  Aitken, Jonathan

  Boyson, Dr Rhodes

  Alison, Rt Hon Michael

  Brandon-Bravo, Martin

  Amess, David

  Bright, Graham

  Ancram, Michael

  Brittan, Rt Hon Leon

  Arnold, Tom

  Brooke, Hon Peter

  Aspinwall, Jack

  Brown, M. (Brigg & Cl'thpes)

  Atkins, Robert (South Ribble)

  Browne, John

  Baker, Nicholas (Dorset N)

  Bruinvels, Peter

  Baldry, Tony

  Bryan, Sir Paul

  Banks, Robert (Harrogate)

  Buchanan-Smith, Rt Hon A.

  Batiste, Spencer

  Butler, Rt Hon Sir Adam

  Beaumont-Dark, Anthony

  Butterfill, John

  Bellingham, Henry

  Carlisle, Kenneth (Lincoln)

  Benyon, William

  Carttiss, Michael

  Best, Keith

  Cash, William

  Bevan, David Gilroy

  Chapman, Sydney

  Biffen, Rt Hon John

  Chope, Christopher

  Blaker, Rt Hon Sir Peter

  Churchill, W. S.

  Body, Sir Richard

  Clark, Dr Michael (Rochford)

  Boscawen, Hon Robert

  Clark, Sir W. (Croydon S)

  Bottomley, Peter

  Clarke, Rt Hon K. (Rushcliffe)

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

  Cockeram, Eric

  106

  Colvin, Michael

  Moate, Roger

  Conway, Derek

  Monro, Sir Hector

  Coombs, Simon

  Morrison, Hon C. (Devizes)

  Cope, John

  Moynihan, Hon C.

  Cormack, Patrick

  Mudd, David

  Corrie, John

  Needham, Richard

  Cranborne, Viscount

  Nelson, Anthony

  Critchley, Julian

  Newton, Tony

  Currie, Mrs Edwina

  Nicholls, Patrick

  Dickens, Geoffrey

  Normanton, Tom

  Dicks, Terry

  Norris, Steven

  Dorrell, Stephen

  Ottaway, Richard

  Douglas-Hamilton, Lord J.

  Page, Sir John (Harrow W)

  Dover, Den

  Page, Richard (Herts SW)

  du Cann, Rt Hon Sir Edward

  Patten, J. (Oxf W & Abgdn)

  Durant, Tony

  Pawsey, James

  Eggar, Tim

  Peacock, Mrs Elizabeth

  Evennett, David

  Percival, Rt Hon Sir Ian

  Eyre, Sir Reginald

  Pollock, Alexander

  Fletcher, Alexander

  Porter, Barry

  Fookes, Miss Janet

  Powell, William (Corby)

  Forman, Nigel

  Powley, John

  Forth, Eric

  Prentice, Rt Hon Reg

  Fox, Marcus

  Price, Sir David

  Fry, Peter

  Raffan, Keith

  Garel-Jones, Tristan

  Raison, Rt Hon Timothy

  Glyn, Dr Alan

  Rathbone, Tim

  Gorst, John

  Rhodes James, Robert

  Gower, Sir Raymond

  Rhys Williams, Sir Brandon

  Greenway, Harry

  Ridley, Rt Hon Nicholas

  Gregory, Conal

  Ridsdale, Sir Julian

  Griffiths, Sir Eldon

  Rifkind, Rt Hon Malcolm

  Grist, Ian

  Roberts, Wyn (Conwy)

  Gummer, Rt Hon John S

  Robinson, Mark (N'port W)

  Hamilton, Hon A. (Epsom)

  Roe, Mrs Marion

  Hamilton, Neil (Tatton)

  Rossi, Sir Hugh

  Hampson, Dr Keith

  Rost, Peter

  Hayhoe, Rt Hon Barney

  Rumbold, Mrs Angela

  Heddle, John

  Ryder, Richard

  Henderson, Barry

  Sackville, Hon Thomas

  Heseltine, Rt Hon Michael

  Sainsbury, Hon Timothy

  Higgins, Rt Hon Terence L.

  Sayeed, Jonathan

  Hirst, Michael

  Shaw, Sir Michael (Scarb')

  Holland, Sir Philip (Gedling)

  Shepherd, Colin (Hereford)

  Howarth, Gerald (Cannock)

  Shepherd, Richard (Aldridge)

  Howell, Rt Hon D. (G'Idford)

  Silvester, Fred

  Howell, Ralph (Norfolk, N)

  Sims, Roger

  Hunt, David (Wirral W)

  Skeet, Sir Trevor

  Irving, Charles

  Smith, Sir Dudley (Warwick)

  Key, Robert

  Smith, Tim (Beaconsfield)

  Latham, Michael

  Speller, Tony

  Lee, John (Pendle)

  Spencer, Derek

  Leigh, Edward (Gainsbor'gh)

  Spicer, Jim (Dorset W)

  Lennox-Boyd, Hon Mark

  Spicer, Michael (S Worcs)

  Lewis, Sir Kenneth (Stamf'd)

  Stanbrook, Ivor

  Lightbown, David

  Stanley, Rt Hon John

  Lilley, Peter

  Steen, Anthony

  Lloyd, Ian (Havant)

  Stern, Michael

  Lord, Michael

  Stevens, Lewis (Nuneaton)

  Luce, Rt Hon Richard

  Stewart, Allan (Eastwood)

  Lyell, Nicholas

  Stewart, Andrew (Sherwood)

  McCrindle, Robert

  Stewart, Ian (Hertf'dshire N)

  McCurley, Mrs Anna

  Stokes, John

  Macfarlane, Neil

  Sumberg, David

  MacGregor, Rt Hon John

  Taylor, John (Solihull)

  MacKay, Andrew (Berkshire)

  Taylor, Teddy (S'end E)

  Maclean, David John

  Temple-Morris, Peter

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

  Thatcher, Rt Hon Mrs M.

  Madel, David

  Thomas, Rt Hon Peter

  Malins, Humfrey

  Thompson, Donald (Calder V)

  Malone, Gerald

  Thompson, Patrick (N'tch N)

  Maples, John

  Thorne, Neil (Ilford S)

  Marshall, Michael (Arundel)

  Thornton, Malcolm

  Mather, Carol

  Townend, John (Bridlington)

  Maude, Hon Francis

  Tracey, Richard

  Mayhew, Sir Patrick

  Trippier, David

  Merchant, Piers

  Twinn, Dr Ian

  Miller, Hal (B'grove)

  van Straubenzee, Sir W.

  Mills, Iain (Meriden)

  Vaughan, Sir Gerard

  Miscampbell, Norman

  Waddington, David

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  Waldegrave, Hon William

  Watson, John

  Walden, George

  Watts, John

  Walker, Bill (T'side N)

  Whitney, Raymond

  Walker, Rt Hon P. (W'cester)

  Wiggin, Jerry

  Waller, Gary

  Winterton, Mrs Ann

  Ward, John

  Winterton, Nicholas

  Wardle, C. (Bexhill)

  Wolfson, Mark

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  Wood, Timothy

  Woodcock, Michael

  Tellers for the Noes:

  Yeo, Tim

  Mr. Michael Neubert and

  Young, Sir George (Acton)

  Mr. Peter Lloyd.

  Question accordingly negatived.
  Mr. Ian Lloyd: I beg to move, amendment No. 2, in page 6, line 12, at end insert—
  '(d) conditions requiring the public gas supplier to encourage the efficient use by consumers of gas supplied through pipes, by means of advocacy, advice, and, where economic, the provision of loans for energy efficiency investments;'.
  Mr. Speaker: With this we shall take amendment No. 6, in page 8, line 27, Clause 9 at end insert—
  '(aa) to promote the efficient use by consumers of gas supplied through pipes;'.
  Mr. Lloyd: I begin by thanking all those who served on the Select Committee on Energy which produced the first report for 1985–86 on the regulation of the gas industry. I thank those hon. Members who helped to conduct the Select Committee inquiry and who served as members of the Standing Committee. I think that energy knows no greater devotion than that.
  So anxious were the Government to make progress that the sittings of the Standing Committee began before the Select Comitee had completed its inquiry and reported to the House. That complicated, but did not exactly thwart, our proceedings. It would have been tidier and more logical—always desirable criteria—if our deliberations in Committee had followed the publication of the Select Committee's report and, perhaps even more importantly, the publication of the government's reply. None the less, my hon, Friends the Members for Rochford (Dr. Clark) and for Enfield, Southgate (Mr. Portillo), who were well supported by the hon. Member for Pontefract and Castleford (Mr. Lofthouse), who referred to my report at one stage as his bible and was desrcibed as the Select Committee's shop steward in Committee, ensured that the Select Committee's views were heard regularly.
  As always, if I judge correctly from the 1,338 columns of Hansard in Committee, though those views were heard with attention and courtesy—we always expect no less from my right hon. and hon. Friends who sit on the Treasury Bench—for the most part the trumpets were sounded in vain, which is not an unusual state of affairs. I say "for the most part" because the Committee welcomed the evidence that the Government were prepared to accept a number of the Select Committee's principal recommendations, even though it was not until 1,164 columns of debate had been printed in Hansard that my right hon. Friend the Minister of State, Department of Energy announced, whether with pride or with shame—it is difficult to discern which—that a few pieces of plaster had been knocked off the walls of Jericho.
  The purpose of the amendments is to knock off a few more pieces of plaster. We have no unreasonable ambitions to cause the walls to collapse. Indeed, we consider—at least, some of us do—that the walls are rather good, or perhaps that the city inside is worth defending. If the city of privatisation is to be defended, it might as well be defended properly. The amendments are concerned primarily with the concept of the efficient use of energy. That was desrcibed as a common aim of the Select Committee and of the Department of Energy. We are all against sin and all for energy efficiency. We are aware that energy efficiency features in many of our reports and many of the reports that are produced by the Department, and are the subject of favourable comment in the press. We have endeavoured to obtain by the amendments a somewhat clearer and more formal recognition of the subjective.
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  The Select Committee recommendations are highly relevant. Paragraph 65 concluded that the
  "national case for promoting energy efficiency must … be one of the determining principles in setting the statutory framework for the regulatory authority which will control the new private-sector corporation."
  and that it was
  "'Quite inconceivable.' that the energy efficiency would not be 'built into' the consideration of the regulatory authority."
  The purpose of the amendments is to achieve just that little bit more building in. My right hon. Friend the Secretary of State stated in Committee that when regulation is appropriate it should be clear, strong and firm. The Select Committee certainly believes that this is such a case and that the Government's declared policy could therefore be reinforced without creating the unnecessary bureaucracy and constraint so properly feared in all parts of the House.
  The Government's response, however, in Cmnd. 9759, was that
  "the imposition on the energy supply industries of a statutory duty … would add little to the industries' already extensive energy efficiency activities."
  It continued:
  "In returning British Gas to the private sector, the Government would not want to impose upon it unnecessary statutory obligations which go beyond those that apply to normal Companies Act companies. The Gas Bill places upon the Director a duty to carry out his functions in such a way as to promote the efficient use of gas."
  The comments of the Select Committee, which I certainly share, are that it is rather strange to desrcibe the new company as a normal Companies Act company. Whatever else it may be—and doubtless it will be many things—it is certainly not that.
  Secondly, the statement that the director general needs clear, relevant and appropriate powers certainly applies in this case. We wish to stress that. And when regulation is appropriate it should be clear, strong and firm, as my right hon. Friend the Secretary of State suggested.
  Where there are strong reasons for stating and achieving such an objective, the duty of the Director General of Gas Supply should, in our judgment, be matched by clear-cut, relevant and appropriate powers defined in the statute. In our view, the director general cannot achieve that objective unless the corporation has a complementary statutory obligation. The prize is large, the stakes are modest and the risk of failure is small. If the nettle of indifference is firmly grasped, the objective can certainly be achieved.
  One more question—is it impractical? We do not think so. The Association for the Conservation of Energy probably provides the most relevant remarks in this context. Commenting in its memorandum to the Select Committee on the situation in California, which is similar in area and population to the United Kingdom with perhaps an even larger gross national product, the association said that
  "the utilities are the best vehicle available to organise and implement policies promoting energy efficiency, particularly in the domestic market. Elsewhere in the United States, Public Utility Commissions have insisted upon the adoption and publication by the utilities of annual programmes of conversation investment, and equally regular reports of their associated achievements."
  That seemed to me to be a very clear and decisive comment on the whole area of regulation and what can and cannot be done.
  If energy wastage in the United Kingdom is, as we are informed and as the Government admit—I do not think

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  that there is any dispute about the amount—about £7 billion, and if the proportion wasted in houses is about £2 billion, there is plenty of room for what might be desrcibed as a little policy overkill. That, I think, is all that can be said of these two amendments.
  10.15 pm
  Mr. Ted Leadbitter: One of the outstanding features of the work of the Select Committee on Energy has been the recognition of the Secretary of State's enthusiasm for energy efficiency. We have accorded to the present Secretary of State not only our fullest support, but, out of step with the normal practice of criticism, we have underlined our enthusiasm for his influence in this area through the work of the Energy Efficiency Office. It is in that spirit that we should be seeking to gain the support of the Secretary of State in what is an interesting amendment but, nevertheless, an essential one.
  Of course, British Gas plc may well say that these matters are self-evident. It may say that it can give advice about energy efficiency and that it will be the best advocate in the United Kingdom for the proper use of what it supplies. It may say, "Of course we will provide the right investment programme to meet the objectives that the amendment appears to have". That is not the point. We do not yet know what the animal will be like.
  The present management will certainly, for a short time, project the standards and the purposes of British Gas. We are proud of British Gas, but some years will pass, new management will take over, and it is not without experience in the House that we are able to say that often new policies provide different economies which are sometimes harmful to essential parts of an industry.
  We have seen that happen in the private sector on many occasions, often in research and development. The programme of investment diminishes if there are serious strictures on the economy in a particular financial year. Therefore, we are saying that the Secretary of State is not taking on board more than he advocates himself in accepting this set of amendments. Certainly we would like to see the provision of loans for energy efficiency investment.
  It is clear that in the domestic and commercial sector, especially the latter, we have some reluctance to deal with energy efficiency. The hon. Member for Havant (Mr. Lloyd) referred to the enormous losses involved in the use of gas in spite of the advocacy of British Gas and its present chairman. Therefore, there is much to be done.
  For the sake of brevity I shall underline what the Chairman of the Select Committee has said. The proposals that have been put before the Secretary of State in our recent report make it abundantly clear that we are keen to have the Government take on board what is good common sense and certainly good national housekeeping. We have to do much to conserve our energy resources and the response from the Government hitherto has not been encouraging. We are puzzled that the Secretary of State has an abundance of enthusiasm for his Energy Efficiency Office, yet somehow there is less response to our report. We have spent many hours and considered the submissions of many witnesses over a long period of time. Therefore, I suggest that it would be helpful to the House if the Secretary of State responded with more enthusiasm.
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  This is not an addition to the structure of the Bill, to which the Minister referred earlier, but a few words supportive of the objective which is that it is in the national interest to support the resources that we have in such a way that the demand for energy and the supply of it is harmonised with conservation, efficiency and the proper use of British Gas when it is privatised. That objective was one of the aims of the Standing Committee, because that matter was brought to its attention. It is one of the objectives of the Select Committee on Energy, conforming with the majority opinion in the country.
  Mr. Rost: It gives me great pleasure to support the amendment so ably moved by my hon. Friend the Member for Havant (Mr. Lloyd), and spoken to by the hon. Member for Hartlepool (Mr. Leadbitter).
  The House may not be aware that this appears to be the first occasion, at least in my short lifetime in the House, when a Select Committee has gone to great lengths to have an input in legislation as it proceeds through the House, first, by producing a report, which appeared just as the legislation was going into Committee, and, secondly, by adopting the rather unusual procedure of tabling amendments across party lines on behalf of the Committee to support certain points which we as a Select Committee felt strongly should be in the legislation. We recommended in our report that they should be included.
  My main concern, in supporting the amendments promoting energy efficiency, is the consumer, because in the end it is the consumer who suffers if he is not given the best advice, guidance and support. British Gas is in a unique position to help to promote greater energy efficiency, because it has direct access to the consumer through regular billing, meter reading and correspondence. It also has the management and staff infrastructure to provide that advice and service.
  Secondly, the utility is in a unique position to promote energy efficiency because it has exceptional marketing skills. British Gas can promote energy efficiency far more aggressively and effectively, in the interests of its consumers, because of that marketing ability. Like other members of the Select Committee, I have had opportunities to study the utilities in other parts of the world, particularly North America, where the gas utilities are private enterprise utilities. Despite that, or perhaps because of that, they have a statutory obligation to demonstrate that least cost resource acquisition of gas is applied. They also have an obligation to promote energy efficiency in the interests of their customers, as well as to apply demand management. Where it is more cost-effective to invest in greater energy efficiency rather than to persuade customers to consume more wastefully, they have an obligation to invest on the demand management side rather than expand on the supply side.
  We believed, in our Select Committee investigation, that there should be a similar obligation on British Gas and that it would not be unnecessarily cumbersome or involve bureaucratic red tape to build into the legislation a general directive, an obligation that British Gas should promote energy efficiency. Although we acknowledge, as I certainly do, that British Gas already does a great deal—no doubt my right hon. Friend the Minister of State will reply along those lines, saying that it makes great efforts—I believe that no harm would be done in writing that obligation into legislation to ensure that that effort is maintained and, indeed, increased.

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  When my hon. Friend the Member for Havant ably moved the amendment, he referred to evidence that we received in the Select Committee during our inquiry into the Energy Efficiency Office. We asked the Director-General of the Energy Efficiency Office whether more could be done to promote energy efficiency by the energy utilities—gas and electricity. He said that in his view it was inconceivable that energy efficiency would not be built in to the consideration of the regulatory authority for British Gas. However, it seems that it is conceivable, because the Government have not done that. The vague references in clause 4 are not an adequate substitute for a more formal commitment in legislation.
  I believe that there should be a general obligation on British Gas to promote the efficient use of gas. My right hon. Friend the Secretary of State should set British Gas annual guideline targets, and British Gas should report annually to the Director-General of Gas Supplies on its achievements in increasing energy efficiency with respect to tariffs and the contract market.
  My right hon. Friend the Minister may suggest that it would be wrong and unfair to impose that obligation on British Gas because no such obligation has been imposed on the electricity industry. I would reply that, in that case, such an obligation should be imposed on the electricity industry as well. Two wrongs do not necessarily make a right. We have an opportunity to make at least a start, and I hope that we shall do so.
  Mr. Lofthouse: As the hon. Member for Erewash (Mr. Rost) has said, this is an unique occasion. I believe that it is the only time amendments to major legislation have been made through a Select Committee. I was delighted to hear the Select Committee's Chairman, the hon. Member for Havant (Mr. Lloyd), the hon. Member for Erewash and my hon. Friend the Member for Hartlepool (Mr. Leadbitter). I feel like a striker on a football field who has been running up and down a football field by himself for a few weeks waiting for the support players behind him to give him the ball to feed into the net. I regret the absence of many of the hon. Members who put their names to the amendments. I had hoped that they would be here to give support. I hope that they will vote later.
  Much hard work within a short period went into producing the Select Committee's report with a view to assisting the deliberations of the Standing Committee. Unfortunately, the Government have not taken much notice of the Select Committee'a report. There may have been a hiccough here and a sneeze there but generally they have taken little notice of the recommendations. Ministers must show that they have taken some notice of them.
  The weekend press told us—I do not know whether it was right or wrong—of the contempt of the Secretary of State for the Back Benchers on the Committees. The right hon. Gentleman does not want to hear that, because he is not listening. My colleagues on the Select Committee have probably, therefore, been wasting their time. The Bill was presented in indecent haste, without a White Paper. Hon. Members were given no time to digest it, and that arrogance is still with us.
  I shall not go over the ground I covered in Standing Committee except to refer to the debate on Amendment No. 158, which I had the privilege of moving, which was similar to the amendments tabled by the hon. Member for Havant in Select Committee. There is hardly any difference at all. I draw the attention of the House to cols.
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  471–2, 741–3, 790–2 and 873–5 of the Official Report of Standing Committee F. I do not wish to take too long, so it is better if I leave it there.
  10.30 pm
  For very small amounts of money we could have further conservation. In fact, many local authorities throughout the country, particularly in London, carry out the improvement and insulation of properties at an average cost of £600 per job. As a result, the amount of electricity burnt has been decreased, from about 8,900 kW/hours to about 4,500—a saving of nearly 50 per cent. One can appreciate the financial savings that means to the lower paid and the unemployed. If the private sector had a statutory obligation to provide assistance for such insulation, the saving to the country in terms of gas supply and the saving for those who can ill afford to pay would be great.
  No hon. Member, least of all the Secretary of State or his Ministers, can have any real confidence that under a newly privatised British Gas the motive will be anything other than pure and simple profit. I doubt whether the consumer will be foremost in the minds of those who hope to buy parts of British Gas. It will simply be profit. I even doubt whether the motivation that now exists within the BGC will continue. These private companies should have a statutory obligation to provide finance to enable gas to be saved and prices to be cut.
  I hope that the Government will listen to the Select Committee. At present there are many wasted hours. By that I mean that on many occasions people are kept on their toes because they know that they may have to face the Select Committee, but I can recall few occasions on which the recommendations of a Select Committee have been taken on board by the Government.
  Mr. Leadbitter: My hon. Friend referred to columns 471–2 and others of the Official Report of the Standing Committee, and also said that a similar amendment was considered by the Committee. Am I correct in thinking that some Conservative Members, who have appended their names to this amendment, did not vote for that similar amendment in Committee?
  Mr. Lofthouse: It is worse that that, because they failed to vote for the amendment when I, as their shop steward, appealed to them to do so.
  Mr. Bruce: I support the amendment tabled by the Select Committee. It is weaker than I would have wished, but I presume that that is to maximise the breadth of support for it, and to enable the Government to accept it, as I hope that they will.
  I should point out that the phrase "all-party Select Committee" is used rather freely as only two of the nine parties in the House are represented on it. However, I do not wish to detract from the good job that it did on the report, which we had before us at the start of the Standing Committee and on which most hon. Members who were trying to work effectively drew heavily. Regrettably, Ministers did not, and although they paid tribute to the Select Committee's work, so far they have accepted few of its recommendations. I hope that in this last gasp they will put the record straight on that.
  The hon. Member for Erewash (Mr. Rost) who was not a member of the Standing Committee, used the expression "least cost resource". Those who were members of it will

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  recall that I proposed an amendment to persuade the Government that least cost resource should apply when determining the acquisition of new supplies. Regrettably, they were unwilling to take that point on board. I, too, quoted from the useful documents produced by the Association for the Conservation of Energy called "Lessons from America", especially from number five. I commend the document to hon. Members who are interested in the matter because it draws heavily on the American example, and seeks to highlight some of the points against which the Government have argued.
  Mr. Rost: I would hate the House or my right hon. Friend the Secretary of State to get the impression that my remarks were based on second-hand material from the Association for the Conservation of Energy, however much I respect its research. In recent years, some hon. Members have had the opportunity of visiting utilities in America, and of seeing them at first hand. That was the basis of my argument.
  Mr. Bruce: I thought that the hon. Gentleman had made that plain. I hope to do the same this summer. My only regret is that I must do so after, rather than before, the Standing Committee. I accept his point, but take it that he is not contradicting the evidence, and that he has come to the same conclusion as the Association for the Conservation of Energy.
  Conservation is rightly described by the ACE as the fifth fuel, and it should be treated in that vein. In other words when one considers the ways of supplying energy in future, we should not simply look at how to acquire new supplies, but should compare the cost of acquiring new supplies with the cost of investing in conservation, which is the point about least cost resource. If it is demonstrated that the investment in conservation would release more for less investment, that is the right avenue to follow and is better than investing in new sources of supply in advance of need. In the long run we shall always need those supplies, but we do not need always to address ourselves to acquiring those supplies.
  The North of Scotland hydro-electric board, for example, is laying a cable across Skye to the Western Isles to provide electricity there. It would make sense to see whether that is the best investment, or whether it is better both for consumers and the board to invest in energy efficiency measures to ensure that the people there get the same level of comfort at a similar cost, simply by using the energy from existing supplies more efficiently.
  That is a simple example of the sort of thing that should be considered. There is a whole range of such examples, on which any hon. Member could draw. I urge the Government to recognise that a modest amendment, such as this, which simply exorts British Gas to put energy efficiency as a specific requirement on its list of priorities, is the least that they could accept. Given the all-party basis on which the amendment has been endorsed, I hope that the Minister will accept it.
  Mr. William O'Brien: As a member of the Select Committee on Energy, may I add my comments to those of the Committee's Chairman and other members. I join in requesting the Secretary of State to accept the amendments in the spirit in which they were tabled—that it would be in the best interests of all consumers,
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  industrial and domestic, to encourage efficiency in the use of gas supplies. Everyone knows the Labour party's opposition to the Bill, but if we must have privatisation, we believe that the Bill must contain provisions for efficiency, to ensure that the gas supplied is used to the best advantage. Gas is used in glass making and other large industries, so it is important that it is used as efficiently as possible.
  We must ensure that advice is given to domestic consumers on the best use of gas. The amendments also suggest that where efficiency requires investment, loans should be made available to consumers. That would be in the interests of British Gas, the consumers and the country. Against that background, I hope that the Secretary of State will accept the amendments.
  One hon. Member called the amendments modest. Perhaps they are modest, inasmuch as they have been tempered to ensure that they do not breach the spirit of the Bill. I plead with the Secretary of State to accept the amendments and include those provisions in the Bill, because they will benefit the efficient use of the gas supplied to consumers.
  Mr. Rowlands: The Opposition Front-Bench spokesmen support wholeheartedly the amendments that were moved by the hon. Member for Havant (Mr. Lloyd). I do not reveal any secrets when I say that during 156 hours of debate in Committee one approaches amendments with varying degrees of commitment and belief. However, as we considered this issue, I became more convinced of the special role that the public utilities could play in energy efficiency and conservation.
  Take the example of British Gas plc. It will purchase every cubic foot of gas that comes from the North sea. British Gas plc will control the entire national gas system which delivers that gas to the homes of more than 16 million customers. It will control between 60 per cent. and 70 per cent. of the sales of gas appliances. Therefore, British Gas plc will be part of the commanding heights of the nation's energy resources and their use. Given that incredible position—this is not a normal company, as the hon. Gentleman said—and the huge and specific responsibilities, as well as privileges, that will be placed upon British Gas, it is reasonable for us to expect British Gas to accept the duties that the amendments seek to place upon it.
  It is complacent now, as it was in Committee, to make the observation that BGC already does much in a voluntary capacity. By adopting, a little more than it does now, the arguments about conservation, efficiency and a balance between conservation and energy efficiency versus investment in new development, it could have a tremendous impact on depletion policy in the North sea and on the cost of gas to the customer.
  10.45 pm
  This is not a fanciful argument to make, as members of the Select Committee and others who speak from experience have shown. Reports by the Association for the Conservation of Energy have shown that in America, from Texas to California, major public utilities in that essentially private enterprise economy, under regulation from the Public Utilities Commission, have been the leaders in promoting energy efficiency to individual householders, industry and commerce. The amendment does not cut across private enterprise, commercial practice

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  and capitalism. In the most private enterprise society, a combination of regulation and duties is placed upon the public utilities to develop energy conservation.
  The argument applies to all parties, as the support given to it by all members of the Select Committee on Energy shows. Therefore, the Minister will have to produce much better justification than he did in Committee. Among other things, he has to justify why, of the 14 conditions enforced on the 25-year private monopoly licence that the Government want to give British Gas plc, not one deals with energy conservation and efficiency. That shows the contempt and lack of interest that Ministers have shown towards conservation and the role that public utilities should play in it.
  I see the Secretary of State shake his head. I point out to the hon. Member for Havant (Mr. Lloyd), the Chairman of the Select Committee on Energy, that his Committee has been treated with the contempt that the Secretary of State showed to the Standing Committee. He spoke for about four or five minutes in 156 hours, and spent the rest of his time in perpetual motion talking as he is again this evening.
  The Secretary of State for Energy (Mr. Peter Walker): Shame.
  Mr. Rowlands: It is a shame. The right hon. Gentleman has shown unbelievable behaviour. He was not even listening when my right hon. Friend the Member for Salford, East (Mr. Orme) made a number of basic points. It is time to tell the Secretary of State that his behaviour has not been up to the standard that one expects of a Secretary of State. The issues raised by the hon. Member for Havant, and all members of the Select Committee, show that the Government should heed such widespread requests and support the principle of these amendments.
  Mr. David Hunt: It is sad that the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), having made a pretence of welcoming cross-party support for the amendments, should then make a disgraceful attack on my right hon. Friend the Secretary of State, who has taken every possible trouble to produce careful legislation to ensure that when privatisation takes place it is a major success story both for the Government and for the nation. It is inappropriate for the hon.Gentleman to make such comments.Throughout most of the Report debates today the hon. Gentleman has had behind him no more hon. Members than he had behind him in Committee. One would have thought that on such a major and important Bill the Labour party would have produced more than 10 Back Benchers for most of today's proceedings.
  The hon. Gentleman should not have started this argument. He has lowered the standard of this debate by making such a disgraceful attack upon my right hon. Friend the Secretary of State for Energy. I ask him to turn away from partisan arguments and return to the position from which he started.
  The hon. Gentleman began reasonably well, by paying tribute to the all-party support for energy efficiency. These amendments deal with matters which the Government believe to be of great importance. My right hon. Friend has designated 1986 as Energy Efficiency Year. He and my right hon. and hon. Friends are making unprecedented efforts to spread the word about energy efficiency and about the benefits that can be reaped by all sectors of the community.
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  At breakfast specials., more than 16,000 top executives have listened to the energy efficiency message. This morning I addressed 400 top executives in Nottingham. That followed my right hon. Friend's addresses to more than 2,000 top executives in Solihull and London in the new round of Monergy breakfast specials.
  My hon. Friend the Member for Havant (Mr. Lloyd) paid tribute to the work of his Select Committee. I join him in congratulating the members of his Select Committee, and I congratulate him on his leadership of the Committee and on the extent and depth of the investigations that were conducted by the Select Committee. It has been of enormous help to many hon. Members on both sides of the House to have the Select Committee's report on the regulation of the gas industry, and its report on energy efficiency policy.
  My hon. Friend the Member for Havant referred to the £7 billion of energy that is being wasted. It is a national scandal. As a conservative estimate, that is 20 per cent. of our total energy bill of £35 billion. His Committee was right to highlight the appalling waste of £2 billion by the domestic sector and to report that it is the most deserving of immediate attention. However, I hope my hon. Friend realises that this Government have done more than any other Government have clone since the war to promote the cause of energy efficiency.
  I ask my hon. Friend to recognise that the Government's commitment in the Bill to energy efficiency has been followed through by placing upon the Secretary of State and the director general a duty to exercise their functions in a manner that is best calculated to promote the efficient use of gas by consumers who are supplied with gas through pipes. This duty will stand alongside the others in clause 4. It will give to the director general and the Secretary of State general guidelines about the way in which they should exercise their functions.
  The director general will have to bear this duty in mind when exercising all his functions. However, we imagine that he will want to lay emphasis on this duty in relation to his other functions under the Bill, under which he is obliged to give assistance and advice to consumers. He will also wish to give his support to the tremendous activities that are undertaken by British Gas to ensure that its customers use gas efficiently, both in their own interests and in the interests of the British Gas in order to secure the long-term future of its markets?
  I do not think that the hon. Member for Pontefract and Castleford (Mr. Lofthouse) did justice to his hon. Friends on both the Select Committee and the Standing Committee. He made some deprecatory comments about their contribution to the 'work of the Standing Committee. He said that he often felt that he was standing by himself. However, my hon. Friends the Members for Rochford (Dr. Clark) and for Enfield, Southgate (Mr. Portillo) made a considerable contribution to the work of the Standing Committee. My hon. Friend the Member for Southgate moved a very important amendment relating to competition. He ensured that the Government were made aware of the important and decisive views of the Select Committee on that subject. It was the hon. Member for Pontefract and Castleford who said that the BGC had nothing much to brag about on energy efficiency. That rather runs contrary to the belief of other members of the Select Committee that British Gas did make a great

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  contribution. My hon. Friend the Member for Erewash (Mr. Rost) made a point about that just a few moments ago.
  British Gas told the Select Committee in clear terms exactly what its contribution was to energy efficiency and it gave examples of how it was helping domestic consumers to use their energy efficiently. It promotes energy efficiency through a number of services and schemes—the BGC school of fuel management; the BGC technical consultancy services; the gas energy management awards for industry and commerce; the designs for energy management; the energy management competition; support for energy managers generally; support for the Energy Efficiency Office showroom advice experiment and the building centre energy advice centre. It has also done much to promote energy education in schools, and it explained to the Select Committee that its proper role was to develop and promote energy efficient practice and to educate customers about it.
  Mr. Lofthouse: The hon. Gentleman has been telling the House of the Government's record on energy efficiency and conservation. Does he agree that the Government have cut the money available for insulation? Indeed, in real terms the money available now is only 58 per cent. of that available in 1979–80.
  Mr. Hunt: That is not correct. If the hon. Gentleman looks carefully at the figures he will see that there is a history of underspend on that scheme. He will also recognise that we have debated that many times in the House, and my right hon. Friend the Secretary of State for the Environment has not just allocated what he believes is sufficient money to meet the need this year, but has said that when it comes to additional bids he will bear in mind that we are in Energy Efficiency Year.
  Mr. Leadbitter: The hon. Gentleman referred to clause 4 in an attempt to persuade the House of Commons that that supports energy efficiency. I am afraid that the hon. Gentleman has not read the amendment. Clause 4 addresses itself specifically to those authorised to supply gas. The amendments are concerned with the consumers of gas. That is an important point for him to bear in mind. Why are we chewing over four lines tonight when they could be put into the Bill and forgotten about?
  Mr. Hunt: I know that the hon. Gentleman feels strongly about the issue, but it is not as simple as he has sought to suggest. The hon. Member for Merthyr Tydfil and Rhymney said that he could not find it in the authorisation. It is in the primary legislation.
  Clause 4 is an important clause. It imposes the clear duty
  "to promote efficiency and economy … and the efficient use of gas supplied through pipes".
  We are talking about duties on the public gas supplier. In seeking to challenge me on that the hon. Gentleman is talking about the customer or consumer, and that is the relevance of the amendment. But he should recognise the clear obligation that is on the director general, and if he looks elsewhere in the Bill he will see that the director general has obligations, as I have already said, to the consumers, and that is an easy way to explain what I believe is an effective duty already there.
  120
  In that context let me examine the wording of the amendment. I appreciate the way in which the hon. Gentleman paid tribute to my right hon. Friend and his tremendous enthusiasm to promote the cause of energy efficiency, which receives considerable all-party support. I recognise that my hon. Friend the Member for Erewash has also paid tribute to my right hon. Friend on many occasions. I equally recognise that my hon. Friend has carried out considerable research into this question.
  11 pm
  I must tell the hon. Member for Gordon (Mr. Bruce) that the Select Committee recognised that initiatives taken by energy utilities in the United States to reduce energy consumption were not necessarily appropriate in the United Kingdom. Had the hon. Gentleman explored further he would have reached that conclusion. He now has to make his decision before he sees at first hand the relevance of that.
  The Association for the Conservation of Energy has a good record in urging Governments to take up the cause of fuel efficiency. I pay tribute to that association, but in this context—I shall explain why—the amendment will not assist.
  I have examined the BGC's record. The amendment seeks to single out British Gas for this obligation. I do not know whether my hon. Friends and Opposition Members want to place a similar obligation on the National Coal Board, the electricity industry or the oil companies. If they do not, why? If they do, they must recognise that even if I do not accept their arguments they have an unfair approach to the problem. It would be far better to deal with the problem under primary legislation and by imposing that duty on all utilities and energy corporations. I do not accept that such a duty should be placed on them, but surely it is more logical to impose a duty generally than to single out British Gas, which has a tremendous record.
  As the Minister responsible for energy efficiency, I have had tremendous support from British Gas in the energy efficiency campaign. I hope the hon. Member for Hartlepool (Mr. Leadbitter) recognises that one has to be careful about putting duties in legislation, if by doing that one complicates the situation.
  My hon. Friend the Member for Havant made it clear that he would not support the amendment if he thought it would do other than present firm and strong words in the right direction. He has said that forcefully. The amendment would impose a bureaucratic nightmare on the industry, which deserves clear, simple wording in legislation. By singling out British Gas, and by imposing this obligation on British Gas, the amendment would create a legislative minefield. It would be an invitation to all potential litigators to single out a corporation which had done a tremendous amount for energy efficiency to complicate matters and to stop the legitimate move towards energy efficiency which is gathering pace.
  The British Gas Corporation is extremely enthusiastic about energy efficiency. Why do my hon. Friends think of supporting an amendment which would make ours a land more fit for lawyers than for people who believe in energy efficiency? I ask my hon. Friends to recognise that my right hon. Friend's massive monetary campaign, already successful, represents a better path to achieve our common objective—energy efficiency.
  When hon. Members come to consider the need to promote energy efficiency, they will recognise that it is not

  121
  easily accomplished by an amendment which is so complicated. If they wish to press ahead with the objective which we all share, I hope that it will not be by creating an unnecessarily bureaucratic system of control, as proposed in the amendment.
  Question put, That the amendment be made:—
  The House divided: Ayes 184, Noes 220.

  Division No.107]

  [11.05 pm

  AYES

  Adams, Allen (Paisley N)

  Freeson, Rt Hon Reginald

  Anderson, Donald

  Freud, Clement

  Archer, Rt Hon Peter

  Garrett, W. E.

  Ashdown, Paddy

  George, Bruce

  Ashley, Rt Hon Jack

  Gilbert, Rt Hon Dr John

  Ashton, Joe

  Godman, Dr Norman

  Atkinson, N. (Tottenham)

  Golding, John

  Banks, Tony (Newham NW)

  Gould, Bryan

  Barnett, Guy

  Gourlay, Harry

  Barron, Kevin

  Hamilton, James (M'well N)

  Beckett, Mrs Margaret

  Hamilton, W. W. (Fife Central)

  Beith, A. J.

  Hardy, Peter

  Benn, Rt Hon Tony

  Harman, Ms Harriet

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

  Harrison, Rt Hon Walter

  Bermingham, Gerald

  Hart, Rt Hon Dame Judith

  Bidwell, Sydney

  Healey, Rt Hon Denis

  Blair, Anthony

  Heffer, Eric S.

  Bray, Dr Jeremy

  Hogg, N. (C'nauld & Kilsyth)

  Brown, Gordon (D'f'mline E)

  Holland, Stuart (Vauxhall)

  Brown, Hugh D. (Provan)

  Howells, Geraint

  Brown, N. (N'c'tle-u-Tyne E)

  Hoyle, Douglas

  Brown, R. (N'c'tle-u-Tyne N)

  Hughes, Robert (Aberdeen N)

  Bruce, Malcolm

  Hughes, Roy (Newport East)

  Buchan, Norman

  Hughes, Sean (Knowsley S)

  Callaghan, Rt Hon J.

  Janner, Hon Greville

  Callaghan, Jim (Heyw'd & M)

  Jones, Barry (Alyn & Deeside)

  Campbell-Savours, Dale

  Kaufman, Rt Hon Gerald

  Canavan, Dennis

  Kilroy-Silk, Robert

  Carter-Jones, Lewis

  Kirkwood, Archy

  Clark, Dr David (S Shields)

  Lambie, David

  Clarke, Thomas

  Lamond, James

  Clay, Robert

  Leadbitter, Ted

  Clelland, David Gordon

  Leighton, Ronald

  Clwyd, Mrs Ann

  Lewis, Terence (Worsley)

  Cocks, Rt Hon M. (Bristol S)

  Litherland, Robert

  Cohen, Harry

  Livsey, Richard

  Conlan, Bernard

  Lloyd, Tony (Stretford)

  Cook, Robin F. (Livingston)

  Lofthouse, Geoffrey

  Corbett, Robin

  Loyden, Edward

  Corbyn, Jeremy

  McCartney, Hugh

  Cox, Thomas (Tooting)

  McDonald, Dr Oonagh

  Craigen, J. M.

  McKay, Allen (Penistone)

  Crowther, Stan

  McKelvey, William

  Cunliffe, Lawrence

  MacKenzie, Rt Hon Gregor

  Cunningham, Dr John

  McTaggart, Robert

  Davies, Ronald (Caerphilly)

  McWilliam, John

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

  Madden, Max

  Deakins, Eric

  Marek, Dr John

  Dewar, Donald

  Marshall, David (Shettleston)

  Dormand, Jack

  Martin, Michael

  Douglas, Dick

  Mason, Rt Hon Roy

  Dubs, Alfred

  Maxton, John

  Duffy, A. E. P.

  Maynard, Miss Joan

  Dunwoody, Hon Mrs G.

  Meadowcroft, Michael

  Eadie, Alex

  Michie, William

  Eastham, Ken

  Mikardo, Ian

  Evans, John (St. Helens N)

  Millan, Rt Hon Bruce

  Ewing, Harry

  Miller, Dr M. S. (E Kilbride)

  Fatchett, Derek

  Mitchell, Austin (G't Grimsby)

  Field, Frank (Birkenhead)

  Morris, Rt Hon A. (W'shawe)

  Fields, T. (L'pool Broad Gn)

  Morris, Rt Hon J. (Aberavon)

  Fisher, Mark

  Nellist, David

  Flannery, Martin

  Oakes, Rt Hon Gordon

  Foot, Rt Hon Michael

  O'Brien, William

  Forrester, John

  O'Neill, Martin

  Foster, Derek

  Orme, Rt Hon Stanley

  Foulkes, George

  Park, George

  Fraser, J. (Norwood)

  Parry, Robert

  122

  Patchett, Terry

  Soley, Clive

  Pavitt, Laurie

  Spearing, Nigel

  Pendry, Tom

  Steel, Rt Hon David

  Pike, Peter

  Stott, Roger

  Powell, Raymond (Ogmore)

  Strang, Gavin

  Prescott, John

  Straw, Jack

  Radice, Giles

  Thomas, Dr R. (Carmarthen)

  Redmond, Martin

  Thompson, J. (Wansbeck)

  Richardson, Ms Jo

  Thorne, Stan (Preston)

  Roberts, Allan (Bootle)

  Tinn, James

  Robinson, G. (Coventry NW)

  Torney, Tom

  Rogers, Allan

  Wallace, James

  Rooker, J. W.

  Wardell, Gareth (Gower)

  Ross, Ernest (Dundee W)

  Wareing, Robert

  Rost, Peter

  Weetch, Ken

  Rowlands, Ted

  Welsh, Michael

  Sedgemore, Brian

  Wigley, Dafydd

  Sheerman, Barry

  Williams, Rt Hon A.

  Sheldon, Rt Hon R.

  Wilson, Gordon

  Shore, Rt Hon Peter

  Winnick, David

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

  Wrigglesworth, Ian

  Silkin, Rt Hon J.

  Young, David (Bolton SE)

  Skinner, Dennis

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

  Tellers for the Ayes:

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

  Mr. Frank Haynes and

  Snape, Peter

  Mr. Don Dixon.

  NOES

  Alison, Rt Hon Michael

  Currie, Mrs Edwina

  Amess, David

  Dicks, Terry

  Ancram, Michael

  Dorrell, Stephen

  Arnold, Tom

  Douglas-Hamilton, Lord J.

  Aspinwall, Jack

  Dover, Den

  Atkins, Robert (South Ribble)

  du Cann, Rt Hon Sir Edward

  Baker, Nicholas (Dorset N)

  Durant, Tony

  Baldry, Tony

  Eggar, Tim

  Banks, Robert (Harrogate)

  Evennett, David

  Batiste, Spencer

  Eyre, Sir Reginald

  Beaumont-Dark, Anthony

  Fletcher, Alexander

  Bellingham, Henry

  Fookes, Miss Janet

  Benyon, William

  Forman, Nigel

  Best, Keith

  Forth, Eric

  Bevan, David Gilroy

  Freeman, Roger

  Biffen, Rt Hon John

  Garel-Jones, Tristan

  Blaker, Rt Hon Sir Peter

  Glyn, Dr Alan

  Body, Sir Richard

  Goodhart, Sir Philip

  Boscawen, Hon Robert

  Gower, Sir Raymond

  Bottomley, Peter

  Greenway, Harry

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

  Gregory, Conal

  Bowden, Gerald (Dulwich)

  Griffiths, Sir Eldon

  Boyson, Dr Rhodes

  Grylls, Michael

  Braine, Rt Hon Sir Bernard

  Gummer, Rt Hon John S

  Brandon-Bravo, Martin

  Hamilton, Hon A. (Epsom)

  Bright, Graham

  Hamilton, Neil (Tatton)

  Brittan, Rt Hon Leon

  Hampson, Dr Keith

  Brooke, Hon Peter

  Heddle, John

  Brown, M. (Brigg & Cl'thpes)

  Henderson, Barry

  Browne, John

  Heseltine, Rt Hon Michael

  Bruinvels, Peter

  Higgins, Rt Hon Terence L.

  Buchanan-Smith, Rt Hon A.

  Hirst, Michael

  Butler, Rt Hon Sir Adam

  Holland, Sir Philip (Gedling)

  Butterfill, John

  Holt, Richard

  Carlisle, Kenneth (Lincoln)

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

  Carttiss, Michael

  Howarth, Gerald (Cannock)

  Cash, William

  Howell, Rt Hon D. (G'ldford)

  Chapman, Sydney

  Howell, Ralph (Norfolk, N)

  Chope, Christopher

  Hunt, David (Wirral W)

  Churchill, W. S.

  Jopling, Rt Hon Michael

  Clark, Dr Michael (Rochford)

  Key, Robert

  Clark, Sir W. (Croydon S)

  Latham, Michael

  Clarke, Rt Hon K. (Rushcliffe)

  Leigh, Edward (Gainsbor'gh)

  Cockeram, Eric

  Lennox-Boyd, Hon Mark

  Colvin, Michael

  Lester, Jim

  Conway, Derek

  Lewis, Sir Kenneth (Stamf'd)

  Coombs, Simon

  Lightbown, David

  Cope, John

  Lilley, Peter

  Cormack, Patrick

  Lord, Michael

  Corrie, John

  Luce, Rt Hon Richard

  Cranborne, Viscount

  Lyell, Nicholas

  Critchley, Julian

  McCrindle, Robert

  123

  McCurley, Mrs Anna

  Shepherd, Colin (Hereford)

  Macfarlane, Neil

  Shepherd, Richard (Aldridge)

  MacGregor, Rt Hon John

  Silvester, Fred

  MacKay, Andrew (Berkshire)

  Sims, Roger

  Maclean, David John

  Skeet, Sir Trevor

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

  Smith, Sir Dudley (Warwick)

  Madel, David

  Smith, Tim (Beaconsfield)

  Malins, Humfrey

  Soames, Hon Nicholas

  Maples, John

  Speller, Tony

  Marshall, Michael (Arundel)

  Spencer, Derek

  Mather, Carol

  Spicer, Jim (Dorset W)

  Maude, Hon Francis

  Spicer, Michael (S Worcs)

  Mayhew, Sir Patrick

  Stanbrook, Ivor

  Merchant, Piers

  Stanley, Rt Hon John

  Miller, Hal (B'grove)

  Steen, Anthony

  Mills, Iain (Meriden)

  Stern, Michael

  Miscampbell, Norman

  Stevens, Lewis (Nuneaton)

  Moate, Roger

  Stewart, Allan (Eastwood)

  Morrison, Hon C. (Devizes)

  Stewart, Andrew (Sherwood)

  Moynihan, Hon C.

  Stewart, Ian (Hertf'dshire N)

  Mudd, David

  Stokes, John

  Needham, Richard

  Sumberg, David

  Nelson, Anthony

  Taylor, John (Solihull)

  Neubert, Michael

  Taylor, Teddy (S'end E)

  Nicholls, Patrick

  Temple-Morris, Peter

  Normanton, Tom

  Thomas, Rt Hon Peter

  Norris, Steven

  Thompson, Donald (Calder V)

  Ottaway, Richard

  Thompson, Patrick (N'ich N)

  Page, Sir John (Harrow W)

  Thorne, Neil (Ilford S)

  Page, Richard (Herts SW)

  Thornton, Malcolm

  Parkinson, Rt Hon Cecil

  Townend, John (Bridlington)

  Parris, Matthew

  Tracey, Richard

  Patten, J. (Oxf W & Abgdn)

  Trippier, David

  Pawsey, James

  Twinn, Dr Ian

  Peacock, Mrs Elizabeth

  van Straubenzee, Sir W.

  Percival, Rt Hon Sir Ian

  Vaughan, Sir Gerard

  Pollock, Alexander

  Waddington, David

  Porter, Barry

  Waldegrave, Hon William

  Powell, William (Corby)

  Walden, George

  Powley, John

  Walker, Bill (T'side N)

  Prentice, Rt Hon Reg

  Walker, Rt Hon P. (W'cester)

  Price, Sir David

  Waller, Gary

  Raffan, Keith

  Ward, John

  Raison, Rt Hon Timothy

  Wardle, C. (Bexhill)

  Rathbone, Tim

  Watson, John

  Rhodes James, Robert

  Watts, John

  Rhys Williams, Sir Brandon

  Whitfield, John

  Ridley, Rt Hon Nicholas

  Whitney, Raymond

  Ridsdale, Sir Julian

  Wiggin, Jerry

  Rifkind, Rt Hon Malcolm

  Winterton, Mrs Ann

  Roberts, Wyn (Conwy)

  Winterton, Nicholas

  Robinson, P. (Belfast E)

  Wolfson, Mark

  Roe, Mrs Marion

  Wood, Timothy

  Rossi, Sir Hugh

  Woodcock, Michael

  Rumbold, Mrs Angela

  Yeo, Tim

  Ryder, Richard

  Young, Sir George (Acton)

  Sackville, Hon Thomas

  Sainsbury, Hon Timothy

  Tellers for the Noes:

  Sayeed, Jonathan

  Mr. Gerald Malone and

  Shaw, Sir Michael (Scarb')

  Mr. Peter Lloyd.

  Question accordingly negatived.
  11.15 pm
  Mr. Ian Lloyd: I beg to move Amendment No. 3, in page 6, line 12, at end insert
  '(e) conditions requiring the public gas supplier to publish, annually, audited accounts showing separately the profits arising from sales of gas subject to maximum price regulation, which accounts shall be certified by the Director as showing the real costs and revenues ascribable to those activities of the supplier.'.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): With this it will be convenient to take amendment No. 4, in page 6, line 28, at end insert—
  `(c) to comply with any direction given by the Director as to the manner in which the accounts of the public gas
  124
  supplier are to be prepared and published; and as to the formulation of indicators of standards of service to be published with such accounts.'.
  Mr. Lloyd: Before I come to the two amendments I should like to say how much I appreciate the tribute by my hon. Friend the Parliamentary Under-Secretary to me and my Committee. I would do very little without my Committee. There is an inescapable tension between any Select Committee and Government at any time if both are doing their jobs properly. In my judgment that tension is part of the value of the system, and if it were to disappear we would lose something. Governments must govern and they must get it right, one hopes, 95 per cent. of the time. Select Committees must give second opinions and, if they are doing their work properly, perhaps one time in 20 they will be right. Perhaps, if it is a very good Committee, that ratio may well improve.
  I should like to refer to a phrase used by the right hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), who, I am sorry to see, is not in his place. He said that the Select Committee was treated with contempt. I must say that I have never, at any time, experienced any contempt from my right hon. Friend the Secretary of State or any of his hon. Friends and other Ministers from the Department of Energy. Indeed, if ever I thought my Committee was treated with contempt the speech I would make in this House would be very different from the one that I made earlier and that I propose to make now. Indeed, the compulsion and immediacy of Government, as experienced by any Government from time to time, could give rise to what Shelley referred to in "Ozymandias", king of kings, as the "sneer of cold command". Those at the other end of Government policy sometimes misinterpret what is an unavoidable and necessary act of policy as the "sneer of cold command".
  My right hon. Friend the Secretary of State and all his predecessors have always gone to considerable lengths to ensure that the Committee, at least occasionally, feels that its points and arguments contribute to the formation of energy policy in this country. Naturally, we hope, as all Select Committees hope, that that ratio will be improved and that we shall make a more valuable input into the formation of policy; but contempt, no.
  Mr. Orme: I am interested in what the hon. Gentleman, as the distinguished Chairman of the Select Committee on Energy, is saying. As Chairman, he is lucky in view of the way in which the Secretary of State for Energy dealt with the Select Committee on Environment over the weekend. That is a different matter. He talked about Back-Bench Members who happened to be members of the Committee not knowing what they were talking about. I notice that the response to the hon. Gentleman's Committee was not the same. However, we have a right to refer to the Secretary of State's response to the Select Committee on Environment, which is not directly related to his Department, but was dealing with Sellafield. The response in that case was entirely different.
  Mr. Lloyd: I note the right hon. Gentleman's comment. It is not for me to comment on other Select Committees or their fate over the weekend. That Committee has also entered into an area of great controversy, and inevitably, in some measure, the same problems arise. I think that it is true to say that while our system provides that the Executive is drawn from the

  125
  House, I do not see that there will ever be a completely satisfactory solution to the problem. We must try to get the best out of both systems, recognising that there is an inherent and unavoidable conflict simply because of our constitutional practice and procedure.
  No preamble to the amendments is necessary. We move here into the arcane area of mystery known as accounting. The question that the amendments imply is: how accurate, relevant and informative can the accounts of the new company be? How completely can they be made to disclose what is happening without in any way damaging the operating efficiency of the concern? I regard that as the common objective of the House.
  Our arguments are set out in our report under the heading "The 'X' factor", in paragraphs 30 to 35. I shall not bore the House by reading them all, as I am sure that every hon. Member who is here will have had the chance to look at them. We recommend
  "that Condition 2 of the draft Authorisation be amended to require that British Gas should publish, annually, the profits that arise from sales in the regulated tariff market".
  That proposal lies at the heart of our amendment. In the Government's reply, the arguments against that are, essentially, first, that the director general already has the information, and, secondly, that he has the discretion to publish it. However, the key objection that the Government have put forward to our proposal is in paragraph 54 of their reply, where they conclude:
  "Any requirement to publish detailed profit figures must be compatible with the nature of the business."
  I think that everyone will accept that.
  "The nature of the integrated gas supply business means that it is not possible to associate in a rigorous way specific costs to individual sectors of the market."
  I am in slightly less than total agreement with that conclusion. The Government continue:
  "The objective accuracy of separate profit figures for tariff and contract sectors is not sufficient for regulation to require audited published accounts."
  In that context, it seems to me that whatever difficulty one may experience in allocating costs, there is seldom any real difficulty in allocating revenues. Even if one has a partial allocation—less than satisfactory, but certainly better than a global aggregation or agglomeration of figures—that will reveal some information that will be valuable.
  In our judgment, it is essential that the public should have great confidence in the integrity of the accounts of the new corporation. The amendment is significant, but not unduly ambitious. It merely calls for an honest effort by all parties to produce fair, reasonable and informative figures. I do not think that anyone can object to that. The objective, especially of amendment No. 4, is that, in the accounts of British Gas, there should not only be no possibility of concealing what might be described as energy accounting skulduggery— we are all familiar with what that can mean—but it should be seen by the public at large, and indeed by the experts who study those figures with great assiduity, and burn the midnight oil in so doing, that no such concealment has been attempted, taken place or indeed, in a near ideal world, was ever likely.
  Mr. Leadbitter: I hope that, before the guillotine falls and we all leave this place, harmed and hurt, the Minister will resolve not to create an international crisis, as his colleague the Under-Secretary of State tried to do with the last group of amendments. I thought, on listening to the
  126
  hon. Gentleman, that the Organisation of Petroleum Exporting Countries was going to call my emergency meeting and that the lawyers were sharpening their knives for another feast. Frightening questions of litigation were raised and the great shadow of a new bureaucracy loomed— all over four lines of a simple common-sense amendment.
  At this time of night, hon. Members sitting here, or, in my case, standing— I do not know for how long because I am beginning to enjoy myself— want the Minister of State to make a response that differs from the theatricals of the Under-Secretary of State. Interesting though the hon. Gentleman's speech was, it was irrelevant. The Labour amendments Provided for nothing less than what the hon. Gentleman said would be expected of good private enterprise. However, in this and in the previous group of amendments, we are not dealing with privatisation. There is no such thing as "privatisation" here. That is cannibalisation and prostitution of the word. We have here private monopoly.
  As a state monopoly, British Gas is accountable to Parliament. It prepares accounts. All those people interested in its affairs who send letters to the board receive not only letters of courtesy and explanation but an expensively drawn-up annual report. We have learnt a great deal from that close working relationship, which has been valued in the House.
  We are creating a new animal. For a moment, there will be a honeymoon. The chairman will be there, unlike Lord King, who does not care who owns the shop so long as he manages it. The present chairman of British Gas has fought hard for the company, because he believes in it. The Government wanted to fragment British Gas. They wanted to get rid of the shop window dressing which told all the consumers how wonderful British Gas was. The chairman won his battle, but the outright obduracy of the Government prevailed. They said, "We cannot get our way on fragmentation, so we shall get rid of the lot." Once "the lot" is gone and parliamentary accountability is diminished, no hon. Member, no Secretary of State and no Prime Minister can give an undertaking that the new private monopoly will do what the Government want. The new company will be accountable to its shareholders. The priorities in energy use may be put at risk if there are any economic strictures in a particular year.
  I recall how, under another Administration, a valuable piece of investment which was of paramount importance to the United Kingdom in the world of transport was brought to an end in one weekend because of the plea that economies had to be made.
  These amendments call for accountability. We want accounts to be made available and annual reports to be made public. We want to know what the profits are and how they have come about. We want to know how much profit is associated with the maximum prices that are prevailing at the time. Such accountability helps the House of Commons to analyse, scrutinise and monitor in such a way that the Mother of Parliaments can say, "Halt, private monopoly gas! Your are going too far. Some of the priorities that we feel essential are being diminished—in this instance, these priorities concern the users of gas."
  It is important that the Minister considers these amendments with great care. He should remember that on balance it is sometimes much better to accept the good sense of the House of Commons than the advice that he receives from the Ministry.

  127
  11.30 pm
  I have paid tribute to the Secretary of State. As the Chairman of the Select Committee on Energy knows, I am an ardent Labour supporter and am the longest-serving member of that Select Committee. For many years before that I was a member of the Select Committee on Science and Technology. I have been adamant in supporting the objectives and purposes of the Select Committee, and have always been generous in conveying my appreciation to Ministers, particularly to the present Secretary of State.
  Having said that, I remind the House that the reputation of the Department of Energy as having a monopoly of initiative has not been too high. Anyone reading the Select Committee's report on conservation will understand our battle to persuade the Department of Energy to get out of its sleepy posture. We are proud that at last we have had some influence.
  It is often better for Ministers to take account of what the House of Commons is saying. This is the best university in the world. There is a great deal of experience and learning in this House. It does not follow that because a man becomes a Minister, he is overnight given a wisdom that he never had before. When Ministers listen to their advisers, they should remember that there is nothing to suggest that they are any better or worse than the advisers who attend the Select Committee. We are privileged to have a great deal of knowledge. It is therefore important that the Government should reciprocate more generously in their response to the work of the Select Committee.
  As has been pointed out, this is the first Select Committee to have tabled amendments to the outcome of a Standing Committee's deliberations. There may well have been good reason to have done so previously, but we are now at the moment when the Government should understand why we have tabled these amendments. The hesitancy of Select Committees over the years to table amendments in the House is an indication of the care that we take not to abuse the House or stretch its tolerance too far. Therefore, the Minister should bear in mind that after all the years of agony of persuasion, the Select Committee has established with the Department a relationship that calls for a more generous response. The amendments are important because they will enable the House to see what the new private monopoly does. In the short term, we are not so worried, but with a change of board and chairman, and with the monopoly taking hold and becoming more predominant than the interests of the House, we must take great care to establish in the Bill the statutory requirements so that the responsibilities will emerge in the interests of gas consumers.
  Amendment No. 4 suggests that this form of accountability should take into account the formulation of indicators and standards of service to be published with the accounts. Those indicators are important because the standards are different from the efficiency of the service. There can be efficiency without the highest standards. Again, we want to establish the harmonisation of efficiency and standards in such a way as to maintain the high reputation that British Gas has established over the past few years.
  The amendments are contained in a matter of three or four lines. That is not a great deal to include in the Bill. It will not add to the structure or create a great bureaucracy. Lawyers will not be affected. After all, they get a good share of what goes on in the House. They are overloaded with case work and litigation. Anyone who
  128
  knows much about lawyers knows that they know full well how to look after themselves, without the Minister doing so. It is harder to get the truth or information out of the mouth of a lawyer without a fee than it is to open an oyster without a knife. Ministers do not need to make pleas on behalf of lawyers or to produce a frightening theatrical exercise about litigation. We are asking for accountability, and that is enough for this time of the night.
  Mr. Rost: In supporting the amendments I shall not attempt to emulate the eloquence of my hon. Friend the Member for Havant (Mr. Lloyd) or the hon. Member for Hartlepool (Mr. Leadbitter). I remind my right hon. Friend the Secretary of State that on Second Reading many hon. Members on both sides of the House raised anxieties about whether the legislation would impose on British Gas the obligation to publish adequate financial information, and some of us continue to have doubts. In Committee we have not written in sufficient safeguards to ensure proper accountability.
  It is unsatisfactory that British Gas should not be obligated to disaggregate its costs and profits between different functions and activities. That is important to ensure there is no question of unfair cross-subsidisation concealed by not providing adequate information.
  British Gas should be obliged to publish adequate financial information on the separate components of its business. That is not an unreasonable obligation to write into the legislation. Indeed, it occurs in all good corporate practice in the private sector. Many major companies voluntarily publish a detailed breakdown of their turnover and profit centres, as opposed to one side of their business and the other. They do so to inform their shareholders. If that applies to private sector enterprise, it must apply even more rigorously to an effective monopoly. It should have an even greater obligation to specify that the director general can obtain all the information that he might require to exercise his duties. In demanding that in the amendments, we are not asking for any more than is enshrined in the legislation on British Telecom, where the Director-General of Oftel can order any information which he requires to exercise his duties.
  The director general should have the power to specify what information is included in the accounts over and above the minimum legal requirements of the Companies Act, and to request that that should be included in the legislation is not unreasonable. Hon. Members on both sides of the House, especially Conservative Members, should be sympathetic towards that aim. I hope that my right hon. Friend will reconsider whether there are adequate safeguards and will table amendments in another place to ensure complete safeguards.
  I am not satisfied that the legislation as drafted will provide for the publication of minimum contract prices. That is important to put beyond doubt that there shall be no predatory pricing. Unless we insist that minimum as well as maximum contract prices are published, the legislation will remain weak. I hope that my right hon. Friend will take that point on board.
  Mr. Hardy: I join the hon. Member for Erewash (Mr. Rost) in his plea to the Minister. The hon. Gentleman is entitled to make the request, because his conduct during the past hour had been a demonstration of consistency and logic. He was the only Conservative Member to join us in voting for the Select Committee's amendment, and he was

  129
  entirely justified in doing so. This amendment has almost become a consideration of the position of the Select Committee, from which it originated. As my hon. Friend the Member for Hartlepool (Mr. Leadbitter) reminded us, this is the first occasion on which a Select Committee has tabled amendments to a Government Bill. Therefore, it is regrettable that the amendments should have been so badly supported by the majority of the members of the Select Committee, some of whom have not even bothered to attend the debate.
  The hon. Member for Havant (Mr. Lloyd) said that the public should be aware that there is no concealment. Every hon. Member should support that view. There is already enough concealment built into the Bill. No hon. Member has reminded the House that there will be substantial concealment of shareholdings. In Committee, we pressed for proper protection for the public and for those who hold shares on the privatised company, and we argued that there should be no anonymous holdings. The Minister assured us of the protection of the Companies Act, under which anyone who holds more than 5 per cent. of the equity would have to be known by British Gas. Five percent. of a tiny business may not be significant, but in the largest gas undertaking in the world, a 5 per cent. holding will allow people to hold about £400 million worth of equity without being identified to British Gas plc.
  We have had passing reference today, and detailed consideration in Committee, of foreign ownership. As the hon. Member for Havant said, there is cause for concern about concealment. The possibility of massive secret holdings, and of foreign holdings, of which individual holdings could amount to £1,200 million or more, depending on the size of the flotation, suggest that the Government need to be particularly careful to ensure that the call of the hon. Member for Havant on behalf of the Select Committee receives a proper response. There would be cause for great concern on the Committee if its report receives the same treatment as the last one.
  It would be sad, if on this significant, perhaps even historic occasion, the Select Committee, which already has grounds for ample complaint about the way that it has been treated by Her Majesty's Government, found this amendment dismissed as well. It would give even the most docile Conservative Member cause for concern that the Government seem prepared to see yet more concealment built into the privatised structure.
  My hon. Friend the Member for Hartlepool was justified to call on the Minister to resolve the difficulties caused by the Government's rejection of the previous amendment. I trust that the excessive docility shown by the colleagues of the hon. Member for Erewash will not encourage the Government to act with the insolent approach that has dominated their proceedings today. They seem to have mistaken verbosity for elegance and co-operativeness.
  The Secretary of State has done a great deal of damage, although the Under-Secretary was quick to spring to his defence when a mild rebuke was offered earlier. The Secretary of State has had a field day in the past 48 hours, attacking one Select Committee with viturperative arrogance, and now dismissing the Select Committee on Energy because the Conservative majority, apart from the hon. Member for Erewash, is guilty of the most appalling docility. The Government have done a great deal of damage to Select Committees. It was not wise for this Committee to have adopted the stance of the Grand Old
  130
  Duke of York. It may not have assisted the historic development of Select Committees in their present form, which is most important. I trust that the hon. Members for Havant, for Rochford (Dr. Clark), for Littleborough and Saddleworth (Mr. Dickens)—who has not graced us with his presence—
  Mr. Bruce: He has enough troubles.
  Mr. Hardy: He may have, and it may have been better for him if he had been present in the debate, as he is a member of the Select Committee.
  The hon. Members for Enfield, Southgate (Mr. Portillo) and for Rugby and Kenilworth (Mr. Pawsey), all of whom had their names to these amendments, should be here, and should have considered voting for the amendments more seriously than they appear to have done. They will no doubt receive another tribute from the Minister.
  Paragraph 71 of the Select Committee report refers to the British Gas view that, it should be free to operate within the private sector. The Select Committee found two reasons for the rejection of that view. The first was that British Gas would not be operating and competing within the private sector, but within the public sector too, thus being involved in the economically schizophrenic position normally reserved for politicians on the Right.
  The second reason that the Select Committee identified was that British Gas would be operating in what is effectively a monopoly position. I am glad that the hon. Member for Havant (Mr. Lloyd) has returned to the Chamber. I made a critical reference to his absence a few minutes ago from the Division Lobby. The hon. Member for Havant and his colleagues were right to identify those two reasons, but there is a third. In addition to the two valid arguments that were perceived by the Select Committee there is also the factor of scale. British Gas will be enormous when it is privatised. It will be enormous not only in British terms but in international terms. Its market operations could have a distorting effect. That is another reason for the Select Committee's attitude, which I hope it will sustain if the Government are not prepared to adopt a responsible attitude towards these amendments.
  Earlier this evening my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) was criticised for referring to British Gas as a monster monopoly. That was a perfectly accurate description of it. I accept that the hon. Member for Swindon (Mr. Coombs) assumed that my hon. Friend was using the word "monstrous" as a noun rather than as an adjective. But it is enormous. So long as it remains under its present management it could be described almost as an elephant. An elephant is herbivorous. Problems begin if the elephant becomes a carnivore. If the elephant, because of its size, becomes a marauding carnivore, it could wreak enormous damage upon the environment. For that reason, if I may be excused the zoological metaphor, it would be entirely appropriate if the safeguards that are embodied in the very modest amendments for which the Select Committee asks could be achieved. I recognise that Sir Denis Rooke might not welcome being described as a herbivore, but he has conducted himself in a responsible manner and we shall not be so anxious while Sir Denis Rooke or the existing members of the higher levels of management are in charge, but there is no guarantee—
  Mr. Wilson: The hon. Gentleman is expressing a degree of disrespect to Sir Denis Rooke. I am not sure that he would be very pleased about being described as a herbivore or as a pachyderm. However, should this ferocious, marauding, carnivorous elephant come into existence, does the hon. Gentleman think that if the elephant grew too big the danger is that it might stand on a lot of people rather than goring them with its tusks, or eating them, or doing whatever other strange affectation might come to the hon. Gentleman's mind?
  Mr. Hardy: If the hon. Gentleman will forgive me, I shall not pursue the matter because the Minister of State may wish to reply to the debate. Ministers have complained about our descriptions of them since the second week in December. I shall not add insult to injury on this occasion. However, I do not apologise for leaving the Minister of State with only a short time in which to reply because the contributions of Ministers on the previous two amendments were of inordinate length. It serves them right if they are caught out by their guillotine.
  I trust that on this occasion the Select Committee will not be treated with the arrogance—[Interruption.] It is no use the Minister of State complaining. First he wanted me to sit down so that he could reply. Now he seeks to interject from a sedentary position. The fact remains that sooner or later people may be in charge of the new, privatised organisation who will have the marauding or carnivorous disposition to which I have already referred. It is in order to supply society with the kind of protection that the Select Committee perceived as being necessary that we support these amendments and trust that the Minister of State will accept them.
  Mr. Buchanan-Smith: I am glad that the hon. Member for Wentworth (Mr. Hardy) has given me at least a few minutes in which to reply to this group of amendments.
  I begin by acknowledging the contribution that the Select Committee has made to the discussions on the Bill, particularly in relation to accounting. My hon. Friend the Member for Havant (Mr. Lloyd) referred to this as an arcane area of accounting. He is not doing himself justice. I do not think that it is arcane. It is a very important area of accounting. I agree with what he is trying to achieve. To use his words, he wants the Government to produce real information figures. I accept that it is important that we have real information figures, otherwise one could get cross-subsidisation between one area of activity and another, and that could cause problems in relation to fairness and everything else.
  We have looked carefully at the accounting requirement that should be imposed on British Gas in the authorisation. I know that the Select Committee was critical in paragraph 33 that condition two regarding separate accounts for the gas supply business did not entirely fulfil the purposes which it felt were necessary. But there is a clear requirement in condition two on British Gas to draw up accounts for the gas supply business, and it gives the director general the role of scrutinising the allocation of costs between the gas supply business and any other business that British Gas undertakes. The authorisation will ensure that proper accounts are drawn up which represent a true and fair view of the gas supply business.
  The hon. Member for Wentworth referred to the response of my right hon. Friend the Secretary of State to the Select Committee's report and questioned whether we
  132
  were right in saying that the nature of the gas supply business means that it is not possible to associate in a "rigorous way" specific costs of individual sectors of the market. I hope that the hon. Gentleman and other Committee members will reflect on that further, because not only do tariff and non-tariff sales share the same pipes, but they share the same emergency, purchasing and general services.
  Therefore, given the way in which the provisions of long-term gas purchasers' contracts have developed over the past 20 years, there is a particular difficulty in the apportionment and proper identification of the costs which relate on the one hand to maintaining peak supply needs and on the other those which relate to meeting the base load. Therefore, there is not necessarily the kind of simple connection, which the Select Committee is recommending in paragraph 33 and the amendment, between, for example, the load factor and the costs. Costs could be allocated in any one of a considerable variety of ways, and the choice that is made materially affects the accounts. To take the test which the Select Committee has used of the objective accuracy of separate profit figures is not a proper reflection of the realities of the gas supply business and for the authorisation to require audited published accounts.
  We have achieved the same purposes in the authorisation because the director general will be able to exercise his judgment in that area. That area will not always be the same. I prefer the flexibility given to the director general to scrutinise the accounts and to achieve proper allocation to the slightly greater rigidity of writing that into the primary legislation, although I understand the purpose of that. From the start the director general will be able to use his powers to call for all the necessary information covering the tariff market. He will therefore have access to information about the possible bases on which costs and revenues can be related and to the price regulatory section of the market. Those powers are clearly in clause 7.
  My hon. Friend the Member for Havant also raised the matter of transparency. Clause 34 gives the director general a discretion to publish information that he considers appropriate, and procedures are set out in the Bill which enable the authorisation to be modified. If the director general found that he was being inhibited in carrying out the purpose of the amendment, which I support, he would be able to introduce those modifications.
  On that basis, the regulatory arrangements set out in the Bill and the draft authorisation must be looked at together. They deal with the important need to ensure that proper accounts are drawn up and published. I ask my hon. Friend the Member for Havant to withdraw his amendment, not because I disagree with its purpose, but because I believe that by what we have already done about authorisation we meet the purposes which he and the Select Committee wish. I hope that my hon. Friend will not press the amendment to a Division.
  Mr. Ian Lloyd: I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  It being Twelve o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to the Order (17th February) and the Resolution this day, to put forthwith the Questions on amendments moved by a member of the Government.

Clause 10

  DUTY TO SUPPLY CERTAIN PREMISES
  Amendment made: No. 8, in page 9, line 27, at end insert—
  '(3A) The Secretary of State may, after consultation with the Director, make provision by regulations for entitling a public gas supplier to require a person requiring a supply of gas in pursuance of subsection (1) above to pay to the supplier an amount in respect of the expenses of the laying of the main used for the purpose of giving that supply if—

  (a) the supply is required within the prescribed period after the laying of the main;

  (b) a person for the purpose of supplying whom the main was laid has made a payment to the supplier in respect of those expenses;

  (c) the amount required does not exceed any amount paid in respect of those expenses by such a person or by any person previously required to make a payment under the regulations; and

  (d) the supplier has not recovered those expenses in full.'.—[Mr. Buchanan-Smith.]

Clause 14
  FIXING OF TARIFFS
  Amendment made: No. 10, in page 14, line 4, after `or', insert `other'.—[Mr. Buchanan-Smith.]
Clause 16
  STANDARDS OF QUALITY
  Amendment made: No. 11, in page 14, line 39, leave out 'he' and insert 'the Secretary of State'.—[Mr. Buchanan-Smith.]
Clause 19

  ACQUISITION OF RIGHTS TO USE PIPE-LINES
  Amendments made: No. 12, in page 21, line 8, at end insert—
  '( )for regulating the terms on which the supplier will supply gas to the applicant where the applicant's exercise of the right is temporarily interrupted by his inability to obtain gas from other sources;'.
  No. 13, in page 21, line 40, at end insert—
  '(6A) Where directions under this section require the public gas supplier to accept an obligation to supply gas to any person, the obligation shall be to supply gas to that person only in circumstances where to do so would not prejudice the performance by the supplier of such of his duties under sections 9(1) and 10(1) above, and of his contractual obligations, as fall to be performed otherwise than on the temporary interruption of the exercise of a right conferred in pursuance of those directions or of any other directions under this section.'.—[Mr. Buchanan-Smith.]

Clause 24
  MODIFICATION REFERENCES TO MONOPOLIES COMMISSION
  Amendment made: No. 16, in page 27, line 35, after `supplier', insert `and to the Council'.—[Mr. Buchanan-smith.]
Clause 25

  REPORTS ON MODIFICATION REFERENCES
  Amendments made: No. 17, in page 29, line 25, leave out from beginning to 'in' in line 29 and insert—
  '(5) Subject to subsection (6) below, the Director shall—

  (a) on receiving such a report, send a copy of it to the public gas supplier and to the Secretary of State; and

  (b) not less than 14 days after that copy is received by the Secretary of State, send another copy to the Council and publish that other copy'.

  No. 18, in page 29, line 35, leave out from 'days' to end of line 38 and insert
  'mentioned in subsection (5) above, direct the Director to exclude that matter from the copy of the report to be ient to the Council and published under that subsection. '. [Mr. Buchanan-Smith.]

Clause 28
  ORDERS FOR SECURING COMPLIANCE WITH CERTAIN PROVISIONS
  Amendment made: No. 19, in page 33, line 4, after '4', insert 'and 13A'.—[Mr. Buchanan-Smith.]
Clause 41

  GENERAL RESTRICTIONS ON DISCLOSURE OF INFORMATION
  Amendments made: No. 22, in page 41, line 42, at end insert—
  `( ) for the purpose of facilitating the performance of any functions of the Health and Safety Executive under any enactment;'.
  No. 23, in page 42, line 8, at end insert—
  '( ) the Consumer Protection Act 1961;'.
  No. 24, in line 13, at end insert—
  `( ) the Consumer Safety Act 1978;'.
  No. 25, in page 42, line 20, leave out 'this Part' and insert
  'any provision of this Part other than section (Power of Council to investigate other matters) (3) above'.—[Mr. Buchanan-Smith.]

Clause 46

  PROVISIONS AS TO REGULATIONS
  Amendments made: No. 26, in page 45, line 11, leave out 'or incidental' and insert `, incidental or transitional'.
  No. 27, in page 45, line 15, leave out 'or failing to comply with'.—[Mr. Buchanan-Smith.]

Clause 47

  INTERPRETATION OF PART I
  Amendment made: No. 28, in page 46, line 41, leave out 'References in this Part' and insert
  'In this Part, except in section 18, references'.—[Mr. Buchanan-Smith.]

Clause 49

  BRITISH GAS STOCK
  Amendment made: No. 29, in page 48, line 15, at end insert—
  '(3A) As from the transfer date British Gas 3% Guaranteed Stock, 1990–95 shall be renamed "3% Exchequer Gas Stock, 1990–95" '.—Mr. Buchanan-Smith.]

Clause 60

  EXCLUSION OF CERTAIN AGREEMENTS FROM RESTRICTIVE TRADE PRACTICES ACT 1976
  Amendments made: No. 30, in page 55, line 25, leave out from '1976' to 'shall' in line 1 on page 56.
  No. 31, in page 56, line 5, after 'agreement', insert `containing provisions'.
  No. 32 in page 56, line 8, at end insert—
  '(2) The said Act of 1976 shall not apply, and shall be deemed never to have applied, to any agreement which—

  (a) is or was made on or after 28th November 1985;

  (b) is or was an agreement containing provisions relating to, or to activities connected with, the supply otherwise than under an authorisation granted under section 7 above of gas won under the authority of a petroleum production licence; and

  (c) satisfies such other conditions as may be specified in an order made by the Secretary of State.

  (2A) The conditions specified in an order under subsection (2) above may include—

  (a) conditions which are to be satisfied in relation to a time before the coming into force of this section;

  (b) conditions which refer any matter (which may be the general question whether the said Act of 1976 should apply to a particular agreement) to the Secretary of State for determination after such consultation as may be so specified.

  (2B) Any modification on or after 28th November 1985 of any agreement made before that date shall—

  (a) if it relates exclusively to the identities of the parties to the agreement, be treated for the purposes of this section and the said Act of 1976 as a modification before that date; and

  (b) in any other case, be treated for those purposes in relation to the original agreement as a separate agreement.

  and, accordingly, in neither case shall the modification be capable of having the effect of requiring an agreement made before that date to be treated for those purposes as an agreement made on or after that date.'
  No. 33, in page 56, line 9, after 'section', insert
  'the following in particular, that is to say, exploration for gas and'.
  No. 34, page 56, line 32, at end insert—
  '(4A) In relation to any supply before the appointed day, the reference in subsection (2) above to a supply of gas otherwise than under an authorisation granted under section 7 above shall have effect as a reference to a supply of gas otherwise than in performance of any duty imposed by the 1972 Act.'.—[Mr. Buchanan-Smith.]

Clause 64
  GENERAL INTERPRETATION
  Amendment made: No. 35, in page 58, line 8, after 'requirement', insert regulations'.—[Mr. Buchanan-Smith.]
Clause 65

  AMENDMENTS, TRANSITIONAL PROVISIONS, SAVINGS AND REPEALS
  Amendment made: No. 36, in page 58, line 32 after 'of', insert—
  '(a)'
  No. 37, in page 58, line 33 at end insert—

  (b) any reference (in whatever terns) in that Act or subordinate legislation to a person carrying on a gas undertaking or to such an undertaking; or

  (c) any reference in that Act or subordinate legislation to any enactment repealed by this Act.'.—[Mr. Buchanan-Smith.]

Clause 66

  SHORT TITLE, COMMENCEMENT AND EXTENT
  Amendment made: No. 38, in page 59, line 28 at end insert—
  'section [Statement in connection with flotation] . — [Mr. Buchanan-Smith.]

Schedule 2

  GAS CONSUMERS' COUNCIL
  Amendments made: No. 39, in page 61, line 19 leave out 'Treasury' and insert 'Secretary of State'.
  No. 40, in page 61, line 23 at end insert—
  '(3) The consent of the Treasury shall be required for the giving by the Secretary of State of an approval for the purposes of sub-paragraph (1) above.'.—[Mr. Buchanan-Smith.]

Schedule 5

  PUBLIC GAS SUPPLY CODE
  Amendments made: No. 41, in page 72, line 38 leave out 'in writing'.
  No. 44, in page 73, line 39 leave out 'in writing'.
  No. 45, in page 74, line 4 leave out 'in writing'.
  No. 46, in page 74, line 16 leave out 'in writing'.
  No. 47, in page 74, line 26 leave out 'in writing'.
  No. 48, in page 75, line 33 leave out 'in writing'.
  No. 51, in page 76, line 23 at end insert—

  PUBLIC GAS SUPPLY CODE

    Information as to escapes of gas
    13A. It shall be the duty of a public gas supplier to take such steps as are necessary to ensure that, if he is informed of an escape of gas that he is not required by paragraph 13 above to prevent, he passes the information on, as soon as reasonably practicable—

    (a) to the person who appears to the public gas supplier to be responsible (whether under that paragraph or otherwise) for preventing the escape; or

    (b) in the case of an escape occurring in the authorised area of another public gas supplier, to that other public gas supplier.'.—[Mr. Buchanan-Smith.]

Schedule 7

  MINOR AND CONSEQUENTIAL AMENDMENTS
  Amendments made: No. 52, in page 82, line 35 leave out '213(3).'.
  No. 53, in page 83, line 44 at end insert—
  '(g) paragraph 3 of Schedule 5 to the Road Traffic Regulation Act 1984.'.—[Mr. Buchanan-Smith.]

Schedule 8

  TRANSITIONAL PROVISIONS AND SAVINGS
  Amendment made: No. 54, in page 103, line 23 at end insert—
  '(2A) If the said rights and liabilities vest by virtue of section 49 of this Act in the Treasury, any agreement made, transaction effected or other thing done in relation to any British Gas 3% Guaranteed Stock, 1990–95 which is in force or effective immediately before the transfer date shall have effect as if made, effected or done in relation to that Stock as renamed under subsection (3A) of that section and, accordingly, references to that Stock in any agreement (whether or not in writing) or in any deed, bond, instrument or other document whatsoever to that Stock shall be taken as referring to that Stock as to renamed.'.—[Mr. Buchanan-Smith.]
  Bill to be read the Third time this day.

Statutory Instruments, &c.
Mr. Deputy Speaker (Mr. Ernest Armstrong): In order to save the time of the House I shall put together the Questions on motions 3, 4 and 5 on the Order Paper.
Motion made, and Question put forthwith pursuant to Standing Order No. 79 (5) (Standing Committees on Statutory Instruments. &c.).

Statutory Instruments, &c.
  NORTHERN IRELAND
  That the draft Mental Health (Northern Ireland) Order 1986, which was laid before this House on 28th January, be approved.
  NORTHERN IRELAND
  That the draft Mental Health (Northern Ireland Consequential Amendments) Order 1986, which was laid before this House on 28th January, be approved.

  REPRESENTATION OF THE PEOPLE
  That the draft Parliamentary Constituencies (England) (Miscellaneous Changes) Order 1986, which was laid before this House on 20th February, be approved.—[Mr. Neubert.]
  Question agreed to.

  European Community (Intervention Buying)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]
  12.1 am
  Mr. Geraint Howells: I shall not delay the House much longer at this early hour. We have had a busy day debating important issues. I am glad to have the opportunity to discuss the intervention buying system that operates within the Community. I shall be brief, but I shall ask some probing questions of the Minister to which I hope he will give a favourable reply.
  My firm belief is that the intervention buying system for agricultural products is responsible for much of the bad publicity that surrounds the EEC and gives unnecessary ammunition to those who oppose our membership. In the past few years many hon. Members who are opposed to our being a full member of the European Community have raised this matter.
  Nothing is more calculated to arouse the anger of the ordinary person in the street than reports of tonnes of butter being sold off cheaply to the Russians because of intervention. The Government apparently are reluctant to supply cut-price butter to Britain's old-age pensioners, even though that would cost less than half the subsidy needed to dispose of it to the Russians. That kind of economics is incomprehensible to most people, and offensive to those who wish to see a proper marketing effort for EEC goods that would benefit consumers and producers.
  Are the Government planning to make the butter available to the old and needy in Britain, or to Third world countries, as a short-term food aid measure in difficult times? Many of the elderly people in our society would be delighted at the opportunity to buy cheap butter and many people would be complimentary to the Government and Ministers if they decided on that course in the near future.
  The intervention system is basically wasteful. My purpose is to find out whether the Government support the system or whether they have given sufficient thought to alternative forms of marketing that would provide more efficient results. We are well aware that many European countries, especially Germany, are keen to retain the intervention system. We have been told on many occasions that the present Minister for Agriculture, Fisheries and Food is keen to hold on to the system. Let us hope that we can persuade the right hon. Gentleman to change his mind and to try to introduce a different marketing system for what we produce in Britain.
  The intervention system creates problems for producers, makes some commodities too expensive and denies the British consumer the right to have fresh and reasonably priced food. Can the Minister give us an idea of the storage costs for various products within the Community? Have the Government suggested to their European partners a more efficient marketing method than selling surplus products to the Russians? I read with interest an article that appeared in one of the leading Sunday newspapers a few weeks ago. Is it true that beef cattle are bought for £500, for argument's sake, slaughtered, put into intervention for about six months and

  139
  then sold to the Russians for the equivalent of £50? That would produce a colossal loss and that sort of marketing should be stopped forthwith.
  Is the Minister able to tell us how much food is sold to Russia from the European Community every year? Secondly, can he tell us how much this costs the British taxpayer? Has the Minister given any thought to introducing a deficiency payments scheme for beef cattle to help beef producers? The deficiency payments scheme worked well in Britain for decades until the Tory Government of 1973 did away with it. During 1973–74 we did not have a guaranteed price for beef produced in this country and I am sure that the Minister will remember those days when the store market and the beef markets in many parts of Britain were in dire trouble. We have been told that the intervention buying for beef cattle will be abolished within the next 12 months. Can the Minister give an assurance to beef producers in Britain that the variable premium will be safeguarded and that it will remain, whatever happens to the intervention system?
  Has it been calculated how the intervention system affects the British farmer? For example, if there had not been intervention, would there have been the necessity for the damaging quota system that has been imposed on British farmers to deal with the surpluses that have accumulated? Would there have been a different position for Welsh farmers, who have suffered especially badly from the imposition of quotas? With the massive surpluses of grain that are now in storage, it is likely that cereal growers in Britain will face similar quotas. Has the Minister any plans to introduce quotas for cereal growers?
  Is there not a case for an improved marketing division within the European Community that could ensure the disposal of European produce to world markets without harming Third world markets, or for working out better ways of marketing within the Community? I have said for years that we can blame our own Government and other Governments within the Community and argue for days on end that we are overproducing in Britain, but it must be realised that the real fault lies with the marketing division within Europe. If we could only control our marketing structure and methods in Europe of disposing of our surpluses, I do not think that British producers would have any need to worry. I am sure that the Minister will agree that confidence is now at a very low ebb in the agriculture industry. When the industry loses confidence in its leaders and in the policy being pursued by the Government that confidence must be restored if the industry and rural life in Wales and elsewhere are to be maintained.
  A press release issued by the Farmers Union of Wales on 7 March following a meeting between its president, Mr. Huw Hughes, and Welsh Office agriculture department officials at Aberystwyth on 6 March reads as follows:
  "Mr. Hughes said that, against the current background in the EEC, the Union was well aware of the problems facing the Community. The estimated value of UK intervention stocks of foodstuffs— excluding feedwheat and barley—at the end of 1985, was £678 million calculated on the basis of the buying-in prices valid at that time. The estimated value of EEC intervention stocks at the end of November 1985 was around £6,000 million. The most recent estimate of storage and related costs in respect of UK intervention stocks amounted to £102 million."
  That is a colossal sum to keep our products in cold storage.
  The press release continues:
  "He emphasised, however, that as far as European overproduction was concerned, the problem sectors were wine,
  140
  cereals, sugar, and milk. The Community was only just over self-sufficiency levels in beef and veal, and the position was expected to improve by the end of the decade."
  If that is true, it is very good news for the livestock sector in Wales and other parts of Britain. The press release further states:
  "As far as the sheep sector was concerned, the EEC was well below self-sufficiency levels and was not expected to be self-sufficient by the end of the decade."
  I still blame the intervention system. Meat used to be hoarded in biblical times and all these years later we are doing the same thing. We should devise a system within Europe to stop the best products of our agriculture— beef, butter and other commodities— from being put into cold storage for months at enormous cost to taxpayers here and in Europe. Instead of falling out about whether we should have a common agricultural policy, whether we should stay in Europe and what to do about overproduction, if all the European countries got together to discuss marketing as the top priority that would be far more help to all concerned.
  12.13 am
  Mr. Richard Livsey: I support my hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells) in raising a most important subject.
  One of the reasons why farming has acquired such a bad image in recent years is the reference on television and in the other media to mountains of surplus food. Good housekeeping should involve keeping a little surplus, but we now have vast amounts of surplus food. The cost is about 10·5 million ecus and the main surpluses are in dairy products, grain and beef. In the past 12 months the butter surplus has increased by 1 million tonnes. That is a vast quantity, which we feel should be going to the pensioners, not only in Britain, but in other European countries. That would be a far more preferable way of dealing with our surplus products than exporting them to Russia.
  The dairy product surplus represents about 31 per cent. of the costs of the surplus, whereas grain costs represent about 14 per cent. of the cost. It is noticeable that the French, in particular, seem to get rid of their surpluses through national aids and apply export credit guarantees for the export of grain by their own grain producers. That is something that we do not seem to be prepared to do. I would like to see international co-operation in the disposal of grain, particularly in relation to the Third world. I would favour the creation of something like an international grain fund, which would operate rather like the International Monetary Fund and would bring surpluses of grain to a central fund so that it could be distributed to those countries most in need and the starving in those nations could be rescued.
  There are 750,000 tonnes of beef in surpluses and I believe that we need to attack the system of support in Europe. As we all know, in this country we have a very good system of variable premiums supporting beef. There is no reason why the rest of Europe should not adopt that system, whereby the consumer can get beef at a reasonable price and less beef is placed in store. I believe that at present we are being placed under unreasonable pressure by fellow members of the Community to scrap the variable premium system. That is not in the national interest and it is certainly not in the interests of the European Community, which should be looking at that system as a

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  method for reducing its vast stocks of beef and ensuring that the consumers of Europe receive that beef at a reasonable price.
  12.16 am
  The Minister of State Ministry of Agriculture, Fisheries and Food (Mr. John Selwyn Gummer): I think that it is useful for us to be able to discuss the issue of intervention buying. However, it seems an odd way to approach the European Community. It is rather like saying that one will blame the lifeboats for the storm. The idea that it is the intervention system which is at fault instead of the surpluses seems to be an odd concept.
  I share all the desires of the hon. Member for Ceredigion and Pembroke, North (Mr. Howells). I am a great supporter of the European Community and I am very keen that Britain should not only continue to be a member but should contribute more and more to the growing unity in Europe. However, we will not help the Community if we begin by saying that the system is wrong, rather than the amount that we are producing.
  We are over-producing in this country and in the rest of Europe, but it is not just us. It is happening in the United States of America, the Third world, China and India. None of those countries outside Europe has an intervention system. Therefore, it is not the system which has created the surpluses. We have a world in surplus. Last year, for the first time, the Chinese were able not only to feed a quarter of the world's population but to export food. Last year India sent more food aid to Ethiopia than did the whole of the Soviet bloc. Therefore, the idea that there is something special about the intervention system which in some way creates surpluses seems to be a fiction.
  The reality is that we live in a world of surplus. Apart from sub-Saharan Africa, and that to a lesser extent this year than before, and the incompetent Soviet Union, there is no major part of the world which cannot feed its own people. However, there are parts of the world in which the distribution, economic system or way of managing the economy means that the surpluses do not reach the poorest people.
  We live in a world of surplus, and we have to start there. The idea that by changing the intervention system we would deal with the problem is a falsehood. We have to look at how best to change from a system based on the problem of shortage to a system that will meet the surplus. Intervention provides one of the most sensible ways to deal with a world in which shortfall is feared, in which equality between supply and demand is the aim and where some reasonable method of buying and storage meets that balancing desire.
  In other words, that works where one does not have a surplus. Once one has a surplus, intervention becomes an unsatisfactory way of solving our problems, because it is very highly geared. I am sure that the hon. Gentleman will have read the Prime Minister's speech to the National Farmers Union, in which she referred specifically to the problem of gearing. A 4 per cent. surplus in beef means 50 per cent. more beef in intervention, and a 200 per cent. increase in the cost of it. The whole thing is very tightly geared. In those circumstances, we must look not so much at the system that we have, but at how to reduce the surpluses that give rise to that distortion of the system.
  The hon. Gentleman is perfectly right to say that those surpluses cause considerable unhappiness about the nature of the European Community. Any of us who are
  142
  determined to put forward positive aspects of the Community must be concerned about the way in which those mountains and lakes give to the narrow-minded opponents of the European Community an opportunity to attack a fine institution.
  If one wants to deal with the problem, I plead that one should not seek to change the symptoms. One has to get down to the disease. The disease is the surpluses that we are producing. They come not from intervention, but from technological advance and the ability to grow four tonnes an acre where once one could grow only two tonnes. The British dairy herd has much the same number of cows as 10 years ago but is producing 29 per cent. more milk. That is the reality of the nature of technological advance, in terms of breeding and husbandry.
  If that is so, what do we do about it? In answer to the questions asked by the hon. Gentleman, I have to say, first, that we need to provide a means of support for the agriculture community that does not make those surpluses inevitable, even though technology makes them possible. Therefore, in dealing with beef, the hon. Gentleman is right to applaud the fact that the Commission is putting forward proposals that will move us away from intervention and towards premium. However, the premium that we want is much more akin to the variable premium. We support the variable premium because it has the great advantage of being linked directly to the market—when the market is good the premium is low, and when the market is poor the premium is high—whereas the fixed premium has the disadvantage of giving the farmer too much when the market is high and too little when the market is low.
  The proposals are grossly discriminatory against the United Kingdom, because those premiums are available only for the first 50 head of cattle. We are not prepared to accept that, because we believe that one must not discriminate as though it were possible to use one's basic agricultural support as a means of promoting a certain sort of farming against another sort of farming. That is not what we intend to do in Britain. Therefore, we are determined to see that those are non-discriminatory measures.
  If we are to do that, the hon. Gentleman is right to say that we should move— we hope to convince our colleagues of it—away from intervention in that area. But it must be on a fair, non-discriminatory basis, with the satisfactory lessons that Britain has had. I hope that the hon. Gentleman will not put forward the case that somehow deficiency payments in general would be a satisfactory answer. If we were to have the same deficiency payments system as before our entry into the European Community, the cost to the British taxpayer would be much greater. The cost is always based on the interpretation of the figures, but it would be up to twice as much as the present cost. It would be an expensive way of doing it.
  Mr. Geraint Howells indicated dissent
  Mr. Gummer: The hon. Gentleman shakes his head. Let me give him the figures as far as I can remember them. Naturally, I was not aware that he would ask that question, but I hope that I am right in saying that the figures are something like this. The Exchequer contribution is about £1·6 billion. With a deficiency payments system, the amount would be closer to £2·5 billion, which would be

  143
  a considerable increase. That is why the Liberal party does not favour the deficiency payments system. The hon. Gentleman may be in favour of it, but I do not wish to enter into party political issues. This was going to be one of those few occasions when I had an opportunity not to do so. I realise that the Liberal party is divided on this matter, but the official Liberal policy is that we should not return to the deficiency payments system. The Liberals know that the figures do not work out and that, therefore, it would not be reasonable to put that proposition forward.
  As for grain surpluses, it is important that the amount of grain produced should be much closer to the amount we need. I beg the hon. Member for Ceredigion and Pembroke, North not to suggest to his farmers the wholly fictitious view that if only we improved the marketing we would be able to sell this grain. That is nonsense. The trouble is that there is no area in which we can sell it or even give it away. The hon. Gentleman wants to give the grain to the Third world, but that is the way to undermine all the incipient farmers there. We are desperate to rebuild those communities. The most imperialist, anti-Third-world policy would flood those markets with wheat and destroy farming in those rural communities. That is opposed by every major aid organisation. Ask the Save the Children Fund, War on Want and even those organisations which have opposing political affiliations to ours what is needed, and they will say that cash is best for aid. Giving large amounts of food aid on a continuing basis undermines the Third world's ability to create its own economy. I say to the hon. Member for Ceredigion and Pembroke, North that if he cares about the Third world he should not lead his farmers down that false alleyway—it is a disgraceful and dangerous path.
  Some years ago I spent some time in Mauritania where I saw what happened when there was a constant supply of food aid from outside the country. The result was that indigenous agriculture and nomadic culture and husbandry, which had been the basis of the food supply, were not encouraged. That is what happens if Third world countries are flooded with the over-production of the European Community.
  Our job has been to use our surpluses to help the Third world in times of famine when those countries have had no chance of recreating their agriculture, partly because their Governments have purposely destroyed agriculture
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  through their economic policies, as happened in Ethiopia. Where that happens, there is an immediate and urgent, although not a continuing need. The idea that there is a continuing market for food or a proper area to which to give food is contrary to the experience and advice of all those who are involved in giving aid and all those voluntary organisations which we depend for advice.
  It is no good telling people that, however sophisticated their markets are, the growing surpluses in Europe can be dealt with, especially the surpluses in perishable goods, such as butter. The hon. Gentleman suggested that we should give butter to the Third world as a means of overcoming the problem, but that is surely contrary to all reason. Many parts of the third world do not want butter. [Interruption.] The hon. Gentleman must look at the record, because I clearly noted that he suggested that butter should go to the Third world and to pensioners. Giving butter to the Third world would be a misuse of our resources, because that money could be much better used in direct cash aid than in transporting the product to the Third world in parts of which, for all kinds of religious and other reasons, it cannot be used.
  I come to the question of the pensioners. The hon. Gentleman is right. It would be extremely advantageous if we could find a way of providing this butter for the pensioners, honourably and decently, to give them something that they would not otherwise have. I very much hope that he was not making a play for their support by saying that, without admitting the problem. Let me be absolutely straight. All our experience, and all the efforts, that we have made to check on this, show that if we provide cheap butter for pensioners, they buy the cheap butter instead of the butter that they would otherwise have bought, and that butter goes into the very intervention stocks that we are trying to run down. That increases the costs of the system.
  The hon. Gentleman is asking for the circular system by which we spend more and more money, thus increasing the costs of intervention. I hope that he will join us in fighting to ensure that the Community reduces its surpluses. Let us get rid of the disease. Let us not—as is often the case when we deal with Liberals—deal only with the symptom. Let us stop that, let us get down to the real issue and let us stop playing party politics with this important matter.
  Question put and agreed to.
  Adjourned accordingly at half-past Twelve o'clock.

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Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Leicester.
The Marquess Camden—Sat first in Parliament after the death of his father.

Schizophrenia: Newspaper Articles
Baroness Elliot of Harwood: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have noted the recent series of articles in The Times on schizophrenia, and whether they are addressing themselves to the problem.
Baroness Hooper: My Lords, perhaps I may begin by expressing the regret of my noble friend Lady Trumpington that she is unable to reply to this Question herself. She is, in fact, attending the National Schizophrenia Fellowship Conference in Oxford.
We have indeed noted the series of articles in The Times; and the noble Baroness will be aware from my noble friend's letter in The Times on 23rd December, and from the interview with my right honourable friend the Secretary of State, that we have for some time been addressing ourselves to the problems recently highlighted by The Times. In particular, two years ago we launched a specific central initiative designed to improve the quantity and quality of contact with schizophrenia sufferers needing longterm community care. Most recently the Secretary of State has announced the decision to launch a series of development projects which will help to ensure that health districts can really offer comprehensive care to people with schizophrenia living in the community.
Baroness Elliot of Harwood: My Lords, I thank my noble friend very much for that reply. I knew about the conference, which is very important, and I am very glad that the Government have taken this matter very seriously to heart. I should like to ask my noble friend one supplementary question. With the closing of quite a few mental hospitals and with schizophrenic patients living in the community, do the Government realise that it is very difficult to care for people with schizophrenia in a community and that nothing like enough help is available? Cannot something be done?—because otherwise tragedies such as people committing suicide when they go out into the world and find that they cannot cope will happen more often. I hope the Government realise that community care is vital and that it is inadequate at the present time.
Baroness Hooper: My Lords, on a number of occasions, including during the recent debate in your Lordships' House only last December, we have stated that consideration is to be given not only to sufferers from schizophrenia but to the people who look after
788
them in the community. It is perhaps worth pointing out that schizophrenia tends to be an episodic illness. Many sufferers are valued members of their family circle between episodes of illness. However, where pressures become unbearable, as they certainly can, it may well be appropriate to take the patient into hospital for assessment and rehabilitation until things have settled down again. We believe that comprehensive psychiatric services would regularly provide such a service.
Lord Ennals: My Lords, is the noble Baroness aware that many of the problems which are so described apply to all sorts of other people with mental illness and that there is a very serious problem of health authorities discharging into the community patients who have been suffering from mental illness when local authorities do not have or are not using funds to provide community care? Is this not a problem which is happening all over the country? Is it not possible for the noble Baroness's department to play a more active role in tackling this problem, which in a sense lies between the health authorities and the local authorities?
Baroness Hooper: My Lords, on a number of occasions we have stated that any hospitals which it is proposed to close will not be closed unless the necessary alternative services are available to replace them. Broadly, as regards local health authorities, the Secretary of State has in mind to provide earmarked support over the the next few years, particularly for innovative projects for community care for mentally ill people in a number of districts. The results will then be carefully evaluated and publicised for the general benefit.
Lord Campbell of Croy: My Lords, does my noble friend agree that The Times has performed an outstanding service in enlightening its readers about this, the most common of the serious mental illnesses, and in particular in helping to dispel the illusion that it is simply a Jekyll and Hyde phenomenon? Is my noble friend aware that, although it is now possible, owing to advances in medicine, for many schizophrenics to live outside institutions, cases differ and there are some who are quite incapable of fending for themselves, who need care in the community or return to hospital?
Baroness Hooper: My Lords, the Government did indeed welcome the series of articles in The Times, as well as recent programmes on television concerning schizophrenia, as it helps to create a greater awareness in the community of the problems of these particular sufferers. In fact, the cases quoted were not unique; nor were they necessarily typical. I think it is necessary to say that it would be totally wrong to assume some sort of automatic link between schizophrenia and violence as a result of some of the examples quoted. However, it is certainly the Government's intention to preserve hospital or institutional remedies for this type of suffering so that those who are not capable of total care in the community can at least have periods in hospital.
Lord Elwyn-Jones: My Lords, are the Government giving sufficient help to bodies like the Mental Health

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Foundation, which are doing admirable work in this field? The Times articles rather gave the impression that no one was doing anything about it. A great deal of research has been carried out into this difficult problem. Will the noble Baroness look into the need to give recognition and encouragement to the bodies that are already at work in the field?
Baroness Hooper: My Lords, the Government fully acknowledge the valuable contribution of the voluntary sector and other organisations in this matter. There have recently been remarkable breakthroughs in research and techniques to help sufferers, but the department assists voluntary sector organisations by making grants available for this research.
Lord Elwyn-Jones: My Lords, perhaps I should have declared an interest in that I am president of the Mental Health Foundation.
Lord Mottistone: My Lords, is my noble friend aware that I, too, attended the meeting in Oxford to which she referred, for its morning session? Is she also aware that when one of the speakers said that before people are discharged from hospital it must be ensured that there are adequate facilities for receiving them into the community, particularly when their families cannot take them, this received prolonged clapping? I understand that this might mean further legislation. Would my noble friend give consideration to such legislation being introduced?
Baroness Hooper: My Lords, I am most grateful to my noble friend for giving us a hot-from-the-scene report on the conference taking place in Oxford today. The subject of legislation has been raised on many occasions, and not least, as I said before, in the debate in your Lordships' House in December. It has been suggested that legislation is required, but the Government feel that legislation itself could not conceivably solve all problems and they are taking time and care not to rush into further legislation without the most careful thought.
Lord Mayhew: My Lords, does the noble Baroness agree that, whereas this is a profoundly worrying situation, there has, at least in the last 10 or 20 years, been a considerable increase in public sympathy and understanding of these mental illnesses?
Baroness Hooper: My Lords, I would certainly agree with the noble Lord, and I thank him for his comment.
Lord Campbell of Croy: My Lords, does my noble friend agree that one of the most useful contributions that Parliamentarians could make would be to refrain from misusing the expressions "schizophrenia" and "schizophrenic" in public debate on other subjects?
Baroness Hooper: My Lords, I agree.
Lord Greenway: My Lords, may I ask the noble Baroness whether the Government will keep an open mind on alternative treatments of schizophrenia, and I refer in particular to diet?
Baroness Hooper: Yes, my Lords, I think I can assure the noble Lord that one of the grants recently made to the voluntary sector is particularly for research into this aspect.

Iran: Smuggling Allegations
2.46 p.m.
Lord McNair: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they can confirm allegations in Forbes Magazine (27th January 1986) that the London office of the Iranian National Oil Company assists in the smuggling of stolen US war material into Iran; and, if this is so, whether it is legal.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, the Government have no evidence on this matter and cannot therefore comment on these allegations. The export of war material from the United Kingdom to all destinations is prohibited unless the exportation is covered by an appropriate licence. Provided that the goods mentioned in the article in Forbes Magazine were neither stolen in nor exported from the United Kingdom, no offences under United Kingdom law would have been committed.
Lord McNair: My Lords, can the noble Lord tell me whether Her Majesty's Government have received representations from the Government of the USA for assistance in preventing the onward transmission to Iran of material illegally acquired in the USA?
Lord Young of Graffham: Yes, my Lords, the Foreign and Commonwealth Office is in close contact with the United States authorities on all aspects of the Iranian-Iraqi conflict, including the supply of defence equipment. These contacts have included discussion on Iranian military procurement activities based in London.
Viscount Buckmaster: My Lords, in view of the difficulty in detecting much of this smuggled equipment, have the Government plans for the further training of Customs officials in this field?
Lord Young of Graffham: My Lords, this is a matter where we have no evidence at the moment, and therefore we shall be looking to see where we can acquire some.
Lord Williams of Elvel: My Lords, is there not also a separate problem in that the Iranian National Oil Company is established in this country as a trader in hydrocarbon products? If the offices of this company are being used for other purposes, then the declarations that are made to the Inland Revenue in that respect may well be false. Would the noble Lord therefore agree that the Inland Revenue itself has powers under the Income and Corporation Taxes Act 1970 to investigate this company, particularly in respect of business expenses, if that activity is being carried on?
Lord Young of Graffham: Yes, my Lords; but I would wish to assure the noble Lord, Lord Williams, and your Lordships' House, that we have no evidence of any involvement of the Iranian National Oil Company in this activity.
Lord Mayhew: My Lords, when the noble Lord says that the Government have no evidence, does that mean that the Government have made no inquiries of this firm?
Lord Young of Graffham: My Lords, I think in all the circumstances that it would be better to say that the Government have no evidence in the matter and therefore cannot comment further. Whether or not inquiries have been made, and the outlook on those inquiries, are not matters that I think we should raise in this way.

Nuclear Weapon Tests: Soviet Proposal
2.49 p.m.
Lord Brockway: 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 action they propose to take in response to the moratorium on all nuclear weapon tests unilaterally declared by General Secretary Gorbachev of the Soviet Union until 31st March 1986.
The Minister of State for Defence Support (Lord Trefgarne): My Lords, we have made clear on numerous occasions that declaratory gestures of this type have no real value in arms control terms. We remain committed towards achieving balanced, verifiable arms control agreements which contribute to British security. In particular, we remain committed to seeking progress towards a comprehensive test ban treaty.
Lord Brockway: My Lords, I thank the Minister for that Answer. May I ask him whether he has noted President Reagan's invitation to Soviet scientists to witness a nuclear detection system and to monitor an underground test in Nevada? Does this not indicate that one of his reasons for not signing the comprehensive ban is to carry out further experiments, some of which may be more dangerous? While the Soviet Government may decline the invitation, because they are carrying out unilaterally no underground tests, will the Government do three things: first, press President Reagan to ratify the 1974 and 1976 test ban treaties; secondly, complete the hopeful negotiations on verification; and, thirdly, sign the comprehensive treaty?
Lord Trefgarne: My Lords, if I may take first the first of the noble Lord's supplementary questions, where he referred to the 1974 threshold test ban and the 1976 peaceful nuclear explosion treaties, I understand that the United States wishes to carry out or achieve better verification provisions for those treaties before they can move ahead; and I can well understand its anxiety in that respect. But the United States has indicated that those measures, such as
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proposals for test site observers, are a basis which could work towards an effective verification regime for those treaties. So perhaps the situation is not quite so black as the noble Lord suggested.
Verification remains the key on the signing of a comprehensive test ban treaty. We believe strongly that such a treaty would be without value if it does not have effective verification provisions within it.
Lord Cledwyn of Penrhos: My Lords, while we appear to live in an age of declaratory gestures which are not always helpful, is it not the case that the deputy Soviet Foreign Minister, Mr. Komplektov, recently said that the Soviet Union was prepared to negotiate on site verification and the possibility of a full test ban treaty? Can the noble Lord tell us what steps Her Majesty's Government are taking towards the possibility of talks on those two subjects?
Lord Trefgarne: My Lords, the Soviet Union has indicated that it would be willing under certain conditions, as I understand it, to accept observers of Soviet nuclear tests; but apparently the proposal is tied, in a way which is not entirely clear, to United States prior acceptance of the moratorium. That is a matter with which we should have some difficulty, for reasons which the noble Lord will understand. We have made clear in the past, as I endeavoured to make clear in the main Answer to the Question this afternoon, that declaratory gestures such as the moratorium which the Soviet Union has been proposing are without value while they are not properly verifiable.
Lord Cledwyn of Penrhos: My Lords, with great respect, does the Minister not agree that the moratorium is not a declaratory gesture but a fact which has been taking place for some months? Will the Minister therefore say what steps Her Majesty's Government are now taking to clarify whether or not the moratorium is the condition that he describes it to be?
Lord Trefgarne: My Lords, it is always difficult to get to the bottom of exactly what the Soviet Union is proposing, because it keeps on attaching conditions to whatever is proposed. The fact remains that the United States proposal, to which the noble Lord, Lord Brockway, referred, where President Reagan invited observers to watch an American nuclear test, was without conditions of any kind.
Lord Mayhew: My Lords, will the noble Lord confirm, however, that the unwillingness of the Government to resume negotiations for a comprehensive treaty is due to difficulties of verification and not to the fact that further tests are needed for the Trident project?
Lord Trefgarne: No, my Lords. The Government position on this matter is that we should like to see the verification problems addressed before the negotiations are resumed. We do not think there will be much point in negotiations while these problems loom large and have not been solved.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that to call a unilateral decision to stop testing a declaratory gesture is to murder the English language? In the circumstances, will he not make a similar declaratory gesture, if that is what it is, and decide that this Government too will stop testing? If a unilateral decision to stop testing is a declaratory gesture then a large number of us on this side of the House will welcome it.
Lord Trefgarne: My Lords, I do not think that the limited unilateral and indeed declaratory gesture to which I have referred is any substitute for a long-term durable agreement. That durability will be achieved by resolving the problems, not by sweeping them under the carpet.
Lord Molloy: My Lords, the Minister has quite correctly said that the key to all this seems to be verification acceptable to both sides. Would it not be possible for Her Majesty's Government to consider talking to the United States and to the USSR, to have a conference and a discussion about what they feel might be the first realistic step towards ultimately achieving verification, which would mean so much to all mankind?
Lord Trefgarne: My Lords, what the noble Lord has in mind would be a meeting of technical experts, for example, to address the problems of verification, which are not inconsiderable, and the Government would support that.
Lord Brockway: My Lords, will the Government reconsider their attitude on this issue by an immediate signing of the comprehensive treaty? Is the Minister not aware that all world opinion, except for America, this Government and France, is in favour of the signing of the comprehensive agreement? Will he not respond to world opinion?
Lord Trefgarne: My Lords, there is really no point in entering into an agreement where there is scope for widespread cheating. That must remain the position while it is not possible to verify the effective compliance with such an agreement.

Health Authorities: Appointments
2.57 p.m.
Lord Dean of Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what criteria have been used in the appointment or reappointment of health authorities which will take effect in April of this year, how many new appointments have been made, how many reappointments have been made, and whether a comprehensive list of the chairmen and their authorities can be published.
Baroness Hooper: My Lords, I assume that the noble Lord is referring to the appointment of district health authority chairmen which is to date from 1st
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April 1986. In some ways the noble Lord's timing is perfect in that my honourable friend the Minister for Health will be making an announcement of the names later this afternoon. I cannot therefore comment in detail, but I can assure the noble Lord that in making such appointments we take into account a wide variety of factors. The most important are the candidates' personal qualities, their interest in and commitment to the National Health Service, their management or other relevant experience and the need for fresh ideas.
Lord Dean of Beswick: My Lords, I am grateful to the noble Baroness for that Answer and for the fact that the information will be made available today. But is she aware that there is great concern in West Leeds because of the removal of Mr. Robin Wood, the chairman of the health authority in whose area I reside? I understand that Mr. Wood is a supporter of the Government. The only quality he does not seem to have is to be a "yes man" for the chairman of the regional authority. Is the Minister aware that a delegation of all the consultants in West Leeds based on the Leeds General Infirmary, which is one of the largest teaching hospitals we have, saw the chairman of the regional health authority to seek support for the reappointment of Mr. Wood? The chairman made an explicit statement in which he said, I understand, that he would not be prepared to support that. Can the Minister tell us whether we are now in the ball game of people like the chairman of the Yorkshire Regional Health Authority being able to pick his own team?
Baroness Hooper: My Lords, the noble Lord will appreciate that it would not be proper for me to comment on individual appointments in view of the Statement to be made in another place shortly. However, in view of press comments and the general concern which has arisen in Mr. Wood's case, I should say that it is unfair to imply that an individual has been sacked when the statutory term of his appointment has come to an end.
The noble Lord will appreciate that in making appointments we find it important to bring in new people to provide fresh insights into the service, as well as to reappoint existing chairmen. The decision taken not to reappoint some chairmen in no way reflects on them personally or on the genuine and valuable service that they have given over the past four years.
Lord Ennals: My Lords, will the noble Baroness accept that we shall study very carefully the list when it is published? Is she aware that there is a widespread view throughout the country that membership of the Government party is a very important consideration when choosing authority chairmen? Is it not wrong that authority chairmen who have criticised government policy or regional policy should in any way be excluded from reappointment? As the noble Baroness herself rightly said, is it not the commitment of the persons concerned to the National Health Service, their competence and their skill, regardless of any political considerations, which should govern who should be appointed?
Baroness Hooper: My Lords, indeed, chairmen of health authorities are appointed for their personal qualities and not to represent any sectional or particu

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lar interest. While we may be aware of political affiliations in some cases, we do not seek that information and neither is it the basis on which we select chairmen.
Lord Cledwyn of Penrhos: My Lords, will the noble Baroness deal with the point that my noble friend has made about the additional political qualification which is not on the list that she read out to the House? To what extent is it true that nominations of this kind are vetted by the Conservative Party Central Office, as was reported in one newspaper? Is there any truth in that? Is she aware that the House would take it very amiss, as would the country, if party political qualifications should be in any sense a qualification for this important post?
Baroness Hooper: My Lords, I am sure that the noble Lord, like many of your Lordships, does not believe everything that he reads in the press. In fact, in the case of these appointments the Secretary of State is not required to consult anyone. He did, however, take account of nominations and views from various sources, including those from Members of Parliament of all parties, national and local organisations and various individuals.
Baroness Fisher of Rednal: My Lords, will the noble Baroness inform us whether any women have been included among the list of chairmen who have been appointed?
Baroness Hooper: My Lords, I am afraid the noble Baroness will have to wait until the announcement is made in another place very soon.
Lord Cledwyn of Penrhos: My Lords, may I therefore assume that the noble Baroness is now giving a categorical denial that these party political qualifications are taken into account?
Baroness Hooper: My Lords, yes. Political qualifications do not count in these appointments.
Lord Dean of Beswick: My Lords, is the Minister aware that I am grateful for the remarks that she made when she said that those who have been removed have not been sacked but have been stood down, even though some of them have done only one term? Some of us find it strange that certain people have been reappointed. It is not the regional chairman's turn for appointment, but he has obviously had an influence on the three who have been removed in West Yorkshire. He and the chairman of a neighbouring authority, who were bitterly criticised in the report on the deaths at Stanley Royd of 17 or 19 old people through salmonella poisoning, appear to have been reappointed. What really is the standard that the Government apply?
Baroness Hooper: My Lords, I cannot comment on individual cases but I can say that the views of regional health authority chairmen are clearly important in this context.

Glorious Revolution and Bill of Rights: Tercentenary Celebrations
3.3 p.m.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, with the leave of the House I should like to make a Statement on the arrangements for celebrating the tercentenary of the Glorious Revolution and the Bill of Rights.
In 1988 we will be celebrating the tercentenary of the Glorious (or Bloodless) Revolution and the Bill of Rights. These were the foundations from which evolved, peacefully, the system of parliamentary democracy under a constitutional Monarch which we enjoy today, and which has inspired the constitutions of many other countries of the world. Parliament itself will wish to take a lead with an appropriate celebration to mark this anniversary. Mr. Speaker and I are therefore appointing today a small committee of Members of both Houses to advise us on the form of these celebrations, and to oversee the arrangements to be made.
I am also happy to tell your Lordships that the Prime Minister and the Leaders of other parties have indicated their full support for these proposals, and have agreed to become patrons of this project.
The following noble Lords who are Members of this House have kindly agreed to serve on the advisory committee: the noble Lords, Lord Blake and Lord Crawshaw of Aintree; the noble and learned Lord, Lord Elwyn-Jones. PC; and the noble Lords, Lord Henderson of Brompton and Lord Thomas of Swynnerton. A Clerk from each House will serve the committee.
My Lords, that concludes my Statement.

Consolidated Fund (No. 2) Bill
3.5 p.m.
Lord Denham: My Lords, on behalf of my noble friend the Lord President of the Council, I beg to move the first Motion standing in his name on the Order Paper.
Moved, That Standing Order 44 (No two stages of a bill to be taken on one day) be dispensed with for the purpose of taking the Consolidated Fund (No. 2) Bill through its remaining stages this day.—(Lord Denham.):
On Question, Motion agreed to.

Business of the House: Debates 18th March
Lord Denham: My Lords, again on behalf of my noble friend the Lord President of the Council, I beg to move the second Motion standing in his name on the Order Paper.
Moved, That Standing Order 38 (Arrangement of the Order Paper) be dispensed with to enable the four Motions standing in the name of the Lord Elwyn-Jones to be taken before the Second Reading of the Housing (Scotland) Bill on Tuesday next.—(Lord Denham.):
On Question, Motion agreed to.

Consolidated Fund (No. 2) Bill
Read a second time; Committee negatived.
Then, Standing Order No. 44 having been dispensed with (pursuant to Resolution), Bill read a third time, and passed.

Museum of London Bill
Read a third time, and passed and returned to the Commons with an amendment.

Latent Damage Bill [H.L.]
3.8 p.m.
The Lord Chancellor: My Lords, I rise to move that this Bill be now read a second time.
The object of this Bill is to put into effect the recommendations of the 24th Report of the Law Reform Committee on a reference I made earlier in my present term of office on the subject of the limitation of actions for negligence in cases where the damage alleged to have been caused by negligence is not obvious and only appears long after the breach of duty has taken place. I made the reference in August 1980. The committee chaired by my noble and learned friend Lord Scarman reported in November 1984 and I have only now been able to obtain a slot for it in the Government's programme. The Bill is only five clauses and six pages long. It therefore ranks as a short Bill; but if, as I hope, it finds its way on to the statute book it will effect an important and valuable change in the limitation law as it affects the tort of negligence.
The necessity for the reference to the Law Reform Committee arose out of a series of court decisions which I need not enumerate seriatim. The tort of negligence arises when damage occurs as the result of a negligent act or omission in breach of an existing duty of care. A breach of duty by itself is not enough to give rise to the cause of action. The right of action arises only when the breach results in actual damage. The ordinary limitation period for actions for damages for negligence, apart from the numerous cases of personal injury (with which the Bill is not concerned) is the ordinary period of six years. In most cases this is perfectly adequate since in most cases the damage is obvious from the first. My Lords, if I run into your canoe in the Thames or negligently knock over a pile of plates in your restaurant or negligently set fire to your house, you have only yourself to blame if you let six years pass without issuing a writ. But sometimes damage occurs which is not easily or reasonably discoverable till after the six-year period has already passed. It may be that I am an architect or builder who has faultily designed or constructed the foundations of your house or a surveyor who failed to discover under the plaster. It may be that I am a solicitor or an under the plaster. It may be that I am a solicitor or an accountant who has advised incautiously or drawn a document in a way which for some time does not come to light. There is a whole range of cases and relationships to which such considerations may apply. What happens then, my Lords? The case to which I have referred establish, first, that the cause of action does not arise and therefore the six-year period does
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not begin to run on the breach of duty before damage has actually occurred; secondly, that the time does begin to run when damage has occurred even though it is not reasonably discoverable; and, thirdly, the principle of discoverability does not therefore apply to the limitation period. The reference therefore to the committee covered a very limited field. It covered the accrual of the cause of action; it covered the desirable limitation of the cause of action; and though it excluded latent disease or personal injuries it included a wide range of occupational relationships: builders, architects, solicitors, accountants and many others. It also covered the case where the victim of the damage was a third party—for instance, the purchaser of the house, or, in the case of a will drawn by a solicitor during a prospective testator's lifetime, an intended beneficiary. These are all persons other than the person to whom the original duty of care was owed.
There are really two classes of person whose interests are affected in this area of the law, apart from the third parties; the potential plaintiff (or alleged victim of the negligence) and the potential defendant (or alleged tortfeasor). They are both equally important. But there is this difference between them. In the main the potential defendants are well represented by professional associations of one kind or another who are extremely articulate, extremely competent and very well advised. The potential plaintiffs, however, do not constitute an identifiable class, since at any given point of time, ex hypothesi, they are unknown and, since they cannot be identified, cannot be represented and have no articulate voice at all.
The committee found that the present law did an injustice to both classes: to the potential plaintiffs, because owing to the irrelevance of the principle of discoverability the limitation period might elapse before they could reasonably be aware that they, had a right of action; and to the potential defendants because the right of action might arise so long after the negligent act or omission that they are unable to assemble adequate evidence to contest a claim, and might find it impossible or at any rate difficult to insure against it. In addition, under the existing law third party victims, as when a house is sold to a third party after damage has occurred and the action has accrued, can remain uncompensated, and in any case where the limitation period is in question the courts themselves are required to perform in every case the time-consuming, expensive and sometimes impossible task of ascertaining exactly when damage began to occur. It was to remedy these defects in the law that the committee recommended changes and now this Bill embodies their recommendations.
Following the committee, the design of the Bill follows three principles. The first principle was that plaintiffs must have a fair and sufficient opportunity of pursuing their remedy. The second principle was that defendants are entitled to be protected against stale claims. The third principle was that uncertainty in the law is to be avoided wherever possible.
These principles resulted in two major recommendations: first, that the ordinary period of limitation of six years should be subject to an extension which would allow the plaintiff a further three years from the date on which he discovered, or could reasonably have

799
discovered, that he had suffered significant damage; but, secondly, that there should be a long stop provision which should operate to bar all negligence claims, however well founded, involving latent defects or damage that are brought more than 15 years from the date of the defendant's breach of duty. These recommendations are embodied in the Bill.
I must say a word about the contents of the Bill and scope for discussion. In the first place, I must emphasise that the Bill, based on the Law Reform Committee recommendations, is a highly balanced document based on the widest consultation, with over 140 entities listed in the appendix to the report. It endeavours to do justice both to the inarticulate, unorganised and unidentified potential plaintiff and to the highly articulate, well organised and easily identifiable potential defendant. Both gain by the Bill, I believe. In the second place, although it does not deal with insurance (which is the subject of an entirely separate consultation document issued in 1985 by the National Economic Development Office), nor with insurability, the long stop provisions which are for the benefit of potential defendants should ease their insurance problems. In the third place, both the Bill and the report on which it is based contain certain further provisions, which I will now enumerate seriatim.
First, the Bill deliberately makes no change in the general rule of substantive law whereby a cause of action in negligence accrues at the date on which the resulting damage occurs. The report deals with that at length. Secondly, the Bill provides that a person under disability (for instance, minority or unsoundness of mind) at the date of discoverability is given an extension to cover the unexpired portion of his disability. Thirdly, the Bill ensures that fraud, deliberate concealment or mistake are not protected by the long stop. Fourthly, the Bill provides that unlike the date of the accrual of the cause of action, the long stop period runs from the date of the breach of duty and not from the occurrence of damage. That is of course beneficial to potential defendants.
A suggestion was made to your Lordships in the course of a short debate a few weeks ago on the Unstarred Question by the noble Lord, Lord Hacking, that the long stop period should run from the date of completion. That suggestion was deliberately rejected by the committee, particularly on the grounds, first, that it is applicable only to a narrow segment of the potential litigants in the causes of action concerned—for example, the construction industry—and, secondly, on the ground of the difficulty, even in relation to the construction industry, of defining completion so as to avoid injustice especially to defendants responsible for very large projects. Completion is a contractual concept, essentially difficult to apply, and perhaps wholly inapplicable to the law of tort. Furthermore, on consultation the suggestion was firmly rejected by the official referees who are perhaps the specialists best qualified to referee this decision.
Clause 3 enables successors in title to the original victim to inherit the original cause of action. This continues to be effective only within the original limitation period, and subject to the long stop.
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I ought to say a word about the drafting of the first two clauses which at first sight might seem a little clumsy. As the House will remember, we consolidated the Limitation Acts, which by that time were becoming a little complex, in 1980. We do not wish to lose the advantage of that consolidation in 1986. We have therefore drafted Clauses 1 and 2 of the Bill in such a form as to read as textual additions to the consolidation Act in the form of a new Section 14A (the discoverability addition) and 14B (the long stop addition). Clause 2 of the Bill, which is consequential on Clause 1, adds a new Section 28A to the consolidation Act. Subsection (1) of that new clause gives the additional protection to those who are under a disability at the time of discoverability. Subsection (2) removes the long stop protection from a defendant guilty of deliberate concealment. I have described the effects of these provisions earlier in my exposition of the policy.
I think that Clauses 4 and 5 speak for themselves, and I will therefore add nothing. My Lords, I beg to move.
Moved, That the Bill be now read a second time.—(The Lord Chancellor.)
3.23 p.m.
Lord Silkin of Dulwich: My Lords, may I begin by thanking the noble and learned Lord the Lord Chancellor for his clear exposition of a Bill on a highly complex subject? In doing so, perhaps I may also be permitted to express my thanks and, I am sure, those of the House for the clear and interesting report of the Law Reform Committee upon which the Bill is based.
There is little that I can usefully add to what the noble and learned Lord the Lord Chancellor said, more particularly perhaps because we had a short debate on the Unstarred Question asked by the noble Lord, Lord Hacking, a few weeks ago, to which the noble and learned Lord referred. The issues raised by the Bill were thoroughly canvassed then.
However, there is one matter which I raised on that occasion to which I should like to return and with which I do not think the noble and learned Lord dealt when he answered the point raised by the noble Lord, Lord Hacking, either then or on this occasion. As the noble and learned Lord said, the Law Reform Committee put forward three principles which it sought to reconcile. They are not principles with which I would wish to quarrel. The first is that the plaintiff must have a fair and sufficient opportunity to pursue his remedy. In that context, perhaps I may draw particular attention to what the noble and learned Lord said a moment ago when he repeated what he said on the earlier occasion; that plaintiffs in such an action, particularly those which relate to defects in buildings, are unlikely to be assisted by the organisation or even the articulateness which defendants probably enjoy, so that when one considers what is a fair and sufficient opportunity one must bear that point in mind. The second principle is that a defendant is entitled to be protected against stale claims. The third is to avoid uncertainty wherever possible.
Of course, the difficulty which the committee had to resolve was how to reconcile those three principles

801
which, particularly in cases related to buildings, are not always easy to reconcile. It may well be that the defect which causes loss and damage to the plaintiff is one of which he did not become aware and, indeed, of which he could not have become aware until many years have elapsed. I speak with a certain amount of personal experience inasmuch as settlement occurred to the house that I occupy which was not noticeable until some 25 years or more after it had been built. It certainly could not have been known about before then.
The plaintiff or the house owner may be put in a very difficult position as a result of the existing law, and the report and the Bill go some way towards dealing with that. The ideal situation would be to remove altogether the possibility that a plaintiff is debarred from suing upon something about which he neither knew nor possibly could have known. To achieve that ideal is extremely difficult without extending the limitation period so long as to be totally unfair to the defendant. It is fair to say in that context that the builder or the architect, if he keeps proper records, would normally be in a very much better position to defend himself against an accusation of negligence than would the plaintiff who may not even have been the first purchaser of the house if the defect does not appear for a substantial period of time.
The plaintiff in such circumstances will probably have to rely upon the advice of an engineer or other expert at the time when eventually the defect appears. As I know from my experience, it was not until extensive and expensive excavations had taken place that it was possible for me to be advised as to whether the settlement was due to any fault on the part of the builder or not. That is a situation which is likely to be repeated. It is in that context that I raise the only point on this Bill and on the report which has worried me; and that is the period, which is not subject to any change in any circumstances, of 15 years as the long stop period. As I have mentioned, in my own case it was 25 years before the defect became apparent, and though, fortunately, I was able to put the cost upon an insurance company, that will not always be the case and the costs of putting right that kind of defect can be quite frightening.
The question which has worried me in reading the report of the Law Reform Committee is whether it would be desirable and possible to give to the court some elasticity in the application of the long stop period. This matter was raised before the committee, which somewhat summarily rejected it on the basis that a long stop ceases to be a long stop if there is any uncertainty at all about its length.
I wonder whether that was a sound reply and whether it would be practicable—I am not seeking at this stage to think in terms of drafting—to give to the court some power to vary, obviously within fairly close limits, the 15-year period in favour of the plaintiff where it appears to the court on the facts before it, first, that it would not involve unreasonable hardship on the defendant; and, secondly, that in the circumstances of the case it would cause hardship to the plaintiff, particularly when he neither knew nor could possibly have known of the defect and the damage, and where, as soon as he did know, he took immediate action to bring the matter before the court. The courts have
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powers in other fields to vary limitation periods and I should have hoped that it might be possible to devise a satisfactory way of doing that in the sort of case to which I have referred.
Apart from that one difficulty on which I have doubts, and which I recognise is a matter of the balance to which the noble and learned Lord the Lord Chancellor referred—and I fully understand that those who represent the builders, the architects and those concerned with the erection of a building may prefer the balance to be on one side, while the householder may prefer it to be on the other—it seems to me that this is an extremely valuable Bill and I commend it to the House.
3.34 p.m.
Lord Mais: My Lords, I feel hardly qualified to rise and speak on this occasion in company with such an abundance of legal talent, but I can assure your Lordships that I shall at least be brief. There are many points in this Bill which required attention, but the one which has bothered me most, and I think it has bothered most people connected with the construction industry, whether on the professional side or on the industrial side, is the period of 15 years.
It is only recently that the subject of latent damage has been dealt with and I think we are all very grateful to the noble and learned Lord, Lord Scarman, for his report, which certainly clarifies the position both from the professional point of view and from the point of view of those who go their way in industry. I have been in the construction industry for the best part of 50 years and the fear of latent damage arising has always been with both the professions and the contractors who carry out the work. For the professions it is a very serious matter indeed, because, unlike the contracting element, they are entirely dependent upon the amount of insurance that they carry and it is not always possible to cover for the amount of damages that might be levelled against them.
The question of latent damage claims is worse now and much more prevalent than it used to be when I first started in the industry. Then there was a certain amount of covering up and people said, "We mustn't bring a case like this, because it will cause unnecessary suffering." But now people think of looking for the possibility of making a claim before a job has even started! In fact, I have come across cases where contract documents are handed over to the legal side of a company to see whether there are any loopholes in those documents which will support a claim at a later date.
When one is thinking about the unfortunate person who is on the receiving end of late contracts, and contracts completed several years after they were told, one should also bear in mind the problems of architects, engineers and contractors. With labour conditions as they are, and with the unknown problems which one may face on any contract, particularly if it is a big one and it is abroad, people need to have some protection.
There is no particular point to which I object in the Bill. In fact, it is a good Bill so far as the industry is concerned. The only point that I wish to raise is the period of 15 years from the breach of duty. That

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problem could arise at a stage in the contract which meant, ultimately, that it would be not 15 years but 20 or even 23 years. It could mean severe financial disaster for some people. If it is possible at this late stage, I suggest that the Bill should be amended so that the period will be "the completion of the contract" plus 10 years. That would be much more reasonable and acceptable so far as the industry is concerned, and certainly so far as the professions are concerned. It would also have the advantage of being in accordance with the Continental procedure. I have no other point to raise. It is a Bill which is welcome, so far as the industry with which I have been connected is concerned. There is just the one point which worries us considerably, and I would only ask whether at this late stage it could be looked at again.
3.40 p.m.
Lord Hacking: My Lords, in rising to make his comments to your Lordships' House the noble Lord, Lord Mais, spoke of some diffidence at speaking among so many lawyers. I am one of those lawyers but I also speak with diffidence for I have nothing like the detailed knowledge and experience of the noble Lord, Lord Mais, and other noble Lords in the construction and other industries that are affected by the provisions set out in this proposed legislation. I hope that other non-lawyer Members of your Lordships' House, whether they are representing the articulate or inarticulate and whether they are concerned about the interests of plaintiffs or defendants, will participate in this debate.
In beginning my comments, I should like to express again thanks to the noble and learned Lord the Lord Chancellor for the enormous time and trouble that he and his officials have taken in the extensive consultations that have taken place prior to the Bill being put before your Lordships' House. I shall not name the officials of the noble and learned Lord but I am glad to see that they are in attendance in the House and I state again my personal indebtedness to the noble and learned Lord and to his officials for the time and trouble they took over these consultations.
I welcome this Bill for several reasons. First of all, I welcome it because it produces justice for plaintiffs, whether inarticulate or articulate. It is some time now since the law came to the rescue of the plaintiff with latent injury. That arose after the troubling case in 1963, if my memory is correct, of Cartledge v. Jopling. The plaintiffs were held in that action to be statute barred even though they did not know about their latent injuries which in that case was pneumoconiosis. The Houses of Parliament came quickly to their rescue in—again if my memory is correct—the Limitation Act 1963. It is therefore clearly right and appropriate that the law should come to the rescue of, and do fairness to, plaintiffs who have suffered from latent damage and who have been statute barred long before they knew of their damage.
I also welcome the Bill on behalf of defendants because it does fairness to them. They should not be exposed to stale actions when so much time has passed that they are put at a severe disadvantage in defending the plaintiff's claim against them. I also welcome the
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Bill because it goes some way, although I hope to persuade your Lordships that the Bill should go further on this route, to establish greater clarity and certainty in the law relating to limitations of actions and particularly relating to latent damage.
The present law has not been in a satisfactory state for some time. For that reason I much welcome these measures but I am sorry, though, that the Government have not yet been persuaded—in bringing these measures before your Lordships—to deal with the five different accrual points for the period of limitations upon which I addressed your Lordships in the Unstarred Question in February. I hope nonetheless that the noble and learned Lord will give further and fresh consideration to this problem to which I intend to return at the Committee stage. I presented the argument as best I could in the Unstarred Question and I shall at this stage leave that argument as it rested there.
The noble and learned Lord has referred—and I have repeated the words—to the "articulate" and the "inarticulate" in his concern that the inarticulate plaintiffs interest should be protected, and protected within the framework of this legislation. I think it would be right, although I in no way defer from this concern of the noble and learned Lord, to draw your Lordships' attention to other persons who are potential plaintiffs who are far from inarticulate. I refer to large property companies and to large local councils and I refer to the Consumers' Association, which sent to me (and I suspect to other noble Lords) a letter which was highly articulate and represented the concern of potential plaintiffs. In truth, defendants and plaintiffs each have their special problems and that is why I welcome the Bill.
I should like now to turn to some special points concerning this proposed legislation and to address a few comments upon them. I turn first of all to the activating event for the long stop period. In new Section 14B of the 1980 Act it is proposed that that activating date should be, in effect, the date of breach of duty. The difficulty is that it covers so many wide, diverse activities. It covers the building of buildings to the making of products and indeed, as the noble and learned Lord mentioned, solicitor negligence. Therefore this test of breach of duty, while it covers all those differing activities, still presents some difficulty in ascertaining the accrual point. I do not think it was me in the debate that I introduced in February who argued that we should settle on "completion date". This is a matter which has been extensively discussed among those in the construction industry—among those members who are truly concerned for clarity of the law and not to get an advantage for their own interests.
It has been suggested—and I hope to deal with this in Committee—that some compromise may be reached about the accrual date for the long stop period in terms which would fairly bring the completion date as one of the starting points for the accrual point of the long stop period. I merely put before your Lordships what I believe to be the difficulty, which is to find a phrase which covers such wide and diverse activities from the building of buildings to the making of products or to the provision of services.

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I turn next to the period of the long stop. In fixing this period it is clear that different persons have different interests. It spans (does it not?) a 10-year period to a 12-year period, to a 15-year period to a 20-year period. At this stage I shall not advocate before your Lordships any particular period. I just reflect that the time that has been chosen in the Bill is clearly a middle period. It is also the period that the noble and learned Lord, Lord Scarman, and the fellow members of his committee recommended in their report. It has a sense of fairness in the sense of being middle ground.
All I make is the general observation that the plaintiff is not being served by too long a long stop period. He is not being served because it is the plaintiff who is also put to disadvantage by stale litigation. He is not being served because too long a period means that he may no longer be able to find his defendant or, more seriously, no longer able to find his defendant with means to pay damages because, for example, that defendant is no longer covered by insurance. Thus it is not in the interests of the plaintiff to go for too long a period. Indeed, it is in the interest of both the plaintiff and the defendant that there should be an alertness to the need to get on with the action and—more than that—an alertness about the need to be sure that the products you are receiving into your possession—whether it be a house or another product—are carefully examined so that you are not caught by latent damage and, worse still, caught by the 15-year period.
I turn now to another point in the Bill. It is set out in the proposed Section 14A and subsections (5), (6), (7) and (9). The noble and learned Lord explained how those subsections came to be drafted into the Bill. He referred to them in his most helpful speech to your Lordships in explaining the Bill as "textual additions" to the Consolidated Limitation Act 1980. In my humble submission that is precisely the difficulty about those provisions. They are indeed largely, although not exclusively, taken from Section 14 of the 1980 Act, as the test of knowledge for plaintiffs who have suffered personal injuries.
I should like to refer to this matter in a little more detail because it is my submission that those tests are not appropriate for latent damage cases. It is my submission also that, to coin a phrase used by the noble and learned Lord, these provisions are "too cumbersome".
The new section involves a series of tests, and I shall read from the text of subsection (5):
"For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which any potential plaintiff first had knowledge both—

(a) of the material facts about the damage in respect of which damages are claimed; and

(b) of the other facts relevant to the current action mentioned in subsection (7) below".

Leading from those two initial tests, we go on to the actual tests for putting into effect subsection (5)(a). I refer to subsection (6), where we find these words:
"For the purposes of subsection (5)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages
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against a defendant who did not dispute liability and was able to satisfy a judgment."
That is not the end of the matter because the clause goes on to elaborate upon the test in subsection (5)(b). Subsection (7) states:
"The other facts referred to in subsection (5)(b) above are—

(a) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and

(b) the identity of the defendant; and

(c) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant".

Your Lordships might think that that is a big enough mouthful, but the clause goes further because it is again picking up "textually" Section 14 of the 1980 Act. Thus it is proposed that the "knowledge" test is now applied.
Subsection (9) states:
"For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire—

(a) from facts observable or ascertainable by him; or

(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek":

and that subsection goes on to describe yet another caveat with which I need not trouble your Lordships.
The sum total of all of this is, with great respect to the noble and learned Lord, that—to adopt again his own phrase—the clause is extremely "cumbersome". Indeed, if one refers to the very adequate Explanatory Memorandum on the face of the Bill, one finds it is all contained within half a sentence and within lines that number no more than two. In describing Section 14A, the Explanatory Memorandum states:
"It prevents bringing such actions after 6 years from the date on which the cause of action accrued"
and these are the critical words—
"or 3 years from the date on which the plaintiff knew or ought to have known facts about the damage, whichever is the later".
That puts the proposition with at least greater clarity—if not with sufficient precision for the text of the Bill—without the cumbersome use of all these tests, which I have put before your Lordships.
Another point of worry that I should like to draw to your Lordships' attention concerns the general extension of Section 32 of the 1980 Act as it is intended to refer to the proposed revisions. The general proposition in Section 32 is that the period of limitation shall not run when there has been fraud, concealment or mistake. In those circumstances, the plaintiff—within certain procedures that I shall not detail to your Lordships—is still entitled to bring his action, albeit that he is out of the six-year time frame. The inclusion of the word "mistake", which is a technical term well known to lawyers, produces some degree of uncertainty, and that is another matter that causes me concern.
I have one other small observation to make before returning to my general welcome for this Bill. The Explanatory Memorandum includes a note that states:
"There are no EC implications".
Unless I have misunderstood it, I take it that that means there are no EEC implications. I am a little concerned about this proposition because there is a Council Directive of 25th July 1985 that I know is well

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known to the noble and learned Lord the Lord Chancellor and to his officials. With respect, I believe that that Directive has a direct bearing on the provisions in the Bill. I shall not go into detail but I will return to that point, and the importance of it when considering the long stop period, when we reach the Committee stage.
Those are the observations that I have for your Lordships' House on the proposed measures in the Bill. I end as I began, by giving the Bill's provisions a general welcome; but I also end by urging that your Lordships should, when in Committee, show a flexibility that I hope will be shared by the noble and learned Lord so that we may make a reasonable Bill a much better Bill.
3.56 p.m.
Lord Kimball: My Lords, it is with some trepidation, as one who is not versed in the law, that I dare to enter into this debate. My only reason for so doing is that for the past two and half years I have been joint chairman of Lloyd's of London's law reform committee. We have been negotiating with the department on this particular Bill and on the long stop provisions especially. In any negotiations with a government department, the more that one has to negotiate, more often than not one gets let down by it. It is fair to say that my understanding of the position of the negotiations as we finished them was exactly that as summarised by the noble Lord, Lord Hacking, who has just spoken; namely, that the long stop provision would run for 10 years from the date of completion of a building. That is a very acceptable arrangement and one equally proposed by the noble Lord, Lord Mais.
The 10-year long stop provision would be in line with the EC directive under Article 11 on product liability, which states that product liability must run for a 10-year period. The 10-year long stop provision would also have the merit of avoiding the criticism that was in the 24th report of the Law Reform Committee, when it criticised the Scottish 20-year period of extended liability. It criticised that provision on the ground that it led to,
"stale claims and defendants risking litigation over an unreasonable length of time".
I submit to your Lordships that the 10-year long stop period would meet that particular objection.
After all, the longer one waits over a claim, the more difficult it is to prove the fact. Surely the consumers are best served by ensuring that architects, quantity surveyors and civil engineers are all covered by soundly-based policies against claims for latent damage. The position in the market is that those very quantity surveyors, architects and civil engineers are now finding it an extremely difficult market in which to obtain proper insurance provision. Premiums are galloping away at the moment. The Institute of Civil Engineers is currently finding it impossible to obtain building inspectors, who are not prepared to take the jobs simply because they cannot afford to take out the necessary insurance to cover themselves. I hope that when we reach the Committee stage of this Bill we will look very carefully at the whole question of the long stop provision for latent damage.
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Your Lordships will be aware that there are many small states in America where distinguished doctors, surgeons and other professional people simply cannot practise today because they are unable to obtain the necessary insurance cover. It always frightens me when the courts and the law see an insurance company and a claim. It is rather like a pack of hounds when they see their fox. The lawyers' tongues hang out and their wigs flow behind them as they brandish their sticks and pursue the wretched insurance company and the wretched underwriter to a point where they can no longer carry on in business. I am quite certain that that is a situation we wish to avoid. I hope that eventually, during the course of the Committee stage, we shall agree to limit the latent damage provision to a 10-year period.
4 p.m.
Lord Denning: My Lords, I too welcome this Bill and also thank the noble and learned Lord, Lord Scarman, and his committee for a well-reasoned and convincing report. As I have been concerned in many of the law cases that were under consideration, perhaps I may be permitted to explain to your Lordships that the primary object of this Bill, as I understand it, is to deal with latent defects in buildings.
We had two or three cases, the leading one of which was Sparham-Souter in 1976. A house had been built on rubbishy foundations. A little damage was noticed from time to time, but it was over six years before the cracks became very bad in the house, and so the householder looked to see who he could sue because it was discovered that the foundations had been laid on a rubbishy base. The builder had gone into liquidation, so the householder sued, if you please, the inspector of the local authority for having passed the foundations when he ought not to have done. It was seven years or more since the house had been built. It looked as though his claim would be defeated by the six-year limitation. However, in the Court of Appeal, after much consideration, we held that the time did not run against him until he knew of the defects or, with reasonable care, ought to have known. Therefore, he won his case.
The next case in the House of Lords was similar, that of Anns v. Merton. There was even a third case which, I stress, again concerned foundations. The owner of the house noticed a few cracks after 10 years. He had them patched up by a jobbing builder, but after another 10 years—that is, 20 years altogether—the house was falling down. Excavations were carried out and it was found that the concrete flooring was only three inches where it ought to have been 10 inches, or whatever it should be. There had been a breach of the building regulations. The local inspector had passed it. The Court of Appeal held that the householder could not reasonably have known of the bad foundation work for 20 years and that his action was good.
Then there came the great case in the House of Lords of Pirelli. This did not concern foundations but dealt with a 160-foot high chimney at Pirelli's works at Southampton. The chimney looked satisfactory when it was built and for a little time. But after, I believe, six years the owners had occasion to send up a steeplejack

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who found that the wrong material had been used in cladding the chimney at the top. Because of that the chimney had cracked and it was only then discovered. I am afraid that the House of Lords said those earlier cases of ours were wrong; that the time of limitation arose from when the cracks first appeared six years before, although no one had seen them, no one had been up the chimney, and no one knew that they were there. But the time ran from the time of the damage.
In that case the House of Lords said that it was time this matter was looked into. The noble and learned Lord the Lord Chancellor appointed this committee as a result of that case. I am glad to see that the fundamental recommendation of the committee is that in cases of latent defect the time should not run against the plaintiff until he knows of the defect or with reasonable diligence could have discovered it. That is a welcome principle which I gladly accept. It protects the individual who has been unorganised, as my noble and learned friend said, whose house falls down after years and he finds that there is a latent defect. Therefore, so far I welcome the Bill.
Another question arises which is almost more important. It could be said to be hardly within the scope of the committee's report. It does not deal with latent defects in building but with negligent advice from an architect or a solicitor which causes no physical damage but only financial loss. One of the most interesting cases recently is where a man made a will to leave something to his sister-in-law, a Mrs. Ross. The solicitor sent the will to the testator to sign and told him to get it witnessed, but to get it witnessed by someone independent. Therefore, the testator had the will witnessed not by Mrs. Ross but by her husband, Mr. Ross. That made the gift fatal and flawed because the Wills Act says that wills must not be witnessed by either a beneficiary or by the spouse of a beneficiary. The solicitor had not told the testator of that. After he died, the poor sister-in-law was done out of her legacy because the solicitor had given the wrong advice about the witnessing of the will.
I am glad to say that in an important judgment the Vice-Chancellor, Sir Robert Megarry, held that the solicitor was liable for that negligence. That was an almost epoch-making decision. But what if that happens 10, 15 or 18 years afterwards; is there to be no remedy?
The committee wondered whether it ought to go into such a matter as the liability of a solicitor giving negligent advice. The committee said:
"we can see no reason in principle why a plaintiff who has, for instance, suffered damages as a result of a negligently drawn lease should be in any worse a position than a plaintiff whose house has defective foundations".
I agree. The committee did not mention it, but it means overruling cases which have stood for over 100 years. For over 100 or 160 years the law said that a solicitor was liable for breach of contract, for his carelessness or for not taking due care, but was not liable in an action for negligence for tort.
That lasted until about 20 years ago. I am afraid we got round that a bit and we held that a solicitor was not liable for breach of contract only but also in tort for negligence. But it is an open question. There was an important long article in volume 100 of the Law
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Quarterly Review a short time ago which said that the House of Lords has not ruled upon that. Is not the solicitor liable only in contract and not in tort? It is therefore an open question. However, the important point I would raise is this. There are two cases, one called Howell v. Young in 1826 and the other called Forster v. Outred in 1985 or 1986, when it was said that so far as a solicitor's negligence is concerned the time runs from when the person acts upon it.
The cases are these. A man goes to a solicitor and says "I want to lend £1,000 on this property. Advise me, is it good security or not?". The solicitor says "yes". After seven, eight, 10 or 15 years, when it comes to realising the security, it turns out that it was bad and the solicitor's advice was bad. The courts have held that in such a case the time runs from the solicitor's initial act. Those cases must, and I hope will, be overruled by this Bill. Regarding solicitors and all those people, the principle should apply not only in regard to latent defects in the making of buildings but also to bad advice by professional men. It is the very important principle of our law that time should run against the man only from when he knows of the defect or damage or ought reasonably to have known of it. That is the general principle.
Perhaps I may say one word about the long stop. I have given some illustrations. Fifteen years would have knocked out the case about which I have already told your Lordships, Dennis v. Charnwood, where the damage was not discovered, or could not be, for 20 years. It would knock out the will case when the solicitor's negligence was not discovered or did not appear for 20 years. Is it to be looked at again? Is there not ground, as my noble and learned friend Lord Silkin said, not for making this long stop absolute but for giving a discretion to the judge in a proper case to extend it, as has been done in the personal injury cases?
With regard to the date of completion so urgently recommended by my noble friends Lord Mais and Lord Kimball, there is a good deal to be said for this. In the Defective Premises Act 1972—that is on contract, not negligence—Parliament has made the time run (I think it is 12 years) from the date of completion, so that it is already on the statute book in regard to defective or bad work from the date of completion. I can well see how the industry—the engineers—would like to see it from the date of completion. I shall say nothing in favour of it, because I should prefer the principles as enunciated and set down in this report.
I raise those small points, but I should like to say this. We ought to make it clear that the negligence we are concerned with here is not only neglect of a common law duty of care but also negligence in breach of a contract to use due care and negligence in breach of building regulations and the like which have to be observed. At the moment the Bill does not deal with those. My noble friend Lord Hacking suggested in the Unstarred Question that we should deal with them. I should have thought that it was a very good idea to make that clear.
Subject to those observations, many of which no doubt would have to be discussed in Committee, I welcome this Bill.
4.15 p.m.
Lord Wilberforce: My Lords, I ask your Lordships' indulgence in order to add one or two words, prompted by the interesting and valuable observations made by noble and "un-learned" Lords who have spoken in this debate. I am referring, if they will allow me the designation, to the noble Lords, Lord Mais and Lord Kimball. I agree that this is a useful Bill and that the report on which it is based is a very valuable report. But I should like to make the point, which I think is inherent in the observations of some of your Lordships too, that the report is based on very narrow and limited terms of reference.
The committee was to consider the accrual of the cause of action and limitation in negligence cases involving latent defects. I treat that, as I think is the reality, as basically referring to building and engineering cases. That is an enormously important area. When we heard the case of Anns in this House some years ago we were told that there were 200 cases of a similar character awaiting that decision. The law reports are full of cases in which it has been discussed, followed, and so on, and not only here. There is a volume of jurisprudence in Canada, the United States, Australia and New Zealand on this very difficult question of latent damage in building cases.
That is the major problem which was being faced by this report and with which this Bill deals. Picturesque cases about the negligent making of wills, and so on, are very interesting, but that is not the main subject with which we are dealing. I think it is a pity that the terms of reference were so narrowly drawn. They prevented the committee, and it says so in its report quite fairly, from considering broader questions of breach of contract, breach of statutory duty and other cases of liability which may arise in this country. But, more important than that—and this is the point to which the noble Lord, Lord Mais, drew attention—they prevented the committee from considering whether there should not be imposed strict liability in these cases, coupled with a short period of limitation. That is what all the Continental laws, to my knowledge, provide for: strict liability with 10-year limitation. It is not only the Continent of Europe; this has gone into Egyptian law, and has been followed therefore in all the Arab states, because it gives a convenient and, on the whole, just way of dealing with these cases. One does not have to prove negligence; one has strict liability.
I therefore agree entirely with what the noble Lord, Lord Mais, said, subject to this. If one is going to cut down the period to 10 years—and there is a lot to be said for that—one must accompany that with the other limb in the case; namely, strict liability and not negligence. This is the trend in the EC. That is what is being recommended in the case of product liability and in relation to this area. We should be going along entirely with the modern trend if we were to do that instead of sticking to our old common law negligence.
I know that there is an inherent, in-built resistance to dispensing with our precious common law of negligence. We love it. Let the juries, if there are still juries, or the judge find it. Prove negligence; there is nothing so fruitful in costs in litigation as having to prove negligence in relation to an act which may have
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taken place five, 10 or 20 years ago, involving the calling of experts, architect against architect, surveyor against surveyor, and so on. Can we not face up to the fact that the beautiful common law of negligence is not a panacea for all evils and come into line with some of these other countries? It is a great pity that the Bill has been drawn on a report which itself was prepared on so narrow a base. However, perhaps it is now too late to do anything about that here.
Coming to the Bill itself, I have one or two observations to make. It does a faithful and good job in carrying out the recommendations of the report. But I should like to draw attention to three points. First, in spite of the terms of the remit, which is to consider the law relating to the accrual of the cause of action, the Bill does not do anything about it at all. The committee's report says that it does not recommend any change in the law by which a cause of action accrues when damage occurs. But Clause 1 of the Bill simply refers to accrual of the cause of action without telling us when the cause of action is to be deemed to accrue. That is followed up in the new Section 14A(1) in Clause 1, which says: "the date on which the cause of action accrued". In subsection (4)(a) it says: "six years from the date on which the cause of action accrued". Then one goes on and adds the additional periods based on the discoverability test.
The noble Lords who have spoken from building experience know perfectly well that it is extremely difficult to find out when the cause of action accrues. Foundations are laid. The right depth is not gone to, according to the regulations. It is on a rubbish dump. The wrong sort of rubble is put there. Perhaps after a couple of years there is a little subsidence and one of the plates holding up the building slips a bit. Does the cause of action accrue then? A few years later perhaps some weeds come up—this is an actual case—through a crack in the cement. Does the cause of action accrue then? A few years later there are some cracks in the wall. Does the cause of action accrue then? The man probably feels, "Well, this is very annoying, but I am not going to do anything about it." A few years later still the building falls down. There is no doubt that there is a cause of action then.
All these cases—and I repeat that there are many of them not only in our courts but in other courts all over the world—focus on this point and find difficulty in the point: when does the cause of action arise? Does it arise on the first and imperceptible damage or does it only arise when the damage occurs which means something in money on which the man is to sue?
I repeat again for clarification that this has nothing to do with the discoverability problem which is separately solved by this Bill by the additional three years. You have to start with the accrual of the cause of action and the Bill does not help us at all on that point. I know that the noble Lord, Lord Hacking, has much to say on this point which is much more valuable than what I have just said. It is a very real point and I am sorry that the Bill does not clarify it.
The second point is that I believe—I may not have understood the Bill fully—that the provisions about concealments is likely to give rise to some difficulty. Your Lordships will find that on page 4, Clause 2(2). It is a convoluted clause; one cannot follow it in the

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ordinary way. Fortunately, if one goes to the report, it will tell you what it is trying to do. What it is trying to do in paragraph (f) on page 28 is to say that the long stop should not apply in cases of latent damage involving fraud, deliberate concealment or mistake. That is surely very right, but does that not open the door to the whole difficulty with which the report has been dealing—deliberate concealment? Many of these cases are ones of deliberate concealment: the builder covers it up; the inspector says, "All right, let it go, it won't be noticed for some time." Do not worry about fraud, but deliberate concealment is a very great reality. It seems that cases of deliberate concealment are taken out of the long stop provision. We shall therefore be faced with a lot of litigation as to whether particular cases are cases of deliberate concealment or not.
The third point is rather a lawyer's point but I cannot refrain from making it. I am very sorry to see that this Bill follows the bad old English habit of making limitation cases a question of procedure. This is an old English absurdity which has been followed for many years. This country is quite unique in it, and we have our affection for these old things. We keep it as a matter of procedure instead of substance. Every European law does the opposite. I thought that we were going to bring our law into line with European law in order to enable us to ratify their Judgments Convention. Here we find this old thing: limitation is a matter of procedure which related to an old doctrine in Dicey and Morris on Conflict of Laws because we wanted to apply our procedure limits to cases arising abroad. We should forget about it; we do not need it here.
I know that the report has something about contribution, which it says may be helped by this particular provision. I was not impressed in the least by that. I think it is just a case of our old conservatism preserving this rule which is out of date, out of line with everybody else, out of line with our own intending obligation to come into line with Europe. I am sorry to see it here again. It is a technical Bill. I am sorry it is so narrowly based. It has one or two things wrong with it, but it represents a laudable attempt within its limits and within its lights to right a definite wrong and remove a definite difficulty.
I apologise for having kept your Lordships.
Lord Simon of Glaisdale: My Lords, may I slip into the gap behind my noble and learned friend Lord Wilberforce just to make one very short technical point. My noble and learned friend the Lord Chancellor explained why the method of drafting by textual amendment of a principal Act—in this case the 1980 Limitation Act—was adopted. No doubt over and above that my noble and learned friend will take note of the criticisms that were made by my noble friend Lord Hacking and my noble and learned friend Lord Wilberforce. My point is a different one. If this sort of method is adopted I had hoped that immediate steps, before the matter ever came before Parliament, would be taken to ensure that the Statutes in Force were so reprinted that the principal Act—the 1980 Limitation Act in this case—was reprinted with the amendment proposed to be made.
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I hope that my noble and learned friend the Lord Chancellor will be able to assure your Lordships that that has been done, and that if it has not been done, immediate steps will be taken to implement that procedure. I know that he is interested in it and has personally pursued the matter. I hope it will be applied in this case.
The Lord Chancellor: My Lords, this has been a lively and variegated discussion. I would like to thank all those noble and learned Lords who have played their valuable parts in it. I will take note of the last point made by my noble and learned friend Lord Simon of Glaisdale about the Statutes in Force, but he knows that I take an interest in the point and will see that it is looked into. One does not, of course, want to anticipate the decision of Parliament at too early a stage.
Going backwards along the list of speakers. I was very interested in what my noble and learned friend Lord Wilberforce had to say about strict liability and the nature of the law of limitation. I am afraid I have to tell him that, although like everything else he says there was immense penetration and perceptiveness in his argument, basically speaking the choice before Parliament at the moment is not about altering the whole nature of the English law of limitation but about the way in which it applies to a fairly narrow range of cases. I would agree with him that if we were dealing with product liability, as we may be—although the matter is not within my departmental functions as Lord Chancellor—in applying the European rule, it is quite possible that we shall be adopting the principle of strict liability over a range of cases probably wider than, or at any rate different from, the range of cases to which this Bill applies.
The Law Reform Committee quite deliberately, and for reasons which it explains in its report, said that it did not want to introduce into our law of limitation in this particular exercise a principle which operated to destroy the plaintiffs right rather than the principle which is already there and inherent in English law: that it limits the circumstances or time at which he can bring his cause of action. It gave reasons for this. I believe them to be sound. I do not, however, feel any sense of guilt about limiting its terms of reference. I was, like my noble and learned friend Lord Denning, concerned in 1980 with a whole range of cases that dealt with latent damage and not with the whole law of limitation that had been the subject of successive amendments and, finally, of consolidation only a year before under the Labour Government.
I was concerned with the sequence of cases—some have been cited by noble and learned Lords—with which the noble and learned Lord, Lord Scarman, and his committee were concerned. The real point that I am trying to make is that if one considers the time that it took the committee to look at the narrow range of issues with which it was asked to deal between August 1980 and November 1984 and the time thereafter that it took me to find a slot in the programme even for that, your Lordships will, I think, probably agree that although what my noble and learned friend Lord Wilberforce says makes, as it always does, a great deal of sense, I was right, faced with the actual practicalities of the situation, to choose the course of action that I did and to which at any rate by now I am committed.

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Assuming that we are not concerned with strict liability, I must now address myself to the other points raised in the debate. The grand debate lay, of course, between the criticism of the noble and learned Lord, Lord Silkin, from the Opposition Front Bench, who thought it arguable that the long stop provision was too short and rightly pointed out that his own house had subsided after 25 years when the long stop provision is limited to 15 years from the breach of duty, and those noble Lords of whom the noble Lord, Lord Mais, was one and my noble friend Lord Kimball was, I think, another, and there were others, who thought that the long stop period should be shortened still further, some with and some without a change in the definition of the point at which the time should run.
I have to return to something that I said at the beginning. I asked the committee to undertake a limited task. It consulted 140 different entities and came up with the 15-year period running from the breach of duty and not from the occurrence of the damage, which is too short to help the noble and learned Lord, Lord Silkin, and too long to please the noble Lord, Lord Mais, and my noble friend Lord Kimball. Someone asked me to make a compromise. But the 15 years is, in fact, a compromise. Any other period that you choose will be a compromise if you are going to have either a limitation period or a long stop period at all. Five minutes before the period runs out a plaintiff, even though slightly unmeritorious, will be able to exercise his full rights. Ten minutes later, when five minutes have passed since the long stop period came down like a guillotine, he will not be able to exercise any rights at all. It is bound to be a compromise and is bound to have an element of arbitrariness against it. This is what limitation laws are about, whatever form they take.
The noble Lord, Lord Hacking, thought that I was overstating the case when I said at the beginning that my experience had been that potential defendants were articulate, well organised and extremely lucid whereas potential plaintiffs were inarticulate, unidentifiable and not represented. It was only through the matter of chance that the noble and learned Lord, Lord Silkin, came to their assistance in this debate. And that was because it had happened to him. He does not happen to be inarticulate, and the last thing that I would suggest is that he is not well organised. It is, however, a pure matter of chance that from the body of the kirk the potential plaintiff was represented at all. I am not at all convinced that the person in the position of the noble and learned Lord, Lord Silkin, would be in the least mollified by what the noble Lord, Lord Hacking, says when he points to large property companies and the Consumers Association. I do not think that they do represent him. It is my duty to put his point of view. The committee took exactly the same view.
I do not wish to dismiss summarily what my noble friend Lord Kimball said. I would, however, ask him to banish from his mind the bogey of American-type litigation in this country and his picture of lawyers with their wigs trailing and their sticks waving, chasing whatever form of spiritual ambulance it may be to get cases started. This does not happen here. I must point
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out that the two major factors in what has led to this evil, for I believe it to be an evil, although I am not so familiar with American law as I am with our own system is, first, the contingent fee which a potential plaintiff's advisers are entitled to charge; and, secondly, the fact that the civil jury continues to exist in my mother's country—that great mausoleum, or museum, of archaic and obsolete English practices—and that civil jurors in America are quite wise to the contingent fee and aim off in their assessment of damages to make allowance for it. Neither of those features, if I have anything to do with it, will occur here. So whatever else may be true about the periods and the particular criticisms made, that one, I do not think, need be taken seriously as yet.
The only other matter that I should like to mention on Second Reading is that those arguing for a shorter long stop were arguing for the following proposition. Damage occurs on either view. The question, as so often in civil law, is on whose shoulders the loss is going to fall. Their proposition, if I may put it bluntly, plainly and, I hope, not unpleasantly, is that it should fall on the victim and not on the tortfeasor. This is a proposition where the burden of proof lies on those who wish to place it there.
What I have done, and what the committee has done, for the potential defendant is to give him a long stop with certainty and provide that the long stop should not run from the occurrence or discoverability of the damage, as the limitation period does, but from the actual breach of duty. That may mean a great deal less than the 15 years which would have run had it been made to run from the date of damage or any other period. We shall have to return to these matters in Committee. I should like now to conclude my remarks, looking forward to any further debates that we may have later.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Local Government (Temporary Provisions) (Northern Ireland) Order 1986
4.38 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell)The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell) rose to move, That the order laid before the House on 13th February be approved.
The noble Lord said: My Lords, I beg to move the Local Government (Temporary Provisions) (Northern Ireland) Order 1986, which was laid before this House on 13th February.
Your Lordships may be aware that the order was made at a meeting of the Privy Council on 12th February this year under the urgent procedure as provided for in Schedule 1, paragraph (1)(4)(b), to the Northern Ireland Act 1974, by reason of urgency and without a draft having been approved by this House. The urgent procedure requires the order to be approved by resolution of your Lordships within 40 days after the date on which the order was made, if the order is to remain in force.
Your Lordships will be aware of developments in Northern Ireland during the past few months and that since September 1985 Unionist-controlled district

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councils in Northern Ireland have been adjourning or even suspending business, firstly, in protest about the presence of Sinn Fein members on councils, and now because of the Anglo-Irish agreement. By the end of January, or even early February this year, it was clear that the adjourning of councils would put at risk the making of district rates for the financial year 1986–87.
Perhaps I should explain to your Lordships that, under the provisions of local government legislation in Northern Ireland, there are three specific functions which must be exercised by councils themselves and cannot be delegated to either officers of councils or to a committee of the council. These functions relate to the making of a district rate, the borrowing of money and land transactions. The failure to make a rate is a clear indication that Unionist-controlled councils wish to intensify their action against the Government's policy. In such circumstances, the Government's first priority has to be the protection of local authority services and jobs, and it was for this reason that on 12th February this year the Privy Council was asked to make the order before us this afternoon.
My honourable friend the Northern Ireland Minister responsible for local government made clear at that time that (I quote shortly):
"this precautionary step is being taken because the Government is not prepared to allow citizens and ratepayers in any district council area to be deprived of those services and facilities to which they are entitled, nor to allow the jobs of council employees to be put at risk through the actions of councillors".
That is what my honourable friend the Minister responsible for local government in Northern Ireland made clear earlier this month.
There are default powers already existing in local government legislation in Northern Ireland. However, these powers are cumbersome as they require a failure to exercise a function or a breakdown in service before action can be taken and, as your Lordships will be aware, such action may take several weeks to complete. Such powers are therefore insufficient to ensure an uninterrupted delivery of local services. The new powers by contrast will provide government with the ability to respond flexibly and in a measured way to disruption of local government.
As it has been indicated by some Unionist councillors that they wish to cause maximum disruption to local government and as the Unionist-controlled councils which have been refusing to meet normally are responsible for providing services to approximately 80 per cent. Of the total population of Northern Ireland, it would be a negation of duty by the Government not to take these necessary additional powers to minimise the damage that could be done either to the public or to the employees of councils. That is the main reason why the Government are seeking the approval of your Lordships to the order before us this afternoon.
Despite the assurances by the leaders of the main political parties involved that protest action against the Anglo-Irish agreement would be constitutional and within the law, noble Lords should be aware that we now have a situation where a majority within Belfast City Council has deliberately defied the rulings of the High Court; where 18 councils including Belfast have deliberately defied a direction from the Department of the Environment to make a district
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rate, having earlier already decided to break the law by not making a rate by the due date; and where these same councils continue to adjourn or suspend meetings thereby putting at risk services in these council areas.
I now turn to the main provisions of this order. Article 3 provides that, if it appears a council has failed or is unable or unwilling to exercise duly and effectually any of its functions, then the Department of the Environment may make an order which would suspend that council and appoint a person or persons to assume responsibility for its functions. It is important to emphasise that, since this is a measure of last resort, the Government would also want to ensure that any application of these powers would not necessarily be permanent. Your Lordships will therefore see that there are provisions for any order so made to be revoked if circumstances subsequently changed and councillors were willing to resume normal business.
4.45 p.m.
It is also important to draw your Lordships' attention to paragraph 2 of Article 3, as this will give the power for the suspension from all other public bodies to which a councillor has been appointed or elected by virtue of his membership of a district council. It would be anomalous to suspend district councillors from their council activities and not at the same time consider their suspension from those other public bodies on which they purport to represent local interests. The remaining provisions in Article 3 are consequential to the suspension of councillors and their replacement by other persons. These consequential provisions will ensure that those persons appointed to look after the councils's interests have the full authority of the law to continue to exercise all functions previously exercised by the council.
Paragraphs (7) and (8) of Article 3 are designed during the period of direct rule to preserve the position of the Assembly if legislative powers were devolved to it. While direct rule continues, they are modified by Schedule 1 to the Northern Ireland Act 1974 which suspends the requirement to lay such orders before the Assembly in its present consultative form. Your Lordships will see from Article 4, at the foot of page 3 and over the page, that the legislation shall remain in force until 31st May 1988 but could, if necessary, be extended for periods not exceeding one year until 1991: that is, for a five-year period in all.
The Government will not be diverted from their objective of safeguarding those services in Northern Ireland which are a fundamental entitlement in any society. The Government have been patient over a period of months during which local councils have not been meeting, but the stage has now been reached where it has proved necessary to seek these additional powers on a contingency basis in order to be in a position to secure the provisions of local authority services and to protect jobs. I hope that these powers will not have to be used, but as a measure of last resort the Government are prepared to do so.
It is worth reminding Unionist councillors that the services provided by their councils, such as health inspection, burials, building control, refuse collection and the operation of leisure facilities, are for the

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benefit of all sections of the community. It is the Government's wish that these important local services should remain under the control of local elected representatives, but if this proves to be impossible the Government must be certain that they can take steps to protect innocent members of the community.
I have explained the background against which the Government found it necessary to introduce these new powers and I have given a brief summary of their intent. I am sure that your Lordships will agree that the Government's action is justified in the circumstances and will recognise that the powers would be used only if absolutely necessary. I commend the order to the House.
Moved, That the order laid before the House on 13th February be approved.—(Lord Lyell.)
Lord Prys-Davies: My Lords, regrettably the choice has been made by the Unionist-controlled district councils to adjourn meetings of their councils and to refuse to strike a rate for 1986–87 in protest against the Hillsborough agreement, although that agreement has been overwhelmingly supported by Parliament. We have heard from the Minister—indeed, we have read in the newspapers—how councils were directed by the Department of the Environment in Belfast to carry out their functions and to strike a rate. They defied the directive. This policy of defiance and obstruction is unlawful. Not only is it unlawful, but it is extremist and irresponsible—irresponsible because it puts important services (which the Minister has mentioned) and jobs at risk. Given this situation and this escalation, we agree that the Government have no alternative but to introduce this order, which will give them the statutory authority to take over all the functions allotted by law to the district councils should this become necessary. That caveat has been entered more than once by the Minister in the course of his speech this afternoon.
If the policy of opposition to central government policy which has been adopted by the opposition should lead at some future date to the implementation of this order, that would be an ironic consequence for Unionist councillors to impose upon their communities. I understand that the functions of the disctrict councils in Northern Ireland are relatively modest, and are far fewer than those discharged by the district councils in England and Wales. Nevertheless, the services carried out by the district councils are important and cannot be allowed to break down. The dead have to be buried; refuse has to be collected; drains have to be cleaned; and streets have to be swept. They are the requirements of a civilised community.
If one day in the future the district councils have to be run by commissioners appointed by the Department of the Environment and without accountability to the local community instead of by democratically-elected representatives who have walked out on their councils, that would be the choice of the Unionist councillors. In those circumstances, the Unionist councillors cannot fairly complain of dictatorship by the Department of the Environment, and yet this accusation is already being intemperately hurled by the councillors and others at the department. This is sheer propaganda, whether consciously or otherwise, to mislead the public.
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It is sad that councillors who have served their wards and have been prominent in public life for years should now walk away from their councils. One would have thought that to remain in control of their councils, watching local expenditure and the quality of local services, would at least ensure accountability of government at district level to the local community. But this decision to defy the department, the decision to adjourn their councils, suggests deep-seated frustration, or possibly trauma, felt by the Unionist leaders. That I certainly acknowledge. We would not from this side of the House underrate the frustration or the trauma. But to the Unionist leaders we would say that they do not best serve their cause by taking the law into their own hands and effectively suspending the councils which were entrusted to their care by their electorate.
For all those reasons we approve the order. Indeed, this is the only practical answer available to the Government if services and jobs are to be protected. We know only too well that some 150 jobs with the community groups in Protestant areas are already seriously at risk. This is the cause of anxiety in the Protestant community. Is it possible, as it becomes clearer that the policy of non-co-operation puts jobs at risk, that the Unionist councillors will have second thoughts?
The Minister has explained to your Lordships' House that the decision to introduce this order has not been hastily approached. Councils were stood adjourned generally in September last, but it is only now that the Government bring the order before the House. This may be an indication—I think that the noble Lord hinted at this—that the order will not be hastily implemented. But this is not to suggest that the Government should wait until the point of breakdown of services is reached before they exercise the powers which this order gives them. With those few comments, and with a certain degree of sadness, we approve the order.
Lord Donaldson of Kingsbridge: My Lords, the noble Lord, Lord Prys-Davies, speaks of sadness. That is what I feel intensely at the moment. This seems to me to be the first sign after the general strike, which was an explosion, of something which may be very bad indeed for all of us—so much so that I feel impelled to pause for a moment to look at what has happened to the loyalty to this country of the loyalist majority in Northern Ireland: our friends and compatriots who are now deliberately trying to reduce their part of the United Kingdom to anarchy.
They are doing this because they feel unable to accept a minimum step towards treating the minority community as citizens with equal rights to their own. I think it is worthwhile trying for a moment to explain—I say to explain to them, but I think it may be too late—the logic of the intense disapproval of their attitude on the part of so many British citizens on the mainland. I shall give my own version of this, but I think it is widely shared in the Alliance Party, the Labour Party, and in many parts of the Tory Party.
I believe that what is important for Northern Ireland in the long run is not whether it finally consents to join the South, but whether it can manage its own affairs so that the whole population turns against the senseless

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years of brutal and often cowardly killing by the IRA. Only with the help of the whole population can this be achieved, and it will take years of determined government. To obtain this consensus we must put right the most obvious of the many complaints made by the minority community of unequal treatment; of no say in government; of secretarianism in the RUC; of discrimination over housing, employment, and so on. The Unionists freely admit the existence of these complaints, though they claim that they are mostly unfounded. We on the mainland do not agree. We think there is a great deal which must be altered if the Province is to remain a part of the United Kingdom.
During the last year both sides have agreed in writing in the New Ireland Forum and The Way Forward that they must live peacefully together, which means respecting the views and aspirations of the other side even while not agreeing with them. I believe that the only way forward is through devolved government with both sides sharing power, which they showed in 1974 they could do very well if they could be protected from the attacks from the hard men on the Unionist side. The Government are pledged to work for this and we shall support them, but first agreement must be found on the manner of partnership in the new Assembly.
The SDLP sadly failed to come in at the last attempt. They insisted that certain points must be conceded first. One—and for the Unionists the most difficult—was some recognition of what has been called the Irish dimension. The demand was for joint sovereignty, or at least joint authority between the British and Irish Governments. Our Government, in my opinion rightly, refused firmly to agree to either. The most they would concede was joint discussion to take place in the standing conference, with no powers of action at all. All powers would remain with the British Government, but clearly they could be influenced in their action by such a conference. The concession was so small that Dr. FitzGerald was bitterly attacked by Mr. Haughey for agreeing to it.
It is to destroy this function of consultation, which to me seems entirely harmless, that the Unionists called the one-day strike. They failed to prevent their supporters from acting with brutal violence, much to their shame, and are now proposing to paralyse local government by refusing to do their duty as councillors. Their intention, openly stated, as the Minister said, is to produce such anarchy that government is impossible and to do it by imposing real hardship on the people by stopping, or trying to stop, many services on which so many depend not only for their comfort but for their living, and, indeed, as the noble Lord said from the Front Bench, for their dying.
5 p.m.
It seems to me to be unforgivable to behave like this over an issue which involves no transfer of authority from the Government and which was conceded to encourage Mr. John Hume to persuade the SDLP to discuss terms for joining the assembly. If it could have been accepted, we should by now have had a devolved government and with it the gradual transferance of subjects to it from the conference terms of reference. This, in my opinion, is the key to all future progress.
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As it is, we are confronted with legislation to deal with the councillors' strike.
There is a gleam of hope. The Unionist leaders have, it seems, suggested further talks, though I am not sure how firm this suggestion is. Certainly the Prime Minister has made it clear that she wants them. Mr. Hume, none too soon, has said that he will talk to anyone at any time, though I beg him to be generous, having achieved so much of what he wants, and to help the Unionists to co-operate by not sticking on detail. Something therefore may happen. But those of us who, like myself, have always sympathised with the determination of the Unionists to remain British are deeply shocked. I believe that this agreement, far from being a step towards a united Ireland, could be the last chance for the Unionists to maintain their present position as full British citizens.
I turn at last to the order before us. Though I have spoken for myself up to now, I speak for the Alliance parties without equivocation in supporting it.
Lord Fitt: My Lords, it is an indication of British insensitivity to the Irish situation that we are discussing these orders on St. Patrick's Day. One would have thought that there could have been a more appropriate time, but perhaps there was an emergency situation. However serious the first order may be, it will be even more insulting that on the next order we shall be discussing the mental health of Northern Ireland, which, I think it would be conceded, has been seriously affected by the Anglo-Irish Agreement.
I have been a Member of this House for a few years now; I was a Member of another place for many years. I recall when the boot was on the other foot, when I was the leader of the minority population. As I have said on occasions in this House, the great ability of the English has for many years been to compromise: an Ireland that does not exist, an Ireland where there are victories and defeats. I recall vividly in 1971 when Irish nationalism met the total opposition of the Northern Ireland Parliament, supported by the British Government on the introduction of internment. What did the Irish nationalist population do? They withdrew from all the local authorities on which they were represented. They called on the nationalist members of local authorities, as they were then constituted, to absent themselves. They called on the nationalist population to boycott and abstain from the institutions of government because the Catholic nationalist population saw in those days that they were being victimised by the institutions of government.
In 1986, 14 years after, we find that the wheel has turned full circle and the Unionists now feel how the nationalists felt then. The history is that the Unionists in Northern Ireland have no real history of rebellion. Throughout the centuries, particularly in these last 100 years, they have succeeded in imposing their will on a succession of British governments by threatening what they would do: in 1886, 1903, 1910, 1912, 1914 and 1974. But now they are faced with a British Government who have decided, rightly or wrongly, to have the Anglo-Irish Agreement. The Unionist or Protestant in Northern Ireland does not know what to do in this situation. He gets out his newspaper cuttings or goes to the library and asks, "What did the Nationalists do when they were in a situation such as

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this?" He sees that Gerry Fitt was leader of the nationalist party. When things were not going the way that Gerry Fitt for the SDLP wanted them to go, he advised his councillors to withdraw from the local authorities. That is what I have repeatedly said in this House.
There are two sections of the community in Northern Ireland. They are motivated by the same impetus in their opposition to what they feel to be an injustice. When the nationalist minority felt that they were being unjustly treated, they withdrew from public life. Now the Unionists feel that. Whether I agree that what they feel is right or not, they feel that they are being unjustly victimised.
This order is before the House because the Unionists are in a majority in Northern Ireland. When the nationalists withdrew their councillors from the local authorities in the 1970s, the Unionists—the British Government since 1972, since direct rule—did not have to take any real action such as this, with the exception of one case. The withdrawal of the nationalist councillors from local authorities did not have the devastating effect that the withdrawal of the Unionists will have, because the Unionists hold 18 out of 26 seats. The nationalists, being a minority, did not have that punch.
This is not the first time that this has been done. There was the famous, infamous or notorious Deny city council (Londonderry city council, as it then was) which over the years had gerrymandered itself in favour of the Unionists against all the laws of natural justice, and the overwhelming majority of the people living in the city of Derry were Nationalists and opposed to unionism. But because of the vicious system of gerrymandering, the Unionists had totally unjustly controlled that town. The British Government had no hesitation then, and I applauded them for it at the time, in abolishing the Londonderry city council and putting in commissioners. The commissioners received the support of the overwhelming population, even of the Unionist population, in the city of Derry when this happened. If the Government are forced to act in this, people in local authorities may feel that they would rather have commissioners then councillors.
One has to take into consideration the psychology of local authority councillors. I was one for 25 years, and so I have half an idea of what it is all about. There is nobody in political life in this country who feels himself to be more important than the local councillor. When they are fighting elections in Northern Ireland, you would almost think it was a presidential election, and particularly under PR. You get the strangest candidates, the strangest elections and even more strange results. And these people are now—or, are they? I ask them through this House—prepared to put their positions of importance into jeopardy. Would the Government, for example, consider taking action against those councils in Northern Ireland who have refused to strike a rate, to surcharge them and to disqualify them from serving for five years? Would it be possible for the Government to do that? They have done it in Lambeth and at Liverpool. Would the Government consider
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doing that in the 18 councils throughout Northern Ireland?
How many men would you disqualify in that situation? So far as concerns the Unionist councillors who have been elected, it has already been said here by the Front Bench on this side of the House that many of them have given what they consider to be and what their own community considers to be sterling service throughout the years. But because of their deep-rooted feelings of insecurity and opposition to this agreement, they have withdrawn their services from the local authorities.
Having said what I have, I think it is right that the Government should take these emergency powers. I am not a representative of West Belfast now; I am not an elected representative. But over the past number of days I have received numerous requests from the community organisations in West Belfast, the constituency which I formerly represented and which is now allegedly represented by a pseudo-IRA man. He cannot make any plea to this Government. So the people who rejected me at the polls—and I have no doubt that they are some of the people who are writing to me now—are asking for me to put forward their point of view on what may happen before the end of this month. They fear that there will be many people in the community associations, in the graveyards, in the cleansing departments in the city and constituency which I formerly represented who, unless emergency powers are taken, will find themselves out of a job with no guarantee as to when and where their jobs will be reinstated.
I say to the noble Lord that I do not think that anyone in his right mind could oppose this legislation because it is taken in an emergency situation. But while saying that, I go along with what has been said by my noble friend, Lord Donaldson. He perhaps cannot see as readily as I do the fear that exists among the Unionists, but he recognises that it is there. He has made an appeal here today, and I would reinforce that appeal, that to allay the fears and the suspicions that exist in the minds of the Unionist population, and in this case in the minds of their local authority representatives, the SDLP should make a further reciprocation. They should keep trying to do something to allay the fears that exist within that Protestant community.
There are two sides to the conflict in Northern Ireland and I have seen the two sides. That is perhaps why I was not the most successful of politicians in Northern Ireland. It is very easy to see one side and guarantee your own success. Incidentally, my Lords, just think of the term "emergency"! How many emergency legislations have we had since the advent of direct rule in 1972? How many emergency legislations did we have since 1922 in the form of the Special Powers Act in Northern Ireland?
It is necessary to bring forward this legislation. But I say do not implement it too hastily. Do everything that you can to bring those councillors back to what they have been regarding as their duties; because it is only by doing that that you will make this type of legislation unnecessary in the future.
5.15 p.m.
Lord Lyell: My Lords, we are immensely grateful for the interest shown by noble Lords who have

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spoken and to other Members of your Lordships' House who have listened to what I believe has been a very succinct summing up of the entire political scene in Northern Ireland by the noble Lord, Lord Fitt, and certainly, all the very worthwhile and valuable contributions that have been made by both the noble Lord, Lord Prys-Davies, and the noble Lord, Lord Donaldson.
Perhaps I may first of all thank the noble Lord, Lord Prys-Davies, for his forthright support for the measures which we have outlined in the order. I think that this is a common theme, certainly in the preliminary remarks that I made and in the entire debate this afternoon, that these powers which we have in the order before us are to be used very much as a last resort.
The noble Lord, Lord Prys-Davies, mentioned this defiance of councillors in showing their defiance of the Anglo-Irish agreement and the noble Lord also stressed the importance of the functions of local councillors in Northern Ireland. I think he mentioned the word "dictatorship"—the cry of "dictators" and "dictatorships" that came towards the Government and to the Northern Ireland Office. Your Lordships who are acquainted with Northern Ireland will realise that that is particularly mild. When people call me a dictator, I tend to think that they have been off their food or are ill because we expect much stronger meat than that. Nevertheless, I take the point that was raised by the noble Lord, Lord Fitt. Nobody who is interested in Northern Ireland, who visits there or who lives there, as does my noble friend behind me can fail to be aware of the very strong feelings in regard to the Government and to the political situation which exists in Northern Ireland at the moment.
The noble Lord, Lord Prys-Davies, raised one particular point which has caused concern here, in another place and in Northern Ireland. He touched on what we call the voluntary groups or voluntary bodies. I shall try to reassure the noble Lord and your Lordships who are interested in these groups. I understand that a meeting of Belfast City Council has been called for 27th March when the matter of grants to voluntary bodies will be included in the agenda. I am afraid that this is very conditional and hypothetical; nevertheless perhaps it might be hopeful.
The Government will be monitoring closely what decisions emerge from that meeting. Therefore, it will be premature for me to comment in advance upon what measures the Government might consider to ensure continuity of support for all those bodies who might be at risk. Of course, that does not just mean those bodies in Belfast. It would also cover the voluntary groups in other council areas.
Lord Donaldson of Kingsbridge: My Lords, before the noble Lord leaves that point, I have sent him a copy of a letter today. I see that the noble Lord indicates that he has received it. Will he keep me advised as to what action happens as a result of these meetings and let me know whether it applies to the letter I have sent to him?
Lord Lyell: My Lords, the noble Lord, as always, is lightning fast, rather like the Irish threequarters on Saturday afternoon, and I am pleased that the noble Lord is keeping up their momentum. I have received
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his letter. I am afraid that I have read it but I cannot comment yet. I shall certainly look into it and shall be in touch with him. If there is any specific point, then we shall be able to cover it when I reply and keep the noble Lord informed. But the thought that I had about our understanding that there will be a meeting of Belfast City Council is hedged, as the noble Lord of all people will be aware, with the usual Government caution. However, I take note that I have received a very valuable letter from the noble Lord and we shall deal with it expeditiously and in detail.
In reply to the noble Lord, Lord Prys-Davies, I reaffirm what I said about voluntary groups. Any appointment of a commissioner would be only as a measure of last resort, and the grant-aiding of local community groups is in itself a permissive power available to councillors. These issues, in the first instance, would be for local councillors to consider, and of course commissioners are very much a long stop.
We are grateful for the forthright support of the noble Lord, Lord Donaldson, for the measures in the order. Your Lordships will be aware that the noble Lord was a distinguished precursor in my present office and he is fondly remembered in many parts of the Province. Wherever I go people keep on asking after him and hoping that he is in good health. I have to remind everybody that those of your Lordships who come to speak on Northern Ireland matters here are in very good health.
The noble Lord referred to the sad events of 3rd March. All that I would wish to do this afternoon is to reiterate what I said then. The pictures sent by electronic media and also in printed form throughout the world showed what the noble Lords, Lord Donaldson and Lord Fitt, and my noble friend know, that that is not the true face of Northern Ireland. This was an aberration. It was particularly sad, and I would hazard a guess—if one is allowed to do that from this position—that what happened on that day is slowly being recognised as most unhelpful to everything that all of us want in Northern Ireland. I am of course very grateful for the support that the noble Lord, Lord Donaldson, gave to the order.
The noble Lord, Lord Fitt, speaks with considerable authority, since he has had a long history of service to Northern Ireland, and all your Lordships will appreciate everything that he did in Northern Ireland and continues to do in your Lordships' House. He mentioned that the Unionists would rush along to the public library and might be tempted to follow the boycotting events of 1971 and 1972. I would hazard something stronger than a guess that the Unionists would be very foolish if they did that. What they probably should be doing is reading the newspapers and perhaps following the noble Lord, Lord Fitt, in his other, more profitable, activities which will be familiar to your Lordships. Perhaps if the Unionists were to follow the noble Lord's record in that way, they might be a great deal healthier. However, I do not think the Unionists need any lessons in obstruction or foolish tactics from what happened in 1971 or 1972.
The noble Lord, Lord Fitt, mentioned the word "surcharge". The law in respect of surcharge in Northern Ireland is quite specific. A local government auditor may apply to the court for a declaration that

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any item of account is contrary to law, and if the court makes such a declaration the person or persons responsible for authorising or incurring such expenditure shall be liable to repay the amount in question. Also, where it appears to a local government auditor that a loss has been incurred or a deficiency caused by the wilful misconduct of any person, he shall certify that the amount of the loss or deficiency is due from that person.
Certainly it would not be proper for me to speculate on whether the present action by councils will result in penalties of this nature. The law demands that these are matters for the local government auditor, in his quite independent capacity, to consider. I would stress to your Lordships that there is no clear parallel with the events which took place in Liverpool. We hope that this question of surcharge will not arise, but it is not something that we could help with, especially this afternoon, because it is a question for the local government auditor in his independent capacity. His duties and powers are laid down by statute and I think the noble Lord, Lord Fitt, would agree that we should leave it there.
I think I have said enough. We are all immensely grateful for the support that has been received for this order. I stressed to your Lordships that it is a long stop power, but we feel that it is prudent and indeed necessary to have the order.
On Question, Motion agreed to.

Mental Health (Northern Ireland) Order 1986
5.26 p.m.
Lord Lyell Lord Lyell rose to move, That the draft order laid before the House on 28th January be approved.
The noble Lord said: My Lords, I beg to move that the Mental Health (Northern Ireland) Order 1986, a draft of which was laid before the House on 28th January this year, be approved.
The order, as your Lordships will see, deals with the status and legal position of the comparatively few people suffering from mental disorder who need special protection or control either in their own interests or in the interests of others. It replaces and amends the existing mental health legislation which is contained mainly in the Mental Health (Northern Ireland) Act 1961.
Although this Act has worked very well, there have been considerable changes in mental health service structures and practices in the 24 years since it came into force. These include such developments as the advent of the open door hospital, the shift to community care and the introduction of multidisciplinary team management. Public attitudes have also changed, as I think your Lordships would agree. There is a much greater emphasis on individual rights and an increased demand for legal safeguards to protect those rights. The new proposals are intended to bring the mental health legislation into line with these changes and to provide a statutory framework which will not frustrate future developments.
The order gives effect to the proposals of an interdepartmental working group. These proposals are
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largely based on the recommendations of the MacDermott Committee. This was an independent committee set up under the chairmanship of a distinguished member of the Northern Ireland Judiciary, Mr. Justice MacDermott, to review the mental health legislation there. We are deeply indebted to him and his committee for providing us with such a well-formulated blueprint for new legislation. Some of the proposals in the order reflect the changes made to the mental health legislation in Great Britain and will perhaps seem familiar to those of your Lordships who participated in the long and intensive debates on the English and Scottish amending Bills.
The main effects of the order are to improve safeguards for people compulsorily detained in hospital or placed under guardianship, to clarify the position of staff looking after them and to remove uncertainties in the law. However, the order is not a new statement or philosophy of the law. The 1961 Act established a number of important principles. Among them are those which require that where care and treatment in hospital are needed, they are given on a voluntary basis wherever that is possible and that, in those few cases where compulsion is necessary, it should be subject to very strict controls. I doubt whether any of your Lordships here today would challenge those principles. The order, although it introduces many new provisions, certainly does not seek to challenge them. On the contrary, it seeks to ensure that they are implemented in a better way.
Like the Mental Health Acts in England, Wales and Scotland, this is a very long and in parts complex piece of legislation. I am sure that your Lordships would not wish me to deal with each article individually, so perhaps I may direct your attention to the main provisions, especially to the ones which are new, and to those which vary significantly from the 1961 Act. If your Lordships wish to raise any points about the provisions contained in the Act, I shall do my very best to respond to them. If I am unable to do so this afternoon, I guarantee that we shall be in touch, expeditiously, in writing. I am sure that your Lordships appreciate that the measures are long and detailed. I shall do my best.
If we turn to Part I, we find that it deals with definitions. The first change here is the introduction of a definition of mental illness. This is the first time that mental illness has ever been defined in United Kingdom legislation, and the intention is to identify clearly, for the benefit of patients and staff alike, those characteristics of mental illness which justify the use of compulsory powers.
The second change is the replacement of the term "arrested or incomplete development of mind" by the term "mental handicap". Both terms refer to broadly the same group of people, but the latter reflects current medical perceptions of the nature of mental handicap by emphasising the importance of social functions, such as the ability to eat, control one's bodily functions, learn new skills, recognise hazards or exercise reasonable judgment and foresight.
The lack of these abilities is now considered to be as much a part of mental handicap as low intelligence, and their inclusion as essential elements in the

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definition is intended to make it clear that a person who is intellectually dull but otherwise normal is outside the scope of the order.
Another change is the disappearance of the expression, "person requiring special care" and the use of the synonymous term, "severe mental handicap" to identify those mentally handicapped people who may be placed under guardianship or who are protected against sexual abuse. The difference between "mental handicap" and "severe mental handicap" is one of degree. It is entirely a matter for clinical judgment as to whether a person exhibits "significant" or "severe" impairment of intelligence and social functioning.
A very important change is the introduction of "severe mental impairment" as a new sub-category of "mental handicap". This is defined in the same way as "severe mental handicap" but includes the additional element of abnormally aggressive or seriously irresponsible conduct. The effect of that is to make it impossible for mentally handicapped people to be compulsorily detained in hospital for treatment unless their handicap is severe and they present abnormally aggressive or seriously irresponsible behaviour. In that way, the new category distinguishes the small number of mentally handicapped people who need to be detained in hospital under long-term powers, from the majority who do not. It ensures that mental handicap, no matter how severe, can never constitute by itself a sufficient ground for long-term detention.
There is a body of opinion which continues to insist that compulsory powers are not needed for the mentally handicapped, and that they should therefore not be included in the legislation at all. I understand and appreciate the strength of the conviction with which that view is held. Most mentally handicapped people can and should receive the care and training that they need on a voluntary basis. Nevertheless, the weight of professional opinion is that there is a very small minority of mentally handicapped people, without any other mental disorder, for whom compulsory powers are needed, either in their own interests or for the protection of others.
Part I also introduces the concept of a substantial likelihood of serious physical harm as one of the two criteria for compulsory admission to or detention in, hospital. The purpose of this is to ensure that all decisions to admit or to detain a patient are based on objective evidence that the patient is likely to be dangerous either to himself or to other people.
The new criterion is of course rather more restrictive than the one in the 1961 Act which it replaces—that detention should be in the interests of the patient's health or safety or for the protection of others. That is precisely why it is being introduced. Compulsory admission or detention is a very serious step involving deprivation of liberty and the restriction of individual rights and freedom of action, and it is clear from the responses received during the consultation period that the prevailing view in Northern Ireland is that it can be justified only in extreme circumstances.
Part II deals with compulsory admission to hospital and reception into guardianship. It makes a number of important changes to the existing provisions. A new system of admission is introduced by Article 4. Central
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to this is the period of assessment. All patients who are compulsorily admitted to hospital will be held initially for an assessment period of up to 14 days before a decision is taken as to whether they should be detained under the long-term powers. During that period there will be a precise diagnosis of the patient's mental state and a comprehensive assessment of the need for compulsory admission. This period is half that of the assessment period under the English Act, but it is generally accepted by professionals in Northern Ireland as long enough to enable a decision to be reached.
Article 12 of the order provides for the assessment period to be followed by detention for treatment. The use of the term "treatment" makes it clear that the purpose of such detention is therapeutic rather than custodial. The authority to detain a patient for treatment lasts for six months and then it must be renewed for a further six months, after which it must be renewed every year, thereby halving the period for which a patient may be detained under the 1961 Act without a renewal of authority.
The order authorises psychiatric and mental handicap nurses of certain classes, which will be specified in regulations, to restrain patients from leaving hospital for up to a maximum of six hours, until a doctor can be brought. That power is similar to that in the English Act and has been welcomed by the nursing profession because at the moment nurses have to rely on common law powers which, because of their uncertainty, they are reluctant to use.
Only very limited use has been made of the guardianship powers under the 1961 Act. To encourage greater use of that useful and less restrictive alternative to detention in hospital, the powers of the guardian are more clearly defined and restricted to those which are essential for ensuring that patients receive the medical treatment, social support and, above all, the training that they require.
In addition, it will no longer be possible for children under 16 to be received into guardianship. Instead, they will be dealt with under the children and young persons legislation or, if appropriate, by voluntary admission to hospital. In future, guardianship will have to be in the interests of the welfare of the patient rather than simply in his interests. That will clarify the purposes of guardianship and it further restricts the powers.
Finally, the authority for guardianship must be renewed at the same intervals as the authority for detention for treatment—at the end of the first six months, at the end of the second six months and subsequently, for one year at a time. We must obviously look at the objections of nearest relatives. The nearest relative continues to have the right to veto an admission or guardianship, but in an emergency the order now allows a patient to be admitted to hospital or to be received into guardianship against the nearest relative's wishes if the approved social worker making the application consults a second approved social worker.
Part III deals with the group of patients which is called offender patients. It deals with the admission to hospital of persons who are concerned in criminal proceedings or transferred to hospital from prison. It

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follows very closely Part III of the 1961 Act, but it introduces a number of changes which reflect amendments to the law in England.
In future, courts will be allowed to send accused persons to hospital for limited periods of time to be examined or treated for mental disorder before taking a final decision in their case. Courts will continue to have the power make a hospital order, regardless of the availability of a hospital place, but the health and social services board responsible for the administration of the admitting hospital will be given an opportunity to make representations to the court before an order is made.
Restrictions on discharge will only be imposed where it appears to be necessary,
"for the protection of the public from serious harm".
Finally, restrictions on the discharge of patients who have been transferred to hospital from prison will end at the earliest date of release, had the patient stayed in prison and earned full remission, and not at the date his sentence ends, which is the present case.
Part IV is new and clarifies the circumstances in which treatment can be given without consent. The 1961 Act does not give any express authority to treat patients. It had been assumed that the authority to treat detained patients without their consent was implied, but this assumption is no longer valid. These new provisions are very similar to the corresponding provisions in the English and Scottish legislation and the issues involved were thoroughly debated during the passage of the amending Bills.
Part V of the order brings together the provisions relating to the Mental Health Review Tribunal and introduces a number of new measures designed to strengthen it and to increase the opportunities for patients to have their cases considered by it. The right to apply to the tribunal is extended to patients under 16 and to offender patients with restrictions on their discharge or who have been conditionally discharged. Any case which has not been considered for two years will be automatically referred to it for review and, if appropriate, a hearing by the responsible health and social services board.
The powers of the tribunal are widened. It will share with the Secretary of State the power to discharge restricted patients. To allow adequate time for appropriate after-care arrangements to be made, it will be able to direct a patient's discharge on a future date. It will also be able to recommend leave of absence, transfer to another hospital or transfer into guardianship to facilitate future discharge. In addition, the restrictions on the numbers of members who may be appointed to the tribunal are lifted to enable it to cope with the increased workload.
Part VI provides for the establishment of the Mental Health Commission to protect the interests of the mentally disordered. The commission will be an independent multi-disciplinary body of not more than 12 part-time members, including the chairman and vice-chairman. Unlike its counterpart in England and Wales, the Mental Health Act Commission, the new body's role will not be restricted to detained patients. It will cover voluntary patients, people in guardianship, people in residential accommodation and, indeed, anyone suffering from mental disorder.
The commmission will monitor the working of the order, investigate complaints, visit patients, make reports to the appropriate authorities and, very importantly, it will have a discretionary power to require these authorities to provide it with information about the action they have taken as a result of any report. Other functions of the commission include the appointment of independent doctors and other persons to verify consent and to provide second opinions for the purposes of the consent of treatment provisions; the appointment of the doctors required for the admission, detention and guardianship procedures under Part II; and the review of decisions to withhold patients' mail. I am aware of the excellent work done by the Mental Health Act Commission for England and Wales, so ably led by my noble friend Lord Colville—I do not see him in his place—and by the Mental Welfare Commission in Scotland. Part VII deals with the registration of private hospitals which are the equivalent of mental homes in England and is a re-enactment of Part IV of the 1961 Act. Part VIII is concerned with the management of the property and affairs of mentally disordered patients and replaces the existing law on this subject, mostly contained in the Lunacy Regulations (Ireland) Act 1871, which was 115 years ago. So Part VIII brings everything up to date. These new provisions are based on the corresponding provisions in the English Act, but take into account the differences in Northern Ireland's legal system.
Part IX contains a code of practice and places a number of miscellaneous duties on the Department of Health and Social Services Board. Two of these reflect measures introduced in the 1983 Act. The first is the duty of the department in Article 111 to produce, publish and keep up to date a code of practice for the guidance of professional staff concerned in the treatment of mentally disordered patients. The second is the duty placed on health and social services boards by Article 115 to appoint approved social workers. Mental health has a social as well as medical and legal dimensions. The order acknowledges this by allocating social workers a new and distinctive professional role. At the same time, the order recognises that social workers need special training and experience to ensure high standards of professional practice in carrying out this role, and accordingly provides that no one shall be appointed until approved by a board.
5.45 p.m.
Part X deals with offences. These are very much the same as those in the 1961 Act, except that the provisions relating to sexual offences have been brought into line with the law in England and Wales. The final part of the order—Part XI—deals with a number of miscellaneous and supplementary matters which, in the main, are re-enactments of similar provisions in the 1961 Act. I will mention just one, Article 127, which reaffirms the fundamental principle that people who suffer from mental disorder should be able to receive treatment in hospital, without the need for any special formalities, in the same way as people suffering from physical disorders.
That concludes my outline—my notes say "brief outline", and your Lordships have been very patient

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and kind—of the main provisions of the order. It is a lengthy and detailed order, which is also very interesting and important. There are many other changes, but the basis of them all is the need to strengthen the rights to safeguard the liberties of the mentally disordered while retaining a proper regard for the rights and safety of the general public and staff who look after the mentally disordered with such care. Although it is perhaps not as revolutionary as the 1961 Act was in its time, I believe the order will be a landmark in the history of mental health care in Northern Ireland and that the changes which it introduces will significantly improve the quality of life for people suffering from mental disorder in the years ahead. With that, I commend the order to your Lordships. My Lords, I beg to move.
Moved, That the draft order laid before the House on 28th January be approved.—(Lord Lyell.)
Lord Prys-Davies: My Lords, this is not only a long and detailed order. I find it to be a complex order, but the failure may be mine. Although objections—and sometimes serious objections—have been raised by two or three of the bodies concerned to the provisions of the order, it has nevertheless been well received by the voluntary, the professional and the statutory bodies concerned and, as the Minister has explained, the order is seen as an important step forward which will be of value to the patients, to their relatives and to the staff involved in their care. I am sure that we shall not do justice to this order this afternoon.
It is an important order, because compulsory detention in a psychiatric hospital is one of the very few situations where the law permits a person to be held against his will without prior access to a court. The Minister has explained the provisions and the structure of the order and has emphasised its main effects. It will improve the safeguards for mentally disordered people who are compulsorily admitted or detained in hospital. It clarifies the position of the staff who are looking after them and makes provision for the management of the property and affairs of patients. Following the England and Wales and Scotland legislation, it establishes a Mental Health Commission for Northern Ireland to keep under review the care and treatment of patients.
I mentioned that there have been strong objections to some of the provisions and one ought to place the objections on record, though I do not believe that I can do justice to them. The National Schizophrenia Fellowship are concerned about the criteria in Article 4(2)(b) for formal admission of patients into hospital. They would much prefer the criteria contained in the Mental Health Act 1983, which applies in England and Wales, and in the relevant legislation for Scotland. Again, in fairness, the Minister has touched upon this. The bodies which have a special interest in the mentally handicapped are disappointed that mental handicap should be included in a mental health order.
They also disagree over the definitions employed in the order. The Minister has quoted some of those definitions. They disagree with the definitions and they regret that the order should depart from the legislation for England and Wales in its general treatment of mental handicap. My only point is that the criteria for
834
compulsory admission to hospital and the definitions of categories of mental handicap are not political issues and it is therefore surprising to this layman that different criteria, different definitions, should apply within this small jurisdiction of England, Wales, Scotland and Northern Ireland. Should not the criteria and the categories be consistent and unified throughout the different parts of the United Kingdom, or will the Minister say that the common sense of the layman is flawed in supporting this plea?
I return to the broad area of agreement. All the comments which I have read welcome the proposed Mental Health Commission. This is seen by all the bodies concerned—without exception—as a notable innovation, but it would be even more welcome had it been given more powers and more resources. Although the department has stuck to its view—it may be a sound view as far as I know—that the commission should not be an enforcement agency, there is in general satisfaction that the original draft of the order has been amended to enable the commission to publish on its own initiative such reports on its functions as it thinks fit and that the original draft order has also been amended to impose a duty on the various authorities to reply to an inquiry emanating from the commission. These are two important amendments and they go some way to strengthening the role and authority of the commission.
Drawing on the goodwill of all the bodies concerned with mental disorder, the commission could bring a new impetus to this complex field. Yet many people fear that the commission will not work as well as it is hoped because it will have inadequate resources. How does the Minister propose to allay the fear that it has inadequate resources to do a proper job? In any event, can the Minister give an indication of what the additional expenditure which is envisaged will amount to? How will it be found? It is anticipated that the order will lead to a greater access to the mental health review tribunals, but few applicants to mental health review tribunals are able to meet the costs of legal assistance and representation. Can the Minister assure the House that applicants will be eligible for legal aid to meet the costs of representation before the tribunal? Can he also assure the House that lawyers appearing before the tribunal will be drawn from an approved panel of lawyers with specialist knowledge of the order?
I note that there is no reference in the order or in the Minister's speech to a secure regional unit in the Province for mentally disordered prisoners or accused persons. Does the department have any plans to establish such a unit in the Province? If not, is the department satisfied that the health authorities have adequate facilities for the treatment of prisoners suffering from mental disorder? It is an important issue which has been before the House on a number of occasions. We should like to be assured either that the department has the regional unit in mind for the Province or that the facilities are adequate.
The issues which are dealt with in this order are not simply legal ones. The Minister has made the point that they are psychiatric and also psychiatric and social. If one is to understand the order and to implement this order, one must not only know the law but have an appreciation of medical concepts. I can

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certainly sympathise with the people who have asked the department to produce a well written, easily understood guide to the order. That would be helpful for patients, their relatives and staff. We hope that the department will put this in hand. With those comments, we support and approve the order.
Lord Donaldson of Kingsbridge: My Lords, I will not keep your Lordships very long. I want simply to say that this is a marvellous example of the inefficiency of our system of direct rule in the discussion of what happens. It is perfectly inadequate to deal with a matter as important as this without a Committee stage, without amendments and without three or four meetings in this House. I am not going to attempt that. The noble Lord, Lord Prys-Davies, made a jolly good shot, and I agree with most of what he said.
I want to know how much is different from what exists in English law or what is going to exist in English law by the end of the year. For example, if in Northern Ireland certain innovations are being brought in now which will follow in the British Acts, that is all right. If they are entirely different, they ought to be listed separately and we ought to see them. It is too late to do it now and I certainly shall not oppose the order, but I should like the noble Lord to ask his staff to send a short statement saying what is unique and is going to go on being unique to Northern Ireland in this measure and what is simply bringing it up to date with England. If it is simply bringing it up to date with Great Britain, I am prepared to wave it through perfectly happily. I know the abilities and the care taken by the departments in Northern Ireland, and I do not want to do more than have a brief glance at it. If it is bringing in a lot of new stuff, it should be properly debated and at length. I should be very grateful to have an answer to that point. In any case, I shall give the order this rather modified blessing.
Lord Fitt: My Lords, perhaps I may say at the outset that I realise that this is a serious debate. I am indebted once again to my noble friend Lord Donaldson. The noble Lord has talked about the uniqueness of the situation in Northern Ireland and about the innovations that have been brought out in Northern Ireland. It has ever been so. Northern Ireland is unique. Innovation after innovation has been tried in Northern Ireland. Perhaps I may say to the noble Lord who is to reply that this is St. Patrick's Day.
The noble Lord, Lord Prys-Davies, has obviously gone into this order in great detail, which I have not. It is a mental health order and I think it would be generally accepted that the mental health of Northern Ireland in particular and of Ireland in general has been seriously disturbed by the advent of the Anglo-Irish agreement. I wonder whether that has been taken into consideration and whether the effects of this agreement will be contagious to the mental aberrations of this Government and other Governments. I realise that this may not be terribly serious, but it may have a consequence to which we shall have to look in the future.
Lord Broxbourne: My Lords, perhaps I may very respectfully endorse the plea from the noble Lord opposite for a statement of comparison between the
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law existing in England and Wales and the law embodied in this document. It is no doubt true that if noble Lords will peruse the whole of the order and then peruse the mental health Acts which in operation on the statute book, then they might arrive at the answer. However, I believe that the House will agree that some assistance should be accorded to it in that respect.
6 p.m.
I am bound to say that I am probably a little rusty on mental health law. I see the noble Lord on the Woolsack who took such a prominent part in the proceedings leading to the 1959 parent Act, all those years ago, and who has these matters within his recollection. It was of course a very long and detailed Act and it has since been added to and improved by recent legislation on this subject. If it were possible to relate the large corpus of law in England and Wales to the not inconsiderable document that we are now discussing, then that would be helpful. I am glad to see the noble Lord on the Front Bench opposite nodding his acquiescence. Such would be helpful not only to your Lordships but also to considerable numbers of people interested in this subject from outside.
Having made that general point, I shall take up two specific points made by the noble Lord, Lord Prys-Davies, in his interesting dissertation. If I understood him aright—and if I did not do so then I hasten to say that it is solely my fault—then the noble Lord queried the propriety or wisdom of incorporating a definition of mental handicap within the overall definition of mental disorder and related expressions contained in Article 3 of the order. But again, if my recollection is not too rusty, surely that was the course followed in the parent Act, where we included mental handicap in the overall definition of mental disorder. The noble Lord and the House as a whole will appreciate that the insertion of a comprehensive definition including mental handicap in no way confuses the differences between mental handicap and certain other forms of mental disorder. In fact, it is clearly defined. It means:
"a state of arrested or incomplete development of mind which includes significant impairment of intelligence and social functioning".
That is followed by the definition of severe mental handicap, meaning,
"a state of arrested or incomplete development of mind which includes severe impairment of intelligence and social functioning".
Those are definitions bringing it within the scope of the legislation, but it is of course accepted that they raise very different aspects. I do not know whether the noble Lord can tell the House whether he has received any representations, for example from MENCAP. I regret, for this reason only, that the noble Lord on the Woolsack is on the Woolsack at the present time—because he is the distinguished president of MENCAP. If MENCAP had any reservations or any objections to the proposed course being taken, then no doubt it would have communicated them to ministers. In the absence of a contribution from the noble Lord on the Woolsack, perhaps we may hear more of that matter from my noble friend the Minister when he replies.
One other point arises out of the speech of the noble Lord, Lord Prys-Davies, in regard to proceedings

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before the tribunal. He queried whether there was any provision within the order for—again, if I understood him aright—the granting of legal aid to assist with costs. That would be a very proper provision. As I read the order, it does not expressly confer such a right. The procedures of the tribunal are dealt with in Article 83 of the order, and are fairly lengthy. Article 83(6) states:
"The Review Tribunal may pay allowances in respect of travelling expenses, subsistence and loss of earnings to any person attending the tribunal as an applicant or witness, to the patient who is the subject of the proceedings if he attends otherwise than as the applicant or a witness".
So far, clearly, there is no provision made in regard to the award of legal aid to a person so appearing. There then follows a surprising exception, in the bracketed part of that provision:
"(other than counsel or a solicitor) who attends as the representative of an applicant".
One is dealing here with very important cases that in a sense affect the liberty of the subject in regard to proceedings for detention and the like. What is the reason for excluding from the provisions of that article counsel or a solicitor? Is it intended to deprive any applicant or any patient of professional assistance, from which some of the complex matters involved might benefit, or what is the reason? I go perhaps a little further than the noble Lord, Lord Prys-Davies, with whose general observations I venture to record my respectful agreement, and ask why it is that such a provision has been inserted.
Again, it is the sort of provision that reinforces the suggestion made by the noble Lord opposite in regard to the desirability of further examination of this complex order and his comment that it would have better followed the procedure of a Committee stage and a detailed examination. Meanwhile, I am sure that the House will be grateful if my noble friend the Minister will deal with the points raised by the noble Lord, Lord Prys-Davies, and by others in this debate.
Lord Prys-Davies: My Lords, perhaps I may be allowed to respond to the noble Lord's questioning. The Assembly consulted widely on the terms of the order. I read the evidence that MENCAP submitted to the Assembly, and I read also their oral evidence in support of the written evidence. It appeared to me that they were saying basically three things. First, they were saying that the mentally handicapped ought not to be considered in an order that deals with mental illness. Secondly, it seemed to me that they were objecting to the definition of mental handicap and to Article 3 of the order. My comments are based on the evidence of MENCAP to the Assembly as I understood it.
Thirdly, it seems to me that the order makes no provision for the availability of legal aid to an applicant who wants to be represented before the tribunal. It appears that Article 83 provides for the expenses which could be paid by the review tribunal. Of course, there is no reference to the expenses incurred in instructing a solicitor or counsel. Therefore, I am anxious to know from the Minister whether the legal aid regulations in Northern Ireland make it possible for applicants to be represented.
Lord Broxbourne: My Lords, with the leave of the House, may I comment further, as the noble Lord,
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Lord Prys-Davies, has been good enough to refer expressly to what I said in my observations? On the second part of what he said in regard to Article 83 we are, I think, wholly ad idem. Indeed, I went a little further than he, so there is no need to comment further on that.
In regard to Article 3, I was most interested to hear what he said about MENCAP, but I remind the noble Lord and the House that the inclusion of mental handicap in the general definition has this very respectable parentage from the Mental Health Act 1959 and it is not equated with mental illness. Indeed, the provisions of Article 3(1) list them quite separately. Mental disorder means:
"mental illness, mental handicap and any other disorder or disability of mind".
That is merely intended to be a comprehensive definition to govern all forms of mental disorder.
Viscount Colville of Culross: My Lords, I apologise to the House and particularly to my noble friend the Minister and the noble Lord, Lord Prys-Davies, for being detained and therefore unable to hear their speeches. The points that I wish briefly to make are, I think, well known to my noble friend Lord Lyell and will not come as a surprise to him.
I should like to start by welcoming the new Mental Health Commission for Northern Ireland. There have been discussions among the various departments concerned, including, I am glad to say, that of Scotland. It is with great pleasure that we shall be welcoming at the Mental Health Commission conference this week the chairman and the secretary of the Northern Ireland commission so that they may see the English equivalent body in operation. It is not quite an equivalent body, as the powers and duties are slightly different, but there will be enough common ground for that to be useful for all of us. In the English commission we have always consorted with our Scottish colleagues, and I hope that there will now be a tripartite operation which will enlighten us all.
The point has already been made about the definition in Article 3. I do not wish to enter into the merits of it because they have evidently already been widely discussed. In any event, I made some of those points a while ago and the Government have not seen fit to alter the definition in Article 3. I see what they are doing. They are using the "mental handicap" definition for the purposes of assessment but not detention. They are also using it for purposes of guardianship. My impression is that they have seen the result of legislation in other parts of the United Kingdom and have decided that they will make minor variations.
Originally I had some concern about this because there has been a fairly substantial alteration in the definitions as between the 1959 and 1983 Acts in England and Wales, not least as a result of the activities of MENCAP and others interested in this respect. Certainly mental handicap as such, as defined in this order, is not even grounds for compulsory detention for assessment any more in England and Wales. However, it occurred to me when I was looking at the draft of this order that those who have to interpret the meaning in the English and Welsh Act of "mental impairment", which is the term now used,

839
might be confused if Westminster subsequently passed this order, which has the effect of primary legislation, containing different definitions but all touching on very much the same area. I suspect, however, on reflection that the context of these definitions in the Northern Ireland order is sufficiently different for there not to be any confusion.
6.15 p.m.
However, I would just say to my noble friend Lord Lyell that in respect of the changes of definitions, my understanding of what happened in relation to people detained for what is effectively mental handicap under the 1959 Act in England and Wales, and who very likely might not have been so detainable under the equivalent provisions in 1983, has been a fairly slow but nevertheless enlightened process. It is not so much that because of the change of definition patients who were previously detained have been instantly set free, but rather that the mental health review tribunals, in reviewing these cases on the regular basis that they do, have taken account of these definitions, with the medical and other evidence available, and probably for this reason, among others, have been discharging people who were previously detained under the 1959 Act.
I hope that the tribunal in Northern Ireland will similarly be astute and will look at these definitions to make sure—I know that the number of patients is very much smaller—that, if any patient is affected by the change in definition so that under this order he or she is no longer within the criteria for detention, that will be reflected in its decisions. That would seem to be a thorough and proper way of doing it; by some organ which has all the information before it.
However, a second point arises on this definition. We now have added yet another variation to the battery of definitions of criteria by virtue of which people may be detained. Your Lordships should do what I did recently and look at the legislation applying in Scotland, the Isle of Man, Jersey, Guernsey, England, Wales and now in Northern Ireland. There is almost no common thread running through the criteria for detention. Each of the jurisdictions has passed its own legislation. In some of the Acts concerned they are comparatively ancient. This means that, no doubt for good reason, we are adding yet another set of criteria to what is already a very confused picture. That may be all very well in Northern Ireland, because the authorities there will, I am sure, be well equipped to deal with it, but there are rare occasions when patients are transferred between the jurisdictions. Indeed, in this order there is a provision for it in Article 134. Similarly, in the English and Welsh legislation there are equivalent provisions which are sometimes used for the transfer of patients from Scotland, Northern Ireland and the islands to hospitals in England and Wales.
What this order contains—which I should have thought is wholly right and ought to be copied elsewhere—is a provision for re-assessment upon receipt of a patient in Northern Ireland from any other jurisdiction. That is clearly sensible from the point of view of the hospital and those who are to look after the patients, but it is also a paramount method of taking
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account of these differences in detainability. My noble friend Lord Lyell, neither in this nor the consequential provisions order, can do anything about the other jurisdictions, but I ask him to suggest to his right honourable friends the Secretaries of State for England, Wales and Scotland—we cannot do anything about the islands because that is not a direct responsibility—that on the list of items for revision in due course, when the primary legislation in England and Wales is looked at again, they should include a provision for re-assessment upon the transfer of a patient.
There is one more archaic reason why this should be done. That is because in the English and Welsh legislation, as in this, when a patient is transferred the detention he is under is deemed to start again in the new country as from the date of the transfer. As a rule, this means that the date for an appearance before a tribunal is postponed for a year however near he may have been to that date in the country from which he came. In turn this means that the opportunity for an independent body to assess the criteria for detention is equally postponed. That will not happen in Northern Ireland under this order because the order deals with it. But it will continue to happen in the other jurisdictions. I hope that my noble friend will be good enough to pass on this message to his colleagues, because I suggest that it is time that was changed to take advantage of this excellent example in the order.
I am sorry to have come in so late. Those are the observations that I wish to make upon this matter.
Lord Lyell: My Lords, I apologise to your Lordships for taking so long to go through the order but, as your Lordships will be aware, it is a very complicated matter. The debate we have had since I sat down shows that there were many points that interested your Lordships and that I am afraid I was not able to cover first time round the course. I hope that I shall have more luck than some of the great jockeys at the steeplechases when I come round the second time, but I shall hang on.
Perhaps I may start with the observations of the noble Lord, Lord Prys-Davies. We were very grateful for his thoughts and his support for the order and the provisions. The noble Lord raised a number of points. First, he mentioned, so far as I recall, the substantial likelihood of serious physical harm, and compulsory admission or detention. As the noble Lord and your Lordships will appreciate, compulsory admission or detention is a very serious step which involves the deprivation of liberty and the restriction of individual rights and personal freedom. That is what I stressed in my opening comments. It can also carry with it a stigma and can generate feelings, which are not altogether helpful, of self-deprecation in the patient. It is therefore right that such powers should be used only where they are absolutely necessary.
The purpose of the new criterion is to provide a clear and objective test for admission or detention. This is based on recent overt behaviour, as I understand it is called. This represents the minimum possible interference with the rights of individuals who suffer from mental disorder. It is still consistent with the need to protect both them and members of the public from serious physical harm.

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It is more restrictive than the health safety in the protection criterion. It does not permit the compulsory admission or the detention of patients who, although not a danger to themselves or anyone else, would benefit from treatment but do not have any insight into their condition and refuse to accept any treatment. I appreciate the concern that doctors feel for these people and the distress which is experienced by their relatives. However, the prospect of benefit from treatment is not considered to be sufficient justification by itself for exercising compulsory powers of admission or detention in order (if we can put it so strongly) to impose treatment.
The noble Lord and others of your Lordships—I think most notably my noble friend Lord Broxbourne—were particularly worried about the definitions of the two new terms which do not appear in the English Mental Health Act of "mental handicap" and "severe mental handicap". The first term, "mental handicap", refers to one of the three categories of mental disorder as defined in the draft order. It covers everyone who has a mental handicap. We hope that the inclusion will ensure that all mentally handicapped people will have access to the help and the protection which will be available under the order. We take one example: the help of the office of care and protection in looking after their property; and above all the protection of the Mental Health Commission.
"Severe mental handicap" is a sub-category of mental handicap. It is included in the draft order to ensure that the most vulnerable group of mentally handicapped people are protected against such things as sexual abuse: or, if they require a limited amount of supervision to enable them to remain in the community, they can be placed under the care of a guardian.
The noble Lord, Lord Prys-Davies, quite rightly raised the question of resources. The changes which were introduced by the provisions of the order will involve the deployment of additional resources in the mental health field. For most of the changes, however, the additional resources required will be—and I say it advisedly—marginal, and they will be contained within existing resources. The major source of additional expenditure will be the Mental Health Commission, which will be funded by the Department of Health and Social Security. I understand that the figure of £200,000 has been made available in 1986–87 for this purpose to cover the commission's costs. Perhaps I should have spelt that out: it is not in the financial year which is about to come to an end.
The noble Lord, Lord Prys-Davies, raised two other points about the separate definitions in England, Wales and Northern Ireland. I am sure that he would agree with me that there is nothing political about these definitions. The noble Lord and my noble friend Lord Colville will certainly know that Scotland also has its separate legislations and views in this field. Certainly the Northern Ireland position was reviewed. It was discussed by the MacDermott Committee and by the local bodies.
The noble Lord, Lord Prys-Davies, had one query which I may be able to cover for him about a medium secure unit. The department has been considering the
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question of a medium secure unit. At one stage, provision was made for the unit in the department's capital development programme. However, I have to tell your Lordships that the constraints of finance prevented an allocation of resources being made for this purpose. But I am sure that the noble Lord will be interested to know that the report of the review committee on the services for the mentally ill, which was set up by the Department of Health and Social Security in April 1980, expressed doubts as to whether containment in a medium secure unit is the best and most efficacious way of treating and rehabilitating severely disturbed patients. The committee favoured the different course of providing appropriate care in high-intensive nursing care units such as are already in various stages of planning in two of the health and social services boards.
As the high-intensive nursing care units are brought into use the department will be in a stronger position, in the face of competing priorities and demands upon the financial resources, to take into account the effectiveness of these units and the priority which should attach to the provision of a hypothetical medium secure unit. We therefore hope that we are going along, as we might call it, parallel paths to that which the noble Lord is seeking. But we hope that this is the most effective way of carrying out this provision certainly in the current financial climate.
6.30 p.m.
The noble Lord and my noble friend Lord Broxbourne also raised the question of solicitors and counsel. I think that the noble Lord, Lord Prys-Davies, put it more succinctly. He called it legal aid. The extension of legal aid to cover representation at the Mental Health Review Tribunals was made in 1983 to include legal representation for all applications to the tribunal under the attractively named acronym of ABWORS—Assistance by Way of Representation Scheme. Previously, of course, legal assistance was available under the green form scheme, and in deference to the noble Lord, Lord Fitt, this is no crack at St. Patrick's Day but was to help patients and other applicants of limited means to prepare their cases. This scheme covered all work carried out by a lawyer, short of instituting proceedings and legal representation at the tribunal hearings. The green form scheme continues but is extended now by ABWORS to assistance given by a lawyer to an applicant in instituting and conducting proceedings, including the representation of the patients. I hope that will go some way, if not all the way, to help my noble friend Lord Broxbourne, and will help the noble Lord, Lord Prys-Davies.
The noble Lord, Lord Prys-Davies, also had a question about the panel of solicitors for the purposes of the Mental Health Tribunal. I understand that the Law Society of Northern Ireland may be looking at this question. I am sure that the noble Lord's comments and my reply will be brought to their attention. I shall certainly see that they are passed on.
The noble Lord, Lord Broxbourne, asked about MENCAP. I see the noble Lord who is now sitting upon the Woolsack and know of his great interest in this particular aspect. The noble Lord, Lord Prys-Davies, also raised a question on MENCAP. There

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was quite vivid talk, over my head. I was interested to note it but your Lordships will be aware that there were representations from MENCAP which criticised the categories of mental handicap during the consultation period. This followed the publication of the draft order as a proposal in April of last year. I assure your Lordships, I assure my noble friend and I assure the noble Lord, Lord Prys-Davies, that these were taken into account along with all the other comments which we received on that order.
I was very grateful to my noble friend Lord Colville for his kind comments and very grateful for his thoughts as far as this particular order is concerned. We know of his great expertise in this field. My noble friend will be aware that Scotland has a provision to allow the reassessment of patients when they are transferred from another country within the United Kingdom. I do not know quite whether the Isle of Man, Jersey, Guernsey and all the points mentioned by my noble friend were covered, but I am advised that Scotland possibly alone has such a provision. I understand it is Section 88, paragraph 1, of the Scottish Act. I hope that will be of partial consolation to my noble friend Lord Colville. I am very grateful to him for what I call his let-out about the Northern Ireland context of these definitions, and indeed some of the aspects of reassessment. We shall make sure that the Mental Health Tribunals are aware of my friend's points. I shall certainly bring my noble friend's points to the attention of my honourable friend as far as the Mental Health Tribunal is concerned. That is as far as I can go this evening.
No doubt one or two points of a more detailed nature have been missed, but I hope I have been able to satisfy your Lordships with the answers I have been able to give. As I warned when I stood up for the second time, this was something akin to a ride round a major steeplechase course. I think I have negotiated it.
Lord Donaldson of Kingsbridge: My Lords, could the noble Lord indicate whether he can answer my request to let us have a statement in due course—not to hold up this order—showing us the difference between legislation in England and Wales, which is the basic legislation, and the new legislation in Northern Ireland?
Lord Lyell: My Lords, I do apologise; I should have taken that up. That point was also mentioned by my noble friend Lord Broxbourne. I am not able to say definitely whether I can get what might be called a simplified Minister's guide to this. May I look into this and see if there is a chance of having a guide, or if indeed we can find simplified notes of sorts so that what we call the layman might have some idea of the provisions of the order. Of course, noble Lords will be aware that many of the provisions in the order will be in the field of my noble friend Lord Broxbourne and, indeed, my noble friend Lord Colville. It will be much more of a lawyer's field, and I have covered the point of legal aid. If I may look into his query and see if it is feasible to provide some simplified guidance or notes, would that satisfy the noble Lord tonight?
Lord Donaldson of Kingsbridge: Yes, my Lords. My difficulty about this is that I think it is absolutely
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wrong that we should pass legislation of this kind, which is extremely complicated, without the proper attention which we should give to it if it were English, Welsh or even Scottish legislation. For that reason, as I said, I think the system by which we deal with this sort of thing here is inadequate without further preparation. I know that the noble Lord, Lord Broxbourne, and the noble Lord, Lord Renton, know all about this. I happen not to. I know about some things that they do not. As this has nothing to do with it, it seems to be absolutely wrong that legislation as complicated as this should be carried without a direct comparison with what is going on in England and Wales.
Lord Lyell: My Lords, if I may finally reply, I have two points. Certainly my noble friend Lord Colville stressed that this order had an input—and certainly I had stressed this—from all round the United Kingdom. Secondly, I do not know if the noble Lord took on board all the points made by the noble Viscount, Lord Colville, but I found that my noble friend did explain these aspects very clearly.
As for the other aspects raised by the noble Lord, Lord Donaldson, they are in the generality of all legislation that we take in this way in your Lordships' House, and I am sure that he will accept that this is an imperfect situation in which perhaps tonight's order is not the best example. However, I take his points and I hope that he will accept that I will see if there is anything that I can do. I find it very interesting, and it was made even more interesting by my noble friend Lord Colville. I should like to thank him for his kind words of support for what we are trying to do.
With that, I hope the House will accede to our giving this order a fair wind.
On Question, Motion agreed to.

Mental Health (Northern Ireland Consequential Amendments) Order 1986
6.38 p.m.
Lord Lyell Lord Lyell rose to move, That the draft order laid before the House on 3rd February be approved. [10th Report from the Joint Committee.]
The noble Lord said: My Lords, I beg to move that the Mental Health (Northern Ireland Consequential Amendments) Order 1986, a draft of which was laid before your Lordships' House on 3rd February this year, be approved.
A number of Acts of Parliament applying solely to Great Britain or, indeed, to the United Kingdom as a whole require to be amended as a result of the changes introduced by the Mental Health Order which we approved a few seconds ago. These amendments are of a purely consequential nature and are contained in a separate enactment because the law which is being amended falls outside Northern Ireland's legislative jurisdiction.
I hope your Lordships will accept that these amendments are indeed consequential. With that, I beg to move.
Moved, That the draft order laid before the House on 3rd February be approved.—(Lord Lyell.)
On Question, Motion agreed to.

Overseas Holidays: Market Restrictions
6.40 p.m.
Lord Teviot Lord Teviot rose to ask Her Majesty's Government whether they approve of a closed shop in the sale of overseas holidays where this cannot be proved to be exclusively for the benefit of the consumer.
The noble Lord said: Underlying this Question is action being taken by the Association of British Travel Agents—ABTA—to the detriment of British holidaymakers, its own travel agent members, shipping companies, coach operators and, it seems to me, the association itself. Your Lordships will hardly need reminding that the holiday industry is volatile. It sells dreams—dream holidays—and holidays are often the biggest purchase a family makes each year. As well as being the biggest purchase, it can bring the greatest pleasure, not only the holiday itself but the anticipation of it and the planning of it. Looking through those brochures in dark, miserable winter days gives one great pleasure and joy. One can see oneself on a beach in the South Seas, until of course when the bills come in you feel that what remains in your pocket would be more befitting a week in a holiday flat in Clacton. So holidays are important. They should be protected from the failure of holiday organisers.
It is to ABTA's credit that it took steps as far back as 1965, following the Fiesta failure, to put its own house in order. It launched what is called Operation Stabiliser. One has to recognise that, through ABTA's initiative, the public interest has benefited even more than self-interest. However, that element of self-interest has always been a potential danger to the efficient self-regulation of the industry. It has caused problems within the membership of the association, and from time to time some blood-letting has been necessary. An essential element in Stabiliser's protection of the public is the financial safeguard provided by a bonding system, while the need to deal with customer complaints in an objective way is also recognised. The trouble is that, as a basis for this protection, ABTA felt the need for a closed shop. When it introduced Operation Stabiliser in 1965, it required its travel agent members to sell only the holidays packaged by its so-called tour operator members. Similarly, the operators were only to sell through ABTA members. That included their own direct sales.
From the outset, it was recognised that there were certain other holiday firms that could not logically be excluded from the holiday choice made available to the public through the travel agencies. These were the coach companies providing overseas tours—at that time under statutory licences—and also the shipping companies with their cruise and ferry services. Both these classes of operations were at first given dispensations from Operation Stabiliser, and the shipping companies, members of the Passenger Shipping Association, still have such a dispensation, although it is now under threat. In the case of the Bus and Coach Council coach operators, however, ABTA decided to make them an intrinsic part of Stabiliser by enshrining their position in its own articles of association. Now it wishes unilaterally to reverse this action. The difficulty is that as Stabiliser is
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undoubtedly a restrictive trade practice, it was referred to the Restrictive Practices Court in 1978. The Confederation of British Road Passenger Transport, now known as the Bus and Coach Council, or BCC for short, was a party to that action. In the judgments of the court in 1982 and 1983, it is made clear that the members of the CPT licensed continental section are, along with all members of ABTA, parties to the Stabiliser agreement.
The dispensation for members of the Passenger Shipping Association was also noted. It is apparent that these sensible relaxations in the closed shop principle were major factors in the decision of the court that it should not rule that Stabiliser was against the public interest. The court specifically affirmed that ABTA should not use its closed shop in a way that would prevent any suitably protected holidays being sold to the public by its members. The court went so far as to say that in considering dispensations from Stabiliser under Article 13(7)—a procedure that was insisted upon—ABTA must not consider any tendency to weaken, or to fortify, its supervisory functions. Ironically, it seems to be on these clearly prescribed grounds that ABTA is now seeking to force coach operators and shipping companies into its membership by cancelling their present rights, although the court further adjudged that to act as a recruiting sergeant would not be a proper use of its discretion.
ABTA speaks of rescinding dispensations, but that is another flaw in its reasoning because, as already explained, the coach operators do not have a dispensation. They are in fact parties to the Stabiliser agreement. ABTA does not seem to realise that it can only be heading straight back to another hearing before the Restrictive Practices Court by making such a fundamental change in the agreement that it accepted. What is more, it is hardly likely to give a very convincing account of its stewardship when it is choosing to ignore the very specific advice given to it by the court.
Another factor which ABTA chooses to ignore is the position of Stabiliser under Article 85 of the Treaty of Rome. This article prohibits
"as incompatible with the Common Market: all … decisions by associations of undertakings … which may affect trade between Member States and which have as their … effect the prevention, restriction or distortion of competition within the Common Market and in particular those which"
there follow (a), (b) and (c); and then (d) states:
"apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage".
One would think that, after a few minutes studying those words, ABTA would recognise that it is placing more at risk than the loss of a relatively small number of holiday sales. It is with these factors in mind that one turns to the Government and asks them to give some clear indication of the public interest which has until now been pretty well served by the Stabiliser agreement. One can only wonder whether the custodians of the agreement have lost their way, overwhelmed by a self-imposed responsibility for protecting the public from every Tom, Dick or Harry who in any way sells an overseas holiday. They claim to believe that the public is too stupid to choose

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between their own bonding scheme and those of other organisations which they now see as competitors.
Since the trouble started in the 1960s, the consumer protection schemes provided by the Bus and Coach Council and the Passenger Shipping Association have never once been called into action. ABTA's is the only scheme that has ever had to rescue holidaymakers let down by its own members. Let me stress, however, that it did a very fair job of this and gained much experience. But is it not a great irony that ABTA should seek, after 20 years, for no valid reason, to evict those with a clean bill of health from the Stabiliser agreement in which they had participated in the public interest?
Finally, let me say that the fragility of ABTA's arguments may be explained by the line taken in private by certain of its members, which is clearly to protect their own sales from the success of others. As one said, self-interest has always been lurking in the wings since Stabiliser has been on stage. I can tell those of your Lordships who may ask that every effort has been made by the Bus and Coach Council and by the Passenger Shipping Association to avoid this head-on clash. Yet diplomacy seems to have been interpreted by ABTA as weakness. This has led it into ill-considered actions without stopping to weigh the consequences for itself. Fortunately, it is not too late to bring it back from the brink. I am delighted that it is my noble friend Lord Brabazon of Tara who will be replying to this debate as an Unstarred Question some 18 months ago was his first. I hope that he will be able to put matters in a perspective that will yet lead to an amicable settlement of this totally unnecessary dispute and will allow holidaymakers both protection and choice when they next visit their travel agent.
6.50 p.m.
Lord Williams of Elvel: My Lords, I hope not to detain your Lordships very long. It is quite right of the noble Lord, Lord Teviot, to raise this matter in his Unstarred Question. I have had a slight disappointment, because at one stage in his speech I had hoped that we would have a debate about the relative merits of South Sea islands and holiday packages, but I find that we now come to the rather narrow issue of the dispute between ABTA and the BCC, which is the point on which the noble Lord concentrated.
There is a very strict and slightly legalistic answer which the Government could make to the noble Lord's initial Unstarred Question which is:
"whether they approve of a closed shop in the sale of overseas holidays where this cannot be proved to be exclusively for the benefit of the consumer".
The Government, through their legislation, are bound to take the public interest into account, and the public interest has been defined on many occasions by legislation.
However, if I may, I want to go further into the noble Lord's argument. The noble Lord is certainly right that the travel association, ABTA, has done some excellent work in what I would call the general principles, which we on this side of the House would support when it comes to overseas travel, which is the
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essential protection of British citizens and British residents travelling abroad—the travelling public.
Since Stabiliser was set up in 1965 there have been several occasions of travel companies going bankrupt and some quite extensive horror stories of people being stranded. If it had not been for Stabiliser and the bonding arrangements of ABTA, I think we would all agree that the situation would have been much worse than it was.
Our second principle is that the members of the BCC, the bus and coach operators, should receive fair treatment. It is in trying to draw a balance between these two general principles that the difficult area arises. Essentially, the matter arises out of a decision of the Restrictive Practices Court in 1982 which was called upon by the Director General of Fair Trading to judge on Stabiliser when, as your Lordships will remember, in 1976 the restrictive practices legislation was extended to apply to services as well as to manufactured goods.
The question to which the court addressed itself, at the request of the director general, was whether Stabiliser was in the public interest. After, I think, a six-week hearing and a great deal of argument put forward in all directions, as the noble Lord, Lord Teviot, said, the court decided in favour—if I may put it like that—of Stabiliser. However, there were certain conditions: that there should be codes of conduct, the right of appeal, and so on. The paramount interest of the Restrictive Practices Court in arriving at that decision was consideration of the public interest.
The noble Lord is certainly right in saying that Article 63 of the ABTA constitution built in dispensation to one section of the BCC members: those who were already in Stabiliser. Under that article they had—and I shall use the term in spite of what the noble Lord said—automatic dispensation from the general ruling of ABTA, the general ruling being that if you want to belong to the Stabiliser scheme and you want to sell through ABTA agents, you must be an ABTA-registered tour operator and bonded through ABTA. Therefore, dispensation which partially existed under Article 63 for some of the members—I think they are called section members—of the BCC, is now proposed to be removed.
The resolution that is being brought forward at the ABTA general meeting is Resolution 9, which is designed to rescind Article 63 and to put all the people—the operators who hitherto had enjoyed dispensation under that article—into the same category as anyone else who wishes to apply for dispensation from the ABTA rules as normally applied. I note that dispensation is still available under Article 13(7), with a right of appeal under Article 13(8). That is to say, anybody can apply for dispensation, and all ABTA appears to be doing is saying to these people who had a slightly privileged existence under Article 63, "I am very sorry, you can no longer enjoy this privilege if this resolution is passed. You must apply in the normal way for dispensation; there is a time limit imposed during which that application can be made".
I have a certain lingering sympathy for ABTA in some of these matters because, if anything goes wrong, it is always ABTA that gets blamed. When there is a

849
failure of any sort concerning tour operators—perhaps people are stranded on whatever South Sea island it might be, however desirable that might be—it is always the chief executive of ABTA who is called upon to answer questions on television. The serious point which ABTA makes about this is that it is very difficult to accept the responsibility in the public eye for supervising and being seen to supervise tour operators when there is no power to do so. It is a general point which I think covers a wide range of organisations of this nature. It may be the fault of the tour operator; it may be the fault of ABTA; it may be the fault of the people who provided the bond in the first place. Nevertheless, in the public eye I believe that ABTA is seen to be the major supervisor of tour operators in general.
Lord Teviot: My Lords, I am most grateful to the noble Lord for giving way. I hesitate to intervene, but the noble Lord mentioned that he has sympathy with ABTA in this area because it thinks it has to carry the can. I do not know whether the noble Lord used those words but I believe that that was his meaning. I would enirely agree with what the noble Lord says, but it should be pointed out that one would have sympathy for ABTA, especially if there had been cases. However, as the BCC and the PSA have had clean bills of health for 20 years, I can see no reason, and I would ask the noble Lord to take that point into account.
Lord Williams of Elvel: My Lords, I am very grateful to the noble Lord, Lord Teviot, for his intervention. Indeed that is the case. I was talking as a matter of general principle. I think I said that if generally, across the board, there were any such failure—and I am not claiming that there was—ABTA would be the people who would be regarded, certainly by the media, as being the governing association, and, I think quite properly, the chief executive of ABTA would be required to answer the questions of newspaper and television reporters.
The question which arises, which your Lordships have to determine and which the noble Lord, Lord Brabazon, has to determine when he answers the Question, is whether this is a proper matter that can be debated in your Lordships' House. As there has been a judgment of the Restrictive Practices Court, I have no intention of commenting on that judgment and of stating whether I think it was a good or a bad judgment. I understand that the director general was rather disappointed in the judgment, but that is his problem and not mine. It would be quite improper for me to comment on that.
It is perfectly true that the passing of Resolution 9 and the recision of Article 63 could create a change of circumstances under which the Director General of Fair Trading might feel it appropriate to re-open the issue in front of the Restrictive Practices Court. That no doubt is a question which is being addressed by the director general and he will come to his own conclusions, as is his statutory obligation. He will or will not ask the Restrictive Practices Court to look at the matter again. It would be very interesting if the Minister has any views, opinions or knowledge about
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the attitude of the director general in this particular instance.
As the noble Lord, Lord Teviot, said, it is also true that there may be a contravention of Article 85 of the Treaty of Rome, which the noble Lord quoted in full. It may be that the Fourth Directorate General in the Commission, which looks at competition matters, will look at this and say that there is a prima facie violation of this article, that they wish to take the matter further and will take it through the appropriate procedures. It is not for me to say whether that is right or wrong; that is their business. Again, I would be very interested if in his reply the noble Lord, Lord Brabazon, has a view or information as to whether the European Commission and the Fourth Directorate General will look rather closely at this problem. That would be interesting.
The point that I really wish to make is that in our view the legislation for dealing with this type of problem is already in place. There is a Fair Trading Act—the Fair Trading Act 1973. There is an Office of Fair Trading. There is a lot of restrictive practices legislation and there is a Restrictive Practices Court. We would believe that the proper place for these matters to be fought out would be in those places and not, as one might believe, between government and Opposition in your Lordships' House.
If the legislation is to be changed, that is certainly something which we would want to look at and discuss and have a normal debate on. But while the legislation is there, whatever we may think about the legislation, it is, in my view, proper to leave the matter to those who are competent to operate that legislation in the way they have been doing up until now. I therefore would simply say to the noble Lord, Lord Brabazon of Tara, who is replying to the Question, that so far as we are concerned we are, as it were, neutral on this issue. We believe that the right place is in the Restrictive Practices Court if that is the director general's intention, or in the European Court if that is the intention of the Commission, but we would not wish to take sides because we think the legislation is there and it would be improper for us to do so.
Lord Carmichael of Kelvingrove: My Lords, I should like to speak briefly on this Question. I am most grateful to the noble Lord, Lord Teviot, for his initial explanation, and also to my noble friend Lord Williams of Elvel for his further clarification of what is quite clearly an unclear matter and a quite difficult subject. My concern is largely with whether this will affect the ordinary holidaymakers who want to go abroad by coach, where most of the problems seem to arise in terms of the failure of companies. I understand from some information I have been given that, for instance, this year there will be over 1 million people booked through the bonded holiday arrangements of the Coach Council, and they will book through ABTA travel agents. Will this cease now, or will the Bus and Coach Council require to pay some fee to take part in the ABTA arrangements for insurance purposes should anything go wrong with the holiday?
The reason I raise this matter is that from the little knowledge I have been able to glean—although I have been approached by a number of people about the subject—it seems that while the courts felt unable to rule that this scheme was against the public

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interest—that was the stabiliser scheme, and even more so the moving of Resolution 9 when the ABTA annual general meeting comes—they did make clear that it was important that ABTA's decisions should be based on the public interest and not on its members' own particular interests. I just wonder whether ABTA is in some way trying to build a fence around itself and give itself something that would ultimately be against the public interest.
I agree with my noble friend Lord Williams of Elvel that ultimately the machinery is there for decisions being taken by the Restrictive Practices Court or the European Court in the competition terms if they so wish. But if there is uneasiness about the working of some new regulation about to be brought in—which obviously has a certain amount of contention in it because the original decision of the Stabiliser caused a bit of confusion, and Resolution 9 seems to me as though it is going to tighten that up and make it even more of a closed shop (though I may be wrong there)—while the machinery may be there, it does not do any harm to raise this at an early stage in your Lordships' House so that, if nothing else, there can be a rethinking of the spirit of the decision as well as the actual words of the decision.
7.4 p.m.
Lord Brabazon of Tara: My Lords, as my noble friend Lord Teviot reminded us, the last time I answered an Unstarred Question of his was some 18 months ago on the Buses White Paper. Judging from my noble friend's activities during the passage of what is now the Transport Act, I regretfully have to come to the conclusion that what I said that evening may not have been to my noble friend's complete satisfaction. I hope I can do a bit better this evening.
My noble friend has by his Question brought to the attention of your Lordships' House tonight a matter which is worthy of close consideration. It is a matter of concern to those who provide holidays, to retailers who sell those holidays on their behalf and, most importantly, to the 9 million people in this country who, each year, commit considerable sums of money to the travel industry in good faith and in the reasonable expectation that the travel, accommodation and other arrangements for which they have paid will be provided in due time.
It is, I am sure, common ground that the alteration or cancellation of holiday arrangements has been an all too frequent source of frustration and disappointment to holidaymakers. The risk that a holiday company or a travel agent will collapse leaving the holidaymaker with no compensation and perhaps stranded abroad has been an even greater source of worry which consumers in a modern society should not have to bear. Let me say at the outset therefore that the Government greatly welcome the efforts made by the travel industry in recent years to provide holidaymakers with the greater certainty and security which they deserve.
The Government believe that overseas holidays are a good example of where voluntary action by the industry can, and should, achieve a high level of consumer protection. The codes of conduct developed by the Association of British Travel Agents, ABTA, in
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consultation with the Office of Fair Trading have done a great deal to reassure holidaymakers, as noble Lords have already mentioned.
This is not the time to recall all that the industry has done in recent years to improve "its service to consumers; but it is perhaps relevant to tonight's debate to observe in particular that the bonding arrangements to which both tour operators and retail outlets within ABTA's membership contribute now offer consumers a comprehensive and substantial measure of protection against the failure of holiday companies and travel agents. I would not wish to overlook in my remarks the parallel efforts being made in this direction by other bodies, such as the Bus and Coach Council, the BCC and the Passenger Shipping Association.
Naturally, there will always be room for improvement. I understand that there is still a substantial volume of consumer complaint to the Office of Fair Trading about package holidays. This possibly reflects the very considerable amount of foreign travel that now takes place; and consumers have quite understandably grown to expect a progressively higher standard of service from the British travel industry. There is clearly no scope for complacency. In this context, the Government particularly welcome the recent announcement by ABTA that it will further strengthen its code of conduct to provide safeguards and compensation for consumers who are inconvenienced by last minute changes to the travel or accommodation arrangements made for them.
However—and this brings me to the focus of my noble friends concern—the travel industry's laudable efforts at self-regulation have given rise to a degree of conflict between the equally desirable aims of open competition and consumer protection. On the one hand, it is clearly in the interests of consumers that there should be a wide choice of holidays and that the market should be open to new tour operators and travel agents, bringing with them fresh ideas and innovative methods.
On the other hand, the operation in the market of holiday companies or travel agents not subject to disciplines capable of giving holidaymakers adequate protection against shoddy service or financial failure is not of benefit to consumers and is bound to undermine confidence in the travel industry generally. As my noble friend reminded us, ABTA's solution to this problem was to introduce the arrangement known as Stabiliser, under which tour operators within ABTA are prohibited from selling holidays through retail agents who are not also members of ABTA, and ABTA travel agents may not sell foreign holidays which are not promoted or organised by tour-operator members of the association. This ensures that in any dealings with ABTA companies consumers can be sure of services governed by ABTA's codes of conduct. But it clearly limits the opportunities for non-ABTA holiday companies and can be fairly described as a closed shop.
The question of where the balance of public interest lies in such matters is a complex one, and under the Restrictive Trade Practices Act 1976 it is a question which must be determined by the Restrictive Practices Court. The rules and codes of conduct of ABTA were

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referred to the court by the Director General of Fair Trading in 1982. The court was by no means satisfied that every restriction contained in those rules and codes was in the public interest, and a number of provisions were amended or abandoned, as the noble Lord, Lord Williams, reminded us; but the court was satisfied that the Stabiliser arrangement itself was not contrary to the public interest. It took the view that without such an arrangement the commitment of ABTA members to the association's bonding arrangements and their adherence to other disciplines laid down by ABTA would decline to the obvious detriment of consumers.
Nevertheless, the powerful market position in which Stabiliser places ABTA and its members has been fully recognised. In its judgment, the court placed emphasis on the existence, under ABTA's rules, of a procedure which would permit tour operators or travel agents not in membership of ABTA but operating to similar standards, to apply for a dispensation which would enable them to market overseas holidays through or on behalf of ABTA members. The court further emphasised that the paramount criterion for the consideration of such applications should be the consumer interest and not simply the strengthening of ABTA's supervisory role. The court was quite specific about this; it stressed that the ABTA council should not be acting as a recruiting sergeant for that would be an improper use of the discretion. It was with this in mind that the Director General of Fair Trading urged ABTA to extend its fully independent appeals procedure to cover requests for dispensation, and this, too, was an important factor in the court's decision.
The Government believe that the judgment of the Restrictive Practices Court provides a basis on which a degree of competition consistent with the need to protect consumers can be maintained in the market for overseas holidays. The responsibility for ensuring that the judgment is being implemented correctly rests with the Director General of Fair Trading. If the circumstances on which the court has based its judgment change in a material way it is open to the director general to seek leave to apply to the court for a variation of its decision.
My noble friend Lord Teviot has raised a particular problem concerning the Bus and Coach Council, and has fully explained the background. I believe that the formal relationship between the BCC and ABTA is a matter which the two organisations must determine for themselves. What is important is that one way or another the BCC and those of its members who are not also ABTA members should have a timely
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opportunity to make a case for their continued dispensation from Stabiliser and that such a case will be considered strictly according to the consumer interest criteria emphasised by the court. If the BCC's application is unsuccessful it may of course invoke the independent appeals procedure laid down in ABTA's rules. I believe that these procedures should be sufficient to safeguard the consumer interest in this matter. However, if, having invoked all the safeguard procedures available to it, the BCC considers that Stabiliser is nevertheless having an effect not envisaged by the court when judgment was made, I am sure that the Director General of Fair Trading will take those views into account in deciding whether there has been a material change of circumstances such as to require the court's reconsideration.
My noble friend and the noble Lord, Lord Williams, both mentioned the European Commission and asked whether that would be looking at this question. I am aware from press reports that a complaint has been made to the competition directorate of the Commission, and I am sure that it will consider the matter carefully. EC competition rules are likely to apply to Stabiliser in so far as it may affect trade between member states. It is for ABTA and its members to ensure that they are not in breach of those rules, but the competition rules clearly recognise that certain agreements which affect competition cannot at the same time be of benefit to consumers. I am sure that the EC Commission, like the Restrictive Practices Court, will take that into account in considering Stabiliser.
The noble Lord, Lord Carmichael, asked me whether holidays booked this year would be affected in any way. The arrangements governing the sales of holidays during the coming season will not be affected by the current dispute between BCC and ABTA. The bonding arrangements will protect the holiday maker.
In conclusion, I should like to thank my noble friend Lord Teviot for bringing this matter to the attention of your Lordships' House, and the noble Lords, Lord Williams and Lord Carmichael, for taking part. This debate has served to underline that the balance between consumer protection and free competition in the market for overseas holidays is a delicate one, and I am confident that, in seeking to ensure that the judgment of the Restrictive Practices Court on this matter is upheld, the Director General of Fair Trading will take careful note of your Lordships' concern.
House adjourned at sixteen minutes past seven o'clock.

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