Sitting of 16 March 1987

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

    British Rail Workshops
    Mrs. Dunwoodyasked the Secretary of State for Transport if he will have urgent talks with the chairman of British Rail about the concentration of repair work in the regional depots, and the work available to British Rail Engineering Limited, Crewe in the light of the accelerated redundancies.
    The Secretary of State for Transport (Mr. John Moore): The allocation of repair work between regional depots and British Rail Engineering Limited is a management matter for the British Railways Board.
    Mrs. Dunwoody: Is the Secretary of State aware that that extraordinarily distancing reply will do nothing to satisfy the interests of those of my constituents who are now told that they will be faced with redundancies, not in tens, but in hundreds? If the right hon. Gentleman does not intend to support British Rail workshops, he should now make that plain. We cannot afford to lose work in the workshops.
    Mr. Moore: It was not a distancing reply; it accurately described the proper relationship between the management of British Rail, BREL and the Government. Obviously, I would regret further job losses, and I know that the hon. Lady will be concerned about her constituents. She, like others, should also be concerned to argue the case for British Rail beyond this sector. For example, it would be pleasant for her constituents if she were unequivocally to support British Rail with regard to the Channel tunnel.
    Mr. Coombs: Is it not time that the news from BREL was about job creation rather than about job losses? Would not the most positive measure that the Government could take be to prepare British Rail Engineering Limited for the private sector so that, like Jaguar, it could create new jobs instead of laying people off? It might then follow in the footsteps of the Great Western Railway, which was at its greatest when it was in the private sector.
    Mr. Moore: The Government cannot make any comment on privatisation. No decision has been taken on whether, when or how BREL could be privatised. The Government have a lot of other things to do at the moment. My hon. Friend should be commended for the way that he has handled the problems of ex-BREL employees in his constituency and for the work that he has created as a consequence.
    Mr. Anderson: The Minister will know that much of British Rail's rolling stock is in poor condition. A programme of refurbishment is precisly what BREL is good at, and it is very labour intensive. Will he, with the management of British Rail, stress the importance, in job-creation terms, of that refurbishment programme?
    Mr. Moore: The hon. Gentleman is right about the importance of refurbishment, but he would want me to remind the House that the £2 billion investment programme over the next five years for British Rail includes £716 million for locomotives and rolling stock. That is a sizeable re-equipment and refurbishing programme.

    Airlines
    Mr. Dicksasked the Secretary of State for Transport what information he has as to the number of airlines currently based in the United Kingdom.
    The Parliamentary Under-Secretary of State for Transport (Mr. Michael Spicer): There are about 50 United Kingdom airlines holding air transport licences.
    Mr. Dicks: What are the major benefits of competition in the airline industry, and what are the major obstacles to that greater competition?
    Mr. Spicer: Our policy towards encouraging competition in the airline industry is one of the reasons why our industry is now the largest and most efficient in the Western world outside the United States.
    In answer to the second part of my hon. Friend's question, we would like to extend competition in Europe and to see British airlines able to compete more fairly for business in the United States.
    Mr. Sheerman: When scrutinising some of the deals that smaller airlines are tying up with large American airlines will the Minister ensure that those deals do not give a foothold to major American airlines which can damage the national interest and the British airline business?
    Mr. Spicer: I agree with the hon. Gentleman if he is implying that any such tie-ups should be on a reciprocal basis, but we would like our airlines to be able to invest in commuter travel in the United States. It would only be on such a reciprocal basis that we would conceive of the reverse being the case.
    Mr. Soames: I congratulate my hon. Friend on his robust championing of the aviation industry. Will he give a fair wind to the applications by British Caledonian for a number of new European routes being heard today? Does he agree that, through no fault of its own, British Caledonian has had a difficult year and needs every assistance that we can give it?
    Mr. Spicer: My hon. Friend is far too well versed in the affairs of the airline industry to expect me to make any comment about the hearing currently before the Civil Aviation Authority. My right hon. Friend the Secretary of State has a quasi-judicial role in relation to appeals, so he will have a role if an appeal is made. The Government's avowed policy is to encourage all sorts of competition between British airlines wishing to fly into Europe.
    Mr. Wallace: Will the Minister take this opportunity of congratulating Loganair, one of our domestic airlines,

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    which this year celebrates its 25th anniversary? Will he pay tribute to the valuable service that it provides to and within the islands communities in Scotland? Does he accept that British Airways complements that service to an important extent? May we have an assurance that following privatisation the Government will not agree to any diminution in the vital lifeline services which British Airways provides for the islands communities?
    Mr. Spicer: I associate the Government with the first part of what the hon. Gentleman said about British Airways and Loganair.
    The second part of the hon. Gentleman's question might come up in detail later in connection with lifeline services. The British Government are committed to lifeline services and to the appropriate licensing procedures associated with them.
    Mr. McCrindle: How many of the 50 airlines fly scheduled services through Stansted, or how many have indicated a desire to do so? Can my hon. Friend confirm that the Government's policy is still the expansion of Stansted to a maximum of 7 million to 8 million passengers a year, looking to the time when there will be complementary services to the main European destinations?
    Mr. Spicer: Air UK is the major supplier of scheduled services through Stansted. My information is that airlines are increasingly finding it difficult to get into Gatwick and Heathrow and are looking at Stansted as an alternative. That is one reason why we took the decision last year to expand Stansted.
    Mr. Carter-Jones: As American airlines have change of gauge facilities in this country, will the Minister arrange for British airlines to have similar change of gauge arrangements in the United States?
    Mr. Spicer: One of the matters being discussed in Washington by our officials this afternoon is the question of reciprocal arrangements and fair trade between the United States and the United Kingdom. The hon. Gentleman is right to say that the American airlines, which often are the first to complain about charges, at Heathrow airport for instance, can use their rights at Heathrow—change of gauge is one of them, and to pick people up at Heathrow, is another—which our airlines cannot do in the United States. One day that will have to be redressed.
    Mr. Roger King: Will my hon. Friend accept the grateful thanks of the people of the west midlands in particular for the fact that, because of his policy on competition and deregulation within the internal airline industry, shortly we are to have an international transatlantic service in the shape of Highland Express, which I am sure will go a long way towards re-establishing Birmingham as the country's industrial capital?
    Mr. Spicer: Highland Express is applying to the Civil Aviation Authority for the appropriate permission, so I cannot comment about any particular airline which is currently applying for licences. My right hon. Friend has a quasi-judicial role. We want to encourage the maximum number of viable airlines to fly to the United States, or anywhere else.

    Railways (Electrification)
    Mr. Maddenasked the Secretary of State for Transport when he next intends to meet the chairman of British Rail to discuss electrification of the Bradford-Leeds railway line.
    The Minister of State, Department of Transport (Mr. David Mitchell): The chairman is well aware that I am willing to consider any proposals for electrification where there is a sound case.
    Mr. Madden: Does the Minister agree that rail passengers travelling between Bradford and Leeds are entitled to a first-class service that is fast, clean and comfortable, rather than the fifth-rate service that they now receive, which is slow, dirty and uncomfortable? When he next meets the chairman of British Rail, will he tell him that instead of subsidising sick public relations stunts, such as taking people to Sellafield on the first anniversary of the Chernobyl disaster, he would be better employed submitting electrification proposals for the Bradford-Leeds line, which would help to give passengers a better service, to combat unemployment, to expand local industry and to promote tourism?
    Mr. Mitchell: The hon. Gentleman will be aware that, during the past 12 months I have paid two visits to Bradford, both by rail. The hon. Gentleman spoke about the level of services between Leeds and Bradford and asked for a first-class service. I must tell him that responsibility for the level of local passenger services in West Yorkshire rests with the passenger transport authority.
    Mr. Waller: Is my hon. Friend aware of the multimillion pound investment in new rail services, including new stations and the latest and most modern trains, that is being embarked upon by the West Yorkshire passenger transport executive? This more efficient use of resources is a clear rebuff to the forecasts of Opposition spokemen, who claimed that bus deregulation would spell the end of rail services because they would be unable to compete with buses on the most profitable routes.
    Mr. Mitchell: My hon. Friend is perfectly correct. I am also grateful to him for his invitation to visit his constituency later this week, when I shall have the opportunity to ride on some of those buses.
    Mr. Meadowcroft: If the responsibility for services rests locally, surely the Minister is not suggesting that the local community should electrify the lines? Does the Minister appreciate that electrification may well bring advantages that will enable other stations to be opened between Leeds and Bradford, including west Leeds? The benefits of through-running will be greatly appreciated by people in Pudsey and west Leeds as well as Bradford.
    Mr. Mitchell: Electrification is a matter for British Rail to propose. British Rail proposes and Ministers dispose.
    Our record of approving electrification proposals for British Rail is one that should give the hon. Gentleman some cause for complimenting the Government. Between 1974 and 1979, when the Labour Government were in office, £71 million worth of electrification was approved. Since 1979, under the Conservative Government, no less than £476 million worth of electrification has been approved. I believe that the figures speak for themselves.
    Dr. Hampson: In the context of the development of the Channel tunnel, does my hon. Friend agree that electrification will be an important factor in preventing the relocation of northern companies in the south-east? Will he assure us that he will consider the development in Yorkshire of a new freight terminal, possibly with free port status, to assist companies to stay in the north?
    Mr. Mitchell: My hon. Friend is absolutely right to draw attention to the considerable advantages to the north that will come from the Channel tunnel with the possibility of direct through services for both passengers and freight.
    With regard to the development of freight terminals in Yorkshire, British Rail will report back to me in July with its report on the freight side, which will say where it wants those terminals.

    Motorways
    Mr. Knoxasked the Secretary of State for Transport how much has been spent on new motorway construction in each of the past three years, at constant prices.
    Mr. Moore: In the past three years, expenditure on motorway construction at constant 1985–86 prices reduced from £323 million in 1983–84 to £317 million in 1984–85 and £254 million in 1985–86, reflecting the switch to trunk road improvements, particularly bypasses. Capital investment in roads is now nearly 30 per cent. higher than in 1978–79.
    Mr. Knox: Is my right hon. Friend concerned that the figure for 1985–86 showed a sharp decline compared with the two previous years? Does he agree that a much better motorway network is essential if we are to improve our industrial efficiency?
    Mr. Moore: We have seen an overall increase of 30 per cent. in real terms, because that encompasses the switch to trunk roads and bypasses. However, I recognise the point that my hon. Friend has made. Without question, motorways assist the economic development, and to that extent I know that my hon. Friend will be interested to learn that I am currently reviewing the overall programme and hope to make an announcement about it in the spring.
    Mr. Ashby: My right hon. Friend will be aware that the M42 comes up to the boundaries of my constituency. He will also be aware that the contract for the extension to that road is shortly to be placed. Will my right hon. Friend please ensure that there is no slippage in that contract, because the traffic conditions in Measham and Ashby-de-la-Zouch—2,000 extra vehicles per day—are absolutely dreadful? Will my right hon. Friend also undertake to see whether it is possible for the contract for the next section, from Ashby to Kegworth, to be put forward ahead of time?
    Mr. Moore: I bow to my hon. Friend's detailed knowledge of his constituency and its environs. I know he will be pleased that the completion of the M42 is part of our programme. I shall draw the attention of my hon. Friend the Minister with responsibility for roads to the additional points that my hon. Friend is understandably making within his constituency.
    Mr. Ward: Is my right hon. Friend aware that the trunk roads and bypasses programme has been a tremendous help, particularly by restoring a respectable and quiet way of living to numerous towns and villages? Nevertheless,
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    when he reviews the programme, will he bear in mind the necessity of completing the link between the M3 and the M27? At present the two motorways are connected by a dangerous and narrow section of road, which is highly dangerous for the heavy traffic from Southampton arid Poole docks and for traffic from London.
    Mr. Moore: Again, I have listened carefully to the point made by my hon. Friend about the connection between the M3 and the M27. He is right to draw attention to the fact that since 1979 we have completed 398 miles of new, all-purpose trunk roads in addition to the motorway programme. Sixty-seven bypasses have been completed and another 150 are in the programme. We can be pleased with and proud of that programme.

    Manchester Airport
    Mr. Silvesterasked the Secretary of State for Transport if he will make a statement on the latest position regarding the development of the rail link to Manchester airport.
    Mr. David Mitchell: I understand that an outline application for grant for the rail link to Manchester airport will be submitted very shortly. I welcome this progress and will ensure that the application receives immediate attention.
    Mr. Silvester: Is it not a little disappointing that this is taking so long? Where does responsibility lie for the next stage? Can my hon. Friend give us any idea of the date on which he expects the application to be submitted?
    Mr. Mitchell: As far back as 28 October last year I promised to consider a section 56 grant application urgently. Apparently it is not regarded quite so urgently by the passenger transport authority, or presumably I should have received it before now. I understand that there is private sector interest in providing a rail link, either partly or wholly at its own expense, relating to the development that the private sector is prepared to undertake at the airport. That may be very good news for people in the area and for the airport.
    Mr. Stephen Ross: I congratulate Manchester on getting permission for its airport connection and getting it under way, but will the Minister tell us what progress has been made in the review of a rail link to Heathrow, which I suggest is absolutely urgent?
    Mr. Mitchell: The review of the corridor and of the transport links within it is proceeding.
    Mr. Adley: Will my hon. Friend make a clear statement on behalf of the Government that his Department accepts that, if we are fully to maximise the advantages of a new airport, it must have a rail link? Given the increase in road traffic that airports bring, a rail link is an environmental necessity for a modern airport.
    Mr. Mitchell: My hon. Friend makes an interesting point, but we have to consider horses for courses. In some cases, people travel to an airport from all directions and do not all channel down a single rail link. My hon. Friend must take that fact into account in his enthusiasm for railways to all parts of the country.
    Mr. Carter-Jones: When the Minister receives the application, will he give it favourable and speedy

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    consideration and appreciate the significance of the rail link, not only for the airport, but for the infrastructure of Manchester and the north-west?
    Mr. Mitchell: I undertake to deal with it speedily, but until I receive it I cannot say how I shall regard it.

    Driving Tests
    Mr. Peter Bruinvelsasked the Secretary of State for Transport how many driving test examiners are employed by his Department (a) nationally and (b) in Leicester; what qualifications are required of driving examiners; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Transport (Mr. Peter Bottomley): (a) 1,445; (b) 15. The waiting times in Leicester are below the national average. I have arranged for the information on qualifications to be placed in the Official Report.
    Mr. Bruinvels: I welcome the possible privatisation of driver testing, which would reduce waiting lists. The average waiting time for the 2 million driving tests each year is 15 weeks. Will my hon. Friend investigate urgently the possible impersonation by a number of people in driver tests? Is he aware that in the east midlands people are charging £200 to take someone else's driving test? In one case, the person failed the test—even though he had a current driving licence—then went outside the driving test centre, removed the L plates, drove away, and was eventually prosecuted and fined £300. Will my hon. Friend investigate this as a matter of urgency?
    Mr. Bottomley: I am grateful to my hon. Friend for his welcome of the internal review of driving tests. We do not have fixed views on what the outcome should be. We know that it is right to see whether improvements could be made. My hon. Friend seems to have given one example of an instance when impersonation, or personation, was detected. If he has any further information on that or other cases, will he give it to us? It is not right for us to give every bit of information on how we check people who falsely take the driving test, but all information will be welcome.
    Mr. Robert Hughes: What on earth possessed the Minister to bring forward the bizarre idea that, by privatising driver testing, he could increase efficiency and improve pass rates? Will driving schools offer 10 lessons at £100 or 10 lessons at £300, with a driving licence at the end of the course?
    Mr. Bottomley: The hon. Gentleman should be aware that we try to run the driving test regime in a way that is seen to be safe, fair and honest. It is our intention to keep it that way. We want to see whether it is possible to give customers a better service and to get greater efficiency. —[Interruption.] I ask the hon. Gentleman to listen to my reply. I listened to his question. If I may, through the hon. Gentleman, I shall speak to the 1 million people a year who take the driving test. It is ludicrous that over half of them present themselves when they are likely to fail. It is ludicrous to have a waiting time of 13 weeks on average. It is sensible to see whether we can make improvements that can include delegation to the private sector.
    Following is the information:
    Examiners must be over 26 years old. They must have at least six years experience of driving different types of vehicles, and wide experience of driving in the three years before appointment. They must demonstrate their driving ability in
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    a special test. After initial selection by interview, they must complete successfully an intensive residential training course, usually lasting four weeks.

    London Underground
    Sir John Biggs-Davisonasked the Secretary of State for Transport, pursuant to his answer to the hon. Member for Epping Forest on 23 February, Official Report, column 8, what consideration he has now given to the memorandum about the running of the London Underground submitted to him by the hon. Member for Epping Forest.
    Mr. David Mitchell: I have, as I offered, copied the memorandum to the chairman of London Underground for consideration and reply. In addition, I covered a number of these matters in my recent letter to my hon. Friend.
    Sir John Biggs-Davison: Although the improvement of tracks and signals must take time, may immediate attention be given to the representations of the Line Users Action Group regarding timetables, with particular reference to Epping and Debden?
    Mr. Mitchell: I shall ensure that my hon. Friend's views are drawn to the attention of the chairman of London Underground Ltd. There were problems on the introduction of the new timetables, but I understand that they are now being satisfactorily dealt with.
    Mr. Squire: Is my hon. Friend aware that there is a widespread welcome in my constituency for the increased number of trains on the District line, particularly in the rush hour, and the fact that it has been achieved at a reduced cost to the taxpayer? Will my hon. Friend, when he tries to improve the use of the Underground, continue to bear in mind the fact that a large number of women refuse to travel on the Underground after the evening rush hour?
    Mr. Mitchell: I am grateful to my hon. Friend for drawing attention to that fact. The sum of £15 million is being allocated over the next three years to London Regional Transport to help cut crime on the Underground. I hope that that will bear the sort of fruit that he and I want to see.

    Air Traffic Control
    Mr. Wallaceasked the Secretary of State for Transport if he will make a statement on the ratio of air traffic controller posts to the number of flights.
    Mr. Michael Spicer: This matter is the statutory responsibility of the Civil Aviation Authority. The authority's inspectorate of air traffic control ensures that there are sufficient qualified staff at all air traffic control units to handle the traffic there.
    Mr. Wallace: Does the Minister accept that since the last major review of air traffice control, transatlantic flights, for example, have doubled and that air movements plotted by the air traffic control centre at Prestwick have gone up by 267 per cent., while staffing levels have remained the same? Against that background, does it not seem rather odd that the Civil Aviation Authority is seeking to reduce its manpower by 10 per cent.? Will the Minister undertake that when he, or the Secretary of State, meets the chairman of the Civil Aviation Authority he will

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    emphasise the paramount consideration of safety over any commercial considerations that it may have in trying to compete for other contracts at other airports?
    Mr. Spicer: The answer to the last part of the hon. Gentleman's question is yes. The Civil Aviation Authority employs air traffic controllers at a limited number of airports. One of the reasons why its payroll has been falling is that it recently lost the Liverpool contract. As the hon. Gentleman implied, as long ago as 1983 the Monopolies and Mergers Commission reported that there was under-utilisation of air traffic controllers at some airports. As a result, the CAA is trying to make better utilisation of its air traffic controllers at non-busy airports and at off-peak periods. On the hon. Gentleman's last point, I can give him a specific assurance that, despite the increase in traffic to which he referred, the number of serious risk-bearing air misses declined between 1976 and 1985 from 40 to 16.
    Mr. Tim Smith: Does my hon. Friend agree that there is an inherent conflict of interest within the Civil Aviation Authority arising from the fact that it is both the principal provider of air traffic control services on the one hand and the official investigator of air misses, which may involve those very air traffic control services, on the other? If he agrees, does he think that the problem might be resolved by privatising the CAA's air traffic control services?
    Mr. Spicer: The provision of air traffic control services operates in competition with at least three other organisations, There is never any question of there being any conflict of interest on safety. The answer to the question that was asked earlier about whether safety is paramount has to be yes.
    Mr. Foulkes: Does the Minister not accept that the volume of traffic that is being controlled by the Atlantic centre at Prestwick is rising, and will continue to rise, and that to try to control aeroplanes with a reduced number of air traffic controllers is both a false and a dangerous economy? Will he express these views to the CAA so that we do not end up with an air crash and the Minister having to make a statement at the Dispatch Box to explain that the crash occurred because some poor air traffic controller had been working long hours because of the cuts, with the blame inevitably falling on that poor scapegoat instead of where it ought to fall—on those who are making the economies?
    Mr. Spicer: I very much hope that the hon. Gentleman is right and that air traffic into Prestwick is increasing from across the Atlantic.
    Mr. Foulkes: No, through the Atlantic centre.
    Mr. Spicer: Through the Atlantic system as well, through the Prestwick control. However, the hon. Gentleman is absolutely wrong and, I have to say, almost mischievously wrong, in his implied criticism that safety is being put at risk. I have already stated categorically that during the last 10 years the air traffic control system has progressively become safer and safer. That is the policy of both the CAA and the Government. It is quite another matter to consider whether or not there is some scope for better manning during off-peak periods and also in airports that are not busy. That is all that is being proposed.
    Mr. Robert Hughes: Will the Minister take to heart the very old adage that prevention is better than cure?
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    Therefore, does he agree that by far the best course of action is to have a proper system of regulations that lay down hours of work and proper rest periods while on duty? Although an air traffic controller may not be hyperactive during a certain period, the fact that he is not doing very much may equally be a cause of fatigue. That matter ought to be looked at very seriously.
    Mr. Spicer: If the hon. Gentleman is saying that there should be standardised regulations throughout the country, I do not agree. At the busier airports there are already very substantial fatigue periods. Every two hours at a busy airport there is a half an hour fatigue period for air traffic controllers. I do not agree with the hon. Gentleman that standardised regulations are the answer. Airports throughout the country are very different. In some cases there will be a greater requirement for air traffic controllers. For example, as STOLport comes on stream there will be more air traffic controllers. It is a matter for the judgment of the CAA, for a start, which always puts safety at the top of its list of priorities.

    Roads (West Sussex)
    Mr. Soamesasked the Secretary of State for Transport if he will make a statement on investment by Her Majesty's Government in the road infrastructure in West Sussex.
    Mr. Peter Bottomley: The M23 and its associated Gatwick link were completed in 1974 and 1975. Apart from a short length of the A3, the other trunk roads in West Sussex are the A23 and A27. Actual and planned expenditure since 1979 amounts to more than £70 million at 1983 prices. In addition, £18 million has been made available to the county council through transport. supplementary grants over the past five years.
    Mr. Soames: I thank my hon. Friend for his great help, but does he agree that the increase in vehicle miles arid traffic in and around my constituency has been dramatic in the last few years? Is he also aware that the traffic congestion is unacceptable to my constituents? Although my hon. Friend has been down to see this for himself, will he do whatever he can to assist 'Nest Sussex county council in resolving this problem, to the betterment of my constituents and local industry?
    Mr. Bottomley: I should like to pay tribute to my hon. Friend, not only for inviting me to meet those primary school children and to see at first hand the problems of the growing amount of local and longer-distance traffic. It is the Government's determination to put figures on the help given to county councils, rather than fresh directions, which do not. We intend to go on trying properly to meet the needs of both commercial and domestic road users. I look forward to associating myself with my hon. Friend's efforts towards that achievement for many years to come.
    Mr. Gow: Does my hon. Friend agree that East Sussex is adjacent to West Sussex, and will he—[Interruption.]
    Mr. Speaker: Order. The question is about roads infrastructure, not adjacent to, but in, West Sussex.
    Mr. Gow: Will my hon. Friend accompany me on that part of the A22 which is the London to Eastbourne road, which passes through West Sussex? If he makes that journey he will realise that great though is the need of my

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    hon. Friend the Member for Crawley (Mr. Soames) and his constituents, the needs of my constituents are even greater.
    Mr. Bottomley: If I am allowed, Mr. Speaker, I shall quote from my briefing, which states:
    "also applies to East Sussex, if raised."

    British Airports Authority
    Mr. Hubbard-Milesasked the Secretary of State for Transport what representations he has received about progress in the privatisation of the British Airports Authority.
    Mr. Moore: Preparations for the privatisation of BAA plc are progressing well. The privatisation is planned for June-July this year.
    Mr. Hubbard-Miles: I am grateful to my right hon. Friend. What, if any, special arrangements have been made for employee shares?
    Mr. Moore: The 7,200-plus employees will be involved in the issue. They will be eligible for about £100 worth of shares at no cost, at the time of flotation. In addition, the Government will provide two free shares for each share purchased by an employee up to a maximum of about £400 of free shares for £200 purchased. All employees and pensioners of BAA plc will be able to apply on a priority basis for shares at the offer price.
    Mr. Robert Hughes: Have the Government learnt any lessons from the sale of British Airways, in which a great deal of public money was lost? Or has the right hon. Gentleman been reminded by the Prime Minister of a statement that she made to the House in April 1968, when she said that it would be Conservative party policy to sell off public assets at below their true value?
    Mr. Moore: We certainly have learnt lessons from the successful privatisation, of British Airways. The prime lesson is that I am still trying to discover what the Opposition fear most, a further successful privatisation, or a general election.
    Mr. Bowen Wells: Will my right hon. Friend advise the House how, when preparing the British Airports Authority for privatisation, he will deal with the loss-making Stansted airport? He will know that a new terminal is being built there. In a recent answer to a question from me he said that the passenger traffic at Stansted is decreasing. Will not the abolition of income from duty-free sales at the airport put BAA totally in the red for a long time ahead? Will he consider curtailing the development at Stansted to prevent that occurring?
    Mr. Moore: I cannot accept certain of my hon. Friend's propositions. Like others, he will want to look forward to the detailed prospectus that will appear in advance of the privatisation of BAA, which, as I said, we are looking forward to, successfully, in June-July this year.
    Mr. Stephen Ross: May I take it that in the legislation providing for the privatisation of BAA protection will be given to ensure that foreign airlines will not be able to acquire shares and form cartels which might give them some effective control over the future of BAA?
    Mr. Moore: I can reassure the hon. Gentleman on that fair point. Provision will be included in the articles of
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    association of the privatised BAA plc restricting the shareholding of any individual or of parties acting in concert to 15 per cent. of the total issued share capital. In addition, the Secretary of State will retain a special share that will give him the right to veto any proposed change in the articles of association.

    Motorways
    Mr. Coombsasked the Secretary of State for Transport how many miles of motorway have been completed since 1979.
    Mr. Peter Bottomley: Two hundred and sixty-five miles of new motorway have been completed in England since April 1979.
    Mr. Coombs: Will my hon. Friend tell the House what major new motorway schemes are now in preparation? In particular, will he say what progress is being made in research on the extra traffic in the M4 corridor between the M25 and London as a result of the opening of the M25 and the extra traffic now being siphoned off the M3 and M40 on to the M4 coming into west London?
    Mr. Bottomley: We said that we would review the M25 a year after it was fully opened. Obviously, our major schemes will help the M40, the M20 and the Manchester outer ring road. My right hon. Friend the Secretary of State expects to open the southern turn of the junction of the M5 and M42 this Wednesday. It is important, to have not only motorways, but trunk roads and relief roads. Our increase of 30 per cent. in spending contrasts with the Labour Government, who cut new national road spending in half during their term of office.

    Road Safety
    Mr. Jannerasked the Secretary of State for Transport whether he will set up an inquiry into the provision and funding of further road safety measures for schoolchildren.
    Mr. Peter Bottomley: The Department is funding a detailed survey on the provision of road safety education in the United Kingdom. The subject has been considered in the interdepartmental review of road safety. We shall consider with the Department of Education and Science further appropriate action.
    Mr. Janner: Is the Minister aware that the education of children in road safety is not enough and that much more money is needed for road safety measures outside schools? Is he further aware that the absence of such safety measures caused the death of a child in Anstey lane, Leicester recently and that there is a desperate need for money to enable the local authority to provide pedestrian crossings where they are needed and so that safety measures can be implemented effectively?
    Mr. Bottomley: Yes, Sir. First, our guidelines must be right so that local authorities can put in safety measures. Secondly, it is important to have safe routes to school analysed and to have changes made. Obviously, education matters, but most important, especially for young children, is that parents and those around them chaperone them when they are below the age of seven and make sure that they are properly trained before they go out on the roads alone.

  ATTORNEY-GENERAL

    State Security
    Mr. Jannerasked the Attorney-General when he next expects to meet the Director of Public Prosecutions to discuss progress with the consideration of possible prosecutions under section 2 of the Official Secrets Act in the eight currently outstanding cases.
    The Attorney-General (Sir Michael Havers): I expect to meet the Director of Public Prosecutions shortly and to discuss with him such matters as appear at that time to be appropriate.
    Mr. Janner: May I say how pleased we are to welcome back the Attorney-General in good health?
    Is the right hon. and learned Gentleman considering the lessons to be learnt from the catastrophic mishandling of the Wright case in Australia? As a result, will he make any further prosecutions under section 2 of the Official Secrets Act? Which of the eight are to be prosecuted and, if any, do they include Nigel West, alias Allason, who is a prospective Conservative candidate?
    The Attorney-General: I am grateful to the hon. and learned Gentleman for his kind remarks, which I greatly appreciate.
    I do not accept that the case in Australia was a catastrophic disaster. It concerned a principle which we are maintaining and we were right to do so. Of the eight outstanding cases, two have been convicted, two have been dropped and the rest are awaiting final consideration. I have already dealt with the decisions on the others.
    Mr. Forth: Does my right hon. and learned Friend appreciate how much support there is for the principle that those who sign the Official Secrets Act and then break it, particularly for personal gain, should be pursued and prosecuted, and that anything that he and his Department do in that connection in the future will have wide support on this side of the House?
    The Attorney-General: I am grateful to my hon. Friend. That in a nutshell is the principle behind the case.
    Mr. Foot: If that is true, as it is alleged in some of the reports about what is in Mr. Wright's book, that people from MI5 were engaged in some sort of conspiracy against the elected Government of the United Kingdom, does the Attorney-General think that that, too, is a matter of principle? What steps has he taken to ensure that that is properly investigated?
    The Attorney-General: I think I can refer the right hon. Gentleman most conveniently to the answer of the then Prime Minister when he addressed the subject.
    Mr. Rippon: Most right hon. and hon. Gentlemen will welcome what my right hon. and learned Friend has just said. Does he agree that the operations of the secret service must remain secret and that they involve a lifelong duty of trust?
    The Attorney-General: I agree entirely with my right hon. and learned Friend. I am surprised that so many Opposition Members seem unable to accept that principle.
    Mr. John Morris: I, too, wholeheartedly welcome the Attorney-General back to his place in the House.
    What is the prime consideration in relation to prosecutions? Is it damage to national security, or is it
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    political embarrassment? Does the Attorney-General maintain consistency in his approach to Miss Tisdall and Mr. Ponting and to others such as Mr. West, Mr. Pincher, Lord Rothschild and the security men who may have leaked information to those people? Has not section 2 of the Official Secrets Act been virtually put out to grass and replaced in practical terms as a damage limitation exercise by actions for breach of confidentiality?
    The Attorney-General: I thank the right hon. and learned Gentleman for his kind remarks. He used the word prosecutions, not for the first time during my questions. In fact, the proceedings in Australia are civil proceedings. There is no way in which we can prosecute under the Official Secrets Act in another country. With regard to the action in Australia, the principle has been brought out clearly today that it is the Government's determination to establish that once a man joins a service in which he promises to keep secret for the rest of his life all that he finds, that principle should be upheld.
    Mr. Mates: For the benefit of the right hon. and learned Member for Aberavon (Mr. Morris), will my right hon. and learned Friend reinforce the point that whether or not a matter is politically embarrassing, the fundamental principle to be observed is that if a person breaches trust he must be pursued by any Government as far as it is legally possible to do so?
    The Attorney-General: It would be impossible for the intelligence services to carry on their business and to maintain the confidence of other intelligence services if that principle was not upheld.

    State Security
    Mr. Dalyellasked the Attorney-General if he has yet reached any decision whether to prosecute Lord Rothschild in relation to alleged offences under the Official Secrets Act.
    The Attorney-General: The police investigation to which the Solicitor-General referred on 6 February is as yet incomplete.
    Mr. Dalyell: Before appealing in Australia, would it not be wise to find out what on earth induced Victor Rothschild to pay money for Peter Wright to come here and to introduce him to Chapman Pincher? As I suggested in an Adjournment debate on 6 February, is there not some selectivity in prosecution policy? Why go for Wright and not for Victor Rothschild?
    The Attorney-General: I have made it clear that there is no question of any decision being taken about Lord Rothschild. The police inquiry is not complete and the Director of Public Prosecutions has no report. With regard to the case in Australia, the hon. Gentleman again fails to distinguish between insider and outsider books.
    Mr. Mark Carlisle: Is not the answer to the selectivity issue raised by the right hon. and learned Member for Aberavon (Mr. Morris) the fact that neither Mr. Chapman Pincher nor Mr. Nigel West is subject to the Official Secrets Act and thus cannot be prosecuted under it?
    The Attorney-General: With one reservation, my right hon. and learned Friend is right. A person who directly repeats information from someone bound by the Act could himself be liable.

    Wright Court Case
    Mr. Winnickasked the Attorney-General if he is now in a position to make a statement on the Wright court case in Australia.
    The Attorney-General: With permission, I shall answer this at the end of Question Time.

    High Court Judges
    Mr. Maddenasked the Attorney-General what criteria the Lord Chancellor uses in recommending the appointment of High Court judges.
    The Solicitor-General (Sir Patrick Mayhew): High Court judges are appointed by the Queen on the recommendation of the Lord Chancellor. The statutory qualification is to be a barrister of 10 years' standing, but those appointed are usually of more senior standing than that. The criteria for selection are judicial potential, ability, experience, reputation and personal integrity.
    Mr. Madden: Can the Solicitor-General, from his personal recollection, think of anyone who has been promoted in one go from registrar to High Court judge?
    The Solicitor-General: I can think of one—or, at least, I have been prompted of one. It is unusual, but there is one. To make a general response to the question, I believe that the reputation of our judiciary is unsurpassed throughout the world. Where the constitution appears to be working well, on the whole I am averse to changing it.
    Mr. Stokes: Is my right hon. and learned Friend aware that most people in this country, unlike some Opposition Members, regard our judges in the highest light? They look to them as protection against arbitrary power and they want no changes in their appointment, and certainly no political mucking about with what they do.
    The Solicitor-General: As usual, my hon. Friend speaks with the good sense that characterises the opinion of the vase majority of people in Britain.
    Mr. Skinner: Has the Solicitor-General seen the recent remarks of Judge Argyle, who last week addressed a meeting and said that those who are found guilty of crimes which result in sentences of more than 15 years should be hung—[HON. MEMBERS: "Hanged."]—hanged: it is the same argument. He also said that there are 5 million illegal immigrants in Britain. How did he manage to become a judge? Who was responsible for giving him the job? Why is it that the Government can cast aspersions on the Australian judge, yet this one seemingly attracts no comments from the Attorney-General and his mates?
    The Solicitor-General: The advantage of having an independent judiciary is that its members are responsible for their own opinions, if they are correctly reported. The Attorney-General is not responsible for anything that is reported to have been said by any judge.

  OVERSEAS DEVELOPMENT

    Africa
    Mr. Norrisasked the Secretary of State for Foreign and Commonwealth Affairs what action he is taking to help control the devastation being caused by locusts and other pests in Africa.
    The Minister for Overseas Development (Mr. Chris Patten): Last month I committed over £1·5 million for pesticides, sprayers, vehicles and spares to combat the current desert locust upsurge in eastern Africa. I have agreed to today to provide a further ·567,000 for locust and grasshopper control in the Gambia, Mali and Sudan. This is in addition to the £3 million the Government provided last year to help to control locusts and other pests in Africa. We stand ready to provide more help if needed.
    Mr. Norris: Does my hon. Friend agree that the locust and grasshopper devastation in central Africa, all the way from Senegal to Djibouti, wreaked untold damage on the fragile economies of those countries? Does he agree that although his news today is welcome, we must do all that we can to combat those serious attacks on the economies of central Africa?
    Mr. Patten: I very much agree with my hon. Friend, whose remarks underline the importance of supporting the regional organisations working on the control of locusts. I was pleased to visit the desert locust control organisation a couple of weeks ago, which we support and will continue to support.

    Mozambique
    Mr. Soamesasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the amount of aid her Majesty's Government will be extending to Mozambique in 1988–789.
    Mr. Chris Patten: We expect to maintain a substantial aid programme to Mozambique in 1988–89. Figures will be announced in due course in the usual way. We shall also remain ready to contribute food aid and emergency relief.
    Mr. Soames: Although I congratulate my hon. Friend on the imaginative programme that he has introduced for Mozambique, does he agree that Britain has some important interests in a stable Mozambique? Will he do all that he can to ensure that if any EEC food surpluses are available for that region, Mozambique has the first charge upon them?
    Mr. Patten: I very much agree with my hon. Friend's first point. I hope that Mozambique will soon agree on a programme with the International Monetary Fund and the World Bank, which we shall support when it happens. As for food aid, I am pleased to be able to tell my hon. Friend that following my visit to Mozambique we immediately raised the question of food aid in Brussels. A further 60,000 tonnes of cereals was agreed by the Commission on 3 March. Much of it will be provided from Zimbabwe.
    Mr. Kirkwood: Bearing in mind the fact that economic security cannot exist in the absence of military security, and having regard to the problems of Mozambique at present, do the Government have any plans to increase military aid to the front-line states and to Mozambique in particular?
    Mr. Patten: Although the matter is not strictly within my terms of reference, I can confirm that we are helping with the training of the Mozambiquean armed forces, and we are also providing battalion unit training for the Zimbabwe army.
    Mr. Bowen Wells: Is not a major cause of Mozambique's difficulties and need for food aid the disruptive tactics of the Republic of South Africa to the south, supporting the guerrillas within the country, who are disrupting the normal flows of supply? This happens throughout the Southern African Development Coordination Conference countries. What thoughts have my hon. Friend and his Department given to supporting those countries that are being seriously disadvantaged by the sanctions being imposed on South Africa and South Africa's retaliation?
    Mr. Patten: We have continued to urge restraint on South Africa in relation to Mozambique and the other front-line states, and we have continued to urge South Africa to stick to the Nkomati accord.
    Mr. Anderson: I welcome the new warmth in the relationship between our country and Mozambique and the coming visit of President Chissano, but what are the Government doing about South Africa's destabilisation policies, which are destroying the very infrastructure that the Government are seeking to assist? Are we telling the South Africans that they cannot get away with arming and financing these rebels, who are surrogates of South Africa and destroying our aid efforts?
    Mr. Patten: In answer to the previous questions I have already referred to the representations that we have made to the South African Government. As I was able to make clear at the meeting of SADCC in February, we are also providing more support to help the front-line states become more independent economically of South Africa.

    Development Research
    Mr. Stuart Hollandasked the Secretary of State for Foreign and Commonwealth Affairs what measures he is taking to ensure the viability of development studies and development related research in the United Kingdom.
    Mr. Patten: The ODA currently provides £17 million a year for direct support of about 30 British institutions undertaking development-related research. Another £12 million is provided in grants for research by specific individuals or teams. Support for courses in development studies at British universities is provided by the Department of Education and Science through the University Grants Committee. The ODA also provides assistance to postgraduate students from overseas.
    Mr. Holland: The Minister must be aware that the cuts undertaken by the Government have lacerated research in tropical development institutions and core funding of research institutes such as the institute of development studies at Sussex. Since December it has been clear that the whole future of the school of development studies at East Anglia is at risk. The Minister made a good start at this by expressing concern over the matter, but why has he not followed it through? Can he not get the Department of Education and Science to grant funding, and if he cannot, will he not come up with something from his own budget as a temporary measure to ensure that that school can survive?
    Mr. Patten: The first part of the hon. Gentleman's question is nonsense. As to the second, I was concerned to learn about the proposals being discussed to reduce undergraduate training programmes in development
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    studies at East Anglia. As the hon. Gentleman suggested, I made clear publicly how much value we place on the work of the school of development studies there. I have also made those views known to my hon. Friend the Under-Secretary of State for Education and Science and to the chairman of the University Grants Committee. I understand that discussions are continuing, and I hope that there will be a satisfactory outcome.

    Development Process (Women's Participation)
    Mrs. Dunwoodyasked the Secretary of State for Foreign and Commonwealth Affairs if he will list the specific projects in his present programme of overseas aid that relate to women's participation in the development process.
    Mr. Chris Patten: All aid affects women. Examples of projects and programmes with a direct impact on women are given in the booklet "Women in Development", copies of which are in the Library.
    Mrs. Dunwoody: Is the Minister aware that in most Third world countries it is women who do all the hard physical labour, and specific targeting of projects that would help them in training and in agricultural matters would have a direct effect on the standard of living of most difficult areas, particularly those in need of some kind of economic investment?
    Mr. Patten: I agree with the emphasis that the hon. Lady places on training. Too few women are on our training programme, and we are taking that point up with the Governments of aid recipient countries.
    Mr. Forth: Do we not have to be careful not to impose our own standards and mores on other countries? Will my hon. Friend give me an assurance that any pontifications that we make on this matter will be kept to a minumum, as with expressions of our attitude to the internal, domestic and social affairs of other countries?
    Mr. Patten: The answer to the first part of the question is yes. The answer to the second part of the question is yes.
    Mr. Deakins: Is the Minister aware that one way of helping women to take part in the development process in the Third world is to enure that they have full access to information, suppliers and advice generally on family planning so that they can choose for themselves the number of children they will have and their spacing and can preserve their health and play a full part as citizens in the development process?
    Mr. Patten: There is a great deal in what the hon. Gentleman said. In 1985 we spent £15·5 million on population-related activities. I believe that there is a close relationship between the success of population programmes and literacy rates among women.

    Immunisation Schemes
    Mr. Butterfillasked the Secretary of State for Foreign and Commonwealth Affairs what support is being provided from the aid programme to immunisation schemes in developing countries.
    Mr. Chris Patten: We support immunisation programmes through our contributions to the United Nations Children's Fund and the World Health Organisation's cold chain support unit and as part of our bilaterally funded primary health care projects.
    Mr. Butterfill: Does my hon. Friend agree that in this modern age it is unacceptable that so many children throughout the world should suffer and die because of a lack of immunisation? Does he agree that Britain's contribution compares favourably with those of other countries? Will he give a comparison? What is my hon. Friend's opinion on how well UNICEF is carrying out its functions in that regard?
    Mr. Patten: UNICEF is doing an extremely good job. That is why I was pleased that we were able in January to announce a £5 million grant for its immunisation programme. This financial year we shall contribute more than £13 million to UNICEF, which is the largest amount that we have ever contributed. We are making £164,000 available to the WHO's cold chain support unit. In addition, we hope to spend more than £10 million on bilateral health activities, many of which include immunisation.

    Aid-Trade Projects
    Mr. Kirkwoodasked the Secretary of State for Foreign and Commonwealth Affairs what further projects he is considering for developing countries under the aid-trade provisions.
    Mr. Chris Patten: Thirty four capital aid projects and 37 technical co-operation proposals are currently under consideration for funding from the aid and trade provision.
    Mr. Kirkwood: Does the Minister accept that Britain alone within the OECD is one of the few countries whose proportion of aid as bilateral aid — as opposed to funding through multilateral sources—is increasing? Is that not regrettable?
    Mr. Patten: I am not sure exactly what the hon. Gentleman is asking. I believe that the more significant figure is in the OECD's recent findings—80 per cent. of our aid budget goes to the poorest countries, as against an average for the OECD of 60 per cent.

Wright Court Case
3.32 pm
The following Question stood upon the Order Paper:
Mr. David Winnick: To ask the Attorney-General if he is now in a position to make a statement on the Wright court case in Australia.
The Attorney-General (Sir Michael Havers): The principle which the Government are seeking to uphold is clear. Having considered Mr. Justice Powell's judgment and the advice of Australian counsel, the Government have decided to appeal against it. A notice of appeal will be lodged as soon as practicable.
Mr. Winnick: Is the Attorney-General aware that many people believe that it is simply a further waste of taxpayers' money to pursue the appeal in Australia? Is he aware also that the Opposition are concerned not about the tittle tattle of the memoirs—we all know that Wright is a very embittered individual—but about the need to ensure that there is adequate parliamentary scrutiny of the security services? In view of the allegations that a Labour Government were destabilised—at least at certain stages—by the Security Service, will there be a clear promise that there will be a full judicial inquiry into those allegations?
The Attorney-General: I have no power to give any such undertaking. That is not a matter for me. I remind the House of what the Prime Minister of the day said. He said that, after conducting detailed inquiries, he was satisfied that the allegations about the Security Service
"did not constitute grounds for lack of condifence in the competence and impartiality of the Security Service or for instituting a special inquiry."
Mr. Ivan Lawrence: Does my right hon. and learned Friend agree that if the Government had done nothing to try to stop those who are entrusted with the nation's secrets from betraying those secrets for money they would have been subject to the accusation of having shown the grossest irresponsibility? Do we in this country not have reason to believe that a system of justice founded upon our system will uphold the principle of confidentiality?
The Attorney-General: Those are certainly matters that the Ministers concerned took very much into consideration when reaching the decision to start the proceedings in Australia.
Mr. Merlyn Rees: May I refer the Attorney-General to the answers that he has given twice today about the inquiry that took place in the summer of 1977, in which I played a part? The statement to which he referred, of which I have a copy, reads:
"The Home Secretary, as the Minister to whom the Security Service is responsible, has been closely involved in the enquiries".
We were not inquiring into the allegations that are now made by Wright and by others. We were inquiring into alleged electronic devices at No. 10, and it was on that issue that the then Prime Minister issued his statement, in which I played a part.
None of that information would be provided to the Attorney-General. None of that information would be provided to the Home Secretary of today. None of that would be provided to the Prime Minister. It is a convention—I note that the right hon. and learned
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Gentleman is nodding in agreement—that none of that information is provided to a later Government. I am satisfied that the information about the Wright allegations and other allegations is not referred to in the inquiry. When Ministers, including the Attorney-General, say that the Prime Minister of the day dealt with it in his statement, I can say that he did not, and neither did I. They are different allegations, and unless an inquiry is set up—this is an exercise by dissident members of MI5 and not a question of national security—I shall get at the root of it whatever happens. The Government had better remember that.
The Attorney-General: I am sure that the right hon. Gentleman would not suggest for a moment, as he has made clear, that the Government are seeking to mislead in any way.
Mr. Merlyn Rees indicated assent
Mr. Dennis Skinner: Misleading! Come clean to the House.
The Attorney-General: I am grateful to the right hon. Gentleman for his acknowledgement—
Mr. Skinner: Come clean.
Mr. Christopher Soames: Shut up.
Mr. Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) must not interrupt like that.
Mr. Skinner: Why do you not mention Bunter, Mr. Speaker? Why do you not get stuck into Bunter, Mr. Speaker?
Mr. Speaker: Order.
The Attorney-General: As the right hon. Member for Morley and Leeds, South (Mr. Rees) has said, we do not have access to any of the papers that were considered by him and the then Prime Minister. I shall, however, ensure that what he has said is drawn to the attention of my right hon. Friend the Home Secretary.
Mr. Geoffrey Rippon: I warmly welcome the statement that the Government are to appeal in the Wright case. Many in the House believe that the Government are right so to do and that there is no alternative but to take that course. Does my right hon. and learned Friend agree that if the operations of the secret service must remain secret, the means by which it is controlled must remain the responsibility of the Government of the day and cannot be delegated to any other body?
The Attorney-General: That has been the convention for a very long time. That is why questions about security are usually not allowed by the Table Office. I agree with everything that my right hon. and learned Friend has said.
Dr. David Owen: Is the Attorney-General aware that I am sure that both sides of the House agree with the principle that no one who has worked in MI5, either present or retired, should be free to publish what he wishes? The question of accountability of MI5, however, and what appear to be fairly widespread illegal practices are causing great concern. Will the Attorney-General, who is answerable on this issue to the House, explain why he was not involved in the decision not to prosecute Mr. Chapman Pincher six weeks before the book was published? Did that decision relate to the fact

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that the book had been stolen? Will the Attorney-General tell the House also why no action was taken against Mr. Peter Wright when he appeared on television?
Both those events occurred in Britain, and surely it is better to proceed on that basis than to go on digging a deeper hole, when one is deep enough in it already, down in Australia. Surely we should deal with the issues for which we are responsible and for which the Attorney-General is responsible, which preceded what happened in Australia by a couple of years.
The Attorney-General: I well understand the anxieties that have been expressed by the right hon. Gentleman. I was not consulted, and therefore I am unable to comment on why I was not, and that is clear.
As to the rest of the right hon. Gentleman's question, I am still bound by the obligation that was imposed on me earlier, because this morning I consulted counsel in Australia and was told that I cannot make any full or detailed statement until the appeal is over.
Mr. Jonathan Aitken: As the confusion over the Wright case seems to be deepening with all these announcements, will my right hon. and learned Friend take note of the view that, by his announcement today, he may be pursuing a good principle, but by the wrong method? Instead of spending the best part of £1 million of taxpayers' money on what I fear will be a vain attempt to persuade the Australian courts to uphold Britain's narrow view of the Official Secrets Act, will my right hon. and learned Friend and his advisers concentrate on the higher priority, which is to ensure that all present and future members of the security services are given binding and enforceable contracts of employment, the breach of which makes them clearly liable to damages and loss of their pension rights if they dishonour their obligations of confidentiality?
The Attorney-General: One of the decisions of the learned judge, Mr. Justice Powell, was whether there was an enforceable contract, which almost certainly will be one of the grounds of appeal.
Is this a vain attempt? No, Sir. We do not accept that it is a vain attempt. I would not agree to any appeal unless I felt confident that there was a proper chance of success. That is why we have taken this decision.
Mr. D. N. Campbell-Savours: Why does the Attorney-General not take up the offer that was repeatedly made by Mr. Turnbull last week, that he was willing to do a deal with the Attorney-General on the content of the book and exclude any material which the Attorney-General felt breached national security, with one proviso, that the material that Wright has produced on the destabilisation of Labour be published? Surely it is in the public interest that that be made available?
Why did the Attorney-General go through his agent, on bended knee, to the judge in the Australian court, insisting that the affidavit of Mr. Wright which dealt with the destabilisation of Labour be taken in secret behind closed doors? Why was that area of his affidavit not made available in the public domain so that the whole world could learn what happened during the mid-1970s?
The Attorney-General: A great deal of the book remains, in the view of Her Majesty's Government, a
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matter of confidence. On those occasions there was no question of going on bended knee to the judge. On the occasions that it was clear to anybody looking at a passage that it was a matter of confidence, the proceedings were heard in camera. There was no question of having to go on bended knee. I am sorry, but I have forgotten the first point.
Mr. Campbell-Savours: The deal with Turnbull.
The Attorney-General: Again, the hon. Gentleman has failed to understand the principle, which I thought we had repeated so many times that it would be clear to anybody. The principle is that we need to uphold a promise that is made by those employed in the intelligence services that they will not, at any time, disclose anything that they have learnt in confidence. We cannot have a settlement, because if we achieve a settlement we shall be in breach of that principle.
Mr. David Ashby: Has my right hon. and learned Friend considered that the reason why the Australian courts take a different view of section 2 of the Official Secrets Act is that they have a Freedom of Information Act, which effectively has replaced the Official Secrets Act? Is that not the direction that we should be taking? Should we not get rid of section 2 and replace it with a Freedom of Information Act that will say what can and cannot be published.
The Attorney-General: Section 2 of the Official Secrets Act played no part in our conduct of this case in Australia. As to the second matter, my hon. Friend will know that in 1979 we sought to improve section 2 but that that proposal did not meet with favour. Ultimately, that must be a question for my right hon. Friend the Home Secretary.
Mr. Willie W. Hamilton: Is the Attorney-General aware that a large number of people inside and outside the House will regard the Government's decision to appeal as little more than a delaying mechanism to prevent any further discussion of the matter this side of the general election?
Does the right hon. and learned Gentleman recognise that taxpayers' interests are at stake? Can he tell the House the total estimated cost to the taxpayer of this farce? In the light of what has happened to the Liverpool councillors, does the right hon. and learned Gentleman agree that he and the Prime Minister should be surcharged if the appeal fails?
The Attorney-General: The councillors would have been in a much stronger position if they had acted on, instead of against, legal advice.
The hon. Gentleman talks about people outside. For the third time at Question Time I must tell the House that I have received not a single letter from any member of the British public about our taking action in Australia. Perhaps the hon. Gentleman reads something into the issue in which the British public do not believe. I think that they believe in the principle that we accept.
What the hon. Gentleman said about a delaying mechanism is nonsense. I am confident that we have a better than even chance of success. As I said to the right hon. and learned Member for Aberavon (Mr. Morris) on the last occasion when I was able to attend Question Time, I am longing for the opportunity to make that statement, and I still am.
Sir Ian Percival: Is my right hon. and learned Friend aware that the majority of people in this country understand and support his desire to uphold the principle that, in the interests of national security, secrets are secrets and should not be sold for money by those to whom they are entrusted in the course of their duties?
The Attorney-General: I do not wish to comment myself, but I believe that to be the view of the British public.
Mr. John Morris: Which is the weightiest principle in the Government's mind—failing to recognise inconsistency delaying other cases, or kicking the ball for touch until after the next election?
Who takes the decisions—the Law Officers or the Prime Minister? Alternatively, was it on the Attorney-General's advice that it was decided to sue in Australia as well as in relation to Miss Miller's book in Ireland? Why was the Attorney-General not consulted about the decision not to act in Pincher's case? Was it because the book's proofs were obtained illegally? Having failed to ban such books in Australia and in Ireland, has the right hon. and learned Gentleman considered that even if he were to win in Australia he would fail to ban publication in Ireland or America?
The Attorney-General: The right hon. and learned Gentleman listens too much to gossip. He talks about weighty principles and kicking the ball for touch. That is one way to put it, but I have now told the House not once, but three times, that I am satisfied that our chances of success are sufficient to justify an appeal. There is no question of taking a deliberate political decision in order to get past the next election. This is a ministerial, collective decision on which the Attorney-General advises.

European Community (Steelmaking Capacity)
3.48 pm
Mr. John Smithasked the Secretary of State for Trade and Industry if he will make a statement oil European Commission proposals to reduce steelmaking capacity within the European Community.
The Minister of State, Department of Trade and Industry (Mr. Giles Shaw): The European Commission's view, which is generally shared by the member states, is that substantial excess steelmaking capacity remains in the European Community. This excess capacity is generally estimated to be in the range of 20 million to 25 million tonnes per annum of hot rolled capacity.
Against this background, the European Steel Producers Federation, Eurofer, put forward proposals to the Commission on 1 March for reducing capacity in a number of steelmaking sectors. These proposals were presented to the Commission on 1 March. No capacity reductions from the British Steel Corporation were included in the Eurofer proposals.
At a meeting of the Council of Ministers on Thursday 19 March, which I will attend, the Commission will, I understand, make an oral statement of its views of the Eurofer proposals in relation to the excess capacity in Europe. I shall, of course, be reporting to the House following that Council of Ministers in accordance with normal practice.
Mr. John Smith: Is the Minister aware of the alarm that spread rapidly throughout the British steelmaking communities when news was received of possible proposals by the European Commission to reduce steelmaking capacity, particularly in hot-rolled coil and strip production? Can the Minister give a categorical assurance that the pledge given to maintain the five integrated steel plants will be maintained absolutely until 1988 and that no proposals will be agreed to take effect thereafter or to prejudice decisions for the future?
Is the Minister aware that the United Kingdom has already borne a severe reduction in the steel industry and there is just no room for any more? Can the Minister confirm that no proposals—I believe that he said this in his statement, but it is so important that I hope he will confirm it—to reduce capacity have been made by the British Steel Corporation, through the mechanism of Eurofer, in discussions with the Commission? Will the Minister make clear at the Council of Ministers meeting on Thursday a view that I believe is fairly widespread throughout the House, that the British Government will not agree to any further reduction in steel capacity, particularly in hot-rolled coil and strip production, either now or in the future?
Mr. Shaw: I unequivocally give the right hon. and learned Gentleman the assurance that he wishes in connection with the maintenance of the five integrated plants strategy as agreed in August 1985 and to which the Government are fully committed.
In relation to the Eurofer proposals, I assure the right hon. and learned Gentleman that no step will be taken which in any way prejudices the future of that strategy

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after the particular date. I can give him the assurance that there is no element in the Eurofer proposals than has been submitted by the British Steel Corporation.
Thirdly, in relation to the Eurofer initiative, the right hon. and learned Gentleman will be aware, as I am aware, that initial rounds were put together in the Peat, Marwick, Mitchell and Co. report, which became public.
I can assure the right hon. and learned Gentleman that in the discussions that I have had, particularly with Vice-President Navjes, in relation to the reports that appeared in the press last weekend, there is absolutely nothing which in any way weakens or undermines the assurances that I have given the right hon. and learned Gentleman.
Sir Alex Fletcher: The maintenance of the five integrated steel plants is a tribute to the Government's persistence, but, to ensure that they achieve viability, the future of those steel works should not be endangered by the current talks taking place in Europe.
Mr. Shaw: That is absolutely correct. It should be borne in mind that the position in the United Kingdom today is that we have a steel corporation and a steel industry which are infinitely more competitive than they have been since the war. The British Steel Corporation is actively seeking to increase the sales of many of its steel products, to the advantage of the United Kingdom, and against European competition. That is a major sea change in steel production.
Sir Russell Johnston: We welcome the assurances that the Minister has given to the right hon. and learned Member for Monklands, East (Mr. Smith). However, the Minister must be aware from his recent visit to Scotland that many fear that the BSC might be making the European Community an excuse for advancing the closure of Ravenscraig. When the Danish Commissioner, Mr. Petersen, recently visited Strathclyde, he agreed with those who pointed out that Britain had already taken more than its share of cuts and that in the next round the brunt should be borne by the French, the Italians and the West Germans.
Mr. Shaw: I take note of what the hon. Gentleman said. He will be aware that that is all the more reason why the BSC has not offered volume reductions in relation to the Eurofer proposals. As regards the Government's view, whatever the Commission may say, it is a political decision by the Council of Ministers that will determine the issue.
Mr. Robin Maxwell-Hyslop: Will my hon. Friend remember that it is not sufficient to state important truths once, and that the facts of the extent to which Britain slimmed its steel industry before the other members of the European iron and steel community did so, bear repeating in public over and over again?
Mr. Shaw: I entirely agree with my hon. Friend, and I expect that that fact needs to be repeated several times.
Dr. Jeremy Bray: Did the BSC propose to Peat, Marwick, Mitchell and Co. the closure of any capacity, and were any such proposals subsequently withdrawn before the report was submitted to the Commission? Further, can the Minister give an assurance that nothing that the BSC is allowed to incorporate in its own plans will be based on the assumption of any major plant closure after 1988?
Mr. Shaw: I have already given the right hon. and learned Member for Monklands, East (Mr. Smith) the assurance that the hon. Member for Motherwell, South (Dr. Bray) would wish me to give. The BSC position in relation to Eurofer is that no volume of BSC capacity is involved therein. On the first part of the hon. Gentleman's question, I must make it clear to him that Peat, Marwick, Mitchell and Co. was free to conduct its own assessment of what would be required. The Eurofer meeting determined which proposition should be placed before the Commission. Those proposals, which are the only proposals that have been made by Eurofer, were deposited with the Commission on 1 March and they will form the basis of the Council meeting on 19 March.
Sir Peter Emery: My hon. Friend may return to Brussels with the knowledge that he has the backing of the whole House. Is he aware that he must make it clear to the Commission that not only the BSC but the Government would find it unacceptable that there should be any cut in British steel production, and that he should continue to point out that although we have reduced production, other nations have increased their production and have not slimmed down? There can be no question of Britain making further reductions until the rest of Europe is in line.
Mr. Shaw: I very much endorse what my hon. Friend has said. He is correct to point out that the capacity exists elsewhere in the Community.
Mr. Tam Dalyell: Following the question of my hon. Friend the Member for Motherwell, South (Dr. Bray), may I ask whether Peat, Marwick, Mitchell and Co. put forward proposals for shrinkage? Is it not a fact that the company could have done so only if such proposals were put forward by the BSC?
Mr. Shaw: I do not think that the hon. Member can be right. Peat, Marwick, Mitchell and Co. made propositions to Eurofer, but the British Government and the Government of all other member states did not know what those proposals would involve, because that was the basis on which Eurofer approached Peat, Marwick, Mitchell and Co. for an exchange of views. As I understand it, the only formal propositions made by Eurofer were those delivered to the Commission on 1 March.
Mr. Teddy Taylor: No one doubts the Government's determination to fight in the Council of Ministers for the retention of five integrated steel works, but will my hon. Friend say clearly to the House whether steel capacity is an area in which Britain has the right of veto, or whether it is likely that other members could make decisions, by a majority vote, on the steel capacities of member states, including the possible future closure of a plant?
Mr. Shaw: I think my hon. Friend will recognise that there can be no more important issue than discussion in the Council of Ministers of such an important matter. I would not wish to prejudge how that discussion will end.
Mr. Dennis Skinner: Why does the Minister not answer the question that he has just been asked? He has been asked a straightforward question by one of his hon. Friends about whether Britain would use the veto to stop further steel closures. Why does the Minister not have

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the guts to stand up to those people in the Common Market instead of continually giving in, as the rest of the Tory Ministers have done over the past five years?
Is the Minister not aware that countless thousands of people throughout the country have been scattered around by the lethal combination of the Common Market and this Tory Government over the past eight years? It is time that we put a stop to it. Get across there and tell them that we are having no more of it.
Mr. Shaw: I understand the hon. Member's strong views on this matter. He will know that the whole of the steel regime is bound up with such matters as quotas, quota liberalisation, increases in quotas, capacity and many other issues. The United Kingdom wishes to secure the best possible solution in relation to its European capacity, and that is a matter for negotiation.
Mr. Michael Shersby: Is my hon. Friend aware that the sea change in the fortunes of the British steel industry to which he has referred is a source of considerable pride to people in this country and that any robust action that he takes in relation to the European proposals will have the widest support in all parts of the House?
Mr. Shaw: I am pleased to have my hon. Friend's support. I am grateful to know that hon. Members on both sides of the House recognise the strong position of the United Kingdom steel industry.

Wright Court Case
3.59 pm
Mr. D. N. Campbell-Savours: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the appeal in the Australian courts in the case of the Attorney-General v. Heinemann Australia Pty. Ltd. and Peter Wright."
The matter is important because a great body of opinion in this country, of all political persuasions, believes that to appeal would only heap one embarrassment upon another, as the Government would inevitably lose. A wise man knows when he has been given a sound beating. Only a fool would go on in search of more punishment. The great majority of people in this country object strongly to the undignified spectacle of Britain being mauled and hauled over the coals in an Australian court action. People are unable to understand the inconsistency in the Government's prosecution policy—the green light to Pincher and West, and the red light to Wright, The Guardian and The Observer, against whom injunctions remain.
People believe that an appeal would leave Britain open to further revelations as to the identity of security officers who, despite lifetime obligations of confidentiality to the Crown, have leaked secrets and yet have not been prosecuted. There is concern about the delay that any appeal may have on the decision whether to prosecute Lord Rothschild, under section 7 of the Official Secrets Act 1920, for soliciting Mr. Peter Wright, by means of an offer of money, to pass to Mr. Pincher documents known or believed to contain official secrets relating to the security services.
What is most worrying is the grave matter of the insistence of the British Government in the Australian court that Wright's affidavit on the destabilisation of Labour should be taken in private session behind closed doors. Why have the Government so vehemently denied that any attempt was made to destabilise Labour, yet made a desperate plea to the judge to prevent Wright from making his allegations in public? We know that that happened, from reading the small print in the judgment. When I alleged this matter months ago, there were repeated denials. We have Mr. Justice Powell to thank for allowing this part of the secret evidence to be brought into the public domain. It is clear that a major cover-up of security service activity in the mid-1920s is now taking place. The Government want to keep the lid on the issue until after the general election.
The matter is urgent because we need a full debate on the accountability of the security services to Parliament and on the reform of the law. I earnestly hope that my memorandum to the Privileges Committee on the necessary reforms will be fully considered. It provides the framework that would avoid embarrassment in the future.
Finally, the matter is important to me as a Socialist. We do not want a future Labour Government, wrestling with unemployment, to be destabilised by a gang of out-of-control security officers.
Mr. Speaker: The hon. Member for Workington (Mr. Campbell-Savours) asks leave of the House to move the

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Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the appeal in the Australian courts in the case of the Attorney-General v. Heinemann Australia Pty. Ltd. and Peter Wright."
I listened with care to what the hon. Gentleman said, as I listened also to the exchange of questions to and answers from the Attorney-General earlier today. I regret that I do not consider that the matter the hon. Gentleman has raised is appropriate for discussion under Standing Order No. 20 and I cannot, therefore, submit his application to the House.

Register of Members' Interests
4.3 pm
Mr. Dennis Skinner: On a point of order, Mr. Speaker. As all hon. Members know, you are responsible for entries within the Register of Members' Interests—responsible in the sense that hon. Members must give what they honestly believe to be the truth and nothing but the truth. The Register is then compiled under your general direction. As a matter of curiosity, I wonder whether there will be an entry for the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) as a result of the new moonlighting job that he obtained at Oxford on Saturday. [Interruption.] Hon. Members must be fair. I am asking a serious question.
I was a little puzzled about the ballot. It was not run along the lines that Conservatives regard as proper and right for trade unions. Precise figures were leaked after the first day. It was not even an exit poll. People were queuing up in kinky dresses. There was no proportional representation, yet the winner was one of those who stand by the idea of proportional representation. I should have thought that, as the right hon. Gentleman received only 40 per cent. of the ballot, he would demand a run-off. The turnout was abysmal. It was worse than the turnout for the House of Commons on a bad day. It was almost like the turnout for the House of Lords.
There are many inconsistencies with Establishment-type figures. They preach to the nation about trade unions having proper ballots, yet when it comes to their having a ballot they do not even—
Mr. Speaker: Order. What does this have to do with the Register of Members' Interests?
Mr. Skinner: It is quite simple, really, Mr. Speaker. I am asking you, as the man in charge of the Register, whether the name of the victor will be entered into the Register of Members' Interests as the new Chancellor of Oxford university, and whether it will enable him to keep away from this place any more than before. Many considerations should be taken into account. The principal point concerns what I said earlier. There are contradictions here because people want to tell the working class how to run its affairs, but when it comes to having a ballot of their own, there is the biggest cock-up of all time.
Mr. Tam Dalyell: On a point of order, Mr. Speaker.
Mr. Speaker: I take it that it is a different point of order. I hope so.
I say to the hon. Member for Bolsover (Mr. Skinner) that I understand that the election took place only last week. Whether this appointment is put into the Register of Members' Interests will be for the Select Committee.

Standing Order No. 20 Applications
4.7 pm
Mr. Tam Dalyell: On a point of order, Mr. Speaker. Those hon. Members who listened carefully to what you said when turning down the application by my hon. Friend the Member for Workington (Mr. Campbell-Savours) noticed that you used a form of words that was rather different from the courteous way in which you normally turn down such requests. You said that you had

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taken account of what had happened during questions to the Attorney-General. Are you not on rather dangerous ground? Does that not imply some sort of value judgment from the Chair as to whether such questions were answered satisfactorily? Some of us who have been begging that Downing street should refer the case of Lord Glenamara to the Security Commission might think that they were answered most unsatisfactorily. With respect, Mr. Speaker, do you not think that you should be careful in making judgments about requests for early debates that involve questions on which there is a difference of opinion whether they were satisfactorily answered?
Mr. Speaker: The hon. Gentleman has given me some good advice. In future I shall stick strictly to the words on my brief. I was merely seeking to explain to the hon. Member for Workington (Mr. Campbell-Savours) that we had had an exchange on this matter today. I was not making a value judgment on it. I thank the hon. Member for Linlithgow (Mr. Dalyell) for his suggestion. I shall take it to heart.

Orders of the Day

  Immigration (Carriers' Liability) Bill
  Order for Second Reading read.
  Mr. Speaker: I must announce to the House that f have selected the amendment in the name of the Leader of the Opposition.
  4.7 pm
  The Secretary of State for the Home Department (Mr. Douglas Hurd): I beg to move, That the Bill be now read a Second time.
  The immediate spur to this proposal has been the arrival of over 800 people claiming asylum in the three months up to the end of February. So this is not a Bill about Tamils alone, or about Sri Lanka alone. It goes wider than that. Its aim is to make sure that our immigration control remains effective in the face of rapidly changing international pressures. We have to reconcile that aim with our international obligation to help the genuine victims of persecution.
  We start—I hope the whole House starts—from the conviction that a firm immigration control is essential for harmony in our nation, and in particular in our cities. It has to be administered fairly, humanely, and where necessary, compassionately, and I believe that it is. But it has to be kept firmly in place, and that means from time to time strengthening it as new points of pressure on it become clear.
  I say at the outset to Opposition Members—without rancour; they have not yet shown their hand on this Bill—that it is simply no use pretending that it is possible to have it both ways. They cannot proclaim in general terms that they want effective control while opposing everything that is needed to keep it effective. People will soon see through that. There is no point in agreeing that there must be a bucket, but on the sole condition that it has plenty of holes in it. Yet that is the present stance of the Labour and Liberal parties on immigration control. I was particularly irked, as he knows, by the stand taken by the hon. Member for Leeds, West (Mr. Meadowcroft) when I made my statement a fortnight ago.
  This country is not alone in wanting immigration controls to work effectively, nor are we alone in facing growing pressures, particularly from the Third world. A powerful combination of pressures now arises, because for the first time large numbers of people across the world have the means, the knowledge and the will to leave their own homes in the Third world and seek greater security, comfort and prosperity elsewhere.
  These pressures can affect many parts of our immigration system. That is why we decided last year to extend the visa requirement to five countries of the Indian sub-continent and west Africa. The need for this was clearly explained and fully debated in the House. Immigration control at the ports had come under sustained pressure over a period of many months. In the first eight months of last year, some 8,500 people from these five countries were refused entry at Heathrow and Gatwick. That was nearly 50 per cent. more than in the same period the year before. In the following six weeks, the pressure at the ports became more intense—indeed,

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  becoming a rush of people who were not eligible for admission but who hoped to gain a foothold here before the visa deadline took effect.
  The House will recall the angry huffing and puffing that greeted our proposal for visas. We were told that it was not necessary and that it would not work. No adjective was too severe for it. But now relative silence has fallen because the benefits of the new arrangements are plain. The great majority of people who want to come here are bona fide, and for them the new system is a considerable improvement. The arrangements in Ghana and on the Indian sub-continent have been operating now for five months, and over 90 per cent. of applications are dealt with on the day that they are received. I think that that is remarkable. The system has therefore confounded its early critics. Visa holders can travel here, confident that there are unlikely to be any difficulties when they arrive. The arrangements have reduced congestion at the ports and have done much to restore the effectiveness of our controls.
  Mr. David Winnick: Will the right hon. Gentleman give way?
  Mr. Hurd: I shall give way to the hon. Member now, if that is what he wants.
  Mr. Winnick: I am grateful to the right hon. Gentleman. He has given me due warning. Does he not recognise that the reason why there has been little criticism since the new system has been operating is precisely because of what he has just said: that in the main these applications have been dealt with very quickly indeed—as he stated, on the day itself? If that can be maintained, there will be less criticism than when the system was introduced. However, a great deal will depend upon whether there is delay, bearing in mind the very lengthy delay that arises when people apply for permanent settlement. I do not know whether the Home Secretary has touched on this point already, but will he try to avoid the completely false accusation that because the Labour party criticises the Government from time to time it is not fully committed to effective immigration control? The right hon. Gentleman knows that that is not so and that we are totally committed to such controls.
  Mr. Hurd: The hon. Gentleman's first point was very fair. The effectiveness of the system obviously depends on how well it is run, but that is a very far cry from the racist accusations that were being tossed about freely last autumn when the Government introduced this system. As for the hon. Gentleman's second point, I have touched upon it. This is the bucket with the holes in it. We cannot say that we are in favour of effective immigration control if we then oppose every step that is taken, as it becomes necessary, to keep that control effective, yet that is what the Opposition parties do. I have touched on that point, and there may be occasions when I have to touch on it again.
  Mr. Michael Meadowcroft: Does the Home Secretary have evidence or information about those who would have been able to enter this country under the ordinary system and who would not have been refused entry but who, because of the problems connected with travelling from villages and staying overnight in
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  Islamabad or elsewhere, have been unable to apply for a visa and therefore have been unable to obtain visas? Does the Home Secretary have evidence that there are people who fall into that category?
  Mr. Hurd: I do not have any such evidence, although I rather expected that there might have been some. That is partly because visa applications can be dealt with by post and partly because people have overcome the problem to which the hon. Gentleman referred.
  In recent months, however, we have been faced with a fresh loophole. It applies mainly to people who require visas but who nevertheless arrive here without them and resist immediate return to their country of origin by claiming asylum. As I have already said, from December 1986 to the end of February of this year, over 800 applications for asylum were made by people arriving at our ports—nearly twice the number for the whole of 1984. Of those 800, nearly 500 were from Sri Lanka. In December and January, some 370 Sri Lankans arrived without valid visas and claimed asylum—more than half the total number of Sri Lankans who were granted visas in Colombo in those two months.
  The House will know of the circumstances of the arrival of the group of 64 Tamil asylum seekers on 13 February, most of whom were refused entry. I announced to the House on 3 March that I had decided to refer their cases to the United Kingdom Immigrants Advisory Service. Thereafter, fresh individual decisions will be reached in the light of all the relevant facts. I expect to receive representations on these cases by 18 March—the day after tomorrow—and I do not propose to make any comment on them today. Indeed, it would not be right or possible for me to do so.
  We are not alone in facing such pressures. In West Germany, 100,000 people applied for asylum in 1986—a huge number compared with ours. In France, 26,000 applications were made last year, and the French Government announced last August that they would reexamine their regulations because of the problems of such an influx. In October last year Denmark passed urgent laws to refuse access to the asylum procedure for those who come from a third safe country. Sweden has followed suit. In 1986 it received 14,500 applications for asylum, of which 1,700 were refused at the frontier as manifestly unfounded.
  On 20 February this year Canada introduced new measures to control asylum abuse, and most recently Belgium, which was facing 500 to 600 arrivals seeking asylum each month, has just introduced legislation to refuse access to some asylum seekers, to transfer decision taking from the United Nations high commissioner for refugees to a Belgian authority and to impose financial sanctions on carriers bringing people without the proper documents to Belgium. I understand that the Dutch are also proposing to introduce legislation soon, to the same effect.
  This is not, therefore, in any way an isolated problem. I believe that we have to work with other countries to come to a more sensible international understanding of how these matters can be better arranged. Under our presidency of the European Community, a special working group on immigration, including asylum abuse, was set up. That initiative has gone forward under the Belgian presidency, and I can tell the House that last week the group agreed specific recommendations that included

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  reference to the liability of carriers on much the same lines as the Bill that is before the House. These recommendations will come before a ministerial meeting, which I hope to attend next month.
  Mr. Sydney Bidwell: When anybody comes to this country pleading political asylum, does the right hon. Gentleman not agree that a lengthy process is involved to test the validity of that claim and that it is very likely that anybody who arrives without papers is a political refugee? It takes a long time to establish the truth. It is difficult to convince the public that we are upholding traditional British standards if we do not give refugee status to those who legitimately ought to have it. If we do not make that clear to people as soon as they arrive, that puts our great British tradition in jeopardy.
  Mr. Hurd: The hon. Gentleman has put very succinctly the case against the Bill and I intend to deal with it, but I do not accept that in all cases one can draw that conclusion. If we allowed for delay in all cases, that delay would impose the decision because at the end of the day it would be impossible to send people back to the place from which they came.
  To conclude the international part of my speech, I hope that during discussion of the Bill there will be no ignorant pretence that this is the proposal of a harsh or inhumane British Government. Other countries more seriously affected than ourselves have already acted as we propose to act. We should be strongly and rightly criticised if we delayed our own action until the trickle became a flood, as more and more people began to use the loophole. That is the background against which I ask the House to give the Bill a Second Reading.
  Of course it is not the whole answer and we must continue to be vigilant and ready to take further action if that turns out to be necessary. The Bill reinforces the existing responsibility of carriers for the passengers that they bring to this country. It also gives effect to the decisions already agreed by Parliament about the documents people should have when they arrive.
  Carriers are already responsible under the Immigration Act 1971 to pay for detention, accommodation and maintenance costs when certain passengers are refused entry. They are required also to pay for removal if directions are given within two months of entry being refused. The present Bill works within that principle. It is intended to ensure that people who cannot show that they have a claim to entry because they do not have the basic travel document and the necessary visas are not accepted by the carrier for travel. Responsible airlines already check on those things because they know of their liability to pay detention and removal costs and because it is simply not in their interests, or in the interests of their passengers, that people should be delayed or detained when they arrive here. The Bill aims to ensure that all carriers follow the same good practice.
  Clause 1 enables a charge of £1,000 to be made for each passenger who requires leave to enter the United Kingdom, and who arrives at our immigration control without a valid passport or other travel document and without a valid visa where one is required. The clause provides for that level to be varied by order subject to the negative resolution procedure of this House. The charge of £1,000 is more or less in line with what other countries are imposing but if, after experience, the figure needs changing, we shall change it.
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  Subsection (2) of clause 1 provides that no liability will be incurred if the carrier can show that, at the time of embarkation, the passenger produced to the carrier the necessary valid documents. In the same way as carriers' liability for detention costs is interpreted, the clause provides that any document should be regarded as genuine unless its falsity was reasonably apparent.
  Clause 2 provides for the Act to cover the whole of the country and, as I announced on 3 March, provides for liability to the charge—this is important—to start from 5 March.
  I hope that carriers will recognise the need for this legislation and respond positively to it. I welcome the constructive comments made by British Airways following my original announcement. It already has checking procedures for flights to other countries and will now review the checks that it makes for travel here. I hope on reflection that those who have expressed concern about the procedure will also come to see that it makes good sense. We do not expect carriers to spot clever forgeries, but it is reasonable to expect them, for example, to be able to look at a passport, check that it is current and that the. passport photograph is convincing—
  Mr. Nicholas Soames: I am grateful to my right hon. Friend for giving way. He may know that British Caledonian is a constituent of mine and that it has told me that it does its best to ensure that the correct travel documents are carried. What steps will he take when a foreign airline tells the immigration authorities that it took every step to ensure that the detained person had the correct travel documents? How can my right hon. Friend check whether that was true?
  Mr. Hurd: Those concerned will have to make a judgment. If they think that that is not so, they will go ahead and levy the necessary penalty and it will be for the carrier to decide whether it wishes to make representations or to have the decision reviewed in the courts. I know that British Caledonian opened with a statement containing some reservations about that. I hope that, to some extent, the later discussions that we have had will reassure it.
  The immigration service is ready to give carriers any advice that they need on documentation. It has recently approached carriers to offer help on what documents are required for travel to this country, and what carriers should look for. I understand that the response to that has been good, and that the immigration service will undertake a programme of visits and discussions.
  Obviously, the Bill will make it much more difficult for those who want to come to this country, but who have no valid grounds for doing so. That is its intention. It is also intended to stop abuse of asylum procedures by preventing people travelling here without valid documents and then claiming asylum before they can be returned. That also is its intention.
  Mr. Jeremy Corbyn: On that point, if asylum seekers are fleeing from terrible oppression, by the very nature of that oppression they would be unable to get the relevant documents agreed by their own Government and would be unable to come here. Is the Home Secretary saying, in effect, that he is not prepared to entertain applications from people fleeing from such oppression?
  Mr. Hurd: Before I finish I shall go on to consider the way in which genuine refugees come here at present, because that will cover the important point that the hon. Gentleman has made.
  If we turn a blind eye to the abuse of asylum procedures and to unregulated and disorganised arrival in this country, we provide a ready market for the racketeer. Clearly, he is already in the market. We risk the breakdown of a properly organised asylum policy which successive Governments have maintained and developed over the past 30 years.
  That policy is firmly based on the United Nations convention of 1951. That convention laid on us a clear obligation towards refugees, which it defines as follows: a person who
  "'owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country'."
  The second part of the definition refers to those without nationality. Where individuals qualify under that definition, the convention provides that they be accorded various special protections and benefits in their country of refuge.
  The convention itself does not tell Governments how to carry out that obligation and it does not deal with machinery or rights of appeal. It states clearly a general principle which we accept, and which, incidentally, is more definite and far-reaching than anything current in the 1930s.
  I recognise that there are hon. Members, those connected with agencies and people in Third-world countries who would like us to go further. They would like us to grant asylum to anyone who arrives here from a part of the world which is suffering economic or social hardship, civil commotion, famine, natural disaster or war. However, we cannot do that. That change to make that extension beyond our obligation under the convention would lead to a huge, general and open-ended commitment, inconsistent with immigration control or harmony in our nation. It would call into question the whole basis on which the notion of refugee status, to which the hon. Member for Islington, North (Mr. Corbyn) referred, has up to now been acceptable to the people of this country. We cannot put too great a weight on that tradition if we want it to survive.
  The Canadian Minister of Employment and Immigration said in February:
  "We want a positive immigration programme that permits the orderly entry of immigrants and refugees, but we cannot maintain such a programme if we allow abuse of our refugee programme to continue".
  That is the position of this Government towards refugees. The necessary balance can be struck fairly and well only if we return to a properly ordered and regulated system for dealing with asylum.
  I come to the hon. Gentleman's point and to the entirely right concern of some hon. Members about the effect that this Bill might have on genuine refugees. I understand that concern, but it is ill founded. I should like to examine the way in which genuine refugees actually get here. Until recently, over 90 per cent. of all applications for asylum were made by people who were already in this country on a genuine, legitimate and properly documented
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  basis, but who, because of a change in the circumstances of their home country, were unwilling to return. That group will not be affected in any way by this legislation.
  A small proportion of people find temporary refuge in other countries and apply at British posts abroad to come as refugees. They can be admitted if their claim to asylum is well founded and this country is the right place for them because of personal contacts and relationships. It is right that we should act carefully in these cases and satisfy ourselves that we are right to accept responsibility for them. Where we do so, they will be issued with the necessary papers to travel here. That group will not be affected in any way by the legislation.
  We are also able to make special arrangements from time to time for groups of people still living in their country of origin. For example, a previous Conservative Government began a programme in the 1970s which admitted 4,000 Chileans, mostly direct from Chile. More recently we have admitted under the orderly departure programme direct from Vietnam the close relatives of Vietnamese already here. Indeed, we have a special provision for Sri Lankan Tamils who may obtain a visa in Colombo if they are suffering from severe hardship and have ties with this country. Those groups will not be affected in any way by the legislation.
  Finally, there are cases of individuals coming from behind the iron curtain or elsewhere, such as Shcharansky who crossed on foot from East to West Berlin and later visited this country on an Israeli passport; and Irina Ratushinskaya who travelled here on a valid Russion passport with an exit visa.
  Such individuals will not be affected in any way by the legislation. The Government will continue to honour their commitments to the convention. However, we must retain proper latitude over the means. The convention, perhaps wisely, did not prescribe machinery, perhaps foreseeing that the circumstances of 1951 might change, as indeed, they have. The convention left the discussion of such means and machinery to the member states who adhere to it.
  Mr. Tony Banks: I apologise to the Home Secretary for having missed the opening part of his speech and hope that he will forgive me if he has already covered this point. If, for example, the captain of a British vessel finds a group of people, obviously without travel documents, on the high seas having escaped from their country and he takes them on board and lands them, will he be caught by the legislation? I am thinking of people such as the Vietnamese boat people.
  Mr. Hurd: The captain would have time to communicate with us and to discover what the position and reaction would be. As I have already said, this is a discretionary power. It is possible to construct theoretical occasions when the legislation would bite on genuine refugees, and I do not deny that. For the past five minutes I have tried to set out how genuine refugees arrive here in practice and to show that all those methods would not be affected by the legislation. Obviously, the Vietnamese boat people, for example, did not arrive here originally; they went to other countries, then there were international discussions and we played our part in that and in receiving some of them.
  Mr. Stuart Holland: There are less theoretical cases which the Home Secretary has not

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  addressed—for example, Kurdish refugees and refugees from Iran, Tigré and Eritrea who cannot apply for documents in their home countries. The Minister of State is aware of that and has been helpful towards Kurdish refugees from Iran. The problem is that they cannot go through the procedure of applying for the relevant travel documents. They can leave the country only on false documents or by crossing frontiers without producing documents.
  Mr. Hurd: My right hon. and learned Friend the Minister of State has told me that he arranged for those people to come, so they fell exactly into one of the categories that I mentioned. Many Kurds leave the country where they feel they are being oppressed. They are then in other countries and if they feel that there is a particular reason to exercise the right of aslyum in the United Kingdom, they can make representations from the safe country to which they have gone. Those cases do not fall outside the categories about which I have been speaking.
  It is possible to construct hypothetical cases of genuine refugees on whom the legislation would bite; that is what I mean when I talk about balance. Are we to allow our legislation to be affected in order to meet those theoretical cases when actual cases and ways in which refugees come here are not affected by the legislation? If we allow our provisions to he as wide as that, we would leave open the loophole of which I have spoken. I should like to assure the House that that loophole presents a genuine prospect of difficulty for the United Kingdom and it is already in reality a great difficulty for many of our European and north American partners.
  There have been long discussions in the United Kingdom about an independent right of appeal for those claiming asylum whose claim has been turned down. The Select Committee on Race Relations and Immigration recommended in 1985 that there should be such an independent right of appeal and my predecessors spelt out in measured terms why they could not accept that. That conclusion holds and has been much strengthened by the increased figures that I have given to the House. The nature and scale of the problem has increased enormously since those exchanges took place. I ask the House to come to grips with reality. If the appeals procedure is to make any impact, it must be thorough. If it is not thorough, it is not convincing. If it is thorough, it will take time. If it takes time, delay will often decide the issue in practice, and the House should realise that.
  Whether those concerned are detained—we have little enough accommodation for this purpose — or whether they are temporarily admitted with the risk that they will evade the control — whatever happens to them while they wait — it will in practice become increasingly difficult as days pass to send them away. In effect, the delay dictates the decision. For example, recently the Indian authorities refused to accept back some 17 Tamils originating in Sri Lanka who spent some time in India and then came to the United Kingdom. Their applications for asylum were refused and India refused to take them back on the ground that they had spent longer in the United Kingdom than in India. That is an example of what I am describing.
  The experience of other countries strongly suggests that a formal right of appeal before removal would lead to a substantial increase in unfounded applications. Anyone
  714
  who wishes to follow that intellectual path should first have a word with the Canadian authorities. More than 28,000 people were refused at our ports last year and it would take only a small proportion of those to claim asylum—that would be an obvious move for them, if there were an independent right of appeal — to overwhelm any appeals system. Therefore, I would not favour such a system if we are seriously concerned to protect the controls.
  Mr. Max Madden: The Home Secretary has just referred to accommodation. Does he recall that within hours of the Zeebrugge disaster it was leaked that the Home Office was proposing to have a ferry moored off the coast of Weymouth for detention purposes? Clearly, that was a proposal to return to prison hulks. Will he take this opportunity to say that the Home Office had no intention to proceed along that path and that that proposal has been cancelled?
  Mr. Hurd: No, I will not take any such opportunity. We are extremely short of suitable accommodation for detention. There is a good deal of public criticism of occasions such as the present one, when we use hotels for people under detention. That is not satisfactory. Nor is it satisfactory that such people should go to prisons because they have not been convicted, of any crime. Indeed, the hon. Gentleman was one who criticised us last autumn when, during the visa problem, some people were imprisoned. We need more accommodation specifically designed for detention. Whether we can reach an agreement with Sealink about a particular vessel I do not yet know. We have not yet reached a decision. But, providing that the accommodation is of the right quality, there is no reason why that should not be a better alternative to the present position.
  As the House knows, part of our response since 1983 has been a limited arrangement involving reference to UKIAS. Although, for the reason I have stated, events make it impossible to continue the arrangement in its present form, we have no intention to sweep it away without replacement. We intend that there should be discussions with UKIAS about how the present arrangements should be revised. It would be an excellent idea if those discussions also involved the United Kingdom representative of the United Nations High Commissioner for Refugees. There should be a continuing role for UKIAS, but, as I said on 3 March, I do not believe in the expectation that such referrals will be automatic.
  Mr. Corbyn: Will the Home Secretary give way?
  Mr. Hurd: I shall not give way again to the hon. Gentleman. I have already done so and I should draw my remarks to a close.
  Whatever fresh arrangements are devised, it is unnecessary and undesirable for Heathrow to remain the main place at which large numbers of undocumented people make claims for asylum, yet in recent years the number of asylum applications at the ports has grown from about 400 in 1984 to about 1,850 in 1985, swollen by the arrival of Sri Lankans before visas were introduced. Very few have been found to be eligible as refugees under the 1951 convention. It is likely that some of that small number did not have the documents required by this legislation, but it certainly does not follow that this

  715
  country was the only, or even the right, source of refuge for them or that they could not have made proper arrangements before their arrival here.
  This Bill seeks to ensure that people abide by the requirements, particularly the visa requirements, which have been approved by Parliament. It puts no new requirements on any traveller. The same number of people will remain subject to immigration control, the same number will be required to produce valid documents, and the same number will require valid visas. It is surely sensible government to move in a measured and determined way quickly to repair the gap which has appeared in our control. We cannot have an ordely system of control without such action. I am sure that we should keep our system of operating orderly arrangements for asylum in the interests of all genuine refugees.
  This legislation is necessary, considered and well constructed. There are ample precedents for it in other countries not normally regarded as illiberal — New Zealand, the United States, West Germany and Canada. It is already proving to be an effective deterrent here. Carriers have already started to check more carefully and responsibly the papers presented to them by their passengers who want to come here. In the first week of March, when the provisions came into operation, there were only 12 asylum applications from those arriving at the ports, compared with an average of about 60 a week in the previous three months. Most of these people would not have had valid visas. If the improvement continues, this short Bill will be doing its work.
  The Bill is not ill considered or hasty. It is an essential and timely response to the new problem faced by our immigration control. We have accepted the responsibility to act when it is necessary to ensure that the control operates as Parliament intended. I believe that we have the support of the majority of the House and the overwhelming majority of people outside in that contention. What I hope will result is a better service for the ordinary passenger, greater assurance that immigration problems can be considered calmly and in advance, and a decent, humane and orderly consideration of genuine asylum applications, free from the threat of exploitation and abuse. I commend the Bill to the House.
  4.42 pm
  Mr. Gerald Kaufman: I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House, while condemning racketeers out to exploit for financial gain the vulnerability of people seeking to leave their own country for another in circumstances where they regard themselves as under threat, declines to give a Second Reading to a Bill which, drafted in haste, fails to take account of the predicament of genuine refugees from dictatorial or authoritarian regimes who may not be able to acquire the necessary travel documents."
  The Bill arises out of the case of the 64 Tamils who arrived at Heathrow last month, but I want to emphasise from the start that our attitude is based on much wider considerations than the merits of the Tamils' case. We believe that the Government are profoundly mistaken in seeking to enact what, despite the denial of the Home Secretary, we regard as a hasty and ill-thought-out piece of general legislation in reaction to one episode with which the Government have found it difficult to deal.
  716
  I should like to emphasise also, despite the rather snide implications of the Home Secretary, that neither the Bill nor the Labour party's attitude to it relates in any way to the general issue of immigration control. We in the Labour party repeat our commitment to firm immigration control, which should be based on neither racial nor sexual discrimination.
  Seldom, however, can a Bill with such wide implications for treatment of would-be refugees seeking asylum in Britain have been based on such invalid assumptions relating to a single case or group of cases.
  The background is well known. Last month, a group of 64 Tamils arrived at Heathrow from Bangladesh claiming asylum as refugees, and a speedy decision was taken to remove them. I was contacted by UKIAS and, in turn, I made contact with the Home Secretary's office to ask for a stay of removal while the cases were properly studied.
  If my request had been granted, none of the Government's subsequent difficulties with the courts would have arisen. What is more, the outcome would have been exactly the same as has followed the intervention of the courts. My request was rejected, however, and the Government proceeded to take action to remove the Tamils.
  When the matter was raised in the House on 17 and 18 February, the Minister of State repeatedly made unequivocal and prejudicial statements about the Tamils' claim to remain. The columns of Hansard are littered with outright statements that the right hon. and learned Gentleman made. I shall quote just one or two, but I could quote many:
  "we are satisfied, on the basis of their own accounts given to immigration officers, that they have no claim to refugee status. We are therefore arranging for them to be returned to Bangladesh without delay … I have to make it quite plain that they are not refugees, that their claim to refugee status has been examined and found wanting and that the information available to the Government from the British high commission in Colombo gives no reason to suppose that people … will be harassed or ill treated … it was quite obvious, from the examination carried out by the immigration officers at the port, that the claims made by these people were manifestly bogus." — [Official Report,17 February 1987; Vol. 110, c. 769–70.]
  The right hon. and learned Gentleman made similar statements later in those exchanges and the following day.
  Those statements were made after initial interviews which, in many cases, took no more than 20 minutes. As we know, circumstances arose and, following them, an application for judicial review was granted. The Home Secretary was then obliged, first in a letter to UKIAS and then in a statement to the House on 3 March, to disown and repudiate the prejudicial statements of the Minister of State and to agree that the cases of each of the 64 applicants should be re-examined individually. They were not any more "manifestly bogus", but cases which had to be examined individually because there was the most cursory initial examination.
  The Secretary of State also said that the cases should be referred to UKIAS. After two weeks of turmoil and confusion, the Government were compelled to do what, if they had heeded my initial request, they could have done sensibly and with good grace.
  The Home Secretary was then forced by the Prime Minister, who was in her usual "Somebody has got to be summoned" frame of mind, to take some action—any kind of action—and the result is the Bill that we have before us. We should be clear that the Bill imposes on all

  717
  airlines a duty to interpret and implement Britain's immigration rules, with the prospect of a £1,000 fine per passenger if they get it wrong.
  One hundred and forty nine airlines fly into Britain from at least 246 ports of embarkation. It will now be necessary for officials from all those airlines and all those ports of embarkation to be experts in British immigration law and to implement it faultlessly—something which Britain's own immigration and entry clearance officers are incapable of doing themselves, to judge from the high proportion of successful appeals against their decisions in many countries of origin.
  Some of the officials who will be given the role of surrogate immigration officers, or entry clearance officers, will be officials of authoritarian or dictatorial countries. Officials of the KGB involved in the working of Aeroflot will be interpreting and implementing British law, not simply in the case of their own nationals, but in the case of passengers from other countries who have stopped over in Moscow and wish to fly on to London.
  Similar duties will be put on shipping officials. The General Council of British Shipping sent me and perhaps other hon. Members a memorandum today about the difficulties that our shipping lines expect to encounter. I shall read it in full because it is a case that the Government must answer and deal with if there are not to be enormous difficulties for shipping lines and their officials. The council says:
  "The General Council of British Shipping is seriously concerned at the proposal to impose a penalty of £1,000 on carriers bringing passengers to the United Kingdom whose travel papers are not in order. In particular, they are concerned that this will apply to ferry passengers embarking at European Community or other near European ports.
  In order to avoid the penalty, ferry operators will be required to set up a system of examination of passports and visas in a zone from which the passenger cannot depart except to join the ship, provided of course that the country of embarkation is prepared to provide such a zone. The inspectors, who will in many instances be foreign nationals, will require a detailed knowledge of UK Immigration Law and documentation, and of passports world-wide, a greater degree of expertise than can be expected from the type of personnel employed in checking tickets. It seems doubtful that this is what the Government, on consideration, would wish. Its target is much smaller but the operator can only be sure of avoiding such penalties (and indeed others, such as accusations of discrimination) if it examines the documents of day trippers and school parties with the same vigilance as it examines those of persons thought to be attempting to enter illegally.
  Quite apart from expense, even if the system could be set up, annoying delays to passengers would appear inevitable. Lord Brabazon of Tara, in the recent debate in the House of Lords, acknowledged the problems of dealing with a large number of people in a short space of time; a detailed passport examination raises even more difficulties."
  It continues:
  "The whole process would of course be repeated, perhaps two hours later, by the Immigration Officers in the UK. Shipowners know, to their considerable cost, that these are sometimes deceived, but they are the proper persons to decide whether papers are valid. A reporting time of 45 minutes for cars is normal. To be required to examine passports and compare photographs with the physical appearance of perhaps 1,200 passengers, either in cars, coaches or trains, cannot be seen as anything other than an intolerable burden on an industry already facing intense competition. Under the proposed regime, they would have a revising function, the main burden having been placed on the ferry operator who already bears the burden of returning such passengers to the port of embarkation or, in some cases, to distant parts of the world.
  718
  In GCBS view, the Bill should not apply to intracommunity travel. If the Government cannot accept this, an assurance that the penalties would not be applied in the case of such travel should be sought. This would be compatible with the Community intent to eliminate barriers to intracommunity travel."
  That is a very serious objection, put up not by people who wish to torpedo immigration policy but by those who will face the practical consequences of the ill-thought-out Bill that the Government are seeking to rush through the House in a few days. Overseas airline and shipping officials will have to become experts in scrutinising documents for possible forgery. Under clause 1(4) carriers are absolved from a possible fine only if the falsity of the document is "reasonably apparent". In other words, the Bill excludes those who have gone to incompetent rather than to accomplished forgers. No doubt this will have a salutary effect on the standards of excellence of forgery in certain countries, and people unable to obtain passports and visas legitimately will become prey to the higher prices commanded by those who can promise to fool airline and shipping officials.
  It is not as though British immigration law is simple even for our own officials to interpret. For example, the United States is a non-visa country for visitors, but for those wishing to establish themselves in business or to join relatives in this country visas are required. The same applies to other non-visa countries. How are airlines and other carriers to decide whether a visa trip or a non-visa trip is intended? Are they expected to conduct interrogations?
  Conversely, not all nationals of Commonwealth visa countries require visas for every purpose. How will their rights be protected? There are others, not claiming to be refugees, whose interests are also at stake. Last autumn, when visas were imposed for four Commonwealth countries and Pakistan, the Secretary of State in an invidious little passage at the beginning of his speech—designed, as always, to try to make some capital out of the situation—specifically agreed that there might be cases of great emergency in which a passenger might not have time to apply for, let alone obtain, a visa, for instance, on hearing of the sudden mortal illness or death of a relative in this country.
  The Home Secretary specifically agreed on procedures to protect the interests of visa nationals in such circumstances. His own guidelines to protect people in such a predicament, as quoted to his hon. Friend the Member for Halifax (Mr. Galley), state:
  "If the passenger was refused entry because he did not have an entry clearance required under the Immigration Rules action to remove the passenger will only be deferred if at the time of intervention the Member demonstrates that there are exceptional and compelling circumstances (eg recent bereavement or sudden grave illness here in the immediate family). In such cases and in cases of refusal where no entry clearance was required action to remove the passenger will normally be deferred for a period of 12 working days to enable the Member to submit written representations." —[Official Report,6 November 1986; Vol. 103, c. 540.]
  That carefully worked out guideline is now a load of rubbish because the airlines will not carry people who do not have the documents, although the Secretary of State himself admitted that they might have perfectly valid reasons for having failed to obtain them. All those assurances will go by the board because if a person with difficulties of the kind specifically recognised by the

  719
  Secretary of State in November tries to obtain a seat on an aircraft, the airline is likely to turn him down rather than risk a fine under the Bill.
  There are also people from visa countries who claim to be exempt from immigration control because they are British citizens by descent and thus, whatever their travel document, do not require a visa to enter the United Kingdom. Will such passengers now have to prove to the airline that they have a British parent and, if so, how? That is why we describe the Bill as ill thought out and oppressive. People whose grounds for not obtaining a visa have been recognised as valid by the Home Secretary will be prevented from travelling because of the fines laid down in the Bill. The Bill must be amended in Committee to take account of all those potential anomalies because some are likely to cause great human hardship or distress.
  Even when a person gets through the new barrier with all the documents required by the Secretary of State—either valid or well forged, as the Bill lays down—his claims will have to pass tougher tests without the protections that previously existed. Even if the person's documents are in order, his chance of being accepted as a refugee will be subject to greater hazard in the future.
  In the debate on refugees on 31 March 1983, the Minister of State said:
  "I believe that there is a strong case for formulating arrangements for the notification of asylum cases to an agency at an early stage when a negative decision is contemplated. The refugee unit at the Home Office will in future give formal notification to the UKIAS refugee councillors of all cases when no other agency or hon. Members has previously intervened and a negative decision has been proposed." — [Official Report, 31 March 1983; Vol. 40, c. 522.]
  The Home Secretary has completely abandoned that commitment, made by the Minister of State at a calmer time. The Secretary of State kicked that pledge right out of the field in his announcement on 3 March and in his deplorable and misleading statement today about the Government's response to the Home Affairs Sub-Committee on Race Relations and Immigration.
  Despite the statement by the Minister of State in 1983 recognising the strong case for notification and referral, the Home Secretary now says:
  "Accordingly, the present arrangements under which my Department refers cases to UKIAS will be revised and I shall be inviting UKIAS to join in discussions to that end … and for the avoidance of doubt I must place it on record that in future there will be cases which will not be referred to UKIAS and that therefore applicants for asylum can have no expectation in future that as a result of the arrangement arrived at in 1983 or otherwise there will in their cases be such a reference. Similarly there will be instances in which early removal is necessary in the interests of immigration control and it would not be right for me to defer removal on a Member's seeking to put a stop on the case. It follows also that those who seek to challenge in the courts decisions to refuse asylum cannot expect that they will automatically be allowed to stay here until proceedings are completed." —[Official Report,3 March 1987 Vol. 111, c. 733.]
  The Home Secretary has withdrawn the pledge on reference to UKIAS, withdrawn the right of an hon. Member to put a stop on and withdrawn the opportunity of effective judicial review. That is the effect of his announcement on 3 March. The way in which he has tried to mislead the House is quite deplorable. In withdrawing
  720
  those three protections he is withdrawing safeguards that his Department told the House and the Select Committee were the proper safeguards against wrongful decisions.
  This afternoon the Home Secretary has referred in the most deliberately disingenuous terms to the Home Affairs Sub-Committee's report on refugees and asylum. He certainly asknowledged that the Sub-Committee recommended a right of appeal before removal for those who sought asylum on arrival at a port of entry in the United Kingdom. I noted the Home Secretary's words carefully. He said that his predecessor had spelt out in measured terms why he would not accept that appeal recommendation.
  What were the measured terms that the Home Secretary thought he could get away with by describing them as such this afternoon? What did the Government reply to the report? They rejected the appeal proposal because they said that for this category of applicants there were other safeguards— representations by hon. Members, judicial review and the UKIAS referral procedure. The Government replied:
  "The referral system is providing an effective safeguard and a satisfactory substitute for formal appeal rights … In practice … the referral procedure is providing a broader safeguard than a formal appeal to the immigration appellate authorities."
  The Sub-Committee on Race Relations and Immigration proposed a right of appeal. The Home Office rejected that because it said that there was a right of reference to UKIAS, a stop right of Members of Parliament and a right of judicial review. The Home Secretary withdrew all three rights on 3 March and now has the effrontery to say that he still rejects the right of appeal even though he has taken away the safeguards that his Department said were a valid substitute for appeal. That is a shoddy way in which to try to mislead the House, and I hope that he is thoroughly ashamed of himself. I did not think that I could feel so strongly about anything that the Secretary of State said. I have considerable personal respect for him, but I was horrified to hear how he dealt with this issue this afternoon.
  The Home Secretary should think again about the matter. Having relied for a period on those three safeguards and having now rejected them, the Government should introduce the right of appeal before removal as recommended by the Sub-Committee on Race Relations and Immigration.
  Another problem relates to refugees who wish to claim asylum but will never get here because the airlines and other carriers will not take the risk of carrying them. On 3 March the Home Secretary told the House:
  "The Government remain fully committed to their obligations under the United Nations 1951 Convention to genuine refugees as defined in that Convention. The decisions on individual cases which I make as Home Secretary will respect that obligation."—[Official Report,3 March 1987; Vol. 111, c. 733.]
  Of course, the Home Secretary is bound to say that because he is bound by the immigration rules. Those rules state:
  "Where a person is a refugee full account is to be taken of the provisions of the convention and protocol relating to the status of refugees."
  Article 31 of the United Nations convention on refugees says:
  "The Contracting States shall not impose penalties, on account of their illegal entry or presence, on refugees who, coming from a territory where their life or freedom was threatened in the sense of Article 1, enter or are present in

  721
  their territory without authorization, provided they present themselves without delay to the authorities and show good cause for their illegal entry or presence."
  I acknowledge immediately that that would not apply to the current case of the Tamils because they did not come directly from Sri Lanka, but our attitude to the Bill is not governed by that case. I said that at the beginning of my speech, and it is irrefutable that the Bill violates that paragraph of the convention. The Bill breaks the Home Secretary's undertaking of 3 March, because the convention states:
  "The Contracting States shall not impose penalties … on refugees who … enter or are present in their territory without authorisation, provided they present themselves without delay to the authorities and show good cause for their illegal entry or presence."
  But, of course, the £1,000 fine is a penalty and the Government are consequently violating the convention.
  The Minister of State, Home Office (Mr. David Waddington): No.
  Mr. Kaufman: We do not know whether they are refugees until we find out. The Minister is suggesting that none of them is a refugee, but that is manifestly bogus.
  Mr. Waddington: The right hon. Gentleman has not yet realised that the penalty of £1,000 is imposed on the carrier, not the person of refugee status.
  Mr. Kaufman: That was a clever little interruption. The person seeking refugee status is penalised by the penalty on the carrier, of course. It was the kind of remark that the right hon. and learned Gentleman could get away with in the courts as a nice little joke to the judge, but it does not help people who are fleeing in fear of their lives.
  Mr. Waddington: That is silly.
  Mr. Kaufman: No, it is not silly. The right hon. and learned Gentleman made some prejudicial remarks about people who lost their lives as a result of the penalties that he championed so strongly.
  Mr. Corbyn: Is it not right that of the 58 cases that the Minister of State attempted to decide in advance of the court decision, not one of the individuals concerned could have entered this country had the Bill been law at that time?
  Mr. Kaufman: My hon. Friend is absolutely right. The Minister of State prejudged the cases by saying that they were manifestly bogus, whereas the court declared that they were not manifestly bogus. The Home Secretary is now having to look at every individual case himself. The Minister of State is completely wrong and my hon. Friend is right.
  What is more, the Bill violates the statement of the position on refugee procedures in the Home Office memorandum of 17 December 1984, which stated:
  "A valid claim for asylum overrides the normal requirements of immigration control that other immigrants must satisfy in order to enter or remain here."
  Nothing can be plainer than that Home Office commitment and nothing can be plainer than the Home Secretary's breach of it in the Bill. The Bill is posited on the assumption that a would-be refugee would have no difficulty in obtaining a visa from the British post in his country of origin. The idea is laughable. Can hon. Members envisage the position? Someone is on the run from the secret police in an eastern European country or another visa country. He breaks off from his escape or
  722
  emerges from his cover, strolls into the British mission, applies for and obtains a visa in a few minutes without difficulty or delay, and then resumes his escape.
  Under the United Nations convention, a person seeking a visa in his own country cannot be defined as a refugee. The convention defines as refugees
  "persons who fulfil the conditions of paragraph 2 of this section."
  Paragraph 2 states:
  "As a result of events occurring before 1 January 1951 and owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it."
  On 6 March, the Minister of State summed up perfectly for us the position of Jews and others under the German Nazis, when he said:
  "In 1938 the British Government imposed a visa requirement on Germans and Austrians. From that time onwards, Germans and Austrians fleeing from Nazi persecution came here with visas, having satisfied the British authorities that they had the wherewithal, or that they had people here who were prepared to look after them." — [Official Report.6 March 1987; Vol. Ill, c. 1209–10.]
  That, he implied smugly, was that. The fact is that for many people that was that. Nine days ago in Glasgow, a Jewish woman told me how, in the 1930s, she had luckily obtained a visa and got away to Britain. Her parents were unable to obtain a visa and did not get away. They were victims of the same nice, tidy smugness as would penalise those who suffer from this Bill and from the same contemptible complacency of today's Home Office Ministers nearly half a century on.
  The position could be the same even with passports. Indeed, the demand that airlines should always turn away passengers without passports conflicts with the United Nations High Commissioner for Refugees, which envisages that the absence of a passport will be the norm, not the exception, for genuine refugees.
  The United Nations handbook on procedures states:
  "It has sometimes been claimed that possession of a passport signified that the issuing authorities do not intend to persecute the holder, for otherwise they would not have issued a passport to him."
  That is how the commission approaches the matter, as it confirmed to me only today. The trouble is that, under the Bill, such a person would not get here for his or or her case to be considered on its merits. That person would not get here because in the Bill the Home Secretary hands over his obligations on refugees under the United Nations convention to foreign airlines and foreign shipping companies, including Aeroflot, South African Airways and the rest.
  The least that the Government could do would be to amend the Bill so that the carrier will be absolved from the fine in respect of any person without proper documents who is subsequently accepted as a bona fide asylum seeker. That would not solve the problem, but it would ease it.
  Even countries which the Home Secretary cited in support of his measure provide safeguards. Australia does not fine airlines where the cases of passengers are referred to the independent refugee determination committee, whatever the outcome of the case, so let not the Home Secretary cite Australia without providing a similar safeguard. Denmark does not fine airlines if a passenger

  723
  faces return to a country where he or she would not be safe, so let not the Home Secretary cite Denmark in his support.
  It is sometimes claimed that Britain has an outstanding record on acceptance of refugeees. There have been times when that record has been outstanding, when it has enhanced our reputation for humanity in the eyes of the world. But there have been other times, as when refugees from Hitler were excluded from this country when they could have been saved, when our reputation has been less glorious. Sadly, the Bill takes us into one of those less glorious times.
  Ministers will not care. They have abandoned any standards of decency on this matter, at any rate until the general election is over. The Bill is not about keeping out a few bedraggled victims of seedy racketeers—racketeers whose trade in human flesh we all condemn. The Bill is about having a shoddy little debate in which racism can be stirred up in the hope of winning a few votes. At every general election, Tory Members cannot resist playing the race card. They are doing it again now, and it is especially lamentable that this Home Secretary, of whom people expected better, should have lent himself to this shabby manoeuvre.
  Mr. Hurd: The right hon. Gentleman is coming to the end of his speech, but since he told us that he would be unable to stay until the end of the debate, perhaps he will allow me to say this. I have listened with great care to his speech, but he has not addressed what I regard as the nub of the matter, which has nothing to do with elections or the race card. It is simply that a tradition of granting political asylum, as embodied in the United Nations convention, is in danger of being overwhelmed right across Europe by the sheer scale of applicants. Denmark has gone much further than we propose, and is declining to entertain applications for asylum from people who come via a third country. That alters the entire aspect, but the right hon. Gentleman has not tackled it yet.
  Mr. Kaufman: I acknowledge that there is a problem — [Interruption.] The way in which Conservative Members leer and giggle about these matters is one of the most nauseating aspects of their approach to the issue. This is the most despicable parliamentary Conservative party that I have encountered during the past 17 years. When I mentioned Shcharansky in a previous debate, one hon. Member was quoted in Hansard as saying that it would be right to keep him out of the country, which shows the ugly undercurrent among Conservative Members.
  Mr. Waddington: There is no need to be so unpleasant.
  Mr. Kaufman: Not as unpleasant as the right hon. and learned Gentleman is, without effort.
  Mr. Waddington: Nasty.
  Mr. Kaufman: However hard I may try to be nasty, I could not succeed as effortlessly as the right hon. and learned Gentleman does.
  I agree with the Home Secretary that there is a problem. He acknowledged that the problem is not as great as it is for several other countries, although it is possible that, as other countries deal with their problems, it may grow in Britain. But why, instead of slamming down a little Bill
  724
  overnight, did not the Home Secretary go to the UKIAS or to the United Nations High Commissioner for Refugees? Why did he not come to us and say, "Let us sit down and try to find a solution to the problem as quickly as possible."? But he did not want to do that. The reason is that Conservative Members glory in and are enjoying the Bill, because they believe that it is a way of playing the race card once again.
  The Home Secretary teaches us the lesson that we should have learnt by now: that in the end Conservative Members, liberals or hard-liners, wets or drys, are all the same. Let them make the most of this electorally—I am sure that they will. If any of them still have consciences, let them live with them.
  5.18 pm
  Mr. Timothy Raison: It is something that in his closing, intemperate remarks the right hon. Member for Manchester, Gorton (Mr. Kaufman) acknowledged that there is a problem to be faced, and of course there is a serious and very difficult problem. As my right hon. Friend the Home Secretary said, the Bill is not exclusively concerned with refugees. However, the background to the Bill is the problem of refugees, which is inescapably growing, and we must give a lot of thought to ways of tackling it.
  Behind it all lies the spread of civil wars and other wars, and tyrannical regimes. There is also the problem of economic refugees—people who wish to flee from their country, not because they are being actively persecuted, but because the regime in which they live is, to put it mildly, increasingly distasteful and hostile. There is also the problem of whether we are right to go down the path of orderly departure, to which my right hon. Friend referred. I have always been a little anxious about this. I see why it was introduced for Vietnam, and for Chile before that but it has about it something of the flavour of almost sanctioning the entitlement of Governments to persecute their citizens. We must think about that hard and carefully.
  It is right that we should be discussing these matters with our European partners, and it is to be welcomed that the newish United Nations High Commissioner for Refugees, Mr. Hocké, should be showing clearly that he is prepared to ask fundamental questions. As it happens, he has asked me to go to a seminar or conference that is to take place shortly to talk about these things, and we have to face some important and basic questions.
  We know that the pressure of intense migration has led to the introduction of visas for India, Pakistan, Bangladesh, Nigeria and Ghana. In the case of Sri Lanka and the Tamils essentially it was the refugee problem that caused that to come about. Now we have the Bill, which is designed to strengthen the effect of the visa system to control the surge that would take place if we did not take steps to prevent it.
  I do not particularly object — I never have—to the idea that carriers should bear the cost of taking back those who are refused entry, not do I object to the visa system as a method of controlling the surge. I do not think that the principle of the Bill is necessarily unreasonable, although the practicalities of it will have to be examined carefully in Committee. However, I am deeply concerned that we should not weaken our traditional commitment to do our share in helping refugees. I hope that the Government and my right hon. Friend will be able to give

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  reassurances on two aspects of the policy that goes alongside the Bill. We must look at the Bill in conjunction with the general system for handling refugees when they appeal to us to take them in.
  The first of these questions is about access to this country. My right hon. Friend the Home Secretary made it clear that in the past the majority of refugees accepted here have been people who have been here already — students, and others, for example, whose circumstances have changed because of what has been happening in their home countries. Some refugees will certainly try to escape here directly, and we recognise certain groups as having particular claims on us, notably through family connections. We recognise that they have a certain amount of entitlement to take refuge in this country and to come here to do so.
  However, we need some assurance about how far in practice genuine potential refugees will will be able to secure visas in the countries of their origin. Will they be able to go to the British posts in their country? This point was raised by the right hon. Member for Gorton. Will that work effectively? Will the fact that they are still in their own country allow them to be considered for refugee status? After all, the 1951 convention defining refugee status talks of the refugee being
  "outside the country of his nationality".
  In Sri Lanka, for example, how many people are reaching our post in Colombo, or perhaps some other way of getting in touch with our authorities and applying for a visa on refugee grounds and then succeeding in getting one? We need to know the answers. I recognise that the answers can relate only to the recent period because until not long ago, Sri Lankans were able to come here to claim status when they arrived here. We want to know whether it is possible, in practice, for such people to work their way to Colombo, get in an application for refugee status, and if so how it is dealt with, particularly in the light of the point that I have just made about the definition of the status of the refugee.
  Mr. Alfred Dubs: I can answer the right hon. Gentleman's question. I have here a letter from the British high commission in Colombo, dated 10 July 1986, to an applicant. It says:
  "You have applied for entry clearance with a view to admission to the United Kingdom as a refugee but there is no provision in the immigration rules for entry clearance to be granted for this purpose."
  Mr. Raison: The answer may he that he has to apply for entry to the United Kingdom for consideration for refugee status. That may be the procedure. I should like to hear from my right hon. and learned Friend when he winds up the debate how the procedure works, because that is an important matter.
  Today I received an answer to a parliamentary question which makes it clear that the proportion of those seeking refugee status applying outside the United Kingdom has in the past been small. In the year October 1985 to September 1986 the number of applicants outside the United Kingdom was 50, of whom 30 were granted refugee status, 10 were refused asylum but granted leave to remain on exceptional grounds, and 10 were refused asylum. That was a small number, but under the new system it may increase. We need to know where we are.
  My second major concern is what happens to would-be refugees if they intend to get here by one means or another.
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  This is very much the issue recently raised by the affair of the Tamils. It is true that the numbers likely to do so will, in all probability, be much reduced both by the introduction of visas and by the consequences of the Bill, but it is also true that refugees, who may be desperate, find ways to travel and get here, as do their rather more bogus counterparts, and this is the problem that we have to face. People will continue to turn up at our ports and it is important that we should think carefully about what they do when they get here. Up to now, as the parliamentary answer to which I have just referred shows, a significant number of those allowed to stay have been people who have applied at the ports rather than in their country of origin.
  It is here that I am concerned about the possibility of erosion of the safeguards that we have established. The convention does not require any kind of appeal system. We are party to the consensus of the executive committee of the United Nations High Commissioner for Refugees, which called for a system of formal reconsideration of a refusal at the port of entry. We have operated that since my right hon. Friend made his announcement in 1983.
  We have responded by three particular means, which were mentioned by the right hon. Member for Gorton. One is intervention by UKIAS. The second is Members' representations, and the third is judicial review. All those would happen before removal. The system put forward by my right hon. Friend was accepted by the protection division of the United Nations High Commissioner for Refugees as an adequate way to deal with the problem.
  The question now is that will happen to the system. My right hon. Friend the Home Secretary, in his statement of 3 March, clearly foreshadowed changes that could be significant. The right hon. Member for Gorton has just quoted the passage to which I would have referred, so I shall not repeat it. However, it is important to consider carefully what my right hon. Friend said then, and I hope that he will think carefully, as I know he will, about the remarks made during the debate today about the system. We want to know rather more precisely what it is that my right hon. Friend has in mind. I cannot say whether my right hon. and learned Friend the Minister of State will be able to spell that out, but I should welcome such a response. I accept that there should be proper consultation with the UNHCR and UKIAS. I hope that by the time we have considered the Bill in Committee, on Report and on Third Reading we will have a clear idea of exactly what is proposed in place of the system agreed in 1983.
  I recognise, as do most hon. Members if they are honest, that there is a genuine problem of abuse, but we know that it is difficult to be sure of the facts. The courts have said that entry by false means does not in itself lead to the conclusion that a person is not a refugee. A person may come here by wangling, but that does not take away from the fact that he is a genuine refugee. The High Court has made that clear and we should all accept it.
  The reports about the 64 Tamils, who in a sense are at the heart of the controversy, show that a substantial number fall into either the category of people who would be expected to be granted refugee status or the category of people who are likely to be given permission to remain here under the discretionary power. Until we know the outcome of these cases it is not possible for me to know the answers, but there are signs that a number of the Tamils are people who, in normal circumstances, would be

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  allowed to stay for one reason or another. If that is so, no doubt they will be allowed to stay when the process of examination has been completed.
  I ask my right hon. Friend the Home Secretary to retain some way of reconsidering refusal of entry to possibly bogus applicants before removal. I should be anxious about a system which firmly stated that immigration officers on their own, and without any reconsideration, can decide that certain people have to return home immediately. If the Bill is passed, as I expect it will be, the problem of pressure is bound to decline, but we should not get ourselves into a position that is out of line with the UNHCR executive committee's resolutions. We should find a way of adhering to them.
  There is a real problem with the applicant who abuses the system. I do not press for a formal appeal system to operate within this country in cases of abuse or when people arrive here without visas, and I do not believe that we should introduce a system providing for a fully fledged formal legal appeal, but I press for the present system, as set out in 1983, essentially to remain in being for most people, with the possibility of using the three alternative approaches that I have mentioned.
  There should be some way of rapidly considering the cases of those whom the immigration service feels are bogus entrants. I have in mind a system of notifying representatives of UKIAS or of the UNHCR in this country that Britain proposes immediately to send back someone because we think that he is applying on completely bogus grounds. That would at least enable some sort of discussion to take place with the representatives of the UNHCR or of UKIAS about the case and, if they accepted that the applicant was bogus, he would immediately be removed. If the UNHCR or the UKIAS wanted to contest the case, there would be a clear obligation on them to use a mechanism that would operate rapidly.
  It would be wrong to set up a mechanism that would enable people to remain in this country indefinitely and to start playing the all too familiar game of operating the immigration rules when there is no genuine ground for doing so.
  I would not favour accepting a system whereby Members of Parliament were able to weigh in on the process. There should be a swift, effective way of considering these cases. I hope that my right hon. Friend the Home Secretary will be willing to consider this proposal carefully.
  I am glad that my hon. Friend the Member for Westminster, North (Mr. Wheeler), the Chairman of the Race Relations and Immigration Sub-Committee of the Select Committee on Home Affairs, is present. I take it that he will take part in the debate. I am not certain exactly what the Select Committee recommended in its report. Who is better placed to tell us than my hon. Friend? It is not entirely evident that the Select Committee was talking about a fully fledged system of appeal. It talked about the way in which the abuse problem could be prolonged by some kind of appeal system. In paragraph 105 the Select Committee stated:
  "We recommend that the Home Office decide in principle to extend the right of appeal to all asylum applicants, and, for types of case where the applicant currently lacks a right of appeal exercisable within the UK, to establish procedures by which leave to remain is withheld in obviously bogus cases,
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  and by which such refusals of leave can be rapidly reviewed if appealed against; and that it set up a working party to determine how such procedures would operate."
  The Select Committee says that the right of appeal should be extended to all asylum applicants, but it does not specifically say that that should happen in this country before removal. I am not sure what the Committee means. The Select Committee talks also about refusals of need being "rapidly reviewed" if appealed against. I do not know whether by "rapidly reviewed" the Committee means the formal appeal process, or whether it means something much more akin to the process that I have described. I hope that my hon. Friend the Member for Westminster, North will explain what the Committee had in mind.
  I hope that my right hon. Friend the Home Secretary will think carefully about the points that I have made. If he accepts my proposal that there should be a quickfire method of dealing with the bogus or the disputed cases, that might meet with the acquiescence of the UNHCR. I dare say that it would prefer something more, but I think that a system could be set up that would command sufficiently broad assent to work, and we would then be able to say that we have not back-tracked from the type of principle for dealing with refugees which I think we have generally adopted. What I have said is parallel to the Bill rather than concerned with its substance. I hope that it will be possible to find a satisfactory and honourable way of resolving this difficult problem.
  5.38 pm
  Mr. Michael Meadowcroft: I wish to follow the civilised remarks of the right hon. Member for Aylesbury (Mr. Raison)—
  Mr. Michael Morris: On a point of order, Mr. Deputy Speaker. Is it not a grave discourtesy to you, Sir, and to Parliament that the right hon. Member for Manchester, Gorton (Mr. Kaufman), who opened for the Opposition, should find more pressing business outside Parliament than to listen to the debate, especially after the sort of speech that he offered us?
  Mr. Meadowcroft rose—
  Mr. Kaufman: Further to the point of order, Mr. Deputy Speaker. First, I am doing no more than the Chancellor of the Exchequer has done on a number of occasions. Secondly, I did notify the Home Secretary. Thirdly, it will be acknowledged that the Bill came up suddenly and one was not able to plan one's arrangements accordingly. Fourthly, the hon. Member for Northampton, South (Mr. Morris) knows very well that whatever my other shortcomings—of which I am sure he is fully appraised and able to describe at length—one of the things that I do not generally do is dodge fire.
  Mr. Meadowcroft rose—
  Mr. Jeremy Hanley: Further to the point of order, Mr. Deputy Speaker. Would it not be in order for the right hon. Member for Manchester, Gorton (Mr. Kaufman), who is now leaving the Chamber, to apologise to my right hon. Friend the Member for Aylesbury (Mr. Raison) inasmuch as everything that the right hon. Gentleman accused Conservative Members of feeling and saying was certainly not borne out by my right hon. Friend's speech.
  Mr. Deputy Speaker (Mr. Harold Walker): I call Mr. Meadowcroft.
  Mr. Meadowcroft: I was about to say that I was pleased to be able to take up the civilised comments of the right hon. Member for Aylesbury and to commend 90 per cent. of the speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman), who, 1 believe, spoke in good faith. I am only sorry that his measured terms were undermined by his final comments. In dealing with these issues there is nothing to be gained by endeavouring to divine ulterior motives. Nothing annoys me more than those who try to use a crystal ball, as it were, to determine the meaning and intent behind my comments. By the same token it does no good to try to impute motives to others. Many of the comments that we make on sensitive issues such as the one before us give the appearance that something additional is meant, but to say that somebody has said something deliberately for that purpose is unfair. I believe that the right hon. Gentleman went over the top, and that was of no value to the debate.
  No one on either side of the House has a monopoly of virtue or an exclusivity of compassion. The right hon. Member for Gorton, who, sadly, has had to leave the debate, should have had drawn to his attention the position of the Kenya Asians in 1968. Promises had been made and it may well have been that people were under stress in Kenya. The Kenya Asians then found that the promises that had been made to them were not kept by the then Labour Government. It seems that no one is beyond reproach.
  My complaint about the Bill is that the Government are seeking to follow their Back Benchers instead of endeavouring to lead and initiate. It is serious that at this stage in the Parliament the Government are seeking to placate the opinion of Conservative Back Benchers. I have a particular moment in mind. On 5 March, during Home Office questions, I asked the Minister of State whether he believed that the United Kingdom Immigrants Advisory Service, or the British Refugee Council, would connive in the irregular entry of immigrants. The Minister of State dodged around, as it were, without saying yes or no, and during that time there were a number of cries from Conservative Back Benchers to the effect that they believed that UKIAS would behave in that way. That is a clue that explains why the Bill has been introduced.
  The Home Secretary said that the Bill was sparked off by the Tamil case but that it had wider connections than that. In tacking it on to one issue, such as the Tamils, there is the problem of retrospection. There are great dangers in that course. Airlines and shipping lines can hardly be expected to know of the debates that we are to have in this place. They are certainly not to know of the debates that will take place in Committee. They will not know what is in our minds when it comes to the interpretation of what appears to be a valid passport. These are sensitive issues and it is of concern that the Bill will be retrospective.
  I followed the argument of the right hon. Member for Aylesbury about the Vietnamese refugees. His concern suggested that international agreement to take refugees amounted almost to tacit assent to the repressive actions in their countries. This is not the same problem as is faced by those who seek to placate terrorism. Where entrenched and clearly ideological or racist action is taking place within a country that provokes the sort of despair that leads people to take to sea in open boats, the least that the
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  international community can do is to come to terms with reality and to ascertain whether there is some way of persuading individual countries to accept their fair share of the refugee problem.
  If the issue goes wider than the Tamils who arrived at Heathrow, one of the Government's arguments must be questioned. The Government contend that refugees can go to a neighbouring country and obtain documents, but not all countries are signatories to the United Nations convention. There may be neighbouring countries to a dispute where assent to human rights and human international conventions is far from the level and depth that we would wish in Britain. That would make it difficult for the Government to say to refugees that they should go to a neighbouring country.
  If all countries took the same action as the Government are endeavouring to take by means of the Bill, how can a refugee travel? If all shipping lines and airlines found themselves facing a potential fine of £1,000 and if someone were found to be travelling without documents or with obviously forged documents, the result would be that no one would be able to travel to this country or even to a neighbouring country. If every country took the same line as ourselves, there would be no means of travelling in an emergency in the way that people are forced to do when fleeing from terror. To say that we shall take unilateral action despite what might happen elsewhere, and to excuse doing so on the ground that someone can travel easily to another country and then travel on properly with documents, seems to go against the spirit of the international attitude that we should advance. If we do not play our part in coping with the problems of the world's refugees, how can we expect others to do so?
  In some instances it is unreal to expect refugees to travel in safety to a British embassy or high commission. There are places where those entering or leaving a British embassy will be watched. There are places where people will not feel safe to visit the embassy even if they are safe in doing so. In many instances the belief in terror matters rather more than the terror itself. All hon. Members are familiar with that attitude from dealing with their case work. In the light of events in the last few days in India. it seems that Tamils would not necessarily be safe in attending an embassy or high commission there or elsewhere.
  There is a great need for some form of referral system. The Minister of State wanted to return 58 Tamils on 17 February. No doubt he would have wanted to return 64—
  Mr. Hanley: When the 58 Tamils were stopped at Heathrow or threatened with deportation, one of them announced on the television news that he had not applied for a visa in Colombo because the British high commission was "ringed with troops". The British high commissioner has since said that there was only one policeman outside the high commission to his knowledge. Are we not in danger of accepting some slightly exaggerated statements?
  Mr. Meadowcroft: I appreciate that argument. It is not my argument that all the 64 or 58 were genuine. I am saying that some of them may have been genuine. It appears now that some of them are regarded as genuine. It may be that circumstances were exaggerated for the sake of individual cases, but I hope that the hon. Gentleman will accept that there is no way of testing the genuineness

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  and the validity of a case without the possibility of referral; otherwise the issue will rest entirely on the judgment of one official.
  The Minister of State has told the House that he believed that all the Tamils were involved in a racket based in Malaysia. It has transpired, however, that the United Nations High Commissioner for Refugees, through his representative in London, has said categorically that a number, perhaps a minority, are genuine refugees. If the Minister had had his way there would have been no referral. So strong was his belief in his case that he was not prepared to refer it to outside inspection. If he was so confident of his case, surely he could have referred it to an outside body such as UKIAS for inspection. If his case had been weak, he would not have dared to refer it. Now that it has transpired that a minority of the Tamils are genuine refugees, the case for ceasing to refer individuals to UKIAS in future has been fatally undermined.
  The Sub-Committee on Race Relations and Immigration said that a formal appeal system was not needed because of the availability of referral and of Members' representations. That has now been called in doubt however, because various provisions have been set aside. Surely fairness and justice demands some measure of appeal. There is a belief in the rule of law that runs throughout the House and one that Conservative Members frequently talk about. Confidence in the judiciary, the courts and the legal process will not be undermined because there are appeals and because appeals occasionally overturn the original finding. No one claims that appeals are fatally flawing our system of justice. Appeals are accepted as the norm, and that is why we have appeals built into the general system. Surely we cannot accept the appeal system within our ordinary legal processes without accepting that it should be available to refugees.
  Mr. Hurd: Does the hon. Gentleman accept that if we took his advice we would run a serious risk that anyone arriving at our ports for settlement or for any other purpose would soon realise that if he said, "I want to be treated as a refugee," he would be here in practice for quite a long time? That is the problem that the Germans have had to face, and it has become a serious problem for them.
  Mr. Meadowcroft: I appreciate the Home Secretary's point, but my argument is that we have to resolve the problem by international rather than unilateral action. If we take unilateral action, it simply means that other countries will take the same action, and we shall be left with no way of solving the problem. Refugees may well still be refugees. Unless a process of determining that is adopted, and accepted as fair, we shall not be resolving the problem; we shall simply be hiding it.
  I hope that I am not irking the Home Secretary, as he said earlier that I was. I am sorry if my rather warm remarks on 3 March irked him, but perhaps it was right for them to do so if that expressed some of the feelings of hon. Members about the treatment directed at people in the most vulnerable circumstances.
  Perhaps that is the difficulty. I accept that in different circumstances, when we are not dealing precisely with the refugee problem, there may be a good reason to have a debate about the whole issue of immigration and the status of people who should be entitled to come here. However
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  you, Mr. Deputy Speaker, would certainly soon be shouting for order if I endeavoured to set out the policy on such cases.
  The problem is that every time the Government introduce new legislation or orders to deal with immigration, the parameters of the debate are changed. It then becomes impossible to discuss who should be allowed to come to the country and who should not as if that had not happened. To take it to extremes, no party in this House can debate what immigration policy should be as if nothing had happened since 1962. The difficulty is that every incoming Government must accept the rules and regulations as they are at that time and try to work backwards or forwards from them, or simply take them on board. The difficulty is that it changes all the time. Perhaps that is why no Labour Government ever repealed any of the Acts that they voted against in the first place —because the circumstances had changed. Once an artificial barrier has been erected, to take it away causes further difficulties.
  If the Home Secretary is right, there may be more refugees genuinely seeking to get out of countries. The problem may be not that more people are trying to fool the system and to enter the country irregularly, but simply that there is an increase in genuine refugees. If that is so, we must have a procedure with which to determine whether they are genuine.
  Mr. John Wheeler: Has the hon. Gentleman reflected on what controls should be imposed, or is there to be an open-ended commitment, regardless of the number of people who may wish to enter the United Kingdom?
  Mr. Meadowcroft: Of course I have reflected on that. I have had discussions with the United Nations High Commission representative in London, and with other agencies. I concluded that we must reach an international settlement that takes on board the existing position. That means that we must deal with the Tamils specifically, as we dealt with the Vietnamese and the Ugandan Asians. If that gives us some breathing space to look at the broader issue—for instance, whether UKIAS can deal with more referrals—it must be done. However, I do not believe that we should use the general issue of immigration to undermine the refugee principle. That would do despite to people in an especially vulnerable position.
  I worry about the other side of the coin for Conservative Members. Whereas they may accuse the Opposition of wanting to ease immigration generally, the difficulty for Conservative Members is that if pride in colonial heritage and in the Commonwealth is uppermost in their minds, that inevitably increases the desire of those in danger, or believing themselves to be in danger, within the Commonwealth to come to this country. Because there has been immigration of people whose families are now threatened, that will increase people's desire to come to this country. It would be hiding from that fact, and extremely dangerous, to say, "Because we have taken so many people and the country is overcrowded, we cannot do so in future."
  Hon. Members on both sides of the House would not be here if it had not been for provisions of refugee legislation in the past. The hon. Member for Cardiff, West (Mr. Terlezki) has a background of being in the Ukraine, and his family had to suffer tremendous repression. The

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  right hon. and learned Member for Richmond, Yorks (Mr. Brittan) comes from a family who entered this country as refugees, and he lost a member of his family because of Hitler. Other people in the House and outside it have come from that background.
  The Home Secretary mentioned Mr. Shcharansky. People of note get out in ones and twos, but they have papers because the Soviet Government have allowed it. But that would not cover someone attending a scientific conference or a sporting or artistic event who managed to abscond and boarded an aeroplane or ship. They would not be carrying papers allowed to them by the Soviet Union. Such people cannot obtain the documents that our Government require. But Conservative Members will probably feel more sympathetic towards such cases than towards some that we are seeing now.
  Mr. Waddington: My right hon. Friend's point was that those fortunate enough to have left the Soviet Union have left as a result of being granted an exit visa by the Soviet authorities and an entry visa to come into this country. It is difficult to imagine circumstances in which anyone in Russia has been lucky enough to get to an aeroplane, or anywhere near an airport. Mr. Shcharansky walked from East Germany into West Germany. In the other case quoted by my right hon. Friend, Britain had granted a visa after the Soviet authorities had granted an exit visa.
  Mr. Meadowcroft: There have been cases in which people have been given asylum after absconding from other events.
  Mr. Waddington: If someone has come here to attend another event, what bearing has that on this carrier legislation? That person would have an exit visa from, for instance, the Soviet Union to come here as a visitor for that event.
  Mr. Meadowcroft: He might well have gone to a third country, from which he would have no exit visa. He would have only a visa for that other country, and would not be able to travel any further.
  The crucial point is that such issues, whether or not they are popular, often depend on international consensus. It worries me that Conservative Members are upsetting that consensus on a very serious and delicate issue. The Home Secretary said that he believed that his proposals were supported by a majority of hon. Members, and by an overwhelming majority outside the House. That may be true, but with some issues that should by no means be an overriding concern. We should not set public opinion aside lightly, but some issues, although they are important to a relatively small number of people, are crucial to those individuals. We should try to do what is right: we should maintain the international conventions, and treat people with fairness and justice. I do not believe that this legislation goes anywhere near that.
  5.59 pm
  Mr. John Wheeler: I assure the hon. Member for Leeds, West (Mr. Meadowcroft) that the United Kingdom has always adopted a generous and liberal policy towards those seeking asylum. That is still true today. I know from my work as Chairman of the Race Relations and immigration Sub-Committee of the Select Committee on Home Affairs that by comparison with any other country we can be proud of our record of support
  734
  for the United Nations convention. Not one Socialist East-bloc country has signed the convention, whereas we were among the first to accede to it, and since our accession in 1967 we have been scrupulous in its observance.
  I know from my work in and contact with the Western democracies in Europe and North America that there is a serious and growing problem of immigration from so-called Third world countries and others. That is the nub of this issue. It is perfectly understandable that people in over-populated and impoverished countries — where often there is poor government, bad management and no economic prospects — will seek the advantages of the affluent West. No one could have more sympathy than I and, I suspect, most hon. Members, have with that ambition, but the fact remains that it is impossible for the United Kingdom — indeed, any Western country — to allow in a steady and persistent influx of persons from other countries.
  In recent years, the United States, Canada and all the EEC countries have had to consider ways of containing immigration and preventing illegal immigration. As these procedures have tightened, the tactics of those who wish to enter the Western world for economic reasons have changed. This has resulted in an increasing black market for forged, altered and counterfeit passports and travel documents. Most Western countries now have stringent visa requirements. I am glad to say that the visa system that we have adopted in recent months has been outstandingly successful, due to the remarkable efforts of our overseas offices, as well as our offices at the immigration ports and airports in the United Kingdom. The visa system is working, and consequently it is reducing a great deal of the harm and hurt of the people who wish to travel from poorer countries.
  The one loophole that has been exploited—in recent months in particular—is the claim to refugee status. A refugee, as I understand it, is someone who does not want to leave his home country but is forced to do so because of a genuine belief and expectation that were he to remain he would be killed or tortured. He harbours a determination to return to his home country at the earliest opportunity, and seeks to do so in the future. The wave of so-called refugees who have been seeking to enter the Western democracies do not fall into that category. The evidence is overwhelming that many of these unfortunate people are seeking to leave their own country for economic reasons and not strictly for reasons of oppression.
  The 64 Sri Lankan Tamils who arrived at Heathrow from Bangladesh on 13 February had travelled first from Malaysia to Dhaka and from there to London. They had obtained sanctuary in Malaysia and, secondly, in. Bangladesh. If they had been genuine refugees, as I understand the meaning of the term, fleeing from the prospect of being killed or tortured, they would have obtained the sanctuary and protection that they pretended to seek in either of those countries. Their course of action and all that is known about them demonstrates that they were not genuine refugees. The conduct of the immigration service and my right hon. and learned Friend the Minister of State seems to have been correct in the circumstances.
  The 64 Sri Lankan Tamils had been organised by an agent who had travelled with them from Malaysia to Dhaka. All the Tamils travelled on forged or mutilated passports, or had no passports, having destroyed them on the journey. None of them had the required United Kingdom visas, yet they would have had the opportunity

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  of obtaining those documents through the United Kingdom authorities in Malaysia or Dhaka, where we have a high commission which is skilled in the granting of such documents in proper cases. They claimed asylum on arrival in the United Kingdom and the Government, satisfied that the Tamils had no claim to refugee status, attempted to return them to Bangladesh.
  The hon. Member for Leeds, West called for international understanding of the problem. I wish that there was a willingness for international understanding. The difficulty that is faced by the United Kingdom and other Western democracies is that some countries use any excuse not to accept back into their territory persons who are not genuine asylum seekers and who have no right to be in the Western country in question.
  The problem that is faced by my right hon. Friend and his officials is that if he does not turn round the bogus refugees in a very short time the United Kingdom and its citizens will be left with a responsibility for those persons, which is improper and does a grave disservice to the genuine asylum seekers, to whom we traditionally give sanctuary. On this occasion the Government were prevented from doing what they believed to be their duty by a High Court order staying any action to remove them. The Home Secretary, as he said in the debate, decided to refer the 64 cases to the United Kingdom Immigrants Advisory Service and reach fresh decisions on each case.
  It is a matter of regret that UKIAS did not use far more professionalism and objectivity in examining these cases. It does no good to the cause of the genuine asylum seeker if organisations that are funded by the taxpayer — as UKIAS is, to the tune of 90 per cent., with 10 per cent. coming from an official body which deals with refugee issues — do not exercise their special obligations and responsibilities in a manner that takes into account the interests of the country and the whole concept of fair immigration control, because the two go hand in hand.
  I hope that the management of UKIAS will look further at that aspect of its affairs. It is only right that my right hon. Friend should invite it to consider the progress of these matters in the way that he has done.
  Mr. Meadowcroft: The hon. Gentleman mentioned one or two of these matters earlier in relation to what I had said. Is he saying that UKIAS should say that there is a quota and that once a certain number is reached the national interest requires that we send the next ones back? I cannot understand what the hon. Gentleman is saying about the national interest compared with an individual's right. If UKIAS is seeking to interpret the rules as they stand it must make its own judgments on the individual. If that is not done—the hon. Gentleman spoke earlier about our splendid record—we shall find ourselves in the position of the Western powers at the end of the war when, in the national interest, they sent Slavic refugees back to Russia, to a certain death, rather than accept them.
  Mr. Wheeler: I hope that the hon. Gentleman will forgive me if I do not pursue what happened after the second world war, as historically, that is so distant as not to be relevant to the situation in which we find ourselves today.
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  The point that the hon. Gentleman raises about how many refugees should be admitted into the United Kingdom or any other Western democracy is a serious one.
  I perceive that the Western democracies—the United States, Canada or any of the EEC countries—are now saying that, in practice, there is a limit to the number of persons that they are prepred to allow into their countries as refugees. A consequence of a tightening-up of this specification is that the United Kingdom, with its more liberal policies for admission, is becoming more vulnerable to persons coming from other countries. The problem is to determine who is the genuine refugee and who is not. The 64 Tamils could have been returned to Dhaka in Bangladesh, where they could have applied for visas to the United Kingdom and safely remained there, as they were not at risk from any activity in Sri Lanka while they were resident in Dhaka. The same applies to Malaysia. The Tamils could have been processed properly within the system there and lived in safety.
  Mr. Raison: I wonder how my hon. Friend is able to make that judgment on UKIAS handling of the problem. The essence is that the Tamils did not see the officials in the first instance, but they have subsequently been able to see them. I understand that the Tamils are still being interviewed and, as my right hon. Friend the Home Secretary said, representations can be made until Wednesday this week. What is the evidence for saying that UKIAS has not handled the cases correctly?
  Mr. Wheeler: I understand the facts that I have presented to be correct and they have not been challenged. The 64 Tamils travelled in an organised way. They either had no documents, or the documents that they had were false, forged or mutilated. The evidence is overwhelming that the Tamils were far from genuine in that sense. They came from two Commonwealth countries where they were not at risk and where they could have obtained sanctuary from oppression, if that was their first objective. Apparently they did not seek that sanctuary in the kingdom of Malaysia or in the republic of Bangladesh. If they had done so they could have applied to come to the United Kingdom through our high commissions in the normal way and their applications would have been considered.
  Mr. Raison: I am not sure that that meets my point. The question of how the Tamils got here, or whether they should have been interviewed in Malaysia of Dhaka, is not UKIAS's responsibility. UKIAS had a responsibility to interview those involved, once that was possible.
  The court's view, which I do not challenge, is that the crucial question is not how the people got here—I am sure that there was racketeering—but whether they are refugees or people whose conditions are such that it would be wrong to send them back. That is at the heart of the matter. That is what UKIAS has been involved in. I do not think that UKIAS has mishandled the case. I understand that a substantial number of those involved deserve refugee status and should be considered for the right to remain here.
  Mr. Wheeler: My right hon. Friend will concede that if at the end of the inquiry into the individual cases the granting of asylum is considered appropriate, the next question that will arise is to which country that will apply.

  737
  Will it he the land in which they first arrived—Malaysia — or the second country to which they travelled— Bangladesh? My right hon. Friend the Secretary of State has great experience in the management of immigration control procedures and he will apprehend my argument. It is important.
  Mr. Winnick: I am grateful to the hon. Gentleman, whose speech has been interrupted on a number of occasions, for giving way. I apologise for interrupting him again. This is a matter for debate and I have my own views. I accept that the number of people whom the United Kingdom can accept must be limited. The hon. Gentleman is a fair-minded person, however much we disagree, but is he aware of any criticism by the Home Office or any other agency of the way in which UKIAS has handled the Tamil cases, or any other case that has been referred to the refugee unit in the last three years? The hon. Gentleman was the Chairman of the Sub-Committee which examined UKIAS and which came to the view that the organisation was well run and did a proper job.
  Mr. Wheeler: I am grateful to the hon. Gentleman. As the House knows, he plays an important part in the management of UKIAS, as he is its honorary chairman. I cannot comment on individual cases and I have no other comments to make on UKIAS in today's debate. My point is that UKIAS has a special responsibility. It is recognised by the Home Office as the intermediary in handling appeal cases. It has to use its time and resources carefully. My point is that in the situation that I have described, involving a particular group of Tamils who could have gained safety in other countries, we must question whether time should be spent on involvement in their affairs when there might be other cases on which the asylum issue should be more genuinely explored. That must be considered carefully.
  When my Select Committee considered the subject of refugees and asylum in 1984 and 1985, it reported and recommended that the Home Office should consider the extension of the right of appeal to all asylum seekers. That is the point to which my right hon. Friend referred in his excellent speech. It recommended extension for cases where the applicant currently lacks the right of appeal exercisable in the United Kingdom to establish procedures by which leave to remain is withheld in obviously bogus cases and by which refusals of leave can be reviewed rapidly if appealed against.
  In their response the Government acknowledged that this is a most difficult issue and said that they understood the need for immense care in handling such cases. As it has turned out, the Government's grave concern about this aspect of the procedure is well illustrated by what has happened at our ports of entry, in particular at Heathrow airport.
  The difficulty is that in 1984–85, when my Select Committee considered the matter, we were beginning to understand the strength of pressures placed upon Western countries in particular and the difficulty that we in the United Kingdom would face as other countries tightened their procedures. I recall a visit to West Germany when about 100,000 people entered through east Berlin, claiming to be refugees. The West German Government had to care for those people, although they believe that they were not genuine refugees, but economic refugees. West Germany had to look at ways of dealing with the
  738
  problem and the Government were concerned because they could see no end to the numbers that would arrive. There are compelling economic reasons in many Third world countries why people should move to improve their quality of life. We in the House would not disagree with that.
  The experience of the Select Committee in 1984–85 and the current events of 1987 are such that I now firmly hold the opinion that the traditions of this country and the care that we extend to asylum seekers must remain an important part of our government and culture. Indeed, the evidence since 1979 under this Government is that more than 8,000 individuals from all over the world have been granted asylum. Over 6,000 more who failed to qualify for asylum have been granted exceptional leave to remain.
  The balance must be struck between protecting the genuine refugee and preventing abuse of the United Kingdom's generous and liberal immigration and refugee policy. In the light of current developments in the Western democracies, the United Kingdom has no alternative but to bring forward the measure which the House is now considering. There are similar provisions already in operation in many other Western countries, including Canada, the United States, Australia, New Zealand and West Germany. I also know that other Western countries are taking steps to exercise the tightest possible control against abuse.
  I do not believe that the passing into law of the Bill will in any way operate against genuine asylum seekers as defined by the United Nations convention; nor will it prevent Jewish refugees from the Soviet Union or any other oppressive society from gaining entry into the United Kingdom. If we are to maintain a liberal asylum policy, we must have proper controls over the bogus. That is at the heart of the problem.
  My right hon. Friend the Member for Aylesbury (Mr. Raison) spoke about an appeals procedure that could he almost instant and could be operated at the port of entry. I wish that I could devise a system that would hold the certainty of independence and objectivity, but would minimise the possibility of delay: a system that would operate instantly, that is within a matter of hours, but would not defeat the Government's need for effective control over immigration.
  The number of people who are already referred for further inquiry is causing major difficulties over accommodation and the subsequent bureaucratic investigation of their cases. I am afraid that I can see no practical alternative, given the circumstances that face the Western world in 1987. None of us can deny the pressure of numbers wanting to come. However, it must rest with the Executive to act as the point of refusal in the first instance, and the point of review in the second instance —at the port of entry. There can be no alternative to the operation of such procedures. I can see no way in which the United Kingdom will have effective control unless we follow such procedures.
  6.21 pm
  Mr. Max Madden: There can be no doubt that the Bill was conceived in panic, is being rushed through this House in great haste and, if enacted, is unlikely to be workable and is probably in breach of international conventions.
  When the Home Secretary opened the debate he made some reference to the visa entry system, and I would like

  739
  to comment upon that system. The right hon. Gentleman seemed to portray an abundant degree of complacency about the system. It is certainly true that a large number of visa applications are being granted without personal interviews. At present a larger proportion of applications are being accepted than before the visa entry system was introduced. Certainly the figures I have been given bear that out. That leads one to the inevitable conclusion that either the quality of the decisions made by immigration officers at Heathrow and elsewhere, prior to the visa system, were as bad as successive reports suggested, or there is now a clear political direction to British posts overseas to grant a large number of visa applications.
  There are many anomalies within the visa entry system. Indeed, later this week I shall be writing to the Minister of State about a constituent of mine who has been waiting since the middle of January for his 10-year-old nephew to have his visa application approved. I also think that renewed consideration should be given to establish a post in Mirpur to deal with applications from that part of Pakistan.
  On the substance of the Bill, I support those speakers who have urged that this country should have a proper appeal system. That was first recommended by a committee more than 20 years ago. There is an overwhelming case for the introduction of a proper appeal system that would work quickly and effectively. The Government would not have got themselves into their present difficulties if there was such a system and it was operating satisfactorily.
  There is concern about the Government's proposal to use a ferry moored off the coast at Weymouth as a floating detention centre or perhaps as a prison hulk—that is how many people described it when the proposal was first made. I have been advised by the Library that it appears that a moored passenger ship used for such a purpose falls into a legal limbo. Even the Library hinted that that may well be the reason why the Home Office has chosen to consider that proposal. Whatever the motive, I had hoped that, in his statement, the Home Secretary would have announced that the proposal was scrapped. I am sad that that is not the case.
  Today it has been announced that there is a crime committed in this country every minute. Our prisons are so full that there are rumours circulating that the Government are shortly to announce an amnesty for 6,000 prisoners, convicted of minor offences. That is an appalling commentary on the Government's performance in dealing with law and order. That they should seriously propose the introduction of prison ships, moored off the coast of Weymouth, to deal with people who, for one reason or other, are refused entry to the country is appalling.
  Mr. Corbyn: Hurd's hulks.
  Mr. Madden: This is a nasty little Bill. It has been condemned by a number of organisations. The United Kingdom Immigrants Advisory Service states:
  "UKIAS regrets the introduction of this Bill. As drafted, it will place serious obstacles in the way of bona fide asylum-seekers with a genuine fear of persecution, who seek asylum in the UK."
  The Joint Council for the Welfare of Immigrants states:
  "We believe that rushed legislation directed against asylum-seekers, which seeks only to secure their exclusion
  740
  from the UK, is likewise no basis for a fair and just refugee policy, which must ensure that genuine refugees have the opportunity of asylum in the UK and do not face arbitrary return to countries where they may be in danger."
  The Immigration Law Practitioners Association states:
  "This Bill is unnecessary, unworkable and in contravention of this country's international obligations."
  We are all aware that the Bill is being introduced following the Tamil case that led the Government into embarrassment, into the courts and resulted in an even more embarrassing U-turn.
  The Home Secretary and the Minister of State have come to the House time and again to seek to persuade it that action is necessary to deal with rackets and racketeers. They have refused to accept that Tamils in Sri Lanka face real dangers and have true concern about their safety and that of their families.
  I believe that the Home Office should consult the Foreign Office about the degree of the danger that is faced by Tamils in Sri Lanka. In The Observer yesterday, under the headline,
  "Revealed: Briton who led Contra mercenaries,"
  there was an extremely interesting article about Mr. Michael Borlace who was employed by an extremely mysterious organisation known as KMS. The article stated:
  "President Jayawardene of Sri Lanka, in the strategically important Indian Ocean, also sought British help to keep him in power against minority Tamil 'terrorists.' Because India tended to support the Tamils, Britain did not send troops. Their dispatch would have been politically controversial. But KMS was allowed to send a private force, eventually numbering 100 men, to help establish and train a 'special task force' of Sri Lankan troops."
  In the article the Sri Lankan Minister for national security is quoted as saying:
  "We have to accept that our own forces are not as experienced in this type of operation as the British are. We heard about the KMS when it was used by the Sultan of Oman to help with his terrorist problems."
  The article concludes:
  "Last year — amid reports of atrocities in Sri Lanka which eventually led to unease among some KMS 'trainers' —Borlace and a team of five were pulled out of Sri Lanka and sent covertly to aid the Contras. That too was rapidly to end in recriminations and an international political scandal that engulfed the US President, although not, so far, the British Prime Minister."
  No doubt it is only a matter of time before that happens, but I have every confidence that embarrassment will not shroud our Prime Minister until after the general election.
  The House has heard much about rackets and racketeers in the case of the Tamils and in other instances, but the Bill is almost a charter for the racketeers. It is a bonanza for them and for the printers of bogus documents, because they will be compelled to become more sophisticated racketeers and forgers.
  The crooks must have cheered when they got the first wind of the Bill. The Minister of State and the Home Secretary, who have told us so much about the racketeers and the rackets, must be told that the Bill does nothing to deal with the racketeers and their rackets.
  The Minister of State has demonstrated his powerlessness in regard to rackets and racketeers in Malaysia, but why does he not do a little more to bust an immigration racket that is a little nearer home and which he could do something about? Serious allegations have been made by me and the Chinese chamber of commerce in Northern Ireland against a senior RUC officer and others in Belfast.

  741
  Why has that officer not been suspended from duty pending an outcome of inquiries into those serious allegations involving an immigration racket and five-figure sums of money? Will the Minister of State explain in his reply to the debate why that officer has not been suspended, or inform the House that he has been suspended, as he should have been in January and February when the detailed and serious allegations against that man and others were submitted?
  Conservative Members often claim that they have had no correspondence on matters about which Opposition Members claim that there is considerable anxiety. I assure Judge Argyle, who seemed over the weekend to make some extremely intemperate and prejudiced remarks about my constituents, that the letter that I am about to read is from a constituent who is white and is a well-known lecturer in law. He says:
  "As the recent Tamil case indicated, even the High Court does not share the Government's view that because a person has bogus travel documents he cannot, for that reason, be a genuine refugee. Such bogus documents may indicate to the contrary, that he is afraid to approach his Government to get genuine documents. I am sure you will, but I do urge you, nonetheless, to oppose the Government's attempt to frighten airlines into acting as an additional arm of the Immigration Service. Heaven knows, the IS does not do a very sensitive job, but what kind of a job will the airlines do?"
  That constituent is very concerned about the Bill, as are many of my constituents. I believe that a large section of British public opinion is worried about a nasty, mean little measure which cuts across the traditional view of this country. Those who believe that they face genuine danger and seek political refuge for themselves and their families have looked to us to consider their case with sympathy and understanding and to give them refuge. I hope that the Bill will be removed, because it is a shoddy, shameful, nasty little measure which does nothing to assist the United
  Kingdom's reputation throughout the world and which even this Government may be ashamed of within a short time.
  6.34 pm
  Mr. Michael Morris: I welcome the Bill, which follows similar legislation in Canada, Australia, New Zealand, Brazil, the United States and the Federal Republic of Germany.
  Hon. Members are right to ask why the Bill is necessary. We know that, although it was triggered by the 64 Tamils, the problem goes much deeper. It arises because of the changing nature of refugee movements, caused by the ease of air travel, and because there is no single definition of a refugee.
  I am a member of the Migration and Refugee Committee of the Council of Europe. The Committee is closely involved with the United Nations High Commissioner for Refugees and we have recently been examining the movement of refugees in South America. One of our recent reports, which has not yet been put before the Council of Europe, deals with the definition of refugees. We outline six definitions. There are the ultra sound asylum seekers, who are de jure refugees and are recognised as such under the 1951 United Nations convention and the 1967 protocol, and are given asylum in a third country and enjoy the economic and social rights that flow from that recognition. That is the gold standard of a refugee.
  742
  Secondly, there are also the UNHCR refugees who fit in under the 1951 convention and the 1967 protocol and have the added bonus that the UNHCR feels that they should be recognised as refugees.
  Thirdly, there are quota refugees. The right hon. Member for Manchester, Gorton (Mr. Kaufman) referred to direct exchanges from the Eastern bloc and there are similar procedures in Chile and Argentina. Those people are quota refugees.
  Fourthly, there are de facto refugees — a category within which I suspect the Tamils fall. Such refugees do not come under the 1951 convention or the 1967 protocol., but they are unwilling to return to their country of origin, on the ground of reasonable fear.
  There are two other categories. The Council of Europe committee calls one group discreet refugees. They do riot fall under any of the previous four categories, but they believe that they have a special status and right to be recognised as refugees.
  The final category is economic refugees, and that category is all too well known to the House.
  It is clear from these categories that the problem is not straightforward, and it is not surprising that we encounter difficulties in tackling the issue.
  My hon. Friend the Member for Paddington (Mr. Wheeler) referred to the 100,000 refugees who wanted to go to the Federal Republic of Germany. Clearly, there is a large—scale problem. As my hon. Friend said, the majority of those people were seeking economic gain.
  In the past six years the number of people seeking asylum in the United Kingdom has tripled. Two years ago only 10 per cent. of the people granted asylum sought it: at the port of entry. That percentage has changed dramatically, and I understand that the latest figures show that about 50 per cent. of those wanting asylum seek it at the port of entry. That is where the situation in Sri Lanka and the Tamils come to the fore.
  By way of background, I have lived and worked in Sri Lanka and India. I have lived in Pakistan and visited most of south-east Asia. I go to Sri Lanka every year, sometimes as a guest of the Sri Lankan Government, and sometimes under my own steam. I go at least once, and usually twice a year. I have been to the United Kingdom high commission in Colombo on every visit. I went when the new visa controls came in about 18 months ago. I questioned immigration officers, our high commissioner, Tamil politicians and the Sri Lankan media, both favourable to and against the Government. A few weeks ago, in January, I checked on the situation.
  Today, there are no queues of people waiting for visas. The only time there were queues was when we initially brought in the visa requirement. There are no delays. Maybe a person will arrive with not quite the right papers. He is given another appointment a few days later so that he can be speedily dealt with. He does not go through the whole rigmarole again. He is given an immediate appointment to clarify the query. I have never had a complaint from any Tamil. I know many Tamils and some Tamil politicians in Sri Lanka, but none has complained about the visa provisions.
  Hon. Members who do not know Sri Lanka may look at a map, see that it is quite a way from Jaffna to Colombo, and ask how anyone can get from Jaffna to Colombo, which is several hundred miles away. The fact is that they do get there. One has only to look at an analysis of the

  743
  applications, as I did, to know that people from Jaffna are applying and that they go to Colombo. It is not for me to ask by what means they get there.
  Mr. Corbyn: Although I do not doubt the hon. Gentleman's extensive knowledge of Sri Lanka, he has said that Tamil people travel from Jaffna to Colombo. He said that he does not know how they get there. Will he comment on the number of assaults committed upon people who travel by bus or train in an attempt to get from Jaffna to Colombo, or the sheer difficulty of many Tamil people in getting through Elephant pass, off the peninsula and on to the main part of Sri Lanka?
  Mr. Morris: I cannot comment on the number of assaults any more than the hon. Gentleman can. No record is kept, and there are difficulties.
  Mr. Corbyn: But they happen.
  Mr. Morris: They happen, particularly at night. If one is unwise enough to travel at night, when terrorists attack Government troops, one is bound to find oneself in difficulty, as any hon. Member who has done national service or been in the armed forces would know. First, I look at the facts on the ground, at the high commission in Colombo. Many people from Jaffna apply in person at the high commission. They do not apply in Jaffna.
  Mr. Corbyn: A few years ago—
  Mr. Morris: I have been to Jaffna. Let me make it clear that I did not go last January, but I have been to Jaffna and Trincomalee on many occasions.
  Secondly—I do not wish to take it any further than this — I asked the high commissioner the specific question that another hon. Member raised. I asked what happens to the applicant who is afraid that, by entering the British high commission, he may be recognised as a political dissident, someone who is vehemently opposed to the Government of Sri Lanka, and may well be on a wanted list because he has undertaken a robbery or committed some other error. I was told—this does not surprise me, having worked in many countries — that there are means whereby, through the Tamil community, applications can be dealt with without having to go through the front door of the British high commission.
  The right hon. Member for Gorton, the Opposition spokesman on immigration matters, suggested that one has to go through the front door of the British embassy to get out of eastern Europe. That is absolute rubbish. My second name is not Wolfgang for absolutely nothing. The right hon. Gentleman knows as well as I do that the people who sought to get out of eastern Europe before and between the wars did not necessarily do it through the front door of any British embassy. It has long been part of the heritage and success of our asylum policy that our contacts go deep in any country in which there are difficulties.
  Mr. Bidwell: The hon. Gentleman is obviously introducing into the debate considerable knowledge about Sri Lanka and the two antagonistic communities. Has not what he said rather contradicted his observations? He alluded to the exodus of Jews and other persecuted minorities in Europe who did not go through the front door, as he put it. Is that not precisely what is occurring with Tamils coming here and claiming refugee status?
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  Additionally, the more he shows how complicated it is to assess claims for refugee status, the more he shows why we cannot immediately return people who have come here. It is necessarily a long process to determine the pros and cons. In the cases in which I have intervened, if addresses in my constituency are given, it seems that the current Home Office policy is to allow most of those who claim refugee status a period without necessarily granting full political refugee status.
  Mr. Morris: I re-emphasise the point that there are no complaints about the visa system in Colombo today. People from the north and the east get to Colombo. All I am saying is that, underneath, a safeguarding provision operates for those who may be "wanted" by the Sri Lankan Government because they have undertaken a robbery, which is not uncommon, the money from which is being used to support the Tigers. In the circumstances, I can understand why the Sri Lankan Government would want to arrest them, and equally I can understand why the persons involved may want to get out.
  Why did the 64 Tamils not apply for visas, as hundreds of other Tamils have done? If they are good and genuine refugees, and they were in the north or the east, why did they not go to south India, as the majority of Tamils in their situation have done? Why did they travel to Colombo? If they travelled to Colombo, as they clearly must have done to get to Malaysia, why did they not use the system and get a visa, which they can quickly get from the high commission? These questions must be asked. It must be put on record that it is not the policy of the Sri Lankan Government to force any Tamil to leave the country.
  My hon. Friend the Member for Westminster, North (Mr. Wheeler) asked why, having gone to Malaysia, which is a member of the Commonwealth and does not have visa requirements, and having got the sanctuary that they sought there, they did not stay in Malaysia. There are many Sri Lankans in Malaysia. Why did they choose not to stay there in Dhaka?
  The time has come to ask one or two questions about some of the rackets that are going on and that need to be brought out into the open. I asked to see the visa stamp in our high commission. I suppose I should not have been surprised, but I was surprised that the high commission has already had to change it twice. It has had to put on the most sophisticated watermark that it can find because it is already being reproduced on a facsimile basis by highly creative Sri Lankans, mainly of Tamil origin, I believe.
  It is also common knowledge in Colombo that students come to the United Kingdom to do a course but never take their finals because they know that if they took and passed them they would be asked to return to Sri Lanka to follow their particular trade or profession. That racket has been going on for years.
  I have to ask my right hon. and learned Friend why a man like Viraj Mendis is able to hoodwink the authorities, year in year out, and claim that he is persecuted when my Tamil friends tell me that he had only the most junior role in the political movement in Sri Lanka and that he is by no means a leader of it, let alone worthy of lance corporal status.
  I have a large immigrant community in my constituency and I have many friends among the Bangladeshi community. We have taken in for temporary asylum about

  745
  2,000 Sri Lankans and we have said that all of them can get a job, that they do not need permission to go on a Manpower Services Commission training course and that they can avail themselves of the National Health Service, of the other health services provided by local authorities and of social security benefits. Opposition Members ought to realise that my Bangladeshi constituents in Northampton are just as concerned about the taxes that they pay as the indigenous community in Northampton, and they wonder why money should be spent on bogus asylum seekers. Any hon. Member who has had to deal directly with those who are seeking asylum—
  Mr. Corbyn: Will the hon. Gentleman give way?
  Mr. Morris: No. I have already given way once to the hon. Gentleman.
  Any hon. Member who has had to deal with those who are genuinely seeking asylum is more than happy to give them as much help as possible to make their stay in the United Kingdom normal. The Vietnamese boat people are as good an example as any. They are very welcome to stay here, but the nearly 2,000 temporary asylum seekers from Sri Lanka do not, by any yardstick, fall into that category.
  When assessing the position one has to consider India's responsibility. In one sense, every Sri Lankan is an Indian; all of them came originally from India. However, today Sri Lanka is a sovereign democratic state. It is overshadowed by India, but India envies the success of Sri Lanka. Hon. Members sometimes forget that one needs to distinguish between the Indian Tamils and the Sri Lankan Tamils. The Indian Tamils are to be found in the hill states. There is no question of refugee status in their case. The vast majority of them want to stay on the tea estates and they have now been granted citizenship.
  Mr. Corbyn: But they do not have political rights.
  Mr. Morris: They have political rights now. That is what we are talking about today.
  Mr. Corbyn: Then they were a long time coming.
  Mr. Morris: Lots of things take a long time.
  In the past the Tamils were discriminated against because of the language problem, and they suffered; but having worked in Bengal I know that the Bengalis also suffered when Hindi became the official language of India. However, that is in the past. The Tamils are intelligent people and they do well in any walk of life.
  The terrorists are active in the north and in parts of the east of Sri Lanka. For the last three or four years India has actively connived at military camps in India as well as at refugee camps, although claiming at the same time to be a mediator. India has no control over the terrorist movement in Sri Lanka, because the avowed aim of that movement is to set up a Marxist state. Is it any wonder, in those circumstances, that the Sri Lankan Government react? At the beginning, the Sri Lankan army was pretty hopeless. The Tigers are better trained, organised and financed, but I do not know where the money comes from. Atrocities are carried out on both sides, and the atrocities of the Tigers are worse than the atrocities committed by the indigenous army. The terrorists are underwritten by India.
  Peace proposals of 19 December are on the table. They are supposedly supported by India but they are still rejected by the terrorists. However, despite the strife, slowly but surely the Tamils are returning voluntarily from
  746
  south India to Sri Lanka. About 4,000 Tamils have already done so. Those are not my figures, or Sri Lankan Government or press figures; they are Indian figures. They are based on information that has come from the Indian immigration authorities. Since Christmas, 4,000 Tamils have returned voluntarily to live in the north of Sri Lanka, which suggests to me that the situation must be improving. It is reported that the Swiss Government are recommending that more than 40 Tamils should be returned to Sri Lanka. Switzerland does not have a hard-headed, Right-wing Government who are determined to throw out everybody that they possibly can. The Swiss weigh up matters. If the Swiss Government are thinking of returning those Tamils to Sri Lanka, it suggests that the position is improving there.
  My view on the 64 Tamils and the 2,000 temporary asylum seekers is that the British Government have been duped. I question the so-called perfect stance of the United Kingdom Immigrants Advisory Service. The other morning while driving to the House, I was listening to a radio programme during which the director of UKIA.S, Mr. Michael Barnes, was interviewed by the BBC. He said that a significant number of the 64 Tamils had been tortured. It is not the role of an independent body like UKIAS to state categorically that people have been tortured. It is entirely appropriate to say that allegations of torture need to be investigated, but it is completely wrong for the director of an independent body to state in the media, when evidence has not been produced, that people have been tortured.
  Mr. Tony Banks: Is it not equally wrong for the Minister of State to say without any evidence that the Tamils were bogus refugees?
  Mr. Morris: The hon. Gentleman tempts me to look again at the case that I have been deploying. I do not know whether he has been in the Chamber for the whole of my speech. I think that my right hon. Friend the Home Secretary was absolutely right to say that one does not tear up passports and documents if one has nothing to hide. One does not avoid going to south India, where all one's colleagues go if they are under political pressure, but. instead goes all the way down to Colombo, through all the difficulties that the hon. Member for Islington, North (Mr. Corbyn) pointed out, unless one is adopting a slightly bogus approach. Furthermore, one does not leave other colleagues in Malaysia—there are many Sri Lankans in Malaysia—and move on to Dhaka, and after that to the United Kingdom, unless one has something to hide.
  Mr. Corbyn: Will the hon. Gentleman give way?
  Mr. Morris: No. I have given way several times to the hon. Gentleman. He will have his chance in a minute, arid I am sure that he will take it.
  Mr. Corbyn: This is an important point.
  Mr. Morris: Yes; this is an important subject. I rarely speak on it, and today I intend to have my full pennyworth.
  The right of asylum to this country is precious. Many hon. Members have commented on Chile and Vietnam. I will go a long way to support any genuine case, but I doubt whether there are any genuine cases among the 64 Tamils. I doubt also whether there are many genuine cases in the 2,000 or more temporary asylum seekers. If Sri Lankans,

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  of their own volition, are returning to India, as hundreds have been doing so since Christmas, should not the same happen here?
  As I have said—I do not often boast—no one in the House knows Sri Lanka as well as I do. Perhaps I shall need to bring the case of a genuine refugee from Sri Lanka to the attention of my right hon. Friend. There will be people who are violently opposed to the present Government and, in the future, there may well be some absolutely genuine cases. However, when I make that case to my right hon. Friend, I shall make it on good evidence and with facts. It will not be the trumped-up support of Left-wing hon. Members who get on any band wagon they can find to undermine the democratically elected Government in Sri Lanka.
  As a postscript, perhaps it is time that my right hon. Friend told the Indian Government that if they are genuinely concerned about peace, it is time that they closed their camps in south India, patrolled the strait of Palk, stopped the kidnapping of young people and got the Tamils to accept the proposals on offer. That done, peace will follow. If the Indian Government do not do that, India will rue the day and Britain certainly will not pick up the pieces.
  To the relief of some Opposition Members, I finish on the issue of the English language, which is at the heart of the problem. As more and more people throughout the world have English as their second language, we must ask ourselves whether we in this country, which is the home of English, will allow everyone throughout the world who has English as his or her second language to seek sanctuary here. That would be an unrealistic policy, but it is the implication behind what is happening today with the Tamils.
  7.2 pm
  Mr. David Winnick: In accordance with the conventions of the House, I should declare an interest, although it is non-commercial. Needless to say, I am the chairman of UKIAS.
  As we know, there is a long and honourable tradition, going back many centuries, of giving asylum to victims fleeing political and religious persecution. My fear, like that of my hon. Friends, is that the Bill will undermine that long tradition.
  In the memorandum that was submitted by the Home Office in December 1984 to the Race Relations and Immigration Sub-Committee of the Select Committee on Home Affairs, reference was made to the tradition of asylum here. That does not mean that Britain should be in a position to accept a large number of refugees. That certainly is not, and has never been, my view. Therefore, one must accept that, at the end of the day, the number of genuine refugees that the United Kingdom will accept will always be rather small. I hope that the Western European countries, including our own, will act in concert, in trying to bring about joint co-operation to assist those in genuine fear of their lives, and not, as is happening at the moment, that one country after another in Western Europe is virtually closing its doors to refugees.
  There should be no doubt that those who have a real fear of persecution or worse if returned to their own country directly, or sent back to a country which would
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  return them to their own land, look upon the countries of democratic Western Europe as safety nets, if only as temporary ones.
  I am reminded of what happened when the coup occurred in Chile in 1973. That was an army coup, or at least a coup that was carried out by the armed forces against the democratic Government. The reaction of the British embassy was to close its doors. There could have been no doubt that the people who were seeking refuge at the British embassy were genuine refugees. As we know, the army carried out killings and atrocities. It is to the great credit of my party that when we came to office in February 1974 we made it much easier for Chilean refugees to come to Britain. I shall never apologise for that.
  Mr. Corbyn: Is my hon. Friend aware that many of those people whose entry to the British embassy was denied because the gates were slammed had sought asylum temporarily in the Mexican and Cuban embassies and that they were subsequently admitted to this country only after trying to get into the British embassy in the first place?
  Mr. Winnick: I entirely accept my hon. Friend's point.
  In the absence of an appeals system for asylum applicants who are turned down at ports of entry in the United Kingdom, surely it is all the more important that the referral system to the refugee unit of UKIAS should be maintained in full? Like my hon. Friends, my criticism tonight to the Home Secretary is that that referral system will apparently be eroded and somewhat undermined. I regret that. It is a crucial safeguard for cases in which the passenger is seeking asylum here on the grounds that his or her removal could lead to grave dangers that the referral system remains.
  The question is raised also whether, under the Bill, asylum seekers will actually reach the United Kingdom in the first place. Although some applications for asylum are successfully made abroad—I do not question that—that decision would be discretionary and taken outside the formal immigration rules. In the main the application will be made only when the passenger is in the United Kingdom. It was clearly because the Sub-Committee recognised how vital the referrals system would be in such cases that it recommended that the Home Office should decide, in principle, to extend to all asylum applicants the right of appeal before they are sent back. What was the response of the Home Office—
  Mr. Hanley: The hon. Gentleman will admit that the Sub-Committee said that that should include all asylum cases that were not clearly bogus and recommended a speedy departure for those that were bogus.
  Mr. Winnick: I do not question that. However, I am sure that the hon. Gentleman, who is a member of that Sub-Committee, will recognise how important it is, whether an application is bogus or not, that it should be the subject of referral unless it is blatantly bogus. I do not disagree with the hon. Gentleman on that. However, where so much is at stake and, where the person is claiming that his or her life could be in grave danger, surely the hon. Gentleman would agree that a system of referral is necessary?
  What was the response of the Home Office to the Sub-Committee's report? It rejected outright the need for such an appeals system in those asylum cases. It would be

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  wrong for me to give the impression that I do not understand or that I minimise some of the difficulties that would be involved if there was a full appeals system for asylum seekers. UKIAS, as an organisation, would recognise the need for such an appeals system. I go along with that to a large extent, but I recognise some of the difficulties that would undoubtedly arise. I also accept that such a formal appeals system would, as the Home Secretary said today, probably increase the number of people applying.
  The main argument put forward by the Home Office in rejecting the Sub-Committee's recommendation of an appeal system was based on the fact that there were other adequate safeguards, namely representation by Members of Parliament, judicial review and the UKIAS referral procedure. In response to the Sub-Committee the Home Office stated:
  "the referral system is providing an effective safeguard and a satisfatory substitute for formal appeal rights…In practice therefore the referral procedure is providing a broader safeguard than a formal appeal to the immigration appellate authorities."
  Obviously, if the Home Office, rightly, places so much emphasis on the referral system as a subsitute for an appeal system one must question anything which would undermine the referral system.
  As we know, this procedure did not operate for the 64 Tamils. I do not know whether I am being over-generous, but I imagine that the Home Secretary, if not the Minister of State, rather regrets the original decision that the referral system should not operate. They know of the application for judicial review and the climb down by the Home Office. Indeed, there is no other way to describe it.
  Understandably, UKIAS and, I am sure, the UNHCR, take exception to the comments of the Minister of State during exchanges on 18 February. He said that UKIAS gave the impression that it did not wish to stamp out immigration rackets and that it was
  "determined to bend all its efforts to allowing racketeers to succeed."—[Official Report, 18 February 1987; Vol. 110, c. 910.]
  I regret those remarks because there is no justification for them and when the Minister replies I hope that he will apologise or, at least, withdraw them. UKIAS does not wish in any way to act as some sort of apologist for racketeers or to bend any rules. The Home Office unit that deals with refugees, and is in contact almost daily with the UKIAS refugee unit would, I am sure, agree that there is no evidence of any attempt to bend the rules.
  So that there should be no misunderstanding I stress that we should have the utmost contempt for those who trade in human misery and fear. Last night I watched a television series about the second world war and it showed black marketeers in action. They always appear when there are food shortages, wars or people fleeing for their lives. Such people always have been and probably always will be prepared to use any means to gain a profit, no matter what misery may accrue. I do not suppose that even the most fervent advocate of free enterprise on the Conservative Benches would he in favour of such racketeers.
  Racketeers of course are not in the least concerned about refugees, whether genuine or otherwise. A clear distinction must be made, however, between those who trade in human misery and fear and the passengers themselves. I do not know which is the case in relation to the 64 Tamils, but we know, and the Home Secretary
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  should know, that people who are fleeing for their lives will do anything to get any sort of document because they are frightened. Have we not seen enough in 20th century Europe, let alone in other parts, to understand what happened on countless occasions before and during the second world war when people would use any means to get documents, probably completely false, in order to reach a place of safety?
  I criticise the handling of the 64 Tamils because no distinction was made between the possession of false documents and their case for genuine asylum. Initially that was not recognised, but eventually the Home Secretary made a statement accepting that their cases should be referred to UKIAS.
  During 1986 the Home Office referred 441 cases of asylum seekers to UKIAS. That is hardly a huge number and it would not swamp the United Kingdom. Of them, 155 came from Sri Lanka, 148 from Iran, 38 from Afghanistan, 30 from Ghana, 18 from Pakistan and the remainder from several other countries. I resent the criticisms of the hon. Members for Westminster, North (Mr. Wheeler) and for Northampton, South (Mr. Morris) about the refugee unit of UKIAS. As I tried to explain in interventions on the speech of the hon. Member for Westminster, North, it is not for UKIAS to decide national policy over how many refugees and others should be admitted. Indeed, it would be strange for such an organisation to make such decisions. Similarly, it is not the funtion of UNHCR to decide how many refugees should be allowed entry. That must be determined by Parliament. That is our function and, finally, that of the Government of the day to decide by their majority here. There is no doubt about that.
  I know of no criticism of the way in which refugee counsellors at UKIAS have carried out their day-to-day duties. If there had been any criticism either before or since the case of the 64 Tamils, surely as chairman it would have come to my notice at meetings of the executive committee or by the director informing me? The work is carried out on a professional basis, as one would expect. The people concerned are interviewed in depth and reports are made to the Home Office with recommendations where appropriate. If hon. Members have a criticism of Labour Members, so be it, but it is unfair to criticise an independent organisation which has no wish to bend any rules.
  Mr. Michael Morris: May I make it clear that I have not previously criticised UKIAS and that I have used the organisation on many occasions? But does the hon. Gentleman ageree that the director of UKIAS should not have broadcast on radio to the nation that in a significant number of these cases people had been tortured in Sri Lanka—a statement which may or may not be true — until the evidence had been given to the Home Office for assessment? Moreover, who is to say who did the torturing in Sri Lanka? There is clear evidence that the Tamil Tigers have done far more torturing than the Government forces have ever done.
  Mr. Winnick: I did not listen to that broadcast which goes out just after the morning 9 o'clock news when I am on my way to the House. Perhaps if I had known that it was to be broadcast I would have listened, but I am not fully aware of what the director said. However, the director, who is incidentally a former Member of this

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  House, would be careful about what he said. One of the difficulties is that the hon. Gentleman is very keen to defend the Sri Lankan Government. I am not in a position to defend them or otherwise. I accept that the hon. Gentleman has a detailed knowledge of the country, which I do not have as I have not taken the closest interest in it. He may be right or wrong. Whatever may have been done in that country, I oppose terrorism as a means of changing things. There should be no doubt about my views on that score.
  The right hon. Member for Aylesbury (Mr. Raison) quoted the decision of the executive committee of the UNHCR at its 34th session, to which we were a party, when it discussed matters concerning asylum. I hope that the Home Secretary will note fully what it said:
  "an unsuccessful applicant should be enabled to have a negative decision reviewed before rejection at the frontier or forcible removal from the territory. Where arrangements for such a review do not exist, Governments should give favourable consideration to their establishment."
  That is important, and anything which tends to undermine it should be deplored.
  I agree with my right hon. and hon. Friends that, to a large extent, the Bill is a panic reaction. I trust that it was not meant to be a pre-election attempt to play the immigration and race relations card and to demonstrate that the Labour party is not in favour of effective immigration control. As I said during an intervention in the Home Secretary's speech, we all know that, whether in government or opposition, the Labour party is committed to effective immigration control. [Interruption.] I do not know why the Home Secretary is tut-tutting.
  Perhaps the Home Secretary will give us some idea whether the Bill's Committee stage is to be taken on the Floor of the House. Irrespective of whether it is taken here or upstairs, I hope that the Government will be willing to respond to constructive amendments. If we are to have the Bill, it is vital to maintain the referral system and to overcome some of the obvious difficulties of asylum seekers reaching the United Kingdom.
  For the reasons that I have given, and bearing in mind the nature of the Bill, we are perfectly right to pursue our reasoned amendment.
  7.22 pm
  Mr. Robert McCrindle: Perhaps predictably, the debate has ranged widely over immigration policy, the status of refugees and the role of the independent service, although the Bill is a fairly narrow measure. I plan to concentrate on its contents and to seek some assurances from my right hon. and learned Friend the Minister of State.
  Before doing that, however, I should like to say something about the background. Like most of my right hon. and hon. Friends, I believe that the Bill is in accord with international trends. It cannot be said that we are taking initiatives that are at variance with the approaches to this vexed problem that have recently been adopted by other countries in Western Europe and elsewhere. The Bill takes note of the need for the humanitarian treatment of genuine refugees.
  There has been an understandable indication from Conservative Members that we must consider the growing tendency of what the hon. Member for Walsall, North
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  (Mr. Winnick) rightly called the trade in human misery. We must therefore recognise the need not to give the impression that we have, or can have, an open door. A balance has to be struck between humanitarian acceptance of some people seeking asylum and the pressure of public opinion, which we are supposed to represent, to limit the number of people whom we accept.
  The Bill achieves that balance. Its basic requirement is that airlines and shipping companies must accept responsibility for people who arrive without proper documents. The right hon. Member for Manchester, Gorton (Mr. Kaufman) said that 149 foreign airlines are effectively being asked to become experts in United Kingdom immigration rules. That is far from the purpose or likely outcome of the Bill. What is likely, however, is that airlines which have been prone to overlook immigration details relating to United Kingdom procedures because their commercial interests run along the lines of carrying passengers rather than concerning themselves too much whether they will be admitted at one of Britain's airports would be required to balance the commercial pressure to fill an aircraft seat against the need to recognise that, if they do not take appropriate measures, their commercial interests may be affected when a passenger arrives in Britain.
  I do not see that that is other than the correct approach. It is not at all a bad thing that airlines and shipping companies which bring people to the United Kingdom should be engaged in a partnership with the Government to control the traffic that is at the heart of this brief Bill. I therefore support the Bill's purpose, but some airlines, British and foreign, are worried about one or two of the details.
  Perhaps I should declare an interest, in that I advise British Caledonian Airways, to which my right hon. Friend the Home Secretary referred. The questions that I shall ask, however, are asked on behalf of all airlines, which increasingly accept the need for the Bill, but which are understandably anxious for clarification about where they stand in regard to some of the details.
  What would happen to a passenger in transit through the United Kingdom, perhaps merely transferring from one London airport to another? The passenger might say, when he is boarding in a third country, that he wants to transit through the United Kingdom and therefore to be freed of the necessity for complete immigration documents which would normally be required. If he then changes his mind, perhaps because his aircraft is diverted or delayed, and says when he arrives in the United Kingdom that he wants to stay, what happens? Airlines have a right to know whether they will be liable. Perhaps my right hon. and learned Friend will give some thought to how an airline will be able to prove that the passenger indicated on boarding an aircraft in a third country that his intention was merely to transit through the United Kingdom. That is a detail, but it is of considerable importance to the operation of the measure.
  Secondly, airlines are asking whether the £1,000 fine per passenger will be in addition to the detainee costs, which are already a source of considerable financial pressure to some airlines, or whether the fine will somehow be set off against those costs. Hon. Members may know the answer, but so far I have heard nothing to tell me whether that would be an acceptable way to proceed.
  Thirdly, what mechanism is proposed for airlines to dispute the fine in specific cases, such as the transit cases

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  to which I have referred? It is important to have a mechanism that is practical in its operation. Although one appreciates the urgency with which the legislation is being introduced, it is incumbent upon the Government to let us into their thinking about the detailed operation of the Bill.
  Finally, in relation to clause 1(4), how can we ensure that acceptable proof will be forthcoming as to the falsity of a document? How can one define "reasonably apparent?" Who is to judge whether the appearance of a document was such as reasonably to persuade airline personnel at the port of embarcation that it was the genuine article? What kind of evidence will be acceptable, and who will exercise judgement?
  I do not know how many Members have wide experience of embarking on aircraft in certain Third-world countries, but in the period immediately preceding boarding a jumbo jet headed for this country there is, to say the least, some confusion. Airlines in those countries may also have greater difficulty training their personnel to be as vigilant in checking travel documents as their counterparts are at British airports.
  For all those reasons, therefore, although the general aim of the Bill is acceptable and the detail is understandable, I believe that some points still need to be dealt with. My right hon. and learned Friend may say that they should be dealt with in Committee, but although we are today discussing the principles of the measure I believe that a deeper understanding is required of certain areas before one can accept the principles. I hope that my hon. and learned Friend will be able to give me some reassurance. I appreciate the reasons for the measure, and it is right and proper that it should be dealt with as a matter of urgency, but I hope he will accept from me that it would be wrong if, in a few months' time, we discovered that the operation of the legislation had not been given adequate attention at this stage.
  7.33 pm
  Mr. Jeremy Corbyn: Many organisations have stated their opposition to the Bill. Although the Bill was conceived in enormous haste and the Government are attempting to rush it through Parliament, there has nevertheless been a significant amount of lobbying and a considerable number of declarations of opposition. I have received such declarations from the United Kingdom Immigrants Advisory Service, the British Refugee Council, the Immigration Lawyers Association, Rights and Justice, the Iranian Community Centre and many others, including organisations in my constituency, such as the Islington Indian Association.
  A common theme of all the objections is that the Government have created difficulties in the way in which they have sought to deal with the Tamil asylum seekers. They have created a racist hype in the media about the problems that Tamil asylum seekers have gone through and they have decided that the best way out is not to consider the causes of the problem or the ways in which, historically, people have sought asylum but to push through this nasty, shameful little Bill. In future, people seeking political asylum in this country will be able to get here only if they have a valid exit permit from their own country, if that is required, and a valid entry document for this country. Those conditions would certainly have excluded many of the people who have gained asylum in this country in the past century.
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  As my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) pointed out, many Jewish refugees fled from Russia in 1905 and From Nazi Germany in the 1930s. If the Bill had been law at that time, they could not have come here. There are also the victims of the Iran-Iraq war, the Fascist junta in Chile, and so on. The list is endless. The Minister should come clean about it. He should be honest enough to say that he is turning his back on all the asylum problems in the world. The racist connotations of not having anything to do with the problems of the Third world show that the Minister is working in concert with other European Governments to turn their backs on problems which in many cases were created by west European Governments in the first place.
  The situation in Sri Lanka is given as the main reason for the Bill, but it is only part of the reason—albeit an important part. In my view, the Tamils have been used as scapegoats. For the past three years the Government have constantly told us that everything is normal and satisfactory in Sri Lanka and that it is quite all right for people to go back there. If that is so, why are so many Tamil asylum seekers leaving prosperous livings in Jaffna. Trincomalee, and other areas of Sri Lanka to come here? I know that some of those who have been granted exemptional leave to remain, although not political asylum, are living in appalling conditions. They are living in utter misery. Have they really left good jobs and careers in Jaffna because they prefer to live in a bedsit in north London, or is there some other reason?
  The other reason is the political oppression in Sri Lanka. There is no doubt about that at all. The hon. Member for Northampton, South (Mr. Morris), who clearly has great knowledge of Sri Lanka, constantly maintains that there is no problem, when it is obvious that there is a serious problem. He would do well to talk to those who have sought political asylum here before he makes such sweeping statements.
  Mr. Michael Morris: I have never suggested that there is no problem in the north or the east of Sri Lanka. There is fighting going on there day and night. That is common knowledge. I believe that the hon. Gentleman has been to Sri Lanka a couple of times—
  Mr. Corbyn: Just once.
  Mr. Morris: From even one visit he should know that two thirds of the population live perfectly quietly, Tamils side by side with Sinhalese, Moors and Moslems, and that there are a million Tamils living absolutely harmoniously with their Sinhalese neighbours.
  Mr. Corbyn: There are certainly places in Sri Lanka where people live harmoniously together, and there have been times in the past when the whole country has been fairly harmonious. Nevertheless, there have been communal riots on a number of occasions. There were appalling attacks on Tamils in 1983 and there have been appalling problems ever since that time. It does no good to ignore that. It also does no good if the British Government, instead of seeking to bring peace to Sri Lanka, as they claim, are busy training Sri Lankan army officers, supplying arms to Sri Lanka and allowing KMS to recruit mercenaries to go into Sri Lanka. Far from bringing peace, is that not simply stoking up the fires of war, and is that not one reason why the British Government should look at the matter with a little more care?

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  The build-up to the Bill was especially disgraceful. Considerable numbers of Tamil people have been arriving in Europe to seek political asylum. Some of them are from prosperous backgrounds, while some come from great poverty, but they have one thing in common. They come to Europe with nothing, seeking political asylum. Attempts have been made to place every obstacle in their way, from the visa requirement, to the restriction on interventions by Members of Parliament, to the introduction of the Bill.
  When the Home Secretary tried to bundle those asylum applicants out of the country in that disgraceful and hideous way, there was a demonstration at the airport. Fortunately, those people did not leave and the case was referred to the courts. The Home Secretary contested the matter all the way through the courts, and only when he lost did he concede that he has an obligation to examine each case in detail. But he can do nothing with grace, so he introduced the Bill as his method of backing down in the face of the court's judgment.
  If only one of those applicants is shown to be a legitimate applicant for political asylum who is subsequently granted refugee status in Britain, the Home Secretary should resign. He is trying to throw out people who may have a legitimate right to be here within the terms of the 1951 convention. We have seen many handstands from the Secretary of State, and if only one of the cases is found to be just, he should resign.
  Although the Government have tried to emphasise their anxiety about Tamil asylum seekers, they have failed to notice that other European countries have taken many more Tamil asylum seekers than has Britain. The number involved is extremely small, but I understand that the Government are trying to get together with other European countries to turn their backs on the Tamils altogether. The Indian Government have taken many asylum seekers. The attitude of Europe, led by the British Government, towards asylum seekers in general has been disgraceful. They were heavily censured by Mr. Poul Hartling, the former United Nations High Commissioner for Refugees. He said that the growing xenophobia of European Governments and of the European media towards asylum seekers did them no good, and he compared the number of asylum seekers which the poor countries were prepared to accept with the attitude of European Governments.
  Although I hope that the Bill will be defeated, I have my doubts in that respect. The Government should think for a moment about the effect that it will have on asylum seekers from other places. Earlier, I mentioned the Iran-Iraq war. I have supported several people who have applied for political asylum, some of whom have had horrendous difficulty in escaping the horrors of that war. They have crossed from Iran to Iraq, fled to a third country and then applied for political asylum here. The Kurdish people, who seem to be persecuted throughout the middle east, would have no opportunity to apply for political asylum here, because they could not get here to do it. They would not have valid exit documents, because in Turkey, even the existence of Kurdistan is denied, never mind the Kurdish language or the use of Kurdish names. If they reached a third country and applied to travel to Britain, they would be caught by the Government's
  756
  privatisation of immigration law—handing responsibility to the airline—and could not obtain tickets to travel here. What will happen to those people?
  It is all very well for the Home Secretary to say repeatedly that Britain can play no part in what is happening in other parts of the world. It is just not true. The British Government play an enormous part in what happens in other countries. I have mentioned the Government's military involvement. The bombing of Kurdish villages in Iraq during the past few weeks originated from NATO bases in Turkey. Britain supplies military equipment to Turkey. Who is supplying arms to the Fascist dictatorship in Chile? The British Government are almost alone in the world in being happy to continue supplying arms to the Government of General Pinochet.
  I hope that the Bill will be understood for what it is —a squalid, nasty little measure to refuse the right of political asylum to genuine seekers of asylum. Had the Bill operated from before the first world war, many Jewish people who fled from pogroms in central and eastern Europe or from the horrors of Nazism would not have got into Britain.
  The Government say that they are introducing the Bill to crack down on immigration racketeers. That is not true, because the Bill encourages people to use forged documents, provided that they are good forgeries. Bad forgeries are out, but good forgeries are acceptable.
  Mr. Tony Banks: Perhaps the Government could get some advice on forging British passports from Mossad, which seems to be very good at it.
  Mr. Corbyn: Absolutely. It is extraordinary that a Bill should be introduced that seeks to differentiate between the standards of forged documents.
  Ministers should understand that when people are fleeing for their lives to seek political asylum abroad they will resort to forged documents. Indeed, hero films are made about people using forged documents to get out of Nazi Germany and other places. People make money explaining how these things are done. Is it surprising that they go to immigration racketeers who are prepared to fly them abroad? Films have been made about this. Films were made about events when Israel was founded in 1948.
  Mr. Gerald Bermingham: Does my hon. Friend agree that the history of the smuggler goes back to the Scarlet Pimpernel?
  Mr. Corbyn: Quite. My hon. Friend makes his own point on this.
  Nothing is more evil than the exploitation of those who are already exploited, and asylum seekers are, by their definition, already exploited. The Bill does nothing about that evil. It simply makes the victim a victim for the second time—but this time a victim of the British Government.
  Many of the organisations which oppose the Bill highlight the need for an independent appeal against decisions made by immigration officers. Until fairly recently, an asylum seeker arriving in Britain who was denied admission by an immigration officer had several courses open to him. He could ask for his case to be put to the Minister, and the Minister would have to consider it. He could ask a Member of Parliament to stop his removal. That was inadequate, but at least it was something. The asylum seeker could also ask for his case to be referred to the UKIAS. Those three safeguards have

  757
  been removed by the Bill. A member's right to intervene is now apparently a concession which the Minister can remove at any time. Are we satisfied that the Minister will have an even-handed approach to Conservative Members and Labour Members? He certainly did not in the Tamils' case. As cases will no longer be referred automatically to the UKIAS, will its role as an advisory organisation constantly diminish and be brushed aside?
  The Bill does not provide ministerial control, but provides for asylum cases to be dealt with by immigration officers at the port of entry. We have debated many times the record of immigration officers at the port of entry and their rather subjective analysis of whom they believe to be trying to evade the immigration laws. It is still the case that there is a much greater likelihood of being stopped and severely questioned at any port of entry if one is coming from Bangladesh than if one is coming from South Africa, Canada or Australia.
  In the 34th executive session of the UNHCR, the British Government, unless they now wish to deny it, endorsed the following:
  "Recognised the substantive character of a decision that an application for refugee status is manifestly unfounded or abusive, the grave consequences of an erroneous determination for the applicant and the resulting need for such a decision to be accompanied by appropriate procedural guarantees and therefore recommend that …an unsuccessful applicant should be enabled to have a negative decision reviewed before rejection at the frontier or forcible removal from the territory. Where arrangements for such a review do not exist, governments should give favourable consideration to their establishment."
  The British Government supported that recommendation, but the Bill is the direct opposite of it.
  In the third report of the Home Affairs Committee in 1984–85 on "Refugees and Asylum, with Special Reference to the Vietnamese", appeal rights were referred to in recommendation 22, which said:
  "The Home Office should decide in principle to extend the right of appeal to all asylum applicants".
  The Government responded:
  "The main category of asylum applicants without such a right of appeal is those refused entry at the ports. For this category of applicants there are other safeguards: representations by Members of Parliament, judicial review and the UKIAS referral procedure."
  The sordid series of statements from the Secretary of State and from Ministers over the past month have taken away all those safeguards. The Secretary of State has said that he is prepared to remove people while judicial review is pending, which means that people cannot stay here. He has already curtailed, and in some cases removed, the rights of Members to make representations and he has removed the UKIAS referral procedure.
  I hope that the Bill will be rejected, although I have my doubts about that. As others have said, some of the motives behind the Bill are the sheer racism of the British media, and the worst examples are in the Murdoch press in its reporting of the Tamil asylum applications. The language used was deliberately emotive. The Government have refused to recognise the world concern about the refugees and asylum seekers and the need to do something about them.
  My hon. Friend the Member for Bradford, West (Mr. Madden) spoke about the proposals to bring in prison ships—Hurd's hulks as they will be called. They will be used to hold these people in detention pending investigation of their cases. What greater condemnation can there be of the Government's attitude towards the
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  problems of divided families, or, more important in this debate, asylum seekers and refugees than that the Government should be contemplating spending money buying a ship in which to lock up these people while their cases are being considered?
  The House has to look seriously at the problems of asylum seekers. It is no good turning our backs on them and closing our eyes. That will not wish the problem away. The problem is there, for all sorts of complicated political or commercial reasons. Wishing it away will not solve the problem. All that the Minister is trying to do is to appeal to the basic sense of xenophobia in the media, in the country and throughout Europe. They want to turn their backs on the problems of the rest of the world. I hope that there will be a greater sense of civilised values on this side of the House when we come to vote against the Bill than has ever been shown by the Tory party.
  7.53 pm
  Mr. Jeremy Hanley: Like a number of hon. Members, I declare a partial interest. As has already been said, one hon. Member was a refugee and there are some who are the children of refugees. I am the grandchild of two refugees. My grandfather left the Soviet Union not with papers properly prepared for him by the authorities, but with a bullet inside him.
  I am a member of the Race Relations and Immigration Sub-Committee of the Home Affairs Select Committee. My most fulfilling work in Parliament has been serving on that Committee. I have enjoyed the non-political companionship of people deeply dedicated to race relations and to studying dispassionately the immigration laws and the practices that the Government adopt in carrying out those laws. We have not had the sort of histrionics that we heard earlier from the right hon. Member for Manchester, Gorton (Mr. Kaufman). We have dealt with these matters in a calm and rational atmosphere. The cries of racist bias and of pandering to the vicious majority and so on are not heard. We discuss matters based on facts. The Sub-Committee consists of three Conservative and two Labour Members of Parliament, and we hope that we carry out an honourable role for the benefit of Parliament.
  Our report on refugee status and political asylum, with special reference to the Vietnamese, has already been mentioned, but it must be remembered that that report was produced with evidence from 1984 and published at the beginning of 1985. The immigration and refugee statistics that were used as the basis for that report were the figures for 1983. It must be admitted that circumstances have changed since then. Not only that, but the pattern of those asking for refugee status in the United Kingdom has also changed inasmuch as the major problem of the Vietnamese boat people was not that of' direct asylum seekers in this country. Those people went to Hong Kong, so the practice today of people actually arriving here in the United Kingdom seeking asylum in large numbers has caused a different picture to be painted and a different set of problems to be faced.
  Mr. Bermingham: I am a member of the Sub-Committee and was also a signatory to the report. Does the hon. Gentleman agree that when we considered the report we looked also at the question of eastern European refugees coming, for example, through Austria after

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  fleeing from Czechoslovakia and elsewhere, and that the principles that we enunciated about asylum have not changed in the past three years?
  Mr. Hanley: The hon. Gentleman is a trusted friend and colleague on the Committee and I value his work greatly. Together we visited the Traiskirchen refugee camp where, for some time, my hon. Friend the Member for Cardiff, West (Mr. Terlezki) waited while his refugee application was being processed. I do not deny what the hon. Gentleman has said, but he may have misheard me or not quite picked up what I said. The difference has been that over the past three years, instead of dealing with refugee applications from a large number of people in Hong Kong, in the past six months many people have been arriving in the United Kingdom and claiming refugee status at ports of entry. I am sure that the hon. Gentleman will agree with that.
  Mr. Bermingham: Does the hon. Gentleman agree that those who fled here from eastern Europe or Germany in the 1930s, or from South America in the 1970s, came direct to the United Kingdom, made their applications here, and did not use an intermediate stage, as the Vietnamese did?
  Mr. Hanley: Yes, I agree with the hon. Gentleman. I am talking about the main point of pressure compared with 1984. Then it was the Vietnamese boat people; now it is the Tamils. If the hon. Gentleman casts his mind back a few years, he will recall that the Ugandan Asians were direct applicants to the United Kingdom and were dealt with specially because of that. I am not trying to make any grandiose claims or statements. I am merely setting out the fact that the report, to which the hon. Gentleman is a cosignatory, did not contain any reference to the Sri Lankan situation because that was not then a major problem.
  The number of people who applied for refugee status from Sri Lanka in 1983 was 226, more than ten times the previous year. In 1979 there was one applicant from Sri Lanka for refugee status, so the Government are confronted with a very different problem now. The recommendations of the Sub-Committee on Race Relations and Immigration must be seen in the light of the circumstances in the spring of 1985, based on research in 1984. I very much regret the fact that the Liaison Committee cannot find sufficient funds to allow the Sub-Committee to go to Sri Lanka to investigate the matter directly.
  While the Sub-Committee was studying these matters, its members spoke to people in a number of European countries—in the Netherlands, where the treatment of refugees and of immigrants of all sorts is second to none, in Belgium, France, Switzerland and Austria. In Switzerland we discovered that 1,800 Tamils had been admitted within the previous four months. I am sure that all hon. Members agree that Switzerland is hardly regarded as particularly racist. It is a welcoming, peace-loving country. We found that the number of Tamils who had gone to Switzerland was so large that the country could not provide for them and was considering expulsion.
  One reason why the Tamils were coming so quickly was that they had apparently learnt in West Germany that they were entitled to a daily financial allowance, immediate housing and other rights while their cases were being considered. It is therefore important to consider the
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  countries through which those Tamils had passed. Many had bought tickets through Aeroflot and had then been passed from Sri Lanka to the centre of the Soviet Union, where they changed planes and were taken to Moscow.
  Many of the Tamils were then taken from Moscow to East Germany where, in a wicked exploitation of the border position between east and west Berlin, they were passed from east to west Berlin since there are no border controls on those entering west Berlin from the east. Once they were in west Berlin, the numbers were mounting up so greatly that they were passed to West Germany and from there, because the numbers were so vast that there was fear of possible outbreaks of violence in the area where they had been housed, they were passed to Switzerland and to other countries bordering West Germany, including Austria.
  Many Tamils coming from Sri Lanka have not been able to prove their refugee status. Many may be able in time to prove that they are genuine refugees, as I am sure will some of the people who have recently arrived in Britain. It is not necessarily true that a person who claims refugee status is entitled to do so. It seems that many Opposition Members do not want to admit that many of the Tamils are jumping on to the bandwagon which, as we can see from the Bill, could hurt genuine refugees. I hope that the Opposition realise that that will be on the consciences of the bogus refugees for the rest of their lives.
  The Bill has been introduced because of suspected abuse by many hundreds of people. One important point in the current problem of the 64 Tamils who were to be deported from Heathrow is that they passed through Malaysia and Bangladesh on their way to the United Kingdom. There is no doubt that they would have been safe in Malaysia or in Bangladesh, but there is little doubt that their economic position would be better in the United Kingdom.
  Mr. Corbyn: Is the hon. Gentleman aware that Malaysia is not a signatory to the United Nations convention and that the Tamils were only in the transit lounge at Dhaka airport and never entered Bangladesh?
  Mr. Hanley: The hon. Gentleman is aware, of course, that both are Commonwealth countries. I should have thought that most reasonable people would recognise that a person who feared for his life in a country such as Sri Lanka would, as soon as he reached Malaysia, welcome the fact that he was not under threat. Is the hon. Gentleman saying that Malaysia, because it is not a signatory to the United Nations convention, would therefore have persecuted these people? Is he saying that they would have been expelled from Bangladesh?
  Mr. Corbyn: Is the hon. Gentleman aware that there are cases of people being sent back to Sri Lanka from Malaysia and that, if they had come directly to the United Kingdom, they would have been sent back?
  Mr. Hanley: Is the hon. Gentleman aware that bogus applicants are sent back, wherever they are discovered?
  The benefits that can be claimed by a person with refugee status — some can be claimed even when a person is under investigation — are immense. One can understand the pressure on a person to claim refugee status in a country which he feels will be most generous to him.
  It is sad that the right hon. Member for Gorton said that the Government are racist in introducing this

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  legislation for base motives. He should recognise that, in 1984, 50,000 immigrants were allowed settlement in the United Kingdom, 50,000 in 1985 and, provisionally, 47,000 in 1986. Admittedly, that is not as generous as the 70,000 and 80,000 under the Labour Government, but it is certainly not fair to say that the Government are racist when almost 50 per cent. of all those who have been granted settlement in the United Kingdom are immigrants from the Indian sub-continent and from the New Commonwealth. It is certainly not fair to say that the Conservative party is a racist party when last year alone there were 29,000 Sri Lankan visitors.
  Mr. Madden: Does the hon. Gentleman accept that the figures he has mentioned for 1986 represent the lowest figures in 24 years for those granted settlement in Britain?
  Mr. Hanley: I certainly accept that the figures are the lowest for many years, but that is not evidence that the Government are racist. If no people from the subcontinent were allowed permanent settlement, I could understand that accusation. But when I was in India with the Sub-Committee, I asked how many British citizens had been granted nationality in India since 1947. One official told me that there were fewer than 10. Another said that not a single person from the United Kingdom had been granted Indian citizenship. This country's record stands up very well.
  This country's record on refugees stands up well also. Some Opposition Members have said that it does not. But since 1979 more than 8,000 individuals from all over the world have been granted asylum in Britain. Perhaps it would be a harsh Government who would say, "If you are granted asylum, stay. If you are not, go." But this Government do not do that. They allow exceptional leave to remain. That is a way of dealing with cases where there is no proven merit for refugee status. Nevertheless, the Government's compassion has allowed people in difficult circumstances to stay, usually in the long term, not temporarily.
  In 1985, 907 Sri Lankan Tamils were granted exceptional leave to remain on an annual basis. In 1986, 1,600 Sri Lankans were granted exceptional leave to remain. The Conservative party is not, therefore, a racist party. The Government are not deliberately trying to expel all Tamils who come here. Those figures are in addition to the 20,000 Vietnamese who have come here. Many Opposition Members have said that some of the Sri Lankans want to come here because Britain is a Commonwealth country. I remind them that we have had no connection over the years with Vietnam. The Government's action towards the Vietnamese is purely humanitarian.
  I have some assurances to seek from my right hon. and learned Friend the Minister of State. First, I hope that he will not fine airlines that bring in asylum seekers who are found to be genuine. The powers set out in the Bill are discretionary, not mandatory. Therefore, I hope that my right hon. and learned Friend will judge each case on its merits. I hope also that he will not fine an airline where it is shown that it has been a party to bringing a person into the United Kingdom who otherwise would have faced death, torture or persecution. I am sure that in judging each case on its merits my right hon. and learned Friend will meet some of the fears and reservations that have been expressed by hon. Members on both sides of the House.
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  Secondly, I hope that my right hon. and learned Friend will advise airlines that, should they be fined for carrying people who should not be allowed into the United Kingdom, the costs should be passed on as a form of contractual term to the agents who organised the parties. Some Labour Members have said that the traffickers in human flesh are not to be punished by the Bill; they have contended that the wrong people will be punished. It is only right that the airlines should pass on their charges to those who have organised such parties. That would be easy to do if the organisers ever tried to arrange a further trip for such passengers. The Sub-Committee has visited Bangladesh and it knows of so-called agents who provide a full package, including forged documents, for their willing customers.
  Thirdly, I ask my right hon. and learned Friend for an assurance that asylum seekers will be able to apply for asylum in the United Kingdom at posts abroad. If the 64 Tamils had arrived in Malaysia and had been able to stay locally and have their cases dealt with by the British high commission, that would have been a sensible way or attempting to prove their asylum status. It would have been a sensible way for us to recognise our international obligations under the United Nations convention. I hope that my right hon. and learned Friend will guarantee that asylum seekers will be able to apply for asylum from third countries. I agree very much with what has been said about the difficulties of applying for valid documents in the country of departure, but I do not believe that in many cases applicants have bothered to ascertain whether they can obtain a visa in Colombo or not.
  Fourthly, I ask for an assurance that my right hon. and learned Friend will brief airlines properly on what constitutes a bogus passport or travel document. Members of the Sub-Committee have been privileged and honoured to be able to investigate the department of the Home Office that looks into forged passports. We have been shown films and scientific techniques, many of which are extremely high-tech while some are not. I think that most members of the Sub-Committee, including the hon. Member for St. Helens, South (Mr. Bermingham), would agree with me that there are fairly easy ways of being able to spot a bogus passport. When we were at terminals 2 and 3 at Heathrow only two weeks ago we were able to find during one hour—this was agreed with the officials—five bogus passports. A quick eye had spotted one of them, but with a little training one could understand how the. bogus passport could also be spotted by an intelligent airline official.
  It is important that the airlines are briefed properly without breaching national security. To brief an airline on all the bogus elements that could be introduced to a passport would be to instruct on how to forge more successfully. There is a level or briefing, however—it is a level to which I believe the Bill relates—that is possible and proper. I hope that special video cassettes and training sessions will be introduced at; Heathrow so that those involved can be informed properly of the more obvious types of forgery.
  Mr. Tony Banks: I am following the hon. Gentleman's arguments closely and waiting to hear whether he believes that it is right in principle that an airline should be put in the position of having to decide whether someone should

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  come to the United Kingdom, with or without documentation. In principle, does the hon. Gentleman think that such a provision is good?
  Mr. Hanley: I believe that airlines should be responsible for their passengers. British Airways has to check the validity of the visas of all those who are travelling to the United States. It is a normal procedure. It is remarkable that in the past airlines have not made such cursory checks of passengers on certain routes. Such a checking procedure would be perfectly acceptable and not in breach of any human rights. It would be unfair, however, if airlines and shipping companies were not trained properly to discover certain of the more obvious forgeries. The equipment that can reveal whether the paper of a passport has been altered is extremely cheap. Airlines and shipping companies should have the opportunity of being trained to a level that does not damage our national security.
  Fifthly, I ask for an assurance that my right hon. and learned Friend will ask, through his colleagues in the Foreign and Commonwealth Office, for proper research to be carried out into the areas from where the refugees come and where they claim to be in danger. My right hon. and learned Friend might remember that I asked him about a week ago whether he had received a report from the high commission in Colombo on the problems in the areas from which the 64 Tamils had originated. He said that he had not at that time. It is vital that we use our Foreign and Commonwealth Office staff with experience of the locality to investigate the problems in the areas from which Tamils and others come. If persons are claiming that their lives are in danger—64 is a large number, and they come from the same area—surely we can use the Foreign and Commonwealth Office staff without endangering anyone very much. If it is held that asylum seekers come from an area where there is no great danger, surely there will be no harm to our own staff carrying out closer investigations in the area.
  Much greater use could be made of staff in our posts abroad in trying to find out the genuineness of otherwise of the claimed activities in the areas from which asylum seekers originate.
  Sixthly, when the Sub-Committee asked for an appeal procedure, it recommended that it should apply to all serious asylum seekers. It mentioned that bogus applications should be processed as speedily as possible and that research should be carried out into ways of dealing with them. The secondary interview section at Heathrow—the staff of which work extremely hard in difficult circumstances — should be able to conduct speedy investigations into asylum seekers.
  I take this opportunity of paying tribute to the staff at our ports of entry, especially in the secondary immigration sections. They have to obtain files from Lunar house, or wherever, at short notice and absorb a tremendous amount of information. They have to use their intelligence and knowledge, which has been accumulated over many years in some instances, along with their experience. We are well served by those people. We are particularly well served by the people who work at Lunar house, who do an extremely difficult job, often reviewing documents and literature from a number of different countries in different languages and from countries where the backgrounds, habits, family ties and so on are so different.
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  Our system should be praised, not criticised. If, on balance, after a secondary interview, one of our Home Office immigration officers — or if abroad, a Foreign Office entry clearance officer—comes to the conclusion that a person is bogus and that there seems to be no good reason for an appeal to be granted, then speedy departure should be executed. However, that should not be to the country from which the person is claiming asylum because of torture or persecution. The non-refoulement clause, with which we and other nations agree, means that asylum seekers, whether they are bogus or not, should not be sent back to their country of origin. They should at least be given another chance to try again.
  The three fail-safe clauses that my right hon. Friend the Home Secretary mentioned as the reason why a full appeal procedure should not be upheld were persuasive at the time. The fact that the UKIAS would be able to interview cases where there was genuine doubt, that hon. Members' representations were part of the system, and that judicial review was provided caused the Sub-Committee therefore to accept the Government's conclusions.
  In genuine cases where, after secondary interview, we believe that there is merit, there should be an appeal procedure. Those who hear a refugee appeal should be appointed by the Lord Chancellor's Department, not by the Home Office. I am grateful that my right hon. Friend has allowed immigration appeal cases to go to hearings with appointees from the Lord Chancellor's Department.
  I still believe that the Bill is necessary, but only as long as it is discretionary and the Government exercise their discretion. I do not believe that the Bill could be justified if it were mandatory. There is not one hint or suggestion from the Government that they intend to do other than exercise their discretion wisely and to consider each case on its merits.
  I shall remember tonight's debate for one reason—the speech of the right hon. Member for Gorton. It was a bitter, vicious, twisted and dishonest contribution. It concluded with some of the most disgraceful descriptions of Members of the Government and Conservative Members. The contribution that followed the right hon. Gentleman's was that of my right hon. Friend the Member for Aylesbury (Mr. Raison) who, in a calm and dispassionate manner, explained the problems in a way that we would expect of right hon. and hon. Members. This problem involves human beings; it is not a matter where cheap political stabs should be made by a cheap political individual.
  Mr. Deputy Speaker: Order. I am sure that on reflection the hon. Gentleman might choose to withdraw that allegation.
  Mr. Hanley: I shall withdraw it, but I wish that you had been here to hear his contribution—
  Mr. Deputy Speaker: Order. I was present, but whatever the right hon. Gentleman said at that time does not justify the remark that the hon. Gentleman has just made. I hope that he will withdraw it in an unqualified manner.
  Mr. Hanley: I withdraw in an unqualified manner. What remains for the public to read are the words that the right hon. Gentleman used earlier, and I know that they will be as disgusted as I was by his final contribution. He insulted many millions of people in this country who

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  understand that to get better race relations—which we all want — we need an honest and strong immigration policy. It is sad that many Opposition Members seem to believe in an open-door immigration policy, yet they also criticise the Government for unemployment, the lack of health care, the lack of education, and the lack of housing, and they fail to realise the pressures upon all those matters that unrestricted immigration causes.
  Mr. Tony Banks rose—
  Mr. Hanley: We are dealing with a human problem in a humane way. We shall meet each problem as it arises, but we shall not be guilty of trying to pander to base motives, which the right hon. Member for Gorton was doing.
  Several hon. Members rose—
  Mr. Deputy Speaker: Order. I can see that four hon. Members are trying to catch my eye. I understand that the Front Benches are hoping to start winding up the debate at 9 o'clock. With a little elementary arithmetic, all four hon. Members might get in.
  8.26 pm
  Mr. Gerald Bermingham: The speech of the hon. Member for Richmond and Barnes (Mr. Hanley) started with a review of the history of asylum, with which I could not disagree to any great extent, because I was a member of that Sub-Committee. It was with great regret that it degenerated into cant and political ideology and a meandering attack with little or no purpose.
  The Bill, once again, is the Government's instant reaction rather than a thought-out solution to a problem. One asks, "What on earth has prompted all of this?" Legislation that is a reaction instead of being thought through is often bad legislation. This legislation says, "If you do not have the right documents the carrier is liable." That does not go to the heart of the refugee or political asylum seeker's problem.
  History has shown that those who flee for their lives rarely, if ever, either take enough money or have the right documents. It is difficult in an east European country, a dictatorial state in south America or a dictatorial state in the far east to pop into the British embassy and get the necessary visa. The minute that one pops into the British embassy one tends to get arrested when coming out, because countries of that ilk do not wish to see their citizens flee from their territories. They have no wish to allow them to go. The political refugee is rarely, if ever, a man or woman with money and rarely a man or woman with documentation. How does the airline or ship check the documentation of the political refugee?
  This country was once called the cradle of modern democracy. It was the hub of a civilised society that catered for the revolutionary who had fled his native state. It catered for the person who was at ideological war with his native state. Whether that ideological war was from the Left or Right mattered not to this nation. That is how we have had in our time extreme Right-wing and Left-wing dissidents. The House should remember that Karl Marx was once a refugee in this country.
  Why is it, in the 1980s, that this country has begun to turn its back on an honourable history of catering for refugees and for those who seek political asylum? I am beginning to wonder — I say this with great sadness—
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  whether this measure has been prompted by the colour of the political refugee. In pandering to that publicity campaign which is engendered by the second-rate media that we have, I wonder whether we do great harm to the true concept of the refugee. What is the ship's captain to do when he comes across a rowing boat which contains people who are fleeing, perhaps, from a far eastern country, a south American country, or from the Eastern bloc? Is he to say, "I say chaps, do you have the documents because if you don't I can't take you on board because that will cost me £1,000 a head."?
  Mr. Tony Banks: Perhaps my hon. Friend was not here when I asked the Home Secretary precisely that question. He said that there would be time on a boat for the captain to radio ahead and find out. But what would happen if the captain were told over the radio, "I am sorry, we are not prepared to accept them, so if you bring them in you will be fined £1,000."?
  Mr. Bermingham: I would hope that the captain would carry on regardless, but I fear that some ships' captains would not.
  I intend to be brief. It is a brief Bill, but it is a sad Bill. It flies in the face of the Geneva convention. It flies in the face of what was said by the Select Committee of which I had the privilege of being a member. Three years ago that all-party Committee of the House recognised that even in the 1980s there was a need to protect political refugees. It seems that because of pressure, a mere three years later there is a pandering to a baying clamouring call at the Home Office door, "Exclude, exclude." In seeking to exclude a small minority of people who are subject to oppression this sledgehammer of a measure will fall upon refugees from the four corners of the earth.
  We were once a nation proud of our determination to protect minorities and their rights, and to accept onto our shores those who are oppressed. It is a sad day in 1987 when we seek to exclude all the oppressed.
  8.32 pm
  Mr. Geoff Lawler: The crux of the Bill, and the point that Opposition Members, including the: hon. Member for St. Helens, South (Mr. Bermingham) have missed, is the balance that must be achieved between the right of the genuine asylum seeker and the right of our citizens to be protected from people trying to enter who have no right to come to our country and who are not, in any sense genuine-asylum seekers. It is important to get the balance right. That is what the Bill is about.
  Most Opposition Members fail to see the difference between genuine asylum seekers and those who try to abuse the system. During the debate on the introduction of visas they made no discrimination and offered no recognition of the fact that people try to abuse the system in an attempt to come to the United Kingdom. Opposition Members are falling into the same trap tonight.
  The Bill arises primarily because of the asylum seekers from Sri Lanka, but we are also talking about people from the Indian sub-continent, for example, who have sought to come here since the introduction of visas. Some have come here without valid visas in their passports. The numbers involved are large. A total of 502 people from India, 255 from Pakistan, 295 from Bangladesh have attempted to come here, but only a tiny proportion of them had valid visas. The majority did not have the required stamp.

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  There is no political reason why people from those countries should seek to come here, evade immigration controls and abuse the visa system, but they have done that. The Bill tackles that problem, as it does the problem of those who claim falsely that they are asylum seekers.
  It is no coincidence that the rapid increase in asylum seekers over the last few months coincides with economic pressure to emigrate from certain countries. The economic pressure is brought about by specific demographic factors and the large increase in the numbers of young men who seek a better economic life elsewhere. The potential for abuse has also increased and it affects the whole Western world.
  The abuse is occurring in all countries which are attractive to potential refugees. For example, in Switzerland, whereas in 1980, 80 per cent. of asylum seekers were accepted, by the beginning of 1986 the figure had fallen to 8 per cent. In France the figure was 95 per cent. in 1976, but last year only 43 per cent. were accepted. Denmark, which had a record for never turning away anybody who turned up on its borders claiming to be an asylum seeker, has introduced visas. Belgium, which had 7,500 applicants in 1985–86 and which uses the UNHCR to determine who is genuine — the most unbiased determining body in the world — accepted only 52 of 7,500 as genuine asylum seekers. What more proof could one want that this is a serious problem which affects the whole of the Western world?
  Mr. Meadowcroft: By demonstrating the small percentage of acceptances, does the hon. Gentleman not make the point that the system is working? The system is obviously able to discern between genuine and non-genuine cases. If the Home Secretary had had his way, all the Tamils would have been sent back, but when they were examined only a minority were considered to be in danger or to be genuine refugees. The system, if it is allowed to operate, obviously works. It is the Home Secretary who is not discriminating between the two types of case.
  Mr. Lawler: The hon. Gentleman misses the point. Although a small number of cases are genuine, many people have gone to great expense not only for their fares but for forged documents. They may have been put in detention so the large majority who are not genuine suffer human misery and expense. Surely it is better to stop that misery occurring and to save that money.
  The 64 Tamils who arrived were interviewed and it was deemed that they were not genuine refugees and were to be returned. As other avenues are blocked and tougher immigration controls are introduced it is natural that other means will be found to try to enter a country for economic betterment. There will always be people who are willing to gain entry to a country which they are not entitled to enter, and, unfortunately, there will always be agents who are ready to exploit them and to make the necessary arrangements—for a handsome fee.
  Unfortunately, some airlines are ready to transport such people. Surely it is now time to stop these official stowaways and to stop trade in human cargoes. People are being taken round the world when the airlines know that they do not have the required documentation to enter the country to which they take them. It is time to put a stop to that irresponsible attitude.
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  Some of the Opposition speeches, including those from the Opposition Front Bench, show that in their opinion the airlines are totally incompetent and incapable of inspecting visas. When I go to America my visa is examined at the British Airways desk, or Virgin Atlantic or the desk of whichever airline I am using. I have no reason to doubt that other airlines are capable of assessing whether a person has a visa which at least looks like the genuine article. It is a slur on airlines throughout the world to suggest that they cannot examine documents. Some irresponsible airlines do not check, but responsible airlines have proved that it is possible.
  Mr. Tony Banks: What happens when a person has no valid visa and claims, when he—or she—arrives at the airline desk in the country of embarkation, that he is in danger of his life and so wants to escape as a refugee? One is asking the airline to decide whether that person is a refugee. That is different from asking it to examine a person's credentials.
  Mr. Lawler: The Home Secretary spelt out the ways in which a genuine refugee can seek to leave his country—he may turn up at the British embassy or consulate in that country. My hon. Friend the Member for Richmond and Barnes (Mr. Hanley) has reminded us that this is a discretionary measure, not an obligatory one.
  In supporting the Bill, I am not concerned about the bogus asylum seeker or visitor, nor the middle man who unfortunately profits too much from this trade in human misery. I am concerned about the genuine asylum seeker. Unfortunately as with visas, those who observe the rules are not the ones who cause extra controls to be imposed. However, it is to their benefit in the long run that this measure—as with visas—is introduced.
  Opposition Members ignore the fact that if some action is not taken to prevent the abuse it is the genuine asylum seeker who suffers. Let us consider the Tamils. We were given graphic evidence of the racket that was perpetrated to enable those people to enter the country. What is the climate of opinion about other Tamils or any other refugees who may have genuine cause? Unfortunately, great resentment is built up among the home community —of whatever colour. One may talk to Indians, Asians or West Indians of various ethnic origins and discover resentment against people who try to come to the country and evade controls. That feeling must be borne in mind with regard to good race relations in this country, but the Opposition persistently refuse to acknowledge it. They are in great danger of seeking to damage race relations in Britain.
  At the next meeting of UKIAS, I hope to be co-opted to the council. I am concerned about the credibility of this organisation and other organisations that have jumped in, feet first, and appear not to practise any discrimination or to recognise that certain people who seek asylum and seek to come here as visitors make bogus claims. I am concerned that those organisations and the Opposition always seek to oppose anything done to protect the genuine visitor or asylum seeker—they seek to oppose every form of control that we impose.
  The right hon. Member for Manchester, Gorton (Mr. Kaufman) said that he was in favour of firm immigration control—that claim was repeated by other Opposition Members. If they are in favour of such control, it is about time that they spelt out exactly how they would implement

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  that control. Everything that we have done to try to tighten the loopholes has been consistently opposed. The Opposition cannot oppose everything and still claim to be in favour of immigration control without spelling out what alternatives they would implement. How would the Opposition stop bogus asylum seekers or bogus visitors who come here to the detriment of the rest of our community and to the detriment of genuine refugees? If they do not impose any control, they will open the way for racketeers to profit.
  The Opposition Front Bench has argued that we are encouraging racketeers because we are asking for better forgeries. The logic of that argument is that we do not need passports—if we have no passports the racketeers are out of a job. That is an absolutely nonsensical argument. We will make life much more difficult for racketeers because some of them will be unable to produce the required goods because their phoney, amateurish work will, I hope, be quickly discovered by airline officials.
  In Committee, I hope that we shall have the opportunity to discuss what would happen to someone who requires a visa in an emergency. For example, one of my Muslim constituents may suffer a death in the family. A phone call may be made to Pakistan on a Friday or a Saturday because a visa is urgently required, but the embassy is closed. As a result of this necessary legislation, perhaps some hot line could be set up or access given to the British embassy on a Friday or a Saturday. The same practice could be introduced in other countries from which visas are required. In that way, we could deal with a potential problem in line with assurances given by the Home Secretary at the time when visas were introduced.
  In the past financial year, the cost to the British taxpayer of removing those refused entry to the United Kingdom and returned home was £1 million. That figure is not insignificant in itself, but no value can placed on the cost of human misery and the damage done to the rights of genuine asylum seekers by those who try to evade controls and enter the country on bogus claims. If this Bill succeeds in some small way towards making airlines meet their part of the responsibility, it will significantly reduce those costs.
  Many speakers have pointed out that the country has had a long history of accepting genuine political asylum seekers. I hope that that tradition will continue. It will continue as long as the threat of abuse is minimised and prevented. For that reason I give the Bill my strong support.
  8.46 pm
  Mr. John Fraser: The hon. Member for Bradford, North (Mr. Lawlor) has accused us of not protecting the genuine asylum seeker. I contribute to the debate purely on the basis of protecting the genuine claimant.
  I am interested in the principle of imposing a penalty of £1,000. That figure does not represent damages, compensation or a criminal penalty. Airlines already pay compensation to the Government for detention, and that is a considerable disincentive to carry the wrong people. The figure in this legislation does not represent compensation or a criminal penalty. In British law, it is extremely unusual to have a penalty of this nature.
  If I came to the House and said that there ought to be a penalty of £1,000 for anyone causing a death at work through a breach of the Factories Acts, building
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  regulations or the use of construction regulations, it would be opposed by the Conservative Front Bench. If we were to say that those who pollute our rivers and cause untold damage to wildlife as well as to human beings should suffer a penalty, that would be resisted. If we insisted there should be a minimum penalty of £1,000 on those who cause death by dangerous driving, or some other form of extreme anti-social behaviour, it would meet resistance. However, in the context of those who seek political asylum in this country the Government see fit to introduce a mandatory penalty that is unrelated to criminal law.
  I am also concerned about the obligation on an airline to be liable to pay a penalty when a person arrives without a visa when he is required to have one under immigration rules. A great many people arrive without being clear, in their own minds, about entry requirements. They arrive as visitors from non-visa countries, but if one questions them closely and their true intentions are discovered, they will probably require a visa.
  Let me give the House an example that I dealt with fairly recently. A young girt arrived from an African country and sought entry as a visitor. Her true intention was to stay as long as she could. If she had formed her views, it would have been clear that it was her intention to settle here. Therefore, under immigration rules she was a person who arrived without a visa but who required one because it was her intention to settle here. She was allowed to enter on a visitor's admission. She sought to remain permanently because of the conditions in her home country. Like many people, she told a story that was not as close to the truth as it ought to have been. Like the Cabinet Secretary, she was economical with the truth.
  While looking accidentally at some Foreign Office papers, I discovered that the Foreign Office had evidence that the girl's father had been murdered by the African regime that ruled her country and that her foster father was missing and was also believed to have been murdered by the regime. When those facts were made apparent, the Home Office—to its credit— noted them and admitted the girl under the exceptional circumstances provision.
  That is an example of someone who had a case for remaining here permanently, but who had not clearly formed the right intention in her mind. If she had been closely questioned in the African country, an airline official might have elicited what I found out when I spoke to her and, therefore, would have denied her entry because she would have required an entry certificate under the immigration rules.
  Similar circumstances apply to many people who come as visitors, but intend to stay as students, business men or people of independent means. It would be wrong to introduce penalties where a judgment is involved and clear lines cannot be drawn. No great harm is done by admitting people as visitors and looking at their cases calmly and dispassionately.
  If a duty is imposed on an airline, it will sometimes fall on a person who is unqualified to make the required judgment. Sometimes the duty will be exercised by an airline official who is cautious by nature. We have all come across public officials, civil servants and others who are excessively cautious and with whom we get very frustrated.
  Some airlines have corrupt officials. I do not want to stigmatise individual countries, but there are some parts of the world where getting on an airline is an exercise in corruption. There are raffles for boarding passes and corruption is rampant. The Minister knows the countries

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  to which I am referring and he ought to understand that the Bill will be another reason for corruption, not among those who, according to Ministers, want to cheat our system, but among those who operate the screening system. Should the screening system be at the door of the concentration camp or prison, or should it operate in the United Kingdom, where cases can be dealt with more calmly?
  I talk with some feeling about refugees because the British Refugee Council has a residential hostel in my constituency and I have to deal with refugee cases, week in and week out. I have thought back over the cases that I have dealt with for the British Refugee Council and as a constituency Member and asked myself whether people who seek political asylum here should have to go through a trial by ordeal. Along with the penalty, we are almost reintroducing a medieval process.
  People will have to go to British posts in the country that they are seeking to leave or take the risk of putting their case before an airline and getting it to take a chance. I remember a woman who was eventually admitted to the United Kingdom, after I had had a long argument with the Home Office. She was seeking refuge from the Soviet Union. Should she have gone to the British embassy in Moscow or taken a chance with Aeroflot? In many cases the airline is controlled by the Government from whom a person is seeking to escape. The right way was the humane way adopted by the Government. They considered the case carefully in this country.
  We are told that people should make applications for visas and explain their case in the country from which they are attempting to escape. However, only this morning we heard on the news that some East Germans have been sent to prison for making inquiries at the West German embassy about emigration to West Germany. That is a good example of what may happen to people who have to run such a gauntlet. Not only were those people denied entry to West Germany, but they were imprisoned.
  I have dealt with several applications for political asylum from people from Afghanistan. Are they really expected to present their case to the British post in Kabul or to take their chance with an airline coming out of Afghanisatan? It is a preposterous idea.
  In some countries there is no British post. Some years ago the British Government and many others closed facilities in Haiti when Duvalier was in control, because they had so many applicants for political asylum. Ambadassors were stationed round Haiti and merely sent in on visits. It is cruel to suggest that people should make application in the country from which they wish to escape.
  Ministers fail to understand the communications problems in many countries. We have two or three posts in Nigeria and a couple of posts in Ghana, but anyone who has tried to travel by road in Ghana will know that it is extremely difficult to get from one end of the country to the other. A person could exhaust all his savings and resources in making a journey to an embassy which, as far as I remember, does not even operate an appointments system.
  The right way to handle the matter is to allow people to come to this country to present their case for political asylum and for us to examine it dispassionately. When people present a case for political asylum, it should be dealt with as quickly as possible. If a person comes here
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  and presents a case for remaining and the case is dealt with slowly—it can take a year or two—the person becomes accustomed to living here and finds it extremely difficult to leave if the application is turned down for genuine reasons. In addition, the longer that a person coming from a country ruled by a dictator stays in this country, the greater becomes the risk of persecution if he has to go back. The finger of suspicion is pointed at people who spend a long time in another country and are known to have made an application for political asylum.
  Another reason why the idea of making an application in the country from which a person hopes to escape is unsatisfactory is that ambassadors and diplomatic officials are loth to disturb cordial, if not friendly, relations between the British Government and the country from which political asylum is sought. It is natural that an ambassador will not want his staff to give political asylum visas to people from the country to which he is accredited. It will make his job much more difficult.
  I can quite understand diplomatic officials refusing entry in those circumstances. That is why it is necessary to allow these matters to take place here. Even then, it is well understood that the British Government are often loth to give political asylum even to people from Russia, East Germany, Poland, Hungary and so on because they do not want to queer the pitch with a country with which they may have trade agreements or with which they are trying to establish a more cordial relationship. The Foreign Office and the Home Office often say, "We shall not give you political asylum, but we shall grant you leave to remain here under exceptional circumstances." That is political asylum by a nod and a wink, which does not queer relations between this country and other countries.
  Mr. Bidwell rose—
  Mr. Fraser: I shall not give way. I am bound to try to finish my speech by 9 o'clock.
  If the problem of those who, rightly or wrongly, seek political asylum in this country were one of Californian film directors arriving at Heathrow, or of nabob Indian princes, or the modern equivalent of the Phanarian princes of the Ottoman empire, we would not be faced with the Bill at short notice. The inescapable conclusion is that we have such a Bill because people come from the poorer parts of the world.
  Why the necessity for speed? Time and again, in our constituencies, as political parties, as the House, we face injustice. When we ask for time, we do not get it, and no rapid Bills are introduced. If we must make a choice, why put the person who seeks asylum at risk? There are adequate penalties already. A quick, objective, dispassionate examination of cases here is the answer. The Bill is wholly unnecessary and will be gravely understood in many parts of the world, to the disadvantage of the reputation of this country.
  9 pm
  Mr. Alfred Dubs: To clear up any misunderstanding I make it clear at the outset —otherwise, Conservative Members will claim not to be clear on the point — that Labour Members believe in firm immigration control, but not immigration control that is racially or sexually discriminatory. I further make it clear that, of course, we are against racketeers who make money out of unfortunate people who wish to claim

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  political asylum. I accept that the refugee problem is growing. Indeed, we have only to look at Vietnamese refugees in Hong Kong—a territory, which, after all, is our responsibility—to realise how difficult the problem can be. I do not believe that we have addressed ourselves as firmly to the problem of Vietnamese refugees in Hong Kong as we should have. I was interested in the speech made by the right hon. Member for Aylesbury (Mr. Raison). I shall read it again carefully tomorrow. It casts at least some doubts on the Government's approach to the difficulties that have been described.
  I have three concerns about the Bill. First, it is unsound in principle. Secondly, it will not work sensibly in practice. Thirdly, it has not been properly thought out. The press release issued by the Home Office, and indeed most hon. Members' speeches, suggest that the Bill is concerned only with refugees. However, on examination, one can see that it goes wider than that. I contend that some of the respects in which it has not been properly thought out relate to its impact on groups other than refugees.
  If the Bill is given a Second Reading, what will be the arrangements for its further stages? Will it be debated in Committee on the Floor of the House or in Standing Committee? If on the Floor of the House, how soon and for how long will it be debated? Some hon. Members are concerned about the details, and want to be sure that there is adequate time in Committee to go properly into the details and not just rush through them.
  The Bill has been reprinted. The second version of the Bill states:
  "To be substituted for Bill previously delivered."
  "Note: This Bill is being re-issued because Clause 1(5) was not printed in italics."
  That is fair enough, but there is another difference between the two versions of the Bill to which the Minister did not refer. The latest version of the Bill states "A.D. 1987." The first version of the Bill stated "A.D. 1985." I wonder whether the Bill has been lying in the Home Office for a couple of years and has just now been trotted out. If so, has the misprint been hidden by an attempt to justify the second printing of the Bill? Perhaps I have an unduly suspicious mind. [Interruption.] The Ministers may laugh, but I think that they have been caught out.
  There are other issues. I wonder whether the reason for the swift introduction of the Bill was the arrival of the 58 Tamils. I share the suspicion of my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) that questions of electoral advantage underlie the hasty introduction of the Bill. I have before me a letter from the Home Secretary. It begins, "Dear Colleague." I hasten to say that I was not one of the colleagues to whom the letter was sent—nor, I am sure, were any of my hon. Friends. I believe that it was sent only to Conservative Members. It refers to the Home Secretary's justification for the Bill and to his view that increasing numbers of people from the Third world have become footloose.
  The letter then refers to the five countries for which visa restrictions were imposed and refers to
  "the five countries from which the bulk of the mischief was coming."
  The letter continues in a similar vein on a later page. It says:
  "Sri Lanka just happens to be the main sore point at the moment."
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  It is a revealing letter that was sent to the Home Secretary's own hon. Friend's about the basis of the Bill. The Home Secretary looks at me in some astonishment. I have the letter here, if he wants to see it.
  What is the real need for this measure? The Government already have the power to impose on airlines the cost of detention and the return fares. If the Government are certain that the Bill will achieve what they say they want it to achieve, I cannot understand why the Home Secretary is also anxious to acquire a ship to provide more detention accommodation. That point was clearly highlighted in the speech of my hon. Friend the Member for Bradford, West (Mr. Madden). At the very least, it seems to be a belt and braces exercise by a Government who are not entirely certain that this measure will have the intended effect. Or is it simply, as the Minister of State said in a speech in the House in October of last year,
  "The problem facing immigration control over the past year could not have been solved by extra staffing. There is insufficient detention accommodation." — [Official Report, 27 October 1986; Vol. 103, c. 132.]
  This country has traditionally been a haven for refugees. I refer to those who may have feared persecution for their religious or political beliefs, or for other reasons. However, in recent years we have taken very few asylum seekers, compared with other countries. In fact, 95 per cent. of refugees in recent years have gone to Third world countries. That helps to put the problem into perspective. My information is that in recent years Pakistan has taken over 3 million refugees and that the Sudan has taken over 1 million refugees. Compared with that, the number of refugees that Britain has taken is very small. According to the Government, we have taken 2,500 Tamils, compared with over 8,000 refugees who have gone to Holland and 20,000 to both France and Germany.
  According to the figures that have been published by the United Nations High Commissioner for Refugees, Britain is very low down the league table in the number of asylum seekers that we have accepted, compared with other European countries. According to these figures, in the first six months of 1986 we took just over 1,000, out of over 80,000 for the whole of Western Europe. That figure is very much below the figues for countries such as Denmark, which took three times that number, Germany, which took 42,000, and most other countries which took more refugees than we did.
  We must keep the problem in proportion and not become quite so hysterical as some people are at the thought that a few hundred people have applied for admission to this country. Of course we have to separate those who are genuine from those who are bogus, but we should not be quite so outraged when we remember that we have taken only a few refugees, whereas most other west European countries have taken far more.
  As for the precise effect of the Bill on refugees, when the Minister of State referred in his speech to the 58 or 64 Tamils, he made a great deal of the fact that some of them had come with inadequate or forged documents. However, in a recent hearing before an adjudicator concerning an appeal against an asylum refusal by someone from an African country, the Home Office presenting officer said:
  "How can you be a genuine refugee? You state on your own evidence that you acquired a passport validly obtained; how can you be a refugee?"
  The Government cannot have it both ways. They cannot allow their officials to cast doubt on whether an applicant

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  for asylum status can be such if he happens to have a passport, and, at the same time, claim that the Tamils who arrived cannot be genuine because they did not have proper passports. The Government are trying to have it both ways and they should not be able to do so. A happy footnote to that problem is that the appellant in the case that I quoted was successful and was allowed to remain in this country.
  Turning to the more specific issue of the 58 Tamils, the Minister has said in the House on several occasions that none of them had a claim to stay as a refugee. Indeed, he was so certain of that that he deliberately short-circuited all the safeguards that the Government had claimed for people coming here as refugees. Other hon. Members have already referred to the report of the Home Affairs Sub-Committee and to the fact that there were three safeguards: the representation that could be made by Members of Parliament; judicial review; and UKIAS referrals. The Government have sought to prevent all three coming into force for those people.
  However, to my mind there is now pretty clear evidence that at least some of those 58 Tamils had been beaten or tortured in Sri Lanka before they left. Some Conservative Members have cast doubt on that, but I have before me a statement from a doctor in Sheffield who examined six patients at Foston Hall in Derbyshire on 26 February. I believe that that is where many of those Tamils are currently being held. Although I do not want to detain the House to the extent of reading through all those reports, there seems enough evidence in that doctor's statement to suggest that several of the Tamils had been beaten in detention in Sri Lanka and that some had been tortured. Therefore, they appear to have a genuine claim for asylum status in this country. Indeed, the UNHCR in London is prepared to say that at least some are mandatory refugees; that is to say, they should have an undisputed right to claim asylum under the United Nations convention.
  Mr. Wheeler: I am grateful to the hon. Gentleman for giving way. Can he explain why those people did not exercise their right to become refugees in the land that they arrived in first? I believe that, in the first instance, that was Malaysia and, in the second, Bangladesh, where presumably they would have been perfectly safe. Why did they move from two countries of safety to a third?
  Mr. Dubs: I cannot answer that in detail—it is one of the issues that UKIAS is considering at the moment—except to say that I understand that neither Malaysia nor Bangladesh is a signatory to the United Nations convention on refugees. Therefore, those people would not have had an assurance that they would not be returned to Sri Lanka from those countries. Indeed, that is why their removal to Bangladesh at this stage has been opposed by people who say that that would be a short step to their being returned directly to Sri Lanka. That is part of what the argument has been about.
  Therefore, I do not think that the fact that, in this instance, they went to one or two countries on their way is evidence that they could have sought asylum there. In contrast, when people come to this country from India and return there, they normally would be safe in India. That is why their security in India is not called into question,
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  whereas the security of such people in those other two countries is called into question from time to time, and has been in this instance.
  Mr. Michael Morris: Is it not a fact that Malaysia, as a member of the Commonwealth with Sri Lanka, does not require a visa for entry and that, like so many others, these Sri Lankans could have stayed in Malaysia?
  Mr. Dubs: I am not aware that they could have stayed in Malaysia. I repeat that my understanding is that Malaysia is not a signatory to the United Nations convention. Therefore, there is not the safeguard that there might be in some other countries that those people would be safe if retured there. All that is the basis of an investigation into their particular claims and will no doubt come to light in due course.
  In contrast to what some Conservative Members suggested earlier, there is evidence that some of those people were tortured and beaten up in custody in Sri Lanka and that the UNHCR believes that some are mandatory refugees. If they were returned to Bangladesh it is likely that they would be sent directly back to Sri Lanka, and Home Office Ministers do not deny the accuracy of that.
  It is of particular regret that for the future the Home Secretary has said:
  "there will be cases which will not be referred to UKIAS…therefore applicants for asylum can have no expectation in future that as a result of the arrangement arrived at in 1983 or otherwise there will in their cases be such a reference."—[Official Report, 3 March 1987; Vol. 111, c. 733.]
  One consequence is, presumably, to prevent applications for judicial review in future. The reason why a judicial review was embarked on and why the courts upheld the rights of the Tamils was, perhaps, the Home Secretary had not adhered to his procedure. Now he has changed the procedure so that in future he will not be as embarrased as he was over the Tamils.
  We do not condone bogus refugees or racketeers who exploit refugees for financial gain, but people applying for asylum have the right to have their cases considered fairly. Surely that is what the argument is about, because the Minister tried to prevent the cases of the Tamils from being considered. He will admit that they all had a brief interview—some people say not more than 20 minutes and others only 10 minutes — and much of the background in the case of each Tamil did not come out in the interview. Yet the Home Secretary decided to remove them without having the sort of information that he should have had.
  We have a right to ask the Government several important questions and, indeed, some have already been asked. First, how can a genuine refugee gain entry to the United Kingdom? In his speech the Home Secretary suggested several possible ways, but most of them would not apply to the Tamils. In reply to a question from the right hon. Member for Aylesbury (Mr. Raison) I quoted a letter from the British high commission in Colombo to an applicant. It states:
  "You have applied for entry clearance with a view to admision to the United Kingdom as a refugee but there is no provision in the immigration rules for entry clearance to be granted for this purpose."
  That makes it clear why people, such as the Tamils, could not be considered for visas, had they applied to the British high commission in Colombo.

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  The Minister may reply, "There is a limited provision for hardship cases." How many people have been granted a visa to enter the United Kingdom under the hardship category? We know the numbers of people from Sri Lanka who have been granted visas to come here on holiday, but how many have been granted entry under the hardship category? I doubt whether the Minister can find more than one or two. No doubt he will tell us when the time comes. By telling people that they must have the right documentation before they can step on a plane, many people who would like to prove that they are genuine asylum seekers will not have that chance. Therefore, we shall be slamming our doors on those who are entitled to be considered as genuine refugees.
  Secondly, even if a traveller on arrival in the United Kingdom eventually proved that he or she is a genuine refugee, what is to stop the airline nevertheless being fined? Many hon. Members have said that the fines procedures is discretionary, but it is a curious law that says, "Don't worry too much, if they are hardship cases, we shall not apply the law." That is not how it will work. The fact that there is a threat of a fine on airlines will mean that, if they are in doubt, they will say no. People will therefore be kept out. I should still like the minor assurance that if somebody comes here and proves to be a genuine refugee, the airlines will not be fined.
  What instructions and guidance will the Home Office or the Foreign and Commonwealth Office give airline staff all over the world? Our immigration procedures are pretty complicated. I doubt whether any hon. Member, including Ministers, understands them fully, but we are asking airline staff to make quite difficult judgments at counters overseas about how our immigration procedures work. It is therefore no wonder that the hon. Member for Brentwood and Ongar (Mr. McCrindle) asked a few quite sensible questions about how the Bill will affect airlines. I hope that the Minister of State will answer them.
  Will the Home Office give airline staff guidance? Will British Airways and British Caledonian be given a little do-it-yourself guide to immigration rules and procedures? How are they to administer these new provisions?
  It seems that the Bill is even more muddled than I have so far demonstrated, as its scope goes beyond refugees. We have already discussed the fact that it will apply to anybody who comes with an obviously forged passport, but what about non-visa countries? It is not clear to me after close examination of the Bill whether it is intended to apply simply to visa countries as defined in the appendix to the immigration rules, or whether it will apply to other countries, the citizens of which require a visa to enter the United Kingdom for certain purposes.
  I have looked pretty carefully at the Bill and at the legislation to which it refers. Clause 2(2) says:
  "In this Act any expression which is also used in the Immigration Act 1971 has the same meaning as in that Act."
  Section 33(1) of the Immigration Act 1971 provides:
  "'entry clearance' means a visa, entry certificate or other document".
  The Bill refers only to visas. I presume, therefore, that it deliberately does not mention entry certificates. If I am wrong, the Minister of State will say so.
  There are circumstances, however, such as are laid out in paragraph 27 of the immigration rules, in which people coming to the United Kingdom to seek employment have to have a visa. The possession of a work permit does not absolve the holder from complying with visa requirements.
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  People can in theory get work permits for the United Kingdom from any country and people coming for work must have a visa.
  It is therefore likely that airline staff would have to establish the purpose of a journey to discover whether the intending traveller ought to have a visa. A visitor from the United States, for example, could be coming on holiday, in which case he or she would not require a visa, and would therefore just buy a ticket. If, however, an American wants to work here, my understanding of the immigration rules is that he or she requires a visa.
  This is a pretty complicated predicament to put before airline staff. They will have to elicit the purpose of the visit before deciding whether a person can travel. I hope that it is not as absurd as that. I simply put the question because it is the only interpretation that I can reach.
  The danger is that airline staff will play safe and say, "This is a nightmare for us. It is far too complicated, so let's say no." Home Office Ministers have talked about other countries with systems of fines. I think that they will find, however, that those countries have a more or less universal visa regime. I do not advocate such a system, but it is certainly clearer for airline staff because there is then only one question—whether the passenger has a visa—and the dilemma remains only for refugees. We do not have a universal visa regime, so the burden on airline staff will be greater. The Minister said that there was nothing exceptional about fines and listed other countries with such a system, but I believe that several have special safeguards for refugees. The United States and Canada have a different approach, as do Denmark and Australia. Our system will be far more rigid. That is another reason why the Opposition are so concerned about the effects of the Bill.
  The United Kingdom Immigrants Advisory Service has been harshly criticised, although it was well defended by my hon. Friend the Member for Walsall, North (Mr. Winnick). All the information that I have shows that under the existing procedures UKIAS does not make representations if a claim is obviously not genuine. Moreover, it has traditionally not made representations regarding asylum seekers coming via India because there was no reason for people to fear persecution if they were returned there. In other countries, however, such safeguards do not apply. Of the latest 50 cases in which UKIAS was involved, it made no representations in 22 cases. Of the remaining 28 cases, 13 were granted leave to remain, four were refused and 11 are still pending. I believe that UKIAS has behaved extremely responsibly in this matter. I hope that the Minister will confirm that and not allow a slur on its reputation to remain.
  I believe that there is great merit in the Sub-Committee's suggestion that there should be an appeals system in this country. The Government rejected that recommendation when it was made, but I believe that they should have examined it again in detail before introducing this legislation. If, as they claim, refugee pressure is increasing throughout the world we should devise a fair and decent system. I believe that the best course would be an appeals system here. The procedure could be speeded up to filter out people with no prima facie case so that the system does not become clogged. I believe that that would be a sensible and proper path. We should be devising a method of identifying genuine asylum seekers, which is at the heart of the problem.

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  If the Government will not accept that solution, I hope that they will consider more sympathetically the role played by UKIAS in the past and allow it to continue in the future. The worse possible option is simply to slam the door on people who may be in danger for their lives and say that they cannot come here unless they can find some convoluted way of getting the necessary documentation together. In practice, the Government's action will fly in the face of the long established tradition whereby this country has provided a haven for people in genuine fear for their lives. The Government are slamming the door on that tradition. That is why many of us will vote against the Government and in favour of the Opposition's reasoned amendment.
  9.29 pm
  The Minister of State, Home Office (Mr. David Waddington): We should be grateful to the hon. Member for Battersea (Mr. Dubs) for the helpful, restrained and sensible way in which he summed up the debate—so very different from the thoroughly unbecoming way in which the right hon. Member for Manchester, Gorton (Mr. Kaufman) opened our proceedings, when he imputed evil motives to all and sundry and then skulked away without having the grace to stay to hear what Members of this House think of right hon. Members who behave as disgracefully as he did.
  Mr. Dubs: I defend what my right hon. Friend said and the fact that he informed the Home Secretary in advance as to why he had to go away. When such an apology is given, the Minister of State should not be so churlish as to refuse to accept it.
  Mr. Waddington: When a right hon. Gentleman telephones and says that he will be absent from the latter stages of the debate, one does not imagine from that message that he will spend his time in the debate making personal attacks on right hon. and hon. Members.
  The Government are taking action to meet a serious threat to immigration control. We are taking action as other countries have been forced to take action. Today, more and more people can travel, and more and more people realise that, by travelling, they have a chance to improve their lot abroad. They or the agents to whom they go for advice have not been slow to realise that the willingness of Western countries to grant asylum to vicitms of persecution can be exploited to the advantage of people who are not refugees, but economic migrants. That point was made forcefully by my hon. Friend the Member for Northampton, South (Mr. Morris).
  As my hon. Friend the Member for Bradford, North (Mr. Lawler) said, the British people are rightly proud of our treatment of refugees. When we think of the Hungarians who came here in 1956, the Chileans who came here after 1973, the Vietnamese and the Iranians, we can be proud of our record. But nothing could be more damaging to the interests of genuine refugees and nothing more damaging to community relations than for the idea to get about that our hospitality was being exploited and nothing was being done about it. We owe it to genuine refugees to ensure that, while their interests are secured, those who try to abuse the system do not get away with it.
  780
  We observe the convention meticulously and will continue to do so. But there are some misconceptions as to what we are obliged to do and what we are not. First, we are obliged to give asylum to someone outside his own country who does not wish to return there because he has a well-founded fear of persecution. The United Nations High Commissioner for Refugees wants us to go very much further; he says that we should also give sanctuary to those who are "of concern". For instance, the UNHCR says that no one should be returned to Sri Lanka, whether a refugee or not. That should be borne in mind during our deliberations.
  In The Times the other day, a Mr. Plender said that the argument between the Government and the UNHCR was not about numbers but about fair procedures. He was entirely wrong, because for a long time the UNHCR has been urging us to go much further than the convention and grant refuge to people who clearly are not covered by the terms of the convention. The House knows that we have recongised that there may be people who, although not convention refugees, should not be returned to the place from which they have come, and we have given many such people exceptional leave to remain. I am grateful to my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) for emphasising that.
  We do not and could not accept that anyone who turns up here from a troubled part of the world, such as Sri Lanka, can stay; yet that is what the hon. Member for Bradford, West (Mr. Madden) suggested. How that is reconcilable with the cry that has come from Labour Member after Labour Member that they believe in firm immigration control, I do not understand. The absurdity of the proposition was emphasised by my hon. Friend the Member for Northampton, South.
  Mr. Bidwell: The right hon. and learned Gentleman alludes to those who have been allowed to stay, but is it not the case that the time is limited? In other words, it is not permanent leave to say stay, but limited leave to remain for 12 months. That shows that the Home Office has not made up its mind. The way in which the Minister referred to this exceptional leave suggests that it is not that way. The fact that the Home Office engages in such activity shows how difficult it is to determine whether one has refugee status. It was to this that I referred when I intervened in the speech of the Home Secretary.
  Mr. Waddington: The hon. Gentleman is under a misapprehension because a refugee does not have indefinite leave to remain but leave to remain for a definite period. Somebody who gets exceptional leave to remain gets his stay extended on an annual basis and eventually, if conditions in his country have not improved, he is allowed to stay permanently.
  Mr. Madden: As the Minister chose to refer to me, I would be pleased if he would refer accurately to what I said. At no stage did I say that all refugees who seek to come here should be allowed to enter. I argued, I thought clearly, that there should be a speedy and effective appeal system to which applicants for asylum would be referred and through which their applications would be dealt. If applications are found to be justified then they should be allowed to enter, and if found to be bogus they should not be allowed to enter. I would have thought that that would be clear to anybody who listened carefully to my speech.
  Mr. Waddington: I understood the hon. Gentleman also to say the first thing.
  We are obliged to examine claims for asylum. We are not obliged to give someone refused asylum on arrival here a right to appeal to an independent authority before removal. I shall try to explain why successive Governments have not gone down that road of giving a right of appeal to someone who is refused recognition as a refugee at a port of entry.
  There were 28,000 port refusals in 1986. If there had been a right of appeal against refusal, each one of those 28,000 could have put up his hand and said, "If you refuse me entry, I shall utter the magic word `asylum'." Each would then have had the right of appeal. That is the critical reason why successive Governments have shied away from giving a right of appeal to unsuccessful claimants for asylum.
  Experience abroad shows what happens when one gives that formal right of appeal. In Canada, as the result of such a right of appeal, recently. even after the Canadian authorities had worked out what they called "a fast track system" to deal with what was thought to be abusive claims to asylum, so great was the pressure of the system that eventually they had to introduce other measures.
  There is a very good reason why, over the years, successive Governments have shied away from giving a right of appeal in this country. It is not apparent to me yet how such a system could work in practice. Where it has operated abroad, it has usually resulted in the most appalling problems.
  My hon. Friend the Member for Richmond and Barnes was entirely right when he referred to the report in 1985 by the Sub-Committee on Race Relations and Immigration, mentioned that it was based on evidence taken in 1984 and talked of how much the position had changed since then.
  Mr. Tony Banks: Surely the Minister cannot be seriously suggesting that a significant number of the 28,000 people refused entry in this country would then have said that they were going to claim refugee status. The overwhelming majority were people coming here as visitors, who were then refused entry. I have a file in my constituency — I have put many of these cases to the Minister — showing that people, having been refused entry, make a voluntary departure. The Minister cannot seriously claim that a significant number of those 28,000 claimed refugee status.
  Mr. Waddington: I am afraid that the hon. Gentleman is not being honest with himself'. There is an argument, which is going on even now, that we should give a right of appeal in this country to people who are refused entry as visitors. I ask hon. Members to face this question. If we continue to resist the plea to give a right of appeal in this country to people who are refused entry as visitors, how on earth can we give a right of appeal in this country to those who are refused entry as asylum seekers? It is plain as a pikestaff that those whom the Opposition are always saying should have a right of appeal in this country as visitors would procure for themselves that right of appeal as visitors as a result of uttering that magic word "asylum", which would then give them access to the appeals procedure.
  Mr. Corbyn rose—
  Mr. Waddington: I should like to continue for a little while.
  We are obliged to give asylum to those with a well-founded fear of persecution. We are not obliged to give refuge to those who come from troubled parts of the world. Under the convention, we are obliged to examine claims to asylum. We are not obliged to give someone refused asylum the right of appeal before removal, and. I do not believe that we could do so. We are certainly not obliged — I may be coming closer to the point about which the hon. Member of Islington, North (Mr. Corbyn) wished to ask me — to refer cases to the United Kingdom Immigrants Advisory Service. In fact, the present system of referral to UKIAS started in only 1983. No one says that we were in breach of the convention before then. Indeed, in 1981, long before the system of reference to UKIAS was set up, the UNHCR accepted that our procedures then conformed with its recommendations.
  Mr. Corbyn: The Minister will recall that his Government supported the executive committee of the UNHCR recommendations that there should be consideration of an appeal against refusal of asylum in each country and that, in defence of the report on Vietnamese refugees by the Home Affairs Select Committee, the Government pointed out that there existed the right to go to UKIAS, the right to go through a Member of Parliament to the Minister concerned and the right for the case to go to judicial review? Since all those avenues have been removed by the Bill, does the right hon. and learned Gentleman concede that the only defence for an asylum application would be if there was a right of appeal?
  Mr. Waddington: The hon. Gentleman knows as well as every other hon. Member that things have moved on apace since 1985. I do not believe that anyone thought in 1985 that all the countries of Western Europe would be faced with the sort of problems that now beset them.
  I am sure that we are all grateful to my right hon. Friend the Member for Aylesbury (Mr. Raison) for his contribution to the debate. We know that he speaks with authority. He had to bear the responsibilities that now are mine, but he did not have to do so for quite so long, which means, no doubt, that he is more mentally alert now than I am. He did not suffer quite the same hardship. We listened with great attention to what he had to say. I can tell him that we shall not abolish the referral system. We feel, however, that it must be examined. I am going to meet UKIAS before very long. I cannot tell my right hon. Friend what progress the Bill will have made by the time that we reach conclusions. We shall not let the grass grow under our feet, however, and I shall be more than happy to talk to my right hon. Friend as matters proceed.
  I see difficulties in my right hon. Friend's suggestion that however abusive an application appears to be, UKIAS should be consulted. As my hon. Friend the Member for Westminster, North (Mr. Wheeler) said, time is of the essence. That is the answer to the hon. Member for Leeds, West (Mr. Meadowcroft) who asked "If a case for refusal is stong, why not refer it to UKIAS?" He wanted to know what would be lost by not doing so. The hon. Member for Norwood (Mr. Fraser) could not have been more wrong when he said that no harm would be done by somebody being admitted as a visitor and all these matters being resolved later. It is the experience of all

  783
  Western countries that once someone establishes a foothold, he is difficult to dislodge. Those who have no genuine claim to asylum manage eventually to stay in the country to which they have gone merely as a result of the effluxion of time. That is a real difficulty that we must all face.
  Mr. Meadowcroft: How does the Minister protect himself from the charges that, by not referring to UKIAS, he is excluding the possibility of it making a judgment that is different from his own? Surely there is protection for the Minister as well as for the person who is seeking asylum. It is the arrival of the Tamils which has sparked off the introduction of the Bill, and although the right hon. and learned Gentleman has suggested that the UNHCR is changing the definition, a minority of them have been adjudged by the UNHCR to be refugees within the terms of the 1951 convention. That would not have been the position if the Minister had had his way and not referred them. How does he protect himself against that charge?
  Mr. Waddington: My right hon. Friend the Member for Aylesbury found it possible to protect himself when he was performing the duties that I now carry out. That was before there was any system of reference to UKIAS. Before it was possible to make that reference, there was confidence in the integrity of the refugee unit within the Home Office. There was confidence that its conclusion would be right. That is how things operated in the early days. I do not understand the hon. Gentleman's arguments.
  Hon. Members have been rightly concerned about the possible effect of the Bill on genuine asylum seekers, which has been the main issue during the debate. The Bill will make it more difficult for people to travel without proper documents and then use our generous procedures to establish a foothold. Until recently, the vast majority of asylum seekers were not those who just turned up at ports, and a moment's thought tells us why. Since the second world war, our neighbours in western Europe have not, thank God, been creating refugees. We have not been the nearest safe country to a refugee-granting state, and those genuinely fleeing from persecution normally seek refuge in the nearest safe country. Indeed, it is the nearest safe country that has the duty to protect them.
  I agree entirely with my hon. Friends the Member for Westminser, North and Northampton, South on this issue. There is nothing mysterious about millions of refugees arriving in Pakistan. Why are there millions of refugees in Pakistan? Because they have escaped from Soviet aggression in Afghanistan.
  Mr. Tony Banks: Millions?
  Mr. Waddington: The nearest safe country of refuge is Pakistan. There is no mystery in the flow of Tamils to south India from Sri Lanka. Indeed, one might expect that if a Tamil living in north Sri Lanka was unsuited to the life he was facing, the place to which he would go would be southern India.
  We do not gain much by trying to draw parallels with the situation, for instance, in Germany before the war. The situation with which we are faced could not be more different. We are not faced with a flow of people claiming refugee status from countries close to us; we are faced with
  784
  a flow of people claiming refugee status who — sometimes for almost inexplicable reasons — have travelled halfway around the world to choose Britain as a place to go.
  Mr. Andrew Rowe: It would be of great help if my right hon. and learned Friend could assure me that if a refugee from Soviet Russia arrives with forged papers—often, that is the only way that a refugee can arrive—those papers will not be an automatic reason for refusal of asylum.
  Mr. Waddington: I can give my hon. Friend that undertaking.
  Asylum seekers have almost entirely come from three categories. The first is people who have been here for a while—for instance, students who have been here since before the fall of the Shah who are now coming to the end of their studies and who have decided that their country has changed out of all recognition. The next category is those who have applied to come here at one of our posts abroad on the basis of a close connection with this country, and I shall return to that in a moment. Then there are people who have come here as part of a carefully worked-out programme which was engaged in by the Government of the day, the sort of programme whih resulted in Hungarians, Chileans and Vietnamese coming here.
  I shall deal with the question of applications to our posts abroad. I assure my right hon. Friend the Member for Aylesbury that there is no difficulty in getting to our high commission in Colombo. Indeed, far from it being ringed by soldiers, there is normally one policeman outside. It is obvious that there is free access to our high commission in Colombo, because in the first seven months of 1986 1,070 Tamils were granted entry clearance. They are not the hardship cases; I am now talking about ease of access to the high commission.
  A person cannot claim refugee status in our high commission in Colombo if he is a Sri Lankan because, by definition, a refugee is somebody who is outside the country to which he fears to return. The basis on which anybody would claim entry to this country would be on the basis not of entitlement to asylum, but of hardship. As my right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan), the former Home Secretary, said in mid-1985, we have always been willing to hear applications in Colombo from Sri Lankans on the basis of hardship. Since then, 51 people have applied for severe hardship visas, five have been issued, 32 refused and 14 are pending.
  Mr. Tony Banks: Very generous.
  Mr. Waddington: The hon. Gentleman says that that is not generous, but the point that is being made is that people cannot apply to our high commission in Colombo. The opposite is the truth. People do apply to our high commission. However, a Sri Lankan cannot apply for refugee status in Sri Lanka and hope to succeed. What he can do is apply at one of our posts outside Sri Lanka. That right is still available to Sri Lankans. They can apply at posts in Madras, Delhi, Bombay, Kuala Lumpur and Dhaka.
  Only in 1985 did we begin to see a change in the pattern of asylem seekers at the ports. As a percentage of all applications, they went up from less than 10 per cent. in

  785
  1984 to 34 per cent. in 1985. I can confirm what my hon. Friend the Member for Northampton, South said — in December 1986 and January 1987 there were more applications at the ports than inside the country. That means that there has been a complete change in a matter of 12 months or so. There is no apparent reason for such a change, unless it is that people are making asylum applications as a device to beat our immigration controls. That conclusion is shared by our European partners and is borne out by the figures. Precisely the same criteria are applied to assessing a person's entitlement to asylem now as in the past. The success rate for port asylum cases plummeted from 23 per cent. in 1983 to 2·3 per cent. in 1985.
  The same problem has had to be faced by country after country. The most startling figures come from Denmark and Belgium. In Denmark, 3,000 asylum applications were made in one month—August 1986—which forced the Government to threaten legislative action against carriers and to refuse access to asylum procedures to people coming from third countries. In Belgium, where until recently the UNHCR ruled on asylum applications, there were in 1986 only 52 grants of refugee status out of 7,500 applicants for asylum. The moral must be that we must stop asylum abuse before it gets too strong a hold or it will overwhelm us as it has threatened to overwhelm others.
  In the face of that threat it is absurd to say that the Bill is unnecessary. It is even more absurd to say that it is unworkable. It is one of those rare beasts—a Bill which has begun to work before it has achieved its Second Reading. That is the answer to the point about retrospection made at the opening of our debate. Already there has been a drop in the number of people arriving at our ports, mostly without documents, claiming asylum. In the week ending 14 February, 95 such people arrived. The next week 41 arrived, the week after that 48, and in the week ending 7 March only 12 arrived. In the week ending 14 March only 18 arrived, and only four of them had forged documents. The House can assume from that that, indeed, the Bill's provisions have been made known to carriers and have already had a salutary effect.
  The right hon. Member for Gorton said that carriers would be obliged to be experts in British immigration law. What utter nonsense. All that they will have to do is ensure that a person has a valid passport and a visa. The Bill applies only to visas, not to other forms of entry clearance required by non-visa nationals to come here, for instance, for settlement.
  In reply to my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), we will help airlines as much as we can so that they will know how to carry out these new duties which are already carried out by a number of responsible airlines. If someone disputes a penalty, he will be able to challenge our demand for payment and take us to court. He will be able to judge whether a document is false. If he disagrees with the conclusions reached by the Home Office, he can challenge our determination in court. I commend the Bill to the House.
  Question put, That the amendment be made:—
  The House divided: Ayes 138, Noes 217.

  Division No. 120]

  [10 pm

  AYES

  Adams, Allen (Paisley N)

  Ashton, Joe

  Alton, David

  Atkinson, N. (Tottenham)

  Anderson, Donald

  Banks, Tony (Newham NW)

  Archer, Rt Hon Peter

  Barnes, Mrs Rosemary

  786

  Beckett, Mrs Margaret

  Lewis, Ron (Carlisle)

  Benn, Rt Hon Tony

  Lewis, Terence (Worsley)

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

  Litherland, Robert

  Bermingham, Gerald

  Lloyd, Tony (Stretford)

  Bidwell, Sydney

  Lofthouse, Geoffrey

  Boyes, Roland

  McDonald, Dr Oonagh

  Brown, Gordon (D'f'mline E)

  McKay, Allen (Penistone)

  Buchan, Norman

  MacKenzie, Rt Hon Gregor

  Caborn, Richard

  Madden, Max

  Callaghan, Jim (Heyw'd & M)

  Marek, Dr John

  Campbell, Ian

  Mason, Rt Hon Roy

  Campbell-Savours, Dale

  Maxton, John

  Canavan, Dennis

  Maynard, Miss Joan

  Carlile, Alexander (Montg'y)

  Meadowcroft, Michael

  Cartwright, John

  Michie, William

  Clark, Dr David (S Shields)

  Millan, Rt Hon Bruce

  Clarke, Thomas

  Morris, Rt Hon J. (Aberavon)

  Clay, Robert

  Nellist, David

  Clelland, David Gordon

  O'Brien, William

  Clwyd, Mrs Ann

  O'Neill, Martin

  Cocks, Rt Hon M. (Bristol S)

  Park, George

  Cohen, Harry

  Parry, Robert

  Coleman, Donald

  Patchett, Terry

  Cook, Frank (Stockton North)

  Pendry, Tom

  Corbett, Robin

  Pike, Peter

  Corbyn, Jeremy

  Prescott, John

  Crowther, Stan

  Radice, Giles

  Cunningham, Dr John

  Raynsford, Nick

  Davies, Ronald (Caerphilly)

  Redmond, Martin

  Deakins, Eric

  Rees, Rt Hon M. (Leeds S)

  Dewar, Donald

  Richardson, Ms Jo

  Dormand, Jack

  Roberts, Ernest (Hackney N)

  Dubs, Alfred

  Robertson, George

  Duffy, A. E. P.

  Rogers, Allan

  Eadie, Alex

  Rowlands, Ted

  Eastham, Ken

  Sedgemore, Brian

  Evans, John (St. Helens N)

  Sheerman, Barry

  Fatchett, Derek

  Shore, Rt Hon Peter

  Field, Frank (Birkenhead)

  Short, Ms Clare (Ladywood)

  Fields, T. (L'pool Broad Gn)

  Silkin, Rt Hon J.

  Fisher, Mark

  Skinner, Dennis

  Foster, Derek

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

  Foulkes, George

  Soley, Clive

  Fraser, J. (Norwood)

  Spearing, Nigel

  Freud, Clement

  Steel, Rt Hon David

  Garrett, W. E.

  Strang, Gavin

  George, Bruce

  Thomas, Dafydd (Merioneth)

  Godman, Dr Norman

  Thomas, Dr R. (Carmarthen)

  Golding, Mrs Llin

  Thompson, J. (Wansbeck)

  Hamilton, James (M'well N)

  Thorne, Stan (Preston)

  Hamilton, W. W. (Fife Central)

  Tinn, James

  Hancock, Michael

  Torney, Tom

  Hardy, Peter

  Wallace, James

  Hattersley, Rt Hon Roy

  Wardell, Gareth (Gower)

  Hogg, N. (C'nauld & Kilsyth)

  Wareing, Robert

  Holland, Stuart (Vauxhall)

  Weetch, Ken

  Home Robertson, John

  Welsh, Michael

  Howarth, George (Knowsley, N)

  White, James

  Howells, Geraint

  Wigley, Dafydd

  Hughes, Robert (Aberdeen N)

  Williams, Rt Hon A.

  Hughes, Roy (Newport East)

  Winnick, David

  Hughes, Simon (Southwark)

  Woodall, Alec

  Janner, Hon Greville

  Young, David (Bolton SE)

  Jenkins, Rt Hon Roy (Hillh'd)

  John, Brynmor

  Tellers for the Ayes:

  Kinnock, Rt Hon Neil

  Mr. Don Dixon and

  Leighton, Ronald

  Mr. Ray Powell.

  NOES

  Amess, David

  Braine, Rt Hon Sir Bernard

  Arnold, Tom

  Bright, Graham

  Atkins, Rt Hon Sir H.

  Brown, M. (Brigg & Cl'thpes)

  Atkins, Robert (South Ribble)

  Buck, Sir Antony

  Baldry, Tony

  Burt, Alistair

  Beaumont-Dark, Anthony

  Butler, Rt Hon Sir Adam

  Bendall, Vivian

  Carlisle, Kenneth (Lincoln)

  Benyon, William

  Carttiss, Michael

  Biggs-Davison, Sir John

  Clark, Sir W. (Croydon S)

  Body, Sir Richard

  Cockeram, Eric

  Boscawen, Hon Robert

  Cope, John

  787

  Dorrell, Stephen

  Luce, Rt Hon Richard

  Dover, Den

  Lyell, Nicholas

  Durant, Tony

  McCrindle, Robert

  Eggar, Tim

  Macfarlane, Neil

  Fallon, Michael

  MacGregor, Rt Hon John

  Favell, Anthony

  MacKay, Andrew (Berkshire)

  Fenner, Dame Peggy

  Maclean, David John

  Finsberg, Sir Geoffrey

  McNair-Wilson, M. (N'bury)

  Fletcher, Sir Alexander

  Madel, David

  Forman, Nigel

  Major, John

  Forsyth, Michael (Stirling)

  Malins, Humfrey

  Forth, Eric

  Malone, Gerald

  Franks, Cecil

  Maples, John

  Freeman, Roger

  Marshall, Michael (Arundel)

  Fry, Peter

  Mather, Sir Carol

  Gale, Roger

  Maude, Hon Francis

  Galley, Roy

  Maxwell-Hyslop, Robin

  Gardiner, George (Reigate)

  Meyer, Sir Anthony

  Garel-Jones, Tristan

  Miller, Hal (B'grove)

  Glyn, Dr Alan

  Mills, Iain (Meriden)

  Goodhart, Sir Philip

  Mills, Sir Peter (West Devon)

  Gow, Ian

  Mitchell, David (Hants NW)

  Gower, Sir Raymond

  Moate, Roger

  Gregory, Conal

  Monro, Sir Hector

  Griffiths, Sir Eldon

  Montgomery, Sir Fergus

  Griffiths, Peter (Portsm'th N)

  Morris, M. (N'hampton S)

  Grist, Ian

  Morrison, Hon C. (Devizes)

  Ground, Patrick

  Moynihan, Hon C.

  Grylls, Michael

  Neale, Gerrard

  Hamilton, Hon A. (Epsom)

  Neubert, Michael

  Hamilton, Neil (Tatton)

  Newton, Tony

  Hampson, Dr Keith

  Nicholls, Patrick

  Hanley, Jeremy

  Oppenheim, Phillip

  Hannam, John

  Ottaway, Richard

  Hargreaves, Kenneth

  Page, Sir John (Harrow W)

  Harris, David

  Page, Richard (Herts SW)

  Harvey, Robert

  Pawsey, James

  Hawkins, C. (High Peak)

  Percival, Rt Hon Sir Ian

  Hawkins, Sir Paul (N'folk SW)

  Pollock, Alexander

  Hawksley, Warren

  Porter, Barry

  Hayhoe, Rt Hon Sir Barney

  Portillo, Michael

  Heathcoat-Amory, David

  Powell, William (Corby)

  Heddle, John

  Powley, John

  Hicks, Robert

  Price, Sir David

  Higgins, Rt Hon Terence L.

  Proctor, K. Harvey

  Hind, Kenneth

  Raffan, Keith

  Hogg, Hon Douglas (Gr'th'm)

  Raison, Rt Hon Timothy

  Holland, Sir Philip (Gedling)

  Rathbone, Tim

  Holt, Richard

  Renton, Tim

  Hordern, Sir Peter

  Rhodes James, Robert

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

  Ridley, Rt Hon Nicholas

  Howell, Ralph (Norfolk, N)

  Ridsdale, Sir Julian

  Hubbard-Miles, Peter

  Robinson, Mark (N'port W)

  Hunt, David (Wirral W)

  Roe, Mrs Marion

  Hunter, Andrew

  Rowe, Andrew

  Hurd, Rt Hon Douglas

  Ryder, Richard

  Irving, Charles

  Sackville, Hon Thomas

  Jenkin, Rt Hon Patrick

  Sainsbury, Hon Timothy

  Jessel, Toby

  Sayeed, Jonathan

  Johnson Smith, Sir Geoffrey

  Shaw, Giles (Pudsey)

  Jones, Gwilym (Cardiff N)

  Shaw, Sir Michael (Scarb')

  Jones, Robert (Herts W)

  Shelton, William (Streatham)

  Kellett-Bowman, Mrs Elaine

  Shepherd, Richard (Aldridge)

  Kershaw, Sir Anthony

  Shersby, Michael

  Key, Robert

  Silvester, Fred

  King, Roger (B'ham N'field)

  Sims, Roger

  Knight, Greg (Derby N)

  Skeet, Sir Trevor

  Knowles, Michael

  Smith, Tim (Beaconsfield)

  Knox, David

  Soames, Hon Nicholas

  Lang, Ian

  Speller, Tony

  Latham, Michael

  Spencer, Derek

  Lawler, Geoffrey

  Spicer, Jim (Dorset W)

  Lawrence, Ivan

  Spicer, Michael (S Worcs)

  Lee, John (Pendle)

  Stanbrook, Ivor

  Leigh, Edward (Gainsbor'gh)

  Steen, Anthony

  Lester, Jim

  Stern, Michael

  Lewis, Sir Kenneth (Stamf'd)

  Stevens, Lewis (Nuneaton)

  Lightbown, David

  Stewart, Allan (Eastwood)

  Lilley, Peter

  Stewart, Andrew (Sherwood)

  Lord, Michael

  Stradling Thomas, Sir John

  788

  Sumberg, David

  Warren, Kenneth

  Taylor, John (Solihull)

  Watson, John

  Taylor, Teddy (S'end E)

  Watts, John

  Temple-Morris, Peter

  Wells, Bowen (Hertford)

  Terlezki, Stefan

  Wells, Sir John (Maidstone)

  Thompson, Donald (Calder V)

  Wheeler, John

  Thompson, Patrick (N'ich N)

  Whitfield, John

  Thorne, Neil (Ilford S)

  Whitney, Raymond

  Thornton, Malcolm

  Wiggin, Jerry

  Townsend, Cyril D. (B'heath)

  Wilkinson, John

  Trippier, David

  Winterton, Mrs Ann

  Twinn, Dr Ian

  Winterton, Nicholas

  van Straubenzee, Sir W.

  Wolfson, Mark

  Vaughan, Sir Gerard

  Yeo, Tim

  Waddington, Rt Hon David

  Younger, Rt Hon George

  Wakeham, Rt Hon John

  Waldegrave, Hon William

  Tellers for the Noes:

  Walden, George

  Mr. Mark Lennox-Boyd and

  Waller, Gary

  Mr. Peter Lloyd.

  Wardle, C. (Bexhill)

  Question accordingly negatived.
  Main Question put forthwith pursuant to Standing Order No. 60 (Amendment on Second or Third Reading) and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the Whole House.—[Mr. Neubert.]
  Committee tomorrow.

  Immigration (Carriers' Liability) Bill
    ESTIMATES
    It being after Ten o'clock, Mr. Speaker proceeded to put forthwith the Questions which he was directed by paragraph (1) of Standing Order No. 53 (Questions on voting of estimates, &c.) to put at that hour.
    ESTIMATES

      ESTIMATES, 1987–88 (NAVY), VOTE A
      Resolved,
      That during the year ending on 31st March 1988 a number not exceeding 69,950 all ranks be maintained for Naval Service.

      ESTIMATES, 1987–88 (ARMY), VOTE A
      Resolved,
      That during the year ending on 31st March 1988 a number not exceeding 178,400 all ranks be maintained for Army Service, a number not exceeding 5,000 for the Home Service Force, a number not exceeding 96,000 for the Individual Reserves, a number not exceeding 87,350 for the Territorial Army and a number not exceeding 7,800 for the Ulster Defence Regiment.

      ESTIMATES, 1987–88 (AIR), VOTE A
      Resolved,
      That during the year ending on 31st March 1988 a number not exceeding 96,700 all ranks be maintained for Air Force Service, a number not exceeding 5,650 for the Royal Air Force Reserve and a number not exceeding 2,370 for the Royal Auxilliary Air Force.

      SUPPLEMENTARY, ESTIMATES 1986–87
      Resolved,
      That a further supplementary sum, not exceeding £1,111,464,000, be granted to Her Majesty out of the Consolidated Fund to defray charges for the Defence and Civil Services which will come in the course of payment during the year ending on 31st March 1987, as set out in House of Commons Papers Nos. 159, 160 and 226.

      ESTIMATES, EXCESSES, 1985–86
      Resolved,
      That a sum, not exceeding £392,730,629–84, be granted to Her Majesty out of the Consolidated Fund to make good

      789
      excesses on certain grants for Defence and Civil Services for the year ended 31st March 1986, as set out in House of Commons Paper No. 158.
      Bill ordered to be brought in upon the two foregoing Resolutions and upon the Resolution [11th March] relating to Supplementary Estimates, 1986–87 by the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. John MacGregor, Mr. Norman Lamont, Mr. Ian Stewart and Mr. Peter Brooke.

      CONSOLIDATED FUND (No. 2) BILL
      Mr. Norman Lamont accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31 March 1986 and 1987: And the same was read the first time; and ordered to be read a second time tomorrow and to be printed [Bill 104].

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Ways and Means Motion may be proceeded with, though opposed, until any hour.— [Mr. Neubert.]

    IMMIGRATION (CARRIERS' LIABILITY) BILL (WAYS AND MEANS)
    Resolved,
    That, for the purposes of any Act resulting from the Immigration (Carriers' Liability) Bill, it is expedient to authorise payments into the Consolidated Fund. — [Mr. Neubert.]

    ACCESS TO PERSONAL FILES BILL [MONEY]
    Queen's recommendation having been signified.
    Resolved,
    That, for the purposes of any Act resulting from the Access to Personal Files Bill, it is expedient to authorise the payment out of money provided by Parliament of—

    (a) any expenses incurred by a Minister of the Crown or a government department in consequence of the provisions of that Act, and

    (b) any increase attributable to that Act in the sums payable out of money so provided under any other enactment.—[Mr. Neubert.]

    STATUTORY INSTRUMENTS, &c.

      CONSUMER SAFETY
      Motion made, and Question put forthwith pursuant to Standing Order No. 101 ( Standing Committee on Statutory Instruments, &c.).
      That the draft Plugs and Sockets etc. (Safety) Regulations 1987, which were laid before this House on 25th February, be approved.—[Mr. Neubert.]
      Question agreed to.

    PRIVATE BILL PROCEDURE
    Ordered,
    That Mr. Albert McQuarrie be discharged from the Joint Committee on Private Bill Procedure and Mr. Bill Walker be added to the Committee.—[Mr. Neubert.]

    STATUTORY INSTRUMENTS (JOINT COMMITTEE)
    Ordered,
    That Mr. Michael Hancock be discharged from the Joint Committee on Statutory Instruments and Mrs. Rosie Barnes be added to the Committee.—[Mr. Neubert.]

  East Anglian Gangmasters
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]
  10.15 pm
  Mr. Clement Freud: I am pleased to have this opportunity to raise on the Adjournment of the House the subject of the registration of gangmasters in East Anglia. On the whole, gangmasters are excellent people. They are essential to the rural economy of East Anglia, where there is little public transport and intensive cropping. The registration of gangmasters is supported by the Transport and General Workers Union, by the honourable people of Lincolnshire, Norfolk and Cambridgeshire and by my honourable neighbour the Member for Holland with Boston (Sir R. Body), whose Bill is about to come before the House for its Second Reading.
  Mr. Tony Banks: What are they?
  Mr. Freud: The gangmaster is an agricultural subcontractor.
  Mr. Banks: I thank the hon. Gentleman. We do not have many gangmasters in Newham. That is why I asked that question.
  Mr. Freud: In 1867, a Bill passed by this House said:
  "Whereas in certain Counties in England certain Persons known as Gangmasters hire Children, Young Persons arid Women with a view to contracting with Farmers and others for the Execution on their Lands of various Kinds of Agricultural Work".
  The 1867 Act was called the Agricultural Gangs Act, and it stipulated that a
  "'Child' shall mean a Child under the Age of Thirteen years; 'Young Person' shall mean a Person of the Age of Thirteen years, … No Child under the Age of Eight Years shall be employed in any Agricultural Gang; No Female shall be employed in any Gang".
  There was more, but the important point was that no person should act as a gangmaster unless he had obtained a licence to act as such under that Act.
  Most hon. Members have said from time to time that every time a new Act reaches the statute book one ought to look around with care for some old Act that needs to be scrapped, and 99 years after the 1867 Act Mr. Richard Crossman's Local Government Bill of 1966 scrapped the Gangmaster's Act. On 14 June 1966, Mr. Crossman said:
  "But I found, for example, that county councils are still required by the Agricultural Gangs Act, 1867, to issue licences to persons of good character fit to be entrusted with the duties of gangmaster. Those duties still include preventing females from being in the same gang as males, or from being under the control of a male gangmaster. Since the fee is only Is. for six months, I felt it was hardly worth keeping, and we have therefore decided to repeal the licensing requirements. — [Official Report, 14 June 1966; Vol. 729, c. 1268.]
  It was an easy and obvious option to take, but the sad part of it is that unscrupulous people have come into the gangmaster business. They are undercutting honourable gangmasters and persuading the farmers who lack a civic conscience to hire personnel from them at a rate in contravention of the agricultural wages board minimum wage.
  The hon. Member for Sheffield, Brightside (Miss Maynard), who is also on the side of the angels, had an Adjournment debate on this four years ago, when she stated that

  791
  "because of the unemployment in the areas concerned, the gangmasters are able to exploit the workers, who have no right to holidays or sick pay, and no insurance is paid by the farmer … Anyone who is known to be a member of the union is never again given a job by certain gangmasters … As there is no system of licensing, any unscrupulous person can set up as a gangmaster. With the high unemployment, he is able to intimidate the members of the work force, who desperately need to bring some form of income into the home … the farmers are doing very nicely out of the arrangement … There are other implications … These people are not the employees of the farmer. He does not have to insure them … If a gangworker is involved in an accident on a farm … presumably, he is not covered for industrial injury benefit and so on …"—[Official Report, 18 February 1983; Vol. 37, c. 640–41.]
  In surgeries over the years, I have found that the odd, dishonest gangmaster has failed to insure the workers, neglected to pass on to the DHSS the national health insurance, or provide holiday pay and other benefits deducted from the payments made to his staff. Having discussed the matter with the Paymaster General, we corresponded, and in January of this year I received a letter from him, stating:
  "The problem of these activities is insidious in two main respects. Firstly, if they rely on benefit payments for their work force, these employers have a source of labour which may feel itself trapped into a situation where low wage levels are subsidised (illegally, of course) by unemployment benefit. Claimants in this situation may believe that they cannot afford to sign off. Secondly, honest employers who are deducting tax and paying contributions find themselves facing unfair competition in the market. It can also have repercussions for individual workers, who may at a later stage wish to apply for sickness, maternity or any other benefits and then find their contributions records deficient because of the employers' practices."
  There are only a small number of dishonest gangmasters, but the great danger is that this small number undercuts the honourable gangmasters and is allowed to flourish. Obviously cheap labour is an attraction to farmers and to packing stations which, more and more in East Anglia, are now in the hands of multinational companies and put out to a management which is on commission.
  The hon. Member for Holland with Boston has a Bill before the House that requires gangmasters to be licensed by justices. The important parts of the Bill are, first:
  "No person shall act as a gangmaster unless he has obtained a licence".
  secondly:
  "Any person acting as a gangmaster without licence … commits an offence of summary jurisdiction";
  thirdly:
  "In deciding to grant a licence to act as a gangmaster the court shall have regard to the applicant's character and the terms of employment which he intends to offer."
  I am not gravely worried about the duration of the licence. I am sure it is right to have an appeals procedure, and obviously it is important to have an interpretation. I should simply like to see the Minister enabling the hon. Gentleman's Bill to become an Act on the statute book.
  I am well aware that the Government have a strange feeling that they should not interfere and that the more legislation they pass the less Conservative the Administration becomes. This is a minor Bill which prevents a major evil. If it is not enacted, unscrupulous farmers will be able to jump on the bandwagon of exploitation.
  792
  The Agricultural Wages Board has two forms of agricultural wage: one for the worker who works for more —or just less—than 30 hours in regular employment which is £2·30 or £2·36; the other for seasonal workers at 40p an hour less. It is the practice of unscrupulous gangmasters to misinterpret the status of a worker, to translate a regular worker into a seasonal one and reap the benefit.
  Recently, I spoke on Anglia television about gangmasters, and the reporter said, "Surely if the Bill goes through, if gangmasters must register and no more cheap labour is provided for less scrupulous farmers, the price of food will go up?" I had to reply that this will not increase the price of food; it would decrease the profits made by middlemen. Sadly, where people can produce food cheaply, that cheapness is not passed on to consumers; just more people line their pockets.
  Registration is a simple solution and would be welcomed by all but the unscrupulous farmer, producer, and packing station. I hope that the Minister will consider the evil which is at present being perpetrated in parts of east Anglia and lend his support to the Bill.
  10.26 pm
  Sir Richard Body: I endorse everything that the hon. Member for Cambridgeshire, North-East (Mr. Freud) has said. Unfortunately, the problem has arisen in recent years because of high unemployment and the way in which the social security system works. The hon. Gentleman spoke of reputable gangmasters, who completely support a system of licensing, being undercut. The undercutting is done by cheating the social security system and by goading people who are desperate for work to go on social security for part of the time and to work for a derisory wage, being treated disgracefully by gangmasters, for the rest of the time.
  I support what the hon. Gentleman said and I know that my hon. Friend the Minister is looking into the matter most sympathetically. I know that he will carry out an investigation and I hope that it will be done speedily so that we can correct this injustice as soon as possible.
  10.28 pm
  Sir Paul Hawkins: I shall not keep my hon. Friend the Minister for more than one minute. At first I did not believe in the Bill, but I have made some inquiries, and although I do not believe that there are any dishonest gangmasters and farmers in Norfolk, I can believe that there may be some on the boundaries. The Bill may be a good way of putting the matter right for those who work for dishonest gangmasters and farmers. In that respect, I support the Bill.
  10.29 pm
  The Parliamentary Under-Secretary of State for Employment (Mr. John Lee): I acknowledge the genuine concern felt by the hon. Member for Cambridgeshire, North-East (Mr. Freud) in this area of gangmaster abuse and also his support for the private Member's Bill recently presented by my hon. Friend the Member for Holland with Boston (Sir R. Body), who spoke with conviction, albeit briefly, to require gangmasters to be licensed by justices. It is clear that the problem of gangmasters is a longstanding one. It goes back more than a century, when provision was made in the Agricultural Gangs Act 1867 for gangmasters to be licensed. The Act was passed to curb cruelty and immorality that existed in gangs at that time.

  793
  It was repealed by the then Labour Government in the Local Government Act 1966 as the abuses had long since disappeared and were considered unlikely to return. The agricultural trade unions were consulted at the time and did not object to the repeal.
  The House returned to the matter in 1983 when the subject was raised on the Adjournment by the hon. Member for Sheffield, Brightside (Miss Maynard) on 18 February. It was then contended that, because rural life had changed out of all recognition in recent years, and because there had been a large rise in unemployment, abuses had returned to the gangmaster system. It was urged that licensing of gangmasters should be reintroduced. The Government's position at that time was that the evidence before them, including the evidence put forward in the debate, did not lead them to believe that the exploitation was such that it required Government interference.
  Now the subject is before us again. I make no complaint about that, as it is clear that there are still strong feelings that something ought to be done to curb the abuses which are said to exist. I see that my hon. Friend's Bill has all-party support and I hope therefore that we can tonight have a frank and sensible, if small, debate about this problem on a non-party basis. Certainly that is how I intend to approach the matter, which I take very seriously.
  What is suggested in the Bill, and what has been proposed by the hon. Member tonight, is the reintroduction of a system of licensing along the lines of that which existed between 1867 and 1966. In a sense, therefore we are asked to turn the clock back—and at a time when we believed firmly that less, rather than more, regulation of business is needed. Turning the clock back is not necessarily a had thing if it is the only way in which to check real abuses, but obviously we must look very carefully at this proposal, and indeed any other proposals for dealing with the problem, before we finally decide what to do.
  I have to say straight away that I remain to be convinced that the reintroduction of a system of licensing or registration of gangmasters would serve any useful purpose today. It could be illogical to require one small group of persons supplying subcontracted labour to be licensed and not all the others in industries such as, say, building or fish processing. Licensing a gangmaster, or requiring him to be registered, would not necessarily improve the terms and conditions of the workers he eventually hired, even if the licensing body was obliged to take into account the terms of employment which he intended to offer before granting him a licence.
  Mr. Freud: Does the Minister accept that, by licensing gangmasters, the Government and their agencies would have access to gangmasters' books, which is currently not the case? At the moment, gangmasters are being allowed, unlicensed and unchecked, to pay less than the minimum agricultural wage, and not necessarily to pass on the deduction to the Government. The Minister is doing a great disservice by opposing licensing.
  Mr. Lee: I accept what the hon. Gentleman says and that there may be pluses in that approach, but we have to consider the problem in the round. We shall consider the pros and cons.
  Licensing gangmasters would mean almost inevitably that a Government agency would have to be allocated the
  794
  additional tasks involved in enforcing the new arrangements. That would not necessarily be desirable. As I have already said, the proposal that gangmasters should be registered would run counter to the thrust of the Government's deregulation policy. At the time I want the House to understand that we are determined that abuses should be eradicated.
  I am aware that some gangmasters provide labour to do work that falls outside the formal definition of agriculture—for example, sorting and grading vegtables in a packing shed, or processing food in a factory.
  There is some doubt as to who works for the gangmaster. A hundred years ago, they were the local villagers who could not obtain regular employment with a farmer, but I understand that the position is different today. Many, if not most, of the workers are married women and students, who are glad of the opportunity for some seasonal work. They are casual workers in the true sense of the phrase and, as with other casual workers, it is not always easy to ensure that they are working within the rules of the tax and benefit systems.
  I know of claims that serious problems are caused by some dishonest gangmasters and that reputable gangmasters are concerned about this, but we do not have evidence to suggest that abuses have been increasing in the past few years. There may well be individual cases of gangmasters whose activities are contrary to the law. As the hon. Gentleman said, we are referring to a minority. It is our duty to ensure that they are prosecuted, where that is appropriate, and that their future affairs are carefully monitored to ensure that there is no extension of abuses. The present evidence before us does not lead us to believe that the scale of abuses is such that they require further legislation, but I am looking into the whole area again and would welcome hard evidence. That would make it a lot easier to consider the whole matter and decide what, if anything, needs to be done.
  The hon. Member will know that gangmasters already have clear responsibilities under existing legislation. When acting as contractors, they are responsible for meeting the requirements of the Agricultural Wages Act 1948 and the relevant Department of Health and Social Security and Inland Revenue regulations. Information received about alleged abuse is pursued systematically, and suitable cases are taken to court. Gangmasters are treated no differently from other labour subcontractors, but it is not easy to get hard evidence of abuse of the system, as I am sure the hon. Gentleman will acknowledge. There is plenty of rumour, but little hard fact, and I am not clear how the registration of gangmasters would significantly improve the situation.
  I hope that the hon. Member understands that the Government treat the matter seriously. He is already aware that my Department is willing to investigate suspect gangmasters. He also knows, because he has been in correspondence with my right hon. Friend the Paymaster General about a particular case, that during recent months the DHSS has mounted a number of investigations into the gangmasters' operations. He also knows that my Department has been pursuing an inquiry into one particular case and that the investigators have made considerable progress. If similar cases are brought to my attention, I and colleagues in the other Departments involved will make sure that they are followed up swiftly and energetically. However, as a result of recent: investigations, my Department now proposes to mount a. saturation survey of East Anglia in the summer. Likewise,

  795
  as a result of representations made to my hon. Friend the Minister for Social Security and the Disabled about abuse in the fish curing and processing industries, my Department is to investigate the employers and workers who are subcontracted in the north-east of Scotland. Ultimately, however, any prosecution depends for its success on the willingness of people to come forward and report abuses.
  Another aspect of the gangmaster system is the level of payments to workers. The agricultural wages boards, which are composed of representatives of employers and workers and independent members, have a statutory obligation to fix minimum rates of pay below which the pay of those covered by the orders must not fall. Hon. Members will be aware that on 10 March a settlement was reached with the full agreement of both sides of industry which will mean a 5 per cent. increase on minimum rates. The parties to a contract can, of course, agree to higher levels of pay. The provisions of the orders cover people who are employed in agriculture and under a contract of service—that is, those who are employees. Workers in the gangs who satisfied this condition would have the full protection of the agricultural wages legislation and would be able to seek the advice and help of the local agricultural wages inspector if they felt that they were being underpaid or otherwise exploited. I understand, however, that in practice the inspectors receive very few complaints. In addition, those workers who are employees are entitled to various rights under the employment protection legislation, provided that they have worked for a minimum qualifying period, which varies according to the right concerned. Those employment rights can be enforced by the industrial tribunals.
  The difficulties that arise mainly involve those who are not within the scope of the agricultural wages orders or the employment protection legislation, because they are self-employed, with the gangmaster acting as agent in finding work. For workers not covered by the orders, pay and other terms and conditions are matters to be agreed between the parties to the contract, without Government involvement. All workers, including those in agricultural gangs, whether employees or self-employed, can seek to enforce their contractual rights through the civil courts. Although it would in theory be possible to make the agricultural wages board minimum rates apply to the self-employed, I do not think that this is a workable solution for the gang members in this category who may or may not be paid lower rates.
  Much of the work done by agricultural gangs is of a short-term seasonal nature. It is unlikely that farmers would wish to employ full-time workers to satisfy these needs, especially in view of the extra work that this would entail at the busiest time of the year for the farmer. It seems sensible that the parties concerned should be able to
  796
  negotiate contractual arrangements which suit the nature of the work. The gang system is a convenient arrangement which provides the necessary flexibility for farmers to meet their short-term needs and for the workers to choose hours of work that fit their personal commitments. The advantages of the system for all concerned outweigh the cases of abuse which may arise.
  Mr. Freud: If the Minister accepts that there is occasional abuse, does he accept that the strength of the 1867 Act was that, if such an abuse was discovered, the gangmaster was disqualified from working as a gangmaster? He was no longer able to hire people. What happens now is that, if a gangmaster is flushed, he moves a few miles away and starts up again, possibly under another name, using the same people without registering them. That is why we want them to be licensed.
  Mr. Lee: I fully appreciate the advantages that the hon. Gentleman sees in licensing, but I repeat that other factors and aspects must be taken into account. That is why we shall be considering the whole area after this debate. I have given that asssurance repeatedly.
  Nevertheless, and even though the gangmaster system serves a very useful purpose. I am in no doubt that there is great concern, in the area where the system operates, that individuals are suffering and that the Government are not receiving revenue and insurance contributions that are their due. I have already said that I view these concerns with seriousness and that I shall ensure that cases brought to my attention are properly and quickly investigated. The difficulty, as I have said, is to get to the bottom of those rumours, although the investigating officers from the Departments affected are doing their best.
  I have already had discussions with my hon. Friend the Member for Holland with Boston about his Bill, as he has acknowledged these discussions are continuing. I will obviously take the comments made in this debate by the hon. Member for Cambridgeshire, North-East into account before deciding what more, if aything, needs to be done. I also intend to consult my colleagues in the Ministry of Agriculture, Fisheries and Food, who clearly have an important interest. I sympathise with the views of hon. Members that something must be done to bring gangmasters' operations within the law—and in such a way that they are seen to be clean and above board.
  We have had a most useful debate, but I have to say that nevertheless I have yet to be convinced that licensing or registration, in themselves, will prove to be effective. There are too many potential loopholes. However, I very much hope that, during our resumed discussions, we shall be able to bring about improvements and a more effective combating of abuse.
  Question put and agreed to.
  Adjourned accordingly at nineteen minutes to Eleven o'clock.

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  Free Milk and Vitamins
  Free Milk and Vitamins
  Hospitals (Value)
  Hospitals (Value)
  Maternity Payments
  Maternity Payments
  Miss Bernadette Kenny
  Miss Bernadette Kenny
  NHS (Health Provision)
  NHS (Health Provision)
  AIDS
  AIDS
  Board and Lodging Claimants
  Board and Lodging Claimants
  Housing Benefit
  Housing Benefit
  Single Payments
  Single Payments
  Local Offices (Claims)
  Local Offices (Claims)
  Regional Cash Limits
  Regional Cash Limits
  Benefits (Claimants)
  Benefits (Claimants)
  Mobility Allowance
  Mobility Allowance
  Meningitis
  Meningitis
  Handicapped People (Day Care)
  Handicapped People (Day Care)
  Social Fund
  Social Fund
  Prescription Charges
  Prescription Charges
  Benefits
  Benefits
  Surrogacy
  Surrogacy
  Mass Screening (Stonehouse)
  Mass Screening (Stonehouse)
  Medical Statistics (Barnsley)
  Medical Statistics (Barnsley)
  Whooping Cough Vaccine
  Whooping Cough Vaccine
AGRICULTURE, FISHERIES AND FOOD
  Milk
  Milk
  Dairy Inspections
  Dairy Inspections
  Food from Britain
  Food from Britain
  Intervention Food Stores
  Intervention Food Stores
  Cattle (Republic of Ireland)
  Cattle (Republic of Ireland)
  Environmentally Sensitive Areas
  Environmentally Sensitive Areas
  Co-responsibility Levies
  Co-responsibility Levies
  Food Aid
  Food Aid
  Freezer Trawlers
  Freezer Trawlers
  Cereals
  Cereals
  Alternative Land Use
  Alternative Land Use
  Anti-fouling Compounds
  Anti-fouling Compounds
  Sheep
  Sheep
  Salmon Advisory Committee
  Salmon Advisory Committee
  Milk and Dairies Regulations
  Milk and Dairies Regulations
  Dairy Cows
  Dairy Cows
  Butter and Meat
  Butter and Meat
  Agricultural Support
  Agricultural Support
  JACNE
  JACNE

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

Football Hooliganism: Control Plan
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they expect their eight-point plan, agreed with the football authorities in order to combat football hooliganism, to become effective.
Baroness Hooper: My Lords, the eight-point plan was agreed with the football authorities on 23rd February. The Football League has already asked its member clubs to prepare local plans on crowd control and to introduce membership schemes covering at least 50 per cent. of their ground capacity. The intention is that the whole of the plan should be in operation before the start of next season.
Lord Gainford: My Lords, I thank my noble friend for that Answer. Has the noble Baroness any information as to when we football fans can possibly enjoy a game of football as we did before the sacrifices enforced on us by the few who created the hooligan element?
Baroness Hooper: My Lords, this package of measures, together with measures already implemented, is seen as having the possibility of achieving the maximum effect. It reflects the determination of the Government, the police and the football authorities to work in partnership to tackle hooliganism in the interests both of public safety and of the future wellbeing of the game.
Lord Ross of Marnock: My Lords, will the noble Baroness make clear the fact that this applies to England and not to Scotland?
Baroness Hooper: My Lords, yes; I believe that that was the intention of the Question.
Lord Dean of Beswick: My Lords, is it not correct that there has been a reduction in the number of disturbances at football matches and disturbances related to football matches? Does not that augur well for the eight-point plan that the Minister has mentioned, which we hope will be put into effect as quickly as possible? Is it not a fact that the Football League, the Football Association and the clubs are giving the Government their fullest co-operation in attempting to deal with this difficult problem?
Baroness Hooper: My Lords, yes; and we welcome that co-operation. My right honourable friend the Home Secretary has yet to receive up-to-date statistics.
1208
However, the considered police view is that the marked and welcome improvement in behaviour last season has generally been maintained at league grounds this season. The alcohol controls, closed circuit television and effective policing have played a major part in the improvement to the extent that, in addition to hooliganism, the police are increasingly able to tackle other forms of unacceptable behaviour, such as obscene or racial chanting.
Lord Graham of Edmonton: My Lords, while I am sure that the whole House appreciates that progress is being made in these matters and that consultation has taken place with a range of people—the police, the league, magistrates and others—will the Minister say to what extent the views of the players and of supporters' clubs have been sought in order to make sure that any plan is implemented? Surely the Minister will agree that the players, through their representatives, and the responsible supporters' clubs are not only entitled to provide the missing ingredient in bringing peace to the terraces.
Baroness Hooper: My Lords, I am not able to quote chapter and verse on that matter. However, if I obtain any detailed information with which I can supply the noble Lord, I shall follow up the matter in the ususal way. My understanding is that the widest possible consultations have taken place in producing the eight-point plan. Certainly, in regard to local clubs and their local plans, wide consultation, which must include players as well as supporters' clubs, will take place.
Lord Taylor of Gryfe: My Lords, will the Minister say whether the experience of Scottish football has been studied in this connection? Hooliganism has disappeared from the Scottish football clubs, which are now playing to record attendances at all football stadia in Scotland. Is the practical experience of this dramatic change being studied by the Minister and the football authorities south of the Border?
Baroness Hooper: My Lords, yes. The Scottish experience has been considered and its results are welcomed. It was particularly reflected in respect of the alcohol provisions which were brought in last year.
Lord Mowbray and Stourton: My Lords, will my noble friend agree that if players are to make a major contribution to this important subject, the best contribution that they could make would be to play a good, clean game?
Baroness Hooper: My Lords, yes.
Lord Taylor of Blackburn: My Lords, will the Minister say whether this applies to rugby league? Does the Minister have any comments to make on the disgraceful behaviour at Cardiff Arms Park a week last Saturday?
Noble Lords: Rugby Union!
Baroness Hooper: My Lords, as I understand the matter, that question is slightly wide of the original Question on the Order Paper, because the football matches which we are discussing in the eight-point

1209
plan concern the Football League and the Football Association.
Baroness Phillips: My Lords, is the Minister aware that, with supreme irony, grounds where supporters have always behaved, such as Fulham, are being taken over by property developers and closed?
Baroness Hooper: My Lords, I believe that that is also another question.

Child Abuse Video: Use in Schools
2.42 p.m.
Lord Mellish: 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 which schools in the London area have refused to allow police to show the video "Have Fun, Take Care"; and what action they will take concerning such refusal.
Baroness Hooper: My Lords, I understand that the police have not yet approached individual schools. However, my right honourable friend the Secretary of State for Education and Science has asked the leader of the Inner London Education Authority to act to ensure that teachers co-operate with the police over the showing of the video.
Lord Mellish: My Lords, I am obliged to the Minister for that Answer. Is she aware that when I tabled the Question there was some very bad publicity and a number of schools were refusing to show the video because of their detestation of the police? I do not understand the reason for that. However, since then, ILEA has displayed a progressive attitude and has urged every school to show the video. I have seen the video. I commend it as essential viewing for children in order that they should learn of the dangers in accepting lifts from strangers and so on. Will the noble Baroness do all she can to ensure that every school in London has a chance of showing this excellent video?
Baroness Hooper: Yes, indeed, my Lords. I believe that the hostility shown by the Inner London Teachers' Association at the idea of showing the video has been very much squashed, and I hope that schools will not refuse to show the video in view of the real concern of parents about child abuse in particular.
Lord Leatherland: My Lords, can the Minister tell us what this film is all about, because some of us have not seen it?
Baroness Hooper: My Lords, the film has been produced as a result of collaboration between the Metropolitan Police and the Inner London Education Authority. It is intented to teach children, particularly very young children, to be on their guard as regards possible abduction and child abuse. I believe that in the odd project where the film has been shown, it has been well received by the children in particular.
Lord Irving of Dartford: My Lords, would the noble Baroness accept that this scheme was introduced jointly by the Metropolitan Police and ILEA on 18th February, and therefore has the fullest support of ILEA? Will she further accept that it has never been the policy of ILEA to exclude the police from schools but rather, to work in the fullest co-operation with them? With regard to the comments, properly made by the noble Lord, Lord Mellish, about the remarks made in Hackney, the secretary claims that he was misquoted, and the Hackney Teachers' Association is now in support. The Inner London Teachers' Association has taken no steps to resist the video, and the Inner London Education Authority anticipates no difficulty in ensuring that it will be seen in every school.
Baroness Hooper: My Lords, we certainly welcome the co-operation of the Inner London Education Authority in this matter. However, we understand that the Inner London Teachers' Association did display hostility initially, and I can only say that for any head teacher to adopt a hostile attitude towards the police in this matter as in any other would be both deplorable and unprofessional.
Lord Hutchinson of Lullington: My Lords, can the Minister think of any motto which is better for the guidance of adult life than this one?
Baroness Hooper: Not offhand, my Lords.

Building Societies: Supervision
2.45 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they intend that a self-regulatory organisation (SRO) will be established to supervise building societies.
Lord Beaverbrook: My Lords, if their application to become a designated agency under the Act is successful it will be for the Securities and Investments Board to recognise self-regulating organisations. An organisation can only be recognised if it satisfies the criteria for recognition set out in the Act.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for that reply. Is he aware that the Securities and Investments Board visualise that building societies should be with the Financial Intermediaries, Managers and Brokers Association, known as FIMBRA, whose present members are very different from building societies, and that FIMBRA at present apparently cannot recognise the scheme of regulation operated by the Building Societies Commission, therefore making it difficult if not impossible for a building society to join?
Lord Beaverbrook: My Lords, the bodies which intend to apply for recognition are expected to apply to regulate specified kinds of investment activity. The membership of most applicant SROs will therefore include different types of firms engaged in a similar

1211
sort of investment business. The building societies will only be required to register with an SRO in respect of investment business, not in respect of business as building societies.
Lord Williams of Elvel: My Lords, would the noble Lord not accept that the noble Lord, Lord Campbell, is entitled to a rather fuller reply to his Question, which raises an important point? If FIMBRA fails to meet the requirements of the SIB and therefore cannot become an SRO, is it not the case that the SIB have to do the job themselves—in other words, that there is a special SRO set up for the purpose by the SIB? Or will the SIB try to push building societies and others into another SRO? What is the Government's attitude to all this? There is a problem here to which the Government need to pay attention.
Lord Beaverbrook: My Lords, without commenting on the fullness of any reply or question, I expect businesses to prefer to obtain authorisation through membership of an SRO, but the alternative of direct authorisation by the SIB will of course be available.
Lord Campbell of Croy: My Lords, is my noble friend aware that that would be extremely unwieldy and would almost certainly lead to duplication and unnecessary expense; and that the building societies are in future likely to play a substantial part in financial services?
Lord Beaverbrook: My Lords, I understand that the SIB have indicated that the five SROs preparing to apply for recognition will form a satisfactory structure capable of providing for the whole range of investment business. They will be looking carefully at FIMBRA's rules and regulations once they come forward for approval.
Lord Elwyn-Jones: My Lords, in view of what passed in the recent debate on the English language, would not a little economy in the use of acronyms be a useful contribution to the proceedings of the House?
Lord Beaverbrook: My Lords, I am inclined to agree. However, having been accused of giving a rather short answer to my noble friend, perhaps I may say that I might have run the risk of giving a rather long answer if I had spelt out the full title of a number of these organisations.
Lord Campbell of Croy: My Lords, does my noble friend agree that in the case of the three acronyms used each has been spelt out, one in my Question, one by my noble friend and the other in full by me?
Lord Beaverbrook: Yes, my Lords; I am sure they have.

EC Expenditure Outlook
2.50 p.m.
Lord Bruce of Donington: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
1212
The Question was as follows:
To ask Her Majesty's Government whether they have been informed by the EC Commission, formally or otherwise, of the projected overrun in Community expenditure for 1987; what is the estimated United Kingdom share of such overrun and the preferred manner for its discharge; and what effect it will have on the agreed arrangements for contribution rebates to the United Kingdom for 1987.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, a communication from the Commission on the 1987 budget outlook is expected shortly. The Commission's present estimate of the potential overrun on agricultural expenditure in 1987 is some 3·5 billion ecu. Its 1987–88 price fixing proposals would reduce this by about 1·3 billion ecu. The Commission has also indicated that it plans to bring forward additional proposals to deal with the remaining excess. The Government have made clear that the Community must live within its means in 1987. Any overrun would have no effect on the arrangements for the UK's abatement.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the figure of the anticipated shortfall in 1987, which he put at 3 billion ecu is equivalent to £2,200 million, of which the United Kingdom's share would be somewhere in the region of £600 million? Can the noble Lord indicate whether the deficit figure of 3 billion ecu for 1987 contains or does not contain the deficit of some 750 million ecu incurred for the year 1986? Will he indicate how this state of affairs squares with the assurance of the Prime Minister following the Fontainebleau conference that strict financial discipline will in future be exercised within the Community?
Lord Brabazon of Tara: My Lords, the figure I gave in the first part of my Answer was 3·5 billion ecu, and that concerned agricultural expenditure. There is also a deficit of some 800 million ecu carried forward from 1986. That I think is the figure to which the noble Lord, Lord Bruce of Donington, referred. We are firmly of the view that the prospective deficit in 1987 must be contained within the resources available within the 1·4 per cent. VAT ceiling, and overall spending levels must be controlled accordingly.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the expenditure envisaged in the 1987 budget cannot possibly be contained within the 1·4 per cent. limit on VAT? Will he say how much of the deficit which he envisages for both 1986 and 1987 will be "satisfied" by the queer payments of non-recoverable advances?
Lord Brabazon of Tara: My Lords, I cannot give a figure for that, of course; but the budget council reached agreement by a qualified majority on the draft budget for 1987 on 13th February. The United Kingdom opposed proposals since they included the negative reserves which would add to the pressures on expenditure, As regards the 1·4 per cent. VAT ceiling,

1213
the Fontainebleau Agreement says that the ceiling may be raised to 1·6 per cent. from 1st January 1988 only with the unanimous consent of member states. Her Majesty's Government see no scope for increases of the order proposed by the Commission.

Business
2.54 p.m.
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Committee stage of the Banking Bill will be adjourned at approximately 7 p.m. for approximately one hour, and that during this adjournment the Industrial Relations (Northern Ireland) Order 1987 will be taken.

Cardiff Bay Development Corporation (Area and Constitution) Order 1987
The Chairman of Committees (Lord Aberdare): My Lords; I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Lord Pitt of Hampstead be added to the Select Committee on the order in the place of the Lord Jacques.—(The Chairman of Committees.)
On Question, Motion agreed to.

Banking Bill
The Secretary of State for Employment (Lord Young of Graffham): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Young of Granham.)
On Question, Motion agreed to.
House in Committee accordingly.
[The BARONESS SEROTA in the Chair.]
Clause 1[Functions and duties of the Bank of England]:
Lord Bruce of Donington Lord Bruce of Donington: moved Amendment No.1:
Page 1, line 17, leave out ("such manner as it thinks appropriate") and insert ("a manner the Treasury shall indicate").
The noble Lord said: In the course of our debates on the Second Reading of the Bill, on behalf of my colleagues I gave an indication that in general we welcome this Bill and that we would endeavour to make a series of constructive suggestions in the course of the Committee stage. This amendment, as with other later amendments, seeks to establish rather more firmly than is apparent from the text of the Bill the authority of Parliament through the government of the day to make the strategic decisions that are required in connection with the total management of the nation's financial affairs.
The Bank of England is, under the Bank of England Act 1946, wholly owned by the state through the agency of the Treasury. It is right that the Bill at all
1214
critical stages—and some perhaps not so critical—should reflect the ultimate responsibility of Parliament, and indeed the full control, where necessary, of the Government themselves. The amendment is a question of emphasis and authority. Clause 1(3) now reads:
"The Bank shall, as soon as practicable after the end of each of its financial years, make to the Chancellor of the Exchequer and publish in such manner as it thinks appropriate a report on its activities under this Act in that year; and the Chancellor of the Exchequer shall lay copies of every such report".
The amendment seeks to delete,
"such manner as it thinks appropriate"
and to substitute,
"a manner the Treasury shall indicate".
In other words, the responsibility for the contents, the methods of publication and the extent of publication shall not be a matter for the Bank itself, but shall be a matter for the Treasury.
I do not know to what extent the Treasury apparatus is capable in itself either of monitoring the Bank of England's activities in accordance with the original provisions of the 1946 Act (which gives the Treasury power to give such general directions as it thinks fit to the Bank) or to what extent the Treasury is equipped to do that; or, for that matter, to exercise the amount of supervision it must exercise if the provisions of this Bill are to have any bite. There is a division of the Treasury called the financial institutions division which, according to the published directory, has an overall responsibility for the Bank of England. One does not know how many personnel that department has. One does not know the nature and extent of liaison between that department and the Bank of England. In short, this is a matter about which the outside world knows very little.
Let us make no mistake. The fundamental reason for this Bill lies in the Johnson Matthey affair. I do not wish to rake over any old embers that relate to that. However, a re-reading of the Bank's report on the Johnson Matthey affair gives some indication as to the defects within the Bank's own system that existed at that time, most of which I am quite sure have since been remedied. Nevertheless, it gave an indication that, just as government departments are frail in parts, banks also are not exempt from the ordinary human frailties and can themselves, after prolonged habit and routine and by taking matters, possibly quite legitimately, on trust, become a little careless, with the results that we have already seen.
I am well aware, as I am quite sure are your Lordships, that the Bank of England even without this Bill has enormous powers at its disposal, particularly in the terms which it fixes itself with the joint stock banks, the merchant banks and the leading institutions. In general terms, its will throughout the City is, quite properly, absolute. The questions are: how can the will be enforced and how can it become all pervasive? I therefore suggest to your Lordships that the whole question as to the nature, extent and publication of the report made by the Bank to the Chancellor of the Exchequer should not be determined by the Bank itself. It ought to be determined where power ultimately lies, and power ought to lie, and ought to be seen to lie, with the Government themselves. I cannot possibly get into the mind of the

1215
financial institutions division of the Treasury and I very much hesitate to project myself into the mind of the Chancellor of the Exchequer, particularly at this time, the day before the Budget. However, I should have thought that the Chancellor himself and his permanent staff have a very good idea as to the kinds of responses and the kinds of reports they want from the Bank. They therefore should be the ones who should set the standard and whose will should prevail.
This amendment has been put down in entirely non-partisan terms. It ought not to be, within a Parliamentary democracy, a party matter because in these Houses of Parliament we are all dedicated, I should hope and believe, to the supremacy of Parliament; but it must be seen. This is a very small amendment and there are others which also seek to place Parliament and the Government in a similar position. To those we shall turn in due course; but it is with that objective and with no other that this change of emphasis, in our view, is necessary. It should not be for the Bank to determine what is appropriate. The Bank in the past has operated very much in its own way. Your Lordships will recall that it rescued Johnson Matthey by the injection of £100 million without telling the Chancellor of the Exchequer, but it told him the next day.
I am quite sure that things have improved since then and I am quite sure that the Bank is sensible, as it ought to be, of its own position. I just want to make quite sure that the supremacy of Parliament, through the Government, is quite unmistakably seen and, where appropriate in this Bill, is quite unmistakably indicated. I beg to move.
Lord O'Brien of Lothbury: After nearly half a century of service in the Bank of England, nobody would expect me to take a totally unbiased view on this question. Nevertheless, I strongly resist the amendment which the noble Lord, Lord Bruce of Donington, has put forward. The Bank of England has been in existence now for nearly 300 years and for most of that time—250 years—it was in private hands. At no time in its history has it questioned the supremacy of Parliament or that of the Treasury, with the Chancellor at its head, as the primary department with responsibility for economic and financial policy. As the noble Lord, Lord Bruce, has said, the Bank has great power and influence in its own area in the City. I think that for the good of us all it is to be hoped that that power and influence will continue.
In this particular amendment—and, as the noble Lord, Lord Bruce, has said, others are to follow and no doubt they will be of a similar character—it is merely a question of reporting. But reporting on what?—reporting on the discharge by the Bank, as agent of Her Majesty's Government, as laid down by Act of Parliament, on the reponsibilities it has exercised during the course of the previous year.
It seems to me, having regard to the stature of the Bank and its long history, only reasonable that it should be allowed to report in the manner which it thinks fit. Of course, given its very close association both with the Treasury and with the Chancellor, any views which may be expressed informally by either of those parties about matters of this sort will, I am sure,
1216
be taken into account by the Bank. But I see absolutely no reason for a direction, and I hope that the Government will resist the amendment.
Lord Beaverbrook: I am most grateful to the noble Lord, Lord Bruce of Donington, for setting out clearly the reasons for this amendment. I am also grateful to the noble Lord, Lord O'Brien, for giving your Lordships his opinion.
This amendment would take away from the Bank of England its discretion to decide the manner in which it publishes the annual report which it is obliged to make under the Bill. It would make the Treasury responsible for deciding the manner of publication.
The manner of publication of the annual report is not a matter of controversy. Indeed, the Bill's provisions in this respect are the same as those of the 1979 Act, and they have worked satisfactorily since then. After careful consideration, the Government see no good reason to change them. Since the 1979 Act was brought into force the Bank of England has regularly published its report under that Act. It is available both separately and bound with its annual report and accounts. Both are made available free of charge. Also of course the report is laid before this Chamber and in another place. I am not aware of any complaints about the manner of publication and I would ask the noble Lords opposite to agree that the Bank of England can continue to be trusted to determine the precise manner of publication. On that basis, I would have to resist this amendment.
Lord Bruce of Donington: I am sorry the noble Lord feels bound to resist the amendment and I must say I was not very much disarmed by the noble Lord, Lord O'Brien, who said that of course in all these matters the Bank would consult with the Government. A responsibility has to be somewhere, and one of the difficulties we have had over the past few years is that it is sometimes very difficult to realise where the powers of the Bank of England end and the powers of the Government begin.
The Bank of England has been no more free of error over the past seven or eight years than the Government themselves. Your Lordships will have seen in today's Financial Tunes the report of the letter concerning questions of economic and other policies which have been raised by four former very distinguished civil servants of the Treasury. It is quite clear that the Bank has almost universally endorsed the errors that were committed by the Government in 1979–80. The relationship in that sense is cosy, and I can quite understand why.
Although I do not want to intrude party politics into this matter, it is quite clear that the policies of the present government and the policies of the Bank of England are, in political terms, almost identical anyway. But, of course, governments change, and for the sake of future governments as well as this one I should like to see authority lie where it ought to lie, and in this case it ought to lie with the Treasury. If there is any question of what is appropriate, then the Treasury itself should decide. I am sorry that the noble Lord has seen fit to reject the amendment, but this is a question of principle on which I think it will be necessary to test the opinion of the Committee.
Lord Thorneycroft: May I just say a word on this subject to the noble Lord, Lord Bruce of Donington? I have no interest to declare in this matter. Indeed, if anything, I was on the other side, so to speak. I was brought up not in the Bank but in the Treasury. But I hope very much that he will not press this amendment to a Division.
This is a Bill which gives powers and responsibilities to the Bank. In a way, many of them are powers and responsibilities which the Bank has always had, but anyway they are with it now. I must say that if you have a great institution—and wherever we sit I think we would regard the Bank of England as a very great institution—discharging powers and responsibilities of that kind, it would be very helpful if it did the reporting, rather than have someone else trying to do the reporting for it as to how something went. In that way you get a much better report. To provide for a report from an outside body is an unhappy way of approaching these matters.
The relationship between the Bank and the Treasury—and it is a subtle one—exists not just when a Conservative Government are in power; it exists also when other governments are in power, and it is in the interests of everybody, wherever he sits in the House of Lords, to try to preserve that to the maximum effect. I appreciate the point that the noble Lord has made. I see the logic of it, and so on. But, as one who has spent quite a lot of time in that sort of area, I think that if he could possibly see his way not to press this amendment it would be wise.
Lord Taylor of Gryfe: On these Benches we had no view on this amendment and we were content to listen to the arguments. As the noble Lord, Lord Bruce of Donington, has said, this Bill is about banking supervision arising from the weaknesses that were revealed in the Johnson Matthey affair. This amendment of the noble Lord, Lord Bruce, raises another equally important question on the relationship between the Treasury and the Bank. This is not an easy relationship. It happens in many countries that there is difficulty in the relationships, particularly between a new government and its central bank. I have found in my own experience that many countries have looked to the Bank of England and to the relationship which exists in this country, based on habit, tradition and good sense, and have accepted the kind of relationship which exists. From these benches we should not feel justified in changing that relationship. I am much persuaded by the noble Lord, Lord Thorneycroft, who said: let the body which is reporting be responsible for its own report. It occurs to me therefore that the pressing of this amendment would hardly be justified and I could not recommend that my colleagues should support it.
Lord Beaverbrook: I should like to pick up a topic to which the noble Lord, Lord Bruce, referred. He mentioned the Treasury's broad power to give direction to the Bank of England which is contained in the Bank of England Act 1946. Although it has never been used, it is there. But I should say that my right honourable friend the Chancellor has no wish to be specifically responsible for the manner of publication of the report, and I should emphasis again that there
1218
have been no complaints of which we are aware about the Bank's normal method of publication.
3.15 p.m.
On Question, Whether the said amendment (No.1) shall be agreed to?
Their Lordships divided: Contents, 49; Not-Contents, 117.

DIVISION NO.1

CONTENTS

Beswick, L.

Mishcon, L.

Birk, B.

Molloy, L.

Bottomley, L.

Mulley, L.

Briginshaw, L.

Northfield, L.

Broekway, L.

Oram, L.

Bruce of Donington, L.

Phillips, B.

Campbell of Eskan, L.

Pitt of Hampstead, L.

Carmichael of Kelvingrove, L.

Ponsonby of Shulbrede, L [Teller.]

Cledwyn of Penrhos, L.

David, B.[Teller.]

Ross of Marnock, L.

Davies of Penrhys, L.

Russell, E.

Dean of Beswick, L.

Serota, B.

Elwyn-Jones, L.

Shackleton, L.

Ennals, L.

Silkin of Dulwich, L.

Ewart-Biggs, B.

Stallard, L.

Falkender, B.

Stewart of Fulham, L.

Fisher of Rednal, B.

Strabolgi, L.

Gallacher, L.

Taylor of Blackburn, L.

Graham of Edmonton, L.

Taylor of Mansfield, L.

Gregson, L.

Turner of Camden, B.

Heycock, L.

Underhill, L.

Jeger, B.

Wallace of Coslany, L.

Jenkins of Putney, L.

Williams of Elvel, L.

John-Mackie, L.

Wilson of Rievaulx, L.

Llewelyn-Davies of Hastoe, B.

Ypres, E.

NOT-CONTENTS

Alexander of Tunis, E.

Ellenborough, L.

Allerton, L.

Elliot of Harwood, B.

Amherst. E.

Elton, L.

Annan, L.

Ely, M.

Atholl, D.

Fraser of Kilmorack, L.

Aylestone, L.

Gainford, L.

Beaverbrook, L.

Gladwyn, L.

Belhaven and Stenton, L.

Gormanston, V.

Bellwin, L.

Grey, E.

Belstead, L.

Gridley, L.

Bessborough, E.

Grimond, L.

Blyth, L.

Haig, E.

Bonham-Carter, L.

Hailsham of Saint

Boyd-Carpenter, L.

Marylebone, L.

Brabazon of Tara, L.

Hampton, L.

Brougham and Vaux, L.

Harvington, L.

Bruce-Gardyne, L.

Hesketh, L.

Butterworth, L.

Home of the Hirsel, L.

Byron, L.

Hood, V.

Caithness, E.

Hooper, B.

Campbell of Alloway, L.

Hooson, L.

Campbell of Croy, L.

Hunt, L.

Carnock, L.

Hylton-Foster, B.

Constantine of Stanmore, L.

Kaberry of Adel, L.

Cowley, E.

Killearn, L.

Davidson, V.[Teller.]

Kinloss, Ly.

De Freyne, L.

Kitchener, E.

Denham, L.[Teller.]

Lane-Fox, B.

Denning, L.

Layton, L.

Diamond, L.

Limerick, E.

Donaldson of Kingsbridge, L.

Long, V.

Donegall, M.

Lovat, L.

Drumalbyn, L.

Luke, L.

Dudley, B.

McNair, L.

Dundee, E.

Mais, L.

Ebbisham, L.

Manchester, D.

Edmund-Davies, L.

Marley, L.

Effingham, E.

Mayhew, L

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Merrivale, L.

Shannon, E.

Morris, L.

Shrewsbury, E.

Mowbray and Stourton, L.

Simon of Glaisdale, L.

Munster, E.

Skelmersdale, L.

O'Brien of Lothbury, L.

Slim, V.

Pender, L.

Somers, L.

Perth, E.

Stedman, B.

Peyton of Yeovil, L.

Strange, B.

Porritt, L.

Strathcarron, L.

Portland, D.

Strathspey, L.

Rankeillour, L.

Taylor of Gryfe, L.

Reay, L.

Terrington, L.

Reilly, L.

Thorneycroft, L.

Ritchie of Dundee, L.

TordorF, L.

Rochdale, V.

Torrington, V.

Romney, E.

Trumpington, B.

Sainsbury, L.

Vaux of Harrowden, L

Saltoun of Abemethy, Ly.

WardofWitley, V.

Sanderson of Bowden, L.

Whitelaw, V.

Seear, B.

Wigoder, L.

Selborne, E.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
3.23 p.m.
Lord Beaverbrook Lord Beaverbrook moved Amendment No.2:
Page 2, line 2, after first ("or") insert ("who is, or is acting as,")
The noble Lord said: This is a technical amendment to establish beyond doubt that the immunity of Clause 1(4) extends to those members of the Bank staff who are seconded to the Bank rather than being its permanent employees. Although directly employed by the Bank, they act essentially as employees. I beg to move.
Lord Williams of Elvel: I am grateful to the noble Lord for explaining exactly what the amendment means. I had taken the amendment to be similar to our Amendment No.3. However, from what the noble Lord has said, it applies only to those people who are seconded to the Bank and who are therefore part of the Bank staff at the particular moment when the Bank is performing its functions under the Act. As such, it is a welcome clarification. I was intending to include in the discussion our Amendment No.3. However, in the light of what the noble Lord has said, we shall move Amendment No.3 separately.
On Question, amendment agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.3:
Page 2, line 2, after ("servant") insert ("or agent")
The noble Lord said: This amendment raises a point which the House studied in relation to the Financial Services Act. It was also studied, although not at great length, in our consideration of the Building Societies Act. The question is whether or not there should be an extension of the immunity from damages of the supervisory body to agents who are required and requested by the supervisory body to act on its behalf.
A simple illustration will suffice to demonstrate what I mean. If the Bank conducts an investigation under this Act and if it employs a firm of accountants to conduct that investigation on its behalf, as I understand it, the accountants may, as the Bill is presently drafted, be liable in damages for anything they do during that investigation, whereas the Bank itself and its officers and servants will not be liable in damages unless it can be shown that an act or omission
1220
was in bad faith. This seems to us to be inequitable. Why should a firm of accountants, acting upon the specific instructions of the Bank, be liable in damages when the Bank enjoys immunity? I recognise that it is a difficult point and one which has been discussed elsewhere. However, I would argue that the immunity expressed in Clause 1(4) should at least extend to those who are acting for the Bank, on the instructions of the Bank, and pursuing its functions under the Act. I beg to move.
Lord Beaverbrook: We have carefully considered the amendment. We have come to the conclusion that it is not necessary to cover such groups of people, particularly reporting accountants or other investigators, because we feel that it would be anomalous to grant them immunity when inspectors appointed by the Secretary of State and by the Building Societies Commission do not enjoy similar protection.
An immunity such as this is to be granted only on a strictly limited basis; in this case, under Clause 1(4), to the supervisory body with statutory functions and to its personnel. That is necessary in order to ensure that the supervisors can act positively in the interests of depositors without being unduly constrained by threat of legal action. On balance, we feel that it would be dangerous to extend immunity further than that. For that reason, I cannot go along with the amendment.
Lord Williams of Elvel: I am grateful to the noble Lord for his response. In my introduction, I think I recognised that I was raising problems that had been discussed in the context of the Building Societies Act and the Financial Services Act. I realise that if a precedent were to be set here, it would have to be followed by amendments to those Acts. Nevertheless, I find it hard to accept the arguments of the noble Lord—just as hard to accept them today as when we were discussing the Building Societies Bill and the Financial Services Bill.
I understand that the Government are extremely reluctant to extend immunities further than is strictly necessary. However, it seems to me that if the Bank is to get good accountants and investigators acting as its agents, it will have to do something about giving them some form of immunity, if only in the form of a contractual indemnity against damages which the Bank would be entitled to do. I should prefer that to be on the face of the Bill, but I shall not push this matter to a Division. I hope that the noble Lord will think again, and we may come back to it on Report if we feel that to be necessary.
Amendment, by leave, withdrawn.
3.30 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.4:
Page 2, line 5, at end insert ("or contrary to law.").
The noble Lord said: I beg to move Amendment No.4 standing in the names of my noble friends Lord Bruce and Lord Morton of Shuna and myself. It may be for the convenience of the Committee if I speak also to Amendment No.18.
These two amendments are in the nature of probing amendments. By moving them I am trying to discover

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exactly where the boundaries lie of the Bank's operations under the Bill as it is before this Committee. The Bill as drafted says that the Bank shall not be liable in damages unless it is shown that an act of the Bank or an omission of the Bank was in bad faith. I ask the following question by means of these amendments. What happens if the Bank does something which is contrary to law, contrary either to this Act or any other Act? What happens if a servant of the Bank purports that the action he has taken is in the discharge of the functions of the Bank—here I am referring to Amendment No.18—when it is not in proper discharge of his functions under the Act? In other words, what is the scope of Clause 1(4)?
I should be most grateful to hear some comment from the noble Lord the Minister on that scope so that we may be quite clear where we stand. I beg to move.
Lord Denning: Perhaps I may say a word against this amendment. The Bank or its servants are in a position which is analogous to that of a judge or an arbitrator. They must he able to do their work honestly and fairly without fear of any action against them for negligence or for damages. Just as there is an appeal from judges to a higher court, so there are appeals set out in Clauses 27 and 28 of this Bill. That is the proper procedure when the Bank or its servants go wrong on points of law. An appeal is provided for. But in order to secure the independence of those who are acting, and to ensure that they are not deterred from doing right by fear of actions for negligence, it seems to me to be right to make them exempt from liability unless they are acting in bad faith.
The additional words "or contrary to the law" are really not necessary at all. They might be a deterrent to people in a responsible position in the undertaking of their duties. Therefore I am against the amendment.
Lord Bruce of Donington: With the permission of the Committee, I intervene to venture to ask the noble and learned Lord, whose views carry great weight, justifiably, not only in the judicial community but also in the country at large, whether I am correct in assuming from what he has said that if the Bank wishes it can act contrary to the law.
Lord Denning: That is putting it a little too high. It does not act contrary if it wishes, but it may by an honest mistake act contrary to the law. Let there then be an appeal to a higher authority, but do not make it liable in damages any more than a judge is liable in damages if he makes a mistake in law.
Lord Beaverbrook: For the convenience of your Lordships' Committee, I too will speak to this amendment and to Amendment No.18.
I understand the concern of noble Lords opposite, but I can assure them that the effect of subsection (4) is not to give the Bank or its servants any immunity from the ordinary process of the criminal law. All that the subsection does is to grant an immunity from damages for things done in the discharge of the Bank's function under the Bill. It is right that the Bank should feel able to operate confidently in its supervisory role and take prompt and robust action to protect
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depositors without contantly looking over its shoulder for fear of legal action.
There is a parallel provision in the Financial Services Act, at Section 187, to protect supervisors under that Act. The provision here does not remove the Bank from the discipline of the law; it does no more than provide immunity from damages. It does not put the Bank outside the authority of the courts or above the law in any way. I remind the Committee that it covers actions done in good faith. In the highly unlikely situation of the Bank or its servants acting maliciously the immunity would not apply.
I go on to speak to Amendment No.18. I am sure the Committee would agree that the Board of Banking Supervision should also feel able to do its work without being intimidated by threat of legal action. That is what subsection (7) provides. It would be wrong for members of the board acting in good faith to lose their immunity from damages if they reasonably but erroneously believe they are acting properly in the discharge of the functions Parliament has given them. I appreciate the Committee's concern that the board should not be given cart blanche to act improperly, but it must be remembered that the members would lose their immunity if it were shown that they had acted in bad faith.
I hope that with that reassurance the noble Lords will feel able to withdraw these amendments.
Lord Williams of Elvel: I am most grateful to the noble Lord. As I mentioned when I was moving both these amendments, they were in the nature of probing amendments to see what the scope and intention of Clause 1(4) was. There is no intention at all from these Benches to try to diminish in any way the role of the Bank in this respect. Clearly the supervisory authority must have immunity from damages when it is acting in a proper legal and sensible manner in accordance with the legislation which we are now discussing.
Nevertheless, I wonder whether the noble Lord can help me. He referred to the Financial Services Act and said a similar provision was there for the Securities and Investments Board. Is there a similar provision in the Building Societies Act for the Building Societies Commission? In other words, do all three pieces of legislation run in tandem or is the Building Societies Commission open to rather more exposure in this respect than the Bank or the Securities and Investments Board under the Financial Services Act? If that is the case, it seems that the Government need to look at this subsection again to line it up with the Building Societies Act. I say that particularly in the light of Amendment No.18 because if the Building Societies Commission does not have the same protection in the purported discharge of its functions the Government have some rather fast thinking to do. But perhaps the thinking is too fast, and I ask the Minister to respond on this point.
Lord Beaverbrook: The noble Lord asked about the Building Societies Act and the Building Societies Commission. It would probably be best for me to consider what the noble Lord has said and then write to him on the subject. It is a complicated matter and I should like to look at it further and study carefully what he has said.
Lord Williams of Elvel: I am most grateful to the noble Lord. I look forward to receiving his letter, and when we have it we shall decide what if anything we need to do at another stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No.5:
Page 2, line 5, at end insert—
("(4A) The Chancellor of the Exchequer may at any time request an interim report from the Bank on the specific exercise of its powers under this Act.").
The noble Lord said: In moving this amendment I should like to speak also to Amendment No.16, which is consequential on it. In this instance I hope that I am knocking at an open door with the Committee. The Bank is required by the Bill to give its normal annual report to the Chancellor. All this amendment seeks to do is to empower the Chancellor of the Exchequer to,
"request an interim report from the Bank on the specific exercise of its powers under this Act".
This would be a rare event, but as we have found out in connection with other legislation, and not particularly legislation affecting the banks or the institutions that are covered in this Bill, occasionally things go wrong.
The overall powers of the Bank of England are not, I am perfectly willing to accept, capriciously applied—and after this Bill becomes law and after the reorganisation that will take place with it they will probably be very diligently applied. But the days when the unspoken word of the Bank of England was law within the City, the times when as a matter of honour City institutions automatically did the right thing on pain almost of being sent to Coventry and put at disadvantage if they went wrong, are unhappily gone. We have only to look at the experience of recent months—I agree in another field but still within the City—to realise that occasionally things go very wrong indeed.
I am hopeful that if the Bill is rigorously enforced—and we shall deal with enforcement at a later stage of the Bill, under Clause 94—one of these financial scandals will not break out in connection with, or arising from, any of the institutions or authorities that are to be governed by the Bill. But it might happen. If it does happen, it will be of significance.
Despite the extra supervisory powers and despite the satisfactory reorganisation that has taken place at the Bank of England, nobody can guarantee that something major will not emerge. In that event—and I am willing to acknowledge that the possibility has receded very considerably following the Johnson Matthey affair—there may come a time when, in the light of revelations that come out in the press or elsewhere, the Government feel constrained in the public interest to call for a special report from the Bank. They should be entitled by law to do so.
The inclusion of this subsection in the Bill would act as an additional deterrent. The responsibility to provide an interim report to the government of the day or to the Chancellor of the Exchequer should not be
1224
laid on the Bank itself, but whenever the Chancellor of the Exchequer thinks fit, whenever he thinks circumstances arise which necessitate in the public interest the rendering of a report by the Bank, he should be entitled to call for one.
3.45 p.m.
Lord Bruce-Gardyne: I apologise for interrupting the noble Lord. I think it might be helpful to the Committee if the noble Lord could explain what inhibits the Chancellor at present from demanding in his discretion such a report from the Bank of England at any moment.
Lord Bruce of Donington: I am not in the mind of the Chancellor and I do not know what powers the Chancellor may think he has other than the powers of general direction that are given to him under the Bank of England Act 1946. My own view is that the Government ought to find this helpful as a reserve power. After all, and within noble Lords' memory, though it may be convenient to forget it, the Bank of England has been known to do a number of important things without consulting the Government at all. Therefore the Government have a right (and it is part of the general stance which I adopted earlier on this afternoon) on occasions to assert their authority in order to be seen to do it, and it ought therefore to be incorporated in the Bill itself. If the noble Lord is content to leave the position as it is, if the noble Lord says, "Well, it will not be necessary; the Bank will probably report of its own volition in the interim if it thinks it is necessary to do so", that is the noble Lord's view. I am only trying to help him.
Lord O'Brien of Lothbury: I do not know whether I can say something to help the noble Lord, Lord Bruce, in reference to the intervention by the noble Lord, Lord Bruce-Gardyne. If an untoward incident arose in the City which gave cause for concern to the Chancellor of the Exchequer and he were to ask for a report from the Bank of England, he would get it. That would require no legislation. It would be the normal course of events. It certainly would have happened in days which I remember, and I believe it would happen now.
Lord Boyd-Carpenter: I wonder why the noble Lord, Lord Bruce of Donington, thinks this is necessary. Unlike my noble friend Lord Thorneycroft, or for that matter myself—I served there for two terms—I do not think that the noble Lord has ever served in the Treasury. Surely those who have know what the noble Lord, Lord O'Brien of Lothbury, has just said is true. The relations between the Treasury and the Bank are close and in many ways are best kept informal. If you start building up legal rights to demand a formal report, you are at risk of formalising a relationship which perhaps is better as it is in its flexible form. If you legislate to give a power to demand information in one particular circumstance, you are at least creating the possibility that the other party may say, "This other situation is not covered by the legislation and therefore there is no right to demand this".
I suggest to the noble Lord that there is absolutely no reason to believe that if the Chancellor of the Exchequer of the day were to ask for information from

1225
the Bank he would not get it. It would be contrary to what has been the working system for a great many years. Unless the noble Lord has some particular reason for believing it is likely to happen now, it seems to me to be a great mistake to tie up in strict legal formulae a relationship which works perfectly well at present. I think the noble Lord, Lord O'Brien, will agree that when a difficult situation arises the governor and his colleagues in the Bank are generally only too anxious to consult the Treasury and to have its assistance and guidance. To put a legal liability on them to make a formal report seems to me to be a retrograde step.
Lord Taylor of Gryfe: Like other noble Lords who have spoken, we, too, are rather puzzled by the amendment which suggests that there is some limitation on the Chancellor of the Exchequer requesting a report from the Bank of England. In my knowledge and experience, I should say that this is quite unlikely. Indeed, as has been said before, the Bill is before us today because of the weaknesses of the Johnson Matthey case. As I recall, the Chancellor and Parliament requested a report from the Bank of England on Johnson Matthey, received it and debated it publicly.
Like others, I am rather surprised. I should have thought that if the Chancellor of the Exchequer was seeking an interim report, apart from the annual report, on something that was vitally important to the financial structure of the country and the City it would be a constitutional outrage if that were refused. Therefore, I do not see the necessity for incorporating this in statute.
Lord Beaverbrook: I, too, do not believe that there is any practical problem that these amendments are needed to solve. Clearly, the Chancellor of the Exchequer may well on occasion request from the Bank of England papers on particular issues under the Bill. If appropriate, these could be published. And the Bank of England can, and frequently does, publish reports on specific aspects of supervision as the need arises. I am not aware of any dissatisfaction as to the quality or quantity of such reports made under the 1979 Banking Act. That Act contains no provisions such as those proposed. I believe that the provisions would be entirely redundant—my right honourable friend the Chancellor requires no additional authority in this respect—and would serve to imply that the Bank of England's record in such matters is inadequate. I do not believe that to be the case, and on that basis I should have to resist this amendment if it were pressed.
Lord Bruce of Donington: This has been a very interesting debate. From it I gather that the Alliance, the Independents and the Conservative Party spokesman in the person of the noble Lord, Lord Boyd-Carpenter, think that all is sweetness and light between the government of the day—
Lord Boyd-Carpenter: Will the noble Lord allow me to intervene?
Lord Bruce of Donington: I have only just started. I shall give way in a minute. They think that all is sweetness and light between Her Majesty's Government and the Bank of England; that, consequently, these relationships are best kept on an informal level, to use the noble Lord's words, and that the two of them together can be relied upon to produce a result which is, generally speaking, in the public interest.
Lord Boyd-Carpenter: I wish to correct the noble Lord on one point. I was in no respect whatever speaking as a Conservative Party spokesman. I was simply contributing as a Member of your Lordships' House who had the experience of serving some six years in the Treasury.
Lord Bruce of Donington: I am most grateful to the noble Lord, for whom I have a profound respect as a former high officer of state and whose contributions on this subject are, I can assure him, most deeply valued by myself. I should not wish to have misrepresented his position here this afternoon in any way. He has been known, from time to time, to express a startling independence of view, often when least expected. Therefore, I cast no reflection at all upon the noble Lord.
The argument that the relationship between the Bank and government can best be left on an informal and friendly basis is not, of course, a new one. When the need for the Financial Services Act was first mooted a considerable volume of opinion said, "These things are best solved informally. The City ultimately can regulate itself. The club will keep its club membership as clean as it possibly can: why is it necessary to have these various Acts of Parliament?" However, as time passed, the necessity for the Financial Services Act became more obvious. And, after Johnson Matthey, the necessity for this Bill became obvious.
In due course, if I may predict to the noble Lord, Lord Young of Graffham, I am afraid that Lloyd's will soon be on his plate again. There is already a volume of opinion in the City advocating that Lloyd's, rather than being self-regulatory, should be brought within a more comprehensive regulatory scheme.
I am not surprised that the Alliance Benches on this occasion should also be in favour of a very cosy relationship and should regard the amendment that I have put down, or rather the consequences of its application, as a constitutional outrage. These arguments do not surprise me. Indeed, they help to lay down the lines of demarcation between the Alliance, on the one hand, and those for whom I have the honour to speak on these Benches.
I repeat that we are trying to help the Government. We shall not seek to press the amendment. The opinions expressed have been most revealing, and I hope that they will be taken note of very widely. In the meantime, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1, as amended, agreed to.
4 p.m.
Clause 2[The Board of Banking Supervision]:
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No.6:
Page 2, line 16, leave out ("jointly")
The noble Lord said: Clause 2(2)(b) which deals with the appointment of six independent members to the new Board of Banking Supervision reads:
"six independent members, that is to say, members appointed jointly by the Chancellor of the Exchequer and the Governor, being persons having no executive responsibility in the Bank".
The purpose of appointing the Board of Banking Supervision with a majority of six independent members is that those members shall act independently. In the course of the Second Reading debate, when the argument was advanced, the noble Lord, Lord Young of Graffham, said that all that was being done in this particular Bill was to follow the precedent set in the Financial Services Act. Indeed, Schedule 7 of that Act, where the qualifications of designated agency are set out, says at paragraph 1(2):
"The chairman and other members of the governing body must be persons appointed and liable to removal from office by the Secretary of State and the Governor of the Bank of England acting jointly".
That section was quoted by the noble Lord in support of his disagreement with the deletion of the word "jointly" in this subsection. The position is entirely different. In the Financial Services Act we were dealing with a designated agency of which the Bank of England was not a member. One was dealing in effect with a body from whom the governor of the Bank of England and the Secretary of State were completely aloof.
However, in the Banking Bill, the board itself consists and is stated at Clause 2(2) to consist of:
"three ex officio members, namely, the Governor of the Bank for the time being, who shall be the chairman of the Board, the Deputy Governor of the Bank for the time being and the executive director of the Bank for the time being responsible for the supervision of institutions authorised under this Act;"
So this board already has three officials of the Bank of England upon it. That means that if the word "jointly" is left in, the Bank which already has three ex officio members on the board of banking supervision, can exercise a veto over the Chancellor of the Exchequer's appointment of independent members. This does not appear to me nor I hope to others to be the correct state of affairs.
In human life, particularly in organisations of human individuals, there is very often a desire to produce a sense of conformity in the composition of boards of directors. As I see it, the function of the independent members is to advise the ex officio members. Indeed, that is in the Bill itself. Is it really right that those who are being advised should have a veto—because this is what "jointly" means—over names that are put forward by the Chancellor of the Exchequer? Is it right that the views of the Chancellor of the Exchequer as to who should be an independent member of this supervisory board should be subject to the agreement of those by whom the independent members are going to be advised? I think this is highly dangerous. Surely the function of the independent members is to be independent.
Those of us in commerce, industry—and indeed in government for that matter—know the dangers of having people around us who cocoon us with their agreement. They are very acceptable to us because they are known to agree with us. There must always be a temptation when there are selections for a board for those who are already on it, while of course not neglecting the ordinary professional human character qualifications, to prefer people, generally speaking (to use the loose term), with whom one gets on pretty well. I think there is a danger here. The function of the independent members, functioning independently, when the occasion arises is to be hair shirts; to be, if necessary, firm; if necessary, abrasive. These are not always characteristics which are admired by people who are accustomed to getting their own way, who are already in positions of great power and influence, as the three ex-officio members of the board of supervision will be.
I hope Committee will concur in the view that it is far better that the independent members should be appointed by the Chancellor of the Exchequer after consultation with the Government. The words "after consultation" mean in law what they say: that there is a responsibility on the Chancellor of the Exchequer to consult. But with an important function of this kind I would have thought it right, bearing in mind the ultimate power of Parliament, that although the governor of the Bank of England should be consulted, and if possible agreement should be arrived at with him, the veto should not lie with the Bank. The Chancellor of the Exchequer, being responsible to Parliament, ought after consultation to be required to make the appointment. I beg to move.
Lord O'Brien of Lothbury: Since I seem to be getting on my feet rather often, perhaps I ought to say at this point that although I am still associated with three banks in the City of London—and as everyone knows I was in the Bank of England for many years—I have consulted no one about this Bill. I have not the least idea whether the present governor of the bank of England would agree with anything I say in the House of Lords on it. I feel free to say what I think in view of my past experience, and I hope that what I say will be congenial to the present governor—but we shall have to see.
As to the amendment proposed by the noble Lord, Lord Bruce of Donington, and the amendments which follow it, as I read them, these amendments display a continuing distrust of the Bank of England. I cannot say I am surprised at that because members of the party on the Opposition Benches have traditionally had a distrust of the Bank of England, as indeed they would have of all central bankers, since central bankers in general are wedded to financial rectitude, probity and good sense. All too often, I am afraid, Left-wing governments lose their sense of direction, to say the least.
It may seem to be a very small point whether the Chancellor of the Exchequer appoints members of this board after consultation with the Bank rather than appointing them jointly with the governor. Nevertheless, I think the difference is important. I would not in any way want to undermine the strength and influence of the Bank in this area—not for the sake

1229
of the Bank but for the sake of the country at large. The Bank is a national asset and one which we should use to the best advantage. We certainly do not do that by undermining such authority as it has, without presuming to give it authority which it should never have.
I would prefer to see the Chancellor of the Exchequer and the governor jointly concerned in these appointments. If they are so concerned, I do not believe the appointments would be just a cosy arrangement between friends to make sure they get people on the supervisory board who are congenial and easily manageable. No sensible Chancellor would have anything to do with that. But I think it is important that the board should be there to advise and help the Bank, not to stick an oar in unnecessarily nor to make the system more difficult to work.
I do not believe that anybody who accepted an appointment to such a board would be anybody's poodle, neither the governor's nor the chancellor's. If they were in the majority on the board, I believe they would exercise that majority function responsibly and fairly for the good of the system. Therefore, I oppose this amendment.
Lord Bruce-Gardyne: I am not sure what attitude my noble friends will take to this amendment. I hope that they will recommend that the Committee resists it, very much along the lines advanced by the noble Lord, Lord O'Brien. Like my noble friend Lord Boyd-Carpenter, I served in a much more humble capacity in the Treasury. From that experience I find that this amendment, and perhaps even more so a number of others to which we shall come shortly, are calculated to undermine the authority of the Bank of England. I share the anxieties which the noble Lord, Lord O'Brien, expressed in that capacity.
However, in respect of this amendment I should like to make just one separate point. Having served for a brief period in the Treasury and having been involved in the relationship between the Treasury and the financial system during that period, frankly I am somewhat bemused by the apparent conviction of the noble Lord, Lord Bruce, that the Treasury is better equipped to choose exclusively the members of the supervisory board than is the Bank. I have to say that I should be inclined to take precisely the opposite view.
The Treasury has many skills and qualities but its understanding of the market-place is almost by definition at one remove compared with that of the Bank. I cannot believe that a more authoritative report on the supervisory board is likely to be achieved if the choice is left to the overriding whims of the Chancellor and the Treasury. It seems to me to be essential that the Bank should have at least an equal role in the selection.
Lord Taylor of Gryfe: I agree with the general view that has been expressed by the noble Lords, Lord O'Brien and Lord Bruce-Gardyne, because, as I said during the discussion on an earlier amendment, I feel that in the relationship between the Treasury and the Bank the balance is just about right. I do not propose to rehearse that argument.
1230
Perhaps I may say to the noble Lord, Lord Bruce of Donington—and I am anxious to be helpful to him on this matter—that recent experience would suggest that joint appointments are desirable. I refer to the case, which I raised in this Chamber, of the appointment of Mr. John Kay, the distinguished director of the Institute for Fiscal Studies, whose appointment was agreed by the Bank and the SIB as a member of that important body. I understand that it was not a joint appointment and that it was vetoed by the Treasury. I suggest that that was a case in which joint discussion and joint appointment would perhaps have avoided embarrassment.
Like the noble Lord, Lord Bruce-Gardyne, I feel that perhaps the central bank is in as good a position to consider the suitability of appointments to the supervisory board as is the Treasury, and consequently I hope that the noble Lord, Lord Bruce of Donington, will withdraw this amendment.
Lord Young of Graffham: The method of appointment and other provisions in respect of the independent members of the Board of Banking Supervision have been the subject of extensive debate in another place. The provisions of the Bill that is now before the Committee reflect that debate following changes introduced by the Government.
The provisions for the appointment of independent members strike the right balance in that they require appointments to be made by my right honourable friend the Chancellor of the Exchequer acting jointly with the governor of the Bank of England. It will be a joint exercise. Many members of the Committte must feel as I do that nothing can be gained by adopting the proposed amendment whereby appointments will be made first by the Chancellor following consultation with the Bank of England. For the convenience of the Committee perhaps I may say that I hope that we are dealing with Amendments Nos. 6, 7 and 8 in connection with this matter, since they are all grouped together.
Surely something would be lost if we removed the former concept of joint appointments, which is that embodied in the provisions of the Financial Services Act recently approved by this Chamber in relation to the appointments to the Securities and Investments Board. There is a need for balance in these matters and I believe that the Bill strikes the right balance. It guarantees an independent voice on the Board of Banking Supervision and at the same time recognises that in order to operate effectively the independent members must work closely with the Bank's supervisors, pooling their advice and experience at the highest level. That is the purpose of these provisions which I believe that the Bill properly reflects.
Lord Bruce of Donington: I am disappointed that the Minister has seen fit to reject the power that I proposed to give to the Chancellor of the Exchequer in this matter. It seemed to me to be a proper reflection of the position that ought to exist between any Chancellor of the Exchequer and any governor of the Bank of England. The amendment that I propose provides for consultation—cosy consultation or informal consultation if one likes. Nevertheless, one should bear in mind that these members are to be independent

1231
members, advising three ex officio members, and that in the final analysis it is the Government, with responsibility to Parliament, who ought to have the ultimate authority.
I was a little surprised to learn from the noble Lord, Lord Bruce-Gardyne, that he did not think much of the Treasury officials' understanding of the marketplace compared with that of officials in the Bank of England. I have the utmost admiration not only for the officials in the Bank of England but also for those in the Treasury, who, after all, are responsible to the Chancellor of the Exchequer. From what the noble Lord, Lord Bruce-Gardyne, has said, I gather that the present Chancellor of the Exchequer, who has the responsibility for the Treasury, does not understand the working of the market-place either.
4.15 p.m.
Lord O'Brien of Lothbury: Perhaps I may intervene here. I have the greatest admiration for our Civil Service, and none greater than for those civil servants at the head of the Treasury with whom I have worked for many years. They are most admirable people in all respects. However, the fact is that the Bank of England is in the market every day of its life. It is part of the market and therefore it comes to know the market much more intimately than could anybody in Whitehall; and my Treasury friends will be the first to acknowledge that.
Lord Bruce of Donington: In the course of my remarks so far I have not referred to the position taken up by the noble Lord, Lord O'Brien. If I may, I shall touch upon that as politely as I can in the course of the next few minutes. However, it is not necessary for the Treasury to be in the market-place in order to understand it. I have said before many times that experts should be on tap and never on top. This is an occasion on which the Treasury, which is responsible to Parliament, ought to be seen to be on top.
I repeat I am surprised to learn from the noble Lord, Lord Bruce-Gardyne, that the Chancellor of the Exchequer, because he is not in the day-to-day market-place, similarly does not understand it. I have long suspected that many of those who advocate the freedom of the market and who believe in market forces do not really understand them anyway.
Lord Young of Graffham: Forgive me for interrupting, but I think that the point being made is not that my right honourable friend the Chancellor of the Exchequer does not understand the market, which is far from being the case, but that because the Bank is in day-to-day contact with the people in the market it will have better knowledge of individual people who are at that time practising in the market.
Lord Bruce of Donington: That makes it all the more necessary for an independent mind to be engaged on this matter. The market-place, particularly in the City, as the noble Lord, Lord Boyd-Carpenter, has pointed out, is a very cosy kind of place. For the sake of Parliament and indeed the country it is wise that there should be an occasional dose of astringency in the business rather than allowing everything to continue
1232
under the old pals act. I have endeavoured to keep party politics out of the debate. The noble Lord, Lord O'Brien, was frank. One can understand what the Bank of England as then constituted—I shall not pass any comment on as now constituted—felt about the policies of successive Labour governments.
Lord Boyd-Carpenter: Hear, hear!
Lord Bruce of Donington: That proves the point that I have been trying to make. When the chips are down, and the noble Lord, Lord O'Brien was kind enough endorse the point, the Bank of England is in fact the Tory party at the place of work.
Lord O'Brien of Lothbury: The point I wanted to make is that the central banker has a professional expertise and concern which he shares with other central bankers throughout the world. He is constantly meeting other central bankers. They always wail about the inadequacy of government and their straying from the path of rectitide. It is part of life. A central banker concerned with correct financial policies, as he sees them, is bound to be unhappy about politicians who stray from them. In the past, Labour may have strayed more often than the Conservatives, but both have strayed.
I always remember that one of Montagu Norman's greatest friends was Philip Snowden. He did not think that Philip Snowden strayed. They were on the same path. It has nothing to do with politics; it has to do with the impact of politics on people who are concerned with professional rectitude.
Lord Bruce of Donington: I am most grateful for the noble Lord's intervention. It reminds me of the observations made by John Kenneth Galbraith when he was American Ambassador to India. In a missive he sent to the then President in connection with domestic affairs he claimed that banking was a profession from which it was difficult to recover.
The purpose of the amendment is to assert, once again, the executive's ultimate responsibility. I understand that those on the Benches opposite find that inconvenient. I am sure that a number of governors of the Bank of England find the amendment repugnant; nevertheless, on the principle, and because we all profess adherence to parliamentary democracy, with governments responsible to Parliament and Parliament exercising ultimate authority, I propose—I am sorry that I shall be unable to attract the members of the Alliance to this concept once again—to divide the Committee on this issue.
4.23 p.m.
On Question, Whether the said amendment (No.6) shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 130.

DIVISION No.2

CONTENTS

Beaumont of Whitley, L

Briginshaw, L.

Beswick, L.

Brockway, L.

Blyton, L.

Bruce of Donington, L

Bottomley, L.

Campbell of Eskan L

1233

Carmichael of Kelvingrove, L.

Molloy, L.

Cledwyn of Penrhos, L.

Morton of Shuna, L.

David, B.

Mulley, L.

Davies of Penrhys, L.

Nicol, B.

Dean of Beswick, L.

Northfield, L.

Denington, B.

Oram, L.

Elwyn-Jones, L.

Phillips, B.

Ennals, L.

Pitt of Hampstead, L.

Ewart-Biggs, B.

Ponsonby of Shulbrede, L.[Teller.]

Falkender, B.

Fisher of Rednal, B.

Rea, L.

Fletcher, L.

Ross of Marnock, L.

Gallacher, L.

Russell, E.

Galpern, L.

Sefton of Garston, L.

Graham of Edmonton, L.[Teller.]

Serota, B.

Shackleton, L.

Gregson, L.

Shepherd, L.

Hatch of Lusby, L.

Silkin of Dulwich, L.

Heycock, L.

Stallard, L.

Jeger, B.

Stewart of Fulham, L.

Jenkins of Putney, L.

Strabolgi, L.

John-Mackie, L.

Taylor of Blackburn, L.

Kirkhill, L.

Taylor of Mansfield, L.

Leatherland, L.

Underhill, L.

Listowel, E.

Wallace of Coslany, L.

Llewelyn-Davies of Hastoe, L.

Williams of Elvel, L.

Lovell-Davis, L.

Wilson of Rievaulx, L.

Mischon, L.

Ypres, E.

NOT-CONTENTS

Alexander of Tunis, E.

Gray of Contin, L.

Allerton, L.

Greenway, L.

Amherst, E.

Grey, E.

Atholl, D.

Gridley, L.

Attlee, E.

Haig, E.

Auckland, L.

Hailsham of Saint

Aylestone, L.

Marylebone, L.

Bancroft. L.

Hampton, L.

Beaverbrook, L.

Harris of Greenwich, L.

Belhaven and Stenton, L.

Harvington, L.

Belstead, L.

Hemphill, L.

Bessborough, E.

Henderson of Brompton, L.

Blyth, L.

Hesketh, L.

Bonham-Carter, L.

Hirshfield, L.

Borthwick, L.

Holderness, L.

Boyd-Carpenter, L.

Home of the Hirsel, L.

Brabazon of Tara, L.

Hood, V.

Brougham and Vaux, L.

Hooper, B.

Bruce-Gardyne, L.

Hylton-Foster, B.

Butterworth, L.

Ironside, L.

Caithness, E.

Killearn, L.

Campbell ofCroy, L.

Kinloss, Ly.

Carnock, L.

Kitchener, E.

Coleraine, L.

Lane-Fox, B.

Constantine of Stanmore, L.

Layton, L.

Cottesloe, L.

Limerick, E.

Cowley, E.

Long, V.

Craigavon, V.

Lothian, M.

Davidson, V.[Teller.]

Luke, L.

De Freyne, L.

Lyell, L.

De La Warr, E.

McAlpine of West Green, L.

Deeds, L.

McNair, L.

Denham, L.[Teller.]

Marley, L.

Denning, L.

Merrivale, L.

Diamond, L.

Molson, L.

Donaldson of Kingsbridge, L.

Morris, L.

Donegall, M.

Mowbray and Stourton, L.

Drumalbyn, L.

Munster, E.

Dundee, E.

Nugent of Guildford, L.

Ebbisham, L.

O'Brien of Lothbury, L.

Eccles, V.

Pender, L.

Edmund-Davies, L.

Peyton of Yeovil, L.

Elliot of Harwood, B.

Pike, B.

Elliott of Morpeth, L.

Portland, D.

Elton, L.

Rankeillour, L.

Fanshawe of Richmond, L.

Reay, L.

Fraser of Kilmorack, L.

Reigate, L.

Gainford, L.

Ridley, V.

Gibson-Watt, L.

Ritchie of Dundee, L.

Gladwyn, L.

Rochdale, V.

Gormanston, V.

Romney, E.

1234

Saltoun of Abernethy, Ly.

Terrington, L.

Sanderson of Bowden, L.

Teviot, L.

Sandford, L.

Teynham, L.

Seear, B.

Thorneycroft, L.

Selborne, E.

Tordoff, L.

Shannon, E.

Torrington, V.

Skelmersdale, L.

Tranmire, L.

Somers, L.

Vaux of Harrowden, L.

Stedman, B.

Waldegrave, E.

Strange, B.

Ward of Witley, V.

Strathcarron, L.

Whaddon, L.

Strathcona and Mount Royal,

Whitelaw, V.

L.

Wigoder, L.

Strathspey, L.

Wolfson, L.

Taylor of Gryfe, L.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.32 p.m.
[Amendments Nos. 7 and 8 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 9:
Page 2, line 17, at end insert ("or any institution authorised under this Act.").
The noble Lord said: I beg to move Amendment No. 9, standing in the names of my noble friend Lord Bruce of Donington, myself, and my noble friend Lord Morton, in the words on the Marshalled List. It may also be for the convenience of the Committee if I speak also to Amendment No.20.
As the noble Lord, Lord Young of Graffham, said, we are here dealing with the balance on the board and the balance of the board's responsibilities vis-à-vis the ex-officio members. The amendments that we have tabled are in the nature of probing amendments to elicit from the Government, if that is possible, what view they take about executive members of banks serving on the Board of Banking Supervision. We are assured that the members will be truly independent. They are described as being independent members in the Bill. At present in what one would call the shadow board there is a mixture of those who are in some cases chairmen of banks, in one case a partner in a senior accounting firm, and in one case the deputy chairman of British Telecom. There is a mix between those who are involved in banking and those who are involved in banking only in a wholly non-executive role. It is always difficult to discern whether the role of a chairman of a clearing bank is an executive or non-executive role; it varies between banks. However, for the moment I shall call it a non-executive role.
I believe that many Members of the Committee would be concerned if all the independent members of the Board of Banking Supervision were executives in an authorised institution. Some Members of the Committee might be concerned if none of the independent members of the Board of Banking Supervision were executive members of an authorised institution. There is presumably some middle ground which would preserve the independence of the independent members so that the advice that the ex-officio members will be receiving will be properly balanced while keeping the sense of the practitioner relationship—the people who are actually in touch with the day-to-day goings-on of banks.
I am quite happy to accept it if the noble Lord says that my amendment is too extreme. Nevertheless, I hope very much that he will give us the benefit of his

1235
views and those of the Government as to where the Government think that the balance should be struck in the group of independent members on the Board of Banking Supervision between those who are not involved on a day-to-day basis with executive responsibilities in banking, and those who are. I beg to move.
Lord Young of Graffham: I appreciate the purpose of these amendments and the need to avoid conflicts of interest arising on the board. But the board is intended to be an expert arm of supervision and in order to play that role it is vital that the board includes—among others—experienced commercial bankers who can bring first-hand knowledge of prevailing banking practices into the supervisors' decision-making process.
There is no reason why this should produce undesirable conflicts of interest. The standard, accepted practice in such circumstances is for a member of a board to declare an interest and to stand aside from any decision of the board that bears directly on that interest. That is the practice that will be followed on the Board of Banking Supervision. Indeed, it would put us under grave difficulty if we were to depart from that standard. All Members of the Committee will agree that it would be a considerable loss to the quality of supervision if a blanket prohibition on bankers playing a role on the board were to be introduced, or that it should be confined to those who have recently retired from playing an active role as a banker. In those circumstances, with all the safety practices which I hope the Board of Banking Supervision will follow to ensure that they stand aside if there is any question of conflict of interest, I invite the noble Lord to withdraw his amendment.
Lord Williams of Elvel: I am grateful to the noble Lord. He responded to my half invitation to say that my amendment was too extreme. I believe that was the thrust of what he had to say. I admitted that the amendment was perhaps designed to elicit some further response than simply that it would not work.
Perhaps I may elaborate for a moment. Practising bankers are not necessarily executive members of a bank. Leaving aside the question of whether a chairman of a clearing bank is executive or nonexecutive—as I say, that is sometimes difficult to discern—on the present shadow board there is the chairman of the Royal Trust Company of Canada, who is a director of the TSB, and indeed a former chief executive of Arbuthnot Latham, who is certainly a banker with enormous experience in banking; but unless I am mistaken I do not think that he has an executive post inside any of those banks that I have mentioned. There is the deputy chairman of British Telecom, who happens to be a director of Barclays Bank as well. I do not think, however, that as a director of Barclays Bank he is an executive of that bank.
There is the chairman of M&G, who is also a director of Kleinworts, but I believe that he is, so far as I know, an executive director of Kleinworts. The noble Earl, Lord Limerick, is correcting me—he is not an executive director of Kleinworts. He is a banker but not an executive director of the bank. There is the
1236
senior deputy chairman of Standard Chartered Bank, who is about to resign from the shadow Board of Banking Supervision once he takes over from the noble Lord, Lord Barber, as chairman of that bank. There is therefore a mix on the board at the moment between those who have a day-to-day involvement in an executive capacity and those who have not necessarily a day-to-day involvement but an involvement which allows them to keep in touch with the market and to meet their colleagues on the boards of banks.
I very much hope that the noble Lord can say a little more about the balance that he would expect to be struck, not just to avoid conflicts of interests but to make sure that the outside world has an impact on the board and on the ex-officio members. I draw the analogy with the Securities and Investments Board. It was written into the Financial Services Act that the public should be represented on that board. I am not saying that the public necessarily need to be represented on the Board of Banking Supervision. Nevertheless, I think that the outside world has to be represented; it has to be there. The organisation should not simply be a group of executive bankers, because they will certainly have an interest collectively in ensuring that the Bank of England does things which are to their own profit. I am afraid that is the way of the world.
Perhaps I may ask the Secretary of State to give a little more guidance on how the Government see the balance being struck between non-executive directors of banks, executive directors of banks and people who are neither executive directors of banks nor non-executive directors.
Lord Young of Graffham: I think it is very difficult, if not dangerous, to be drawn in at this stage in settling policy for decades ahead, or for as long as these boards will continue to exist. What is important is that this is a board that has a very real and vital role to perform. In order to perform a supervisory role it must have at its disposal sufficient knowledge of current banking practice. If we accepted the amendment in any way we should first of all get into definitional difficulties about what is the "executive" or "non-executive" role, which can cause a whole raft of problems for the future. Secondly, we would be excluding from the board the very people who are most aware of the latest practices and the direction in which the market is going. They are also most aware of situations which require changes, perhaps in supervision or changes in order to ensure that this board has teeth; that it actually performs properly. It is a way in which the world is changing; it is a fast-changing world, as we have all come to realise.
I wish that I could go some way down the path which the noble Lord asks me to go in talking about the balance. That really has to depend upon the circumstances at the time, as they arise. I could not accept the assertion of the noble Lord, Lord Williams of Elvel, that bankers are totally interested in self-interest, or in the profit which they themselves, or institutions, may make. I suspect that the interest of all who are serving on this board will be to see that the sector itself, the whole banking institution of the City of London will actually prosper and will perform their

1237
proper role. In those circumtances we say simply this: that the members on the board will be those which it is thought at the time to be the most suitable members. Above all else, we will ensure that there will be no conflict of interest on individual decisions that the board itself will take.
Lord Williams of Elvel: I am grateful to the noble Lord, and I recognise the difficulty which he is in. He cannot set policy for the next six months. Therefore, we shall have to wait and see what appointments are made to the board. Nevertheless, I should draw his attention again to the problem that I have outlined. I should also draw his attention to the fact that, so far as I am aware, these arrangements are not only different to the Securities and Investments Board, but also to the Building Societies Commission which does not have building societies executives forming the whole of the independent sector of the Building Societies Commission. As much as the Government have tried to introduce this as the third part of a financial regulatory system—if I may put it that way—we have a system in the Bill, the crucial system of the Bill, which is the Board of Banking Supervision. That is different in nature to the others. That is the point upon which we have to reflect. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.45 p.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No.10:
Page 2, line 19, after ("fit") insert ("and in such a manner as they think fit")
The noble Lord said: In speaking to this amendment, I shall, with the permission of the Committee, also speak to Amendment No.11. After listening to the tenor of the debate that has so far taken place, I am quite sure that the Goverment will reply that these particular amendments are completely unnecessary.
All that the first amendment seeks to do is to give the independent members not only the right to give such advice as they think fit, but also in such a manner as they think fit. For example, some members may be constrained to put their objections in writing, which is something we think they ought to be able to do.
The next amendment to which I am speaking states:
"The independent members may at their sole discretion communicate the advice they have given to ex officio members to the Treasury at any time and in whatever manner they think fit."
I am quite sure the noble Lords, Lord O'Brien, Lord Young of Graffham, and possibly also Lord Bruce-Gardyne and others take the view that this situation will never arise, and that in point of fact, there is most unlikely to be disagreement between the independent members and the ex-officio members. As Members of the Committee will recall, this is a possibility to which I gave some support earlier. In short, any resistance to these amendments is based on the supposition that the relationship between the independent members and the ex-officio members will be supportive rather than critical. However, that is in disagreement with the observations which fell from the lips of the noble Lord, Lord Young of Graffham, when he spoke to the previous amendments.
The noble Lord said that under the Bill the independent members had teeth. I may be a little old-fashioned, but I had always understood that the function of teeth was that when the occasion arose, they were able to bite. Therefore, if, according to the noble Lord under the Bill the independent members should have teeth, then if they consider it necessary, they must be able to bite. Should they decide to bite for whatever reason, these amendments give them the facility for doing so. In particular, Amendment No.11 gives them the right to communicate the advice that they have given to ex-officio members to the Treasury at any time.
Quite clearly this provision envisages a disagreement between the independent members and the ex-officio members. This may be repugnant to those who have red-tinted or rose-tinted spectacles and who envisage a set-up of eternal harmony and amity on this board, the independent members of which are supposed to have teeth. It may cause a revolution in their minds to imagine that such an occasion could ever happen.
The Bill itself is devised to correct a situation which, two and a half years ago, nobody thought would happen. Therefore, how is it possible to be certain? It will be familiar to the noble Lord, to whom I made the opening remarks at Committee stage, that we seek to place the emphasis where we think the emphasis should lie. In this case, independence is quite obviously a virtue. But, so-called independence where none exists at all can be a cloak, a mere pretence that something really independent is being done and, in the words of the noble Lord, that some teeth have been given to the independent members. I do not think that we ought to mislead the country on this point. If differences of opinion are never envisaged at all, why have a board? If on occasions the board, on the basis of its experience and expertise, believes that the e-officios are wrong, it ought to be free to express itself independently.
In conclusion, I am not seeking to anticipate an antagonism that I hope will never exist. I and my colleagues sincerely hope that the supervisory board will work in amity. We do not seek to provoke trouble of any kind. However, sitting where we sit, it is our responsibility to make sure that the word "independent" has a value. The word and the status implied by the term ought to have value. Therefore, in cases which we do not foresee but which might arise, the board ought to be permitted, in the words of the noble Lord, Lord Young of Grafiham, to bite. I beg to move.
Lord O'Brien of Lothbury: As the noble Lord, Lord Bruce of Donington, has referred to Amendment No.11, I should like to comment on that amendment. The noble Lord spoke of the need for the independent members of the board being able to bite. It seems to me that if they have access to the Chancellor of the Exchequer they are able to bite. Naturally, one accepts that the occasions on which they wish to bite will be rare, but the fact that they are able to bite will make it doubly necessary for the Bank to be mindful of their views, as the Bank would in any case. The Bank's influence and knowledge, being concerned on an everyday basis with the question of banking control,

1239
may outweigh that of the six independent members. It is all the more important that those members should be able to hold their own and not, as I said on an earlier occasion, be members of the boilermakers union brought in to represent the public. They must be able to stand their ground in relation to the high expertise of the Bank of England.
With their access to the Chancellor, they can stand their ground and see that their views are taken into account. I believe that the Bank will endeavour to operate the supervision in a sensible and intelligent manner. Therefore, the ex-officio members will rarely fall out with the six independent members. I am very much against the latter having access to the Treasury if they disagree with the bank. They may have access to the Chancellor of the Exchequer by all means, but access to the Treasury means downgrading the position of the Bank in this area, and I believe that that would be wrong.
Lord Tordoff: I wonder whether the noble Lord, Lord Bruce of Donington, can assist me? It seems to us on these Benches that Clause 2(5) covers the principle of what he is saying. I accept the distinction made by the noble Lord, Lord O'Brien of Lothbury, in relation to the Chancellor on the one hand and the Treasury on the other hand. However, the principle behind the remarks of the noble Lord, Lord Bruce of Donington, is surely covered by subsection (5), save only with reference to Amendment No.15.
Lord Williams of Elvel: I should like to reply to the noble Lord, Lord Tordoff, on behalf of my noble friend Lord Bruce of Donington, and also make one or two comments concerning the intervention of the noble Lord, Lord O'Brien.
The point raised by the noble Lord, Lord Tordoff, is true: namely, that under Clause 2(5) independent members can have access to the Chancellor of the Exchequer, once the ex-officio members have given written notice to the Chancellor of the Exchequer in any case in which it is decided that the advice of the independent members shall not be followed. That is interpreted by the noble Lord, Lord O'Brien, as meaning access to the Chancellor of the Exchequer, and I accept what he says about the Chancellor of the Exchequer rather than the Treasury. I think that it is a perfectly fair comment as regards our amendment.
Nevertheless, this formulation—which is a revised formulation arising from debates in another place—is not without considerable difficulty. It is presumably not intended that independent members should meet separately in order to draw up a collective statement of their advice to ex-officio members. I hope that the noble Lord, Lord O'Brien, will agree that the board will work better if it works together, rather than one group drawing up something which is called "advice" and communicating that formally to the ex-officio members.
In practice there will be a variety of views on any given topic. Members will be sitting around the table, views will be expressed, and no doubt modified, in the light of the discussion which takes place. It is perfectly possible to imagine that the independent members will
1240
not all be of one mind: they may differ in opinion one from another.
Further, it is not entirely clear exactly how one notes the process of decision. When dealing with matters of general policy it is sometimes difficult to say: "Now we decide this". The case is even more difficult where the ex-officio members of the board must say: "Now we decide this; the advice of the independent members is that; and we therefore note a particular situation where a decision has been taken contrary to the advice of the independent members", and the Act (as it will then be) starts to bite. That formulation is difficult and, though I am sure that the Governor, his colleagues and the chosen independent members will be able to handle the matter, I should not like Members of the Committee to think that that will be particularly easy.
Our view is that the independent members, at their own discretion (not if the ex-officio members decide that they will write to the Chancellor saying that they disagree with the advice of the independent members) should have access to the Chancellor. They should be able to say: "We have discussed the matter fully in the board, and, although the Governor felt that he was taking our advice, we must point out to the Chancellor that we do not think the Governor was taking our advice". That situation is not one which is provided for in the Bill as it stands, and that is the purpose of the amendment.
Lord Bruce-Gardyne: If the noble Lord, Lord Williams, accepts the point made by the noble Lord, Lord O'Brien, concerning the desirability of the access being to the Chancellor rather than to the Treasury at official level, I am not clear why his name is appended to the amendment, because Amendment No.11 says the opposite.
Lord Williams of Elvel: When tabling amendments, Members do not necessarily stick to every conceivable word in Committee. We are allowed to change our minds in the light of discussion.
5 p.m.
Lord Bruce-Gardyne: That is absolutely right and proper, and I accept entirely what the noble Lord has said by way of explanation. I thought that the substantive points made by the noble Lord, as regards the complexities of defining precisely the circumstances of divided opinions within the supervisory board and between the independent and ex-officio members, were valid points. However, I submit that they substantially call into question the whole substance of subsection (5). I have substantial reservations about subsection (5) as it is now drafted.
In introducing the two amendments, the noble Lord, Lord Bruce of Donington, said that he expected to be told that they were unnecessary. I do not think that they are simply unnecessary; I regard them as profoundly offensive. However, I am inclined to feel that the wording of Clause 2(5) in the Bill as it stands, and as altered by the Government following the debates in another place, is somewhat offensive in its approach to the relationship between the Bank and the Treasury. I would remind the Committee that originally subsection (5) ended with the words that the

1241
advice of the independent members should not be followed. It is only in the Bill as before the Committee today that the phrase,
"and the independent members shall be entitled to place before the Chancellor the reasons for their advice",
has been added.
I find this a kind of gratuitously offensive double banking. I think we need to watch carefully the evolution of the relationship between the Treasury and the Bank in recent years. I suppose it has always been a relationship of constructive tension—or tension at any rate: perhaps it was not always overwhelmingly constructive in the days when I was involved in these matters. But since then I suggest that there has been a substantial shift of assertiveness from the Bank towards the Treasury, no doubt as a consequence of the Johnson Matthey affair, to which the noble Lord, Lord Bruce, referred and which of course is bound to be substantially at the back of our considerations throughout the perusal of this Bill.
It is important that the Government should beware of the vital importance to the Treasury and the Government that the authority of the Bank, as the overriding supervisory control within the City, is not undermined and diminished. I am not talking about the noble Lord's Amendment No.11, which, as I say, I would regard as profoundly offensive to the Bank and to the authority of the Bank, but I have to say that in my view even subsection (5), as it stands in the Bill after amendment following debates in another place, is somewhat gratuitously offensive to the authority of the Bank.
The Government should beware of doing anything which further undermines the authority of the Bank if they want the Bank to perform the essential supervisory role it has to perform, because for the reasons we discussed on Amendment No.5 I do not believe that the Treasury is qualified to perform that role in the market place. We need to look carefully at the maintenance of the authority of the Bank and do nothing which further diminishes that authority.
Lord Tordoff: Is not the noble Lord, Lord Bruce-Gardyne, supposing that the independent members are in fact Treasury moles rather than independent members? Is that what he is saying?
Lord Young of Graffham: I think I should at the outset remind the Committee that my remarks about the Board of Banking Supervision having teeth referred to the whole board and not to just certain members. In fact I hope they will all have teeth, and I hope they will all use them. We have before us today two amendments, and they are rather different. Amendment No.10, I suspect, goes without saying. The board is empowered by paragraph 4 of Schedule 1 to determine its own proceedings. I feel about this that the words already include giving advice "in such manner as they think fit", and I do not think that we should go much further, but I shall listen to what everybody has to say.
Amendment No.11 is altogether different. I hope—and I think we all hope—and expect that the ex-officio and the independent members of the board will work together in a constructive manner. I am sure that that will be the case. The experience of the shadow
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board which has been set up in anticipation of this legislation supports that view. But it is right that the Bill should provide for difficult cases, disputes or differences, which turn out to be irreconcilable. That is the purpose of subsection (5) of this clause. I heard what my noble friend Lord Bruce-Gardyne had to say, but we are not discussing the clause itself but a proposed amendment to the clause. However, I listened with great care to what he said, and I do take note of his words.
Subsection (5) provides that where the advice of independent members is not to be followed, then the ex-officio members must notify the Chancellor of the fact, and in such cases the independent members are given the explicit right to approach the Chancellor to explain the reasons for that advice. These are adequate safeguards. The expectation must be that in the majority of cases the issues will be resolved within the board itself, and only occasionally will it be necessary for issues to be referred to the Chancellor.
This is a very powerful weapon indeed. The fact that the members can go directly over the head of the Governor of the Bank of England to the Chancellor of the Exchequer seems to me to be a powerful weapon. I do not think that it adds to it, or does anything else, to have the right to speak to nameless officials within the Treasury.
That seems to confuse the whole position, because the amendment seems to assume that the independent members will be communicating with the Treasury on a regular or frequent basis. There is nothing in this Bill to prevent such communication, but surely it is not the intention, nor is it necessary or even desirable, that the Bank of England and not the Treasury should be responsible for day-to-day supervision under the Bill. I feel strongly that this particular amendment is one that we should reject.
Lord Bruce of Donington: This has been a most interesting debate on these two amendments. I am bound to accept the view that subsection (5) in all effective circumstances gives the independent members an entitlement to place before the Chancellor the reasons for their advice. Provided, therefore, that the ex-officio members give the written notice where it is decided that the advice of the independent members shall not be followed, then the independent members have that right.
Once again the course of the debate, and particularly the contribution of the noble Lord, Lord Bruce-Gardyne is a little indicative of a mood that seems to be governed by the almost complete veneration to which the Bank of England is held to be entitled. I took the words of the noble Lord down: "the Government should not offend the Bank". Those were his words. He can see them in tomorrow's Hansard. Why not, if it is necessary?
The Bank is a corporate institution. If every criticism of the Bank is to be rejected as an offence, or as being offensive to the Bank, then parliamentary proceedings mean nothing. I tend to regard as amiable those people who, by and large, tend to agree with me. This is a human characteristic which I think we all have in common. But I do not necessarily take offence because somebody disagrees with me, or because somebody offers criticism.

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Even criticism is not offered either by the subsection to which the noble Lord referred, or indeed by the amendment. Is the Bank composed of super-sensitive people who take any criticism as a mortal blow to their dignity? If one regards the amendment as offensive—or if, as the noble Lord said, even subsection (5) itself is regarded as in some way insulting or offensive—to the Bank, then all parliamentary proceedings in your Lordships' House and in another place are to some degree offensive. There ought to be no offensiveness in honest and straightforward argument and expression of view. Unless these matters are expressed in personal terms, they should give no cause for offence. They are a legitimate expression of views which in a democracy very frequently differ. The Bank of England, no more than anybody else, should be entitled to be immune from criticism, express or implied.
However, I have taken note of the noble Lord's observations about the Treasury in Amendment No.11. Perhaps at Report stage, if we are so minded, and after mature consideration of the debate, we may introduce a similar amendment. I am not saying that we shall, but we could remedy the point made by the noble Lord, Lord Bruce-Gardyne, by putting in "the Chancellor of the Exchequer". That might be more in keeping. I trust that the noble Lord will not thereupon turn round and say that we are being offensive to the Chancellor of the Exchequer.
In the light of the debate and having sensed the feeling in the Committee, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.11 not moved.]
Lord-Williams of Elvel Lord-Williams of Elvel moved Amendment No.12:
Page 2, line 25, leave out ("regular") and insert ("monthly").
The noble Lord said: It may be for the convenience of the Committee if I also speak to Amendments Nos. 13, 14, 15 and 17. The amendments deal with Clause 2(4) which lays on the Bank a responsibility to make reports to the board on matters which are relevant and to provide the board with such information as it needs. I paraphrase that subsection because there are some points in it, to which the amendments are addressed, which I think need certain clarification. It is clearly important that the board be properly briefed by the Bank on matters and it is clearly important that matters should not be irrelevant. There is no point in briefing the board on irrelevant matters.
Nevertheless, I have some problems with the wording of the subsection as it stands. My first question is what is meant in this context by the word "regular"? I have inserted 'monthly" in Amendment No.12, but it could be "quarterly" or any other period. I certainly want to know what "regular" means? Is it on a regular basis or as events occur which happen to occur regularly? Will it be a quarterly piece of information or a weeky bulletin? How will this all happen? I shall return to this if I can, but if it is to be left to the Bank then I cannot see why it is on the face of the Bill.
The next question concerns the expression,
"which the Bank considers relevant".
In other words, the criteria of deciding whether matters are relevant or not to the board rests with the Bank. It is the Bank which decides whether a matter is
"relevant to the discharge by the independent members of their duty under subsection (3) above".
Finally, there is a further qualification on the information that the board may receive; that is the limitation of reasonable requirement. Clearly, it is not to require information which is unreasonable. But I should prefer to see a phrase such as "entitled to" in place of "reasonably require".
These are not matters of world-shaking importance. But, clearly, if we are to have something on the face of the Bill, it is important, first, that it should be clear, and, secondly, that the Committee should fully understand what it is intended to mean. I am bound to say that I have some difficulty in understanding exactly what the responsibility of the Bank is in subsection (4) in respect of the board and the information to be communicated to it. It is so hedged around that either it means everything or it means nothing.
The amendments to which I am speaking would at least make the matter precise. They may make it undesirably precise in the Government's view. I think that they would make the legislation comprehensible as well as precise. If the Government decide that the Bill should be left wholly imprecise, then there is a reasonable formulation which says that the Bank shall keep the board more or less informed about matters it is discussing. These are very general words, but presumably the Bank would do that anyway. I should be grateful for the noble Lord's comments. I beg to move.
5.15 p.m.
Lord Harmar-Nicholls: The noble Lord said that his amendment made the wording more precise. I do not believe that is a proper description of what the amendment would do. There would be rigidity; every month, this would have to be done. That rigidity would create a lot of unnecessary work. Taking all the amendments together, we are very near the point to which the noble Lord, Lord Bruce of Donington, objected on the last amendment—the point where, particularly if one felt in a liverish mood, it could be deemed an unnecessary criticism of the Bank to the extent perhaps of being marginally offensive. At the moment, as the words stand, "regular intervals" mean having to be kept informed when there was something to be informed about.
Lord Tordoff: May I—
Lord Harmar-Nicholls: May I just finish this point? To say that you do not trust the Bank to interpret "regular" to mean that, and to tie it down to "monthly", is a rigidity that stretches behind the point.
Lord Tordoff: With respect to the noble Lord, Lord Harmar-Nicholls, "regular" is restrictive. "Regular" means at a regular frequency. The Bill does not say what that frequency shall be, and the noble Lord, Lord

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Williams of Elvel, is specifying that the frequency shall be monthly. To put in the word "regular" means that there has to be a report at regular intervals which means a rolling programme.
Lord Harmar-Nicholls: I think the noble Lord and I agree. It is in the judgment of the Bank to interpret the word "regular", whereas the amendment says "monthly", tying it down.
Lord Williams of Elvel: Does the noble Lord, Lord Harmar-Nicholls, not recognise that the rigidity he is talking about is there whether one uses the word "regular" or "monthly"?
Lord Harmar-Nicholls: I am suggesting that the words that the noble Lord has in his amendment make the Bill offensively rigid. As it stands, it recognises the responsibility of the people who have to decide the regularity of reports. A bank is no different to running one's own business. Where the board of any business which meets at irregular intervals says that it wants a weekly or a monthly report and that this shall not be at the discretion of the executive who has to give it, that can give the impression that you do not have a lot of confidence in your executives. It can imply that you do not think they can decide that sort of thing. I do not know what my noble friend will do.
While I had a little sympathy with the noble Lord, Lord Bruce of Donington, when he objected to this offensive stuff, this is getting near to a point where, if I was in the executive, I would begin to wonder whether I had the full confidence of a board which wanted to tie me down as rigidly on giving details as these amendments seem to do.
Lord Young of Graffham: It is a surprising world in which we live. I occasionally hear complaints about how people take offence at programmes on television or the radio or in connection with other matters, but I little thought the day would come when the wording of the Banking Bill would turn out to be quite so offensive. It just goes to show!
The Bill requires the Bank of England to provide the board with regular reports on matters relevant to its functions. "Regular" is the key point. Perhaps it would be as well to look into the present practice of the shadow board, which meets monthly. Since this is in line with the pattern of its meetings, it gets a monthly briefing; but in addition ad hoc briefings are received on matters of special interest should the occasion arise.
We are actually putting in additional rigidities, and as a Minister who has some responsibility for deregulation I should hate to introduce unwittingly some new regulations to specify whether the report should be weekly, monthly or whatever. I think it is a slightly unnecessary form of bureaucracy. The word "regular" really means that it should be at periodic intervals but that those intervals could vary as and when the demands of the market might dictate.
Lord Tordoff: With respect to the Minister, surely "regularly" cannot mean that. "Regularly" means regularly, and what the noble Lord is describing is irregularly, or as and when required. If the Bill said
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that there shall be recourse to these reports as and when required but not less than quarterly, or something like that, we might have some common ground. But it says "regularly", and once you have started you have to repeat it at those kinds of intervals.
Lord Harmar-Nicholls: I suppose one can put what interpretation one likes on the word "regular", but the point of my intervention is that you are letting the Bank itself decide the necessity and to decide what is "regular". I think that is right. If you have confidence in it to do the job you have given it to do, it ought to be in a position to decide just that.
Lord Tordoff: I am not disagreeing with the noble Lord, Lord Harmar-Nicholls. I am saying that the Bill at the moment says "regularly", and that means at regular intervals and not as and when people feel like it.
Lord Young of Graffham: I am sorry, but what I said a moment or two ago is simply this. The Bill requires the Bank of England to provide the board with regular reports on matters relevant to its function. There may well be times of particular difficulty when the regularity of that report might have to be increased to weekly, or even daily. Who can tell? Merely to provide for "not less than quarterly" does not take us any further. The important point is that there should not be an occasional report. It is seen clearly in the Bill that they should be at regular intervals—but those intervals can vary if the need should arise to make them more frequent. I cannot imagine the need would arise to make them less frequent, but I cannot tell what circumstances may dictate. Also, when one considers that the independent members of the board are empowered to require any further information they may need, over and above the regular reports from the Bank of England, there is that additional safeguard.
On the second amendment, I believe there is a similar case for the retention of the provision stating that the reports to be made by the Bank are those that it considers relevant to the functions of the independent members. What other test could there be for such reports? Even if the proposed words were removed it must still in practice be the Bank's judgment of "relevance" which determines what reports are made. Once again, if the independent members do not share that judgment the safeguard is provided by their power to call for further information.
The third amendment would remove the word "reasonably" from the provision. It states that the independent members may require further information. I take it the noble Lord does not intend that the members should make unreasonable requests, and in that case I see no real purpose to the amendment. The point of the present drafting is perhaps more presentational than substantial because no attempt to exercise these rights in an unreasonable way could or would be enforced by the courts. But on balance it seems better to retain the words. However, I leave that to the noble Lord.
Lord Williams of Elvel: I am most grateful to the Secretary of State. I think this has been a very useful exchange because we have established that there is a certain rigidity, though its type may change. I hope

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that the Secretary of State was not ruling out irregular reports, in the sense that there may be special occasions when a report might be necessary at a moment's notice. He seemed to refer to the regular report, the frequency of which might change.
Lord Young of Graffham: If the noble Lord will allow me, irregular as to timing but not as to content, I trust.
Lord Williams of Elvel: I am most grateful. We now see that the Bank shall make regular or irregular reports, as the case may be. It is very important to get these understandings absolutely clear in our minds. They are important and we need to have the board, and particularly the independent members, properly informed about what is going on. I take the noble Lord's point absolutely about the independent members having the power, under the clause as drafted, to ask for supplementary information. They can clearly use that should they consider the information they are getting, which the Bank considered relevant, not to be relevant. They can ask for more information. As long as the request for further information is reasonable, as I am sure it would be, there is the necessary power under that clause. So I take the noble Lord's point on that and I shall not press the amendment. I am still very interested in looking at what the noble Lord said about the regular reports and regularity. I shall read his remarks carefully in Hansard.
Lord Tordoff: Just before the noble Lord seeks perhaps to withdraw his amendment, I thought we were coupling Amendment No.17 with these amendments, but I may be wrong. Nobody seems to have spoken on Amendment No.17.
Lord Williams of Elvel: As it happens, I was not going to move Amendment No.17. If that satisfies the noble Lord, Lord Tordoff, I now beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 13 to 18 not moved.]
Clause 2 agreed to.
Schedule 1[The Board of Banking Supervision]:
5.30 p.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No.19:
Page 79, line 9, leave out ("the Bank and").
The noble Lord said: I beg to move the amendment standing in my name and the names of my noble friends. I propose to speak also to Amendments Nos. 21 and 22. As drafted, paragraph 1(2) reads as follows:
"An independent member may resign his office by written notice to the Bank and the Chancellor of the Exchequer".
My amendment would seek to eliminate from that wording the words "the Bank and". That would leave the responsibility of the independent member to write direct to the Chancellor of the Exchequer with his resignation. That would be his responsibility. There is of course no reason why he should not simultaneously
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inform the Bank, but in our view the written notice should be sent to the Chancellor of the Exchequer.
Amendment No.21 concerns the removal from office of an independent member. Paragraph 2 says:
"An independent member may be removed by the Bank with the consent of the Chancellor of the Exchequer if it is satisfied".
Amendment No.21 seeks to eliminate the following words:
"the Bank with the consent or'.
It lays on the Chancellor of the Exchequer the responsibility for removal, and Amendment No.22 is consequential on that. Once again we are on the point of the independence of the member himself. That is why we want the relationship between the Chancellor of the Exchequer and the independent member to be firmly established. That is the purpose of these amendments and they follow very much the same tenor as many of those that have been put previously.
For the avoidance of doubt, I have to say that these amendments are not put down with any object of being offensive to the Bank of England, the sensibilities of which have been perhaps a little exaggerated by the noble Lord, Lord Bruce-Gardyne, who seems to be super-touchy about anything that conceivably might be interpreted by the Bank as offensive. They are not intended in that way at all. They are to put the responsibility in this respect where the responsibility ought to lie and ought reasonably to lie. The word "independent" and the incorporation of the members in the Board of Banking Supervision implies that, although they are working with the Bank, they are not of the Bank. To give the Bank the responsibility either of accepting their resignation or of ordering their removal puts the Bank in a more elevated position than it ought to be in. It is no more or less than that.
There are those who regard any such suggestion that the Chancellor of the Exchequer ought to have anything to do with it as somehow being offensive to the Bank of England. I cannot see that at all. I am well aware that members of Her Majesty's present Government are so fully in concert, agreement and harmony that there is almost a love match between themselves and the Bank of England, but this is not always necessary for the correct conduct of the nation's affairs. The Chancellor is entitled to have his own view independent of the Bank, unless he is so scared stiff, or the Government are so scared stiff, of the Bank of England that they are reluctant to do any thing that might even slightly ruffle its feathers, breathing, as well they might, with the gentleness of a zephyr. This seems to be an extraordinary state of affairs.
I think that these amendments are reasonable. They tend to put the responsibility where it ought to lie in respect of independent people who may on occasion have to be severely critical of the Bank's conduct, and quite legitimately so; and the Government ought to place themselves more squarely behind the independent members of the supervisory board. Otherwise with the best will in the world—and it will not need any words from me—people will tend, with some justification, to regard the independent members of the supervisory board as creatures of the Bank itself.
I am quite sure that this was not the intention of the legislation. I am quite sure that, if the noble Lord,

1249
Lord O'Brien, were the governor, he would not regard them as such. I acquit him of any responsibility. Nevertheless, this is what may be thought, and legitimately thought. Why not place it beyond all reasonable doubt and give to the independent members that direct contact—after all, they are important people exercising a very responsible function—with the Chancellor himself in the circumstances envisaged by the paragraphs to which I have referred. I beg to move.
Lord O'Brien of Lothbury: Before commenting on this series of amendments, perhaps I may say a word about the extreme sensitivities of the Bank of England. They do not exist. The Bank of England is well able to take care of itself and anyone else. It does not like criticism—who does? It does not like criticism which it feels is not justified—who does? But its main efforts to avoid criticism are by doing its job in the best manner possible and it takes whatever criticism comes. So do not let us worry too much about the sensitivities of the Bank of England.
But this Committee, following what happened in another place, has decided at an earlier stage of this Bill that this board should be appointed jointly by the governor and by the Chancellor of the Exchequer. That being so, it seems to me that these amendments simply fall. If the members are appointed jointly, they have to tender their reservations jointly to both the governor and the Chancellor, and it seems to me entirely reasonable that if they fail in their duties and responsibilities as members of the board the governor, with the agreement of the Chancellor, should remove them from it. So I think that none of these amendments should be supported.
Lord Harmar-Nicholls: I think that all that needs to be said has been said by the noble Lord, Lord O'Brien, but I get a little disturbed by the noble Lord, Lord Bruce of Donington. He said it is right that there should be direct contact with the Chancellor. The members have it. What these amendments are trying to do is to stop them having any contact with the governor, with the Bank. It is a joint matter as it stands. They have contact with both. As regards the possibility of ending their membership, and not wanting the Bank to be in a position to give any indication on that, they are the ones who would know whether it is desirable to dispense with their services. The noble Lord, Lord O'Brien, talks with greater authority than anybody as to whether or not the Bank of England is likely to be sensitive, but I think that once again this is to some extent by implication downgrading what we think is the role of the Bank and we ought not to do that. It is bound to be detrimental.
Lord Young of Graffham: I take great comfort from the words of the noble Lord, Lord O'Brien of Lothbury, that the Bank will not be irrevocably damaged by our comments in the Committee this afternoon. What we are dealing with now in Amendments Nos. 19, 21 and 22 is voluntary and involuntary removal from the board. It seems to me just a matter of common courtesy that if a member is appointed on a joint basis he should at least be allowed to retire on a joint basis and to write to both the Chancellor of the Exchequer and to the governor of
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the Bank. I am afraid that I see very little merit in Amendment No.19.
As regards the other amendments which deal with involuntary retirement from the board and the circumstances in which an independent member may be removed, apart from specifying the grounds for removal the clause provides for removal by the Bank with the consent of the Chancellor. This reflects the simple fact that the Bank will be in the best position to know whether any of the specified circumstances have been met, but as a check if you like, the Chancellor must also agree. This seems eminently reasonable to me. I fear that I do not appreciate the desire of the noble Lord, Lord Bruce of Donington, to impose on the Chancellor the sole responsibility, since after all the Chancellor will be less well placed to initiate appropriate action. I fear that we could not accept either of these amendments.
Lord Taylor of Gryfe: We have dealt with the question of joint appointments before on a previous amendment and I simply subscribe to what I said on that occasion. I agree that throughout the amendments so far discussed there seems to be an implication or a suggestion that, somehow or other, the Bank is associated with some cosy City club and therefore we have to establish the supremacy of the Treasury.
Let me say to the noble Lord, Lord Bruce of Donington, that if he has been down in the City of late he will know that it is not just a cosy club. There is no need to repeat the fact that I believe the balance is right at the moment and it would be wrong to upset the balance. It is an arrangement admired in many parts of the world. There are difficult situations in all central banking-Treasury relationships and so far we seem to have it just about right. I do not know whether the noble Lord, Lord Bruce of Donington, is influenced by some political consideration, such as the unlikely assumption that there may be a Labour Chancellor one of these days. If that is his assumption, the balance would still be wrong and consequently we cannot support the amendment.
Lord Bruce of Donington: I am grateful for the remarks which have fallen from the lips of the noble Lord, Lord Taylor of Gryfe. I am glad to affirm that I am in Parliament for a political purpose. Politics, after all, is about the determination of a policy. I am sorry that the reaction of Members of the Committee, with whom I am on terms of normal personal amity, should consistently be such as to suggest that I am the villain of the piece. It is as though I am such a disturbing influence or said to be a disturbing influence in what is evidently an intimate relationship between the Bank and Her Majesty's present Government that to even be party to the suggestion of a rift is almost regarded as akin to high treason. I am sensible of the personal risks which I run in this matter. It may well be that I shall be severely disadvantaged if on any future occasion I find myself seeking facilities from the banking system for my own affairs. It looks very much as though I shall not be able to get a very good reference, other than one saying that I am being (so-called) offensive to the Bank of England.
I think that the amendment is sensible. I draw the Committee's attention to paragraph 2(d) dealing with

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removal from office. The first three conditions set out in sub-paragraphs (a), (b) and (c) are obvious enough. However, sub-paragraph (d) contains a sweep-up clause for the removal of an independent member if he,
"is otherwise unable or unfit to discharge his functions as a member of the board".
I can understand "unfit". However, "unable" may be a matter of opinion. "Unable" may mean unable to put forward views amenable to his colleagues or being disadvantaged in some way by being the odd man out. That may well come within the category of "unable". The words are here and I am entitled to put any reasonable construction upon them.
In any event, I still consider that the independence of independent members ought to be established all the way through on the basis that they are not the creatures of the Bank, in spite of their relationship with the ex-officio members. They must be what they are supposed to be—independent.
Having sensed the mood of the Committee, through the views of the sole representative for the Alliance and the remainder of the Committee on the Government Benches and the Cross-Benches, it would be a waste of time for me to press this amendment to a Division. I am not satisfied with the replies which have been given. At any rate, replies have been ventilated and that is sufficient for our present purposes. With the leave of the Committee, I shall withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 20 to 22 not moved.]
5.45 p.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No.23:
Page 79, line 25, at end insert—
("(2) The Chancellor of the Exchequer shall report to Parliament on the reasons for his removing an independent member from office.").
The noble Lord said: I fear that I must be at it again in moving this amendment. Line 25 in page 79 deals with the removal from office of an independent member. My amendment states:
"The Chancellor of the Exchequer shall report to Parliament on the reasons for his removing an independent member from office".
I am well aware that in the context of previous debates and the amendments which have been rejected, in strict terms removal, as the Bill now stands, must be a joint matter. However, even if that were the case, it should still be the function of the Chancellor of the Exchequer to report to Parliament on the reasons for his concurring in the removal of an independent member from office; that is a matter which could be amended, if necessary, at Report stage. But the general thrust of the argument is that Parliament should be informed.
We must decide how important independent members of the supervisory board are. They have been put there and the Bill is clearly drawn so that six independent members will be included on the board. That may be thought insulting, though I sincerely hope that it will not be because Her Majesty's
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Government are not normally insulting to the Bank. In any case, it is the considered view of the Government that in addition to the loyal, devoted and skilful servants of the Bank, in exercising the supervisory function there should be independent members.
Some Members of the Committee may say that that in itself is offensive. But what else could be expected after the Johnson Matthey affair and what it revealed? I do not wish to rake that matter up again, though I have the report here. It is something which could be discussed if the Committee wished to prolong the discussion on this point. But I have no wish to rake up old embers and I have made few references to that in this Chamber since it occurred because it has been dealt with thoroughly in another place.
If an independent member is removed, a report on the reasons ought to be made to Parliament because Parliament has insisted on the inclusion of independent members. That is of vital significance to Parliament. The report could be short, terse and to the point. In the event of removal for ordinary reasons of sickness or something of that nature, it could be quite formal. However, Parliament should be officially informed because it is vital in this matter. As I informed the noble Lord earlier, we are back to the question of the relative status of Her Majesty's Government on the one hand and the Bank on the other. This amendment is a reflection of my view that Parliament is ultimately supreme and should be informed. It is moved for no other reason. I beg to move.
Lord O'Brien of Lothbury: Once again I find myself in opposition to the noble Lord, Lord Bruce of Donington. It seems to me, as we are now agreed that independent members of the panel should be appointed jointly by the governor and the Chancellor, that the matter of their going should not be unduly advertised. The noble Lord, Lord Bruce, talks about a report to Parliament being terse and to the point. Can you imagine a terse report saying: "Mr. So-and-So has been removed from the council because he has lost his marbles"? That is indeed terse and to the point.
Whatever the reason for a man going, or a woman—because there may be women on this panel in due course—the manner of going should be tactful. The fact that it is achieved by the governor and the Chancellor in concert must surely be good enough for Parliament. I hope I have as great a respect for Parliament as the noble Lord, Lord Bruce, does, but I do not see why every little thing has to come to Parliament. I should have thought that it could be left to the Minister and the governor to effect this on Parliament's behalf in the most discreet manner possible.
Lord Thorneycroft: I hope that the noble Lord, Lord Bruce of Donington, will take note of what has been said by the noble Lord, Lord O'Brien. When people are asked to join boards and institutions, the object is to try to get the best people available in the country for the job. If the time comes for a member to go, one does not advertise all over the country the reasons, which may be rather personal to the member himself. He may have taken to the bottle; he may fall asleep too

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regularly at meetings. There may be a dozen different reasons. All of us have known and worked with people whom we think could be eased out, or promoted to the House of Lords or some other occupation. But the idea that these delicate matters should become the subject of parliamentary debate is remote from the realities of the world, and I hope that the noble Lord will reflect on that.
Lord Young of Graffham: I thought that my noble friend Lord Thorneycroft gave the perfect definition of a member of a board supervising my activities: one who would fall asleep whenever we came to discuss them. But this is a serious point, and I do not think I need to draw attention in this Committee to the circumstances in which members can be removed from boards, including physical or mental incapacity and bankruptcy. It would be invidious for the Chancellor to be required to provide as a matter of course details of the reasons for a member's removal on such grounds. If there were anything controversial, if something happened which caused great debate—of course Ministers are answerable to Parliament for all matters under this Bill—that could then be raised.
If I may say so, what is regrettable in the tone of some of the comments of the noble Lord opposite is that there is some cosy arrangment—he used "cosy" in a slightly derogatory way—between the Bank of England and the Government. The Bank of England is an essential pivot in what is one of the fastest growing areas in our economy. I hope the Government, the Bank of England and the City of London will play their proper roles in the growth of that economy. There is no cosy arrangement of which I know. This is yet another amendment which I must resist.
Lord Bruce of Donington: I am very sorry that noble Lords have seen fit to take this view on the amendment that I have ventured to lay before the Committee. In Schedule I there are two ways in which an independent member can leave the board. He can resign his office by written notice or he can be removed. I too have lived within the City and I too have had some experience on the boards of companies, in commerce and in industry. I am much in favour of discreet departures of directors or, in this case, of independent members of boards.
The amendment I am proposing does not deal with those circumstances that provide for discretion. We all know what happens when it is decided that a member—possibly for a variety of reasons—is no longer suitable for the position that he occupies. In compliance with the conditions set out so clearly by the noble Lord, Lord O'Brien, conversations take place following which the director, or in this case the member, tenders his resignation. That does not call for any report to Parliament by the Chancellor of the Exchequer.
This amendment relates only to those cases in which a director is removed from office. When you remove a director from office as distinct from being discreet and persuading him to resign, which happens under Clause 2, you are rupturing an associaton by force; you are removing somebody. There is no queston of persuading him to resign. I can quite envisage the circumstances which the noble Lord, Lord
1254
Thorneycroft, had in mind, where somebody gets a bit doddery. Heaven forbid that an independent member of such a high-ranking board should ever be doddery or that he should go to sleep over his claret after lunch or dinner, but this could happen even in the best of regulated families.
In spite of the energies and the skill of the governor of the Bank of England in selecting personnel, failings might occur within months or perhaps years of the appointment—small failings that might ultimately induce a member's colleagues to ask him to resign. We are not dealing with that situation. We are dealing with a situation not of resignation and all the circumstances in which that might be tactfully or discreetly arranged, but of removal. It is my considered view that removal is markedly different from being eased out as the noble Lord opposite described it.
Removal should happen very rarely indeed, but it might happen. I sincerely hope that the occasion will never arise. But we are trying to revise the law that is proposed. In those rare circumstances—and they are bound to be very rare—Parliament should be given the reasons. I am very sorry that the Committee is not prepared to assimilate that view. I greatly regret that I shall have to divide the Committee on this issue.
Lord Harmar-Nicholls: Surely the noble Lord recognises that his amendment as it stands is unnecessary. If Parliament wishes to know the reasons it does not have to wait for a report from anybody. Parliament has the power to ensure that it gets the reasons. If the noble Lord is concerned that Parliament should eventually know, in the circumstances that he has described Parliament will know. These words are therefore unnecessary, and there is no reason for the implication which the words carry, even with the explanation which the noble Lord has given, since Parliament has all the power which he wants it to have.
Lord O'Brien of Lothbury: Before the noble Lord divides the Committee perhaps I may ask him whether he would be satisfied if the report which the Bank of England has to make to Parliament on these matters at regular intervals simply stated, "With the agreement of the Chancellor of the Exchequer So-and-So ceased to be a member of the board from such-and-such a date and someone else was appointed in his place"; or alternatively, "With the agreement of the Chancellor of the Exchequer So-and-So resigned from the board from such-and-such a date and someone else took his place". Is there a need to say any more?
Lord Taylor of Gryfe: I hope that the noble Lord, Lord Bruce, will not divide on this matter. If there is an extraordinary case of the Chancellor of the Exchequer exercising his authority and removing an independent member from office, would not Parliament provide the facilities for discussing this by a Private Notice Question or a debate of some kind? The Chancellor of the Exchequer is answerable to Parliament. If it were an extraordinary case, it would presumably be raised as a subject of public debate in the same way as the appointment of John Kay and the SIB was a matter of general comment and debate. That facility is available. To insist that the Chancellor

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of the Exchequer "shall report" on the removal is quite unnecessary so long as these facilities are operating.
Lord Bruce of Donington: Perhaps I may answer noble Lords on this matter. Theoretically, of course, those in another place can demand explanations from government in regard to specific actions, but there is no obligation on government to reply. In my own experience over a number of years some matters remained unexplained in spite of questions having been asked in another place. It is right that Members of another place should have a right to ask but there is no legal obligation on the Government to reply. They can take the political consequences of not replying in some instances but there is no constitutional obligation on them to provide an explanation on request.
I very much prefer to have it written into the Bill, because then the Chancellor of the Exchequer will have to make a report. As to what opportunities may or may not be afforded for debate on these matters, that depends on how the usual channels operate in another place. I prefer not to speculate on that, any more than I should like to speculate as to what would happen through the usual channels in this place if there were a demand for a debate. In order to make the position quite clear I should very much prefer the amendment that I have ventured to lay before the Committee to be formally incorporated into the structure of the Bill.
6.2 p.m.
On Question, Whether the said amendment (No.23) shall be agreed to?
Their Lordships divided: Contents, 47: Not-Contents, 124.

DIVISION No.3

CONTENTS

Blyton, L.

Llewelyn-Davies of Hastoe, L

Borthwick, L.

Lovell-Davis, L.

Boston of Faversham, L.

Milner of Leeds, L.

Brockway, L.

Molloy, L.

Brooks of Tremorfa, L.

Morton of Shuna. L.

Bruce of Donington, L.

Nicol, B.

Campbell of Eskan, L.

Oram, L.

Carmichael of Kelvingrove, L.

Phillips, B.

Cledwyn of Penrhos, L.

Pitt of Hampstead, L.

David, B.[Teller.]

Ponsonbv of Shulbrede, L.[Teller.]

Dean of Beswick, L.

Donoughue, L.

Prys-Davies, L.

Elwyn-Jones, L.

Ross of Marnock, L.

Ennals, L.

Sefton of Garston, L.

Fitt, L.

Shackleton, L.

Gallacher, L.

Silkin of Dulwich, L.

Galpern, L.

Stallard, L.

Graham of Edmonton, L.

Stewart of Fulham, L.

Hatch of Lusby, L.

Strabolgi, L.

Houghton of Sowerby, L.

Taylor of Blackburn, L.

Jeger, B.

Underhill, L.

Jenkins of Putney, L.

Wallace of Coslany, L.

John-Mackie, L.

White, B.

Kirkhill, L.

Williams of Elvel, L.

NOT-CONTENTS

Ailesbury, M.

Attlee, E.

Allerton, L.

Auckland, L.

Amherst, E.

Aylestone, L.

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Beaverbrook, L.

Layton, L.

Belhaven and Stenton, L.

Limerick, E.

Belstead, L.

Lindsey and Abingdon, E.

Bessborough, E.

Long, V.[Teller.]

Birdwood, L.

Lothian, M.

Blyth, L.

Luke, L.

Bonham-Carter, L.

Lyell, L.

Boyd-Carpenter, L.

McGregor of Durris, L.

Brabazon of Tara, L.

McNair, L.

Broadbridge, L.

Marley, L.

Brougham and Vaux, L.

Merrivale, L.

Bruce-Gardyne, L.

Mottistone, L.

Butterworth, L.

Mowbray and Stourton, L.

Caithness, E.

Munster, E.

Campbell of Alloway, L.

Napier and Ettrick, L.

Campbell of Croy, L.

Nugent of Guildford, L.

Carnock, L.

O'Brien of Lothbury, L.

Coleraine, L.

Orr-Ewing, L.

Colwyn, L.

Pender, L.

Constantine of Stanmore, L.

Peyton of Yeovil, L.

Cowley, E.

Pike, B.

Craigavon, V.

Portland, D.

Davidson, V.[Teller.]

Rankeillour, L.

De La Warr, E.

Reay, L.

Denham, L.

Reigate, L.

Diamond, L.

Renwick. L.

Dilhorne, V.

Ridley, V.

Donegall, M.

Rochdale, V.

Dundee, E.

Russell of Liverpool, L.

Ebbisham, L.

Saltoun of Abernethy, Ly.

Eccles, V.

Sanderson of Bowden, L.

Elliot of Harwood, B.

Seear. B.

Elliott of Morpeth, L.

Shannon, E.

Elton, L.

Sharpies, B.

Ferrers, E.

Skelmersdale, L.

Fraser of Kilmorack, L.

Stedman, B.

Gibson-Watt. L.

Stockton, E.

Gormanston, V.

Strange, B.

Greenhill of Harrow, L.

Strathclyde, L.

Grey, E.

Strathcona and Mount Royal

Gridlev, L.

L.

Haig, E.

Swansea, L.

Hailsham of Saint

Taylor of Gryfe. L.

Marylebone, L.

Terrington, L.

Hampton, L.

Teynham, L.

Harmar-Nicholls, L.

Thorneycroft, L.

Harris of Greenwich, L.

Tordoff, L.

Hemphill, L.

Torrington, V.

Hesketh, L.

Tranmire, L.

Home of the Hirsel, L.

Vaux of Harrowden, L.

Hood, V.

Waldegrave, E.

Hooper, B.

Ward of Witlev, V.

Hylton-Foster, B.

Whaddon, L. '

Inglewood, L.

Whitelaw, V.

Kaberry of Adel, L.

Wigoder. L.

Kilmarnock. L.

Windlesham, L.

Kimball. L.

Winterbottom, L.

Kinloss. Ly.

Wise. L.

Kitchener, E.

Wolfson, L.

Lane-Fox. B.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.11 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.24:
Page 79, line 29, at end insert ("provided that the proportion of ex officio and independent members of the Board under section 2(2) of this Act is maintained.").
The noble Lord said: I beg to move Amendment No.24 standing in the name of my noble friend Lord Bruce of Donington, myself and my noble friend Lord Morton of Shuna. This amendment refers to Schedule 1(3) by virtue of which, as the schedule is at present drafted:
"The Treasury may …by order increase or, subject to section 2(2) of this Act, reduce the number of ex officio or independent members of the Board."

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As I understand this, the Treasury may make an increase by simple order: that is, there is no particular control under Clause 2(2) on the increase but there is a control under Clause 2(2) on any decrease. The object of the amendment is to make sure that, if the Treasury increases the totality of the board and then subsequently decides to decrease the number of the board, the proportions of independent members against ex-officio members are maintained.
The noble Lord may say that this amendment is unnecessary and that that provision is built in. I wish to make it absolutely clear that there could be no prospect of the Treasury flooding the board, so to speak, and then reducing the proportion so that the independent members no longer had a majority on the board. I beg to move.
Lord Young of Graffham: These provisions are already fairly detailed, and I believe that there is a danger of creating impractical requirements if we accept this amendment. It is clear from the existing provisions that the Government's intention is that there should be a substantial majority of independent members on the board. It may in future prove desirable to increase the numbers and that is why this schedule provides for such increases. If the need for an increase were to deal with a temporary situation, then subsequent reductions might be required, and this too is provided for; but it would not be sensible to insist on a strict retention of the proportion of one sort of member to the other. If it proves desirable to increase the number of independent members, for example, it does not automatically follow that it would be efficient or necessary for the ex-officio members also to be increased. And how would one cope with an increase of a single independent member? The strict proportion could in no way be maintained. I do not believe the amendment is workable; nor, alas, do I think it necessary.
Lord Williams of Elvel: I am grateful to the noble Lord. Do I understand that it is the government's intention to maintain always a majority of independent members on the board?
Lord Young of Graffham: Yes. I think that there is a provision that there is a majority of independent members and I think that the Government would wish to keep the same majority. However, it is not always possible to keep the same proportion.
Lord Taylor of Gryfe: I am grateful for that assurance. I have some sympathy with the point of view expressed by the noble Lord, Lord Williams of Elvel, but with that assurance from the Government I hope that he will not press this amendment to a Division. The position is satisfactory.
Lord Williams of Elvel: I am most grateful to the Secretary of State and to the noble Lord, Lord Taylor of Gryfe. This is exactly the assurance I was looking for—that there will be at all times a majority of independent members on the board of supervision. Having received that assurance from the Government, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.25:
Page 79, line 36 at end insert—
("(3) The Board shall report on its procedure in its annual report prepared under section 2(6) of this Act.")
The noble Lord said: I regret to say that in the Marshalled List there is a printing error in this amendment. For "proceedings" it should read "procedure". Although the title of that part of the schedule is "Proceedings", nevertheless sub-paragraph (1) indicates that the board "shall determine its own procedure." It is to this procedure that the amendment is directed.
Again, it is a question, if I may put it like this, of transparency; to ensure that nothing happens in the board by way of procedure that would be in any sense undesirable and could be objected to. It is vitally important that the board not only is a proper adviser to the ex-officio members, and hence should be a proper board of banking supervision, but should be seen to be such.
As in any company, there are documents and articles of association setting out procedures on how shareholders operate, what they should do and how they should conduct themselves—indeed many boards of directors have those procedures which are perfectly transparent—so it seems to us that the board should make its procedure perfectly clear. The amendment proposes that the board should report in its annual report, and this seems to be a convenient mechanism. In its first annual report it would set out the procedure that the board has adopted, and in subsequent annual reports it would simply say that it had changed its procedure in this, that or the other direction. This is, as I say, something which would line up the board with the sort of arrangements in companies with which we are familiar. It would line up the board—since the Securities and Investments Board is a company—and would give the public full assurance that the board is conducting, as I am sure it will, its proceedings in a proper and sensible manner. I beg to move.
The Deputy Chairman of Committees (Lord Strabolgi): Amendment proposed, with a manuscript amendment,
Page 79, line 36, at end insert—
("(3) The Board shall report on its procedure in its annual report prepared under section 2(6) of this Act.").
Lord Young of Graffham: I feel a little lost on this particular amendment because I can well see that there are some reasons why the board could report on its proceedings—although that is not the intention of this amendment—but to report on its procedure seems to me no more than the board saying that it met X times a year, and that all the members turned up, or stating who did not. In those circumstances, I really cannot see how it should report in this way, unless reporting on that procedure actually had the intention that the board would report on its proceedings, which is something entirely different. In that respect, a blow by blow account of the board's proceedings would be unacceptable. I cannot see the merit of this amendment.
Lord Williams of Elvel: I must beg the pardon of the Secretary of State. I tried to point out that there was an

1259
error in the amendment and that it should not read "proceedings" but "procedure". I fully agree with the Secretary of State that it would be rather ridiculous for the board to report on its proceedings publicly. That was not the intention of the amendment but the intention of the amendment as mistakenly printed on the Marshalled List. Its intention is to make sure that the procedure of the board is properly known and understood.
What do I mean by procedure? I mean, as follows: whether there are formal votes on the board; how it conducts its business and is there, or is there not, a formal agenda? Is there any form of resolution? What happens—to get back to a previous debate—when it is clear that the ex-officio members are not accepting the advice of the independent members, which gives them rights under Clause 2 of the Bill? How is that determined? It seems to me that this is quite an important point where we need to know more. I hope that I have explained my amendment to the satisfaction of the noble Lord, the Secretary of State. Perhaps he would be kind enough to reply.
Lord Tordoff: I wonder if I might help the noble Lord. It may be that there is some problem with the wording. Presumably, the noble Lord, Lord Williams, would be satisfied if the amendment were to say "shall report on variations in its procedure in its annual report", so that the board would start with a description of its procedure and then subsequently mention any variations from that basic procedure.
Lord Williams of Elvel: I should be perfectly happy with whatever amendment the noble Lord, Lord Tordoff, feels is more acceptable. I said that I did not see that there had to be a report on procedure in every annual report. I envisage that it would start with procedure in the first annual report, saying, "This is how we operate". Then, subsequent annual reports would give any deviation from that procedure. But the report would be the vehicle.
However, I stick to the principle. It is not for the Opposition to be accurate and totally "bomb-proof" in its drafting. It is for the Government to get the drafting right and for us to explain what we mean. I hope I have now explained what we mean.
Lord Young of Graffham: If only the Government always got its drafting right! But that is another matter entirely. I am in some difficulty over this. I fail to see how you actually describe the procedure of individual meetings without getting to the point where you begin to describe the agenda. However, if the noble Lord will write to me, perhaps we can develop this point a little further and come back to it at a later stage.
Lord Williams of Elvel: Yes, I am very happy to write to the noble Lord explaining what I mean and what I think the noble Lord, Lord Tordoff, interprets us to be saying. Perhaps we may come back to it. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.26:
Page 79. line 38, after ("make") insert ("after consultation with the Treasury").
The noble Lord said: The question of facilities, remuneration and allowances of the board is one which I think needs a little probing. This amendment is designed to probe, and I hope that the noble Lord the Secretary of State will take it in that spirit. The schedule as drafted says:
"The Bank shall make such provision as it thinks necessary for providing the Board with facilities … and for providing remuneration, allowances or other benefits for or in respect of the independent members".
There are no problems of principle here, but I think we all want to be reasonably clear that nothing which the independent members may recieve by way of facilities, remuneration and allowances is wildly out of line with what other members in other similar boards receive. In saying "similar," I use again the example of the Building Societies Commission and the Securities and Investments Board and what members of those boards receive. Therefore, I believe there should be some consultation.
Perhaps I may also speak to Amendment No.27, for the convenience of the Committee. It seems to me that there should be an arrangement for the board's annual report or indeed the Bank's annual report—properly, I think, it should be the Bank which reports on this—to make those facilities, remuneration and allowances public. For that reason, I beg to move this amendment.
Lord O'Brien of Lothbury: From my knowledge of the ways of the Treasury, if it had thought that it had a useful and necessary part to play here, then the words which the noble Lord, Lord Williams of Elvel, wanted to have inserted in the draft would be there already. Clearly, it did not: nor do I think that it has a part to play. I would therefore be opposed to the amendment.
Lord Young of Graffham: Dealing first with Amendment No.26, the cost of the board and the facilities necessary for its proper functioning will be provided in any event by the Bank of England in accordance with paragraph 5 of the schedule. These costs will be met from the Bank's own resources and voted funds are not in themselves involved. It seems therefore unnecessary for the Treasury to be consulted in this matter, as indeed the Treasury is not consulted about details of the Bank's other expenditures on banking supervision.
Lord Williams of Elvel: Would the noble Lord the Secretary of State tell me whether the Treasury is consulted on facilities, remuneration and allowances for members of the Building Societies Commission?
Lord Young of Graffham: I shall certainly inquire, but at the moment I could not say because it is not one of those facts which I have ever with me.
Lord Williams of Elvel: I ask this question because I am making a point. All along, on all sides of the Committee, we have accepted the Government's view that this is the third leg of legislation to do with the financial markets. Therefore the more that the third leg, if I may use the expression about this rather extraordinary animal, is similar to the other various legs, the better off we are.

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There are certain deviations in the Bill before us which, it seems to me, could reasonably be cleared up, and I would have thought that this was one of them. I accept that it is not the Treasury which will pay the independent members. It is after all not the Department of Trade and Industry that will pay the board members of the Securities and Investments Board. It is the SIB itself, if I may use that acronym without offence to the Committee, which will pay the members of its board. Nevertheless, there is still a principle here of parallelism, if I may put it like that, which would seem to be appropriate.
I should be grateful if the noble Lord would look at the matter in that light rather than in the light of trying to have some Treasury intrusion on what is after all a Bank responsibility. It matters not a whit who will pay the people. What we want to know is what they are going to be paid.
Lord Young of Graffham: Without going on, principles should always be had but not taken too far. What we have here are not three corners. The third leg, if you like, is a very substantial edifice indeed. It is the Bank of England; it is there; it has resources of its own; it has always carried on meeting from its own resources and sees as a proper expenditure, I might add, the full cost of banking supervision. It will see this no doubt as another of those costs, and indeed does so.
However, I shall look at what the noble Lord said. At the moment, I must say that I have, alas, little sympathy for his view.
Lord Williams of Elvel: I am grateful to the noble Lord. I see that we cannot get very much further with this today and I therefore beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
[Amendment No.27 not moved.]
Schedule 1 agreed to.
Clause 3 agreed to.
Clause 4[Exempted persons and exempted transactions]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.28:
Page 3, line 30, at end insert ("or classes of transactions").
The noble Lord said: This amendment is very minor but it will serve to clarify some of the problems of exemption which we see. The exemptions at the moment in the Bill as drafted under Clause 4(5) refer to transactions. I understand that there may be certain individual transactions exempt from the restrictions imposed on acceptance of deposits. I wonder whether it is sensible to go slightly wider than that and refer to certain classes of transactions as well as certain transactions, so as to give the Treasury slightly wider power. I have particularly in mind the issuance of commercial paper by companies which, as I understand it—and again I may be completely at fault in my understanding—under subsection (5) of the Bill, would be caught as deposits. It would seem to me that it is not the intention of the Bill to regulate the issuance of commercial paper. The issuance of commercial paper is a class of transaction which could legitimately
1262
be taken outside the Bill by the Treasury. I could probably think of other classes of transactions that may come into the same category but it seems that the Bill is here unnecessarily restrictive and for that reason we have put down this amendment. I beg to move.
Lord Beaverbrook: I am advised that the noble Lord's amendment is unnecessary in that the powers available to the Treasury to prescribe transactions by reference to any factors appearing to it to be appropriate is sufficient to allow the regulations to prescribe classes of transactions. The current regulations under the Banking Act 1979—the Banking Act 1979 (Exempt Transactions) Regulations 1986, which are made under the similar wording of Section 2 of the 1979 Act—already prescribe certain classes of transactions; for example, those involving sterling commercial paper. I believe that this amendment is not necessary, and if the noble Lord has in mind any other class of transaction perhaps he will make it clear.
Lord Williams of Elvel: I am most grateful to the noble Lord. Am I to understand that my amendment is unnecessary in all respects and that the expression "classes of transaction" is superfluous because there are already arrangements under this clause which make it so?
Lord Beaverbrook: Yes; I am advised that that is the case.
Lord Williams of Elvel: I am happy to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Schedule 2[Exempted persons]:
6.30 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.29:
Page 80, line 7, leave out ("incorporated (or deemed to be incorporated)") and insert ("authorised").
The noble Lord said: Again, this is a very small amendment, and not one of great significance. However, when talking about Schedule 2—exempted persons—it seems to me that it is not a question of whether a building society is incorporated or deemed to be incorporated under the Act but whether it is actually authorised by the Act. Again, the noble Lord may say that my amendment is unnecessary and that these two expressions come to the same thing. I should be grateful for his comments. I beg to move.
Lord Beaverbrook: I was indeed curious as to the purpose of the noble Lord's amendment and I am grateful to him for his explanation. I think that his amendment fails to take into account the fact that the Building Societies Act permits unauthorised societies which are in the process of starting business to accept deposits in the form of subscriptions for deferred shares and certain other payments. If this amendment were to become part of the Bill, new societies would be prevented from having qualifying capital—in the form of deferred shares—from the founders and therefore could not become authorised. If there is another aspect of the noble Lord's

1263
amendment to which I have not responded perhaps he will put it to me and I shall consider it.
Lord Williams of Elvel: I am grateful to the noble Lord. I understand the argument that he puts forward against this amendment and I am inclined to accept it. It was something that I had overlooked. However, is he saying that a deferred share in a building society that is incorporated and has yet to be authorised is in fact a deposit for the purposes of this Bill?
Lord Beaverbrook: Yes, I am. That is exactly what I am saying.
Lord Williams of Elvel: In that case I understand, and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Schedule 2 shall be agreed to?
Lord Elton: There is one small point that presumably will be picked up by the printers; namely, that in the rubrics Schedule 2 is referred to as Schedule 1 and Schedule 3 is referred to as Schedule 2. I hope that will be put right in the next printing.
On Question, Schedule 2 agreed to.
Clause 5[Meaning of "deposit"]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.30:
Page 4, line 9, after ("premium") insert ("or at a discount").
The noble Lord said: I beg to move Amendment' No.30 standing in the names of my noble friends Lord Bruce of Donington and Lord Morton of Shuna and myself. This is another amendment which is of a probing nature and enables us to have something of a discussion about the meaning of the words "deposit" and subsequently "deposit-taking business". I fully understand that Clause 5 generally follows the definitions given in Section 1 of the 1979 Act. That is understood, but the definitions are quite complicated.
It seems to us that Clause 5 defines "deposit" in very wide terms. As we see it, "deposit" covers any loan or other repayable funds unless it is on terms referrable to the,
"provision of property or services or the giving of security"
or it is received from an authorised institution, an exempted person or a money-lending business or is a group payment or received from an associate.
Most businesses probably take deposits within the meaning of Clause 5 so the definition is not one that will stand by itself. It will only stand in relation to Clause 6, which concerns the meaning of "deposit-taking business". Commercial companies may take deposits as covered by the definition of "deposit" in Clause 5, but clearly they are not deposit-taking businesses within the meaning of Clause 6. It is therefore important to establish that Clause 5, which defines the meaning of the word "deposit", is not necessarily one to which we should pay so much attention. I do not say that we should pay no more than passing attention, because we have to pay attention to it; but it is not the fundamental clause that
1264
deals with the deposit and the deposit-taking business that we are now discussing.
I should like to raise three points with the noble Lord. First, I assume that banknotes are not deposits within the meaning of this Bill. After all, they are promissory notes from the Bank of England promising to pay the bearer a certain amount of money on demand. I assume that those are excluded under Clause 5. I assume too that deposits such as bills of exchange—commercial paper—come within Clause 5 and hence there is the need for them to be taken out when it comes to defining a deposit-taking business in Clause 6. I am uncertain, about the nature of deposits accepted by an institution, a partnership or a body corporate, as agent on behalf of somebody else; for instance, deposits accepted by solicitors as agent though they themselves do not operate as deposit-taking businesses.
Finally, there is the very narrow point of the amendment—I admit that this situation is difficult to conceive but I suppose it is a theoretical possibility—that a deposit may be repaid at a discount if by then it is convertible or if there is an assurance that it will be convertible or there is some arrangement that it may be convertible into an instrument that will more than remunerate the depositor for what he has lost on the face value of his deposit. In practice I find some difficulty in pointing noble Lords toward occasions on which that has happened, but it is not beyond the wit of man in the future to devise circumstances in which it could happen.
I apologise to the Committee and to the noble Lord opposite for having raised a number of rather general points about this clause, which raises certain problems of comprehension. I hope he will not think that I am trying to push him against the wall. I am merely trying to obtain an understanding of what this clause means. I beg to move.
Lord Beaverbrook: I am grateful to the noble Lord for explaining his reasons for putting down the amendment. It is a complicated matter. To answer the points that he made, the Bank of England issues bank notes and is exempted under this provision.
Lord Williams of Elvel: What about Scottish banks? Are they also exempted?
Lord Beaverbrook: I do not have the answer to that, but I imagine that I am probably safe in saying that they will be treated in the same way. Sterling commercial paper is a deposit and hence it is also exempted. Solicitors also have an exemption in respect of deposits taken in the course of business, except under the regulations. I too have had difficulty in identifying, in practice, where deposits would be repaid at a discount because I think that the definition of a "deposit'. would probably contain an element of capital security.
As I understand the effect of the amendment, it is to cover the case of where a depositor pays his deposit, not in the expectation of getting it back with interest but of getting back a lesser sum. I should not regard that as a deposit; nevertheless such transactions could occur. For instance, with a bond, the subscription could be above par, and the initial premium is in effect

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amortised over the life of the bond as a reduction in the interest actually received by the bond holder. I should still regard that subscription as involving a deposit of the par sum which would be repaid when the bond (or deposit) matured. It may be contended that the inclusion of the words "or at a discount" would put beyond doubt the fact that a subscription to the bond, as I have outlined, would involve the making of a deposit. But the words would also have an undesirable consequence. They do not specify that the rate or amount of discount must he known in advance. They thus introduce the idea of capital uncertainty and might, for example, result in subscriptions to equity-style investments being regarded as deposits.
I hope that I have said enough to indicate that the amendment unnaturally and unhelpfully alters the nature of the definition of "deposit". I can reassure the noble Lord that the problem addressed by the amendment has not so far been a practical one for the Bank of England. But, if it were, the power to alter the definition given in Clause 7 would enable the Government to take action. For those reasons, I find that the amendment adds nothing to the Bill.
Lord Williams of Elvel: I am most grateful to the noble Lord. I fully accept, as I said in my introduction, that at the moment I cannot see anything other than rather esoteric transactions involving deposits made and repaid at a discount, but I can see the possibility of that happening. I accept what the noble Lord says—that the Treasury has the power to make an order to cope with any such eventuality.
I was a little confused by what the noble Lord said about sterling commercial paper. As I understand the clause, money market operations by companies in receipt of deposits from anyone are covered. They are deposits because companies are not—I use the word almost by definition—institutions authorised under the Bill. It seems to me, from reading through the clause—with great difficulty, I accept, as the noble Lord accepts—that money market operatings by companies give rise to deposits which are not covered by Clause 5, as at present drafted.
I also accept that we hope that Scottish banks would be authorised institutions under the Bill, if enacted. Any Scottish bank that is not an authorised institution presumably would not be in a position to issue its own bank notes, so that would cover that point.
I shall leave out the question of deposits with the Bank of China, which is a wholly unrelated and separate question that I could raise, but I shall not. My only outstanding question is whether money market activities of companies which involve receiving deposits in the open market qualify for "deposits" under Clause 5. If the noble Lord can satisfy me on that point I shall be happy.
Lord Beaverbrook: It is a deposit. It therefore needs an exemption. It already has one under the 1979 Act which is equivalent to Clause 4. I hope that that is helpful.
6.45 p.m.
Lord Williams of Elvel: I am grateful to the noble Lord. If the 1979 Act is to be repealed, will sterling
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commercial paper also have an exemption under this Bill?
Lord Beaverbrook: Yes, it will. These are complex matters. If I have missed any point that the noble Lord would like answered, I shall be pleased to look at Hansard and I shall write to the noble Lord to clarify the matter further.
Lord Williams of Elvel: I am most grateful. I was going to press the noble Lord on money market operations which do not involve the issue of paper, but I shall not worry him with it. Perhaps he will be kind enough to look at the matter and write to me. In the meantime. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6[Meaning of "deposit-taking business"]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.31:
Page 5, line 6, leave out ("received by way of deposit").
The noble Lord said: I beg to move Amendment No.31. We are again dealing with a clause which is substantially the same as Section 1 of the 1979 Act. There is no reason to dwell too long on this matter; nevertheless, it gives us an opportunity to review the provisions of that Act to see whether there is any improvement that can be made.
My concern is with Clause 6(1)(a), which specifies that the business is a deposit-taking business for the purposes of the Act if:
"in the course of the business money received by way of deposit is lent to others; or"—
and it then goes on with Clause 6(1)(b). In Clause 5 we have already established that deposits—if I may use that expression in a non-technical way—made by authorised institutions—in other words, inter-bank deposits—do not qualify as deposits because the authorised institution which makes the deposit is exempt. Many organisations lend money and finance themselves partly by way of—I shall use the expression "retail deposits"—deposits under Clause 5, and partly through wholesale deposits coming from other authorised institutions. Some institutions would say that the majority of their lending was financed through the wholesale market (through money market deposits).
Clause 6(1)(a) says that a business is a deposit-taking business if:
"in the course of the business money received by way of deposit"—
that is, a deposit as defined by Clause 5—
"is lent to others".
If the majority of the money that is lent by the institution that I have in mind is financed from the money market—that is, by deposits made by exempt institutions which do not therefore under the Bill count as deposits—what is the position of that institution as a deposit-taking business? From my argument, it would seem that it would be excluded from being a deposit-taking business. Clearly, that would be wrong. The purpose of the amendment is to clarify the position to ensure that I am wrong and the Government have it right. I beg to move.
Lord Beaverbrook: This is another complicated matter. I followed with interest the remarks made by the noble Lord in moving his amendment. The Government's view of this amendment is that it would capture a very much wider range of business than is presently caught—that is, those businesses which accept deposits but which do not do so as a profit-making activity. For example, the deposits may be ancillary to other activities. If such deposit proceeds are segregated and placed on deposit with the businesses' bankers, then it cannot be readily said that the deposits have been lent to others.
If the definition were amended as proposed, then the Bill would catch any business which undertook lending—no matter how small—if that business then accepted deposits with any frequency, regardless of whether it segregated those deposits from its business. This would be an undesirable and unnecessary extension of the Bill's ambit. Where deposits are segregated—for example, by being placed in a client's account—and the interest accounted for to the depositors, and not used in the business, then there is no need to bring the Bill's requirements into play.
I hope that I have covered the points made by the noble Lord. If I have not, perhaps he will come back to me.
Lord Williams of Elvel: I am grateful to the noble Lord. He has certainly covered a totally different point from the one I made. I agree that if my amendment were accepted it would widen the ambit in the way that he has suggested. He may think that that is undesirable. I was not directing my attention to that. I was concerned that there are businesses which, by any commonsense definition, would be deposit-taking businesses, yet which finance their loan book in such a manner that they would be excluded because they were financing themselves by more than half, three-quarters, or 80 per cent. (whatever it might be) from transactions which were not under this Bill "deposits" because they were wholesale money market transactions; that is, inter-bank deposits. That was the point I was making.
Lord Beaverbrook: The businesses which finance themselves wholly from the money markets do not require to be authorised. The lenders do not require the protection of this Bill. If they regularly take some retail deposits then they would need authorisation.
Lord Williams of Elvel: That is an interesting and slightly novel point of view. The banks which finance themselves and their lending activity from the money markets do not require authorisation under this Bill? Do I hear the noble Lord correctly? But those who take some form of retail deposit require such authorisation?
Lord Beaverbrook: Correct.
Lord Williams of Elvel: I shall certainly have to think about that and read very carefully what the noble Lord has said in Hansard because I am sure that there are institutions that would like to call themselves banks which finance themselves almost entirely out of the money market.
Lord Beaverbrook: Before the noble Lord sits down, perhaps I may say that these are very complex matters. They will need to be looked at carefully and some time taken to study them. If the noble Lord would like to consider what I have said, perhaps he would like to withdraw the amendment in the meantime.
Lord Williams of Elvel: I shall certainly consider what the noble Lord has said. Perhaps he will be kind enough to think about the problem and drop me a line clearly confirming the position of the Government. At the moment I am in some doubt about the exact position. If he can do that, I shall be most grateful.
Lord Beaverbrook: I shall write to the noble Lord on this point. I give that assurance.
Lord Elton: Will a copy of the correspondence be placed in the Library of your Lordships' House? This point is of some interest generally.
Lord Beaverbrook: Certainly. I am willing to give that undertaking.
Lord Williams of Elvel: I am most grateful to the noble Lord and to the noble Lord, Lord Elton. It is a very important point. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Clause 7[Power to amend definitions]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.32:
Page 5, line 31, after ("Bank") insert ("or the Securities and investments Board or both")
The noble Lord said: I beg leave to move Amendment No.32 standing in the names of my noble friends Lord Bruce of Donington and Lord Morton of Shuna and myself. For the convenience of the Committee, I speak also to Amendments Nos. 33 and 34.
We are dealing here with a power to amend definitions. The definitions about which I am worried, as I think I have made clear to the noble Lord, are definitions of deposit-taking businesses. We cannot foresee the circumstances that will prevail in the future but it is perfectly clear even now that there will be a mix in what are broadly known as financial conglomerates between deposit-taking businesses which are authorised under this Bill and investment businesses which are authorised in one way or another by the Financial Services Act.
During the passage of the Financial Services Bill, when it was before this Chamber, we were seeking to determine the relationship between the banks within a conglomerate (if I may use that ugly expression) and the stockbroker or the investment manager or whatever it might be. These relationships are clearly known and very clearly understood. It would seem to me therefore that deposit taking which may arise in other parts of a conglomerate (if I may again use that expression), and which may have to be amended by definition, should at least have the benefit of some input from the Securities and Investments Board when that definition is made or changed.
It has been a constant theme—and I am not ashamed to bring it up again—that the SIB and the Bank have to work very closely together. There are a lot of activities which will be controlled by one under one piece of legislation and by another under another piece of legislation but which in fact march very closely together. I am concerned that the Securities and Investments Board or the designated agency—or whatever the Government like to call it—should not be involved when the definition of deposit taking is made or changed. It is for that reason that I am moving the amendment.
Since we are getting near seven o'clock perhaps I may anticipate a "stand part" debate that I was going to have with the noble Lord on Clause 7(2). I do not understand why Clause 7(2) singles out,
"the activities of any person who is connected with it in such manner as is specified in the order".
The Treasury have a clear power under the clause to amend definitions. Nevertheless, one category of possible deposit-taking business is singled out under subsection (2). I am not quite clear why the draftsman thought it necessary to single that out. I beg to move.
Lord Beaverbrook: With regard to the Amendment No.32 of the noble Lord, and speaking, with the leave of the Committee, to Amendments Nos. 33 and 34, the effect of these amendments would not be to require the Treasury to consult the Securities and Investments Board as well as the Bank, but would require the Treasury to consult one or other or both of them. As such, they are not necessary. It is open to the Treasury, as well as consulting the Bank (as they must do under the subsection) to consult other interested bodies—including the SIB. If the amendment were to be made, it would, with respect to the noble Lord, result in a somewhat confusing situation, in that some orders could be made after consultation with the Bank, some after consultation with the SIB, and some after consultation with both—a confused state of affairs that I am sure Members of the Committee would not wish to bring about.
I am assured, that in appropriate circumstances, the Treasury will certainly consider whether the SIB (or any other interested bodies) should be consulted as well as the Bank. Having heard that assurance, I hope that the noble Lord will feel able to withdraw his amendment.
With regard to Clause 7(2), the subsection provides that in amending the definition of deposit-taking business the Treasury may include within the definition, or otherwise take into account, activities of persons other than the institution but connected with it. For example, account can be taken of the activities of a subsidiary in determining whether a holding company carried on a deposit taking business. I hope that satisfies the noble Lord on that point.
Lord Williams of Elvel: I am grateful to the noble Lord. I hoped that I had explained the purpose of my amendment. I accept that the wording may be defective. The Treasury should have some duty, when redefining or defining deposit taking businesses, to consult the Securities and Investments Board, or whatever designated agency there may be or indeed
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the Building Societies Commission, if that is necessary. This should also apply where there are activities which impinge on the deposit taking business that the Treasury is seeking to define. That seems to be a matter of common sense. The noble Lord said that the Treasury may do this: indeed, the Treasury may consult the man in the moon but here the Treasury is under an obligation to consult the Bank. I should like to place the Treasury under an equal obligation to consult other institutions such as the Securities and Investments Board or the Building Societies Commission, which have an interest in the matter. That is the point of the amendment. Nevertheless, I hope that I have made my point and indeed, maybe we shall return to this matter at a later stage so I hope that the noble Lord will reflect on what has been said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
The Earl of Dundee: This may be a convenient moment to take a break in the proceedings. In moving that the House be resumed, perhaps I may suggest that we reconvene at eight o'clock. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Deer Bill
Brought from the Commons; read a first time, and to be printed.

Industrial Relations (Northern Ireland) Order 1987
7.2 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell): My Lords, I beg to move that the draft Industrial Relations (Northern Ireland) Order 1987, which was laid before your Lordships earlier this year under the Northern Ireland Act 1974, be approved.
The draft order which we have before us this evening, with a few exceptions, contains provisions which are analogous to those contained in the Employment Act 1982. Like that particular Act, the order before us has two main purposes. First, it extends and strengthens the protection which the law provides for people who work in closed shops, most importantly by making all closed shops subject to the test of a ballot and by providing increased compensation for closed shop dismissals. Secondly, the order restores the right of employers to seek legal redress against those who organise indiscriminate and irresponsible industrial action, including trade unions themselves. The anomaly whereby trade unions enjoyed a far wider immunity than their individual officials will be brought to an end.
I want to make it quite clear that this is not an attack on trade unionists in Northern Ireland. Indeed, I should like to take this opportunity to pay tribute to the excellent Northern Ireland workforce and the

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many responsible trade union officials who have sought to be, and often have been, a very stabilising influence in the Northern Ireland situation.
The order will not put at hazard responsible management or responsible trade union leadership. However, Parliament has an obligation to safeguard the liberty of the individual and it is for this reason that we are making changes to the law on the closed shop. Your Lordships will be well aware of the Government's view on the closed shop. The Government do not believe that people should be required to join a union as a condition of getting or holding a job as this runs counter to the great traditions of personal liberty in this country. This view was made clear in the Green paper called Trade Union Immunities published in 1981, and more recently in the Green Paper, Trade Unions and Their Members, which was published last month, February 1987.
In Great Britain the Government have taken a step-by-step approach to tackling the practice of the closed shop. Likewise in Northern Ireland the Government introduced measures in the Industrial Relations (Northern Ireland) Order 1982 (which parallels the Employment Act 1980) to limit the worst of the abuses of the closed shop. The present order now follows the Great Britian Employment Act 1982 in introducing further controls on the closed shop; indeed almost half the order is concerned with providing redress for individuals in the closed shop situation.
Similarly it is right for Parliament to intervene to underline the rule of law. As the famed gentleman Thomas Fuller said:
"Be you never so high the law is above you".
I am sure that your Lordships will always associate the forceful reiteration of that with the noble and learned Lord, Lord Denning, who is normally on the Cross-Benches. Nevertheless, I understand that this immortal statement was attributed to one Thomas Fuller.
At present trade unions are above the law in that they have a virtual total immunity from actions in tort. The second half of the order is concerned with reducing these immunities. The order refers to and amends existing legislation. I think noble Lords will agree that references to previous legislation always make the going a bit heavy. If your Lordships glance through the order you will see exactly what I am aiming at. However, I assure your Lordships that the principles underlying the order are simple and straightforward. Therefore I do not propose to deal with each article separately but instead I intend to refer only to the main provisions in describing the effect of the order.
Perhaps I may direct your Lordships' attention to Article 4, in page 4 of the order. This enables the Department of Economic Development to pay compensation to persons who were dismissed for not being union members in a closed shop between 1976 and 1982. The persons concerned are employees whose dismissal would have been unfair had the additional closed shop protection provisions of the Industrial Relations (Northern Ireland) Order 1982 been in force at the time they were dismissed. This is a strict parity provision and it brings Northern Ireland
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into line with an earlier ruling of the European Court of Human Rights.
Your Lordships will see Article 5 in pages 4 to 11. This article extends the circumstances in which dismissal for non-membership of a trade union in a closed shop is to be regarded as unfair. In particular, it reinforces the balloting requirements for new closed shops provided by the 1982 order, with a balloting requirement for all existing closed shops if non-union membership is to be relied on as fair grounds for dismissal.
The existing rates of compensation for closed shop dismissals are too low and the cost does not necessarily fall on the right party. The order therefore contains an entirely new framework of compensation for closed shop dismissals. Your Lordships will find that Article 6, in page 11, provides that for unfair dismissal due to non-membership of a trade union, or indeed membership of a union, as envisaged by Article 5, the minimum basic award is to be £2,200.
Perhaps I may direct your Lordships' attention to Article 7, in page 12 of the order. This creates a new special award available where the employee asks for reinstatement but this does not take place. Where the industrial tribunal does not make an order for this to take place, the special award will be two years' pay subject to a minimum of £11,000 and a maximum of £22,000. In the case where reinstatement is ordered but the employer does not comply the special award will be increased to three years' pay subject to a minimum of £16,500 but no maximum. Article 9, in page 14, enables someone who is claiming unfair dismissal as a result of trade union pressure also to claim compensation directly from the union as well as from his employer. Any award of compensation may be either wholly against the union or the employer or it may be apportioned between the union and the employer.
It is important to ensure that employers are not subject to outside pressure to form closed shops through "union labour only" requirements in contracts. Article 13, in page 18, therefore declares void any term in a commercial contract which requires the use of union labour only. It also makes it unlawful to exclude non-union firms from tendering lists, or to terminate a contract on the grounds that non-union labour will be used in performing that contract. These provisions would be ineffective if trade unions were free to accomplish the same results by industrial action or the threat of it. Article 15, in page 20, therefore removes immunity from anyone who puts pressure on an employer to contravene Article 13 and from those who organise industrial action designed for the same purpose.
The later articles in this order deal specifically with trade union immunities. The changes that they make are limited but significant. I stress that they do not affect the ability of trade unions to organise, to seek recognition from employers, to bargain collectively or to organise industrial action by their members in pursuit of improvements in their pay and conditions.
Since 1906, trade unions in Northern Ireland have enjoyed total immunity from civil action even if they have acted unlawfully. It is anomalous that trade unions should have a wider immunity than individual

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trade union officials. Article 16 will repeal the only remaining substantive part of the Trade Disputes Act 1906 and thereby bring the immunity for trade unions in line with the immunity for persons. Article 17 defines the circumstances in which trade unions are to be liable for the unlawful acts of their officials. Article 18 sets limits on the amount of damages which may be awarded in proceedings in tort against a trade union. Article 19 makes it clear that union provident funds, and also political funds which are not used to finance industrial action, are not at risk.
The other main change in relation to trade union immunities is made by Article 20, which tightens up the definition of a trade dispute. It specifies that there is a trade dispute only when workers are in dispute with their own employer and the dispute is wholly or mainly about matters such as pay, conditions or jobs. The effect of these changes is to exclude from the definition of a trade dispute, first, disputes between a trade union and an employer where none of that employer's employees is in dispute; secondly, disputes between trade unions or groups of workers where no employer is involved in the dispute (inter-union disputes); and, thirdly, disputes which are not predominantly about terms and conditions of employment.
Finally, I should like to draw your Lordships' attention to Article 24, which makes statutory provision for schemes designed to assist unemployed persons improve their employment prospects, either through temporary employment, self employment or voluntary work. These include schemes such as Action for Community Employment, Enterprise Allowance and Community Volunteering which are already in operation in the Province but are presently funded on an extra-statutory basis. This provision is not connected to the question of trade union organisation or immunities, but the order before your Lordships is a convenient vehicle to provide firm parliamentary authority for schemes which are acknowledged to be highly successful and parallel some of the special employment measures in Great Britain.
Legitimate union activity, responsibly carried out with moderation and due regard to the rights of others, contributes to our national good. However, if it is based on monopoly power and pursued with disregard for the rights and interests of others, hardship to individuals and the community can result. This order poses no threat to responsible trade unionism. Rather it will enhance industrial rights and will constrain ill-considered and unlawful disruption in the workplace, with consequent damage to the economy and above all jobs. That is why I commend this order to the House.
Moved, That the draft order laid before the House on 22nd January be approved.—(Lord Lyell.)
7.15 p.m.
Lord Prys-Davies: My Lords, I should like to thank the noble Lord, Lord Lyell, for his clear exposition of the detailed provisions of the order. The provisions make major changes in the law on industrial relations in Northern Ireland. I should also like to thank the Department of Economic Development for the helpful background material which it was good enough to
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send to me at my request. However, I make it clear that we do not welcome this order.
As the Minister has explained, the main purpose of the order is to apply the provisions of the Employment Act 1982 in Northern Ireland. With the greatest respect to the Minister, we have not been given a convincing reason, and we have not been referred to convincing evidence, to show why that is thought to be necessary. The Minister has referred to the rule of law and he has referred to the liberty of the individual. However, the trade unions in Northern Ireland do not pose a threat to law and order; they do not pose a threat to the rights and interests of individuals.
The noble Lord said that the law will be applied because it is applied in England, Wales and Scotland. However, my point is that uniformity is not always a major aim of government policy in Northern Ireland. Those of your Lordships who were present last Tuesday will recall that the Minister, the noble Lord, Lord Lyell, was at pains to demonstrate why the law on public order in Northern Ireland should be different in some material respects from that applying in England and Wales. He said that it must be different because the circumstances in Northern Ireland were different.
Northern Ireland is also somewhat different in the field of industrial relations. The subject was devolved to Stormont by the Government of Ireland Act 1920. The comprehensive Industrial Relations Act 1971, the Employment Protection (Consolidation) Act 1978, the Employment Act 1980, the Employment Act 1982 and the Trade Union Act 1984 have not been applied in Northern Ireland. Indeed, industrial relations in that part of the United Kingdom, fashioned by industry and the trade unions and assisted by the Labour Relations Agency since 1976, have worked smoothly. I believe that that will be the evidence of my noble friend Lord Fitt and others. Therefore, there is no evidence that there is a need for new legislation, and to the best of my knowledge there is no demand for legislation.
For the past three years, following publication of the equivalent to a White Paper in Northern Ireland, Ministers at the Northern Ireland Office have spoken consistently in glowing terms about the role of the trade unions and of industrial relations in Northern Ireland. Two years after the passing of the Employment Act 1982, which is now being applied in Northern Ireland, Mr. Christopher Patten, who was then Parliamentary Under-Secretary, paid tribute to trade unionism in Northern Ireland in these words:
"I would not like this opportunity to pass without paying my own personal tribute to the work of many brave and dedicated men and women in the trade union movement in maintaining a civilising influence in this community throughout the last 15 years. What you have contributed here in Northern Ireland presents one of the most valuable of the many contributions which your movement has made to our social and industrial history".
That is an unqualified testimonial.
A month later Mr. Adam Butler, then Minister of State at the Northern Ireland Office, uttered an equally unconditional testimony about industrial relations. He said:
"The Province offers industry an industrial relations record equal to that of West Germany and Japan, and the most productive and efficient workforce in Europe with the highest academic standards".

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The Minister, even tonight, referred glowingly, and I thought with gratitude, to the stability which the unions had introduced to the life of Northern Ireland.
Why, therefore, should the Government seek to introduce the order in this divided community in 1987? I am not aware of any evidence at all that the trade unions have abused their power in the past. I believe that the noble Lord referred to abuses of power in general terms in his introduction. There is no evidence of the abuse of power.
On the contrary there is acknowledgment in the explanatory document, which the department published last May when this proposed order was published, that the unions had not abused their position. The evidence is within the explanatory document. It is to be found in paragraph 35 of the explanatory document which explains Article 4 and Schedule 1 of the order. This is the article which authorises the department to pay retrospective compensation to persons who were dismissed for not being union members in a closed shop during the years between 1976 and 1982.
In paragraph 35 the department acknowledges that,
"few, if any, claims are expected under the compensation provisions"
in Article 4 and Schedule 1. The Minister referred to the employees concerned who could make a claim under Article 4, but according to the explanatory document few, if any, claims are expected to be made under this order. I understand from leading trade unionists in Northern Ireland that they are not aware of a single claimant who has a claim for compensation outstanding under Article 4. Can the Minister give the name and address of a single person in Northern Ireland who, to their knowledge, has such a claim?
I suggest that the article and the schedule—it is a long schedule of about 1,200 words—have been devoted to a non-existent problem. I come back to the question: why then is this order being introduced? Is it the case that the Government have grounds for believing, or fearing, that some unions, or union branches, in Northern Ireland whose members are employed in the supply and provision of essential services are likely in the future to embark upon political strikes not against any employer but against the Government in protest over the Anglo-Irish Agreement, and that the Government require the power of suing the unions and, if need be, of sequestrating their funds in order to meet that threat or potential threat? Perhaps the Minister can answer that question? It is an important question, and we should like to know the answer to it.
Articles 16 and 17 abolish the indemnity of trade unions from an action in tort on the grounds specified in the order, and a dispute with the Government would come within the scope of those articles. The articles mean that the unions can be compelled to pay damages and be fined for contempt of court. We know that heavy damages and fines are an effective way of weakening, if not crippling, the trade unions.
There are three groups of trade unions in Northern Ireland: the GB-based, the Northern Ireland-based, and the Dublin-based. But the order draws no distinction between them. Yet it seems to me that
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there is at least one vital difference between the Dublin-based unions and the others. That difference becomes apparent if and when commissioners for sequestration are appointed on the failure of a union to comply with an order of the court to pay damages or to pay a fine for contempt.
Since 1982, lawyers have learnt a great deal about this ancient writ of sequestration, which was well understood in the 17th century but which had been dormant for almost a century and a half prior to 1982. We know that the commissioners for sequestration can demand of union solicitors, union accountants, union bankers, and union stockbrokers, information about the assets of the union, their location and the name and address of the trustees, and so lay their hands on the union's assets. Union solicitors, accountants, bankers and stockbrokers who are within the court's jurisdiction have no choice but to be in breach of their duty to their clients and to disclose to the sequestrators the information they require; otherwise, they themselves will be in contempt of court.
However, can the commissioners for sequestration demand such obedience from Dublin solicitors and Dublin accountants who are at no peril for non-compliance with their request? This is a proper question to ask the Government, bearing in mind that the Irish Transport and General Workers Union and the Irish National Teachers Organisation, to name only two of the Dublin-based unions, have thousands of members in Northern Ireland.
Are we correct in assuming that a Dublin-based union with its assets in the Republic will escape sequestration which could befall other unions in the Province? Will this distinction be fair as between unions? Indeed, will it lead to union branches in the North becoming affiliated to, or members of, a parent body in the Republic in order to escape the threat of sequestration? Then, conversely, is it right that the sequestrators should be allowed to sequestrate Dublin funds which have been subscribed by members who are citizens of and resident in the Republic and who are outside the jurisdiction of the courts of Great Britain? Is that right?
Therefore is the order fair, and indeed is it workable? I should be grateful if the Minister will confirm to the House whether it is the Government's understanding of the legal position that the funds of the Dublin-based unions which are deposited in the Republic can be reached by the sequestrators? Can the Minister also confirm to the House whether this order has been the subject of a discussion at the inter-governmental conference?
I have concentrated on the most damaging articles contained in the order. However it contains 19 other substantive articles of which 16 are seen by the trade unions in Northern Ireland as being provocative, offensive or unfair to the trade unions or their members. I shall be very brief with the remainder of my comments because I have taken up my time. I must refer to the group of nine articles (Article 4 to Article 12) which cover unfair dismissal or action short of dismissal. A number of questions arise on these nine articles. Will the holding of this periodic ballot in support of a closed shop be disruptive in the workplace? Is the percentage of support at 80 per cent.

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too high, as the trade unionists claim it to be? It is noted that the compensation paid in cases of unfair dismissal is far too high, being two and a half times higher than that paid for unfair dismissal on other grounds. Is this excessive compensation but a provision to be exploited by individuals who are anxious to pick up easy money?
Then there are three other articles, Articles 13, 14 and 15, which cover union membership or union recognition in contracts. I can only say to the Government with as much conviction as I can command that it is feared by the trade unions in Northern Ireland that the consequence of these three articles sooner or later will be to depress the level of wages in Northern Ireland's low wage economy. It would be interesting to know whether the Minister can tell the House if the labour relations agency has been consulted on these three articles, and indeed on the 24 articles of the order. What was its response? We know that the Government have been consulting for a matter of six weeks, but we do not know the result of the consultation. We do not know what response they have received from parties who responded to the order.
I am advised by leading trade unionists in Northern Ireland that this order will do nothing to improve industrial relations. On the contrary, it will almost certainly lead to instability in industrial relations. The Minister may plead and may repeat the statements that this order is not aimed at the trade unions in Northern Ireland; but the trade unions believe it to be an anti-union order. It will alienate the trade union movement which has, over the past 18 years on the evidence of Ministers, been a steadying influence and a civilising influence in that torn Province. I am just wondering whether this order is also evidence that we are dealing with a Government who have no vision of a Northern Ireland within which very high priority is given to bringing together all the affirmatives in the Province. For the reasons that I have given, we on these Benches cannot support this controversial order.
Lord Hampton: My Lords, I too should like to thank the noble Lord the Minister for introducing this order. As I understand it, it is to bring the law as regards industrial relations in Northern Ireland into line with that in force in the rest of the United Kingdom. Should there remain any real differences perhaps the noble Lord the Minister will write to me explaining the reasons, should he not wish to take up the time of the House during the dinner hour. I noted with interest what the noble Lord, Lord Prys-Davies, said that he did not feel there was any need for uniformity of law throughout the United Kingdom; but I think we disagree with him about this. We believe that where the law can be the same it is better.
I shall be brief. The explanatory note states that the order:
"requires companies to include a statement about employee involvement in their annual reports".
It is this one point on which I shall concentrate. We are very concerned that employees, so far as is reasonably possible, should be informed about and involved in the running of their company. The order deals with companies of 250 employees or more and therefore
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tackles the problems of remoteness in larger companies.
We on these Benches take pride that it was through the efforts of my noble friend Lord Rochester at the time of the passage of the Employment Act in 1982 that the Government introduced an amendment at Third Reading (referred to in the Official Report of 13th October 1982 at cols. 824 and 825) that is the word for word basis of Article 11 of the present order on page 4. 1 had thought of reading out the relevant paragraph (3), but I think it is sufficient to draw your Lordships' attention to paragraph (3)(b). This reads:
"The directors' report shall in that case contain a statement describing the action that has been taken during the financial year to introduce, maintain or develop arrangements aimed at…
(b) consulting employees or their representatives on a regular basis so that the views of employees can be taken into account in making decisions"—
I emphasise the words "in making decisions"—
"which are likely to affect their interests".
We accept that in problems of considerable commercial sensitivity it may not be practicable to consult employees before a decision is taken.
In our view the changes here proposed are only a small but valuable step towards improving the country's industrial performance by increasing the extent to which employees are involved in the activities of the company in which they work. With those few comments, I confirm that we support this order.
Lord Fitt: My Lords, I rise for only a few minutes to reinforce the objections which have been put forward by my noble friend Lord Prys-Davies. I am very unhappy about the way this order has been introduced into this House, the fact that it has been brought here before it has been debated in Parliament—
Lord Lyell: This is Parliament, my Lords.
Lord Fitt: —where elected representatives could have expressed an opinion on this most controversial order. I reinforce what has been said by my noble friend to the Minister. He drew attention to the fact that time after time, both in this House and in another place, Ministers come to the Dispatch Box and tell us that we cannot have the same type of legislation for Northern Ireland because Northern Ireland is totally and completely different as a region of the United Kingdom.
I have lived in Northern Ireland throughout my political life. It is sad that I have to add my voice here this evening with a Belfast accent to the objections put forward so vividly by my noble friend Lord PrysDavies.
The one organisation in Northern Ireland to have occupied a key position throughout the troubles which began in 1968, almost 20 years ago, is the trade union movement. That movement has a most difficult role when compared with any other trade union branch in the United Kingdom. It has had to deal every day with the very real sectarian differences that exist not only in Northern Ireland but among its own members. There have been times of crisis in the past when the trade union movement in Northern Ireland has had to

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undertake a very demanding role in appealing, day after day and almost hour after hour on some occasions, to their own members not to get involved in the fratricidal strife taking place.
My noble friend has drawn attention to the fact that a succession of Ministers from both Conservative and Labour governments have clearly pointed to the responsibility that has at all times been shown by the trade union movement. Even at the height of the very serious political disturbances we have had, notably in 1974, when the Ulster workers' strike brought the power-sharing Executive to an end, all the trade union activity in the streets in opposition to the Executive took place without the sanction of the trade union movement itself. They were individuals, as such. The trade union movement as a whole did not sanction a political strike either at that time or on the few other occasions when such strikes have occurred in Northern Ireland.
I cannot see any reason for the introduction of this legislation. Certainly, I have never supported any anti-trade union legislation in the United Kingdom. It may be that we have all seen and lived through industrial disputes and strikes here in the United Kingdom. Perhaps, in the minds of some people, the Government are justified in introducing legislation to contend with industrial disputes such as those which brought a great deal of violence to the streets of the United Kingdom. I can understand that, even though I must make it very clear that I did not agree with that legislation.
However, in Northern Ireland there is absolutely no need for this legislation. There are no cases where workers have been victimised or prevented from taking employment because of the closed shop issue. There have been no cases which could be verified where workers were refused employment because of religious or other barrier. Certainly, given the whole history of Northern Ireland and the sectarian divisions which exist within the community, one can have suspicions that a religious bar does operate in certain industries. But that is not the fault of the trade union movement. The movement has at all times voiced its opposition to any discriminatory practice that might take place on grounds of race or religion. Indeed, we have legislation on the statute book in Northern Ireland to take account of such divisions.
The Anglo-Irish Agreement has led to a situation where the elected representatives have not taken their seats in the House of Commons to represent their constituents. I believe that is a very sad commentary. I have no doubt that those representatives, even though they may be Unionists and on the face of it inclined to be anti-trade union, if they had taken their seats, would be voicing their objections against this legislation. It is sad that mine will be the only Belfast voice raised in opposition to this legislation.
My noble friend Lord Prys-Davies asked some very pertinent questions this evening and I hope that the Minister will avail himself of the opportunity—because it will not take a great deal of time to inquire—to answer these questions. I am quite certain, however, that his answers will fail to convince any Member on this side of the House to accept the legislation. I believe the legislation is totally
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objectionable and totally unnecessary within the context of Northern Ireland.
7.45 p.m.
Lord Dean of Beswick: My Lords, I wish to voice as forcibly as I can my objections to this type of business being dealt with in this way. Here we have an order containing 25 articles and four schedules. In another place and in your Lordships' House there have been a number of Bills of less complexity than this order. Yet we are asked to let it go through almost on the nod. That is the first complaint I wish to make. The Minister will know that I normally support almost totally what the Government have to do in Northern Ireland. They have a rotten job in that respect and I believe they are entitled to the fullest support where necessary. However, I have this objection to make.
Your Lordships may ask why I make the objection. It is because we have to dispose of this within an hour. There is so much involved in connection with the legislation that my noble friend on the Front Bench spoke for 19 minutes and actually flipped through it. He did not deal with it in the depth that he would have wished. That is a serious criticism. The order is "parcelled away" in the dinner-hour and is legislation, as has been said by other speakers, which is not really relevant to the situation in Northern Ireland.
First of all, trade unions, being what they are, are at their strongest when employment is at its highest. We are talking about the area of the United Kingdom that far outstrips any other in its rates of unemployment. Article after article of this order is punitive. It is anti-trade union legislation; nothing else. I was a little surprised to hear the noble Lord, Lord Hampton, on behalf of the Liberal Party, accepting the order with open arms—the Liberal Party, the great freedom thinkers. This is going to put people in a straitjacket completely unnecessarily.
It is of course a fact that throughout the history of Northern Ireland, and certainly during these troubled years there has been no more stabilising influence than the trade union movement, as was said by my noble friend Lord Fitt. Your Lordships may care to cast your minds back to an occasion a few years ago when the noble Lord, Lord Murray—Mr. Len Murray as he then was—as general secretary of the TUC, actually led a back-to-work walk in Northern Ireland. In doing so, he suffered the vilification of being spat upon and abused by certain members of the more outrageous sections of the political spectrum. That was a contribution that he was prepared to make.
It is a little sad that this measure is being introduced, as regards Northern Ireland, in this way. As my noble friend Lord Fitt has said, despite the differences that there are in Northern Ireland between Republican trade unionists and Unionist trade unionists, they have one thing in common. It is to try to keep their industrial base reasonably intact. It is an excellent base and will stand comparison with many. They want to keep it intact for the sake of the community and in preparation for a time when perhaps the present situation no longer obtains, although that will not be in the near future.
When I was in another place, I met numerous delegations from the Northern Ireland TUC, from the

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TGWU and from my own union, the AUEW. I never heard one word from them which could lead one to a conclusion other than that their sole objective was the good of the people of Northern Ireland and they did not indicate any desire to become involved in nonsensical behaviour which would in any sense, be detrimental.
I did not note his words exactly, but I think the Minister referred to the question of rather dubious tendering and so on. I say to the Government that there was a very valuable tender in Northern Ireland 18 months or two years ago that was the absolute height of dubiety and I raised the matter in your Lordships' House. Though I was pleased to see that Northern Ireland had work which would benefit some members of my own union—I am talking about the Tucarno contract—it was impossible to elicit what went on.
The complaint was never answered by the Secretary of State in another place or by the noble Lord, Lord Trefgarne, here, when I asked whether the normal commercial practices had taken place for the letting of that contract to Tucarno. British Aerospace were literally frozen out of it in a most disreputable way. That was the charge that was made and it was never answered.
These measures are worthy of more than an hour of your Lordships' time. I had not intended to speak, but I could not believe that I was listening to somebody trying to push something like this through the back door, because it is worthy of a far more extensive debate than we have been given the chance to have tonight. I am only speaking off the top of my head, but I have no doubt that my noble friend Lord Prys-Davies and I, given a longer debate, could have spoken at greater length with more information at our elbow, which would have exposed these measures that the Government are pushing through tonight for the shabby and totally unnecessary measures that they are.
Lord Kilbracken: My Lords, I wish to intervene for a very few moments, first to express my complete support for what has been said by my noble friends on these Benches, and, secondly, to regret what has been expressed from the Alliance Front Bench by the noble Lord, Lord Hampton, in support of the order. I also want to point out and put on the record that through-out this debate on a matter of extreme importance there has been for most of the time no other occupant of the Benches opposite than the Minister who will reply. There have been no Back-Bench listeners or speakers, let alone anyone from the two unionist parties in Northern Ireland, and only half-a-dozen on this side of the House. I believe that that adds to the evidence that there is a high degree of indifference towards extremely important Northern Ireland matters that is typical of this House and of another place.
Lord Lyell: My Lords, perhaps I may begin by saying that I am very grateful for the close attention that has been paid to the order by everybody who has spoken? I would not have expected all the discussion this evening to be filled with sweetness and light, but all the views have been expressed in concise terms and in the most businesslike way in which your Lordships
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traditionally do business. I accept that there are strong feelings, as have been set forth by your Lordships, about the order.
I want to start by trying to answer some, if not all, of the points raised by the noble Lord, Lord Prys-Davies. He first asked me about the need for legislation and why we needed to debate this order. I think your Lordships will agree that, as I sought to stress at least twice in the course of my opening remarks, this order concerns individual freedoms, and there is nothing that divides us in your Lordships' House on that.
I have already indicated—as was indicated when we discussed this matter in 1982 in regard to England, Scotland and Wales—that we do not believe that people should be required to join a union as a condition of getting or keeping a job. This is the position in Great Britain, and we see no good reason why workers in Northern Ireland should be deprived of freedom of choice regarding trade union membership. I believe that your Lordships will agree with me there. I think that is common ground between us. I stress again that there is nothing in this order which is any threat to responsible trade unionism.
I fully support what was said by the noble Lord, Lord Fitt, and the noble Lord, Lord Prys-Davies, about the community being united in jobs. But I think that the community is also united in believing that the same freedom and liberty as there is in Great Britain should be available to everybody who works in Northern Ireland.
The noble Lord, Lord Prys-Davies, asked about other statutes dealing with labour relations which apply to Northern Ireland as well as to Great Britain. There are as follows: the Trade Union Act 1906, the Contracts of Employment and Redundancy Payments (Northern Ireland) Act 1965. There were two industrial relations orders in 1976 and an industrial relations order for Northern Ireland in 1982. All of those mirrored—I think that the proper word is replicated—the Employment Protection (Consolidation) Act 1978. The last order of this nature which dealt with Northern Ireland replicated conditions in the Employment Act 1980, and the order before us this evening is replicating in almost all conditions, apart from Article 24, the Employment Act 1982.
I take note of what your Lordships have said about this order; but I do not think that I can go through word for word all the debates that took place in 1982 on the Employment Act, as each issue applies to Northern Ireland.
The noble Lord, Lord Prys-Davies, also asked me about Article 4. This article replicates Section 2 of the 1982 Employment Act. As he will be aware, that follows the ruling of the European Court of Human Rights in the case of, I think, three employees of British Rail in 1982.
The noble Lord asked whether the trade unions had been opposed to political strikes. I stress that a trade union can dissociate itself from industrial action and avoid any financial penalty. He raised the somewhat difficult and knotty problem of trade unions which have their headquarters in the Republic of Ireland. I am sure the noble Lord agrees that trade unions which operate in Northern Ireland but have headquarters in the Republic will want to act within the law, especially

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in Northern Ireland. I do not believe that any union would deliberately seek to frustrate or break the law. If a union does so, it must take the consequences of that action wherever there is a breach. If unions have members in Northern Ireland, then I think your Lordships would agree that they must observe Northern Ireland law.
Lord Dean of Beswick: No.
Lord Lyell: The noble Lord, Lord Dean of Beswick, does not believe that. We can probably argue that on Wednesday afternoon.
Lord Prys-Davies: May I intervene?
8 p.m.
Lord Lyell: Perhaps I may just finish this matter. The noble Lord, Lord Dean, who raised the matter, shook his head. He can question that on Wednesday afternoon, if he does not believe it.
Thirdly, the noble Lord, Lord Prys-Davies, raised the question of sequestration. That, of course, is a matter for the courts in Northern Ireland. If I may take the matter of jurisdiction in Northern Ireland and in the Republic a bit further, certainly legislation which would be enforced against a union having its headquarters in the Republic is covered by Section 8 of the Trade Disputes and Trade Unions Act (Northern Ireland) 1927. That section provides that where proceedings are brought against a trade union not having its headquarters in Northern Ireland, then legal processes—for example, a writ that might cover documents concerning sequestration—will be served on any person whose name is furnished by the union to the Registrar of Friendly Societies in accordance with the provisions of the 1927 Act. Further, if the trade union fails to provide such a name then the writ or other form of process may be left or sent by post to any place of business of the union.
Lord Prys-Davies: My Lords, will the Minister clarify one point? It is not really a question of how the trade union that is based in the Republic can be sued in Northern Ireland. The question is whether the commissioners for sequestration sequestrate the funds of a Dublin-based union if the funds are in the Republic. That is the question.
Lord Lyell: My Lords, if the noble Lord wants a full reply to that I shall have to write to him. I sought to give a preliminary reply by saying that sequestration is a matter for the courts. I do not think that we should have the full sequestration Acts as they apply right through in Northern Ireland added to the debate tonight. Perhaps I may write to the noble Lord on that particular point. If I have missed anything, I shall write further concerning sequestration being a matter for courts.
Section 8(4) of the Trade Disputes and Trade Unions Act (Northern Ireland) 1927 provides for enforcement. It provides that Section 15 of the Trade Union Act Amendment Act 1876 shall apply in the case of any failure to transmit any information, such as the name and address of a person who will be
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authorised to accept service of a writ for sequestration, to the Registrar of Friendly Societies with a fine at level 1 on the standard scale for any breach of that particular information.
The noble Lord, Lord Prys-Davies, also asked at least two other questions. He asked about Articles 13 to 15. I am advised that the Labour Relations Agency was consulted. However, it did not specifically comment about Articles 13, 14 and 15.
The noble Lords, Lord Hampton and Lord Prys-Davies, mentioned the need for uniformity within the United Kingdom. I stress that the Government think that there should be parity within the United Kingdom unless there are good reasons against such a course. We know of the difficulties associated with public order in Northern Ireland. That was raised six days ago and everyone spoke about those matters, which require special arrangements. I believe that trade union relations in Northern Ireland should be on the same basis as those in the rest of the United Kingdom.
As regards the matter of supporting trade unions, I believe we recognise the valuable contributions made by trade unions in the difficult situation in Northern Ireland. I endorse everything that has been said and the stand being taken by the trade union movement against any form of intimidation from any source which would affect the right to work. However, as was borne out by the helpful comments made by the noble Lord, Lord Hampton, the whole tenor of the order before us this evening supports responsible, lawful behaviour. If the trade unions in Northern Ireland continue to act responsibly they will not suffer any detriment as a result of the order before us this evening.
The noble Lord, Lord Hampton, asked a question concerning the major differences between the 1982 Act and the order before us this evening, quite apart from Article 24. Perhaps I may write to him. I think he seemed agreeable to that course.
The noble Lord, Lord Fitt, made the robust comment that he thought we should not be taking the order at this hour. Perhaps he can voice his opinions through the usual channels; I am sure they will be noted. I stress to the noble Lord and to all your Lordships that the order before us this evening has nothing to do with the special religious difficulties that abound in Northern Ireland. I hope that I have not said anything—I would not say anything—to exacerbate those conditions. This particular aspect of labour relations in Northern Ireland, and any aspects of discrimination at the workplace or other places of business, are dealt with by the Fair Employment Agency. Perhaps that can be discussed on another night.
I wish to thank the noble Lord, Lord Dean of Beswick, for his support for all the Government have to try to do in Northern Ireland. He pointed out that his noble friend had spoken for a respectable time. I accept that. I do not think that his noble friend was over the odds in any way.
Lord Dean of Beswick: Everyone else has been held up.
Lord Lyell: Yes, my Lords, I appreciate that. I know that others have business which they wish to press. We

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shall not be very long. This is a fairly massive order. It is replicating the fairly massive 1982 Employment Act. I think that the noble Lord, Lord Prys-Davies, made a number of points, and I hope that I have been able to answer some, if not all, of them.
As regards the behaviour of sundry persons in Northern Ireland, the noble Lord, Lord Murray, certainly has my sympathy. As your Lordships know, this is a risk everyone takes in taking part in the political life of Northern Ireland.
The noble Lord, Lord Kilbracken, voiced strong support for the comments made on his side of the House. I did not glance around but certainly there were one or two supporters on the Government side of the House at some stage. Whether they have now gone out for revictualling or refreshment, I am not sure.
The noble Lord referred to the Unionist side. There is no member of your Lordships' House who subscribes to the Democratic Unionist Party.
Lord Dean of Beswick: And we do not want any!
Lord Lyell: They may be lords of the heavens above, but not on earth. I do not know why the Unionist Members of your Lordships' House did not come. Perhaps they have good reasons. As for the behaviour of Unionist Members of another place, that is for them to argue.
I have sought to justify what we are putting forward this evening. I reiterate that the order before us this evening will have no ill effect upon responsible and competent trade unionism in Northern Ireland. I stressed at the outset that we see no good reason why workers in Northern Ireland should not have exactly the same rights as individuals as do other workers doing identical jobs and often affiliated with the same unions in Great Britain. I beg to move.
On Question, Motion agreed to.

Banking Bill
8.10 p.m.
House again in Committee.
Clause 8[Applications for authorisation.]
[Amendment Nos. 33 and 34 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.35:
Page 6, line 24, after ("accountant") insert ("qualified under section 389 of the Companies Act 1985").
The noble Lord said: I beg to move Amendment No.35 standing in the name of my noble friends Lord Bruce of Donington and Lord Morton of Shuna and myself. If the Committee will allow me, I should like to speak also to Amendment No.36.
In Clause 8 we are dealing with applications for authorisation. There is a provision in Clause 8(5) referring to "an accountant". Furthermore, there is a provision in that clause referring to "other qualified person approved by the Bank". These amendments are in the nature of probing amendments. We should like to have some definition from the Government. In our own amendment we give our own definition of
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what "an accountant" is. Speaking to Amendment No.36, we wonder what other "qualified person approved by the Bank" can be charged with providing information or a statement. What information would the Bank require which could not be provided by an accountant? We are assuming that an accountant is one who is qualified under Section 389 of the Companies Act.
There may be precedents for simply referring to "an accountant" in previous legislation but we should like to make sure that such an accountant is not one who holds himself to be an accountant or pretends to be an accountant, but that he is a properly qualified accountant recognised as such. We should like to ask the Government what other type of qualified person approved by the Bank might be relevant under the circumstances.
Once the Government have given their response on those points, we shall decide what to do with this amendment. I beg to move.
Lord Winstanley: Before the noble Lord replies, perhaps I may ask the noble Lord, Lord Williams, whether, if an accountant is to be defined in the way specified in this amendment, we still need the words "approved by the Bank" in the clause.
Lord Williams of Elvel: I am grateful to the noble Lord, Lord Winstanley. Probably we do not need those words if the accountant is as specified, because it is already approved under the Companies Act.
Lord Beaverbrook: The noble Lord has asked me a few questions which I shall come to from a slightly different direction after having set out our position. The effect of the noble Lord's first amendment would he to restrict the choice of account-ant able to provide reports on information submitted in connection with applications for authorisation under this clause. The only eligible accountants would be those qualified under Section 389 of the Companies Act 1985—that is to say, accountants who are members of a United Kingdom body of accountants which is recognised by the Secretary of State, or accountants recognised by the Secretary of State as having similar qualifications obtained overseas.
The noble Lord's second amendment would have the effect of removing the ability of the Bank to require a report from a person who is "qualified", to use the language of the Bill, but who is not an accountant.
These amendments would have the effect of restricting the Bank's ability to approve persons who may be eminently suitable for the task. For example, a report may be required on matters outside the normal competence of accountants, if I may say that without causing offence to the noble Lord, Lord Bruce of Donington. An example would be where a valuation of property was required, when it might be appropriate for a surveyor and/or valuer to be involved. I think that answers one of the questions which the noble Lord asked me, concerning which other persons could be suitable to give advice under this clause.
With respect to United Kingdom accountants, it is unlikely that the Bank would approve an accountant who was not a chartered or certified accountant, but

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reports might be required from overseas accountants in respect of overseas companies or overseas-based controllers of those companies. I would not wish to restrict the Bank from approving such an accountant where, in its judgment, that person was suited to the task in question.
I hope that I have covered the questions which the noble Lord asked me, but if I have not perhaps he can come back to me.
8.15 p.m.
Lord Bruce of Donington: I can assure the noble Lord that as a qualified accountant I take no offence at any part of the Bill which might conceivably be thought to cast any reflection upon my profession. We are not sensitive in that respect.
In subsection (5) there is a requirement "to provide a report by an accountant". I fully appreciate that if the matter involves anything that is covered by the Companies Act the definition in Section 389 of the Companies Act would be appropriate. I suppose I should declare a personal interest here in case it is not known, although I do not think it is possible that any governor would seek to invoke my services in this connection, particularly after the exchanges today, but I am a little puzzled by the wording of the subsection, which speaks of, "an accountant'. I should have thought that the minimum that would be required would be "a qualified accountant". That applies not only in the United Kingdom but if the services of an overseas accountant were required, for example. I can quite see the circumstances where one might require the services of a certified public accountant in the United States, or one might find it necessary to have a comptable from France. I should have thought that the words "an accountant" ought to be qualified by the word "qualified" itself rather than leaving the wording merely as "an accountant".
As your Lordships know, there is no registration of accountants in the United Kingdom and anybody, including the noble Lord himself, if he is not already a chartered or incorporated accountant, can call himself an accountant. I should have thought that it would have been better to have inserted the word "qualified".
I accept the point that the noble Lord has made concerning "or other qualified person". The noble Lord mentioned estate agents or valuers. That point may present problems also because not every estate agent or valuer belongs to one of the recognised professional bodies for that purpose. I can envisage circumstances in which a lawyer would be required, but that is covered by "qualified". I should have thought that in such an important matter one might have been a little more specific. The amendment has been put down for clarification. There is nothing hostile about it and, I hope, nothing offensive. If the noble Lord could provide a little further information it would assist us in our consideration.
Lord Beaverbrook: I have listened to what the noble Lord had to say on this subject. I think it is inconceivable that the Bank would engage anyone other than a qualified accountant, but there is no legal definition which would apply worldwide and it would be better to leave the matter to the Bank's discretion.
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I should like to look at the matter further and perhaps write to the noble Lords once I have had a chance to look at the points they have made in Hansard.
Lord Williams of Elvel: I am grateful to the noble Lord for his undertaking to look at this matter again. I can do no more than reiterate the points that have been made both by myself in introducing this amendment and talking to Amendment No.56 and also by my noble friend Lord Bruce of Donington. If we are to have something on the face of the Bill it seems to me that it should be specific and quite clear in what it intends. If the noble Lord is prepared to look at it again in that light, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.36 not moved.]
Clause 8 agreed to.
Clause 9[Grant and refusal of authorisation]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.37:
6, line 47, after ("any") insert ("relevant").
The noble Lord said: For the convenience of the Committee I should like to speak also to Amendment No.38. If the noble Earl, Lord Limerick, will agree, I shall speak to Amendment No.39; or perhaps the noble Earl would like to take that separately.
The Earl of Limerick: I have no objection. I shall wish to make my own observations when we come to Amendment No.39.
Lord Williams of Elvel: I did not wish to prevent the noble Earl from making his observations but I thought it would be useful and time-saving for the Committee if I put forward our view in speaking to Amendment No.37.
There are three points. Our Amendment No.38 in some way marches alongside the amendment of the noble Earl though it is not exactly in the same terms. Amendment No.37 is a restrictive amendment. It requires the Bank to take into account "relevant matter" rather than "any matters". This may seem to be a small amendment and indeed it is not meant to be a point of great principle. We are all quite certain that the Bank will exercise its powers in a responsible manner. Nevertheless, I came back to what I said on the previous amendment. If legislation is to be passed by Parliament we should make it as comprehensible and watertight as we possibly can. I do not for a moment mean to suggest that the Bank will take into account any irrelevant matters, but there are irrelevant matters and there will be irrelevant matters. I believe that the Bill would be improved by inserting "relevant" at that point.
With Amendment No.38 I shall speak to Amendment No.39 in the name of the noble Earl. In contrast to Amendment No.37, Amendment No.38 is a widening amendment. In other words, the Bank should be able to take into account not only the matters relating to any person who is or will be employed by the applicant but matters relating to,
"any minority shareholder controller, majority shareholder controller, or principal shareholder controller as defined in section 103 below".

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In that respect the Bill is somewhat defective. As I understand it, the noble Earl says in his amendment that it is the affairs of the directors of the holding company of the organisation that are properly relevant to the consideration of grant and refusal of authorisation. I beg to move.
Lord Beaverbrook: For the convenience of the Committee I shall speak to Amendments Nos. 37 and 38. I should prefer to speak to the noble Earl's amendment separately if there is no objection.
Amendment No.37 would introduce an unnecessary word into the Bill. It would purport to restrict the Bank to taking into account only relevant matters relating to persons who will be connected with the applicant institution in the way specified in subsection (4). But of course as a matter of law the Bank may only properly consider relevant matters when reaching a decision. If it were to take irrelevant matters into account its decision would be liable to be reversed on an appeal under Clause 27 or even quashed on judicial review. I believe that the Bill already achieves what the noble Lord wishes in this respect.
The effect of Amendment No.38 would appear to result in the Bank being enabled to consider matters relating to a wider group of persons—namely, the controllers of the applicant institution where this is a body corporate—than is already provided by the subsection. However, the Bill already provides the Bank with this discretion. Under subsection (2) of the clause the Bank is not permitted to grant authorisation unless it is satisfied that the authorisation criteria in Schedule 3 to the Bill are fulfilled. Those criteria include the requirement that the shareholder controllers are fit and proper persons to hold their position. The qualities which are included in fitness and properness are widely drawn and it is thus unnecessary to provide the additional discretion offered by the amendment. For these reasons I hope that noble Lords opposite will feel able to withdraw the amendments.
Lord Williams of Elvel: I am grateful to the noble Lord for his response. If he assures me, as he appears to be doing, that Amendment No.37 is not necessary I am perfectly happy with that explanation. It needs a slightly complicated mind to work its way through the provisions of the Bill to decide that it is not necessary, but if the noble Lord tells me that I am prepared to accept it.
The position is somewhat different with Amendment No.38. I do not want to anticipate arguments that we shall have on the question of principal shareholder controllers, but if the Committee decides that the arrangements in the Bill relative to minority shareholder controllers and principal shareholder controllers are not adequate as at present drafted there will have to be a consequential amendment. It would be wrong for me to anticipate that discussion but I may well come back to it in the light of the decisions which are taken at that time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.38 not moved.]
Clause 9 agreed to.
8.30 p.m.
Schedule 3[Minimum criteria for authorisation]:
The Earl of Limerick The Earl of Limerick moved Amendment No.39:
81, line 34, after first ("directors") insert ("of that institution or of its holding company")
The noble Earl said: In moving Amendment No.39, I declare the interest well known to the Committee that I am a practising banker. I was unable to be present on the Second Reading, but my noble friend Lord Boardman put down a flag to this point of which I have given notice to my noble friend on the Front Bench. I hope he may be able to give me some comfort.
There has been much discussion lately on the role of the non-executive director, sometimes referred to as the independent director. Indeed, the merit often lies in the independence shown by such a person, either from management or from any group of shareholders or indeed any major single shareholding interest.
Paragraph 3 of Schedule 3 was introduced into the Bill during proceedings in another place. It adds another criterion to the former criteria required under Clause 9(2) upon which the Bank may decide upon the grant of a banking licence. The new criterion is the inclusion of,
"such number (if any) of directors without executive responsibility for the management of its business as the Bank considers appropriate having regard to the circumstances of the institution and the nature and scale of its operations."
Certainly I have no quarrel with the principle of non-executive directors; and I have no quarrel with their involvement, for example, in audit committees about which the Bank of England is currently consulting the banking community. Several groups, including my own, are already moving in this direction.
The point of my amendment is this: the wording of the Bill would be appropriate if the institution seeking a banking licence is the principal company in its group. That is not always the case. In the case of my own group and a number of other major merchant banking groups, among others, it is not so. Our structures are such that the licensed banking company is a wholly owned subsidiary of a plc. That quoted holding company has non-executive directors on its board and these non-executives will be involved in independent roles such as those which paragraph 3 evidently envisages.
The board of the banking company, on the other hand, is wholly executive. It is a large board, a full-time working board, and it would not be a natural or even an appropriate place in such a group structure to include non-executive directors.
I have not overlooked the words in paragraph 3 "such number (if any)". I anticipate the reply that the Bank would not insist on non-executive appointments unless it deemed them to be appropriate. That, of course, I accept. However, as the Bill stands, it seems that if the Bank thinks that the appointment of the non-executives would be appropriate it can only require that they be appointed to the board of the banking institution itself, where they may be inappropriate; whereas it cannot require that they be appointed to a holding company board where their presence might be wholly appropriate.
Therefore, those are the anomalies which my amendment seeks to remove: first, that a banking group should not be required to put non-executive directors where their contribution cannot best be made; and secondly, that the Bank of England is alternatively empowered to require the appointment of non-executives to a holding company board when that is the more appropriate place for them. The Bill, as I read it, does not permit that. This is a humble but I believe wholly meritorious amendment drafted by a Back-Bencher with no professional advice and I hope that my noble friend will make my day be accepting it.
Lord Beaverbrook: I think that I may be able to make part of my noble friend's day, although I am not sure about the whole day.
This amendment reflects a question raised by the noble Lord, Lord Boardman, on Second Reading. He asked how the provisions inserted in paragraphs 3 and 4 in Schedule 3 in another place, which refer to non-executive directors and—without naming them—to audit committees, would affect a group which included an authorised subsidiary. There is widespread interest in this question; most major UK authorised institutions, including for example every member of the Accepting Houses Committee, are subsidiaries of holding companies.
The concern which the noble Earl, Lord Limerick, has expressed is similar. To summarise, his question is this: will the effect of the Bill be to require each authorised institution to have its own non-executive directors, where, in many instances, the relevant directors are presently directors of the holding company? This would be an unnecessary distortion of structure, since such directors regard themselves—as no doubt does the group audit committee—as having a direct responsibility for the authorised subsidiary.
We fully recognise this concern and I can give the noble Earl the reassurance that it is more than likely that the Bank, in applying the Bill, will accept such arrangements as satisfying the purposes of the Bill provided that those purposes are indeed satisfied. Certainly neither the Government nor, I am sure, the Bank of England have any intention of seeking rigid solutions to the perceived and generally agreed desirability of bank operations being overseen by directors, or by persons of equivalent rank and status, independent of management and, as far as possible, independent of other dominant interests. The Bank of England has issued a consultative paper on this subject, and has asked for comments by 30th April. I am sure that we can leave it to the Bank in the light of those consultations to work out practical arrangements on our institution by institution basis.
Turning to the amendment itself, it would appear to offer the Bank greater flexibility in agreeing appropriate structures in individual cases. However, the schedule, as it stands, does no more than lay an onus on each institution to have such number "if any-of non-executive directors as are considered appropriate by the Bank having regard, inter alia, to the circumstances of the institution. I stress the "if any". the Bill clearly, and deliberately, contemplates that in some instances an institution will need to have no
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non-executive directors. Those instances will be where the Bank considers that the particular circumstances of the institution make it unnecessary. The most obvious example would be the cases which concern the noble Earl and I can assure him that the provision was drafted with these in mind. On that basis I hope he will be happy to withdraw his amendment.
The Earl of Limerick: I am grateful to my noble friend for his comments. This is a probing amendment, and of course I have no intention of pressing it. I am somewhat reassured by his words, but only somewhat, because they do not really address the question. My question was this. If the Bank of England does not insist, which of course it will not, on such appointments where they are not appropriate; and if it has no power, which it might wish to have, to insist upon it in cases where they would be appropriate on a holding company board, would it not be better to spell out that power as provided in my amendment? I should like to leave that question with my noble friend for further consideration because I do not think that his reply, informative though it was, gave the answer to that point. Nevertheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No.40:
Page 82, line 26, after ("maintain") insert ("proper and").
The noble Lord said: I beg to move the amendment standing in my name on the Order Paper. The Committee will be aware that, in Schedule 3, paragraph 4(7) provides that:
"An institution shall not be regarded as conducting its business in a prudent manner unless it maintains or, as the case may be, will maintain adequate accounting and other records of its business and adequate systems of control of its business and records".
The amendment seeks to insert in each case before the word "adequate", "proper and" so that the appropriate description becomes "proper and adequate". An institution may or may not be a company, plc or otherwise, which comes under the ambit of the Companies Act 1985. If the institution is a company coming within the ambit of the Companies Act 1985, then quite clearly Section 221 applies. Perhaps I may remind the Committee of the accounting requirements of Section 221 of the Companies Act, which reads as follows:

(1) Every company shall cause accounting records to be kept in accordance with this section.

(2) The accounting records shall be sufficient to show and explain the company's transactions, and shall be such as to

(a) disclose with reasonable accuracy, at any time, the financial position of the company at that time, and

(b) enable the directors to ensure that any balance sheet and profit and loss account prepared under this Part comply with the requirements of this Act as to the form and content of company accounts and otherwise.

(3) The accounting records shall in particular contain—

(a) entries from day to day of all sums of money received and expended by the company, and the matters in respect of which the receipt and expenditure takes place, and

(b) a record of the assets and liabiities of the company".

The section goes on to particularise even further. So it will be observed that the requirements of the Companies Act in relation to an institution which is a

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plc or is a limited company are already covered. One can understand the Government's difficulty, in that certain institutions may not be companies—they may be partnerships. Therefore one has to put into this particular clause some coverage of the nature and extent of accounting records. The way the Government have chosen to cover this is by the insertion of the words,
"adequate accounting and other records, of its business and adequate systems of control of its business and records".
It is for consideration whether the word "adequate" is sufficient. In some respects the Government have already pre-empted the position because in the course of the Local Government Finance Bill, which also dealt with accounting matters, they ventured, in describing the allocation of revenue for accounting purposes, to refer in Clause 2(2)(b), (c) and (d) and subsection (3) to "proper practices applicable to accounts", by whatever name known.
The word "proper" is, in my respectful submission, a little more incisive and descriptive than the word "adequate". I should have thought that, in default of laying down more detailed prescriptions as required under Section 221 of the Companies Act and covering the position of institutions which are not limited companies and therefore not subject to it, it would have been far better to have put "proper".
Baroness Seear: If the noble Lord will allow me to intervene how can it be "adequate" if it is not "proper'"?
8.45 p.m.
Lord Bruce of Donington: I believe "adequate" implies a sufficiency, but it can involve a bare sufficiency, whereas the definition of "proper" is a little more precise. If one refers to the Oxford Dictionary, one finds the meaning, "Strictly belonging or applicable; that is in conformity with rule, strict, accurate, exact, correct". That may be, I think, a little more than a bare adequacy or sufficiency. The point is one of semantics. I should have thought that the Government would have sought greater precision and I am offering them a way of making this more precise and perhaps a little more refined that it is at the moment. To some minds "adequacy" means bare adequacy without the more strict requirements which I should have thought, in the light of Section 221 of the Companies Act, were strictly required in this case.
Lord Beaverbrook: We had thought paragraph 4(7) to be wholly satisfactory in requiring accounting records to be "adequate", whose meaning is spelt out in paragraph 4(8). The addition of the word "proper" would imply something different from the word "adequate", but I am not sure that it would be clear what. It might imply that the accounting records should be such as to comply with other legal requirements, for example, under the Companies Act. It would, however, be unnecessary and inappropriate for the Bill to duplicate requirements under other legislation. This is not the purpose of the Bill. Further,
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if the institution were to fail to comply with other legal requirements, whether on accounting records or otherwise, that would cast doubt on whether it was carrying on its business with prudence, integrity and professional skills, and perhaps on whether the directors or managers were fit and proper persons.
However, in the light of the eloquent explanation by the noble Lord, Lord Bruce, of the difference between these two words, if he would be willing to withdraw this amendment, I should, without commitment, like to look at these definitions again and perhaps write to him with a considered opinion.
Lord Bruce of Donington: I am most grateful to the noble Lord. The amendment was intended to he helpful rather than otherwise. One likes to have precision in an Act of Parliament, if possible. Perhaps the noble Lord will write or perhaps he may be prepared to consider something further on Report. It depends on the nature of the correspondence. I ask leave of the Committee to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.41 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.42:
Page 82, line 45, leave out ("£ l million") and insert ("£10 million").
The noble Lord said: I beg to move Amendment No.42, standing in the name of my noble friend Lord Bruce and myself as well as of my noble friend Lord Morton. For the convenience of the Committee, I should like to speak also to Amendment No. 92.
The matter which this amendment addresses was raised on Second Reading and it is very simple: at what point do the Government draw the line as to what are the proper resources of an institution to be authorised under the Bill? It seems to us and others that £1 million is rather a limited figure and we have put £10 million as a probing figure, to discover what is the Government's reasoning in this. I beg to move.
Lord Beaverbrook: The £1 million threshold in paragraph 6 of Schedule 3 to the Bill is included primarily to ensure that institutions that are moving into deposit-taking have an adequate cushion of their own resources against start-up costs and a reasonable financial commitment from their backers. It is a minimum requirement and only applies on initial authorisation. By virtue of paragraph 1(c) of Article 8 of the EC First Credit Institutions Directive, it is not permissible for the supervisors subsequently to withdraw authorisation solely on the ground that the initial minimum net asset criterion is no longer met.
The Bill's provision relating to the capital adequacy of authorised institutions is set out in paragraphs 4(2) and (3) of Schedule 3 to the Bill, which in turn reflect paragraph 1(d) of Article 8 of the directive. They provide that an institution at all times must have net assets and other appropriate financial resources commensurate with the nature and scale of its operations. Thus the Bank of England may require substantially more than £1 million, depending on the size of the business concerned and the risk inherent in

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the proposed operations. It may require more than £10 million, but there is no reason why an institution with very modest plans for deposit-taking cannot be run prudently with net assets of £ 1 million or even less. Size is only one, and not the most important, of the factors which will determine the safety of depositors.
There remains the question of the level appropriate as a cushion against start-up costs and as an indication that the new entrant to the market has sufficient backing. The figure of £ 1 million in the Bill is already a fourfold increase on the figure in the 1979 Act and is more than twice that figure adjusted for inflation. We believe that it is pitched about right. The danger of a higher limit such as the £10 million proposed by the noble Lords' amendment is that it will bar significant numbers of new British entrants to the deposit-taking market. If such a figure had been in force over the past two years, 12 out of 19 of the new British entrants to this market would have been prevented from entering.
For the convenience of the Committee I shall speak also to Amendment No. 92. Under the 1979 Act only recognised banks, together with the Bank of England and other European Community central banks, are permitted to use banking names and descriptions freely. As a general rule a licensed deposit-taker is not allowed to use a banking name and an overseas licensed deposit-taker can only use its banking name qualified by the words "licensed deposit-taker" in immediate conjunction with its name.
Under this Bill, with the abolition of the two-tier system all authorised institutions will be able to use banking descriptions. However, it has been decided to restrict the use of banking names broadly to institutions which have over £5 million paid-up equity. This is a reasonable test to help ensure that the public are not misled.
It has been argued that in banking terms £5 million is not very much and that a figure of £10 million would be appropriate. The Government do not share that view. Whenever a distinct line has to be drawn in this way it is inevitable that there will be debate about its precise path and there will always be two sides to the argument. There will always be those who fall just on one side or other of the line and always those who stand to benefit from finding themselves on the right side while others, possibly commercial competitors, are on the wrong side.
The £5 million test which is appropriate to the effect of the existing requirement has been extensively debated in the other place. As a measure of the difficulty of the line-drawing exercise to which I have referred, much of that debate was concerned with the effect of the test on smaller institutions and whether it might not be unfair to reputable authorised institutions to prevent them having banking names. The Government clearly need to strike a balance. Some have argued that the test figure should be lower or removed altogether; others have argued that it should be doubled. I take heart from the fact that pressure has been exerted in both directions, and I conclude that the balance is probably about right. I hope that that explanation clarifies the direction of our thinking for the noble Lord.
Lord Bruce of Donington: I am grateful to the noble Lord for his detailed explanation of the Government's intentions in this matter. One point requires a little clarification and perhaps the noble Lord can provide it. In paragraph 6(2) of Schedule 3 it is stated that:
"In this paragraph 'net assets', in relation to a body corporate, means paid-up capital and reserves".
The more conventional concept of net assets and certainly one that is widely used in the accounting profession and in commerce is contained in Section 264(2) of the Companies Act:
" 'net assets' means the aggregate of the company's assets less the aggregate of its liabilities (liabilities' to include any provision for liabilities or charges within paragraph 89 of Schedule 4)".
The noble Lord will appreciate that the definition contained in Section 264(2) of the Companies Act differs from the concept of net assets as comprising merely the equivalent of the paid-up capital and reserves.
Lord Beaverbrook: I am not able immediately to give the noble Lord a full explanation of that matter and I shall write to him on the subject. I understand that the definition of "net assets" for banking regulation purposes varies from that used for defining shareholders' assets within a corporation. I believe that it has to do with withdrawability of those net assets-. A different definition may be appropriate for the purposes of regulating minimum capital requirements. The definition of "net assets" used in this Bill is that used in the 1979 Act and has given no difficulty. However, I shall write to the noble Lord to confirm what I have said to him.
The Earl of Limerick: Before the noble Lord withdraws his amendment, if that is his intention, concerning net assets may I ask whether it would not be the case that to use that definition of net assets would mean including loan capital together with capital and reserves among the amounts to be determined? That would have the opposite effect from the one that I thought he was examining, namely, whether the amount written into the Bill was an adequate amount.
Lord Williams of Elvel: That technical discussion was very interesting. It brings into play the whole question of permanent floating rate notes, which are regarded as the capital of banks by the Bank of England, and raises all sorts of technical questions which I do not want to go into at this stage. I am grateful to the noble Lord for his response, which was worth putting on the record. This matter was discussed quite extensively in another place, as he said, and I do not intend to pursue this amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Schedule 3 agreed to.
Clause 10 agreed to.
9 p.m.
Clause 11[Revocation of authorisation]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.43:
Page 7, line 48, leave out from first ("fulfilled,") to end of the line.
The noble Lord said: This is, again, a probing amendment. I do not understand what Clause 11(1)(a) as drafted means. I do not understand how it can be applied. The third schedule outlines the minimum criteria for authorisation. Clause 11 provides:
"The Bank may revoke the authorisation of an institution"—
I shall leave out some words to make the point simple—
"if it appears to the Bank that any of the criteria"—
in that schedule—
"may not he or may not have been fulfilled".
I do not understand how that can be applied in practice.
I understand that the Bank is the final arbiter as to whether the criteria may not be or may not have been fulfilled, but the criteria are complicated. I do not understand how, at any given point in time, the Bank can arrive at that judgment. If it does not arrive at that judgment, it is in danger of not revoking an authorisation which it might otherwise revoke. It may also arrive at the conclusion that the criteria may not be or may not have been fulfilled, and yet it turns out on subsequent investigation that they have been fulfilled. I am not clear as to what that means. I should be grateful if the noble Lord could tell me. I beg to move.
Lord Beaverbrook: The 1979 Act enables the Bank to revoke an authorisation if it appears to it that any of the authorisation criteria are not or have not been fulfilled. Those words were included to deal with the situation where the Bank may have been unable to obtain all the information that it needs to establish beyond doubt that the institution does not fulfil the criteria. One could envisage, for example, a shadowy overseas controlling shareholder resident in the Netherlands Antilles being reluctant to answer all of the Bank's questions. In another case, it may be that a third party refuses to supply information relevant to confirming that a principal controller was not fit and proper. In such instances, the Bank would be on safe ground in proceeding to take action if it considered that depositors' interests were or might be threatened.
It is important to note that the ground contained in Clause 11 provides the basis for the Bank not only to revoke an authorisation but for it to use the lesser power to restrict under Clause 12; for example, to place formal limits on the balance sheet, or to require the removal of a manager. The trigger for the Bank to take action to revoke or to restrict an authorisation has a double pressure. First, the facts (or the lack of facts) which lead the Bank to conclude that its powers are exercisable must be present. Secondly, there must exist adequate reasons, involving a tangible threat to depositors, which make the Bank's prudential actions an appropriate response in the circumstances. The Bank's actions under Clauses 11 and 12 are appealable
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to the tribunal under Clause 27. I hope that that explanation has been helpful to noble Lords opposite and enables them to see the point of the clause.
Lord Williams of Elvel: I am most grateful to the noble Lord. I hear all that he says. I understand every word that he says, but it does not seem to answer the point, which is that the Bank has powers under the Bill as drafted to revoke an authorisation under circumstances where it is, as he says, uncertain as to whether the criteria may or may not have been fulfilled. Although that may be open to appeal to a tribunal, to have the threat of revocation, even on an appealable basis, hanging over an institution seems to be a powerful weapon. I am not sure that the words in the Bill as drafted, although they repeat previous legislation, are entirely satisfactory; nevertheless, I shall read carefully what the noble Lord says. If there is anything that he wishes to say to me before I decide what to do with the amendment, perhaps he would like to intervene.
Lord Beaverbrook: May I come back on one point? The key point here is that the present wording would cope with a case where there was uncertainty and where the Bank is concerned for the protection of depositors, but cannot ascertain with any certainty whether the criteria are met. That point was unclear under the 1979 Act.
Lord Williams of Elvel: I accept that the Bank should intervene where there is a problem related to the protection of depositors. That was not clear in the 1979 Act. I accept the noble Lord's explanation. Revocation of authorisation is a big gun. Unless the Bank is satisfied that it has the appropriate backing for that rather dramatic step, it should not take it. I am sure that the Bank will operate in a wise manner, but if we are to write legislation, it should be properly expressed. That is the point that I was making.
Lord Bruce of Donington: May I just ask the noble Lord one further question? If he turns to Clause 13(4)(a) he will see that there are grounds which use the same words:
"the ground or a ground for a proposed revocation or for a proposal to impose or vary a restriction is that it appears to the Bank that the criterion in paragraph I of Schedule 3 to this Act is not or has not been fulfilled, or may not be or may not have been fulfilled".
One would have thought that if notice were given to the person concerned under Clause 13, it would have been unnecessary to pre-empt the action that it is proposed to take in Clause 11. Surely it would only be if there were an unsatisfactory response to the information required under Clause 13 that action under Clause 11 should be contemplated. Is not the critical point at Clause 13 where a notice is given? If that notice is not complied with, there will be every reason for action to be taken under Clause 11. Clause 11 seems to pre-empt an unsatisfactory response to the requirements of Clause 13. Perhaps the noble Lord will give his observations on that. We are trying to be helpful. We are not making any other particular point.
Lord Beaverbrook: I am grateful to the noble Lord for putting this point. I should like to look at that matter. I do not have an immediate response except to say that the principle of the protection of depositors is very high in our priorities here and we feel that the Bank should have powers to do this. The point is the same under Clause 13 but Clause 13 covers only notice of revocation once the decision has been taken. It is therefore a slightly different point. However, I shall look at it again and if there is further explanation that I can give the noble Lord I shall write to him on the point.
Lord Williams of Elvel: I am most grateful to the noble Lord for his assurance. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Clause 12[Restriction of authorisation]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No 44:
Page 10, line 38, at end insert—
("( ) The Bank shall make public in an appropriate form any restriction that it imposes on an institution's authorisation.").
The noble Lord said: It may be for the convenience of the Committee if I speak to Amendments Nos. 44 and 45 together. I beg to move Amendment No.44 in the names of my noble friend Lord Bruce, myself, and my noble friend Lord Morton. Amendments Nos. 44 and 45 return to a fairly familiar theme that we have put forward in the Building Societies Bill and the Financial Services Bill which went through this Chamber. The measure is even more important in this case where we are dealing with the protection of depositors, as the noble Lord opposite has quite rightly reminded us. I do not believe that depositors can be properly reassured about their interests if they do not know what restrictions may or may not have been imposed on the authorisation and if they do not know that a notice of revocation or restriction has been served by the Bank. It therefore seems to us to be logical and sensible in the interests of depositors that these events should be made public. I beg to move.
Lord Beaverbrook: I can understand the reason behind these amendments. Depositors should so far as is practicable be in full knowledge of the facts. There are, however, good reasons why these facts should not be mandatorily disclosed.
For the convenience of the Committee perhaps I may take Amendment No.44 first. This would require the details of the restrictions on an authorisation to be published. Restrictions are imposed on an authorisation in depositors' interests. An example would be where an institution is judged not to be fitted to take deposits but—because it is capital solvent—an orderly run-down is possible in which assets are steadily realised to repay deposits as they fall due. Restrictions would be imposed to bring this plan about. A premature, forced announcement of the fact that the institution's authorisation had been restricted would be likely to cause depositors to seek
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early withdrawal of funds. This could precipitate a liquidity crisis and closing of the doors, with consequent probable loss to the remaining depositors, the very event that the Bank was seeking to avoid. As the noble Lord opposite knows well, a forced realisation of assets is likely to be less beneficial than a freely negotiated one.
Turning to Amendment No.45, I believe the amendment to be wholly inappropriate. The Bank of England's notice which the noble Lord wishes published is one concerning a proposal of the Bank to act, not a notice confirming the action. Moreover, that notice—as subsection (3) of Clause 13 makes clear—must contain the grounds on which the Bank proposes to act: it will thus contain details of the evidence, no doubt much of it confidential and concerning third parties, which explains why the Bank is concerned about the institution. Moreover, the institution would not yet have challenged the Bank's evidence and its proposal, which it might subsequently withdraw. I hope therefore that with these explanations the noble Lord may feel able to withdraw these amendments.
The Earl of Limerick: Perhaps I may make this comment. Having once witnessed a run on a bank in the Middle East which was precipitated by the merest rumour totally without foundation, and knowing as we do that market places can become very nervous—although not, we hope, as nervous as that in this country—I find the explanation of my noble friend in relation to Amendment No.44 quite convincing.
Lord O'Brien of Lothbury: I should like to say also that I believe that such questions should be handled with the greatest discretion because indeed the first whiff of any kind of trouble applying to any one institution is just the way to start a run. Once a run starts on one institution, it can very well spread. Any noble Lords who are old enough to remember the Credit Anstalt failure in 1931 will know how terrible these things can be.
9.15 p.m.
Lord Williams of Elvel: I am grateful to the noble Lord and the noble Earl, Lord Limerick, and the noble Lord, Lord O'Brien. I agree with the noble Earl when he said—as I said on Second Reading—that with the spread of modern technology it is rumours rather than actual action that cause modern runs on a bank. On Second Reading, I said that the Continental Illinois went bust in twenty seconds simply because there was a rumour that the Chicago Board of Trade had withdrawn a deposit of 40 million dollars. That rumour set off a whole series of market operations which nearly broke a very major bank.
To a certain extent I would take issue with the noble Lord, Lord O'Brien. These rumours are going to happen everywhere, and I think there is a case for saying that if there is a formal situation then it may well be better in the long run to bring the matter right out into the open because rumour feeds on rumour. If there is an official action it may well be better to make the whole matter public.

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I am afraid I was not in this world at the time of the Credit Anstalt failure. I have read with interest the history of Credit Anstalt, and indeed about Baring Brothers in 1890—which is also very interesting in view of the fact that the noble Lord, Lord Young, says he was there! In the modern world it is rumour that breaks things rather than actual declaration of fact. The money market is so quick now that it does not like uncertainty. Declaration of fact removes uncertainty. However, I am not going to press Amendment No.44.
I should like to make one further remark concerning Amendment No.45. I understand what the noble Lord has said in response to Amendment No.45, and I do have a lot of sympathy with it. Nevertheless, if I may jog back for a moment first of all to Clause 9(3), which deals specifically with foreign organisations and establishes the principle of home country control, that is perfectly clearly set out and was referred to on Second Reading. On Second Reading the noble Lord, Lord Young, was quite categoric on the subject that there was home country control, as was set out in the Bill.
One then looks at Clause 11. Clause 11(1)(e) indicates that revocation of authorisation can be "for any other reason" by the Bank. So the principle there of home country control is damaged. There may be other reasons why the Bank wishes to revoke authorisation in the protection of depositors. I wonder whether it is not right in some way for account to be taken of this, particularly in the case of foreign banks. If the Bank of England comes to the conclusion that "for any other reason" depositors should be protected, and that a supervisory authority in the home country (which has home country control) is not adequate, then somebody should know about it. Having said that by way of explanation—I may come back on Report on this question of "for any other reason" in Clause 11—I do not wish to pursue this argument and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Clause 13[Notice of revocation or restriction]:
[Amendment No.45 not moved.]
Clause 13 agreed to.
Clause 14 agreed to.
Clause 15[Surrender of authorisation]:
On Question, whether Clause 15 shall stand part of the Bill?
Lord Williams of Elvel: Before we agree Clause 15, I should like to seek an assurance from the Government that Clauses 48 and 49, in fact, apply even though an authorised institution may surrender its authorisation under Clause 15.
Lord Beaverbrook: I was tempted to say "not without notice". I am not able to answer the question
1302
at this moment and perhaps I may give the noble Lord an exact answer to his question in due course.
Clause 15 agreed to.
Clause 16[Statement of principles]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No.46:
Page 13, line 22, after ("as") insert (", after consultation with the Treasury,").
The noble Lord said: I beg to move Amendment No.46, standing in the names of my noble friends Lord Bruce of Donington and Lord Morton of Shuna and myself. The publication by the Bank of a statement of principles is an important part of the Bill and of the whole procedure of banking supervision. I do not wish to anticipate the debates that may take place at a later stage when dealing with the new clauses that we are suggesting. However, there may well be moments when the Government have a particular policy with respect to the criteria and the principles involved in banking supervision. Leaving aside the foreign lending clause, which we shall discuss later, there may well be a case for saying that the Government should have some input into the Bank's statement of principles.
It is for that reason that I move the amendment. I beg to move.
Lord Beaverbrook: The content of such publications is properly a matter for the Bank, as the authority given responsibility for supervision under the Bill. The situation was the same under the 1979 Act, and the amendment would not change that. I believe that the Bank of England has a first class record in respect of its obligations under the existing Act to publish these statements of principles. It will continue to have a statutory obligation to do so under the Bill and there is no reason to suppose that it will not discharge that obligation in a proper manner.
If the amendment is intended to require the Treasury to give advice to the Bank on the interpretation of the minimum authorisation criteria, the various grounds on which the Bank's powers to revoke and impose restrictions become exercisable, and the circumstances in which the Bank should exercise its discretions to grant authorisation, revoke and impose restrictions, then it would be wholly inappropriate. The Bank of England and not the Treasury is the statutory body charged with responsibility for supervision under the Bill, as under the existing Act.
The amendments would involve the Treasury having an influence on the Bank in areas in which it had no direct experience or detailed expertise. It would give the Treasury a responsibility which it is not intended to discharge. The Bank has a unique authority in banking supervision, built on its day-to-day contacts with banks and its experience in dealing with their problems. It also has a detailed knowledge of complex technical issues, including capital adequacy and liquidity, which together make it the appropriate body to carry out supervision and therefore to be responsible for the statements of principles in question.
Lord Williams of Elvel: I am grateful to the noble Lord for stating what is perilously near the obvious. I do not want to anticipate the discussions that will take place at a later stage as regards where Government policy might impact on principles of lending. Therefore, at this moment I shall not seek to pursue the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 agreed too
Clauses 17 and 18 agreed to.
Clause 19[Directions to institutions]:
On Question, Whether Clause 19 shall stand part of the Bill.
Lord Williams of Elvel: I should like to draw the attention of the Committee to Clause 19(2)(e). Under this clause the Bank may give an institution directions and those directions are spelt out. Clause 19(2)(e) states that the Bank, for the purposes of safeguarding its assets and so forth:
"may in particular … require the removal of any director, controller or manager".
I can easily understand how the Bank can require the removal of a manager: that seems to me to be perfectly proper in any authorised institution. However, I find it less easy to understand how the Bank can require the removal of a director, because, as I understand it, a director is elected by shareholders and it is for shareholders to remove or re-elect a director as they feel fit.
I find it extremely difficult to see how the Bank can require the removal of a controller, because here we are talking about somebody who has a major shareholding in the authorised institution, and to say that the institution itself must remove its controller—in other words, must say to its controlling shareholder, a large shareholder, "You have to go"—makes the mind boggle as to what happens at this point. Suppose the controller says, "I am not going to go". I do not quite understand this clause, and perhaps the noble Lord will be kind enough to enlighten me.
Lord Beaverbrook: I think it would be helpful if I clarified the definition of "controller" in Clause 103. For instance, it also covers managing directors and chief executives who could be removed.
Lord Williams of Elvel: I am grateful to the noble Lord for clarifying the definition under Clause 103. The clause says:
" 'Controller', in relation to an institution, means—
(c) a person who, either alone or with any associate or associates, is entitled to exercise, or control the exercise of, 15 per cent. or more of the voting power at any general meeting of the institution or of another institution".
I do not want to read through the whole subsection. The noble Lord understands what I am saying. I do not understand how the Bank can say that you must remove a 15 per cent. shareholder just like that.
Clause 19 agreed to.
Clause 20 agreed to.
Clause 21[Notification of new or increased control]:
Lord Young of Graffham Lord Young of Graffham moved Amendment No.47:
Page 16, line 6, leave out ("which is a body corporate").
The noble Lord said: In dealing with Amendment No.47 I hope, with the leave of the Committee, that I may deal also with Nos. 48, 49, 53, 54 and 55 since these are a number of technical amendments to the clauses dealing with the section of the Bill on objections to controllers and are grouped together for the purpose of debate. I shall briefly describe their effect.
Amendment No.47 to Clause 21 simply removes some unnecessary words to make for consistency with similar references elsewhere in the Bill. Amendments Nos. 48 and 49 to Clause 22 correct the procedural provisions for the giving of notices of objection by the Bank of England. As currently drafted, the clause does not take into account the period allowed for representations to be made by a person who has acquired a controlling shareholding without clearance and is subsequently served with a preliminary notice of objection by the Bank of England. The Bank might therefore run short of time to consider the case, given that a final notice must be served within an overall time limit of three months. The amendments take account of this, and also clarify the Bank's authority to require information and documents in such cases. This is ambiguous in the present draft.
The amendments to Clause 26 are also technical corrections. Amendment No.54 is consequential on the introduction in another place of Clause 23— objections on reciprocity grounds. The decision to object on such grounds is a matter for the Government and is not subject to appeal to the tribunal constituted under the Bill. The existing reference to allowing time for appeal in subsection (4) of Clause 26 does not therefore apply to action under Clause 23.
Amendments Nos. 53 and 55 simply ensure that copies of notices of restriction made under Clause 26 are sent to all those affected by the notice, which may include a number of people acting as associates. The Bill as drafted failed to deal adequately with such cases. I beg to move.
Lord Bruce of Donington: I am happy to concur with the noble Lord in the amendments that he has put down, particularly that relating to Clause 21, where he seeks to eliminate "which is a body corporate". The elimination of that is not merely a question of redundancy: if it remained, it would in fact be in conflict with the provisions of Clause 103(3)(c). It would also be in conflict with the word "institution" as defined in Clause 104, which refers to partnerships. Thus we are pleased to accept the noble Lord's amendments, which improve the Bill.
On Question, amendment agreed to.
Clause 21, as amended, agreed to.
Clause 22[Objection to new or increased control]:
Lord Young of Graffham Lord Young of Graffham moved Amendments Nos. 48 and 49:
Page 17, line 25, leave out subsection (4).
Page 17, line 42, at end insert ("and may, for the purpose of deciding whether to serve him with such a notice, require him by notice in writing to provide such information or documents as the Bank may reasonably require.
( ) The period mentioned in section 21(1)(b) above (with any extension under subsection (4) of that section) and the period mentioned in subsection (7) above shall not expire, if it would otherwise do so, until fourteen days after the end of the period within which representations can be made under subsection (3) above.").
On Question, amendments agreed to.
Lord Beaverbrook: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

National Provident Institution Bill [H.L.]
The examiner's Certificates that the further Standing Orders had been complied with ordered to lie on the Table, and Bills committed to Unopposed Bill Committees.

Animals (Scotland) Bill [H.L.]
Returned from the Commons agreed to with amendments; the amendments ordered to be printed.
House adjourned at twenty-nine minutes before ten o'clock.

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